CHHARIA HOLDINGS PRIVATE LIMITED vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4-2, DELHI & ANR.

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W.P.(C)/2287/2024HC DelhiDLHC01007044202403 May 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA4 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petitions. The Court found that the notices issued under Section 153C, dated March 31, 2023, for AYs 2010-11, 2011-12, 2012-13, and 2013-14, were ex facie beyond the maximum ten-year window prescribed by the Act. The Court relied on its previous judgment in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd. The reasoning, as elaborated in the Ojjus Medicare judgment, states that the commencement date for computing the ten-year block is the date of receipt of books of accounts by the jurisdictional AO, not necessarily the date of search. The Court reiterated that the block periods must be reckoned with reference to the date of receipt of seized materials by the jurisdictional AO, and the ten-year period is to be reckoned from March 31 of the assessment year relevant to the year of search. Consequently, the impugned notices and all consequential proceedings were quashed.

What were the facts?

The petitioner, Chharia Holdings Private Limited, filed four writ petitions challenging notices issued under Section 153C of the Income Tax Act, 1961. These notices were dated March 31, 2023, and pertained to Assessment Years (AYs) 2010-11, 2011-12, 2012-13, and 2013-14. The revenue, represented by the Deputy Commissioner of Income Tax, Circle 4-2, Delhi, issued these notices. The core of the dispute revolves around the validity of these notices concerning the prescribed time limits for issuing them under Section 153C. The procedural history involves the issuance of these notices and the subsequent filing of writ petitions by the assessee to challenge them.

What were the issues?

1. Whether the notices issued under Section 153C of the Income Tax Act, 1961, dated March 31, 2023, for Assessment Years 2010-11, 2011-12, 2012-13, and 2013-14 are barred by limitation, considering the ten-year window prescribed by the Act? (Question of law) Assessee's Contention: The assessee argued that the notices issued under Section 153C were beyond the ten-year period stipulated by the Act. They relied on the principle that the computation of the ten-year period should be reckoned from the date of receipt of books of accounts or documents by the jurisdictional AO, as interpreted in various High Court and Supreme Court judgments. Revenue's Contention: The judgment does not explicitly record any specific arguments made by the revenue in response to the assessee's challenge regarding the limitation period. However, their presence indicates a defense against the assessee's claims.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

Heard together (3 matters)

W.P.(C) 2287/2024
W.P.(C) 2288/2024
W.P.(C) 2322/2024

Read from the judgment's own cause title. This page is filed under one of them.

$~40 to 43 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 2287/2024, CM APPL. 9518/2024 (Stay)

CHHARIA HOLDINGS PRIVATE LIMITED..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Sumit Lalchandani, Mr. Shivam Yadav, Advs.

versus DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4-2, DELHI & ANR.

..... Respondent Through: Mr. Prashant Meharchandani, SSC with Mr. Akshat Singh, Ms. Ritika Vohra, Mr. Utkarsh Kandhpal, Advs. 41 + W.P.(C) 2288/2024, CM APPL. 9520/2024 (Stay)

CHHARIA HOLDINGS PRIVATE LIMITED..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Sumit Lalchandani, Mr. Shivam Yadav, Advs.

versus DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4-2 & ANR.

..... Respondent Through: Mr. Prashant Meharchandani, SSC with Mr. Akshat Singh, Ms. Ritika Vohra, Mr. Utkarsh Kandhpal, Advs. 42 + W.P.(C) 2322/2024, CM APPL. 9617/2024 (Stay)

CHHARIA HOLDINGS PRIVATE LIMITED ..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Sumit Lalchandani, Mr. Shivam Yadav, Advs.

versus

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4-2 & ANR.

..... Respondent This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/05/2024 at 11:35:27

Through: Mr. Prashant Meharchandani, SSC with Mr. Akshat Singh, Ms. Ritika Vohra, Mr. Utkarsh Kandhpal, Advs. 43 + W.P.(C) 2323/2024, CM APPL. 9619/2024 (Stay)

CHHARIA HOLDINGS PRIVATE LIMITED..... Petitioner Through: Mr. Salil Kapoor, Ms. Ananya Kapoor, Mr. Sumit Lalchandani, Mr. Shivam Yadav, Advs.

versus

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4-2 & ANR.

..... Respondent Through: Mr. Prashant Meharchandani, SSC with Mr. Akshat Singh, Ms. Ritika Vohra, Mr. Utkarsh Kandhpal, Advs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR

KAURAV

O R D E R %

03.05.2024 1. These writ petitions have been preferred against the impugned notices dated 31 March 2023 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Years’ [“AYs’”] 2010- 11 [W.P.(C) 2287/2024], 2011-12 [W.P.(C) 2288/2024], 2012-13 [W.P.(C) 2322/2024], 2013-14 [W.P.(C) 2323/2024] and all consequential proceedings. 2. Bearing in mind the undisputed fact that notices under Section 153C were dated 31 March 2023, it is ex facie evident that the aforenoted AYs’ 2010-11, 2011-12, 2012-13 and 2013-14 would fall beyond the maximum window of ten years as prescribed. 3. The issue in any case stands answered and covered in favour of This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/05/2024 at 11:35:27

the writ petitioner in light of the judgment rendered in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd [2024 SCC OnLine Del 2439]. The relevant paragraphs of the aforesaid decision read as under:- “D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs’ would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs’ would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs’ hinges upon the phrase “immediately preceding the assessment year relevant to the previous year” of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it “from the end of the assessment year”. This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology “immediately preceding” when it be in relation to the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/05/2024 at 11:35:27

six year period and employing the expression “from the end of the assessment year” while speaking of the ten year block.” 4. Accordingly, and for reasons assigned in our decision in Ojjus Medicare, we allow the instant writ petitions and quash the impugned notices dated 31 March 2023 issued under Section 153C of the Act and all consequential proceedings arising therefrom.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MAY 03, 2024/neha

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 07/05/2024 at 11:35:27

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