Delhi HC Reaffirms 10-Year Limit u/s 153C, Quashes Income Tax Notices [Read Order]
The bench elaborated that the First Proviso to Section 153C mandates that the limitation period be calculated from the date of receipt of documents by the non-searched person's AO
Delhi HC
Delhi HC
The Delhi High Court has quashed income tax reassessment notices issued against Ramaa Advisors Private Limited, holding them to be barred by the mandatory ten-year limitation period under Section153C of the Income Tax Act, 1961.
The petitions were filed by Ramaa Advisors Private Limited, challenging multiple notices issued under Section 153C of the Act, including those dated 31.08.2024 and 12.09.2024.
The Counsel for the petitioner argued that the action under Section 153C was unsustainable as the assessment years in question (AY 2010-11 to 2015-16) were beyond the permissible ten-year block period.
The contention was based on the court's own decision in Principal Commissioner of Income Tax Central – 1 vs. Ojjus Medicare Pvt. Ltd, which laid down the principles for calculating the limitation period. It was argued that the ten-year period must be calculated from the date the jurisdictional AO of the non-searched person received the documents from the AO of the searched person.
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The Senior Standing Counsel for the Revenue did not dispute the factual timeline but submitted that the department had not accepted the manner of calculating the ten-year block period as laid down in the Ojjus Medicare case, noting that a Special Leave Petition against that judgment was pending before the Supreme Court.
A division bench comprising Justice V. Kameswar Rao and Justice Vinod Kumar referred to its own detailed observations in a prior judgment. The bench elaborated that the First Proviso to Section 153C mandates that the limitation period be calculated from the date of receipt of documents by the non-searched person's AO.
Applying this principle, the court calculated that the ten-year block period, based on the handover of materials in FY 2021-22, could only extend up to AY 2016-17. Consequently, the notices pertaining to AYs 2010-11 to 2015-16 were found to be beyond the ten-year limit as of the date of their issuance.
Finding that the reassessment notices were issued in violation of the mandatory limitation period, the court allowed all the writ petitions and set aside the impugned notices dated 31.08.2024 and 12.09.2024. The petitions were disposed of accordingly.
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