PCIT Vs Pragun Finance Pvt. Ltd. (Delhi High Court)
The Delhi High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax (PCIT), thereby affirming the deletion of a substantial tax addition made against Pragun Finance Pvt. Ltd. The ruling reinforces the strict jurisdictional and temporal limitations governing assessments under Section 153C of the Income Tax Act, 1961, especially concerning the retrospective application of subsequent statutory amendments.
The central issue before the Court was the validity of a notice issued under Section 153C for the Assessment Year (AY) 2010-11. The High Court concluded that, based on the law prevailing at the time the search was conducted, the notice was time-barred as it pertained to an assessment year outside the permissible six-year block period.
Background of Search and Addition
The matter originated from search and seizure operations conducted on July 23, 2015, targeting a group of individuals, including Mr. Deepak Aggarwal and Mr. Mukesh Kumar, who were identified by the Revenue as “entry operators” involved in providing accommodation entries to various beneficiaries.
During the search on the premises of these entry operators, incriminating documents and papers pertaining to Pragun Finance Pvt. Ltd. (the assessee/respondent) were allegedly found and seized. Since Pragun Finance was a person other than the one searched, the provisions of Section 153C were triggered.
