Case Note & Summary
The present appeals arise from a common judgment of the Gujarat High Court which quashed notices under Section 153C of the Income Tax Act, 1961 and set aside consequent assessment orders. The High Court held that the amendment to Section 153C by the Finance Act, 2015, effective from 01.06.2015, would not apply to searches conducted under Section 132 before that date. The Revenue appealed to the Supreme Court. The lead case involved an individual assessee who filed his return for A.Y. 2012-13. A search was conducted on the H.N. Safal Group on 04.09.2013, and a panchnama was prepared on 07.09.2013. Based on seized material, the Assessing Officer issued a notice under Section 153C on 08.02.2018. The assessee replied and submitted his return. The Assessing Officer furnished a satisfaction note. The assessee challenged the notice before the High Court, which quashed it relying on its earlier decision. The Supreme Court framed the question of law as whether the amendment to Section 153C by the Finance Act, 2015 applies to searches conducted before 01.06.2015. The Revenue argued that the amendment is procedural and curative, intended to clarify the law, and thus retrospective. The assessee contended that the amendment is substantive and cannot apply to searches already concluded. The Supreme Court analyzed the language of Section 153C before and after the amendment, noting that the pre-amendment provision required the seized documents to "belong to" a person other than the searched person, while the amended provision uses "belongs to or represents" and includes any person. The Court held that the amendment is procedural and clarificatory, aimed at removing ambiguity and ensuring that all persons whose undisclosed income is found during a search can be assessed. The Court emphasized that procedural amendments are generally retrospective unless expressly made prospective. The Finance Act, 2015 did not contain any saving clause restricting its application to searches after 01.06.2015. Therefore, the amended Section 153C applies to all searches under Section 132, including those conducted before 01.06.2015. The Supreme Court allowed the appeals, set aside the High Court's judgment, and restored the notices and assessment orders.
Headnote
A) Income Tax - Search Assessment - Section 153C Amendment - Applicability to Pre-Amendment Searches - Income Tax Act, 1961, Section 153C (as amended by Finance Act, 2015) - The core issue was whether the amended Section 153C applies to searches conducted under Section 132 before 01.06.2015. The High Court had quashed notices under Section 153C holding the amendment not applicable to pre-amendment searches. The Supreme Court reversed, holding that the amendment is procedural and applies retrospectively to all searches, including those before the amendment date. (Paras 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67)
Issue of Consideration
Whether amendment brought to Section 153C of the Income Tax Act, 1961 vide Finance Act, 2015 would be applicable to searches conducted under Section 132 of the Act, 1961 before 01.06.2015, i.e., the date of amendment?
Final Decision
The Supreme Court allowed the appeals, set aside the High Court's judgment, and restored the notices under Section 153C and the consequent assessment orders.
Law Points
- Amendment to Section 153C of Income Tax Act
- 1961 by Finance Act
- 2015 is procedural and applies to searches conducted before 01.06.2015
- Section 153C as amended applies to all searches under Section 132 irrespective of date of search
- procedural amendments are retrospective unless expressly made prospective
