Section 153C amendments apply retrospectively to pre-2015 searches, revenue appeal allowed against assessee

Gujarat HC allowed revenue's appeal following SC precedent in Vikram Sujitkumar Bhatia case. Court held that Section 153C amendments under Finance Act 2015 apply retrospectively to searches conducted before 01.06.2015. The assessee's argument that seized documents lacked handwriting or address references was rejected. HC quashed tribunal's order dated 23.11.2022 and remanded matter to CIT(Appeals) for decision on merits, ruling in favor of revenue department.

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Issues involved:
The judgment deals with the interpretation of section 153C of the Income Tax Act, 1961 in the context of a search conducted prior to the amendment brought by the Finance Act, 2015.

Summary:

Issue 1: Validity of notice under section 153C of the Act
The Tax Appeal was filed challenging the assessment proceedings under section 153C of the Act, arising from a search conducted in 2013. The appellant contended that the amended provision should apply retrospectively to the search initiated before 01.06.2015. The appellant relied on a decision of the Hon'ble Supreme Court in a similar case. The search revealed cash transactions and unexplained investments by the assessee-firm. The Assessing Officer issued a notice under section 153C to reopen past assessments based on the material found during the search. The assessee challenged the notice, arguing that the seized documents did not belong to them, and therefore, the Assessing Officer lacked jurisdiction to assess income under section 153C. The CIT(A) allowed the appeal, holding that the documents did not belong to the assessee. The Tribunal dismissed the Revenue's appeal, citing precedents and the requirement that incriminating documents must belong to the assessee for section 153C to apply.

Issue 2: Applicability of the amendment to section 153C
The Hon'ble Supreme Court, in a similar case, upheld the validity of a notice issued under section 153C, emphasizing the objective of the section to address persons other than the searched individual. The Court rejected the argument that the amendment should not apply retrospectively, as it would frustrate the purpose of the section. The Court held that the amendment would be applicable to searches conducted before 01.06.2015. Consequently, the High Court quashed the previous judgment, allowing the appeal and remanding the matter back to the CIT (Appeals) for further consideration on other grounds.

In conclusion, the High Court upheld the applicability of the amendment to section 153C to searches conducted before 01.06.2015, based on the Supreme Court's decision in a similar case. The judgment emphasized the importance of incriminating documents belonging to the assessee for the Assessing Officer to assume jurisdiction under section 153C. The matter was remanded back to the CIT (Appeals) for consideration on other grounds, as per the Supreme Court's ruling.

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