Facts of the Case

A search and seizure operation under Section 132 of the Income-tax Act, 1961 was conducted on 02.11.2017 at the residential premises of Prahlad Kumar Aggarwal in the case of the Rajesh Jain Group. During the search, certain documents pertaining to the respondent-assessee, Deepak Kumar Aggarwal, were found. The Assessing Officer of the searched person recorded satisfaction and handed over the seized documents to the Assessing Officer having jurisdiction over the assessee on 24.06.2021. On the same date, the Assessing Officer of the assessee recorded satisfaction under Section 153C for Assessment Year 2013–14 and issued notice under Section 153C. The assessment proceedings were completed on 31.12.2022 by making additions.

The assessee challenged the assessment before the CIT(A), who allowed the appeal by holding that AY 2013–14 was beyond the permissible period under Section 153C, relying on judicial precedents. The Revenue’s appeal before the ITAT was dismissed. Aggrieved, the Revenue approached the High Court.

Issues Involved

Whether for the purpose of Section 153C, the six assessment years are to be reckoned from the date of search in the case of the searched person or from the date on which seized documents are handed over to the Assessing Officer of the other person, and whether Assessment Year 2013–14 fell within the permissible six-year block.

Appellant’s Arguments

The Revenue contended that since the search was conducted on 02.11.2017, the six assessment years preceding the relevant assessment year should include Assessment Year 2013–14. It was argued that the Tribunal and the CIT(A) erred in excluding AY 2013–14 from the scope of Section 153C.

Respondent’s Arguments

The assessee submitted that in terms of the proviso to Section 153C, the date relevant for computing the six-year period is the date on which the seized documents are received by the Assessing Officer of the other person. Since the documents were handed over on 24.06.2021, the six-year period would commence from that date and would not include Assessment Year 2013–14. Reliance was placed on binding precedents including CIT v. RRJ Securities, Singhad Technical Education Society and PCIT (Central-1) v. Ojjus Medicare Pvt. Ltd.

Court Order / Findings

The Delhi High Court examined Section 153C along with its first proviso and held that in the case of a person other than the searched person, the reference to the date of initiation of search must be construed as the date of receiving the seized material by the Assessing Officer having jurisdiction over such other person. The Court noted that the seized documents were handed over and satisfaction was recorded on 24.06.2021. Accordingly, the six assessment years had to be counted from that date, which did not include Assessment Year 2013–14.

The Court found that the Tribunal had correctly applied the settled legal position and that the issue was no longer res integra, having been conclusively settled in favour of the assessee by various High Court judgments and by the Supreme Court in Commissioner of Income Tax v. Jasjit Singh. The Court held that no substantial question of law arose for consideration.

Important Clarification

The Court clarified that for Section 153C proceedings, limitation is to be computed with reference to the date on which the seized material is handed over to the Assessing Officer of the other person, and not from the date of search conducted in the case of the searched person.

Final Outcome

The appeal filed by the Revenue was dismissed. The Delhi High Court upheld the orders of the CIT(A) and the ITAT, holding that Assessment Year 2013–14 was beyond the permissible six-year period under Section 153C and that the reassessment proceedings for that year were without jurisdiction.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769503427_PR.COMMISSIONEROFINCOMETAXCENTRALGURUGRAMVsDEEPAKKUMARAGGARWAL.pdf

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