Power to Assess Block Period of 10 Years Not Applicable for Searches Before 1-4-2017

Rupesh Kantilal Savla Vs ACIT (ITAT Mumbai)

Power to assess block period of ten years could not be attracted in case of a Income Tax search which had taken place prior to 1-4-2017

In the case of Rupesh Kantilal Savla Vs ACIT Circle 20(3), the Income Tax Appellate Tribunal (ITAT) Mumbai addressed the issue of the block period for assessments in cases of search conducted prior to 1st April 2017. The tribunal ruled that the extended block period of ten years, introduced by the Finance Act of 2017, would not apply to searches that occurred before this date. The case centered on the applicability of the amended provisions under Section 153C, which allow for the reopening of assessments for up to ten years for certain cases of search and requisition. However, the search in this case was conducted in April 2016, well before the April 2017 amendment came into effect. Therefore, the tribunal concluded that the reassessment for assessment years (AY) beyond the six-year limit was not valid.

The Delhi High Court’s recent decision in Karina Airlines International Ltd. Vs Commissioner of Income Tax similarly dealt with the same legal issue, where the applicability of Section 153C, as amended by the Finance Act 2017, was questioned. The court upheld the ITAT’s decision, ruling that the amendment did not apply to searches conducted before 1st April 2017. This case is significant as it reaffirms the limitations on the reassessment of income for years beyond the six-year period under the pre-amendment version of the Income Tax Act. The tribunal’s ruling emphasized that the date of the search, rather than the date of the satisfaction recorded, was pivotal in determining whether the ten-year block period applied.