Sunil Kumar Dhaiya v. Assistant Commissioner of Income Tax Central Circle 29, Delhi

1. The petitioner has filed the present petition, inter alia, impugning the notice dated 31.08.2024 [the impugned notice] issued under Section 148 of the Income Tax Act, 1961 [the Act] seeking to reopen the assessment in respect of the Assessment Year [AY] 2014-15.

2. It is the petitioner’s case that the impugned notice has been issued beyond the period of the limitation.

3. In the present case, a search was conducted under Section 132 of the Act at the premises of an individual Sh. Ishwar Singh and his associates. During the said search, certain documents had been found and it was alleged that the same contained details of cash payments made by the petitioner to Ms. Meenakshi Bindish for purchase of immovable property amounting to Rs. 1,36,00,000/-. Based on the said material, the Assessing Officer [AO] issued the impugned notice on 31.08.2024.

4. The provisions of Section 153C of the Act are inapplicable in respect of searches conducted after 31.03.2021. Nonetheless, it is relevant to consider whether a notice under Section 153C of the Act could have been issued for the relevant AY 2014-15 for the limited purposes of determining whether a notice under Section 148 of the Act can be issued in view of the first proviso to Section 149(1) of the Act.

5. There is no mandatory requirement for an assessing officer of a searched person to record his satisfaction that the assets or documents found during the search belong to a person other than the one searched or contained information regarding such other person in cases of search conducted after 31.03.2021. Thus, for the purposes of considering the limitation under Section 153C of the Act, it is apposite to consider the date on which the decision is taken by the AO to take steps for initiating reassessment proceedings as the relevant date.

6. In Dinesh Jindal v. Assistant Commissioner of Income Tax, Central Circle 20, Delhi & Ors.: Neutral Citation No.:2024:DHC:4554-DB, this Court had considered a similar issue and observed as under:

concerned. The First Proviso to Section 149(1), however, bids us to go back in a point of time, and to examine whether a reopening would sustain bearing in mind the timeframes as they stood embodied in Section 149(1)(b) or Section 153A and 153C, as the case may be. The First Proviso essentially requires us to undertake that consideration bearing in mind the timeframes which stood specified in Sections 149, 153A and 153C as they stood prior to the commencement of Finance Act, 2021.

9. Thus, an action of reassessment which comes to be initiated in relation to a search undertaken on or after 01 April 2021 would have to meet the foundational tests as specified in the First Proviso to Section 149(1). A reassessment action would thus have to not only satisfy the time frames constructed in terms of Section 149, but in a relevant case and which is concerned with a search, also those which would be applicable by virtue of the provisions of Section 153A and 153C.

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 2013-14.”

7. We also consider it apposite to refer to the decision in the case of Principal Commissioner of Income Tax- Central-1 v. Ojjus Medicare Pvt. Ltd.: Neutral Citation No.:2024:DHC:2629-DB, where this Court had explained the manner for calculating the block of six years and ten years for the purpose of computing the limitation for issuance of a notice under Section 153C of the Act read with Section 153A of the Act as under:

AYs’ hinges upon the phrase “immediately preceding the assessment year relevant to the previous year” of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it “from the end 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.”

8. Bearing in mind the aforesaid principles, the block of ten assessment years is required to be reckoned from the end of the AY 2025-26 being the assessment year relevant to the financial year in which the impugned notice under Section 148 was issued. A tabular statement setting out the block of ten years as set out in the petition is reproduced below: AY 2025-26 Year 1 AY 2024-25 Year 2 AY 2023-24 Year 3 AY 2022-23 Year 4 AY 2021-22 Year 5 AY 2020-21 Year 6 AY 2019-20 Year 7 AY 2018-19 Year 8 AY 2017-18 Year 9 AY 2016-17 Year 10 AY 2015-16 Barred by limitation AY 2014-15 Barred by limitation

9. The issue involved in the present case is covered by the earlier decisions of this court in Dinesh Jindal v. Assistant Commissioner of Income Tax, Central Circle 20, Delhi & Others: Neutral Citation: 2024: DHC:4554-DB, KAD Housing Private Limited v. Deputy Commissioner of Income Tax Central Circle-6, Delhi: Neutral Citation: 2024:DHC:8214- DB and Pankaj Jain v. Assistant Commissioner of Income Tax, Central Circle 3, Delhi & Anr.: Neutral Citation: 2025:DHC:157-DB.