Facts of the Case

The writ petitions filed by Alka Agarwal formed part of a large batch of matters decided together by the Delhi High Court arising out of search and seizure operations conducted by the Income Tax Department. Pursuant to the search, the Department issued notices under Sections 153A and 153C of the Income-tax Act, 1961 seeking assessment or reassessment for multiple assessment years, including years extending beyond the normal statutory block period. The petitioner challenged the validity of these notices as being issued without compliance with the mandatory statutory conditions governing extended search assessments.

 Issues Involved

  1. Whether reassessment notices issued pursuant to a search for assessment years beyond the permissible statutory period were legally sustainable.
  2. Whether the extended ten-year period under the Fourth Proviso to Section 153A could be invoked without establishing escaped income of ₹50 lakh or more represented in the form of an asset.
  3. Whether completed assessments could be reopened without fulfillment of jurisdictional requirements.
  4. Whether the satisfaction recorded by the Assessing Officer was sufficient to justify initiation of proceedings.

Petitioner’s Arguments

  • The impugned notices related to assessment years falling outside the legally permissible time frame.
  • The statutory threshold of escaped income of ₹50 lakh or more, represented in the form of an asset, had not been satisfied.
  • The satisfaction recorded by the Assessing Officer lacked credible material demonstrating compliance with the Fourth Proviso to Section 153A.
  • Reopening concluded assessments beyond limitation violated the principle of finality.

Respondent’s Arguments

  • Search assessment provisions constitute a special regime independent of ordinary reassessment proceedings.
  • The statute permits reopening for up to ten years subject to fulfillment of prescribed conditions.
  • At the stage of issuing notice, determination of escaped income is necessarily tentative and precise quantification is not required.
  • Finality of earlier assessments does not bar proceedings initiated pursuant to a valid search operation.

Court Order / FINDINGS

  • Invocation of the extended ten-year period under the Fourth Proviso to Section 153A is permissible only where escaped income represented in the form of an asset amounts to or is likely to amount to at least ₹50 lakh.
  • The Assessing Officer must record reasons demonstrating satisfaction of this jurisdictional threshold.
  • Notices issued for assessment years beyond the permissible statutory period without fulfilling these conditions are without jurisdiction and liable to be quashed.
  • Although search assessment provisions override ordinary reassessment provisions, they remain subject to statutory safeguards and limitations.

Important Clarification

  • The ₹50-lakh threshold under the Fourth Proviso to Section 153A is a mandatory jurisdictional condition for invoking the extended period.
  • Satisfaction must be evident from the record at the time of issuance of notice.
  • Completed assessments do not enjoy absolute immunity from search-based proceedings, but such proceedings must strictly conform to statutory limits.
  • Search provisions operate as a special code but cannot be used to circumvent legislative safeguards.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772263640_ALKAAGARWALVsDY.COMMISSIONEROFINCOMETAXCENTRALCIRCLE28DELHI.pdf 

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