Facts of the Case

The petitioner, Aryan Residency Limited, challenged a notice dated 12.03.2025 issued under Section 148 of the Income-tax Act for Assessment Year 2014-15. The impugned proceedings were initiated pursuant to a search conducted under Section 132 on 15.02.2024. The petitioner contended that the notice was issued beyond the period of limitation prescribed under the proviso to Section 149(1). According to the petitioner, applying the pre-amended provisions, the limitation regime applicable to search cases was governed by erstwhile Section 153A, under which the ten-year block had to be computed in the manner explained by the Delhi High Court in Principal Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd.

Issues Involved

Whether the notice dated 12.03.2025 issued under Section 148 for AY 2014-15 was barred by limitation, how the ten-year block period under Section 153A is to be computed in search cases, and whether the Assessing Officer could proceed with reassessment proceedings for an assessment year falling outside the permissible block.

Petitioner’s Arguments

The petitioner submitted that the search took place on 15.02.2024, corresponding to Assessment Year 2024-25. In terms of Explanation-I to the erstwhile Section 153A and the interpretation laid down in Ojjus Medicare Pvt. Ltd., the ten-year block must be computed from the end of the assessment year relevant to the financial year in which the search was conducted. On this computation, AY 2015-16 would be the tenth year and AY 2014-15 would fall beyond the ten-year block and was therefore barred by limitation. The petitioner placed reliance on a tabular computation demonstrating that AY 2014-15 stood excluded from the permissible block.

Respondent’s Arguments

The Revenue contended that the provisions of Sections 147 to 151, as they stood prior to the Finance Act, 2024, were applicable and that notice could be issued up to ten years from the end of the relevant assessment year in which the search was conducted. It was argued that AY 2014-15 fell within ten years and that incriminating material was found during the search and handed over to the Assessing Officer having jurisdiction over the petitioner. The Revenue also pointed out that the decision in Ojjus Medicare Pvt. Ltd. had been challenged before the Supreme Court by way of a Special Leave Petition.

Court Order / Findings

The Delhi High Court noted that the Revenue did not dispute the tabular computation placed by the petitioner showing the ten-year block period. The Court observed that the issue of computation of the ten-year block was squarely covered by its earlier decision in Principal Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd., which held that the ten-year period under Section 153A is to be reckoned from the end of the assessment year relevant to the financial year in which the search was conducted. Applying the said ratio, the Court held that AY 2014-15 fell outside the ten-year block in the present case. The pendency of an SLP against Ojjus Medicare was held to be of no consequence, as the judgment continued to bind the Court. Accordingly, the Court held that the Assessing Officer could not proceed with assessment proceedings for AY 2014-15 as the same were barred by limitation.

Important Clarification

The High Court clarified that unless the judgment in Ojjus Medicare is stayed or set aside by the Supreme Court, it continues to be binding precedent. The ten-year block under Section 153A must be computed strictly in accordance with the statutory explanation and judicial interpretation, and proceedings initiated for assessment years falling beyond such block are without jurisdiction.

Final Outcome

The writ petition was allowed. The notice dated 12.03.2025 issued under Section 148 of the Income-tax Act for Assessment Year 2014-15 was set aside as being barred by limitation, and the Assessing Officer was restrained from taking any further steps pursuant thereto.

Link to Download Order

https://www.mytaxexpert.co.in/uploads/1769594451_ARYANRESIDENCYLIMITEDVsASSISTANTCOMMISSIONEROFINCOMETAXCENTRALCIRCLE16DELHI.pdf

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