2019 (7) TMI 231 - HC - Income Tax

Court Clarifies Applicability of Section 153C Retroactively, Invalidates Assessment Orders

The Court found the writ-applications maintainable, addressing key questions including the applicability of Section 153C of the Act to searches initiated ... Assessment u/s 153C - whether of notices were barred by the limitation? - Effect of amendment in Section 153C w.e.f .1st June, 2015 - can notice u/s 153C under amended provision be issued in relation to searches carried out till 31st May 2015 - HELD THAT:- With regard to the first question, the coordinate bench of this court in ANILKUMAR GOPIKISHAN AGRAWAL VERSUS ACIT, [2019 (6) TMI 746 - GUJARAT HIGH COURT] took the view that the writ-applications were maintainable. With regard to the second question regarding impact of amendment, the Court took the view that the Legislature has specifically made the amended provisions of Section 153C applicable with prospective effect from 01.06.2015. The Court held that if such amended provisions are not made applicable to the searches carried out prior to 01.06.2015, they would affect the substantive rights of the persons who are brought within the ambit of Section 153C by virtue of such amendment. So far as the third question is concerned with regard to the limitation, the Court took the view that when the statute itself provides for an alternative period of limitation, merely because the period of limitation is provided under the first part has elapsed; it cannot be said that the notices were barred by the limitation on such ground. It had been stated that in terms of clause (b) of subsection (1) of section 153A, the six years assessment years would be the six assessment years preceding assessment year relating to the previous year in which search is conducted or requisition made and in case any notices u/s 153C which have been issued for assessment years beyond the six assessment years referred to hereinabove, such notices would be beyond jurisdiction as the same do not fall within the six assessment years as contemplated u/s 153A. In view of the above, the petition is allowed. The impugned notice is hereby quashed and set aside. Consequently, if any Assessment Order has been passed u/s 153C , the same is also quashed and set aside. Issues Involved:1. Maintainability of the writ-applications2. Applicability of Section 153C of the Act to searches initiated before 01.06.20153. Limitation period for notice u/s. 153C of the Act4. Relevant Assessment Years contemplated u/s. 153A of the ActIssue 1: Maintainability of the writ-applicationsThe Court found the writ-applications maintainable. A batch of writ-applications concerning the legality of notice under Section 153C of the Act was heard and disposed of. The Court addressed four key questions, including the maintainability of the petitions. Ultimately, the maintainability of the writ-applications was upheld.Issue 2: Applicability of Section 153C of the Act to searches initiated before 01.06.2015The Court clarified that the amended provisions of Section 153C of the Act, effective from 01.06.2015, would apply even to searches conducted before that date. It emphasized that failing to apply the amended provisions retrospectively would impact the substantive rights of individuals falling within the scope of Section 153C due to the amendment.Issue 3: Limitation period for notice u/s. 153C of the ActRegarding the limitation period, the Court held that when the statute provides an alternative limitation period, the mere expiry of the initial period does not render the notices time-barred. The Court reasoned that the alternative period of limitation should be considered, and the notices could not be deemed invalid solely based on the elapsed primary limitation period.Issue 4: Relevant Assessment Years contemplated u/s. 153A of the ActThe Court interpreted Section 153A of the Act concerning the issuance of notices for six assessment years preceding the assessment year relevant to the year of search. It specified the assessment years applicable based on the search dates for different groups. The Court emphasized that any notices issued beyond the specified assessment years would exceed the jurisdiction granted under Section 153A of the Act.In the final order, the Court quashed and set aside the impugned notices issued under Section 153C of the Income Tax Act, 1961, and invalidated assessment orders challenged in the petitions due to the lack of jurisdiction in initiating proceedings under Section 153C. The Court applied principles from previous judgments to the present case, leading to the allowance of the petition, quashing of the impugned notice, and setting aside any related Assessment Orders passed under Section 153C of the Income Tax Act, 1961.