The Delhi High Court has set aside a tax assessment against a company, specifying that proceedings begin because the material discovered during search proceedings was barred by limitation.
The Division Bench of Justices Dinesh Mehta and Aditi Choudhary said that the satisfaction note in the case was recorded on June 25, 2021, for AY 2022-23, and the impugned order dated March 30, 2023, is for AY 2010-11.
The applicant claimed that the impugned order had been passed after the limitation period mentioned under section 153A and section 153C of the Income Tax Act, as applicable at the relevant time.
It said that the issue fell under the ruling of the Delhi HC in Principal Commissioner of Income Tax-1 (Central-1) v. Ojjus Medicare Pvt. Ltd. (2024).
The Income Tax Department did not have any objection to the factual position but notified the Court that a Special Leave Petition against the Ojjus Medicare judgment had been filed before the Supreme Court.
As the satisfaction note was recorded on June 25, 2021, i.e. in AY 2022-23, the limitation period for AY 2010-11 should be computed backwards from AY 2022-23, the High Court observed.
Since the allegedly concealed income exceeded ₹50 lakh, the applicable time limit was 10 years. The Court observed that counting backwards from AY 2022-23, the tenth year was AY 2013-14.
Read Also: Delhi HC Directs Opening of Taxpayer’s Locker Seized for More Than 30 Years
“It does not need much discussion that as the satisfaction note was recorded on 25.06.2021, i.e. in the assessment year 2022-23, the order passed on 30.03.2023 qua assessment year 2012-13 is clearly beyond the limitation period (wh/ich shall be 10 years as the escaped income is more than Rs.50,00,000/-), if calculated backward from assessment year 2022-23.,” the Court held and set aside the impugned order.
| Case Title | Consistent Builders Pvt. Ltd. Vs ACIT |
| Case No. | W.P.(C) 6221/2023 |
| For Petitioner | Mr P. Roychaudhuri, Mr Gagan Gupta |
| For Respondent | Mr Ruchir Bhatia, Mr Anant Mann, Mr Pratyaksh Gupta |
| Delhi High Court | Read Order |
