Preeti Chadha Vs ITO (Delhi High Court)
Notice under section 153C issued beyond six year limitation period reckoned from the assessment year immediately preceding the year of recording of satisfaction note is time barred and liable to be quashed.
The Assessing Officer recorded the satisfaction note on 16.06.2022, falling in AY 2023-24, and thereafter issued notice under section 153C on 25.07.2022 for AY 2016-17. The dispute arose because AY 2016-17 fell outside the six assessment years permissible under sections 153A/153C when counted backwards from the assessment year immediately preceding AY 2023-24.
The petitioner challenged the notice dated 25.07.2022 issued under section 153C for AY 2016-17, pursuant to satisfaction note dated 16.06.2022. The petitioner contended that the notice was beyond the limitation period prescribed under sections 153A and 153C. The Department did not dispute the factual position but submitted that an SLP against the judgment in Ojjus Medicare Pvt. Ltd. had been filed before the Supreme Court.
CORE ISSUE: Whether notice under section 153C for AY 2016-17 could validly be issued when the satisfaction note was recorded in AY 2023-24 and the six-year limitation, calculated backwards from the assessment year immediately preceding the year of recording satisfaction, extended only up to AY 2017-18.
FACT: The satisfaction note under section 153C was recorded on 16.06.2022, i.e. during AY 2023-24. The notice under section 153C was subsequently issued on 25.07.2022 for AY 2016-17. Since the escaped income was stated to be below Rs. 50 lakh, the applicable limitation was six years.
AO / CIT FINDING: The impugned notice under section 153C dated 25.07.2022 was issued for AY 2016-17. The High Court examined its validity with reference to the statutory limitation under sections 153A and 153C. No separate finding of the AO or CIT(A) is recorded in the judgment on the merits of the alleged escaped income.
HIGH COURT FINDING: The Court held that since the satisfaction note was recorded on 16.06.2022 in AY 2023-24, the six years had to be reckoned backwards from the assessment year immediately preceding AY 2023-24, namely AY 2022-23. The six permissible assessment years were AYs 2022-23, 2021-22, 2020-21, 2019-20, 2018-19 and 2017-18. AY 2016-17 therefore fell outside the permissible limitation period. Following Ojjus Medicare Pvt. Ltd., the Court held the notice to be clearly time barred.
OUTCOME: The writ petition was allowed. The notice dated 25.07.2022 issued under section 153C for AY 2016-17 was quashed as being barred by limitation. The pending application was also disposed of.
Cases Discussed
- Principal Commissioner of Income Tax-1 (Central-1) v. Ojjus Medicare Pvt. Ltd., [2024] 465 ITR 101 (Delhi High Court). Relied upon by the petitioner and followed by the Court in holding that AY 2016-17 fell outside the permissible six-year period under Sections 153A and 153C. The Department submitted that an SLP against this judgment had been filed before the Supreme Court.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. By way of present writ petition preferred under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 25.07.2022 under Section 153C of the Income-Tax Act, 1961 (hereinafter referred to as ‘Act of 1961’) in furtherance of the satisfaction note dated 16.06.2022 recorded by the Assessing Officer for assessment year 2016-17.
2. Learned Counsel for the petitioner at the outset argued that the impugned notice has been passed beyond the time period prescribed under Section 153A read with Section 153C of the ct of 1961, as prevailing at the relevant time (AY 2016-17).
3. He submitted that the issue involved in the present writ petition is squarely covered by judgment of this Court rendered in the case of Principal Commissioner of Income Tax-1 (Central-1) v. Ojjus Medicare Pvt. Ltd. reported in [2024] 465 ITR 101 (Delhi).
4. Mr. Vipul Agrawal, learned Senior Standing Counsel for the Department could not dispute the aforesaid position of facts involved. He, however, submitted that an SLP against the said judgment has been filed before Hon’ble the Supreme Court.
5. Heard learned counsel for the parties.
6. It does not need much discussion that as the satisfaction note was recorded on 16.06.2022, i.e. in the assessment year 2023-24, the notice passed on 25.07.2022 qua assessment year 2016-17 is clearly beyond the limitation period (which shall be 6 years as the escaped income is less than Rs. 50,00,000/-), if calculated backward from immediately preceding year from the relevant assessment year i.e. 2023-24, which means financial year 2021-22 or assessment year 2022-23.
For ease of understanding, a tabular depiction is made hereunder:
| Year No. (counted backwards) | Assessment Year |
|---|---|
| 1 | AY 2022-23 |
| 2 | AY 2021-22 |
| 3 | AY 2020-21 |
| 4 | AY 2019-20 |
| 5 | AY 2018-19 |
| 6th year | AY 2017-18 |
7. The notice impugned is, thus, time-barred on a plain reading of Sections 153A and 153C of the Act of (hereinafter referred to as ‘the Act of 1961’) so also in light of Ojjus Medicare Pvt. Ltd. (supra).
8. The writ petition is allowed, the notice dated 25.07.2022 is quashed. Pending application stands disposed of.
