SANA BAQAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 28, DELHI & ANR.

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W.P.(C)/3117/2024HC DelhiDLHC01010112202415 May 2024Bench: HON'BLE MR. JUSTICE YASHWANT VARMA,HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV3 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petition and quashed the impugned notice dated June 2, 2023, issued under Section 153C of the Income Tax Act, 1961, along with all consequential proceedings. The Court found that the notice was issued beyond the maximum ten-year window prescribed by the Act for the relevant assessment year. The Court relied on its own prior decision in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd. [2024 SCC OnLine Del 2439]. The reasoning in Ojjus Medicare, as quoted in the judgment, clarifies that the ten-year period for reckoning under Section 153C is to be calculated from the end of the assessment year relevant to the year of search or, in the case of a non-searched person, from the date of receipt of books of accounts by the jurisdictional AO. Since the notice for AY 2010-11 was issued in 2023, it clearly fell outside this permissible period. The ratio decidendi is that notices under Section 153C must strictly adhere to the time limitations prescribed, particularly the ten-year window, which is calculated from the end of the assessment year.

What were the facts?

The petitioner, Sana Baqai, filed a writ petition challenging a notice dated June 2, 2023, issued under Section 153C of the Income Tax Act, 1961, for Assessment Year (AY) 2010-11. The respondents are the Assistant Commissioner of Income Tax and another authority. The core of the challenge lies in the timing of the notice, which the petitioner argues falls outside the permissible period for issuing such notices. The judgment notes that the AY in question, 2010-11, is beyond the ten-year window prescribed by the Act, making the notice ex facie invalid.

What were the issues?

1. Whether a notice issued under Section 153C of the Income Tax Act, 1961, dated June 2, 2023, for Assessment Year 2010-11 is valid, considering the ten-year limitation period prescribed by the Act? Assessee's Contention: The assessee argued that the notice dated June 2, 2023, for AY 2010-11 is invalid as it falls beyond the ten-year window stipulated under Section 153C of the Act. The petitioner relies on the judgment in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd. [2024 SCC OnLine Del 2439] to support this contention. Revenue's Contention: The judgment does not record any specific arguments made by the revenue in opposition to the petitioner's claim regarding the validity of the notice based on the time limitation.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

$~54 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 3117/2024 & CM APPL. 12791/2024 (Stay)

SANA BAQAI

..... Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor and Mr. Shivam Yadav, Advs.

versus

ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 28, DELHI & ANR. ..... Respondents Through: Mr. Gaurav Gupa, SSC along with Mr. Shivendra Singh and Mr. Yojit Pareek, JSCs.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

15.05.2024 O R D E R

1.

This writ petition has been preferred against the impugned notice dated 02 June 2023 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Year’ [“AY”] 2010-11 and all consequential proceedings. 2. Bearing in mind the undisputed fact that notice under Section 153C was dated 02 June 2023, it is ex facie evident that the aforenoted AYs’ would fall beyond the maximum window of ten years as prescribed. 3. The issue in any case stands answered and covered in favour of 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 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 21/05/2024 at 11:45:11

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. 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 21/05/2024 at 11:45:11

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 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 petition and quash the impugned notices dated 02 June 2023 issued under Section 153C of the Act and all consequential proceedings arising therefrom. .”

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. MAY 15, 2024/RW

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 21/05/2024 at 11:45:11

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