SAKSHAM REALTY PRIVATE LIMITED vs. INCOME TAX OFFICER WARD 22-1, DELHI & ANR.

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W.P.(C)/3498/2024HC DelhiDLHC01011692202421 May 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA5 pages
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What did the High Court hold?

The Delhi High Court allowed the writ petitions and quashed the impugned notices dated August 10, 2022, issued under Section 153C of the Income Tax Act, 1961, along with all consequential proceedings. The Court found that the Assessment Years in question (2010-11 to 2013-14) fell beyond the maximum ten-year window prescribed by the Act, given the date of the notices. The Court relied on its previous judgment in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd. The reasoning emphasized that the First Proviso to Section 153C legally deems the commencement date for computing the ten-year period as the date of receipt of seized books of accounts by the jurisdictional AO, not the date of the search. This interpretation, supported by decisions in SSP Aviation, RRJ Securities, Jasjit Singh, and Vikram Sujitkumar Bhatia, means the block periods must be reckoned from this later date. Therefore, the notices issued were ex facie beyond the statutory time limit.

What were the facts?

The petitioner, Saksham Realty Private Limited, filed four writ petitions challenging notices issued under Section 153C of the Income Tax Act, 1961. The notices were dated August 10, 2022, and pertained to Assessment Years (AYs) 2010-11, 2011-12, 2012-13, and 2013-14. The respondents are the Income Tax Officer, Ward 22-1, Delhi, and another authority. The core of the dispute revolves around the validity of these notices concerning the prescribed time limits for issuing them. The petitioner argued that the notices were issued beyond the statutory period allowed by the Act.

What were the issues?

1. Whether the notices issued under Section 153C of the Income Tax Act, 1961, dated August 10, 2022, 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? Assessee's Contention: The petitioner argued that the notices were issued beyond the maximum ten-year period allowed under Section 153C. They relied on the principle that the commencement date for computing this period is crucial and is governed by specific provisions, particularly the First Proviso to Section 153C, which shifts the reference point to the date of receipt of seized books of accounts by the jurisdictional AO, not the date of search. Revenue's Contention: The judgment does not explicitly record the revenue's specific arguments on the limitation period. However, the context implies they likely contended for a different reckoning of the ten-year period, possibly referencing the date of search.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

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Heard together (2 matters)

W.P.(C) 3498/2024
W.P.(C) 3516/2024

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

$~49 to 52 * IN THE HIGH COURT OF DELHI AT NEW DELHI

+ W.P.(C) 3498/2024 & CM APPL. 14292/2024 (Stay)

SAKSHAM REALTY PRIVATE LIMITED ..... Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Shivam Yadav, Mr. Tarun Chanana, Ms. Ananya Kapoor, Mr. Utkarsa Gupta and Mr. Vibhu Jain, Advocates.

versus

INCOME TAX OFFICER WARD 22-1, DELHI & ANR. ..... Respondents Through: Mr. Sunil Agarwal, Sr. Standing Counsel with Mr. Shivansh B. Pandya and Mr. Viplav Acharya, Jr. Standing Counsel with Mr. Utkarsh Tiwari, Advocate. 50 + W.P.(C) 3516/2024 & CM APPL. 14320/2024 (Stay)

SAKSHAM REALTY PRIVATE LIMITED ..... Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Shivam Yadav, Mr. Tarun Chanana, Ms. Ananya Kapoor, Mr. Utkarsa Gupta and Mr. Vibhu Jain, Advocates.

versus

INCOME TAX OFFICER WARD 22(1), DELHI & ANR. ..... Respondents Through: Mr. Sunil Agarwal, Sr. Standing Counsel with Mr. 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 27/05/2024 at 13:03:45

Shivansh B. Pandya and Mr. Viplav Acharya, Jr. Standing Counsel with Mr. Utkarsh Tiwari, Advocate. 51 + W.P.(C) 3519/2024 & CM APPL. 14325/2024 (Stay)

SAKSHAM REALTY PRIVATE LIMITED ..... Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Shivam Yadav, Mr. Tarun Chanana, Ms. Ananya Kapoor, Mr. Utkarsa Gupta and Mr. Vibhu Jain, Advocates.

versus

INCOME TAX OFFICER WARD 22(1), DELHI & ANR. ..... Respondents Through: Mr. Sunil Agarwal, Sr. Standing Counsel with Mr. Shivansh B. Pandya and Mr. Viplav Acharya, Jr. Standing Counsel with Mr. Utkarsh Tiwari, Advocate. 52 + W.P.(C) 3521/2024 & CM APPL. 14328/2024 (Stay)

SAKSHAM REALTY PRIVATE LIMITED ..... Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Shivam Yadav, Mr. Tarun Chanana, Ms. Ananya Kapoor, Mr. Utkarsa Gupta and Mr. Vibhu Jain, Advocates.

versus

INCOME TAX OFFICER WARD 22(1), DELHI, & ANR. ..... Respondents 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 27/05/2024 at 13:03:45

Through: Mr. Sunil Agarwal, Sr. Standing Counsel with Mr. Shivansh B. Pandya and Mr. Viplav Acharya, Jr. Standing Counsel with Mr. Utkarsh Tiwari, Advocate.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MS. JUSTICE TARA VITASTA GANJU

O R D E R %

21.05.2024

1.

These writ petitions have been preferred against the impugned notices dated 10 August 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Years’ [“AYs”] 2010- 11 [W.P.(C) 3498/2024], 2011-12 [W.P.(C) 3516/2024], 2012-13 [W.P.(C) 3519/2024] and 2013-14 [W.P.(C) 3521/2024] and all consequential proceedings. 2. Bearing in mind the undisputed fact that notices under Section 153C were dated 10 August 2022, 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 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 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 27/05/2024 at 13:03:45

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 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 27/05/2024 at 13:03:45

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 petitions and quash the impugned notices dated 10 August 2022 issued under Section 153C of the Act and all consequential proceedings arising therefrom.

YASHWANT VARMA, J

TARA VITASTA GANJU, J MAY 21, 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 27/05/2024 at 13:03:45

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