Income Tax | Delhi High Court Quashes Section 153C Notice As Time-Barred, Relies On Ojjus Medicare Ruling

The Delhi High Court has quashed a notice issued under Section 153C of the Income Tax Act for Assessment Year (AY) 2016-17, holding that the notice was issued beyond the prescribed limitation period.

The Division Bench of Justices Dinesh Mehta and Aditi Choudhary allowed the writ petition filed by Preeti Chadha, challenging the notice dated July 25, 2022, issued under Section 153C of the Act pursuant to a satisfaction note recorded by the Assessing Officer on June 16, 2022.

Petitioner contended that the notice was beyond the period prescribed under Sections 153A and 153C of the Income Tax Act, as applicable to AY 2016-17. She relied on the High Court's earlier judgment in Principal Commissioner of Income Tax-1 (Central-1) v. Ojjus Medicare Pvt. Ltd., (2024).

The High Court noted that the satisfaction note in Petitioner's case had been recorded on June 16, 2022, which fell in AY 2023-24. It observed that for AY 2016-17, the notice issued on July 25, 2022 was beyond the applicable limitation period of six years, considering that the escaped income was less than ₹50 lakh.

It explained that the limitation had to be calculated backwards from the immediately preceding assessment year, i.e. AY 2022-23, and noted that the sixth year in the backward calculation was AY 2017-18.

“The notice impugned is, thus, time-barred on a plain reading of Sections 153A and 153C of the Act,” the Court held while relying on its decision in Ojjus Medicare.

As such, the Court quashed the impugned notice.

For Petitioner: Advocates Ananya Kapoor and Utkarsa Gupta, 

For Respondents: Vipul Agrawal, SSC, with Sakshi Shairwal, Akshat Singh, JSCs