PCIT Vs Dharam Raj Construction & Infrastructure Private Limited (Delhi High Court)
The Delhi High Court reviewed an appeal by the Revenue challenging an Income Tax Appellate Tribunal (ITAT) decision regarding the application of Section 153C of the Income Tax Act to searches conducted before the 2015 Finance Act amendment. The case concerns Dharam Raj Construction and Infrastructure Private Limited, whose tax assessments for 2007-08 and 2008-09 had been disputed. Central to the case was the interpretation of the term “belongs to” in Section 153C, which was revised to “pertains to” by the Finance Act 2015 to expand the scope of documents found during searches to include related parties. The Tribunal had earlier applied a restrictive interpretation, citing the Delhi High Court’s Pepsico India Holdings decision, which limited the use of evidence from searches solely to those parties directly involved.
The Revenue argued that the amendment should apply retroactively, enabling them to use documents discovered in searches against third-party entities involved. Supporting this view, the Supreme Court’s ruling in Income-tax Officer v. Vikram Sujitkumar Bhatia confirmed that Section 153C’s expanded interpretation applied to searches before June 1, 2015. The Delhi High Court agreed with this, setting aside the ITAT’s restrictive ruling and remanding the case to the ITAT for further consideration on unresolved issues raised by the assessee. This ruling underscores the broader application of Section 153C as amended in 2015, impacting assessments and appeals for searches conducted prior to the amendment.
