Court clarifies application of Section 153C Income Tax Act 1961

The Court found the writ applications maintainable and addressed the validity of notices issued under Section 153C of the Income Tax Act, 1961. It held that the amended provisions of Section 153C apply prospectively from 01.06.2015. The Court clarified that the expiration of one limitation period does not render notices time-barred. Regarding the assessment years under Section 153A, the Court explained the computation based on search dates. Ultimately, the Court quashed the notices and assessment orders under Section 153C, ruling the proceedings were without jurisdiction, aligning with established legal principles.

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Issues involved:
1. Maintainability of the writ applications.
2. Applicability of Section 153C of the Act to searches initiated before 01.06.2015.
3. Limitation period for notice u/s. 153C of the Act.
4. Assessment years contemplated u/s. 153A of the Act.

Analysis:

Issue 1: Maintainability of the writ applications
The Court found the writ applications maintainable and proceeded to address the substantive legal issues raised by the petitioners regarding the validity of the notices issued under Section 153C of the Income Tax Act, 1961.

Issue 2: Applicability of Section 153C of the Act to searches initiated before 01.06.2015
The Court held that the amended provisions of Section 153C of the Act, effective from 01.06.2015, are applicable prospectively. Not applying these provisions to searches conducted before the amendment date would impact the substantive rights of individuals brought under the ambit of Section 153C by the amendment.

Issue 3: Limitation period for notice u/s. 153C of the Act
The Court clarified that when the statute provides an alternative period of limitation, the mere expiration of the period under the first part does not render the notices barred by limitation. The Court emphasized that the notices cannot be considered time-barred solely on this ground.

Issue 4: Assessment years contemplated u/s. 153A of the Act
The Court interpreted Section 153A of the Act concerning the issuance of notices to searched persons for filing income returns for six assessment years preceding the relevant assessment year of the search. The Court provided a detailed explanation of the computation of assessment years based on the search dates for different groups involved in the case.

Ultimately, the Court quashed and set aside the impugned notices issued under Section 153C of the Income Tax Act, 1961, along with any assessment orders passed under the same section. The Court ruled that the initiation of proceedings under Section 153C was without jurisdiction in these cases, leading to the success of the petitions. The judgment aligned with the principles established in a previous related case, ensuring consistency in legal interpretation and application.

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