ACIT, CIRCLE-58(1), NEW DELHI vs. RAJAN KUMAR, DELHI

This appeal of the Revenue for the Assessment Year (‘AY’) 2015-16 is directed against the order dated 24.12.2024 of the Commissioner of Income Tax (appeal)-25, New Delhi [‘CIT(A)’].

The Revenue has raised following grounds: “1. Whether the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the Addition of Rs.30,00,000/- made u/s 68 of the Income Tax Act.

That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.

The First Proviso to section 153C significantly shifts the reference point which is spoken of in section 153A(1) while defining the point from which the period of six AYs' is to be calculated, and which stipulates it to be the date of search or requisition, to the date of receipt of books of account, documents or assets seized or requisitioned by the jurisdictional AO of the non- searched person. The Proviso, thus by virtue of a deeming legal fiction, shifts the commencement point from the date of initiation of search or making of requisition to the date of receipt of books, documents or assets by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person thus being governed and regulated by the First Proviso of section 153C(1) is, however, an issue which is no longer res integra….. …. … Vikas Surya Buildwell P. Ltd.

The aforesaid discussion thus renders a determinative quietus to the identification of the starting post from which the block of six AYs' or the "relevant assessment year" would have to be calculated. The contention of the respondents that the said block periods would have to be reckoned with reference to the date of search thus can neither be countenanced nor possibly accepted. That submission is clearly addressed contrary to a long and consistent line of precedents which have held to the contrary and which unequivocally accepted the point of commencement for the purposes of identifying the six or the "relevant assessment year" to be etched from the date of handover of documents, assets or things to the AO of the non-searched party. … 84. As would be evident from the above, although the decisions in Sarwar Agency and RRJ Securities were cited, the learned Judge chose to observe that the section 153C(1) Proviso would only be liable to be construed as relevant for the purposes of abatement. We find ourselves unable to sustain that line of reasoning since both Sarwar Agency as well as RRJ Securities have struck a line which is in consonance with the view taken in SSP Aviation and which has since come to be affirmed by the Supreme Court in Jasjit Singh. In any case, the law as enunciated in RKM Powergen would not sustain bearing in mind the express enunciation of the legal position by the Supreme Court as is manifest from a reading of paragraph 9 of Jasjit Singh.

That then takes us to the principal question of identifying the point of origin for the purposes of computation of the six AYs' and the "relevant assessment year" as defined by section 153A. As is manifest from a plain reading of section 153C, the six AYs' are ordained to be those which immediately precede the AY relevant to the previous year in which the search may have been conducted or requisition made. The block of six AYs' would thus have to be identified bearing in mind the AY pertaining to the FY in which the search had been conducted or requisition made. The aforesaid AY would thus constitute the anchor point for the purposes of identification of the six AYs'. The statute envisages a similar process to be adopted for the purposes of computation of the "relevant assessment year" and where applicable constructs a Vikas Surya Buildwell P. Ltd. block of ten AYs'. The significant difference between the two however is that while the six AYs' hinge upon the phrase "immediately preceding" the AY pertaining to the search year, the ten AYs' are liable to be computed or reckoned from the end of the AY relevant to the year of search. In our considered opinion, the petitioners have correctly identified the aforesaid distinction as being crucial and determinative for the purposes of reckoning the six and the ten AY block period… “ 8.6 Further it is seen that in the aforesaid judgment, the Hon’ble High Court has noted the relevant facts which are as under: 1. Date of search and seizure operation: 18.10.2019 2. Date of issue of notice u/s 153C: 22.03.2022 3. Assessment years for which notice u/s 153C was issued: 2010-11 to 2020-21 4. Date of passing of the order of assessment: 25.03.2023 8.7 On the aforesaid facts, the Hon’ble High Court has further computed which of the six assessment years/ten assessment years would be form part of the block period. The relevant finding of the Hon’ble Delhi High Court in the case of Ojjus Medicare (P.) Ltd (supra) in respect thereof is reproduced hereunder: G. COMPUTATION OF THE SIX AND TEN YEAR BLOCK IN THE PRESENT BATCH OF WRIT PETITIONS

In the present batch, List I pertains to writ petitions which have Satisfaction Notes recorded or section 153C notices issued between the period 01 April 2021 to 31 March 2022. Undisputedly, the First Proviso to section 153C, and which has been consistently recognized to also embody the commencement point for reckoning the six or the ten AYs', shifts the relevant date from the date of initiation of search or a requisition made to the date of receipt of books of account or documents and assets seized by the jurisdictional AO of the non-searched person. Consequently, the block of six or ten AYs' would have to be reckoned bearing the aforesaid date in mind. Although in the present batch of writ petitions, the date of actual handing over has not been explicitly mentioned in a majority of the writ petitions, learned counsels for respective sides had addressed submissions based on the Vikas Surya Buildwell P. Ltd. assumption that it would be the date of issuance of the Satisfaction Note by the AO of the non-searched person and in the case of nonavailability of such a note, the date of issuance of the section 153C notices which would be pertinent for the purposes of the First Proviso to section 153C.

Assuming, therefore, that the handover of material gathered in the course of the search and pertaining to the non-searched person occurred between 01 April 2021 to 31 March 2022, the same would essentially constitute FY 2021-22 as being the previous year of search for the purposes of the non-searched entity. As a necessary corollary, the relevant AY would become AY 2022-23. AY 2022-23 would thus constitute the starting point for the purposes of identifying the six years which are spoken of in section 153C. The six AYs' are envisaged to be those which immediately precede the AY so identified with reference to the previous year of search. It would thus lead us to conclude that it would be the six AYs' immediately preceding AY 2022- 23 which could have formed the basis for initiation of action under section 153C. Consequently, and reckoned backward, the six relevant AYs' would be: - Computation of the six-year block period as No. of years provided under section 153C of the Act No. AY 2021-22 1 AY 2020-21 2 AY 2019-20 3 AY 2018-19 4 A.Y. 2017-18 5 A.Y. 2016-17 6 Consequently, AY 2021-22 would become the first of the six preceding AYs' and would as per the table set out hereinabove terminate at AY 2016-17. ….. …..

List II, forming part of this batch pertains to cases where Satisfaction Notes of the AO of the non-searched person were drawn between the period 01 April 2022 to 31 March 2023 and 01 Vikas Surya Buildwell P. Ltd. April 2023 to 31 March 2024. Tested on the principles enunciated by us in the preceding passages of this judgment, we come to the conclusion that the relevant six AYs' would comprise the following years, when computed for the period 01 April 2022 to 31 March 2023: - Computation of the six-year block period as No. of years provided under section 153C of the Act A.Y. 2022-23 1 A.Y. 2021-22 2 A.Y. 2020-21 3 A.Y. 2019-20 4 A.Y. 2018-19 5 A.Y. 2017-18 6 8.8 From the above-referred judgment of the Hon’ble jurisdictional High Court, it is seen that it has been held that the block of six AYs' would have to be identified bearing in mind the AY pertaining to the FY in which the search had been conducted or requisition made, while the ten AYs' are to be computed or reckoned from the end of the AY relevant to the year of search. Accordingly, it has been held that if the satisfaction notes have been recorded or section 153C notices have been issued between the period 01 April 2022 to 31 March 2023, then the relevant six AYs' would comprise of AYs 2022-23 to 2017-18. A perusal of the satisfaction note drawn in the case of the appellant from AYs 2014-15 to 2020-21 as available on record showed the aggregate of the income escaping assessment to be amounting to less than Rs. 50 lakhs. Thus, as seen, prima facie, the conditions spelt out in the statute and as interpreted by the Hon’ble Courts for permitting reopening beyond 6 years were not fulfilled in the instant case.

The Ld. CIT-DR argued the case vehemently and defended the assessment order.

The Ld. Counsel for the assessee has submitted that the issue involved herein is squarely covered by the decisions of the Hon’ble Supreme Court in the case of Jagjit Singh, 155 taxmann.com 155 and the Hon'ble Delhi High Court in the case of Ojjus Medicate Pvt. Ltd. 161 taxmann.com 160 (Delhi) as the present case did not fall within 06 assessment years as the period of 06 years had to be reckoned from 31 day of March of the AY relevant to the year when the AO of the respondent assessee received the incriminating material and recorded satisfaction to initiate the assessment proceedings under section 153C of the Act. In the present case, the AO of the respondent assessee had initiated proceedings under section 153C of the Act on 16.06.2022. In the instant case, 06 years had to be reckoned from 31 March 2023. Going backwards 06 years would end with AY 2017-18 as 6th year and AY 2022-23 as 1st year. Accordingly, it was contended that the assessment made under section 153C of the Act in the present case was barred by limitation.

We have heard both parties at length and have perused material available on the record. We find merit in the arguments/contentions/ Vikas Surya Buildwell P. Ltd. submissions of the Ld. Counsel. We are of the considered view that this case is squarely covered by the decisions of the Hon’ble Delhi High Court in the case of Ojjus Medicare (P.) Ltd (Supra) and the Co-ordinate Bench of the Tribunal in Plaza Fincap (P) Ltd. vs. DCIT order dated 07.05.2025. We therefore, following the reasoning given by the Hon’ble Delhi High Court in the case of Ojjus Medicare (P.) Ltd (Supra) and the Co-ordinate bench in the case of Plaza Fincap (P) Ltd. (supra), hold that there is no infirmity in the finding of the Ld. CIT(A). Thus, this appeal is decided against the Revenue.

In the result, the appeal of the Revenue is dismissed.