ASHOK KUMAR AGARWAL vs. INCOME TAX OFFICER WARD 34(1), DELHI & ANR.

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W.P.(C)/934/2024HC DelhiDLHC01001772202403 May 2024Bench: HON'BLE MR. JUSTICE YASHWANT VARMA,HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV4 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 November 16, 2022, issued under Section 153C of the Income Tax Act, 1961, along with all consequential proceedings. The Court relied on its previous judgment in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd. The Court reiterated that the First Proviso to Section 153C introduces a legal fiction where the commencement date for computing the ten-year block is deemed to be the date of receipt of books of accounts, documents, or assets by the jurisdictional AO. This date, rather than the date of search, is the relevant reference point for a non-searched person. In this case, the Satisfaction Note dated November 4, 2022, established the starting point for the ten-year period. Since the AYs 2010-11, 2011-12, 2012-13, and 2013-14 fell beyond this ten-year window from the date of the Satisfaction Note, the notices were held to be invalid. The ratio decidendi is that the ten-year period under Section 153C for a non-searched person must be reckoned from the date of receipt of seized materials by the jurisdictional AO, as indicated by the Satisfaction Note.

What were the facts?

The petitioner, Ashok Kumar Agarwal, filed four writ petitions challenging notices dated November 16, 2022, issued under Section 153C of the Income Tax Act, 1961. These notices pertained to Assessment Years (AYs) 2010-11, 2011-12, 2012-13, and 2013-14. The core of the dispute lies in the computation of the ten-year window for issuing such notices. The petitioner's jurisdictional Assessing Officer recorded a Satisfaction Note on November 4, 2022. The petitioner argued that the AYs in question fall outside the permissible ten-year period prescribed by Section 153C, as calculated from the date of the Satisfaction Note.

What were the issues?

1. Whether the notices issued under Section 153C of the Income Tax Act, 1961, for AYs 2010-11, 2011-12, 2012-13, and 2013-14 are valid, considering the Satisfaction Note was dated November 4, 2022, and the ten-year window prescribed by the Act. Assessee's Contention: The petitioner contended that the Assessment Years in question fall beyond the maximum ten-year window stipulated by Section 153C of the Act. The ten-year period, according to the petitioner, should be reckoned from the date of the Satisfaction Note, making the notices for the specified AYs invalid. Revenue's Contention: The judgment does not record any specific contentions made by the revenue. However, the issuance of the notices implies a belief that they were within the statutory period.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153A

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Heard together (3 matters)

W.P.(C) 934/2024
W.P.(C) 935/2024
W.P.(C) 954/2024

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

$~36 to 39 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 934/2024, CM APPL. 3894/2024-(Stay)

ASHOK KUMAR AGARWAL

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

versus

INCOME TAX OFFICER WARD 34(1), DELHI & ANR. ..... Respondent Through: Mr. Prashant Meharchandani, SSC with Mr. Akshat Singh, Ms. Ritika Vohra, Mr. Utkarsh Kandhpal, Advs. 37 + W.P.(C) 935/2024, CM APPL. 3896/2024 (Stay)

ASHOK KUMAR AGARWAL

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

versus

INCOME TAX OFFICER WARD 34(1), DELHI & ANR. ..... Respondent Through: Mr. Prashant Meharchandani, SSC with Mr. Akshat Singh, Ms. Ritika Vohra, Mr. Utkarsh Kandhpal, Advs. 38 + W.P.(C) 954/2024, CM APPL. 3930/2024 (Stay)

ASHOK KUMAR AGARWAL

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

versus

INCOME TAX OFFICER WARD 34(1), DELHI & ANR. 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 11:37:37

..... Respondent Through: Mr. Prashant Meharchandani, SSC with Mr. Akshat Singh, Ms. Ritika Vohra, Mr. Utkarsh Kandhpal, Advs. 39 + W.P.(C) 955/2024, CM APPL. 3932/2024 (Stay)

ASHOK KUMAR AGARWAL

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

versus

INCOME TAX OFFICER WARD 34(1), DELHI & 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 16 November 2022 issued under Section 153C of the Income Tax Act, 1961 [“Act”] for Assessment Years’ [“AYs”] 2010- 11 [W.P.(C) 934/2024], 2011-12 [W.P.(C) 935/2024], 2012-13 [W.P.(C) 955/2024], 2013-14 [W.P.(C) 954/2024] and all consequential proceedings. 2. Bearing in mind the undisputed fact that the Satisfaction Note recorded by the jurisdictional Assessing Officer [“AO”] of the petitioner was dated 04 November 2022, 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. 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 11:37:37

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 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 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 11:37:37

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 petitions and quash the impugned notices dated 16 November 2022 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 11:37:37

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