+W.p.(C) v. Assistant Commissioner Of Income Tax Centralcircle 20 & Anr

$~77 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 15668/2024 and CM APPL. 65785/2024NEERAJ JAIN .....Petitioner Through:MrNitin Gulati withMsReenaGandhi, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX CENTRALCIRCLE 20 & ANR......Respondents .....Respondents Through:Mr Debesh Panda, SSC with MsZehra Khan, Mr Vikramaditya Singhand Mr K. Sri Aditya, Advocates. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MS. JUSTICE SWARANA KANTA SHARMA O R D E R % 14.11.2024 1.The petitioner has filed the present petition impugning a notice dated20.10.2023 (hereafter the impugned notice) issued under Section 143(2) ofthe Income Tax Act, 1961 (hereafter the Act) as well as the order dated08.10.2024, whereby the Assessing Officer (AO) rejected the petitioner’sobjection that the assessment year (AY) 2014-15 does not fall within thedefinition of “relevant assessment year” under Section 153C of the Act. 2.The learned counsel for the petitioner submits that the impugnednotice issued in respect of AY 2014-15 is beyond the period of ten years andcannot be a subject matter of reassessment under Section 153C of the Act.In the aforesaid regard, the petitioner had filed his objections by a letter dated 31.08.2024 referring to the provisions of Section 153C of the Act andcontending that the computation for a block of ten years necessarily requiredto be reckoned from the end of the assessment year relevant to the financialyear (FY) in which the satisfaction note for initiation of such proceedingswas recorded by the AO of the searched person. 3.The respondent (hereafter the Revenue) has filed a counter-affidavit,which is not on record. However, a copy of the same was handed over tothis Court by the learned counsel for the Revenue. 4.Mr Debesh Panda, learned counsel for the Revenue has also drawn theattention of this Court to Annexure-1 to the counter-affidavit which reflectsthat the satisfaction notes regarding the seized assets belonging to a personother than the searched person (the Assessee in this case) was recorded on06.07.2023.The satisfaction note recorded by the AO of the searchedperson does not bear any date. However, the satisfaction note of the AOexercising jurisdiction in respect of the Assessee bears the date 06.07.2023.It is stated that the AO of the searched person and the Assessee is the sameperson. Therefore, the satisfaction note by the AO of the searched personshould also be construed as recorded on 06.07.2023. 5.Since the notice and the satisfaction note are issued/recorded duringFY 2023-24, which is relevant to the AY 2024-25, the period of ten years isrequired to be considered from the end of the AY 2024-25.The issueregarding the calculation of the block of ten years is covered by the decisionof a Coordinate bench of this Court in Principal Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd. : 2024 SCC OnLine Del 2439.The relevant extracts of the said judgment is set out below: “86. In the present batch, List I pertains to writ petitions which have 5.Since the notice and the satisfaction note are issued/recorded duringFY 2023-24, which is relevant to the AY 2024-25, the period of ten years isrequired to be considered from the end of the AY 2024-25.The issueregarding the calculation of the block of ten years is covered by the decisionof a Coordinate bench of this Court in Principal Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd. : 2024 SCC OnLine Del 2439.The relevant extracts of the said judgment is set out below: “86. In the present batch, List I pertains to writ petitions which have Satisfaction Notes recorded or Section 153C notices issued betweenthe period 01 April 2021 to 31 March 2022. Undisputedly, the FirstProvisotoSection153C,andwhichhasbeenconsistentlyrecognized to also embody the commencement point for reckoningthe six or the ten AYs’, shifts the relevant date from the date ofinitiation of search or a requisition made to the date of receipt ofbooksofaccountordocumentsandassetsseizedbythejurisdictional AO of the non-searched person. Consequently, theblock of six or ten AYs’ would have to be reckoned bearing theaforesaid date in mind. Although in the present batch of writpetitions, the date of actual handing over has not been explicitlymentioned in a majority of the writ petitions, learned counsels forrespective sides had addressed submissions based on the assumptionthat it would be the date of issuance of the Satisfaction Note by theAO of the non-searched person and in the case of nonavailability ofsuch a note, the date of issuance of the Section 153C notices whichwould be pertinent for the purposes of the First Proviso to Section153C. 87. Assuming, therefore, that the handover of material gathered inthe course of the search and pertaining to the non-searched personoccurred between 01 April 2021 to 31 March 2022, the same wouldessentially constitute FY 2021-22 as being the previous year ofsearch for the purposes of the non-searched entity. As a necessarycorollary, the relevant AY would become AY 2022-23. AY 2022-23would thus constitute the starting point for the purposes ofidentifying the six years which are spoken of in Section 153C. Thesix AYs’ are envisaged to be those which immediately precede theAY so identified with reference to the previous year of search. Itwould thus lead us to conclude that it would be the six AYs’immediately preceding AY 2022-23 which could have formed thebasis for initiation of action under Section 153C. Consequently, andreckoned backward, the six relevant AYs’ would be: – Consequently, AY 2021-22 would become the first of the sixpreceding AYs’ and would as per the table set out hereinaboveterminate at AY 2016-17. 88. Section 153A replicates the basis on which the six AYs’ are to beidentified and computed with the solitary distinction being that in thecase of the searched person, the six AYs’ are liable to be computedfrom the AY pertaining to the FY in which the search wasconducted. The starting point for the purposes of identifying the sixAYs’ in the case of Section 153A would thus turn upon the year ofsearch as opposed to the handover of material which is spoken of inthe First Proviso to Section 153C. If one were to therefore assumethat a search took place on a person between 01 April 2021 to 31March 2022, the pertinent AY would become AY 2022-23 and thecorresponding six AYs’ would be as follows: - 89. That takes us then to the issue of identifying the “relevantassessment year” for the purposes of computing the ten year block.Explanation 1 to Section 153A specifies the manner in which theentire ten AY period is to be computed. While the computation of sixAYs’ follows the position as enunciated and identified above,Explanation 1 prescribes that the ten AYs’ would have to becomputed from the end of the AY relevant to the FY in which thesearch was conducted or requisition made. The ten AY periodconsequently is to be reckoned from the end of the AY pertaining tothe previous year in which the search was conducted as distinct fromthe preceding year which is spoken of in the case of the six relevant 89. That takes us then to the issue of identifying the “relevantassessment year” for the purposes of computing the ten year block.Explanation 1 to Section 153A specifies the manner in which theentire ten AY period is to be computed. While the computation of sixAYs’ follows the position as enunciated and identified above,Explanation 1 prescribes that the ten AYs’ would have to becomputed from the end of the AY relevant to the FY in which thesearch was conducted or requisition made. The ten AY periodconsequently is to be reckoned from the end of the AY pertaining tothe previous year in which the search was conducted as distinct fromthe preceding year which is spoken of in the case of the six relevant AYs’. 90. Viewed in that light, and while keeping the period of 01 April2021 to 31 March 2022 as the constant, the relevant AY would beAY 2022-23. The ten AYs’ would have to be computed from 31March 2023 with the said date indubitably constituting the end of theAY relevant to the previous year of search. Viewed in light of theabove, the block period of 10 AYs’ would be as follows: - 6.Although, the Assessee has not specifically sought any prayer forsetting aside the notice dated 18.08.2023 issued under Section 153C of theAct in respect of the AY 2014-15, it is apparent that the substance of thechallenge is reopening the assessment for the AY 2014-15. In view of theabove decision, it is apparent that the AO cannot proceed to take any stepsfor assessment in relation to AY 2014-15, as the same is barred bylimitation. 7.In view of the above, it is apparent that the Assessee’s contention thatthe assessment for the year relevant to AY 2014-15 cannot proceed underSection 153C of the Act, in the given facts and circumstances of the case, ismerited. 8.The petition is accordingly allowed and the impugned notice issuedunder Section 143(2) of the Act is set aside. Pending application also standsdisposed of. VIBHU BAKHRU, J NOVEMBER 14, 2024 tr SWARANA KANTA SHARMA, J Click here to check corrigendum, if any