TaxTMI 
TaxTMI 
2026 (9) TMI 508
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppeal before the Tribunal. 3. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the Revenue's appeal being ITA No.2401/Del/2025 for AY 2016-17 as lead case to adjudicate the issues under consideration wherein Revenue has raised the following grounds of appeal :- "a. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) was justified in relying upon the judgment of Hon'ble Delhi High Court in the case of PCIT, Central 1, Delhi vs. Ojjus Medicare Pvt. Ltd. (ITA No.52 of 2024), even when the Revenue has filed a SLP against this decision of Hon'ble Delhi High Court? b. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) was justified in holding that block periods for assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents or assets seized, by the jurisdictional AO of the non-searched person or from the date of issue of Notice u/s 153C of the Act and not from the date of initiation of search? c. Whether on the facts and circumstances ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the case of PCIT vs. Ojjus Medicare Pvt. Ltd. (supra) even though the Revenue has filed an appeal against the aforesaid order before the Hon'ble Supreme Court. As far as merit is concerned, he relied on the findings of the AO. 5. On the other hand, ld. AR of the assessee brought to our notice page 2 of the assessment order and submitted that AO has recorded the reasons to initiate proceedings for issue of notice u/s 153C of the Income-tax Act, 1961 (for short 'the Act') on 30.06.2022. He submitted that no doubt, the original search was conducted on the Alankrit Group on 18.10.2019, however, the AO of the searched person has recorded the satisfaction on 14.06.2022. He submitted that after recording the above satisfaction and on receipt of relevant material from the AO of the searched person, the proceedings were initiated by the AO by issue of notice u/s 153C of the Act and completed the assessment u/s 153C of the Act. He submitted that as per the amended provisions and in specific, he brought to our notice section 153C (3) of the Act which is squarely applicable in this case and he submitted that the AO should have initiated proceedings u/s 148 and not u/s 153C of the Act. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 under Section 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." PCIT Vs Ojjus Medicare (P.) Ltd- [2024] 161 taxmann.com 160 (Delhi) F. IDENTIFICATION OF THE COMMENCEMENT POINT FOR THE PURPOSES OFCOMPUTATION OF THE SIX AND TEN YEAR BLOCK 75. The First Proviso to Section 153C significantly shifts the reference point which is spoken of in Section 153A(1) while defining the point from which the period of six AYs' is to be calculated, and which stipulates it to be the date of search or requisition, to the date of receipt of books of accounts, documents or a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date." 76. Following SSP Aviation, our Court in Commissioner of Income Tax - 14 v. Shree Jasjit Singh23 held:- "3. The question raised before the ITAT was with reference to the first proviso to Section l 53C (1). The ITAT has relied upon the judgment of this Court in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 252 CTR (Del) 291, which in para 14 held that while in the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate shall be the date of initiation of the search under Section 132 or the requisition under Section 132A, in the case of the other person (like the Assessee in the present case) "such date will be the date of receivi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in RRJ Securities. We deem it apposite to extract the following passages from that decision:- "13. The first and foremost step for initiation of proceedings under section 153C of the Act is for the Assessing Officer of the searched person to be satisfied that the assets or documents seized belong to the assessee (being a person other than the searched person). The Assessing Officer of the assessee, on receiving the documents and the assets seized, would have jurisdiction to commence proceedings under section 153C of the Act. The Assessing Officer of the searched person is not required to examine whether the assets or documents seized reflect undisclosed income. All that is required for him is to satisfy himself that the assets or documents do not belong to the searched person but to another person. Thereafter, the Assessing Officer has to transfer the seized assets/documents to the Assessing Officer having jurisdiction of the assessee to whom such assets/ documents belong. Section 153C(1) of the Act clearly postulates that once the Assessing Officer of a person--other than the one searched, has received the assets or the documents, he is to issue a notice to assess/ reasse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....person and assess or reassess his income in accordance with the provisions of section 153A. Therefore, before a notice under section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is--after such satisfaction is arrived at-- that the document is handed over to the Assessing Officer of the person to whom the said document 'belongs'. In the present cases, it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose, it would be necessary to examine the provisions of presumptions as indicated above. Section 132(4A)(i) clearly stipulates that when, inter alia, any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. Thus, there are two stages: The first stage comprises of a search and seizure operation under section 132 or proceeding under section 132A against a person, who may be referred as 'the searched person'. Based on such search and seizure, assessment proceedings are initiated against the 'searched person' under section 153A. At the time of initiation of such proceedings against the 'searched person' or during the assessment proceedings against him or even after the completion of the assessment proceedings against him, the Assessing Officer of such a 'searched person', may, if he is satisfied, that any money, document, etc., belongs to a person other than the searched person, then such money, documents, etc., are to be handed over to the Assessing Officer having jurisdiction over 'such other person'. The second stage commences from the recording of such satisfaction by the Assessing Officer of the 'searched person' followed by handing over of all ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of satisfaction by the Assessing Officer of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the Assessing Officer would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of section 153C(1) of the Act, which construes the date of receipt of assets and documents by the Assessing Officer of the assessee (other than one searched) as the date of the search on the assessee. The rationale appears to be that whereas in the case of a searched ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stion of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date." 9. It is evident 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt or documents or assets were seized by the Assessing Officer of the non-searched person only on 25.04.2017, which is subsequent to the amendment, therefore, when the notice under Section 153C was issued on 04.05.2018, the provision of the law existing as on that date, i.e., the amended Section 153C shall be applicable." 80. The aforesaid discussion thus renders a determinative quietus to the identification of the starting post from which the block of six AYs' or the "relevant assessment year" would have to be calculated. The contention of the respondents that the said block periods would have to be reckoned with reference to the date of search thus can neither be countenanced nor possibly accepted. That submission is clearly addressed contrary to a long and consistent line of precedents which have held to the contrary and which unequivocally accepted the point of commencement for the purposes of identifying the six or the "relevant assessment year" to be etched from the date of handover of documents, assets or things to the AO of the non-searched party. 81. As was noticed by us hereinabove, the respondents had also sought to urge that the First Proviso to S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er this Court as well as by this court. Thirdly, the recent amendment to Section 153 C(1) of the Act states for the first time that for both the searched person and the other person the period of reassessment would be six AYs preceding the year of search. The said amendment is prospective. 12. Consequently, no substantial question of law arises from the impugned order of the ITAT. The appeal is, accordingly, dismissed." We thus fail to either fathom or discern any observation rendered in that decision which may be read as lending strength or credence to the contention of the respondents. 83. Reliance was then placed on the decision rendered by a learned Judge of the Madras High Court in RKM Powergen. We note that in RKM Powergen, the learned Judge while considering the challenge to assessment orders cited certain observations from an earlier order passed by the said High Court and the relevant observations whereof are set out hereunder: "2. The grounds that have been argued and my conclusions thereupon are as follows: (i) The bar of limitation: both limbs of this ground have been considered and rejected by me as per orders dated 12-7-202....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 11-1-2016. However, one hardly need to refer this portion, since the construction of the block is detailed in the last portion of section 153C(1) that states 'for the relevant assessment year or years referred to in sub-section (1) of section 153(1). xxxx xxxx xxxx 15. Thus, the block is to comprise of the those assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made. Seen in this context, the inclusion of assessment year 2010-11 and 2011-12 in the case of RKM Powergen Limited and 2010-11 in the case of RK Powergen Private Limited is seen to be in order. 16. The first proviso to section 153C only deals with the date of initiation of search for the purpose of the second proviso to section 153A(1) to determine the abatement for the sake of completion...." 84. As would be evident from the above, although the decisions in Sarwar Agency and RRJ Securities were cited, the learned Judge chose to observe that the Section 153C(1) Proviso would only be liable to be construed as relevant for the purposes of abatement. We find ourselves unable to sustain that line ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ized by the jurisdictional AO of the non-searched person. Consequently, the block of six or ten AYs' would have to be reckoned bearing the aforesaid date in mind. Although in the present batch of writ petitions, the date of actual handing over has not been explicitly mentioned in a majority of the writ petitions, learned counsels for respective sides had addressed submissions based on the assumption that it would be the date of issuance of the Satisfaction Note by the AO of the non-searched person and in the case of nonavailability of such a note, the date of issuance of the Section 153C notices which would be pertinent for the purposes of the First Proviso to Section 153C. 87. Assuming, therefore, that the handover of material gathered in the course of the search and pertaining to the non-searched person occurred between 01 April 2021 to 31 March 2022, the same would essentially constitute FY 2021-22 as being the previous year of search for the purposes of the non-searched entity. As a necessary corollary, the relevant AY would become AY 2022-23. AY 2022-23 would thus constitute the starting point for the purposes of identifying the six years which are spoken of in Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n AYs' would have to be computed from March 2023 with the said date indubitably constituting the end of the AY relevant to the previous year of search. Viewed in light of the above, the block period of 10 AYs' would be as follows:- Computation of the ten-year block No. of years period as provided under Section 153C read with Section 153A of the Act 91. Tested on the aforesaid precepts, it would be manifest that AY 2022-23 would form the first year of the block of ten AYs' and with the maximum period of ten AYs' terminating in AY 2013-14. We, in this regard also bear in consideration the following instructive passages as appearing in the decision handed down by a learned Judge of the Madras High Court in A.R. Safiullah. We deem it appropriate to extract the following paragraphs from that decision:- "9. Explanation-I is clear as to the manner of computation of the ten assessment years. It clearly and firmly fixes the starting point. It is the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. There cannot be any doubt that since search was made in this case on 10.04.2018, the assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g statute that is free of ambiguity. Such a provision cannot be elastically construed. 11. One other contention urged by the standing counsel has to be dealt with. It is pointed out that the petitioner has invoked the writ jurisdiction at the notice stage. Since the petitioner has demonstrated that the subject assessment year lies beyond the ambit of the provision, the respondent has no jurisdiction to issue the impugned notice. Once lack of jurisdiction has been established, the maintainability of the writ petition cannot be in doubt." In our considered opinion, the decision in A.R. Safiullah correctly expounds the legal position and the interpretation liable to be accorded to the identification of the ten AYs' which are spoken of in Sections 153A and 153C. 92. List II, forming part of this batch pertains to cases where Satisfaction Notes of the AO of the non-searched person were drawn between the period 01 April 2022 to 31 March 2023 and 01 April 2023 to 31 March 2024. Tested on the principles enunciated by us in the preceding passages of this judgment, we come to the conclusion that the relevant six AYs' would comprise the following years, when....