Court rules that notices issued post-01.04.2021 are invalid for searches initiated after the stipulated date
In a significant judgment, the Madras High Court has quashed multiple notices issued under Section 153C of the Income Tax Act, 1961. The court held these notices invalid as they were issued after the statutory cutoff date of April 1, 2021, for searches initiated post this date.
The case involved multiple writ petitions filed by Shri Harigovind and others against the Assistant Commissioner of Income Tax. The petitioners challenged the validity of notices dated February 7, 2023, which pertained to assessment years 2013-14 to 2019-20. The crux of the dispute revolved around the interpretation of Section 153C, specifically concerning the date of initiation of search.
The petitioners argued that the notices were issued without jurisdiction, claiming that the date of handing over seized materials to the jurisdictional assessing officer (JAO) should be considered the date of initiation of search. In this case, the materials were handed over on November 25, 2022, which falls post the cutoff date of April 1, 2021. Thus, the notices were deemed statutorily barred.
The respondents contended that the search date was January 29, 2019, and hence Section 153C was applicable. They further argued that the first proviso to Section 153C was only relevant for abatement purposes.
However, Justice Krishnan Ramasamy opined that the date of initiation of search under Section 153C should be construed as the date of receiving the books of account or documents by the JAO of the other person. The court referred to the Supreme Court judgment in CIT v. Jasjit Singh, which clarified that the proviso to Section 153C(1) applies not only to abatement but also to all practical purposes, including the determination of the date of initiation of search.
Consequently, the court ruled that the notices issued on February 7, 2023, were unsustainable as they were contrary to the provisions of Sub-Section (3) of Section 153C. The judgment emphasized that for searches initiated after April 1, 2021, the statutory provisions of Section 153C are not applicable.
The judgment marks a significant interpretation of tax law, potentially impacting similar cases where the date of handing over seized materials post-01.04.2021 is contested. The decision underscores the importance of adhering to statutory timelines and the implications of legislative amendments on ongoing proceedings.
Bottom Line:
Income Tax Law - The date of handing over of seized materials to the jurisdictional assessing officer (JAO) of the other person is to be construed as the initiation of search for the purpose of Section 153C of the Income Tax Act, 1961. Any such initiation after 01.04.2021 renders the issuance of notice under Section 153C invalid and statutorily barred.
Statutory provision(s):- Income Tax Act, 1961 Section 153C(1) and (3), Income Tax Act, 1961 Section 132, Income Tax Act, 1961 Section 132A
Shri.Harigovind v. Assistant Commissioner of Income Tax, (Madras) : Law Finder Doc id # 2815218
