Allowed

Sharpi Agarwal v. Income Tax Officer, Ward 34(1), Delhi & Ors.

Delhi HC21 May 2024W.P.(C)/1024/2024

Case brief

AI extract

What is this about?

The Delhi High Court allowed writ petitions challenging notices under Section 153C of the Income Tax Act for AYs 2014-15 and 2015-16. Quashing the notices, the court held that the Satisfaction Note was issued beyond the six-year window and failed to justify the 50-lakh threshold for extended time liền according to the Ojjus Medicare precedent. The AO may re-examine if the threshold is met.

What did the court decide?

Quashed the impugned notice dated 15 November 2022 under Section 153C as it relates to assessment years 2014-15 and 2015-16.

Sharpi Agarwal Vs Income Tax Officer, Ward 34(1), Delhi & Ors. — Income Tax | Delhi HC (2024)

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$~100-101

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IN THE HIGH COURT OF DELHI AT NEW DELHI

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- W.P.(C) 1024/2024 & CM APPL. 4243/2024 (Stay) SHARPI AGARWAL ..... Petitioner

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Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Shivam Yadav, Mr. Tarun Chanana and Ms. Ananya Kapoor, Advocates.

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versus

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INCOME TAX OFFICER, WARD 34(1), DELHI & ORS.

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..... Respondents Through: Mr. Indruj Singh Rai, SSC with Mr. Sanjeev Menon and Mr. Rahul Singh, JSC.

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101

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W.P.(C) 1029/2024 & CM APPL. 4252/2024 (Stay)

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SHARPI AGARWAL ..... Petitioner Through: Mr. Sumit Lalchandani, Mr. Salil Kapoor, Mr. Shivam Yadav, Mr. Tarun Chanana and Ms. Ananya Kapoor, Advocates.

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versus

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INCOME TAX OFFICER, WARD 34(1), DELHI & ORS.

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..... Respondents Through: Mr. Indruj Singh Rai, SSC with Mr. Sanjeev Menon and Mr. Rahul Singh, JSC.

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CORAM:

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HON'BLE MR. JUSTICE YASHWANT VARMA HON'BLE MS. JUSTICE TARA VITASTA GANJU

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O R D E R % 21.05.2024

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/05/2024 at 12:58:14

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These writ petitions have been preferred against the impugned notices dated 15 November 2022 issued under Section 153C of the Income Tax Act, 1961 [“ Act ”] for Assessment Years’ [“ AYs ”] 201516 [W.P.(C) 1024/2024] and 2014-15 [W.P.(C) 1029/2024], and all consequential proceedings.

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Bearing in mind the undisputed fact that the Satisfaction Note recorded by the jurisdictional Assessing Officer [“ AO ”] was dated 4 November 2022, it is ex facie evident that the aforenoted AY would fall beyond the window of six preceding AYs’ as provided under Section 153C. An ex facie perusal of the aforenoted Satisfaction Note and the Satisfaction Note dated 14 June 2022 recorded by the AO of the searched person further indicates that the income which is alleged to have escaped assessment for the “ relevant assessment year ” does not exceed INR 50 lakhs. The jurisdictional AO has also failed to record its satisfaction that the escaped income is likely to exceed INR 50 lakhs or more cumulatively for the “ relevant assessment year ”, and thereby fulfilling the threshold requirement as prescribed by the Fourth Proviso to Section 153A.

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The issue in any case stands answered and covered in favour of the writ petitioner in light of the judgment rendered in Principal Commissioner of Income Tax Central – 1 vs. Ojjus Medicare Pvt. Ltd [2024 SCC Online Del 2439]. The relevant paragraphs of the aforesaid decision read as under:-

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““ G. Insofar as the thresholds put in place by virtue of the Fourth Proviso to Section 153A are concerned and the argument of the writ petitioners of the condition of INR 50 lakhs being an unwavering precondition, we find ourselves unable to sustain that submission bearing in mind the indubitable fact that proceedings for search assessment commence upon the issuance of a notice and the AO at that stage having really not had the occasion to undertake a detailed or in depth examination of the evidence collected or come to a

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This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/05/2024 at 12:58:14

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definitive opinion with respect to the total income which may have escaped assessment. Since the computation and assessment of income that is likely to have escaped assessment would at this stage be provisional, it would be incorrect to strike down initiation of action on a mere ex facie examination of the Satisfaction Note. We also in this regard bear in mind the Fourth Proviso using the expression “ amounts to or is likely to amount ”. The usage of the phrase “ likely to ” is indicative of the Legislature being conscious of the provisional character of the opinion that the AO may have formed at that stage.

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H. However, and at the same time, even if the identified asset at that stage be quantified as less than INR 50 lakhs, the AO must for reasons to be duly recorded, be of the opinion that the ultimate computation of escaped income is likely to exceed INR 50 lakhs. The aforesaid satisfaction would have to be based on an assessment of the material gathered and the potentiality of the same being indicative of the escaped assessment exceeding INR 50 lakhs. The formation of opinion in this respect would have to be based not on mere ipse dixit but reflective of a fair assessment of the quantum of income likely to have escaped assessment as distinct from mere speculation and conjecture.

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I. We further hold that since the precondition of INR 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself. We are also of the opinion that the precondition of INR 50 lakhs is not liable to be viewed as being the qualifying criteria for each “ relevant assessment year ” that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of INR 50 lakhs.”

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Accordingly, and for reasons assigned in our decision in Ojjus Medicare Private Limited , while we allow the instant writ petition and quash the impugned notice issued under Section 153C of the Act dated 15 November 2022 insofar as it relates to AYs 2014-15 and 2015-16, we leave it open to the jurisdictional AO to examine the issue afresh bearing in mind the observations appearing in paragraph 3 above.

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In case the jurisdictional AO be of the opinion that the income

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This is a digitally signed order.

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The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/05/2024 at 12:58:14

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alleged to have escaped assessment is likely to exceed INR 50 lakhs in the “ relevant assessment year ”, it would be open to it to draw proceedings afresh, if otherwise permissible in law.

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YASHWANT VARMA, J

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TARA VITASTA GANJU, J

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MAY 21, 2024/ RW

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Sharpi Agarwal v. Income Tax Officer, Ward 34(1), Delhi & Ors.

Case brief

What is this about?

What did the court decide?

Sharpi Agarwal v. Income Tax Officer, Ward 34(1), Delhi & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

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