2023 (10) TMI 572 - SC - Income Tax

Six-year filing period under s.153C runs from date seized materials sent to assessing officer, not seizure date

Commissioner of Income Tax 14 Versus Jasjit Singh

SC held that for assessment under s.153C the six-year period for filing returns by a third party runs from the date the seized materials are forwarded to ... Interpretation of Section 153C - Assessment u/s 153C and 153A - date from which the six-year period for filing returns by third parties is to be reckoned - Whether from the date of forwarding materials or the date of the search and seizure proceedings? HELD THAT:- As on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision u/s 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation [2012 (4) TMI 335 - DELHI HIGH COURT] adopted, the A.O. seized of the materials – of the search party, u/s 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned u/s 153-C after a period of four years, the third party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts. Appeal dismissed. Issues involved: Interpretation of Section 153C of the Income Tax Act, 1961 regarding the date from which the six-year period for filing returns by third parties is to be reckoned.In a batch of appeals, the issue revolved around the interpretation of Section 153C of the Income Tax Act, 1961, specifically concerning the date from which the six-year period for filing returns by third parties is to be reckoned. The appeals stemmed from the Delhi High Court dismissing revenue's appeals under Section 260A of the IT Act. The facts in one appeal highlighted that search and seizure proceedings were conducted at the premises of a particular group, leading to notices being issued to the respondents' assessees by the Assessing Officer. The main contention was regarding the period from which the assessees were required to file returns, whether from the date of forwarding materials or the date of the search and seizure proceedings.The impugned order upheld the decision of the Income Tax Appellate Tribunal, which favored the assessees' arguments regarding the date for filing returns. The revenue contended that the date under Section 153(1) should be related to the second proviso to Section 153A, citing a Delhi High Court ruling in 'SSP Aviation Ltd. vs. Deputy Commissioner of Income Tax.'The Court examined Sections 153A and 153C of the IT Act, focusing on the provisions relevant to the case. The High Court's reasoning in SSP Aviation highlighted the process for assessing income of other persons not covered by the search, emphasizing the importance of the date for pending proceedings to abate.Upon analyzing Section 153C(1), the Court determined that the proviso aimed to address not only the question of abatement but also the commencement date of the six-year period for filing returns by third parties. The revenue's argument that the proviso was limited to abatement was deemed insubstantial. The Court emphasized that a plain reading of Section 153C supported the interpretation adopted.Consequently, the Court found no merit in the appeals and dismissed them without any order on costs.