Case Law Details
PCIT Vs Ojjus Medicare Pvt. Ltd. (Supreme Court of India)
The matter arose from a batch of writ petitions and an Income Tax Appeal challenging the initiation of assessment proceedings under Section 153C of the Income-tax Act following a search conducted on 18 October 2019. The principal issues concerned the computation of the block assessment period under Sections 153A, 153B and 153C, the meaning of the expression “relevant assessment year”, the applicability of the ten-year assessment block introduced by the Finance Act, 2017, and the conditions prescribed in the Fourth Proviso to Section 153A for reopening assessments beyond six years.
The petitioners contended that notices issued for Assessment Years (AYs) 2010-11, 2011-12, 2012-13 and 2013-14 were beyond the permissible block period when computed from the date on which the seized material was handed over to the Assessing Officer of the “other person”. They further argued that AYs 2010-11 and 2011-12 could not be reopened because, under the law as it stood before 1 April 2017, the limitation period for reassessment had already expired and the Finance Act, 2017 could not revive those completed assessments. Some petitioners also challenged the notices on the ground that the alleged escaped income represented by assets was below the statutory threshold of ₹50 lakh prescribed in the Fourth Proviso to Section 153A.
The High Court examined representative factual situations in detail. It noted that the proceedings were initiated on the basis of satisfaction notes prepared after examination of documents and digital material seized during the search, including ledgers retrieved from a laptop allegedly showing unaccounted cash transactions and accommodation entries. Notices under Section 153C were issued for multiple assessment years, followed by assessment proceedings and additions under Sections 68 and 69C in certain cases. The petitioners challenged both the assumption of jurisdiction and the continuation of the assessment proceedings.
The High Court rejected the argument that assessments which had become time-barred under the reassessment provisions prior to 1 April 2017 acquired an indefeasible finality preventing action under Sections 153A and 153C. It held that the reassessment provisions did not control or restrict the special assessment regime applicable to search cases. According to the Court, Sections 153A and 153C operate independently, and accepting the petitioners’ contention would undermine the non obstante clauses contained in those provisions. The Court further held that searches are inherently unpredictable events and that the statutory reassessment timelines cannot govern or limit search assessments. It also concluded that the legislative scheme clearly contemplated the retrospective operation of the amended provisions within the framework prescribed by the statute.
On the issue of the ₹50 lakh threshold, the High Court held that the statutory requirement could be satisfied by considering the aggregate value of the relevant assets where the cumulative value met the prescribed minimum of ₹50 lakh.
Despite rejecting the challenges based on limitation, finality and the interpretation of Sections 153A and 153C, the High Court ultimately held that the impugned notices relating to AYs 2010-11, 2011-12, 2012-13 and 2013-14 fell beyond the maximum ten-year block period. Consequently, it allowed the writ petitions in Lists I and II and quashed the notices issued for those assessment years. In respect of the petitions in List III, it also quashed the notices for AYs 2010-11, 2011-12 and 2012-13 as they were beyond the ten-year block. For the petition concerning AY 2016-17, the Court quashed the notice but granted liberty to the Assessing Officer to examine afresh whether the statutory requirement of escaped income represented by assets of ₹50 lakh or more was satisfied in accordance with the principles laid down in the judgment, and, if so, to initiate fresh proceedings as otherwise permissible in law. The connected Income Tax Appeal was dismissed, and all pending applications were disposed of.
The Supreme Court, while considering the challenge, heard the learned Additional Solicitor General appearing for the petitioner, issued notice on the question of limitation as well as on the Special Leave Petitions, and directed that the matter be tagged with Special Leave Petition (C) Diary No. 53868/2024.
Read Order of Delhi HC in this case: Intricacies of Sections 153A, 153B &153C: Key Conclusions of ACIT Vs Ojjus Medicare Pvt. Ltd
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. Heard the learned Additional Solicitor General appearing for the petitioner.
2. Issue notice on limitation as well as the Special Leave Petitions.
3. Tag with Special Leave Petition (C) Diary No.53868/2024.
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