POWSOL ADVISOORS LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 20 DELHI & ANR.

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W.P.(C)/5458/2024HC DelhiDLHC01020720202416 April 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA5 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petitions. The Court held that the Assessment Years 2010-11 to 2013-14 fall beyond the maximum ten-year window prescribed by Section 153C of the Income Tax Act, 1961. The Court relied on its previous decision in Principal Commissioner of Income Tax Central – 1 v. Ojjus Medicare Private Limited. The reasoning emphasized that the First Proviso to Section 153C shifts the commencement date for computing the ten-year block to the date of receipt of books of accounts, documents, or assets by the jurisdictional Assessing Officer. In this case, the Satisfaction Note was issued on June 17, 2022, and the notices were dated June 19, 2022. The Court found that the AYs in question were beyond the ten-year period reckoned from the date of receipt of relevant documents. Consequently, the impugned notices dated June 19, 2022, issued under Section 153C for AYs 2010-11 to 2013-14 were quashed.

What were the facts?

The petitioner, Powsol Advisors Limited, filed four writ petitions challenging notices issued under Section 153C of the Income Tax Act, 1961. The notices were dated June 19, 2022, and pertained to Assessment Years (AYs) 2010-11, 2011-12, 2012-13, and 2013-14. The petitioner contended that these AYs fell outside the ten-year window prescribed by the Act for issuing such notices. The Satisfaction Note, which is a prerequisite for issuing a Section 153C notice, was issued by the jurisdictional Assessing Officer on June 17, 2022. The respondents are the Assistant Commissioner of Income Tax and another authority.

What were the issues?

1. Whether the notices issued under Section 153C of the Income Tax Act, 1961, dated June 19, 2022, for Assessment Years 2010-11 to 2013-14 are valid, considering the Satisfaction Note was issued on June 17, 2022, and the ten-year window prescribed by the Act. Assessee's Contention: The petitioner argued that the Assessment Years 2010-11 to 2013-14 fall beyond the maximum ten-year window stipulated for issuing notices under Section 153C, making the impugned notices invalid. Revenue's Contention: The judgment does not record specific arguments from the revenue on this point, other than their appearance through Senior Standing Counsel.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

W.P.(C) 5458/2024
W.P.(C) 5460/2024

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

$~61 to 64 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 5458/2024

POWSOL ADVISOORS LIMITED ..... Petitioner

Through: Mr. Sachit Jolly, Advocate

alongwith Mr. Abhyudaya

Shankar Bajpai and Mr. Aditya

Rathore, Advocates

Versus

ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 20 DELHI & ANR. ..... Respondents

Through: Mr. Prashant Meharchandani,

Sr. SC alongwith Mr. Akshat,

Ms. Ritika Vohra and Mr.

Utkarsh Kandpal, Advocates

for ITD

62 + W.P.(C) 5460/2024

POWSOL ADVISOORS LIMITED ..... Petitioner

Through: Mr. Sachit Jolly, Advocate

alongwith Mr. Abhyudaya

Shankar Bajpai and Mr. Aditya

Rathore, Advocates

Versus

ASSISTANT COMMISSIONER OF

INCOME TAX CENTRAL CIRCLE 20 DELHI & ANR. ..... Respondents

Through: Mr. Prashant Meharchandani,

Sr. SC alongwith Mr. Akshat,

Ms. Ritika Vohra and Mr.

Utkarsh Kandpal, Advocates

for ITD

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 23/04/2024 at 11:48:09

63 + W.P.(C) 5461/2024

POWSOL ADVISOORS LIMITED ..... Petitioner

Through: Mr. Sachit Jolly, Advocate

alongwith Mr. Abhyudaya

Shankar Bajpai and Mr. Aditya

Rathore, Advocates

Versus

ASSISTANT COMMISSIONER OF

INCOME TAX CENTRAL CIRCLE 20 DELHI & ANR. ..... Respondents

Through: Mr. Prashant Meharchandani,

Sr. SC alongwith Mr. Akshat,

Ms. Ritika Vohra and Mr.

Utkarsh Kandpal, Advocates

for ITD

64 + W.P.(C) 5463/2024

POWSOL ADVISOORS LIMITED ..... Petitioner

Through: Mr. Sachit Jolly, Advocate

alongwith Mr. Abhyudaya

Shankar Bajpai and Mr. Aditya

Rathore, Advocates

Versus

ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 20 DELHI AND ANR & ANR. ..... Respondents

Through: Mr. Prashant Meharchandani,

Sr. SC alongwith Mr. Akshat,

Ms. Ritika Vohra and Mr.

Utkarsh Kandpal, Advocates

for ITD

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 23/04/2024 at 11:48:09

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

O R D E R %

16.04.2024

CM APPL. 22534/2024 (Exemption) in W.P.(C) 5458/2024 CM APPL. 22536/2024 (Exemption) in W.P.(C) 5460/2024 CM APPL. 22538/2024 (Exemption) in W.P.(C) 5461/2024 CM APPL. 22542/2024 (Exemption) in W.P.(C) 5463/2024

Allowed, subject to all just exceptions.

The applications stand disposed of. W.P.(C) 5458/2024 and CM APPL 22533/2024 (Stay) W.P.(C) 5460/2024 and CM APPL 22535/2024 (Stay) W.P.(C) 5461/2024 and CM APPL 22537/2024 (Stay) W.P.(C) 5463/2024 and CM APPL 22541/2024 (Stay)

1.

Bearing in mind the undisputed fact that the Satisfaction Note was issued by the jurisdictional Assessing Officer [“AO”] of the petitioner on 17 June 2022 and the impugned notices dated 19 June 2022 issued under Section 153C of the Income Tax Act, 1961 ["Act"] relate to Assessment Years [“AYs”] 2010-11 [W.P.(C) 5458/2024], 2011-12 [W.P.(C) 5460/2024], 2012-13 [W.P.(C) 5461/2024] and 2013-14 [W.P.(C) 5463/2024], it is ex facie evident that the aforenoted AYs’ would fall beyond the maximum window of ten years as prescribed. 2. 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 Central – 1 v. Ojjus Medicare Private Limited [2024 SCC Online Del 2439]. The relevant paragraphs of the aforesaid decision read as under:

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 23/04/2024 at 11:48:09

“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 nonsearched 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 six year period and employing the expression “from the end of the assessment year” while speaking of the ten year block.”

3.

Accordingly, and for reasons assigned in our decision in Ojjus Medicare Private Limited, we allow the instant writ petitions and 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 23/04/2024 at 11:48:09

quash the impugned notices issued under Section 153C of the Act dated 19 June 2022, insofar as it pertains to AYs’ 2010-11 to 2013-14.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. APRIL 16, 2024 p’ma 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 23/04/2024 at 11:48:09

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