Summary
The Supreme Court held that, for the third-party assessments in issue under Section 153C, receipt of the seized material by the jurisdictional Assessing Officer governed reckoning of the six-year period. The proviso was not confined to abatement of pending assessments. Relating the period back to the original search despite delayed transmission would unfairly prejudice the third party. The Revenue’s appeals were dismissed.
Issues
- Whether the first proviso to Section 153C(1) affected only abatement or also reckoning of the six-year assessment period.
- Whether that period related to the original search or receipt of material by the third party’s Assessing Officer.
Provisions considered
- Section 153C(1), first proviso, read with Section 153A, Income-tax Act, 1961For the third-party assessments at issue, the receiving Assessing Officer’s receipt of material supplied the relevant reference date for the six-year period as well as abatement. The Revenue’s restriction of the proviso to abatement was rejected. (¶¶ 7, 8, 9, 10)
Held
- The proviso’s purpose was not limited to determining which pending assessments abated. It also governed the reference date for reckoning the six-year period concerning the person whose premises were not searched and whose assessment fell under Section 153C. (¶¶ 8, 9)
- The searched person’s Assessing Officer might delay transmitting material to the third party’s Assessing Officer. Relating the assessment period back to the search in that event would cause disproportionate prejudice and require preservation of records far beyond the ordinary legal requirement. The statutory wording supported use of the receipt date. (¶ 10)
- The Revenue’s proposed interpretation lacked merit, so the judgments sustaining the assessees’ position did not warrant interference. (¶¶ 9, 10, 11)
Result
Revenue’s appeals dismissed without costs; delay in the connected petitions condoned and leave granted.