[Cites 16, Cited by 0]
Gujarat High Court
Popular Developers vs Assistant Commissioner Of Income Tax, ... on 2 February, 2026
Author: A.S. Supehia
Bench: A.S. Supehia
NEUTRAL CITATION
C/SCA/9109/2022 JUDGMENT DATED: 02/02/2026
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 9109 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
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Approved for Reporting Yes No
✔
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POPULAR DEVELOPERS
Versus
ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(3),
AHMEDABAD
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Appearance:
MS SHRUNJAL T SHAH(10617) for the Petitioner(s) No. 1
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 02/02/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. In the present writ petition, the petitioner has prayed for
quashing and setting aside the notice dated 11.03.2022 issued
under Section 153A of the Income-tax Act, 1961 (for short
"the Act") by the respondent - Department seeking to reopen
the income-tax assessment of the petitioner for the
Assessment Year 2011-12. Further, the petitioner also
challenges the order under Section 153A read with Section
143(3) of the Act dated 31.03.2022.
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2 The brief facts giving rise to the filing of the writ petition
are as under:
2.1 The petitioner is a partnership firm carrying on real
estate business. The petitioner filed the return of income for
the year under consideration on 29.07.2011 declaring total
income of Rs.61,719/-.
2.2 The respondent issued a notice dated 11.03.2022 under
Section 153A of the Act for the year under consideration
stating therein that a search was initiated under Section 132
of the Act on 08.10.2020 in the case of the petitioner.
2.3 In response to the notice under Section 153A of the Act,
the petitioner filed the return of income on 25.03.2022
declaring total income of Rs.64,260/- Thereafter, notices
under Section 142(1) of the Act were issued on 12.03.2022
and 20.03.2022 against which the petitioner filed various
details and documents. However, on 31.03.2022, impugned
order was passed making an addition of Rs.8,65,02,100/-.
3. Learned advocate Ms. Shrunjal Shah appearing for the
petitioner, at the outset, has submitted that the impugned
notice is barred by limitation and runs contrary to the
provisions of Section 153A(1)(b) read with Explanation 1 to
Section 153A of the Act. Ms. Shah, learned advocate, has
advanced the following submissions :
3.1 Relying upon Sections 153A and 153C of the Act, he
would submit that notices under Sections 153A / 153C of the
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Act can be issued for a period of "ten assessment years"
immediately preceding the assessment year relevant to the
previous year in which search is carried out and for the
"relevant assessment years", subject to fulfillment of certain
conditions.
3.2 It is submitted that the "relevant assessment year"
means an assessment year preceding the assessment year
relevant to the previous year in which search is carried out 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".
4. It is submitted that in the instant case, the search action
was carried out in the case of the third party on 08.10.2020,
i.e. during the Financial Year 2020-21, and hence the relevant
assessment year to the previous year in which the search was
undertaken under Section 132 of the Act is Assessment Year
2021-22. It is further submitted that the notice under Section
153A of the Act for the Assessment Year 2011-12 would be
time-barred, as the period of ten years would end at
Assessment Year 2012-13, since the Assessment Year 2021-22
will become the first assessment year as per the provisions of
Sections 153A - 153C of the Act.
4.1 In support of his submissions, learned Senior Advocate
Mr. Hemani has placed reliance on the judgment of the Delhi
High Court in the case of Dinesh Jindal vs. Assistant
Commissioner of Income Tax, Central Circle 20, Delhi & Ors.,
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being Writ Petition (Civil) No. 12091 of 2023 decided on
27.05.2024. Reliance is also placed on the judgment of the
Delhi High Court in the case of Principal Commissioner of
Income-tax (Central-1) vs. Ojjus Medicare (P) Ltd., [2024] 161
taxmann.com 160 (Delhi). Finally, he has also placed reliance
on the judgment of the Madras High Court, Bench at Madurai,
dated 24.03.2021 passed in Writ Petition (MD) No. 4327 of
2021.
4.2 Thus, it is urged that the impugned notice may be set
aside.
5. The writ petition is vehemently opposed by the learned
Senior Standing Counsel Mr. Varun Patel appearing for the
respondent - Department, by contending that if the issue
raised in the present petition is answered in favour of the
assessee, it will have wide ramifications. We have heard them
at length. The following submissions are made by the learned
Senior Standing Counsels appearing on behalf of the revenue:
5.1 While referring to Explanation (1) to Section 153A of the
Act, it is contended that the "relevant assessment year" which
finds place in the provisions of Section 153A(b) of the Act
cannot be construed by adopting two different methodologies
- one wherein, for calculating the six assessment years, the
period would start from the previous year in which such
search is conducted or requisition is made, and for the very
same assessee, if it is found that the income of Rs.50 lakhs
has escaped, for calculating ten years, the first assessment
year has to be ignored. It is submitted that the expression
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"from the end of the assessment year" as mentioned in
Explanation (1) to Section 153A of the Act would mean that it
would commence from 1st April, and if we go backwards, in
the present case, the reopening of the assessment for the year
2015-16 would get encompassed within a period of ten years.
5.2 While placing reliance on the notes of the legislature
relating to the provisions of Section 153A and Explanation (1)
to Section 153A of the Act, it is contended that the word "end"
is missing, and hence it is contended that the intention of the
legislature was to exclude the word "end" from the statute. It
is further contended that if appropriate calculation is made,
the calculation of ten years of assessment years under
Explanation (1) to Section 153A of the Act would include the
previous year as per the provisions of Section 153A(1)(b) of
the Act. It is contended that considering the memorandum
and explanatory note of the Finance Act, 2017, the intention
of the legislature, even for the purpose of calculating ten
years, is to exclude the search year and it is always six plus
four years, and therefore "end" is to be construed as 1st April
for going backward.
5.3 An attempt is also made to distinguish the judgment of
the Delhi High Court in the case of Ojjus Medicare (supra),
by submitting that two methods cannot be adopted for
computation of the six-year block period as mentioned in
Sections 153A and 153C of the Act and for calculation of the
ten-year block period by excluding the previous year from
computation of ten years. Thus, it is urged that this Court may
take a different view, disagreeing with the judgments of the
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Delhi High Court as well as the Kerala High Court, and it is
urged that the action of the respondent may be upheld for
reopening the Assessment Year 2011-12.
ANALYSIS AND OPINION :
6. We have heard the learned advocates at length. We have
also perused the case laws cited above and have considered
the provisions threadbare.
7. The facts which are established from the pleadings are
that a search action under Section 132A of the Act was taken
against the petitioner on 08.10.2020, which indubitably falls
in the Financial Year 2020-21. The revenue found some
incriminating material and accordingly issued the impugned
notice under Section 153A of the Act for reopening the
assessment for the year 2011-12. The notice has been issued
under Section 153A of the Act. Since the search is prior to
31.03.2021, the provisions of Sections 153A and 153C of the
Act are applicable.
8. In the present case, the notice under Section 153A of the
Act emanates from the search proceedings undertaken under
Sections 132 / 132A of the Act, and hence the provisions of
Sections 153A and 153C of the Act would get attracted, and
the search assessment of the petitioner has to be examined by
keeping in mind the limitation provided under Section 153A of
the Act.
8.1 At this stage, we may refer to the provisions of Section
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153A(1)(b) and Explanation (1) to Section 153A of the Act, on
which the learned advocates have premised their submissions.
Section 153A(1)(b) and Explanation (1) to Section 153A of the
Act read as under:
"SECTION 153A
Assessment in case of search or requisition.
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 or books of account, other documents or any assets are
requisitioned under section 132A after the 31st day of May, 2003,
the Assessing Officer shall-
XXX XXX XXX
(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
Provided also that the Central Government may by rules made by it
and published in the Official Gazette (except in cases where any
assessment or reassessment has abated under the second provisoj,
specify the class or classes of cases 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
Provided also that no notice for assessment reassessment shall be
issued by the Assessing Officer for the relevant assessment year or
years unless-
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(a) the Assessing Officer has in his possession books of account or
other documents or evidence which reveal that the income,
represented in the form of asset, which has escaped assessment
amounts to or is likely to amount to fifty lakh rupees or more in the
relevant assessment year or in aggregate in the relevant
assessment years,
(b) the income referred to in clause (a) or part thereof has escaped
assessment for such year or years, and
(c) the search under section 132 is initiated or requisition under
section 132A is made on or after the 1st day of April, 2017
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 ."
8.2 The provisions of Sections 153A / 153C of the Act find
place in the proviso to Section 149 of the Act and, hence, the
limitation as provided in Sections 153A / 153C of the Act gets
triggered upon the initiation of assessment proceedings
emanating from a search under Sections 132 / 132A of the
Act. We may, at this stage, mention that the Delhi High Court
as well as the Madras High Court has already considered the
implications of Explanation (1) to Section 153A of the Act to
the limitation and the expression "relevant assessment year"
used therein in Explanation (1) to Section 153A of the Act.
The Delhi High Court, in the case of Ojjus Medicare (supra),
after considering an array of judgments of other High Courts
as well as of the Supreme Court and upon a threadbare
consideration and analysis of the statutory provisions of
Sections 153A, 148 and 149 of the Act, has held thus:
"88 Section 153A replicates the basis on which the six AYs' are
to be identified and computed with the solitary distinction being
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that in the case of the searched person, the six AYs' are liable to be
computed from the AY pertaining to the FY in which the search
was conducted. The starting point for the purpose of identifying
the six AYs' in the case of section 153A would thus turn upon the
year of search as opposed to the handover of material which is
spoken of in the First Proviso to section 153C. If one were to
therefore assume that a search took place on a person between 01
April 2021 to 31 March 2022, the pertinent AY would become AY
2022-23 and the corresponding six AYs' would by as follows:
Computation of the six-year block period as No of years
provided under section 153C of the Act
89. That takes us then to the issue of identifying the "relevant
assessment year" for the purposes of computing the ten year block.
Explanation 1 to section 153A specifies the manner in which the
entire ten AY period is to be computed. While the computation of
six AYs follows the position as enunciated and identified above,
Explanation I prescribes that the ten AYs' would have to be
computed from the end of the AY relevant to the FY in which the
search was conducted or requisition made The ten AY period
consequently is to be reckoned from the end of the AY
pertaining to the previous year in which the search was
conducted as distinct from the preceding year which is
spoken of in the case of the six relevant AYs.
90. Viewed in that light, and while keeping the period of 01 April
2021 to 31 March 2022 as the constant, the relevant AY would be
AY 2022-23. The ten AYs would have to be computed from 31
March 2023 with the said date indubitably constituting the end of
the AY relevant to the previous year of search. Viewed in light of
the above, the block period of 10 AYs would be as follows.-
Computation of the six-year block period No of years
as provided under section 153C read
with Section 153A of the Act
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91 Tested on the aforesaid precepts, it would be manifest that
AY 2022-23 would form the first year of the block of ten AYs'
terminating in AY 2013-14. We, in this regard also bear in
consideration the following instructive passages as appearing in
the decision handed down by a learned Judge of the Madras High
Court in A.R.Safiullah. We deem it appropriate to extract the
following paragraphs from that decision:-
"9 Explanation-I is clear as to the manner of computation of the
ten assessment years. It clearly and firmly fixes the starting point.
It is the end of the assessment year relevant to the previous year in
which search is conducted or requisition is made. There cannot be
any doubt that since search was made in this case on 10.04.2018,
the assessment year is 2019-20. The end of the assessment year
2019-20 is 31.03.2020. The computation of ten years has to run
backwards from the said date i.e. 31.03.2020. The first year will of
course be the search assessment year itself. In that event, the ten
assessment years will be as follows:
1st Year 2019-20
2nd Year 2018-19
3rd Year 2017-18
4th Year 2016-17
5 Year
th
2015-16
6 Year
th
2014-15
7th Year 2013-14
8th Year 2012-13
9 Year
th
2011-2012
10th Year 2010-2011
The case on hand pertains to AY 2009-10. It is obviously
beyond the ten year outer ceiling limit prescribed by the statute.
The terminal point is the tenth year calculated from the end of the
assessment year relevant to the previous year in which search is
conducted. The long arm of the law can go up to this terminal point
and not one day beyond. When the statute is clear and admits of no
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ambiguity, it has to be strictly construed and there is no scope for
looking to the explanatory notes appended to statute or circular
issued by the department.
10. In the case on hand, the statute has prescribed one mode
of computing the six years and another mode for computing
the ten years. Section 153A(1)(b) states that the assessing
officer shall assess or reassess the total income of six years
immediately preceding the assessment year relevant to the
previous year in which search is conducted. Applying this
yardstick, the six years would go up to 2013-14. The search
assessment year, namely, 2019-20 has to be excluded. This is
because, the statute talks of the six years preceding the search
assessment year. But, while computing the ten assessment years,
the starting point has to be the end of the search assessment year.
In other words, search assessment year has to be including in the
latter case. It is not for me to fathom the wisdom of the parliament.
I cannot assume that the amendment introduced by the Finance
Act, 2017 intended to bring in four more years over and above the
six years already provided within the scope of the provision. When
the law has prescribed a particular length, it is not for the court to
stretch it. Plasticity is the new mantra in neuroscience, thanks to
the teachings of Norman Doidge. It implies that contrary to settled
wisdom, even brain structure can be changed. But not so when it
comes to a provision in a taxing statute that is free of ambiguity
Such a provision cannot be elastically construed.
11. One other contention urged by the standing counsel has to be
dealt with. It is pointed out that the petitioner has invoked the writ
jurisdiction at the notice stage Since the petitioner has
demonstrated that the subject assessment year lies beyond the
ambit of the provision, the respondent has no jurisdiction to issue
the impugned notice Once lack of jurisdiction has been established,
the maintainability of the writ petition cannot be in doubt."
In our considered opinion, the decision in A.R Safiullah correctly
expounds the legal position and the interpretation liable to be
accorded to the identification of the ten AYs which are spoken of in
sections 153A and 153C."
8.3 Thus, it is precisely held hereinabove that the statute
prescribes different modes of computation for six years and
ten years. We reiterate that the provisions of Section 153A(1)
(b) of the Act stipulate that the Assessing Officer shall assess
or reassess the total income of six years immediately
preceding the assessment year relevant to the previous year
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in which the search is conducted. However, the ten
assessment year period, consequently, is to be reckoned from
the end of the assessment year pertaining to the previous year
in which the search was conducted, as distinct from the
preceding year which is spoken of in the case of the six
relevant assessment years. Thus, the contention with regard
to the computation of six years as well as ten years under the
provisions of Section 153A of the Act has already been gone
into by the Delhi High Court as well as the Madras High
Court, and we have no convincing reason to take a divergent
view from the view expressed hereinabove. Applying the
aforesaid computation to the facts of the present case, taking
the date of the search as 08.10.2020 during the Financial Year
2020-21, the Assessment Year 2021-22 will become the first
assessment year and, in the same manner, the Assessment
Year 2012-13 will become the tenth assessment year. Thus,
the year under consideration, namely, Assessment Year 2011-
12, for which the impugned notice has been issued under
Section 153A of the Act, would fall beyond the period of ten
years prescribed under the statute as it stood immediately
before the commencement of the Finance Act, 2021, and
hence, on this count, the impugned notice can be said to be
barred by limitation. The impugned order dated 31.03.2022
passed pursuant to the said notice is also illegal and barred by
limitation.
9. For the foregoing reasons, the impugned notice dated
11.03.2022 issued under Section 153A of the Income-tax Act,
1961 by the respondent - Department pursuant to search in
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the case of the petitioner on 08.10.2020 and the impugned
order under Section 153A read with Section 143(3) of the Act
dated 31.03.2022 for Assessment Year 2011-12 are hereby
quashed and set aside. The petition is allowed accordingly.
RULE is made absolute accordingly, with no order as to costs.
(A. S. SUPEHIA, J)
(PRANAV TRIVEDI,J)
SAJ GEORGE
