Rama Garg vs DCIT

PER M. BALAGANESH, A. M.:

The appeal in ITA Nos. 9070 and 9071/Del/2025 for AYs 2014-15 and 2015-16, arise out of the order of the Commissioner of Income Tax (Appeals)-25, Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 10.03.2024 for AY 2014-15 and dated 10.03.2024 against the order of assessment passed u/s 153C of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 10.03.2024 by the Assessing Officer, ACIT, Circle-25, Delhi (hereinafter referred to as ‘ld. AO’).

At the outset, the ld DR filed an adjournment on the ground that the issue of mechanical approval being granted u/s 153C of the Act is subject matter of formation of special bench by the H’ble President of Tribunal and accordingly pleaded for time. Per Contra, the assessee submitted that the Ground raised on section 153D approval is not pressed by the assessee and hence the same may be dismissed as not pressed. Considering the same, the adjournment request of the revenue is hereby rejected.

The ld AR submitted an argument in support of challenging the assumption of jurisdiction u/s 153C of the Act for the year under consideration by stating that the year under consideration fall outside the prescribed block period and accordingly no assessment could be validly framed thereon. This is a preliminary issue going to the root of the matter and hence, we proceed to take up the same first for adjudication.

We have heard the rival submissions and perused the material available on record. The search in the case of Alankit group was carried out u/s 132 of the Act on 18.10.2019. Consolidated Satisfaction note in the case of the assessee herein was recorded by the ld AO of the assessee on 04.11.2022 for initiation of proceedings u/s 153C of the Act in the hands of the assessee for the assessment years 2014-15 to 2020-21. The Hon’ble Supreme Court in the case of CIT vs Jasjit Singh reported in 458 ITR 437 (SC) had held that to initiate the proceedings u/s 153C of the Act and the time limit of six assessment years is to be computed with reference to the date of recording of satisfaction by the AO of the assessee . The date of recording of satisfaction by the AO of the assessee for initiating proceedings u/s 153C of the Act shall have to be construed as the date of search qua the section 153C assessee. The Hon’ble Madras High Court in the case of AR Safiullah Vs. ACIT in CMP (MD) Nos. 3513, 3515 and 3516 of 2021 dated 24.03.2021 had categorically held that the Explanation 1 to Section 153A of the Act clearly provide for the manner of computation of 10 assessment years. Later the very same view was also endorsed by Hon’ble Jurisdictional Delhi High Court in the case of PCIT Vs. Ojjus Medicare Pvt. Ltd reported in 161 taxmann.com 160 (Del HC). The assessee argued that the ld AO could not have initiated proceedings u/s 153C of the Act for AYs 2014-15 and 2015-16 as it was beyond the period of 6 years by placing reliance on the aforesaid decisions. This plea was not accepted by the lower authorities. Hence the assessee is in appeals before us for both the years.

We find that the aforesaid decision clearly mention the manner of computation of 6 assessment years for the purpose of initiating proceedings u/s 153C of the Act reckoning from the date of recording of satisfaction note qua the assessee herein. Accordingly, we hold that the AYs 2014-15 and 2015-16 clearly fall outside the block period of 6 years from the end of the Assessment Year relevant to the previous year in which search was conducted. Similar view was also endorsed by Hon’ble Calcutta High Court in the case of R.B. Jewellers Pvt. Ltd Vs. Union of India in WPO No. 438 of 2021 dated 28.12.2023.

The ld DR before us filed his written submissions stating that the decision of Hon’ble Jurisdictional Delhi High Court in the case of Ojjus Medicare Pvt Ltd is challenged by the revenue by way of Special Leave Petition before the Hon’ble Supreme Court. But we find that the said decision of Hon’ble Jurisdictional Delhi High Court has not been stayed by the Hon’ble Supreme Court. Hence we are inclined to follow the decision of the Hon’ble Jurisdictional Delhi High Court. We find that the ld DR through his written submissions is only trying to impress upon the bench by bringing on record how the 6 years or 10 years reckoning need to be understood by relying on the principles of interpretation of statutes, but when the same issue had already been considered and addressed by the Hon’ble Jurisdictional Delhi High Court, there is no reason for this Tribunal to diverge from the views of the higher forum. Hence we hold that the written submissions of the ld DR does not advance the case of the revenue on this issue.

Respectfully following the aforesaid decisions of the Hon’ble High Court including the Hon’ble Jurisdictional High Court , we hold that the assessment orders framed for AYs 2014-15 and 2015-16 as bad in law, as it was beyond the period of 6 years. Accordingly, the preliminary issue argued by the assessee in this regard is allowed for both the years under consideration.

Since the assessments are quashed for both the assessment years on this preliminary issue, the adjudication of other grounds become academic in nature and hence they are left open.

In the result, both the appeals of the assessee are allowed.