Bombay High Court
Ashok Khandelwal vs Union Of India on 4 November, 2025
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
2025:BHC-OS:20373-DB
8-WP-5412-2024.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 5412 OF 2024
Ashok Khandelwal .. Petitioner
Versus
Union of India and Ors. .. Respondents
Adv. Naresh Jain, a/w Adv. Mahaveer Jain and Adv. Shobhit
Mishra i/b Adv. Neha Anchlia, for the Petitioner.
Adv. Akhileshwar Sharma (through V.C.), for the Respondent.
CORAM: B. P. COLABAWALLA &
AMIT S. JAMSANDEKAR, JJ.
DATE: NOVEMBER 4, 2025
P. C.
1. Rule. Respondents waive service. With the consent of the parties,
Rule is made returnable forthwith and heard finally.
2. The above Writ Petition is filed seeking to quash the impugned
notice issued by Respondent No.2 under Section 153C of the Income Tax Act,
1961 (for short "the Act") dated 1st November 2022. The notice pertains to
Assessment Year 2010-11. As a consequence, the Petitioner also challenges
the notice dated 5th December 2023 issued under Section 142(1) of the Act
by Respondent No.3 for the Assessment Year 2010-11.
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3. A number of contentions have been raised in the Petition. Mr.
Jain, the learned Counsel for the Petitioner, submits that one of the grounds
on which the notice dated 1st November 2022 issued under Section 153C is
challenged is that the said notice is time barred. He further submits that if
this Court finds that the notice is time barred then other contentions would
become merely academic.
4. Mr. Jain submits that during the course of search proceedings
conducted on 18th October 2019 under Section 132 of the Act on the Alankit
Group of Companies (the searched person/party), certain
materials/documents allegedly relating to the Petitioner (the other
person/party) were found. The Assessing Officer of the searched person
prepared a satisfaction note dated 24th June 2022 under Section 153C of the
Act as it stood at the relevant time in respect of the Petitioner (other person)
pertaining to Financial Years 2009-10, 2010-11 and 2013-14. This
correspondingly relates to Assessment Years 2010-11, 2011-12 and 2014-15.
The satisfaction note so prepared was thereafter forwarded to the Assessing
Officer of the Petitioner.
5. The Assessing Officer of the Petitioner, acting upon the
satisfaction note so received, issued a notice dated 1st November 2022 under
Section 153C of the Act for the Assessment year 2010-11. It is the contention
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of the Petitioner that the said notice dated 1st November 2022 is prima facie
time barred as reopening under Section 153C is done beyond 10 years from
the date of recording of the satisfaction note as well as from the issuance of
the notice under Section 153C. The learned Counsel brings to the attention
that the satisfaction note for the transfer of documents from the Assessing
Officer of the searched party to the Assessing Officer of the Petitioner was
recorded on 24th June 2022, as is clear from Exhibit-E. Subsequently, notice
under Section 153C was issued on 1st November 2022. Section 153C of the
Act permits reopening of maximum 10 years from the end of the Assessment
Year in which documents found in the course of search is transferred by the
Assessing Officer of the searched party to the Assessing Officer of the other
party.
6. In support of this contention, the learned Counsel for the
Petitioner placed reliance upon the judgment of the Hon'ble Supreme Court
in Commissioner of Income Tax v. Jasjit Singh [[2023] 155
taxmann.com 155 (SC)]. The learned Counsel also relied upon the
judgment of the Hon'ble Delhi High Court in the case of Principal
Commissioner of Income Tax v. Ojjus Medicare Pvt. Ltd. [2024
(4) TMI 268].
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7. Mr. Sharma, the learned Counsel appearing on behalf of the
Revenue, sought to justify the issuance of the notice under Section 153C by
referring to the averments made in the Affidavit-in-Reply filed on behalf of
the Revenue.
8. We have heard the parties. With their assistance, we have also
perused the documents. We find that the satisfaction note drawn under
Section 153C of the Act by the Assessing Officer of the searched person is
dated 24th June 2022. As per the satisfaction note, the incriminating
material in respect of the Petitioner was found in the Financial Year 2009-10,
2010-11 and 2013-14. The present Petition pertains to the Assessment Year
2010-11, which corresponds to the Financial Year 2009-10.
9. Section 153C of the Act reads as under:-
"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 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
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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 :"
10. As per Section 153C, if during the course of search action on
some assessee, incriminating documents or material is found concerning a
third party, the case can be reopened for six assessment years and "relevant
assessment years" preceding the previous year in which the search is
conducted. The term "relevant assessment year" is defined in Explanation 1
to Section 153A, which is reproduced hereinbelow:-
"Explanation 1.--For the purposes of this sub-section, the expression
"relevant assessment year" shall mean an assessment year preceding
the assessment year relevant to the previous year in which search is
conducted or requisition is made which falls beyond six assessment
years but not later than ten assessment years from the end of the
assessment year relevant to the previous year in which search is
conducted or requisition is made."
11. As per the above explanation, the maximum period for
reopening cannot be later than 10 Assessment Years from the end of the
Assessment Year in which the search is conducted. The first proviso to
Section 153C provides that the date of search under Section 132 shall be
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construed as the date of receiving the books of accounts or documents by the
Assessing Officer having jurisdiction over such other person.
12. Thus, the issue in the present Petition is narrow and is limited to
the computation of the relevant assessment year as given in Explanation 1 of
Section 153A of the Act, for which an assessment order can be made under
Section 153C of the Act.
13. This issue came for consideration before the Hon'ble Supreme
Court in the case of Jasjit Singh (supra). The issue before the Hon'ble
Supreme Court in the case was whether the period of issuance of notice under
Section 153C should commence: (a) only from the date the materials were
forwarded to the Assessing Officer of the third party; or (b) from the date the
search and seizure proceedings were conducted, in respect of the main
assessee under Section 132. This has been set out in paragraph 4 of the
judgment, which is reproduced hereunder:-
"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."
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14. The Hon'ble Supreme Court, in the said judgment, held that the
time period for issuing notice under Section 153C should commence from the
end of the Assessment Year in which the records are transferred to the
Assessing Officer of the third party by the Assessing Officer of the searched
party. The relevant portion of the judgment which is reproduced hereunder:-
"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 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."
15. The Hon'ble Delhi High Court in the case of Ojjus Medicare Pvt.
Ltd. (supra) in its elaborate judgment, has taken the same view following the
above referred decision of the Hon'ble Supreme Court. In the case before the
Hon'ble Delhi High Court, the issue was identical to the present Petition. In
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that case also the searched party was the Alankit Group of Companies, i.e.
same as that of the Petitioner. The documents and records seized from the
premises of the Alankit Group of Companies pertained to the Petitioner
therein, M/s Ojjus Medicare Pvt. Ltd. Though the search was conducted on
the Alankit Group of Companies on 18th October 2019, the notice under
Section 153C was issued after the transfer of records to the Assessing Officer
of the third party. The question before the Hon'ble Delhi High Court was at
what point of time the limitation for the issue of notice under Section 153C
commences. Whether the relevant date commences from the date of search
(i.e. 18th October 2019), or the date of transfer of record to the Assessing
Officer of the third party. In paragraph 78 of the aforesaid judgment, the
Hon'ble Delhi High Court relied upon the judgment of the Hon'ble Supreme
Court in the case of Jasjit Singh (supra). Thereafter, the Hon'ble Delhi High
Court concluded that the period of limitation for issuing notice under Section
153C shall commence from the end of the Assessment Year in which records
are transferred to the Assessing Officer of the third party by the Assessing
Officer of searched party. The relevant portion of the judgment is reproduced
hereunder:-
"119. We thus record our conclusions as follows:
...
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D. The First Proviso to section 153C introduces a legal fiction on the
basis of which the commencement date for computation of the six year or
the ten year block is deemed to be the date of receipt of books of
accounts by the jurisdictional AO. The identification of the starting block
for the purposes of computation of the six and the ten year period is
governed by the First Proviso to Section 153C, which significantly shifts
the reference point spoken of in section 153A(1), while defining the point
from which the period of the "relevant assessment year" is to be
calculated, to the date of receipt of the books of accounts, documents or
assets seized by the jurisdictional AO of the non-searched person. The
shift of the relevant date in the case of a non-searched person being
regulated by the First Proviso of Section 153C(1) is an issue which is no
longer res integra and stands authoritatively settled by virtue of the
decisions of this Court in SSP Aviation and RRJ Securities as well as the
decision of the Supreme Court in Jasjit Singh. The aforesaid legal
position also stood reiterated by the Supreme Court in Vikram
Sujitkumar Bhatia. The submission of the respondents, therefore, that the
block periods would have to be reckoned with reference to the date of
search can neither be countenanced nor accepted.
...
120. In view of the aforesaid discussion, the writ petitions placed in Lists
I and II and pertaining to AYs' 2010- 11, 2011-12, 2012-13 and 2013-14,
all of which fall beyond the maximum ten year block period shall stand
allowed. The impugned notices pertaining to the aforenoted AYs' shall
consequently stand quashed."
16. In the facts of the present case, admittedly, the impugned notice
issued by Respondent No.2 under Section 153C of the Act pertains to
Assessment Year 2010-11, which is beyond the maximum period of 10 years
as mandated under Section 153C. Finding that the issue raised in the present
Writ Petition is squarely covered by the aforesaid decisions, we allow the
above Writ Petition in terms of prayer clause (b) and (c), which read thus:-
"(b) that this Hon'ble Court be pleased to issue a writ of Certiorari
or a writ in the nature of Certiorari or any other appropriate writ under
Article 226 of the Constitution of India, calling for records pertaining to
the impugned notice issued by the Respondent No.2 u/s 153C of the Act
dated 01.11.2022 for the AY 2010-11 (being Exhibit 'B' hereto) and after
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going into the validity and legality thereof to quash and set aside the
same.
(c) That this Hon'ble Court be pleased to issue a writ of Certiorari
or a writ in the nature of Certiorari or any other appropriate writ under
Article 226 of the Constitution of India, calling for records pertaining to
the impugned notice issued by the Respondent No.3 u/s 142(1) of the Act
dated 05.12.2022 for the AY 2010-11 (being Exhibit 'C' hereto) and after
going into the validity and legality thereof to quash and set aside the
same."
17. Rule is made absolute in the aforesaid terms, and the Writ
Petition is also disposed of in terms thereof. However, there shall be no order
as to costs.
18. This order will be digitally signed by the Private Secretary/
Personal Assistant of this Court. All concerned will act on production by fax
or email of a digitally signed copy of this order.
[AMIT S. JAMSANDEKAR, J.] [B. P. COLABAWALLA, J.]
NOVEMBER 4, 2025
Darshan Patil
Signed by: Darshan Patil
Designation: PA To Honourable Judge
Date: 10/11/2025 11:03:34
