INCOME TAX OFFICER versus VIKRAM SUJITKUMAR BHATIA

Citation: [2023] 2 S.C.R. 756 · Decided: 06-04-2023 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 2 S.C.R.
[2023] 2 S.C.R. 756
756
INCOME TAX OFFICER
v.
VIKRAM SUJITKUMAR BHATIA
(Civil Appeal No. 911 of 2022)
APRIL 06, 2023
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Income Tax Act, 1961: s.153C – Assessment of income of any
other person – Initiation of search u/s.132 prior to the amendment
to s.153C – Applicability of the amended s.153C – On facts, search
u/s.132 conducted on the premises on 04.09.2013 and s.153C as it
stood then was applicable – W.e.f. 01.06.2015, s.153C amended
vide Finance Act, 2015 – Books of account or documents or assets
seized by the Assessing Officer of the person other than searched
on 25.04.2017, subsequent to the amendment of s.153 C – Issuance
of notice u/s.153C on 04.05.2018 – Held: Proviso to s.153C creates
a deeming fiction wherein any reference made to the date of initiation
of search is deemed to be a reference made to the date when the
Assessing Officer of the non-searched person receives the books of
account or documents or assets seized etc – Thus, even though the
search u/s.132 was initiated prior to the amendment to s.153C w.e.f.
01.06.2015, the books of account or documents or assets were seized
by the Assessing Officer of the non-searched person only on
25.04.2017, which is subsequent to the amendment, thus, when the
notice u/s.153C was issued on 04.05.2018, the provision of the law
existing as on that date, i.e., the amended s.153C would be applicable
– Moreover, the object and purpose of s.153C is to address the
persons other than the searched person – Thus, the order passed
by the High Court that s.153C as amended by the Finance Act,
2015 w.e.f. from 01.06.2015 shall not be applicable to searches
conducted prior to 01.06.2015 is held to be unsustainable –
Amendment brought to s.153C applicable to searches conducted u/
s.132 before 01.06.2015, i.e., the date of the amendment – Finance
Act, 2015.
s.153C (amended by Finance Act, 2015)– Object/Purpose of
– Stated.
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Interpretation of Statutes: Taxing Statute – Interpretation of
machinery provision – Held: Courts, while interpreting machinery
provisions of a taxing statute, must give effect to its manifest purpose
by construing it in such a manner so as to effectuate the object and
purpose of the statute – s. 153C of the Act is a machinery provision
– Thus, the object and purpose of the amendment to be seen.
Allowing the appeals, the Court
HELD : 1.1 As per the proviso to Section 153C of the
Income Tax Act, 1961 as inserted vide Finance Act, 2005, and
the effect of the said proviso is that it creates a deeming fiction
wherein any reference made to the date of initiation of search is
deemed to be a reference made to the date when the Assessing
Officer of the non-searched person receives the books of account
or documents or assets seized etc. Thus, in the instant case, even
though the search under Section 132 was initiated prior to the
amendment to Section 153C w.e.f. 01.06.2015, the books of
account or documents or assets were seized by the Assessing
Officer of the non-searched person only on 25.04.2017, which is
subsequent to the amendment, therefore, when the notice under
Section 153C was issued on 04.05.2018, the provision of the law
existing as on that date, i.e., the amended Section 153C shall be
applicable. [Para 10.3][777-E-F]
1.2. Section 153C of the Act is a machinery provision. The
Courts, while interpreting machinery provisions of a taxing
statute, must give effect to its manifest purpose by construing it
in such a manner so as to effectuate the object and purpose of
the statute. [Para 10.6][781-B]
1.3. Even the unamended s.153C pertains to the
assessment of income of any other person. The object and purpose
of Section 153C is to address the persons other than the searched
person. Even as per the unamended Section 153C, the proceeding
against other persons (other than the searched person) was on
the basis of the seizure of books of account or documents seized
or requisitioned “belongs or belong to” a person other than the
searched person. However, it appears that as in the case of Pepsico
India Holdings Private Limited, the Delhi High Court interpreted
INCOME TAX OFFICER v. VIKRAM SUJITKUMAR BHATIA
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the words “belong to” restrictively and/or narrowly and which
led to a situation where, though incriminating material pertaining
to a third party / person was found during search proceedings
under Sect

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