Facts of the Case
The case formed part of a batch of writ petitions challenging
notices issued under Section 153C of the Income Tax Act, 1961 to various
assessees, including Saksham Commodities Limited. The petitioners contended
that the notices were issued without any incriminating material discovered
during the course of search pertaining to the relevant assessment years sought
to be reopened.
The petitions arose from searches conducted on certain
entities, following which the Assessing Officer initiated proceedings against
“other persons” on the basis of satisfaction notes. However, according to the
petitioners, the material relied upon either did not pertain to them or did not
relate to the specific assessment years in question.
Issues Involved
- Whether
jurisdiction under Section 153C can be assumed without incriminating
material relating to the specific assessment year.
- Whether
discovery of material pertaining to one year justifies reopening of
multiple preceding years.
- Scope
of assessment of “other persons” under Section 153C vis-à-vis Section
153A.
- Validity
of proceedings where satisfaction notes are absent or not supplied.
Petitioner’s Arguments
The petitioners argued that Section 153C can be invoked only
where material seized during search belongs to or pertains to the non-searched
person and has a bearing on determination of income for a particular assessment
year.
It was contended that mere discovery of material relating to
one year cannot justify reopening of all six preceding years or the entire
block period. For completed assessments, reopening is permissible only if
incriminating material specific to that year exists.
In several cases, petitioners asserted that satisfaction notes
were not furnished or did not demonstrate any nexus between seized material and
the relevant assessment year.
Respondent’s Arguments
The Revenue contended that once incriminating material
relating to the non-searched person is found during search, proceedings under
Section 153C can be initiated for all assessment years falling within the
statutory block period.
It was argued that the statute permits reassessment of total
income for multiple years and that the existence of material is sufficient to
trigger jurisdiction.
Court Order / Findings
- Section
153C proceedings against a non-searched person require existence of
incriminating material discovered during search that pertains to that
person.
- Such
material must have a bearing on determination of income for the specific
assessment year sought to be reopened.
- Discovery
of material relating to one year does not automatically justify reopening
of all other years.
- In
the case of completed assessments, additions can be made only on the basis
of incriminating material.
- The
requirement applies equally to abated assessments where jurisdiction
itself depends on the existence of relevant material.
- Absence
of satisfaction notes or failure to establish nexus between seized
material and the assessment year vitiates the proceedings.
Important Clarification
The ruling underscores that Section 153C is not a blanket
provision for reassessing multiple years of a non-searched person. Strict
compliance with jurisdictional prerequisites—particularly the existence of
relevant incriminating material—is mandatory.
The decision significantly restricts arbitrary reopening of
completed assessments and reinforces safeguards for taxpayers subjected to
search-related proceedings despite not being the primary subject of search.
Link to download the order – https://www.mytaxexpert.co.in/uploads/1772256096_SAKSHAMCOMMODITIESLIMITEDVsINCOMETAXOFFICERWARD221DELHIANR..pdf
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