OM TRANS LOGISTICS LTD vs. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 19(1) DELHI & ANR.

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W.P.(C)/2083/2024HC DelhiDLHC01005873202430 April 2024Bench: HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV,HON'BLE MR. JUSTICE YASHWANT VARMA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the writ petitions and quashed the impugned notices dated March 31, 2023, and July 29, 2022, issued under Section 153C of the Income Tax Act, 1961, specifically concerning AY 2011-2012. The Court relied on its previous judgment in Pr. Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd. [2024 SCC OnLine Del 2439]. The reasoning, as summarized in the Ojjus Medicare decision, established that the First Proviso to Section 153C introduces a legal fiction where the commencement date for computing the six or ten-year block is the date of receipt of books of accounts by the jurisdictional AO. This shifts the reference point from the date of search (as in Section 153A) to the date of receipt of seized materials by the AO of the non-searched person. The six AYs are those immediately preceding the AY relevant to the year of search, and the ten-year period is reckoned from the end of the AY relevant to the year of search. Therefore, the assessment years in question were found to be outside the permissible period.

What were the facts?

The petitioners, OM Trans Logistics Ltd. and Vikas Associates Pvt. Ltd., have filed writ petitions challenging the action initiated under Section 153C of the Income Tax Act, 1961, for Assessment Year (AY) 2011-2012. The core of their contention is that the initiation of such action is unsustainable as the relevant assessment years fall outside the permissible window defined by the statute. The respondents are the Assistant Commissioner of Income Tax and the Income Tax Officer, along with their respective departments. The procedural history involves the issuance of notices under Section 153C, which are now under challenge before the High Court.

What were the issues?

1. Whether the invocation of action under Section 153C of the Income Tax Act, 1961, for Assessment Year 2011-2012 is valid when the assessment years fall beyond the prescribed time window. (Question of law) Assessee's contention: The initiation of action under Section 153C would not sustain as the concerned AYs fall beyond the window of the relevant assessment year as defined by law. Revenue's contention: Not recorded in the judgment.

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) 2083/2024
W.P.(C) 2088/2024

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

$~36 & 37 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 2083/2024 & CM APPLs. 8641/2024

OM TRANS LOGISTICS LTD

..... Petitioner

Through: Ms.Neetu Mohan, Dr.Manas

Shankar Ray, Mr.Shouryendu

Ray, Mr.Anshul Gondale and

Ms.Vatsala Poddar, Advs.

versus

THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 19(1) DELHI & ANR.

..... Respondents

Through: Mr.Ruchir Bhatia, Sr.SC with

Mr.Anant Mann, Jr.SC. 37 + W.P.(C) 2088/2024 & CM APPL. 8676/2024

VIKAS ASSOCIATES PVT. LTD

..... Petitioner

Through: Ms.Neetu Mohan, Dr.Manas

Shankar Ray, Mr.Shouryendu

Ray, Mr.Anshul Gondale and

Ms.Vatsala Poddar, Advs.

versus

THE INCOME TAX OFFICER, WARD-26(3) & ANR. ..... Respondents

Through: Mr.Ruchir Bhatia, Sr.SC with

Mr.Anant Mann, Jr.SC.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV

O R D E R %

30.04.2024

1.

The writ petition assails the invocation of action under Section 153C pertaining to Assessment Year ["A.Y."] 2011-2012. It is the submission of the petitioner that initiation of action would not sustain 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 03/05/2024 at 13:03:54

since the concerned AYs’ would fall beyond the window of relevant assessment year as defined. 2. Learned counsels for parties are at ad idem that the challenge raised here stands concluded and answered in favour of the writ petitioners in light of the judgment rendered in Pr. Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd. [2024 SCC OnLine Del 2439]. The relevant paragraphs of the aforesaid decision are reproduced hereunder:- "K. SUMMARY OF CONCLUSIONS

119.

We thus record our conclusions as follows:

" 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 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 03/05/2024 at 13:03:54

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, we allow the instant writ petitions and quash the impugned notices dated 31 March 2023 and 29 July 2022 issued under Section 153C of the Income Tax Act, 1961 insofar as they relate to A.Y. 2011- 2012.

YASHWANT VARMA, J.

PURUSHAINDRA KUMAR KAURAV, J. APRIL 30, 2024/MJ 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 03/05/2024 at 13:03:54

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