Court Upholds Tribunal's Decision in Favor of Deepak Kumar Aggarwal, Clarifying Interpretation of Section 153C of Income Tax Act
In a significant judgment, the Delhi High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax (Central), Gurugram, challenging the order of the Income Tax Appellate Tribunal (ITAT) in favor of Deepak Kumar Aggarwal, regarding the computation of assessment years under Section 153C of the Income Tax Act, 1961. The division bench, comprising Justices V. Kameswar Rao and Vinod Kumar, upheld the Tribunal's decision, asserting that the assessment year 2013-14 is outside the purview of Section 153C due to the computation method prescribed by law.
The case originated from a search and seizure operation conducted on November 2, 2017, at the residence of Prahlad Kumar Aggarwal, linked to the Rajesh Jain Group. During this operation, certain documents related to Deepak Kumar Aggarwal were seized and subsequently handed over to the Assessing Officer (AO) of the respondent on June 24, 2021. The AO recorded satisfaction under Section 153C of the Act on the same date, initiating assessment proceedings for the year 2013-14, which concluded with certain additions on December 31, 2022.
Aggrieved by the assessment order, Deepak Kumar Aggarwal appealed to the Commissioner of Income Tax (Appeal)-26, New Delhi, who ruled in his favor on August 16, 2024. The CIT(A) relied on precedents set by various cases, including CIT v. RRJ Securities and CIT v. Singbad Technical Education Society, to determine the computation period for the six assessment years under Section 153C.
The Revenue's appeal to the ITAT was dismissed on May 19, 2025, with the Tribunal agreeing that the six assessment years should be calculated from the date the AO received the seized documents, not from the date of the search operation. Consequently, the assessment year 2013-14 fell outside the permissible period for action under Section 153C.
Before the High Court, Mr. Puneet Rai, representing the appellant, contended that the six years should be calculated from the year of the search, thereby including the assessment year 2013-14. However, the court disagreed, emphasizing the first proviso to Section 153C, which mandates calculation from the date the AO receives the seized documents.
The High Court affirmed that the Tribunal's interpretation aligns with established legal precedents and does not raise any substantial questions of law. The judgment further noted that while the case of PCITs. Central-1 v. Ojjus Medicare Pvt. Ltd. is pending before the Supreme Court, it does not affect the current decision.
The ruling is a definitive statement on the interpretation of Section 153C, clarifying the computation of assessment years post-seizure and reinforcing the procedural guidelines for tax authorities in handling such cases.
Bottom Line:
Income Tax Act, 1961 - Section 153C - Six assessment years for which action can be taken under Section 153C are to be computed from the date of receiving seized documents by the Assessing Officer of the concerned person and not from the date of the search conducted. Assessment year 2013-14 held to be outside the purview of Section 153C due to this computation.
Statutory provision(s): Income Tax Act, 1961 - Section 153C
