Assessment notices under Section 153C held valid despite time-bar challenge as limitation starts from jurisdictional handover date

The HC dismissed writ petitions challenging assessment notices under Section 153C as time-barred. The court held that under the proviso to Section 153B, the limitation period commences from the date when seized books/documents/assets are handed over to the assessing officer having jurisdiction, not from the search date. Since previous notices to transferor companies were void, their dates were irrelevant. The court found notices dated 30.12.2022 were within limitation as they were issued after jurisdictional transfer on 27.12.2022, rejecting petitioner's limitation arguments.

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Issues Involved:

1. Validity of notices issued under Section 153C of the Income Tax Act post-amalgamation.
2. Determination of the starting point for the limitation period under Section 153B of the Income Tax Act.
3. Interpretation of the proviso to Section 153B concerning the handover of documents to the assessing officer.

Issue-Wise Detailed Analysis:

1. Validity of Notices Issued Post-Amalgamation:

The primary issue was whether notices issued under Section 153C of the Income Tax Act to entities that had been amalgamated into another company were valid. The petitioner argued that since the four companies had amalgamated with the petitioner company effective from 05.09.2019, any notices issued to the amalgamated entities were void. The Department, referencing the Supreme Court judgment in Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited, acknowledged that notices issued to an entity that ceased to exist post-amalgamation were void. Consequently, the Department issued fresh notices to the petitioner company, which was the surviving entity post-amalgamation.

2. Determination of the Starting Point for the Limitation Period:

The crux of the dispute was the starting point for calculating the limitation period for issuing notices under Section 153C. The petitioner contended that the limitation should commence from the date of the first notice issued on 09.04.2021, arguing that this indicated the handover of documents to the assessing officer before this date. The Department, however, argued that the limitation period should begin from 27.12.2022, when the documents were handed over to the jurisdictional assessing officer for the petitioner company. The court found merit in the Department's argument, emphasizing that the starting point of limitation is when the documents are handed over to the assessing officer having jurisdiction over the amalgamated entity, which in this case was on 27.12.2022.

3. Interpretation of the Proviso to Section 153B:

The court examined the proviso to Section 153B of the Income Tax Act, which states that the limitation period for making an assessment or reassessment is either the period mentioned in clauses (a) or (b) or nine months from the end of the financial year in which the documents are handed over to the assessing officer, whichever is later. The petitioner argued that the handover should be considered from the date of the first notice to the amalgamated companies. However, the court held that the relevant date for the handover is the date when the documents are transferred to the assessing officer having jurisdiction over the petitioner company. The court underscored that the legislative intent was clear that the later of the two dates should be the starting point for the limitation period, thereby supporting the Department's stance.

In conclusion, the court dismissed the writ petitions, upholding the validity of the notices issued on 30.12.2022 and rejecting the petitioner's argument regarding the limitation period. The court emphasized the importance of adhering to the statutory language and the legislative intent behind the provisions of the Income Tax Act.

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