Facts of the Case

The petitioner, Ramaa Advisors Private Limited, filed multiple writ petitions challenging notices issued under Section 153C of the Income-tax Act, 1961 for Assessment Years 2010–11 to 2015–16. The notices were issued on 31.08.2024 and 12.09.2024 pursuant to a search conducted on a third party between 07.04.2019 and 13.04.2019.

The jurisdictional Assessing Officer of the searched person recorded satisfaction and handed over the seized material to the Assessing Officer of the petitioner on 31.08.2024. Based on this handover, Section 153C notices were issued seeking to reopen assessments for the aforesaid years. The petitioner challenged the notices as being barred by limitation under the scheme of Sections 153A and 153C as amended, relying on the decision of the Delhi High Court in PCIT (Central-1) vs. Ojjus Medicare Pvt. Ltd.

Issues Involved

Whether the ten-year block period under Section 153C is to be computed from the date of initiation of search or from the date of receipt/handing over of seized material to the Assessing Officer of the non-searched person, and whether the impugned notices for AYs 2010–11 to 2015–16 were barred by limitation.

Petitioner’s Arguments

The petitioner contended that in the case of a non-searched person, the First Proviso to Section 153C mandates that the limitation period must be reckoned from the date on which the seized books of account or documents are received by the Assessing Officer having jurisdiction over such person. It was argued that even assuming the most favourable date for the Revenue, the ten-year block could extend at best up to Assessment Year 2016–17, rendering the impugned notices for AYs 2010–11 to 2015–16 clearly time-barred. Reliance was placed on the binding judgment in Ojjus Medicare Pvt. Ltd.

Respondent’s Arguments

The Revenue did not dispute the factual matrix reflected in the tabular chart placed before the Court regarding dates of search, handover, and issuance of notices. However, it was contended that the Revenue had not accepted the manner of computation of the block period as laid down in Ojjus Medicare Pvt. Ltd., and it was pointed out that a Special Leave Petition had been filed against that judgment before the Supreme Court.

Court Order / Findings

The Delhi High Court examined the statutory scheme of Sections 153A and 153C and noted that the issue stood squarely covered by its earlier decision in PCIT (Central-1) vs. Ojjus Medicare Pvt. Ltd., particularly paragraphs 86 to 90 thereof. The Court reiterated that in the case of a non-searched person, the relevant date for computing the six-year or ten-year block is the date of receipt of seized material by the Assessing Officer of such person, and not the date of search.

Applying this principle to the facts of the case, the Court held that even if the period between 01.04.2021 and 31.03.2022 were taken as the relevant window, the ten-year block could extend only up to AY 2016–17. Since the impugned notices related to AYs 2010–11 to 2015–16, they were clearly beyond the permissible period. The pendency of an SLP against Ojjus Medicare Pvt. Ltd. was held to be inconsequential in the absence of any stay.

Important Clarification

The Court clarified that for proceedings under Section 153C, limitation must be strictly computed in accordance with the First Proviso to Section 153C by reference to the date of handing over of seized material to the Assessing Officer of the non-searched person. Notices issued beyond the statutorily prescribed six-year or ten-year block are without jurisdiction and liable to be set aside.

Final Outcome

All the writ petitions were allowed. The Delhi High Court set aside the impugned notices dated 31.08.2024 and 12.09.2024 issued under Section 153C of the Income-tax Act, 1961 for Assessment Years 2010–11 to 2015–16. The petitions were disposed of, and all pending applications were also disposed of as infructuous.

Link to download order- https://www.mytaxexpert.co.in/uploads/1769506403_RAMAAADVISORSPRIVATELIMITEDVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE20.pdf

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