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TMI Blog2024 (6) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... the statutory scheme for search assessments as it existed prior to Finance Act, 2021 and the indubitable fact that while in the case of the searched person, the six year or the ten year block period is liable to be computed with reference to the date of search, in the case of the non-searched entity, it has to necessarily be the date when the material is handed over to the jurisdictional AO of the other person . All that would happen in the case of a search which takes place on or after 01 April 2021, and which warrants a reassessment action being commenced in relation to an AY prior to the first day of April, 2021, since no transmission of material would have occurred, we would necessarily have to bear in mind, the date when a decision may be taken by the jurisdictional AO to proceed against the non-searched entity in terms of the amended scheme pertaining to search assessments, and which now stands merged with the larger power of reassessment which stands comprised in Sections 147 and 148 of the Act. We find ourselves unable to construe or read the First Proviso to Section 149 (1) as requiring us to ignore the First Proviso to Section 153C (1), and for the purposes of computatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew our attention to the order dated 15 April 2024 passed in Filatex India Ltd. vs. Deputy Commissioner of Income Tax Anr. WP(C) 12148/2023, and where while dealing with an identical question, upon taking note of the manner in which the relevant period under Section 153C is liable to be reckoned, and which we had otherwise dealt with in some detail in our decision rendered in Principal Commissioner of Income Tax-1 vs. Ojjus Medicare Pvt. Ltd 2024 SCC OnLine Del 2439, we had observed as follows: 3. As is evident from the prima facie observations which came to be rendered by us on that occasion, the reassessment which is sought to be initiated for Assessment Year [ AY ] 2012-13 would not sustain bearing in mind the prescription of limitation as contained in Section 149 (1) (b) of the Income Tax Act, 1961 [ Act ] as it stood at the relevant time. 4. We note that while dealing with a similar question of computation of the time limit for the relevant assessment year as provided under Explanation 1 to Section 153A of the Act, we had in the case of Principal Commissioner of Income Tax-Central-1 v. Ojjus Medicare Pvt. Ltd. [2024 SCC Online Del 2439] held as follows:- D. The First Proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment year . This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology immediately preceding when it be in relation to the six year period and employing the expression from the end of the assessment year while speaking of the ten year block. 5. In view of the aforesaid, we find ourselves unable to sustain the impugned notice dated 13 March 2023 issued under Section 148 of the Act. 6. The writ petition is accordingly allowed and the impugned order dated 18 May 2023 disposing off the objections of the petitioner is hereby quashed. We in consequence also quash the notice dated 13 March 2023 purporting to commence proceedings under Section 148 of the Act. It was on the aforesaid basis that Mr. Jain, learned counsel, contended that the instant writ petition too is liable to be allowed on identical terms. 4. However, Mr. Meharchandani, learned counsel appearing for the respondents, contends that even if the reassessment action were to be tested based on the First Proviso to Section 149 (1) of the Act, the petitioner would not be entitled to any relief for the following reasons. According to Mr. Meharchandani, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 amount to fifty lakh rupees or more: Provided that no notice under Section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under Section 148 or Section 153-A or Section 153-C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or Section 153-A or Section 153-C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under Section 153-A, or Section 153C read with Section 153-A, is required to be issued in relation to a search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132-A, on or before the 31st day of March, 2021. 8. Undisputedly, and in terms of Section 153C(3) of the Act, any search if conducted after 01 April 2021, would cease to be regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C (1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceding AYs or the relevant assessment year in the case of the non-searched entity has to be reckoned from the time when the material unearthed in the search is handed over to the jurisdictional AO. The import of this legal fiction is no longer res integra bearing in mind the judgment of the Supreme Court in CIT v. Jasjit Singh Ors. 2023 SCC Online SC 1265 and the whole line of precedents rendered by our High Court which were noticed in Ojjus Medicare Private Limited. Those decisions have consistently held that in the case of a non-searched entity, it is the date of hand over of material, as opposed to that of the actual search which would constitute the starting point for reckoning the block of six or ten AYs . 14. However, Section 149 (1), as it came to be placed and introduced in the statute book by virtue of Finance Act, 2021, neither effaces nor removes from contemplation the First Proviso to Section 153C (1). Consequently, in cases where a search is conducted after 31 March 2021, the said Proviso would have to be construed and tested with reference to the date when the AO decides to initiate action against the non-searched entity. While in the case of a search initiated after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssments, and which now stands merged with the larger power of reassessment which stands comprised in Sections 147 and 148 of the Act. 17. Insofar as the two Provisos to Section 149 (1) are concerned, we had in Ojjus Medicare Private Limited observed as follows: 108. We also find ourselves unable to countenance the submissions based upon the two Proviso's placed in Section 149 for the following reasons. It must at the outset be noted that Section 149 regulates the time within which a notice under Section 148 may be issued. It thus neither ventures nor attempts to regulate the search assessment powers that are available to be invoked in terms of Sections 153A or 153C. Secondly, although the First Proviso (and to the extent that it included a reference to Sections 153A and 153C), came to be introduced by virtue of Finance Act, 2022 [Act 6 of 2022] with retrospective effect from 01 April 2021, the non obstante clause in Sections 153A and 153C was left untouched. Of equal significance is the fact that that Sections 153A and 153C of their own stipulate no period within which a notice initiating search assessment may be issued. We further find that the bar created by virtue of the Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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