Income Tax Section 153C Notices Time-Barred When Computed From Satisfaction Note Date: Delhi HC Quashes Reassessment [Read Order]

The Delhi High Court has held that Income Tax notices issued under Section 153C become time-barred when limitation is computed from the date of the satisfaction note of the Assessing Officer of the searched person, and it quashed the reassessment notices issued for Assessment Years 2010-11 to 2013-14.

Dhiresh Gupta filed a batch of four connected writ petitions before the Delhi High Court challenging notices issued against him under Section 153C of the IncomeTax Act, 1961 for Assessment Years 2010-11, 2011-12, 2012-13 and 2013-14.

The petitioner’s counsel invited the Court’s attention to the satisfaction note which bore the date 24.06.2022, as referred to by the Assessing Officer of the searched party. They argued that in any case, the notices under Section 153C against the petitioner could have been issued only after the satisfaction note was recorded.

The petitioner’s counsel argued that if the satisfaction note date, i.e. 24.06.2022, is treated as the date of notice or the date of initiation of proceedings, then the notices for Assessment Years 2010-11, 2011-12, 2012-13 and 2013-14 were beyond the period of limitation.

The counsel relied on the Delhi High Court decision in Principal Commissioner of Income Tax Central-1 v. Ojjus Medicare Pvt. Ltd., reported in (2024) 465 ITR 101 (Delhi) where the Court had taken the same view on limitation in Section 153C matters.

On the other hand, the Revenue’s counsel stated that he was not in a position to controvert the petitioner’s factual and legal position. However, he submitted that the department has filed a Special Leave Petition before the Supreme Court against the judgment in Ojjus Medicare Pvt. Ltd.

The Division Bench of Justice Dinesh Mehta and Justice Vinod Kumar observed that the issue was covered by the decision in Ojjus Medicare Pvt. Ltd. The Court observed that the notices issued under Section 153C for Assessment Years 2010-11 to 2013-14 were beyond limitation when computed from the satisfaction note date.

In view of this, the Delhi High Court allowed the writ petitions and quashed the impugned notices issued under Section 153C of the Income Tax Act, 1961 for each of the Assessment Years 2010-11 to 2013-14. Pending applications were also disposed of.

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