S. 153C : Assessment – Income of any other person – Search – Block period – The period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person- Block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted- Precondition of Rs. 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten-year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the satisfaction note itself. [S. 68, 69C, 153A, 260A, Art. 226]
The group of writ petitions and an Income Tax Appeal was filed before Delhi High Court, to assail the initiation of assessment proceedings pursuant to the provisions of Section 153C of the Act. Firstly, the petitioners questioned the identification and computation of the block of six Assessment Years immediately preceding the AY relevant to the previous year in which the search was conducted or requisition made and the enlarged period of ten years that could become subject to reopening or reassessment in cases emanating from a search, introduced by virtue of the amendments made by the Finance Act, 2017.
The court held 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 of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of 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 accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation Ltd v. Dy.CIT (2012) 346 ITR 177 ( Delhi)( HC) and CIT v. RRJ Securities Ltd 2015 SCC Online Del 13085 as well as the decision of the Supreme Court in CIT v Jasjit Singh 2023 SCC Online SC1265 . The aforesaid legal position also stood reiterated by the Supreme Court in ITO v. Vikram Sujitkumar Bhatia 2023 SCC Online SC 370 The submission of the revenue, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. 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 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.
The second challenge was whether the limit of INR 50 lakhs which is spoken of must be satisfied in each of the “relevant assessment year” or could the prescriptions of clause (a) of the Fourth Proviso to Section 153A of the Act be said to be satisfied if that monetary precondition is met on a cumulative calculation of the total asset value pertaining to the years opened up for assessment or reassessment as the case may be.
The court held that the precondition of Rs. 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten-year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself. We are also of the opinion that the precondition of Rs. 50 lakhs is not liable to be viewed as being the qualifying criteria for each “relevant assessment year” that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of Rs. 50 lakhs. (AY. 2010 -11, 2011 -12) (ITA 52 of 2024 dt. 3-4-2024)
PCIT v. Ojjus Medicare Pvt. Ltd & Ors (Delhi)(HC) www.itatonline.org
[Coram : Hon’ble Mr. Justice Yashwant Varma & Hon’ble Mr. Justice Purushaindra Kumar Kaurav]