+ W.p.(C) 4412/2024 & Cm Appl v. Assistant Commissioner Of Income Tax, Circle 7(1), New Delhi & Ors

$~48 & 51 IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 4412/2024 & CM APPL. 18049/2024 (Stay) SAURABH GUPTA .....Petitioner SAURABH GUPTA .....Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Tarun Chanana, Mr. Utkarsha Kumar Gupta and Ms. Ananya Kapoor, Advs. Salil Kapoor, Mr. Tarun Chanana, Mr. Utkarsha Kumar Gupta and Ms. Ananya Kapoor, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7(1), NEW DELHI & ORS. .....Respondents Through: Mr. Sanjay Kumar, SSC along with Ms. Easha Kadian, JSC. Mr. Abhishek Khanna, SPC for R-2/UOI. 51 + W.P.(C) 4418/2024 & CM APPL. 18060/2024 (Stay) SAURABH GUPTA .....Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Tarun Chanana, Mr. Utkarsha Kumar Gupta and Ms. Ananya Kapoor, Advs. Chanana, Mr. Utkarsha Kumar Gupta and Ms. Ananya Kapoor, Advs. versus ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7(1), NEW DELHI & ORS. .....Respondents Through: Mr. Sanjay Kumar, SSC along with Ms. Easha Kadian, JSC. Mr. Abhishek Khanna, SPC for R-2/UOI. CORAM: HON'BLE MR. JUSTICE YASHWANT VARMAHON'BLE MR. JUSTICE RAVINDER DUDEJA O R D E R % 17.09.2024 W.P.(C) 4412/2024 & W.P.(C) 4418/2024 1.The writ petitioner impugns the notices dated 30 March 2023 seeking to reassess the petitioner for Assessment Years[1] 2012-13 [W.P.(C) 4412/2024] and 2013-14 [W.P.(C) 4418/2024] issued under Section 148 of the Income Tax Act, 1961[2]. 2.Undisputedly, and since the notices were issued on 30 March 2023, it would be the amended regime of reassessment which came into effect from 01 April 2021 which would be applicable. The actions for reassessment would thus have to satisfy the provisions made in the First Proviso to Section 149(1) of the Act. The said provision reads as follows: “[149. Time limit for notice.— (1) No notice under Section 148 shall be issued for the relevant assessment year,— (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); [(b) if three years, but not more than ten years, have elapsed fromthe end of the relevant assessment year unless the AssessingOfficer has in his possession books of account or other documentsor evidence which reveal that the income chargeable to tax,represented in the form of— (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees ormore:] Provided that no notice under Section 148 shall be issued at anytime in a case for the relevant assessment year beginning on orbefore 1st day of April, 2021, if [a notice under Section 148 orSection 153-A or Section 153-C could not have been issued at thattime on account of being beyond the time limit specified under theprovisions of clause (b) of sub-section (1) of this section or Section 1 AYs 2 Act W.P.(C) 4412/2024 & W.P.(C) 4418/2024 153-A or Section 153-C, as the case may be], as they stoodimmediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not-apply in a case, where a notice under Section 153A, or Section153-C read with Section 153-A, is required to be issued in relationto a search initiated under Section 132 or books of account, other-documents or any assets requisitioned under Section 132A, on or before the 31st day of March, 2021.” 3.As is evident from a reading of that provision any action for reassessment pertaining to an AY prior to 01 April 2021 can be sustained only if it be compliant with the timeframes specified under Section 149(1)(b), Section 153A or Section 153C as the case may be and on the anvil of those provisions as they existed prior to the commencement of Finance Act 2021. 4.Viewed in that light, it is manifest that the assessment for AYs 2012-13 and 2013-14 could not have been reopened. 3.As is evident from a reading of that provision any action for reassessment pertaining to an AY prior to 01 April 2021 can be sustained only if it be compliant with the timeframes specified under Section 149(1)(b), Section 153A or Section 153C as the case may be and on the anvil of those provisions as they existed prior to the commencement of Finance Act 2021. 4.Viewed in that light, it is manifest that the assessment for AYs 2012-13 and 2013-14 could not have been reopened. 5.This we note bearing in mind the following additional facts. The record would reflect that pursuant to a search and seizure operation conducted in respect of a third party on 09 February 2022, the petitioner was served with the notices under Section 148 on 30 March 2023. Undisputedly and for the purposes of reopening, bearing in mind the Proviso to Section 149(1), action could have been initiated only up to AY 2014-15. 6.We take note of our decisions in Filatex India Ltd. vs. Deputy Commissioner of Income Tax & Anr.[3]and Flowmore Limited vs. Deputy Commissioner of Income Tax[4],where while dealing with an identical question and upon taking note of the manner in which the relevant period under Section 153C is liable to be reckoned, and which we had otherwise dealt with in some detail in our decision 3 2023 SCC OnLine Del 5913 4 2024 SCC OnLine Del 6344 W.P.(C) 4412/2024 & W.P.(C) 4418/2024 rendered in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd.[5],we had observed as follows:- “3.As is evident from the prima facie observations which came to be rendered by us on that occasion, the reassessment which issought to be initiated for Assessment Year [“AY”] 2012-13 wouldnot sustain bearing in mind the prescription of limitation ascontained in Section 149(1)(b) of the Income Tax Act, 1961“”[Act] as it stood at the relevant time. 4. We note that while dealing with a similar question of computation of the time limit for the “relevant assessment year” as provided under Explanation 1 to Section 153A of the Act, we had in the case of Principal Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd. [2024 SCC Online Del 2439] held 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 ofcomputation of the six and the ten year period is governed bythe First Proviso to Section 153C, which significantly shifts thereference point spoken of in Section 153A(1), while defining thepoint from which the period of the “relevant assessment year” isto 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 anon-searched person being regulated by the First Proviso ofSection 153C(1) is an issue which is no longer res integra andstands authoritatively settled by virtue of the decisions of thisCourt 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 VikramSujitkumar Bhatia. The submission of the respondents,therefore, that the block periods would have to be reckoned withreference to the date of search can neither be countenanced noraccepted. 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 5 2024 SCC OnLine Del 2439 W.P.(C) 4412/2024 & W.P.(C) 4418/2024 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 5 2024 SCC OnLine Del 2439 W.P.(C) 4412/2024 & W.P.(C) 4418/2024 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 assessmentyear relevant to the previous year” of search, the ten year period would have to be reckoned from the 31st day of March of theAY relevant to the year of search. This, since undisputedly,Explanation 1 of Section 153A requires us to reckon it “from theend of the assessment year”. This distinction would have tonecessarily be acknowledged in light of the statute havingconsciously adopted the phraseology “immediately preceding” when it be in relation to the six year period and employing theexpression “from the end of the assessment year” while”speaking of the ten year block. 5.In view of the aforesaid, we find ourselves unable to sustain theimpugned notice dated 13 March 2023 issued under Section 148 ofthe Act. 6. The writ petition is accordingly allowed and the impugned orderdated 18 May 2023 disposing off the objections of the petitioner ishereby quashed. We in consequence also quash the notice dated 13March 2023 purporting to commence proceedings under Section 148 of the Act.” 7.Bearing in mind the aforesaid, the computation of the “relevant assessment year” from the date of the impugned Section 148 notice dated 30 March 2023 would be as follows:- W.P.(C) 4412/2024 & W.P.(C) 4418/2024 8. It is therefore ex facie evident that AYs 2012-13 and 2013-14 falls beyond the ten-year block period as set out under Section 153C read with Section 153A of the Act. Consequently, the impugned notices are rendered unsustainable. 9. In view of the aforesaid, we allow the instant writ petitions and quash the notices dated 30 March 2023 referable to Section 148 of the Act. YASHWANT VARMA, J SEPTEMBER 17, 2024/RW RAVINDER DUDEJA, J W.P.(C) 4412/2024 & W.P.(C) 4418/2024