COMMISSIONER OF INCOME TAX 14versusJASJIT SINGH

                 [2023] 13 S.C.R. 706 : 2023 INSC 882



                            CASE DETAILS

               COMMISSIONER OF INCOME TAX 14
                                     v.
                             JASJIT SINGH
                     (Civil Appeal No. 6566 of 2023)
                         SEPTEMBER 26, 2023
       [S. RAVINDRA BHAT AND ARAVIND KUMAR, JJ.]
                              HEADNOTES
      Issue for consideration: In search and seizure, the Assessing Officer
was of the opinion that some documents and material “belonging to” the
respondents(s) assessee, were involved – Notice was issued by the concerned
jurisdictional A.Os. to the said assessees who contended that the period for
which they were required to file returns, commenced only from the date the
materials were forwarded to their A.Os.
      Income Tax Act, 1961 – s.153C – The Revenue urged that the date
(relatable to the period for which six years returns were to be filed
by the assessee) was to be from the date when the search and seizure
proceedings were conducted, in respect of the main assessee u/s. 132 –
The Revenue argued that the proviso [to Section 153(c)(1)] is confined
in its application to the question of abatement.
      Held: It is evident on a plain interpretation of Section 153C(1) that
the Parliamentary intent to enact the proviso was to cater not merely to the
question of abatement but also with regard to the date from which the six
year period was to be reckoned, in respect of which the returns were to be
filed by the third party (whose premises are not searched and in respect
of whom the specific provision under Section 153-C was enacted) – The
revenue’s argument is insubstantial and without merit – It is quite plausible
that without the kind of interpretation which SSP Aviation adopted, the A.O.
seized of the materials - of the search party, u/s. 132 - would take his own
time to forward the papers and materials belonging to the third party, to the
concerned A.O – In that event if the date would virtually “relate back” as
is sought to be contended by the revenue, (to the date of the seizure), the
                                      706
   COMMISSIONER OF INCOME TAX 14 v. JASJIT SINGH                         707


prejudice caused to the third party, who would be drawn into proceedings
as it were unwittingly (and in many cases have no concern with it at all), is
dis-proportionate. [Paras 9, 10]

       LIST OF CITATIONS AND OTHER REFERENCES

     SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (2012) 346
ITR 177 – referred to.
       OTHER CASE DETAILS INCLUDING IMPUGNED
              ORDER AND APPEARANCES

     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6566 of 2023.
     From the Judgment and Order dated 11.08.2015 of the High Court of
Delhi at New Delhi in ITA No.337 of 2015.
     With
     Civil Appeal Nos.6567, 6568 and 6589 of 2023.
     Appearances:
     N Venkatraman, A.S.G., Raj Bahadur Yadav, V C Bharathi, A K Kaul,
Priyanka Das, Sabrish Subramanium, Rupesh Kumar, Nisha Bagchi, Anmol
Chandan, Advs. for the Appellant.
    Ajay Vohra, Sr. Adv., K. R. Manjani, Pankaj Kumar Singh, Kailash J.
Kashyap, K. L. Janjani, Ms. Kavita Jha, Ajay Vohra, Udit Naresh, Akash
Shukla, Advs. for the Respondent.

       JUDGMENT / ORDER OF THE SUPREME COURT

                               JUDGMENT
      1. Delay condoned in SLP(C) Dy. No. 30718 of 2023 and all connected
petitions.
     2. Special leave granted. With the consent of the learned counsel for
the parties, the appeals were heard.
      3. In this batch of appeals the revenue questions four sets of orders
of the Delhi High Court, dismissing its appeals under Section 260A of the
708          SUPREME COURT REPORTS                          [2023] 13 S.C.R.


Income Tax Act, 1961 (hereinafter referred to as ‘IT Act’). Though the facts in
each appeal differ, substantially for the purposes of clarity and completeness
the facts in the appeal arising from SLP (C) No.6644 of 2016 are taken into
account. The facts are that search and seizure proceedings were conducted
in the premises of one M/s KOUTON Group on 19.02.2009. In the course
of scrutiny, the concerned Assessing Officer (A.O.) having jurisdiction after
issuing notice under Section 154 A of the IT Act, to the searched party,
was of the opinion that some documents and material “belonging to” the
respondents(s) assessee, were involved. Therefore, notices were issued
to them by the AO having jurisdiction over their assessments on different
dates (i.e. 25.02.2010 in [SLP(C) No. 6644 of 2016 & SLP(C)No. 14447 of
2016], 12.03.2009 in [SLP(C)No. 23621 of 2016] and 11.08.2014 [SLP(C)
Diary No(s). 30718/2023]).
      4. Notice was issued by the concerned jurisdictional A.Os. to the said
assessees who contended that the period for which they were required to file
returns, commenced only from the date the materials were forwarded to their
A.Os. The Revenue, on the other hand, urged that the date (relatable to the
period for which six years returns were to be filed by the assessee) was to
be from the date when the search and seizure proceedings were conducted,
in respect of the main assessee under Section 132.
     5. The impugned order upheld the order of the Income Tax Appellate
Tribunal (hereinafter referred to “ITAT”) which in turn affirmed the
assessee’s arguments.
     6. It is submitted on behalf of the revenue by Ms. Bagchi, learned
counsel that the impugned order is erroneous because the date referred under
proviso to Section 153(1) is relatable to the second proviso to Section 153A,
only as far as it concerns abatement. The revenue relied upon the ruling of
a Division Bench of the Delhi High Court, reported as “SSP Aviation Ltd.
vs. Deputy Commissioner of Income Tax” reported in (2012) 346 ITR 177.
      7. Sections 153A and Section 153C of the Income Tax Act, 1961 to
the extent they are relevant are extracted below:-
         ”153A. (1) Notwithstanding anything contained in section 139,
      section 147, section 148, section 149, section 151 and section 153,
      in the case of a person where a search is initiated under section 132
COMMISSIONER OF INCOME TAX 14 v. JASJIT SINGH                         709


 or books of account, other documents or any assets are requisitioned
 under section 132A after the 31st day of May, 2003 61[but on or before
 the 31st day of March, 2021], the Assessing Officer shall—
 (a) issue notice to such person requiring him to furnish within such
 period, as may be specified in the notice, the return of income in respect
 of each assessment year falling within six assessment years and for
 the relevant assessment year or years referred to in clause (b), in the
 prescribed form and verified in the prescribed manner and setting
 forth such other particulars as may be prescribed and the provisions
 of this Act shall, so far as may be, apply accordingly as if such return
 were a return required to be furnished under section 139;
 (b) assess or reassess the total income of six assessment years
 immediately preceding the assessment year relevant to the previous
 year in which such search is conducted or requisition is made and for
 the relevant assessment year or years:
 Provided that the Assessing Officer shall assess or reassess the total
 income in respect of each assessment year falling within such six
 assessment years and for the relevant assessment year or years:
 Provided further that assessment or reassessment, if any, relating to
 any assessment year falling within the period of six assessment years
 and for the relevant assessment year or years referred to in this sub-
 section pending on the date of initiation of the search under section
 132 or making of requisition under section 132A, as the case may be,
 shall abate:….”
 “153C.(1) Notwithstanding anything contained in section 139, section
 147, section 148, section 149, section 151 and section 153, where the
 Assessing Officer is satisfied that,—
 (a) any money, bullion, jewellery or other valuable article or thing,
 seized or requisitioned, belongs to; or
 (b) any books of account or documents, seized or requisitioned,
 pertains or pertain to, or any information contained therein, relates to,
 a person other than the person referred to in section 153A, then, the
 books of account or documents or assets, seized or requisitioned shall
710          SUPREME COURT REPORTS                        [2023] 13 S.C.R.


      be handed over to the Assessing Officer having jurisdiction over such
      other person and that Assessing Officer shall proceed against each
      such other person and issue notice and assess or reassess the income
      of the other person in accordance with the provisions of section
      153A, if, that Assessing Officer is satisfied that the books of account
      or documents or assets seized or requisitioned have a bearing on
      the determination of the total income of such other person for six
      assessment years immediately preceding the assessment year relevant
      to the previous year in which search is conducted or requisition is
      made and for the relevant assessment year or years referred to in
      sub-section (1) of section 153A:
      Provided that in case of such other person, the reference to the date
      of initiation of the search under section 132 or making of requisition
      under section 132A in the second proviso to sub-section (1) of section
      153A shall be construed as reference to the date of receiving the
      books of account or documents or assets seized or requisitioned by
      the Assessing Officer having jurisdiction over such other person :
      Provided further that the Central Government may by rules made by
      it and published in the Official Gazette, specify the class or classes of
      cases in respect of such other person, in which the Assessing Officer
      shall not be required to issue notice for assessing or reassessing
      the total income for six assessment years immediately preceding
      the assessment year relevant to the previous year in which search is
      conducted or requisition is made and for the relevant assessment year
      or years as referred to in sub-section (1) of section 153A except in
      cases where any assessment or reassessment has abated.”
     8. In SSP Aviation (supra) the High Court inter alia reasoned as
follows:-
      “14. Now there can be a situation when during the search conducted
      on one person under Section 132, some documents or valuable assets
      or books of account belonging to some other person, in whose case
      the search is not conducted, may be found. In such case, the Assessing
      Officer has to first be satisfied under Section 153C, which provides for
      the assessment of income of any other person, i.e., any other person
      who is not covered by the search, that the books of account or other
   COMMISSIONER OF INCOME TAX 14 v. JASJIT SINGH                           711


     valuable article or document belongs to the other person (person
     other than the one searched). He shall hand over the valuable article
     or books of account or document to the Assessing Officer having
     jurisdiction over the other person. Thereafter, the Assessing Officer
     having jurisdiction over the other person has to proceed against him
     and issue notice to that person in order to assess or reassess the income
     of such other person in the, manner contemplated by the provisions of
     Section 153A. Now a question may arise as to the applicability of the
     second proviso to Section 153A in the case of the other person, in order
     to examine the question of pending proceedings which have to abate.
     In the case of the searched person, the date with reference to which the
     proceedings for assessment or reassessment of any assessment year
     within the period of the six assessment years shall abate, is the date
     of initiation of the search under Section 132 or the requisition under
     Section 132A. For instance, in the present case, with reference to the
     Puri Group of Companies, such date will be 5.1.2009. However, in the
     case of the other person, which in the present case is the petitioner
     herein, such date will be the date of receiving the books of account
     or documents or assets seized or requisition by the Assessing Officer
     having jurisdiction over such other person. In the case of the other
     person, the question of pendency and abatement of the proceedings
     of assessment or reassessment to the six assessment years will be
     examined with reference to such date.”
      9. It is evident on a plain interpretation of Section 153C(1) that the
Parliamentary intent to enact the proviso was to cater not merely to the
question of abatement but also with regard to the date from which the six
year period was to be reckoned, in respect of which the returns were to be
filed by the third party (whose premises are not searched and in respect of
whom the specific provision under Section 153-C was enacted. The revenue
argued that the proviso [to Section 153(c)(1)] is confined in its application
to the question of abatement.
      10. This Court is of the opinion that the revenue’s argument is
insubstantial and without merit. It is quite plausible that without the kind of
interpretation which SSP Aviation adopted, the A.O. seized of the materials –
of the search party, under Section 132 – would take his own time to forward
712            SUPREME COURT REPORTS                        [2023] 13 S.C.R.


the papers and materials belonging to the third party, to the concerned A.O.
In that event if the date would virtually “relate back” as is sought to be
contended by the revenue, (to the date of the seizure), the prejudice caused to
the third party, who would be drawn into proceedings as it were unwittingly
(and in many cases have no concern with it at all), is dis-proportionate.
For instance, if the papers are in fact assigned under Section 153-C after a
period of four years, the third party assessee’s prejudice is writ large as it
would have to virtually preserve the records for at latest 10 years which is
not the requirement in law. Such disastrous and harsh consequences cannot
be attributed to Parliament. On the other hand, a plain reading of Section
153-C supports the interpretation which this Court adopts.
     11. For the foregoing reasons, the Court finds no merit in these appeals;
they are accordingly dismissed, without order on costs.



Headnotes prepared by:                                         Appeals dismissed.
Ankit Gyan