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Judgment
PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal is filed by the Revenue against the order of ld. Commissioner of Income Tax (Appeals, Delhi-25 [“Ld. CIT(A)”, for short] dated 13.02.2026 for the Assessment Year 2013-14.
At the time of hearing, ld. DR of the Revenue brought to our notice the grounds raised by the Revenue and submitted that the ld. CIT (A) was not justified in relying upon the judgment of Hon’ble Delhi High Court in the case of PCIT, Central 1, Delhi vs. Ojjus Medicare Pvt. Ltd. (ITA No.52 of 2024) even when the Revenue has filed SLP against this decision of Hon’ble Delhi High Court. He further relied on the findings of the Assessing Officer.
On the other hand, ld. AR of the assessee submitted brief facts of the issue raised by the Revenue in the grounds of appeal no.(b) & (c) as under :-
“I. BRIEF FACTS RELEVANT TO THE PRESENT ISSUE
Date Particulars Remarks 18.10.2019 Search under section 132 was conducted on Alankit Group Para 2 of AO order 23.06.2022 Satisfaction note recorded by AO of ‘searched person’ Para 4 of AO order 29.06.2022 Satisfaction note recorded by the AO of ‘assessee/other person’ Para 5 of AO order 29.06.2022 Notice u/s 153C was issued Para 5 of AO order 20.02.2024 Assessment was framed u/s 153C for the impugned year 13.02.2026 The Ld. CIT (A), relying upon the judgment of the Hon’ble Delhi High Court in PCIT v. Ojjus Medicare (2024) 465 ITR 101 (Delhi), dated 03.04.2024, quashed the assessment, holding that the impugned assessment year fell beyond the block period of ten assessment years reckoned from the year of search i.e. A.Y. 2023-24, in the present case. Para 8.9 to 8.15 & 9 of the CIT (A) order OUR SUBMISSIONS
1.It is a settled proposition of law that, in the case of an 'other person', the date of handing over of the seized material is to be treated as the date of search. In the present case, the said date is 23.06.2022, which falls in AY 2023-24. Consequently, AY 2023-24 constitutes the search year, with reference to which the block period comprising six assessment years (excluding the search year) and four relevant assessment years beyond the said six years (including the search year) is to be reckoned for the purpose of assumption of jurisdiction under Section 153C read with the fourth proviso to Section 153A, as held in Ojjus Medicare (supra).
2.Accordingly, the following assessment years fall within the block period of ten years for the purpose of assessment under Section 153C:
AYs Block of Six Years ‘Relevant Years’ as per 4th proviso to s. 153A AY 2023-24 1 AY 2022-23 1 2 AY 2021-22 2 3 AY 2020-21 3 4 AY 2019-20 4 5 AY 2018-19 5 6 AY 2017-18 6 7 AY 2016-17 8 AY 2015-16 9 AY 2014-15 10 AY 2013-14 Beyond the block of ten years AY 2012-13 Beyond the block of ten years 3.In view of the above, the impugned assessment year falls beyond the permissible block period and, therefore, the assessment under Section 153C was without jurisdiction, as rightly held by the Ld. CIT(A).
4.It is, therefore, most respectfully prayed that the order of the Ld. CITCA) may kindly be upheld and the appeal filed by the Revenue be dismissed.
Considered the rival submissions and material placed on record. We observed that the assessment year 2013-14 under consideration clearly falls outside the scope of application of section 153C of the Act, for the reason that the date of search for the unsearched parties are the date on which the documents were handed over to the Assessing Officer of such other person or from the date on which the satisfaction was recorded. Therefore, the contention of the assessee is found to be correct on this count. Further we observe that the impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and therefore, the jurisdiction assumed by the Assessing Officer is not tenable in the light of aforesaid legal positions in view of the decision of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra) and Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd. For the sake of brevity, we reproduce the ratio of the aforesaid decisions :-
“CIT vs Jasjit Singh-[2023| 155 taxmann.com 155 (SC)
“9.It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.
10.This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under Section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts.”
PCIT Vs Ojjus Medicare (P.) Ltd- [2024] 161 taxmann.com 160 (Delhi)
F. IDENTIFICATION OF THE COMMENCEMENT POINT FOR THE PURPOSES OFCOMPUTATION OF THE SIX AND TEN YEAR BLOCK
……….
G. COMPUTATION OF THE SIX AND TEN YEAR BLOCK IN THE PRESENT BATCH OF WRIT PETITIONS
86.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 nonsearched 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 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.
87.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 No. of years period as provided under Section 153C of the Act 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.
Section 153A replicates the basis on which the six AYs' are to be identified and computed with the solitary distinction being that in the case of the searched person, the six AYs' are liable to be computed from the AY pertaining to the FY in which the search was conducted. The starting point for the purposes of identifying the six AYs' in the case of Section 153A would thus turn upon the year of search as opposed to the handover of material which is spoken of in the First Proviso to Section 153C. If one were to therefore assume that a search took place on a person between 01 April 2021 to 31 March 2022, the pertinent AY would become AY 2022-23 and the corresponding six AYs' would be as follows:-
Computation of the six-year block No. of years period as provided under Section 153C of the Act
That takes us then to the issue of identifying the "relevant assessment year" for the purposes of computing the ten year block. Explanation 1 to Section 153A specifies the manner in which the entire ten AY period is to be computed. While the computation of six AYs' follows the position as enunciated and identified above, Explanation 1 prescribes that the ten AYs' would have to be computed from the end of the AY relevant to the FY in which the search was conducted or requisition made. The ten AY period consequently is to be reckoned from the end of the AY pertaining to the previous year in which the search was conducted as distinct from the preceding year which is spoken of in the case of the six relevant AYs'.
Viewed in that light, and while keeping the period of 01 April 2021 to 31 March 2022 as the constant, the relevant AY would be AY 2022-23. The ten AYs' would have to be computed from March 2023 with the said date indubitably constituting the end of the AY relevant to the previous year of search. Viewed in light of the above, the block period of 10 AYs' would be as follows:-
Computation of the ten-year block No. of years period as provided under Section 153C read with Section 153A of the Act
Tested on the aforesaid precepts, it would be manifest that AY 2022-23 would form the first year of the block of ten AYs' and with the maximum period of ten AYs' terminating in AY 2013-14. We, in this regard also bear in consideration the following instructive passages as appearing in the decision handed down by a learned Judge of the Madras High Court in A.R. Safiullah. We deem it appropriate to extract the following paragraphs from that decision:-
"9.Explanation-I is clear as to the manner of computation of the ten assessment years. It clearly and firmly fixes the starting point. It is the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. There cannot be any doubt that since search was made in this case on 10.04.2018, the assessment year is 2019-20. The end of the assessment year 2019-20 is 31.03.2020. The computation of ten years has to run backwards from the said date i.e., 31.03.2020. The first year will of course be the search assessment year itself. In that event, the ten assessment years will be as follows :
1st Year 2019-20
2nd Year 2018-19
3rd Year 2017-18
4th Year 2016-17
5th Year 2015-16
6th Year 2014-15
7th Year 2013-14
8th Year 2012-13
9th Year 2011-12
10th Year 2010-11
The case on hand pertains to AY 2009-10. It is obviously beyond the ten year outer ceiling limit prescribed by the statute. The terminal point is the tenth year calculated from the end of the assessment year relevant to the previous year in which search is conducted. The long arm of the law can go up to this terminal point and not one day beyond. When the statute is clear and admits of no ambiguity, it has to be strictly construed and there is no scope for looking to the explanatory notes appended to statute or circular issued by the department.
10.In the case on hand, the statute has prescribed one mode of computing the six years and another mode for computing the ten years. Section 153A(1)(b) states that the assessing officer shall assess or reassess the total income of six years immediately preceding the assessment year relevant to the previous year in which search is conducted. Applying this yardstick, the six years would go up to 2013-14. The search assessment year, namely, 2019-20 has to be excluded. This is because, the statute talks of the six years preceding the search assessment year. But, while computing the ten assessment years, the starting point has to be the end of the search assessment year. In other words, search assessment year has to be including in the latter case. It is not for me to fathom the wisdom of the parliament. I cannot assume that the amendment introduced by the Finance Act, 2017 intended to bring in four more years over and above the six years already provided within the scope of the provision. When the law has prescribed a particular length, it is not for the court to stretch it. Plasticity is the new mantra in neuroscience, thanks to the teachings of Norman Doidge. It implies that contrary to settled wisdom, even brain structure can be changed. But not so when it comes to a provision in a taxing statute that is free of ambiguity. Such a provision cannot be elastically construed.
11.One other contention urged by the standing counsel has to be dealt with. It is pointed out that the petitioner has invoked the writ jurisdiction at the notice stage. Since the petitioner has demonstrated that the subject assessment year lies beyond the ambit of the provision, the respondent has no jurisdiction to issue the impugned notice. Once lack of jurisdiction has been established, the maintainability of the writ petition cannot be in doubt."
In our considered opinion, the decision in A.R. Safiullah correctly expounds the legal position and the interpretation liable to be accorded to the identification of the ten AYs' which are spoken of in Sections 153A and 153C.
92.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 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 No. of years period as provided under Section 153C of the Act
93.The relevant block of six AYs' when computed for the period of 01 April 2023 to 31 March 2024 would be the following:
Computation of the six-year block No. of years period as provided under Section 153C of the Act
94.Similarly, and in light of what has been held by us hereinabove, the relevant block of ten AYs' when computed for the period 01 April 2022 - 31 March 2023, and where the Satisfaction Note was drawn by the AO of the non-searched person between those two dates, would be as under:-
Computation of the ten-year block No. of years period as provided under Section 153C read with Section 153A of the Act
95.The relevant block of ten AYs' when computed for the period 01 April 2023 – 31 March 2024, with the date of the Satisfaction Note drawn by the AO of the non-searched person falling within that period, would come to be identified as under:
Computation of the ten-year block No. of years period as provided under Section 153C read with Section 153A of the Act.
96.To recall, the petitions forming part of List I pertain to AYs' 2010-11, 2011-12 and 2012-13. So far as the aforenoted writ petitions are concerned, undisputedly AY 2010-11, 2011-12 and 2012-13 fall beyond the maximum period of ten AYs'. Since the ten AYs', when computed from the end of AY 2022-23 would terminate upon AY 2013-14, AYs' 2010-11, 2011-12 and 2012-13 would clearly fall outside the block period of ten AYs' and cannot legally or justifiably be reopened under Section 153C read with Section 153A of the Act.
97.Proceeding then to List II, we find that the petitions placed in that list pertain to cases where the hand over occurred in FYs 2022-23 and 2023-24. Consequently, the relevant AYs' would be AY 2023-24 and AY 2024-25 respectively. In light of the principles enunciated by us and which explain how the period of six and ten AYs' is liable to be computed, the reopening of assessments pertaining to AYs' 2010-11, 2011-12, 2012-13 and 2013-14 would clearly fall beyond the ambit of ten AYs' as provided under Section 153C read with Section 153A. We note in this behalf that all of the writ petitions forming part of List II pertain to the aforenoted AYs' 2010-11, 2011-12, 2012-13 and 2013-14.
We are therefore of the opinion that the Section 153C notices issued against the writ petitioners placed in List I and insofar as they pertain to AYs' 2010-11, 2011-12 and 2012-13 would not sustain being beyond the "relevant assessment year" which could have possibly formed the basis for initiation of action under that provision. Similarly, the Section 153C notices impugned by the writ petitioners placed in List II and insofar as they pertain to AYs' 2010-11, 2011-12, 2012-13 and 2013-14 and which have been found to fall outside the net of "relevant assessment year", being the ten year block, would be liable to be set aside on this score alone.”
Respectfully following the aforesaid decisions, we are inclined to uphold the order of the ld. CIT (A) who has passed a well-reasoned and speaking order relying on the aforesaid decisions. Accordingly, the grounds raised by the Revenue are dismissed.
In the result, the appeal filed by the Revenue is dismissed.