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PCIT v. Ojjus Medicare Pvt. Ltd. (2024)465 ITR 101/ 338 CTR 241 /161 taxmann.com 160 (Delhi)(HC)

S. 153C : Assessment-Income of any other person-Search and seizure-Limitation-Six years in respect of which assessment permitted to be reckoned-Date of commencement-Commences from date materials handed over to jurisdictional Assessing Officer of third person-Threshold limit of Rs. 50 Lakhs-Not qualifying criteria for each of relevant assessment year of period independently-Cumulative computation in excess of Rs. 50 Lakhs qualifies statutory requirements-Search assessment in respect of all searches conducted between 31-5-2003 and 31-3-2021-Legislative Intent-No immunity intended to be attached to assessments attaining closure before 31-3-2021-Date of receipt of books of account or documents or assets seized or requisitioned by jurisdictional Assessing Officer of non-searched person and not actual date of search-Amendments of 2017 is not applicable since search was conducted prior to introduction of amendments-Consequently extended ten year block period cannot be applied. [S. 132, 153A, 153C, 260A]

Dismissing the appeal of the Revenue the Court held that prior to the insertion of sections 153A, 153B and 153C of the Income-tax Act, 1961, an assessment in respect of a search case was regulated by Chapter XIV-B of the Act, comprising sections 158B to 158BI which embodied the concept of a block assessment. A block assessment in a search case undertaken under the provisions in Chapter XIV-B was ordained to be undertaken simultaneously and parallelly to a regular assessment. Contrary to the scheme underlying Chapter XIV-B, sections 153A, 153B and 153C contemplate a merger of regular assessments with those pursuant to a search. On a search being undertaken, under section 153A, the jurisdictional Assessing Officer is enabled to initiate an assessment or reassessment, in respect of the six assessment years immediately preceding the assessment year relevant to the year of search and also in respect of the “relevant assessment year”, as defined by Explanation 1 to section 153A. Of equal significance is the introduction of the concept of abatement of all pending assessments.

 

Amendments introduced in sections 153A, 153B and 153C by virtue of the Finance Act, 2017 ([2017] 393 ITR (St.) 1), for the first time adopted the concept of the “relevant assessment year” and provided an Explanation for the term and defined the expression “relevant assessment year”. Both sections 153A and 153C embody non obstante clauses and are in express terms ordained to override sections 139, 147 to 149, 151 and 153. By virtue of the 2017 Act, amendments were introduced in section 153A in the year 2017 which included, inter alia, extension of the search assessment block to ten assessment years consequent to the addition of the stipulation of “relevant assessment year” which was defined to mean those years which would fall beyond the six year block period but not later than ten assessment years. The 2017 Act also stipulated in the fourth proviso to the section, certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the “relevant assessment year”. The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or being “likely to amount to” Rs. 50 lakhs or more in the “relevant assessment year” or in aggregate in the “relevant assessment years”.

As in the case of section 153A, section 153C which pertains to the other person other than the entity subjected to search was also to apply to all searches that may have been undertaken between the period June 1, 2003 and March 31, 2021. In terms of that provision, the Assessing Officer is similarly empowered to undertake and initiate an assessment in respect of the other entity for the six assessment years and for “the relevant assessment year”. The assessment years, which would consequently be thrown open for assessment or reassessment under section 153C follow lines pari materia with section 153A.

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 period is deemed to be the date of receipt of books of account by the jurisdictional Assessing Officer of the other party. The identification of the starting block for the purposes of computation of the six year and ten year periods is governed by the first proviso to section 153C, which significantly shifts the reference to the point in section 153A(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of account, documents or assets seized by the jurisdictional Assessing Officer of the non-searched party. In the assessment under section 153C the starting point is the handing over of books of account or documents or assets seized during the search under section 132 of the searched party by the Assessing Officer to the jurisdictional Assessing Officer of the other person and that event constitutes the point from which the preceding six assessment years or the “relevant assessment year” has to be computed.(AY.2010-11 to 2013-14)