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TMI Blog2024 (9) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... & CM APPL. 10151/2024 (Stay), W.P.(C) 2480/2024 & CM APPL. 10153/2024 (Stay), W.P.(C) 2481/2024 & CM APPL. 10155/2024 (Stay), W.P.(C) 5568/2024 & CM APPL. 23003/2024 (Stay), W.P.(C) 5583/2024 & CM APPL. 23043/2024 (Stay), W.P.(C) 5719/2024 & CM APPL. 23582/2024 (Stay), 52556/2024 (23 Days Delay in Rej.), W.P.(C) 5721/2024 & CM APPL. 23586/2024 (Stay), 52554/2024 (23 Days Delay in Rej.), W.P.(C) 5732/2024 & CM APPL. 23609/2024 (Stay), 52575/2024 (23 Days Delay in Rej.) W.P.(C) 5787/2024 & CM APPL. 23954/2024 (Direction) W.P.(C) 3329/2024 & CM APPL. 13739/2024 (Stay), W.P.(C) 6177/2024 & CM APPL. 25690/2024 (Stay), W.P.(C) 12832/2024 & CM APPL. 53526/2024 (Interim Relief) For the Petitioner Through: Mr. Ruchesh Sinha, Ms. Shilpa Choudhary & Mr. Pankaj Aggarwal, Advs., Mr. Gautam Jain, Mr. Shaantanu Jain & Mr. Manish Yadav, Advs. Mr. Bhupinder Jit Kumar & Mr. Nikhil Sharma, Advs. Mr. Ajay Vohra, Sr. Adv. with Mr. Rohit Jain, Mr. Aniket D. Agrawal, Mr. Deepesh Jain & Mr. Samarth Chaudhari, Advs. Mr. Sumit K. Batra, Mr. Manish Khurana, Ms. Priyanka Jindal & Mr. Siddhanth Sarwal, Advs. Mr. Rohit Jain, Mr. Deepesh Jain & Mr. Samarth Chaudhari, Advs. Mr. Gaurav Jain & Mr. Shubham Gupta, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Private Limited [ABPL], a company incorporated under the Companies Act, 1956 and which had come into existence as a result of a demerger of the Rubber Thread Unit of the writ petitioner pursuant to a Scheme of Demerger approved by the concerned High Court on 11 September 2007. ABPL is stated to have filed a revised Return of Income for Assessment Year [AY] 2007-08 on 29 September 2008. It appears that on 21 January 2011 a search and seizure operation was carried out in respect of the Dharampal Satyapal Group and which included ABPL. Consequently, ABPL came to be served a notice under Section 153A on 09 January 2012. The aforesaid proceedings ultimately culminated in an order of assessment being framed and which saw the Assessing Officer [AO] ordering a disallowance of INR 10,64,45,327/- in respect of depreciation which had been claimed by ABPL. 6. The order of assessment dated 18 March 2013 was subjected to challenge by way of an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. That appeal came to be allowed on 25 April 2014 with the CIT(A) holding that the assessment would not sustain in the absence of any incriminating material having been unearthed in the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Construction P. Ltd. 2016 SCC OnLine Guj 9976 and which had resonated the view expressed by this Court in Kabul Chawla. This flows from a reading of paragraph 27 of the report which is extracted hereinbelow: "27. Thereafter in Saumya Construction, the Gujarat High Court, while referring the decision of the Delhi High Court in Kabul Chawla and after considering the entire scheme of block assessment under Section 153-A of the 1961 Act, had held that in case of completed assessment/unabated assessment, in absence of any incriminating material, no addition can be made by the AO and the AO has no jurisdiction to reopen the completed assessment. In paras 15 and 16, it is held as under: (Saumya Construction case, SCC OnLine Guj) "15. On a plain reading of Section 153-A of the Act, it is evident that the trigger point for exercise of powers thereunder is a search under Section 132 or a requisition under Section 132-A of the Act. Once a search or requisition is made, a mandate is cast upon the assessing officer to issue notice under Section 153-A of the Act to the person requiring him to furnish the return of income in respect of each assessment year falling within six assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion of, the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of Section 153, the intention of the legislature is clear viz. to provide for assessment in case of search and requisition. When, the very purpose of the provision is to make assessment in case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition. In other words, the assessment, should be connected with something found during the search or requisition viz. incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of Section 153-A of the Act, in every case where there is a search or requisition, the assessing officer is obliged to issue notice to such person to furnish returns of income for the six years preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made, any addition or disallowance can be made only on the basis of material collected during the search or requisition. In case no incriminating material is found, as held by the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch annulment by the Commissioner. Therefore, the intention of the legislation seems to be that in case of search only the pending assessment/ reassessment proceedings shall abate and the AO would assume the jurisdiction to assess or reassess the "total income" for the entire six years' period/block assessment period. The intention does not seem to be to reopen the completed/ unabated assessments, unless any incriminating material is found with respect to assessment year concerned falling within last six years preceding the search. Therefore, on true interpretation of Section 153-A of the 1961 Act, in case of a search under Section 132 or requisition under Section 132-A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the "total income" taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments in absence of any incriminating material." 12. The batch ultimately came to be disposed of in the following terms: "36. In view of the above and for the reasons stated above, it is concluded as under: 36.1. That in case of search under Section 132 or requisition under Section 132-A, the AO assumes the jurisdiction for block assessment under Section 153-A; 36.2. All pending assessments/reassessments shall stand abated; 36.3. In case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the "total income" taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and 36.4. In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man, learned ASG appearing on behalf of the Revenue, taking the clue from some of the observations made by this Court in the recent decision in the case of Principal Commissioner of Income Tax, Central-3 v. Abhisar Buildwell P. Ltd., Civil Appeal No. 6580/2021, more particularly, paragraphs 11 and 13, has prayed to observe that the Revenue may be permitted to initiate re -assessment proceedings under Section 147/148 of the Act as in the aforesaid decision, the powers of the re-assessment of the Revenue even in case of the block assessment under Section 153-A of the Act have been saved. 2. As observed hereinabove, as no incriminating material was found in case of any of the Assessees either from the Assessee or from the third party and the assessments were under Section 153-C of the Act, the High Court has rightly set aside the Assessment Order(s). Therefore, the impugned judgment and order(s) passed by the High Court do not require any interference by this Court. Hence, all these appeals deserve to the dismissed and are accordingly dismissed. 3. However, so far as the prayer made on behalf of the Revenue to permit them to initiate the re-assessment proceedings is concerned, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of this application following the procedure stipulated in section 147-151 of the Act as is in force now." 2. Having gone through the averments made in the application and the prayers, we are of the opinion that the prayers sought can be said to be in the form of review which requires detail consideration at length looking into the importance of the matter. Therefore, the present application in the form of clarification is not entertained and we relegate the Revenue to file an appropriate review application for the relief sought in the present application and as and when such review application is filed the same can be heard in the open court. 3. In view of the above and without further entering into the merits of the application and/or expressing anything on merits on the prayers sought in the present application, the present application is not entertained and we relegate the Revenue to file an appropriate review application seeking the reliefs which are sought in the present application and as and when such review application is filed the same be heard and decided and disposed of in the open court. 4. At the cost of repetition, we observe that as we have not entered into t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases, orders were passed considering only other material available in the record in the absence of incriminating material. Hon'ble Delhi High Court delivered a decision on 28-8-2015 in the case of Kabul Chawla [ITA No. 707 of 2014 (Commissioner of Income-tax (Central)-III v. Kabul Chawla)]. It was held that the AO does not have jurisdiction for passing order under Section 153A in the absence of incriminating material found during the search under section 132 or requisition made under section 132A of the Act. 4. Hon'ble Supreme Court in the cases of Abhisar Buildwell (cited supra) and U.K. Paints (Overseas) Ltd. (cited supra), accordingly provided power to the AO to reopen the completed/unabated assessments u/s 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under section 147/148 of the Act, in cases where no incriminating material is found during the search. 5. The implementation of the judgment of Hon'ble Supreme Court is required to be done in uniform manner. Accordingly, in exercise of its power under section 119 of the Act, the Central Board of Direct Taxes (hereinafter referred to as "the Board") directs that the following ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such annulment by the [Principal Commissioner or] Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside.]" Section 153 (8) "Notwithstanding anything contained in the foregoing provisions of this section, subsection (2) of section 153A or sub-section (1) of section 153B, the order of assessment or reassessment, relating to any assessment year, which stands revived under sub-section (2) of section 153A, shall be made within a period of one year W.P.(C)-5721-2024 189 from the end of the month of such revival or within the period specified in this section or sub-section (1) of section 153B, whichever is later." Completed/unabated assessments- 7.2 In respect of cases that were unabated/completed at the time of issue of notices under section 153A/153C and assessments made, the following scenarios will emerge: 7.2.1 In the lead and all the tagged cases, necessary action u/s 148/147 need to be taken in the situation stated by the Court in the para 14(iv) of the said order in view of section 150 of the Act. The AO will be required to reopen the cases following the currently applicable procedure for reopening i.e., followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 The procedure required to be followed by the AO, in compliance with the order of the Hon'ble Supreme Court, is as under: (i) Every AO would have to ascertain which assessments fall in the category of abated assessments and unabated assessments. (ii) Out of abated assessment cases, those that have been annulled by an appellate authority on some technical ground or otherwise, may be potential cases for revival u/s 153A(2) of the Act. (iii) In respect of unabated assessment cases, the AO shall ascertain the facts of the case in hand and take necessary action as per para 7.2 above. (iv) The Hon'ble Supreme Court has held that completed/unabated assessments can be reopened by the AO in exercise of powers u/s 147/148 of the Act, subject to fulfilment of the conditions specified in those sections. The time limit for the issue of notice u/s 148 would be in accordance with the provisions of Section 150 of the Act. (v) For the issue of applicability of the conditions for reopening the assessments at the relevant time, the monetary limits applicable at present would apply while reopening assessment of earlier years. (vi) Regarding sanction for issue of notice u/s 151 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be reopened by the AO in exercise of powers under Section 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. 3. The issue involved in the present case decided by the Hon'ble Bench vide Order dated . . . . (ITA No. ) have similar issue as per the law declared by the Supreme Court in above mentioned judgment of the Hon'ble Apex Court. 4. In view of the Article 141 of the Constitution of India, the ratio decidendi of the abovementioned judgment by the Hon'ble Supreme Court is binding to all courts within the territory of India. Therefore, this Misc. Application is being filed with prayer of condonation of delay of . . . . days, with a request that the Order dated (ITA No . . .) may be reconsidered by Hon'ble ITAT in view of Hon'ble Apex Court's judgment (Civil Appeal No.6580 of 2021). [Note: The Misc. Application will requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India. Therefore, this Notice of Motion is being filed with prayer of condonation of delay of days, with a request that the Order dated . .. (ITA No . . .) may be reconsidered by Hon'ble High Court in view of Hon'ble Apex court's judgment (Civil Appeal No. 6580 of 2021). [Note: The Notice of Motion will require to be filed through Sr./Jr. Standing Counsel and the procedure laid down by the Court in the matter will require to be followed]. Tanmay Sharma Jt. CIT(OSD)-ITJ, CBDT New Delhi" 19. It appears that construing the aforenoted observations of the Supreme Court in Abhisar Buildwell and where reference had been made to Sections 147/148 as a "finding or direction", the CBDT called upon AOs' to re-examine all search assessment cases which had come to be set at naught by virtue of declarations of nullity rendered either by the Tribunal or the High Courts and to examine the feasibility of commencing reassessment action. While issuing the aforesaid advisory, the CBDT observed that in respect of pending or abated assessments if orders have come to be annulled in appeal or in any other legal proceedings, the same would stand revived. It was further observed that ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 25 April 2017. The Court essentially took note of the decisions rendered in Kabul Chawla and Commissioner of Income-tax v. RRJ Securities Ltd. 2015 SCC OnLine Del 13085 to ultimately come to the conclusion that the documents which had been unearthed in the course of the search would not satisfy the test of incriminating material and that consequently, the assessment under Section 153C would not sustain. 23. The appeal of the Department in the case of the writ petitioner is stated to have formed part of the batch of Civil Appeals before the Supreme Court headed by U.K. Paints (Overseas) Ltd. and which ultimately came to be disposed of on 25 April 2023 in terms aforenoted. 24. The writ petitioners contend that the respondents have clearly misconstrued the decision in Abhisar Buildwell as constituting a finding or direction warranting initiation of action under Section 148 of the Act. It was submitted that the Supreme Court in Abhisar Buildwell had merely, and in passing, observed that since the search assessment proceedings could not be sustained, it would be open for the respondents to initiate reassessment, if otherwise permissible in law. 25. Leading submissions on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads: "In suits in which issues have been framed, the Court shall state its finding or decision, with the reasons therefor, upon each separate issue, unless the finding upon any one or more of the issues is sufficient for the decision of the suit." Under this Order, a "finding" is, therefore, a decision on an issue framed in a suit. The second part of the rule shows that such a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. That is to say, the finding shall be one which is necessary for the disposal of the suit. The scope of the meaning of the expression "finding" is considered by a Division Bench of the Allahabad High Court in Pt. Hazari Lal v. Income-tax Officer, Kanpur. There, the learned Judges pointed out: "The word "finding', interpreted in the sense indicated by us above, will only cover material questions which arise in a particular case for decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the, final decision in the appeal, has been the subject of controversy between the interested parties or on which the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Assistant Commissioner can give under Section 31. Under that section he can give directions, inter alia, under Section 31 (3) (b), (c) or (e) or s. 31 (4). The expression "directions" in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the expression "finding" as well as the expression "direction" can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is, empowered to give under the sections mentioned therein. The words "in consequence of or to give effect to" do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to the scope of the findings and directions" 57. As is manifest from the above, a finding was explained to mean a conclusion arrived at on a material question necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order of the Income-tax Settlement Commission is deemed to be conclusive for all the matters pertaining to the concerned assessment year for which the settlement application has been accepted and processed by the Income-tax Settlement Commission. In case, the Income-tax Department is not satisfied with the computation of income by the Income-tax Settlement Commission for the relevant assessment year, the same could only be assailed in accordance with the provisions contemplated under section 245D (6) read with section 245D (7) of the Act. The legislative scheme envisaged for the Income-tax Settlement Commission is self-contained in nature and the intent appears to be to facilitate a mutually satisfactory arrangement which could not be reopened, unless explicitly covered under the textual exceptions of fraud or misrepresentation. 29. In the instant case, the application of the petitioner was accepted and the proceedings were initiated therein by the Income-tax Settlement Commission after the second search and seizure operation was conducted by the respondent on March 5, 2013. Thus, undoubtedly, since the Income-tax Settlement Commission was already held up with the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken." 33. The aforesaid section 150 (1) of the Act, which begins with a non obstante clause to outweigh the mandate of section 149 of the Act, stipulates that a notice under section 148 of the Act may be issued at any time to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a court in any proceeding under any other law. Reliance has been placed by the respondent on paragraph 14(iv) in Abhisar Buildwell P. Ltd. to consider it as a direction or finding of the court to issue the impugned notices. The relevant extract of the said decision is culled out as under: "(iv) in case no incriminating material is unearthed during the search, the Assessing Officer cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the Assessing Officer in absence of any incriminating material found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found necessary initiate fresh proceedings within 60 days from date of disposal of this application following the procedure stipulated in section 147-151 of the Act as is in force now." 2. Having gone through the averments made in the application and the prayers, we are of the opinion that the prayers sought can be said to be in the form of review which requires detail consideration at length looking into the importance of the matter. Therefore, the present application in the form of clarification is not entertained and we relegate the Revenue to file an appropriate review application for the relief sought in the present application and as and when such review application is filed the same can be heard in the open court. 3. In view of the above and without further entering into the merits of the application and/or expressing anything on merits on the prayers sought in the present application, the present application is not entertained and we relegate the Revenue to file an appropriate review application seeking the reliefs which are sought in the present application and as and when such review application is filed the same be heard and decided and disposed of in the open court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch assessments had sought to salvage the situation by balancing the interest of the assessee as well as the Revenue by enabling the respondents to commence action under Section 148. According to learned counsels, the observation of the Supreme Court in Abhisar Buildwell were correctly construed by the CBDT as amounting to a finding and direction empowering the respondents to initiate reassessment action in accordance with Section 150. 33. Learned counsels laid stress upon the non obstante clause which prefaces Section 150 (1) as being demonstrative of the Legislature seeking to confer an overriding effect upon that provision and thus not being bound by the prescriptions of limitation which are otherwise found in Section 149 of the Act. According to learned counsels, principles of equity would also warrant the period consumed in the course of litigation being excluded and the respondents being recognized to have validly initiated the process for assessment. 34. We at the outset note that the interconnection between material that may be gathered in the course of a search and the same being foundational to the invocation of Sections 153A or 153C of the Act, was one which had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment, be a preordained consequence. However, and in light of what has been observed hereinabove, it is apparent that Section 153C constructs a subtle and yet significant distinction insofar as the question of commencement of proceedings or assumption of jurisdiction is concerned. 49. That takes us to the principal question and which pertains to the nature of the incriminating material that may be obtained and the years forming part of the block which would merit being thrown open. Regard must be had to the fact that while Section 153C enables and empowers the jurisdictional AO to commence assessment or reassessment for a block of six AYs' or the "relevant assessment year", that action is founded on satisfaction being reached that the books of accounts, documents or assets seized "have a bearing on the determination of the total income of such other person". We in this regard bear in mind the well settled distinction which the law recognizes between the existence of power and the exercise thereof. Section 153C enables and empowers the jurisdictional AO to assess or reassess the six AYs' or the "relevant assessment year". The Act thus sanctions and confers an authority upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be impermissible to either reopen or reassess a completed assessment which may not be impacted by the material gathered in the course of the search and which may have no plausible nexus. The aforesaid position also comes to the fore when one reads para 17 of ARN Infrastructure and which annulled an action aimed at reopening assessments for years to which the incriminating document which was found did not relate." 36. We had, while rendering judgment on that batch of writ petitions, also had an occasion to notice the judgment of the Supreme Court in Abhisar Buildwell. Taking note of the salient principles which had come to be laid down by the Supreme Court in that decision, we had held:- "54. In any case, Abhisar Buildwell, in our considered opinion, is a decision which conclusively lays to rest any doubt that could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscovered. Section 153C neither mandates nor envisages a mechanical or an en blanc exercise of power, or to put it differently, one which is uninformed by a consideration of the factors indicated above. 56. We also bear in mind the pertinent observations made in RRJ Securities when the Court held that merely because an article or thing may have been recovered in the course of a search would not mean that concluded assessments have to "necessarily" be reopened under Section 153C and that those assessments are not liable to be revised unless the material obtained have a bearing on the determination of the total income. This aspect was again emphasised in para 38 of RRJ Securities with the Court laying stress on the existence of material that may be reflective of undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income for a particular AY." 37. Therefore, today there cannot possibly be any dispute or contestation on the discovery of incriminating material constituting the foundation for any assessment that may be made under Sections 153A or 153C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by providing that such an action would have to be in accordance with law. This note of caution appears at more than one place in that judgment and is apparent from the Supreme Court observing that the power to reassess would be subject to the fulfilment of the conditions mentioned in Sections 147 and 148 of the Act. 41. We also bear in mind the order passed on the Miscellaneous Application which was moved by the Revenue before the Supreme Court and more particularly to the prayers that were made therein. The Revenue had specifically alluded to Section 150 of the Act and sought appropriate clarifications enabling it to proceed afresh. It had also sought the liberty to commence proceedings for reassessment within 60 days of the disposal of that application. The said application, however, came to be dismissed with it being left open to the respondents to move a formal application for review, if so chosen and advised. It appears, however, that no such review was ultimately moved. 42. Regard must also be had to the judgment rendered in the batch of U.K. Paints, and where while according liberty to the respondents to initiate reassessment, the Supreme Court pertinently observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 1 is extracted hereinbelow:- "Time limit for completion of assessment, reassessment and recomputation. 153. (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of twenty-one months from the end of the assessment year in which the income was first assessable: [Provided that in respect of an order of assessment relating to the assessment year commencing on the 1st day of April, 2018, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted: [Provided further that in respect of an order of assessment relating to the assessment year commencing on- (i) the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "twelve months" had been substituted; (ii) the 1st day of April, 2020, the provisions of this sub-section shall have effect, as if for the words "twenty-one months", the words "eighteen months" had been substituted.] [Provided also that in respect of an order of assessment relating to the assessment year commencing on [* * *] the 1st day of April, 2021, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.] [(3A) Notwithstanding anything contained in sub-sections (1), (1A), (2) and (3), where an assessment or reassessment is pending on the date of initiation of search under section 132 or making of requisition under section 132A, the period available for completion of assessment or reassessment, as the case may be, under the said sub-sections shall,- (a) in a case where such search is initiated under section 132 or such requisition is made under section 132A; (b) in the case of an assessee, to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; (c) in the case of an assessee, to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to, be extended by twelve months.] (4) Notwithstanding anything contained in [sub-sections (1), (1A), (2), (3) and (3A)], where a reference under sub-section (1) of section 92CA is made during the course of the proceeding for the assessment or reassessment, the period available for completion of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im.] (6) Nothing contained in sub-sections (1) [, (1-A)] and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of [sub-sections (3), (5) and (5-A)], be completed- (i) where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250, section 254, section 260, section 262, section 263, or section 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act, on or before the expiry of twelve months from the end of the month in which such order is received or passed by the [Principal Chief Commissioner or Chief Commissioner or] Principal Commissioner or Commissioner, as the case may be; or (ii) where, in the case of a firm, an assessment is made on a partner of the firm in consequence of an assessment made on the firm under section 147, on or before the expiry of twelve months from the end of the month in which the assessment order in the case of the firm is passed. (7) Where effect to any order, finding or direction referred to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the approval or rescinding the notification, as the case may be, under those clauses is received by the Assessing Officer; or (iv) the period commencing from the date on which the Assessing Officer directs the assessee to get his accounts audited [or inventory valued] under sub-section (2A) of section 142 and- (a) ending with the last date on which the assessee is required to furnish a report of such audit [or inventory valuation] under that sub-section; or (b) where such direction is challenged before a court, ending with the date on which the order setting aside such direction is received by the Principal Commissioner or Commissioner; or (v) the period commencing from the date on which the Assessing Officer makes a reference to the Valuation Officer under sub-section (1) of section 142A and ending with the date on which the report of the Valuation Officer is received by the Assessing Officer; or (vi) the period (not exceeding sixty days) commencing from the date on which the Assessing Officer received the declaration under sub-section (1) of Section 158-A and ending with the date on which the order under sub-section (3) of that section is made by him; or (vii) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the Assessing Officer having jurisdiction over the assessee,- (a) in whose case such search is initiated under Section 132 or such requisition is made under Section 132-A; or (b) to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to; or (c) to whom any books of account or documents seized or requisitioned pertains or pertains to, or any information contained therein, relates to; or] [(xiii) the period commencing from the date on which the Assessing Officer makes a reference to the Principal Commissioner or Commissioner under the second proviso to sub-section (3) of section 143 and ending with the date on which the copy of the order under clause (ii) or clause (iii) of the fifteenth proviso to clause (23C) of Section 10 or clause (ii) or clause (iii) of sub-section (4) of Section 12-AB, as the case may be, is received by the Assessing Officer,] shall be excluded: Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in sub-sections (1), [(1A)], (2), (3) and sub-section (8) available to the Assessing Officer for making an order of assessment, reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent under Sections 153A or 153C is liable to be excluded if such an action were to be ultimately annulled. The fact that the statute seeks to create rigid time frames within which a reassessment action may be initiated stands fortified by the First Proviso appearing in Section 149, and which came to be introduced in the statute book by Finance Act 2021. 47. Section 149 (1), along with its First and the Second Provisos, is accordingly reproduced hereinbelow:- "Time limit for notice. 149. (1) No notice under Section 148 shall be issued for the relevant assessment year, - (a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); [(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of- (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws:- "10. Undisputedly, and if the validity of the reassessment were to be tested on the anvil of Section 153C, the petitioner would be entitled to succeed for the following reasons. It is an undisputed fact that the proceedings under Section 148 commenced on the basis of the impugned notice dated 30 March 2023. This date would be of seminal importance since the period of six AYs' or the "relevant assessment year" would have to be reckoned from the date when action was initiated to reopen the assessment pertaining to AY 2013-2014. 11. The computation of the six or the block of ten AYs' was explained by us in Ojjus Medicare Private Limited in the following terms: "D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A (1), while defining the point from whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 149 (1) compels us to test the validity of initiation of action for reassessment commenced pursuant to a search, based upon it being found that the proceedings would have sustained bearing in mind the timelines prescribed in Sections 149, 153A and 153C, as they existed prior to the commencement of Finance Act, 2021. This necessarily requires us to advert to the timeframes comprised in both Section 149 (1) (b) as well as Section 153C as it existed on the statute book prior to 01 April 2021, which undisputedly was the date from when Finance Act, 2021 came into effect. 13. While it is true that Section 153C and the procedure prescribed therein had ceased to be applicable post 31 March 2021, the First Proviso to Section 149 (1) does not appear to suggest that the First Proviso to Section 153C(1) would either become inapplicable or be liable to be ignored. Undisputedly, the First Proviso to Section 153C(1), by virtue of a legal fiction enshrined therein requires one to treat the date of initiation of search, and which otherwise constitutes the commencement point for a search assessment in the case of a non-searched party, to be construed as the date when books of accounts or doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would also be contrary to the plain and manifest command of the First Proviso to Section 149 (1), and which compels us to adjudge the validity of reopening based on the test of "could not have been issued at that time on account of being beyond the time limit specified under.......... or Section 153A or Section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021." 51. The respondents, in any event, have not doubted the correctness of the terminal dates which would apply to the relevant AYs which form the subject matter of the present batch of writ petitions. The table, which had been extracted by us in the introductory parts of the present judgement, clearly establishes that all the notices under Section 148 impugned herein would fall beyond the date computed in terms of the First Proviso to Section 149 (1). 52. The respondents despite the clear enunciation of the legal position with respect to search assessments in terms of our judgements in Kabul Chawla, RRJ Securities and a host of others that followed neither chose to initiate any remedial action nor did they adopt a course correction. Nothing fettered the right of the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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