The Supreme Court of India in Commissioner of Income Tax v. Jasjit Singh (2023 INSC 882) examined the correct interpretation of Sections 153A and 153C of the Income Tax Act, 1961, particularly concerning the starting point for reckoning the six assessment years in the case of a person other than the searched person.

The appeals arose out of search and seizure proceedings conducted under Section 132 in the case of a third party, during which certain documents and materials allegedly belonging to the respondent assessee were found. Based on such material, notices were issued to the respondent under Section 153C. The dispute centered on whether the six-year period for filing returns and reassessment should be computed from the date of initiation of search in the case of the searched person or from the date on which the seized material was received by the Assessing Officer having jurisdiction over the respondent assessee.

The Revenue contended that the relevant date should relate back to the date of search under Section 132, whereas the assessee argued that the statutory proviso to Section 153C mandates computation of the six-year period from the date of receipt of documents by the jurisdictional Assessing Officer.

The Income Tax Appellate Tribunal accepted the assessee’s contention, which was affirmed by the Delhi High Court. Upholding these decisions, the Supreme Court held that the proviso to Section 153C is not confined merely to the issue of abatement but also governs the reckoning of the six assessment years for which returns may be called for from a third party.

The Court relied upon and approved the reasoning in SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 346 ITR 177 (Delhi), observing that any contrary interpretation would lead to serious prejudice to third-party assessees, who may otherwise be exposed to reassessment proceedings long after the search, without any fault on their part.

The Supreme Court concluded that Parliament did not intend such harsh and disproportionate consequences and that a plain and purposive interpretation of Section 153C requires the six-year period to be reckoned from the date the seized material is handed over to the Assessing Officer having jurisdiction over the other person. Accordingly, the appeals filed by the Revenue were dismissed.

SOURCE LINK

https://api.sci.gov.in/supremecourt/2016/6379/6379_2016_8_26_47226_Judgement_26-Sep-2023.pdf

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