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Judgment
PER S.RIFAUR RAHMAN,AM:
These appeals are filed by the Revenue against the order passed by the ld. Commissioner of Income-tax (Appeals)-25, New Delhi [for short ‘ld. CIT (A)] dated 19.12.2025 for the Assessment Years 2011-12, 2012-13 and 2014-15.
Since the issues are common and the appeals are connected, hence the same are heard together and are being disposed off by this common order. First we take up the Revenue’s appeal being ITA No.3686/Del/2026 for AY 2011-12 as lead case.
None appeared on behalf of the assessee. We proceeded to decide the appeals with the assistance of ld. DR of the Revenue.
Brief facts of the case are, return of income under section 139 of the Income-tax Act, 1961 (for short ‘the Act’) for the year was e-filed by the assessee on 28.09.2011 declaring total income of Rs.87,46,581/-. Pursuant to a search and seizure operation carried out on Alankit group [stated to be a conglomerate of several group companies with diversified activities], Shri Alok Kumar Agarwal, his son Shri Ankit Agarwal, Alankit Assignments Ltd. and Alankit Ltd. and close associates on 18.10.2019, incriminating evidences revealing a network of accommodation entry modus operandi involving routing of unaccounted cash were found. The assessee was found to be one of the beneficiaries who had taken accommodation entry through Shri Alok Kumar Agarwal and allies/entities controlled by him. Thus, satisfaction note in the case of the assessee was recorded by the AO of the searched persons on 24.06.2022 and subsequently recorded by the jurisdictional AO of the assessee and proceedings u/s 153C of the Act were initiated. In view of the aforesaid, notice u/s 153C of the Act was issued to the assessee on 06.09.2022. In response, the assessee did not file its return of income. Assessment order was subsequently passed on 18.03.2024 determining the income of the assessee for the year at Rs.1,37,68,976/-.
Aggrieved with the above order, assessee preferred an appeal before the ld. CIT (A) raising various grounds of appeal, invoking both legal issues as well as issues on the merits of the additions made. Before ld. CIT (A), vide ground no.6 of appeal, the assessee has raised a specific legal ground contending that proceedings initiated u/s 153C of the Act in its case for the instant assessment year, i.e. AY 2011-12, are time-barred by limitation, illegal and void ab-initio since the instant assessment year falls beyond the period of 10 years from the date of search, interpreted in this case as the date of taking possession of the seized documents or assets by the AO of the assessee or non-searched person or date of handing over of seized documents by AO of searched person to AO of the assessee/date of issue of notice u/s 153C of the Act. In this regard, assessee submitted that in its case, proceedings u/s 153C of the Act for various assessment years (AYs) were initiated by the AO on the basis of search and seizure action u/s 132(1) of the Act conducted on 18.10.2019 on Alankit group. The date of the satisfaction note recorded by the AO of the searched person is 24.06.2022 and the notice issued u/s 153C of the Act is dated 06.09.2022 and hence in assessee’s case, being a non-searched person, the date of initiation of search u/s 132 would lie in the FY 2022-23 [period from 01.04.2022 to 31.03.2023] pertaining to the AY 2023-24. To reiterate, the assessee submitted that proceedings initiated for instant AY, i.e. AY 2011-12 are barred by limitation, since the instant assessment year falls beyond the period of 10 years, and hence is outside the scope of relevant assessment year as defined in Explanation 1 to section 153A of the Act. In support of the aforesaid submissions, the assessee placed reliance on the provisions of section 153C r.w.s. 153A of the Act as well as the following judicial pronouncements:
Hon'ble Delhi High Court in Principal Commissioner of Income-tax (Central-1) v. Ojjus Medicare (P.) Ltd reported in [2024] 465 ITR 101 (Delhi) dated 03. 04.2024 Hon'ble Supreme Court in CIT v. Jasjit Singh (SLP (C) No 6644 of 2016) dated 26.09.2023
After considering the detailed submissions of the assessee and following the binding judgement of the Hon'ble jurisdictional High Court as per judicial discipline, ld. CIT (A) held that the period of ten AYs' would commence being counted w.e.f the AY 2023-24, which, by backward counting, would terminate in AY 2014-15. Accordingly, respectfully following the aforesaid judgment of the jurisdictional High Court in the case of Ojjus Medicare (P.) Ltd (supra), ld. CIT (A) held that notice issued on 06.09.2022 for the instant assessment year i.e. AY 2011-12 would fall beyond the ambit of ten AYs as provided under section 153C read with section 153A, and hence the impugned assessment order dated 18.03.2024 passed u/s 153C of the Act for the instant AY 2011-12 in pursuance of such notice would not survive, having no legs to stand, and is thus annulled, being beyond the period of 10 years and accordingly, allowed the assessee’s appeal.
Aggrieved against the above order, Revenue is in appeal before us challenging the aforesaid legal ground on which ld. CIT (A) allowed the assessee’s appeal.
At the time of hearing, ld. DR of the Revenue relied on grounds of appeal and submitted that the Department is in appeal against the decision of Ojjus Medicare (P.) Ltd. but could not controvert the aforesaid decisions relied on by the assessee and ld. CIT(A).
Considered the rival submissions and material available on record. We observe that the assessment year 2011-12 under consideration clearly falls outside the scope of application of section 153C of the Act, for the reason that the date of search for the unsearched parties are the date on which the documents were handed over to the Assessing Officer of such other person or from the date on which the satisfaction was recorded. Therefore, the contention of the assessee is found to be correct on this count. Further we observe that the impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and therefore, the jurisdiction assumed by the Assessing Officer is not tenable in the light of aforesaid legal positions in view of the decision of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra) and Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd., as rightly observed by the ld. CIT (A). For the sake of brevity, we reproduce the relevant findings of the aforesaid decisions :-
“CIT vs Jasjit Singh-[2023| 155 taxmann.com 155 (SC)
“9.It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.
10.This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under Section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts.”
PCIT Vs Ojjus Medicare (P.) Ltd- [2024] 161 taxmann.com 160 (Delhi)
95.The relevant block of ten AYs' when computed for the period 01 April 2023 – 31 March 2024, with the date of the Satisfaction Note drawn by the AO of the non-searched person falling within that period, would come to be identified as under:
Computation of the ten-year block No. of years period as provided under Section 153C read with Section 153A of the Act.
96.To recall, the petitions forming part of List I pertain to AYs' 2010-11, 2011-12 and 2012-13. So far as the aforenoted writ petitions are concerned, undisputedly AY 2010-11, 2011-12 and 2012-13 fall beyond the maximum period of ten AYs'. Since the ten AYs', when computed from the end of AY 2022-23 would terminate upon AY 2013-14, AYs' 2010-11, 2011-12 and 2012-13 would clearly fall outside the block period of ten AYs' and cannot legally or justifiably be reopened under Section 153C read with Section 153A of the Act.
97.Proceeding then to List II, we find that the petitions placed in that list pertain to cases where the hand over occurred in FYs 2022-23 and 2023-24. Consequently, the relevant AYs' would be AY 2023-24 and AY 2024-25 respectively. In light of the principles enunciated by us and which explain how the period of six and ten AYs' is liable to be computed, the reopening of assessments pertaining to AYs' 2010-11, 2011-12, 2012-13 and 2013-14 would clearly fall beyond the ambit of ten AYs' as provided under Section 153C read with Section 153A. We note in this behalf that all of the writ petitions forming part of List II pertain to the aforenoted AYs' 2010-11, 2011-12, 2012-13 and 2013-14.
98.We are therefore of the opinion that the Section 153C notices issued against the writ petitioners placed in List I and insofar as they pertain to AYs' 2010-11, 2011-12 and 2012-13 would not sustain being beyond the "relevant assessment year" which could have possibly formed the basis for initiation of action under that provision. Similarly, the Section 153C notices impugned by the writ petitioners placed in List II and insofar as they pertain to AYs' 2010-11, 2011-12, 2012-13 and 2013-14 and which have been found to fall outside the net of "relevant assessment year", being the ten year block, would be liable to be set aside on this score alone.”
Respectfully following the aforesaid decisions, we are inclined to uphold the order of the ld. CIT (A) who has passed the well-reasoned and speaking order relying on the aforesaid decisions. Accordingly, the grounds taken by the Revenue are dismissed and the appeal filed by the Revenue for AY 2011-12 is dismissed.
Since the facts in AY 2012-13 are exactly similar to Assessment Year 2011-12, our above findings in AY 2011-12 are applicable mutatis mutandis in Assessment Year 2012-13. Accordingly, the appeal filed by the Revenue for AY 2012-13 is dismissed.
Now we take up ITA No.368/Del/2026 for AY 2014-15. The facts in the present case are exactly similar to AY 2011-12, which are already given in the above order and the same are not repeated for the sake of brevity.
Before the ld. CIT (A), in ground no.6 , the assessee has raised a specific legal ground contending that the notice issued u/s 153C of the Act for the year and the assessment order passed u/s 153C is time-barred by limitation and hence invalid and bad in law and without jurisdiction and that the jurisdictional requirement as contemplated under the fourth proviso to Section 153A(1) of the Act is not satisfied. It has placed reliance on the provisions of section 153C read with section 153A of the Act, that in cases where the escaped income is less than Rs. 50 Lakhs, the notice under section 153C of the Act can be issued for up to 6 assessment years preceding the assessment year relevant to the previous year in which search is carried out or requisition is made, thereby resulting in assessment/reassessment of total income for 7 years in total u/s 153C of the Act. In this regard, assessee relied on the decision of PCIT v. Ojjus Medicare (P.) Ltd. (2024) 465 ITR 101 (Del) delivered on 3rd April, 2024. Hence, the assessee contended that in the instant case under consideration (AY 2014-15), the proceedings were barred by limitation. After considering the submissions of the assessee and relying on the aforesaid decisions relied upon by the assessee, ld. CIT (A) held that the assessee has contended that the income which is alleged to have escaped assessment for the "relevant assessment year" or the aggregate amount in the "relevant assessment years" does not amount to Rs. 50 lakhs or more, i.e., the prescribed limit, thereby not fulfilling the threshold requirement as prescribed by the Fourth Proviso to Section 153A of the Act, and accordingly notice issued beyond a period of six years is unsustainable in law. In fact, this issue has been considered by the Hon'ble jurisdictional High Court in the above-referred case of Principal Commissioner of Income-tax (Central-1) v. Ojjus Medicare (P.) Ltd reported in [2024] 465 ITR 101 (Delhi). He observed that the judgement rendered by the Hon'ble Delhi High Court in the case of Ojus Medicare and other connected matters; and the instant appeal filed by the assessee are arising from the common search conducted on Alankit group on 18.10.2019. The position of the statute has been clear in so far as the amount of income that has escaped assessment for which the reopening can be made for the 'relevant assessment years', i.e. beyond six years and up to ten years, is concerned. In the instant case, there are two issues arising by virtue of these present grounds of appeal, summarized below:
Relating to the date of reckoning for calculating six AYs backwards that can he thrown open for assessment/reassessment after search/handing over of seized material to the AO of the non-searched person; and
ii) Relating to whether the assessment/reassessment can be carried out in the instant case beyond six years but within ten years of the date of search/handing over of seized documents/material to the AO of the non-searched entity.
Ld. CIT (A) observed that as per the decision of the Hon'ble jurisdictional High Court of Delhi, the period of six assessment years means six years prior to the assessment year in which the seized material was handed over to the AO of the other (non-searched) person / satisfaction note u/s 153C was recorded by the concerned AO. As seen in the case, the satisfaction note in the instant case was recorded by the AO of the searched person on 24.06.2022, and, upon receipt of the seized documents, the satisfaction note was recorded by the jurisdictional AO of the 'other person' (appellant) on 03.08.2022 and the notice u/s 153C of the Act was issued on 06.09.2022 by the AO, all dates pertaining to the F.Y. 2022-23 relevant to AY 2023-24. Therefore, by this yardstick, six years period as referred to in section 153C(1) of the Act would be from AY 2017-18 to 2022-23 (and 2023-24).
Ld. CIT (A) further observed that to ascertain whether the income escaping assessment in the relevant assessment year or the aggregate of the assessment years amounted to or was likely to amount to Rs. 50 Lakhs or more, the relevant portion of the satisfaction note drawn as seen from record and submitted by the assessee was perused, the relevant portion of which is reproduced below:
From the above, ld. CIT (A) observed that the aggregate of the income having escaped assessment for the 'relevant assessment years', i.e. impugned AY 2014-15 (FY 2013-14), AY 2015-16 (FY 2014-15) and AY 2016-17 (FY 2015-16) as per the satisfaction note recorded falls short of Rs.50 lakhs.
Ld. CIT (A), following the ratio of decision of Hon'ble jurisdictional High Court in the case of Ojjus Medicare (supra), held that the satisfaction note does not show that the income alleged to have escaped assessment amounted to or was likely to amount to Rs. 50 Lakhs or more in the 'relevant assessment year' or in aggregate in the 'relevant assessment years' in the case of the assessee under consideration. Relying on the above-mentioned case laws and respectfully following the binding judgment of the Hon'ble jurisdictional High Court in the case of Ojus Medicare (P.) Ltd (supra) as per the tenets of judicial discipline, it is seen that A.Y. 2014-15 is not covered within six AYs as per section 153C of the Act and the condition/s for assessing it as part of the relevant assessment year/s was not existent. The notice u/s 153C issued on 06.09.2022 for the AY 2014-15 would thus fall beyond the ambit of six AYs' as provided under section 153C read with section 153A, and hence the impugned assessment order dated 24.03.2024 passed u/s 153C of the Act for the instant AY 2014-15 in pursuance of such notice would not survive, having no legs to stand, and is thus annulled.
Aggrieved against the above order, Revenue is in appeal before us challenging the aforesaid legal ground on which ld. CIT (A) allowed the assessee’s appeal.
At the time of hearing, ld. DR of the Revenue relied on the findings of the AO but could not controvert the aforesaid decisions relied on by the assessee and ld. CIT(A).
Considered the submissions of the ld. DR and material placed on record. We have gone through the detailed findings of the ld. CIT (A), which is also reiterated in the above order. Further, we have already discussed the aforesaid judgments relied upon by the ld. CIT (A) and the relevant findings are also reproduced above. Further, with regard to the issue involved herein, ld. CIT (A) reproduced the findings of Hon’ble High Court in Ojjus Medicare (P.) Ltd (supra) in his order. For the sake of brevity, the findings of Hon’ble High Court is reproduced below :-
B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. These included, inter alia, the search assessment block being enlarged to ten AYs' consequent to the addition of the stipulation of "relevant assessment year" and which was defined to mean those years which would fall beyond the six year block period but not later than ten AYs'. The block period for search assessment thus came to be enlarged to stretch up to ten AYs'. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the "relevant assessment year". The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or "likely to amount to" INR 50 lakhs or more in the "relevant assessment year" or in aggregate in the "relevant assessment years".
C. Section 153C, on the other hand, pertains to the non-searched entity and in respect of whom any material, books of accounts or documents may have been seized and were found to belong to or pertain to a person other than the searched person. As in the case of Section 153A, Section 153C was also to apply to all searches that may have been undertaken between the period 01 June 2003 to 31 March 2021. In terms of that provision, the AO stands similarly empowered to undertake and initiate an assessment in respect of a non-searched entity for the six AYs' as well as for "the relevant assessment year". The AYs', which would consequently be thrown open for assessment or reassessment under Section 153C follows lines pari materia with Section 153A.
D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the "relevant assessment year" is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non- searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted.
E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. ….………
G. Insofar as the thresholds put in place by virtue of the Fourth Proviso to Section 153A are concerned and the argument of the writ petitioners of the condition of INR 50 lakhs being an unwavering precondition, we find ourselves unable to sustain that submission bearing in mind the indubitable fact that proceedings for search assessment commence upon the issuance of a notice and the AO at that stage having really not had the occasion to undertake a detailed or in depth examination of the evidence collected or come to a definitive opinion with respect to the total income which may have escaped assessment. Since the computation and assessment of income that is likely to have escaped assessment would at this stage be provisional, it would be incorrect to strike down initiation of action on a mere ex facie examination of the Satisfaction Note. We also in this regard bear in mind the Fourth Proviso using the expression "amounts to or is likely to amount". The usage of the phrase "likely to" is indicative of the Legislature being conscious of the provisional character of the opinion that the AO may have formed at that stage.
H. However, and at the same time, even if the identified asset at that stage be quantified as less than INR 50 lakhs, the AO must for reasons to be duly recorded, be of the opinion that the ultimate computation of escaped income is likely to exceed INR 50 lakhs. The aforesaid satisfaction would have to be based on an assessment of the material gathered and the potentiality of the same being indicative of the escaped assessment exceeding INR 50 lakhs. The formation of opinion in this respect would have to be based not on mere ipse dixit but reflective of a fair assessment of the quantum of income likely to have escaped assessment as distinct from mere speculation and conjecture.
I. We further hold that since the precondition of INR 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself. We are also of the opinion that the precondition of INR 50 lakhs is not liable to be viewed as being the qualifying criteria for each "relevant assessment year" that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of INR 50 lakhs.
J ……..
K …..
L. The legislative intent of those provisions having retroactive application is clearly evidenced from the statue declaring that they would apply to all searches conducted between 31 May 2003 to 31 March 2021, and the Fourth Proviso in unambiguous terms extending the applicability of those provisions to all searches conducted post 01 April 2017 and Sections 153A and 153C superseding the provisions for reassessment, otherwise appearing in the Act. ….….”
Accordingly, respectfully following the aforesaid decision, we are inclined to uphold the order of the ld. CIT (A) who has passed the well-reasoned and speaking order relying on the aforesaid decision. Accordingly, the grounds taken by the Revenue are dismissed and the appeal filed by the Revenue for AY 2014-15 is dismissed.
To sum up : all the appeals filed by the Revenue are dismissed.