While deciding whether the first proviso to Section 153C of the Income Tax Act would have limited application only for the purpose of abatement of pending proceedings or otherwise, the Madars High Court referred to the decision of the Apex Court in the case of CIT Vs Jasjit Singh [(2023) 458 ITR 437], to hold that Section 153C(1) is not only for the purpose of abatement but also for all the other practical purposes, viz., initiation of search for other person in terms of Section 153C(3) of the Income Tax Act.
The Court clarified that the provision of Section 153C will not apply for any search, which is initiated on or after April 01, 2021. Since the date of handing over of seized material to the petitioner’s Jurisdictional AO is on November 25, 2022 and the said date is the date of initiation of search for the petitioner, the Court pointed out that the initiation of search was subsequent to April 01, 2021, for which, the provisions of Section 153C will not apply.
Thus, finding that the notices were issued without authority and against the provisions of Sub-Section (3) of Section 153C, the Court quashed all the notices as well as the consequential proceedings.
A Single Judge Bench of Justice Krishnan Ramasamy observed from a reading of Section 153C that determination of total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year, in which the search was conducted or requisition was made and for the relevant assessment year or years, referred in sub-Section (1) of Section 153C.
As far as the other person is concerned, the Single Judge explained that the 6 years period would be calculated, the date on which the requisition was made and that would be the date, for the purpose of determination of assessment of income. On the other hand, as far as the searched person is concerned, this 6 years period would vary and the same would be calculated from the date of search made in the premises of searched person.
Therefore, for the purpose of initiation and determination of income for 6 assessment years, two different dates have been fixed by the Statute, i.e., for the searched person, it was taken the date of search, whereas, for the other person, it was taken the date, on which the requisition is made to the JAO of the other person, added the Bench.
The Bench also emphasized that as far as the searched person is concerned, the date of initiation of search is the date, on which the search was conducted in his premises. The said date would be the date of initiation of search for searched person for all purposes. As far as the other person is concerned, the date of initiation of search would be the date, on which the materials, books of accounts, etc., are handed over to the JAO of the other person and this date would be considered as the date of initiation of search for other person for all purposes.
Thus, while pointing out that there cannot be two different dates of initiation of search, either for the searched person or for the other person, the Bench allowed the petition in favour of the taxpayer.
Briefly, the Income Tax Authorities had conducted a search at third-party premises, and obtained incriminating materials pertaining to the petitioner (taxpayer). Pursuant to the same, the notice under Section 148A and Section 148 was issued, without granting sufficient opportunity to the petitioner to file objections. Later, the petitioner submitted his objection and considering the same, the AO dropped the proceedings.
After a lapse of more than five months, the ACIT issued notice under Section 153C for AYs 2013-14 to 2019-20. Now, the main grievance of the petitioner was that no notice under Section 153C can be issued after April 01, 2021 for all the AYs in terms of Sub-Section (3) of Section 153C.
Case Relied On:
CIT vs Jasjit Singh [(2023) 458 ITR 437]
Appearances:
Advocate R Sivaraman, for the Petitioner/ Taxpayer
Senior Advocate A.P. Srinivas and Advocate A.N.R. Jayaprathap, for the Respondent/ Revenue
