2024 (12) TMI 255 - HC - Income Tax

Validity of assessment u/s 153C as barred by limitation - time limit for completion of assessment u/s 153B - starting point of limitation for the purpose of passing order of assessment - HELD THAT - The proviso to Section 153B of the Act needs to be examined. A microscopic reading of relevant portion of the said proviso leaves no room for any doubt that the date when books of account or documents or assets seized were handed over to the assessing officer having jurisdiction over such person is the crucial date and if it is later in time under whichever is later expression this date will be starting point for counting limitation. Since previous notices which were issued to four transferor companies were void same vanished in thin air and relevant dates for issuance of said notices are of no relevance. Merely because some time was consumed in centralising and handing over relevant incriminating material to the assessing officer having jurisdiction the petitioner will not come out of rigors of the said proviso which is clear and unambiguous. In the instant case it is not the case of the petitioner that the officer who conducted search on aforesaid four companies and the officer who has been given jurisdiction by order dated 27.12.2022 are same. We are unable to persuade ourselves with the line of argument of learned Senior Counsel for the petitioner that the notices dated 30.12.2022 are barred by limitation and bad in law. We find no reason to interfere with the impugned orders dated 10.10.2023 and also notices dated 30.12.2022 issued by the Department. Writ Petitions fail and are hereby dismissed.

Summary

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.