PCIT Vs Karina Airlines International Ltd. (Delhi High Court)
Principal Commissioner of Income Tax (PCIT) challenged the order passed by the Income Tax Appellate Tribunal (ITAT) regarding the applicability of Section 153C in the case of Karina Airlines International Ltd. The ITAT had quashed the assessment, primarily citing the Finance Act, 2017 amendments which introduced changes to Section 153C. The amendment extended the assessment period for ten years post-search, but the ITAT concluded that the amendment could not apply as the search occurred in 2016, before the Finance Act came into effect.
The key issue in dispute was the interpretation of “relevant assessment years” for assessment under Section 153C. The ITAT ruled that the amended provisions were not applicable, as they did not apply retroactively to searches conducted before April 1, 2017. According to the Tribunal, the search conducted in April 2016 could only trigger a reassessment for the six years immediately preceding the search year. The assessment made in 2019 for the year 2012-13 was deemed barred by limitation. The PCIT, on the other hand, argued that the amended provisions, being clarificatory in nature, should apply to all cases initiated after their introduction, irrespective of the search date.
The Tribunal’s stance was that the extended ten-year period for reopening assessments post-search, introduced by the Finance Act, could only apply if the search was conducted after April 1, 2017. Since the search in this case took place in April 2016, the reassessment for the 2012-13 assessment year was considered beyond the permissible six-year window, making the reassessment invalid. This interpretation aligns with the understanding that provisions relating to reopening assessments must be followed in accordance with the date of the search, rather than the date when the satisfaction for reopening is recorded.
