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Judgment
PER MADHUMITA ROY, JM.:
The instant appeal filed by the Revenue is directed against the order dated 08.01.2026 passed by the Ld. Commissioner of Income-tax (Appeals), Delhi-25 under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the Assessment Order dated 28.03.2023 passed by the Assessment Unit, Income-tax Department under Section 153C of the Act for Assessment Year 2013-14.
It is the case of the Assessee that the order initiating proceeding under Section 153C is without jurisdiction and, therefore, the entire proceeding is to be quashed. This is particularly in view of the order passed by the Hon’ble Delhi High Court in the case of PCIT, Central-1, -Vs- Ojjus Medicare Private Limited, reported in 2024 465 ITR 101 (Delhi) dated 03.04.2024, wherein the Hon’ble Delhi High Court clarified the date of search in the case of the person other than searched person as per a deeming legal fiction under the first proviso to Section 153C of the Act, being date of handing over of seized documents to AO of non -searched person.
In this regard, the Ld. AR has drawn our attention to the observation made by the Ld. CIT(A) while holding the order of assessment beyond the ambit of 10 Assessment Years as provided under Section 153C r.w. Section 153A of the Act.
The Ld. DR on the other hand could not controvert such submission made by the Ld. AR.
Heard the parties, perused the records. While allowing the appeal preferred by the Assessee, the Ld. CIT(A) made the following observation on the issue impugned before us:
“11.The issue, i.e. what would be the commencement point for the purposes of computation of the six and ten year block and how the six and ten year block will be computed has been considered by the jurisdictional High Court in the case of Principal Commissioner of Income-tax (Central-1) v. Ojjus Medicare (P.) Ltd reported in [2024] 465 ITR 101 (Delhi) dated 03.04.2024. In the aforesaid judgment, with respect to what would be the commencement point for the purposes of computation of the six and ten year block, the Hon'ble High Court, after discussing the statutory provisions and various judicial pronouncements, has held as under:
F. IDENTIFICATION OF THE COMMENCEMENT POINT FOR THE PURPOSES OFCOMPUTATION OF THE SIX AND TEN YEAR BLOCK
75.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.
80.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.
85.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 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 AYrelevant 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.
11.1On 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 High Court in the judgement delivered in 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
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 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 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. LINCOME
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 period as provided under No. of years section 153C of the Act No. Of years A.Y 2021-22 1 A.Y 2020-21 2 A.Y 2019-20 3 A.Y 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.
88.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 period as provided under Section 153C of the Act No. of years A.Y 2021-22 1 A.Y 2020-21 2 A.Y 2019-20 3 A.Y 2018-19 4 A.Y 2017-18 5 A.Y 2016-17 6 89.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 themanner 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'.
90.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 31 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:
Computations of the ten year block period as provided under Section153C r.w. Section 153A of the Act No. of years 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 A.Y 2016-17 7 A.Y 2015-16 8 A.Y 2014-15 9 A.Y 2013-14 10 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: -
No. of years A.Y 2023-24 1 A.Y 2022-23 2 A.Y 2021-22 3 A.Y 2020-21 4 A.Y 2019-20 5 A.Y 2018-19 6 A.Y 2017-18 7 A.Y 2016-17 8 A.Y 2015-16 9 A.Y 2014-15 10 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...
(Emphasis supplied)
12.From the aforesaid judgment of the Hon'ble jurisdictional High Court, it would be 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 or satisfaction note recorded/seized documents handed over to jurisdictional AO; however, the ten AYs' are to be computed or reckoned from the end of the AY relevant to such year of search/requisition. Accordingly, if the Satisfaction Notes have been recorded/seized documents handed over between the period 01 April 2022 to 31 March 2023, then the relevant AY would be AY 2023-24 and accordingly AY 2023-24 would form the first year of the block of ten AYs' and the period of ten AYs' would terminate in AY 2014-15, and accordingly notices issued for assessment years prior to AY 2014-15 would fall beyond the ambit of ten AYs' as provided under section 153C read with section 153A.
The relevant facts and dates in the case of the appellant under consideration, as seen from record and the documents furnished during appellate proceedings, are, for the sake of convenience, tabulated hereunder:
| S. No. | Particulars | Facts of the case of the appellant |
| a | Date of search and seizure operation | 18.10.2019 |
| b | Person on whom search was conducted | Alankit Group of Companies/entitles |
| c | Date of issue of notice u/s 153C | 16.03.2023 |
| d | Date of recording of satisfaction note by AO of non-searched person (appellant) | 15.03.2023 |
| e | Assessment years involved for Section 153C proceedings as per satisfaction note | 2010-11 to 2020-21 |
| f | Date of passing of the assessment order. | 28.03.2023 |
Thus, in this regard, as tabulated above, the date of recording of the Satisfaction Note by the AO of the non-searched person (appellant) is 15.03.2023 and the date of issuance of notice issued u/s 153C of the Act is 16.03.2023 [AY 2023-24). As mentioned in the satisfaction note dated 15.03.2023 recorded by the AO of the appellant, the satisfaction note prepared by the AO of the searched person was recorded on 18.04.2022 [AY 2023-24]. These events thus pertain to the FY 2022-23 relevant to AY 2023-24. The relevant portion of the satisfaction note dated 15.03.2023 is reproduced below:
In view of the above discussion, it is seen that beneficiary has made/ facilitated unaccounted cash transactions for taking /facilitating accommodation entries; has traded in shares/commodities against cash; and has taken and repaid unsecured loans. In light of the above, it is to be examined and verified the nature and genuineness of transactions and take necessary action as per law as these entities/persons have made transactions.
10.It may be noted that the proceedings for the A.Ys 2014-15 to 2020-21 vide satisfaction note drawn on 18.04.2022. However, during the course of assessment proceedings and examination of Incriminating seized documents material available on record, I am satisfied that these documents belong to the assessee and there is escapement of income above 50 lakhs represented in form of "assets" which is unsecured loan and unaccounted cash for the A.Ys 2010-11 to 2020-21.
11.On account of the above, the said satisfaction note prepared by the AO of the person searched has been kept on record. I have also examined the above documents and the contents noted/ written therein. After examination of these documents, I am also satisfied that these documents belong to the assessee. In view of the same, I am further satisfied that it is a fit case for initiating proceedings u/s 153C of the Income-tax Act, 1961 for the A.Y.s 2010-11 to 2020-21.
12.Accordingly, notice u/s 153C of the Act is being issued as per the provisions of the Income-tax Act, 1961 for the A.Y. 2010-11 to A.Y. 2013-14 since Notice u/s 153C of the Act have already been issued for the A.Y.s 2014-15 to 2020-21.
Dated: 15.03.2023
Accordingly, based on the aforesaid facts in the instant case of the appellant, following the judgement of the Hon'ble jurisdictional High Court, it is held that the period of ten AYs' would commence being counted w.e.f AY 2023-24, which, by backward counting, would terminate in AY 2014-15. Accordingly, respectfully following the aforesaid judgment of the jurisdictional High Court in the case of Ojjus Medicare (P.) Ltd (supra), it is held that notice dated 16.03.2023 issued for the instant assessment year, AY 2013-14 would fall beyond the ambit of ten AYs' as provided under section 153C read with section 153A, and hence the impugned assessment order dated 28.03.2023 passed u/s 153C of the Act for the year in pursuance of such notice would not survive, having no legs to stand, and is thus annulled, being beyond the period of 10 years.
In view of the order passed by the Ld. CIT(A) considering the judgment passed by the Hon’ble Jurisdictional High Court in the matter of PCIT –Vs- Ojjus Medicare Pvt. Ltd. (supra) holding the reassessment for A.Y 2013-14 is beyond jurisdiction is found to be just and proper so as not to warrant interference.
The Appeal preferred by the Revenue is, thus, found to be devoid of any merit and dismissed.