ACIT vs Poonam Malhotra

PER S.RIFAURRAHMAN,AM:

This appeal is filed by the Revenue against the order passed by the ld. Commissioner of Income-tax (Appeals), Delhi-23 dated 16.07.2025for the Assessment Years 2017-18. The assessee has also filed cross objections against the aforesaid impugned order dated 16.07.2025.

At the time of hearing, ld. AR of the assessee submitted that assessee has filed legal/jurisdictional grounds in cross objections and the said grounds being technical and legal in nature, the same are accepted. The said grounds are reproduced below :-

Ld. AR of the assessee first submitted submissions on ground no.1 of cross objections i.e. jurisdictional issues raised in cross objections. In this regard, he submitted the relevant facts and his submissions are as under. He submitted that the assessee is an individual engaged in the business of trading in jewellery through her proprietorship concern, M/s Poonam Deep Buillions and Jewellers. The Income Tax Return for the year under consideration was filed on 07.11.2017, declaring a total income of Rs. 12,93,570/-.

A search and seizure action was conducted at the residential premises of the assessee, i.e., D-58, Kamla Nagar, Delhi, on 29.11.2016, under Section 132 of the Act. Pursuant to the said search, proceedings were initiated under Section 153A/143(3) of the Income-tax Act, 1961 (for short ‘the Act’) for the year under consideration, being the year of search.

He submitted that in the first round of assessment proceedings, the Assessing Officer completed the assessment under Section 143(3) r.w.s. 153A of the Act vide its order dated 31.12.2018, inter alia, making the addition on account of unexplained purchases u/s 69C of the Act. Aggrieved by the above assessment order, assessee preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) vide order dated 31.07.2019 partly allowed the appeal by sustaining an estimated profit on the addition of purchases amounting to Rs.39,45,052/- in respect of the three parties remained unverified. He submitted that thereafter, both the assessee and Revenue preferred cross appeals before the ITAT in ITA No.7995/Del/2019 (by assessee) and ITA No. 8081/Del/2019 (by Revenue) and ITAT, Delhi Bench vide its order dated 28.02.2023, set aside the issue concerning the three unverified parties to the file of the AO, with the following specific direction recorded at para 13 and 14 of the order:

Ld. AR submitted that in second round of assessment proceedings, pursuant to the above directions of the ITAT, the AO issued notices dated 14.06.2023 and 26.06.2023, thereby initiating the second round of assessment proceedings to verify the three unverified parties. In response to the same, assessee duly filed the reply and documentary evidence in support of the same. He submitted that thereafter, AO proceeded to conclude the assessment treating the entire purchase as bogus and passed the fresh assessment order under Section 143(3) r.w.s. 254 of the Act on 26.04.2024, making an addition of Rs.15,59,13,279/- u/s 69C of the Act. In view of the above facts, it is submitted that the impugned assessment order dated 26.04.2024 is barred by limitations prescribed under Section 153(6) of the Act and is, therefore, liable to be quashed as being null and void ab initio.

Further ld. AR made submissions relating to the limitation issue and brought to our attention the statutory provision of Section 153(6) of the Act, which reads as under:

Ld. AR submitted that a plain reading of the above provision makes it abundantly clear that where an assessment is framed in consequence of a direction given in an order passed u/s 254 of the Act, such assessment must be completed within twelve months from the end of the month in which the order of the Hon'ble ITAT is received by the Departmental Representative.

He submitted that the decisive factor for computing the limitation period under Section 153(6) is the date of receipt of the ITAT order dated 28.02.2023 by the Departmental Representative/concerned AO,

He further submitted that in order to ascertain this date, the assessee filed an application under the Right to Information Act, 2005 on 10.02.2026 before ITAT and copy of the same is placed at PB Pg. 396-397. In response to the above RTI application, the ITAT vide letter dated 06.03.2026 provided the information sought and confirmed that the said Tribunal order was provided to the office of the Departmental Representative by hand on 23.03.2023 and copy of the same is placed at PB Pg. 398-401 and the relevant extract is reproduced below:-

He submitted that as is evident from the RTI response dated 06.03.2026, the ITAT order dated 28.02.2023 was received by the Departmental Representative on 23.03.2023, i.e., in the month of March 2023. Accordingly, the period of twelve months from the end of the month of March 2023 expired on 31.03.2024, and accordingly, the fresh assessment order in the second round was required to be passed on or before 31.03.2024. However, the AO passed the fresh assessment order under Section 143(3) r.w.s. 254 of the Act on 26.04.2024, which is 26 days beyond the prescribed statutory deadline of 31.03.2024. The assessment order is, therefore, clearly barred by limitation and is null and void. In this regard, he submitted that it is pertinent to mention here that assessee had raised an additional ground before the Ld. CIT(A) in the second round of proceedings, challenging the validity of the assessment order on the ground of limitation, which was admitted by the Ld. CIT(A) for due adjudication. He submitted that the Ld. CIT(A) in para 7 to 7.2 on page 9 of its order duly considered the contention of the assessee regarding receipt of the ITAT order by the Departmental Representative and the judicial precedents relied upon in support thereof. However, Ld. CIT(A) dismissed this ground of limitation stating that no documentary evidence was filed w.r.t the service of order passed by ITAT.

Ld. AR further submitted that now before the ITAT, assessee, vide a RTI application, has obtained the actual date of on which order of ITAT was handed over to the Departmental Representative is 23.03.2023. It is further submitted that Section 153(6) merely uses the expression "received" for the purpose of computing limitation. The legislature has consciously not qualified the said expression by using words such as "received by the jurisdictional Assessing Officer" or "received by the concerned officer".

He further submitted that the Act recognizes receipt of the order by the Department and not receipt by any particular officer within the Departmental hierarchy. Once the order enters the Department and is received by an officer acting in his official capacity, the requirement for receipt contemplated under the statute stands duly satisfied.

He submitted that accordingly, for the purposes of Section 153(6), the relevant consideration is the date on which the order is first received by the Income Tax Department and not the date on which it may subsequently reach a particular officer within the Department. Any subsequent transmission of the order within the Department cannot defer or extend the commencement of the limitation period prescribed by law

Furthermore, he submitted that the Hon’ble Delhi High Court in Odeon Builders Pvt. Ltd. [2017 (3) TMI 1266 (Del.)] has categorically held that the expression “received” is to be construed with reference to the date on which the order is pronounced and made available to the parties notified of such pronouncement. As observed in para 43 of the judgment (extracted below), once the order is pronounced in open court, both parties are deemed to have received the order, and any subsequent internal transmission within the Department is irrelevant for computing limitation. Accordingly, the period of limitation must commence from the date of pronouncement/receipt by the parties and not from the date on which the order reaches any particular departmental authority. Further, he submitted that the decision of Odeon Builders Pvt Ltd was affirmed by the Hon’ble Supreme Court by dismissal of the Revenue’s SLP (c) Diary NO. 11792/2018 on 1st May 2018

He further placed reliance on the following decisions:-

He submitted that from the aforesaid settled legal position, it is evident that the expression “received” does not contemplate service of the order upon any particular jurisdictional Commissioner. He submitted that as held by the Hon’ble Delhi High Court in Odeon Builders Pvt. Ltd., once the order is pronounced in open court and the parties notified of such pronouncement are deemed to have received it, the period of limitation commences. Consequently, receipt of the order by the Department through its authorized representatives, including the Departmental Representative or the CIT (Judicial), is sufficient for the commencement of limitation, and any subsequent internal transmission within the Department cannot defer or extend the statutory period.

He further submitted that even otherwise, in the present case, we are also producing evidence of actual date of receiving in this regard obtained through RTI Application. Since the ITAT order dated 28.02.2023 was received by the Departmental Representative on 23.03.2023, the twelve-month period under Section 153(6) expired on 31.03.2024. Accordingly, he pleaded that the fresh assessment order dated 26.04.2024 is, therefore, beyond the prescribed time limit and is liable to be quashed as null and void.

On merit, Ld AR submitted that the issue under consideration is covered and brought to our notice the page 8 of the First Appellate Order, he relied on the findings of Ld CIT(A).

On the other hand, ld. DR of the Revenue brought to our notice para 7.2 of the first appellate order and submitted that the assessee has not submitted any proof of service of the order of ITAT in the month of March, 2023 and the Assessing Officer has already dealt with this issue at para 15 of the assessment. He submitted that the Assessing Officer observed that the order of ITAT was received in the office of Pr.CIT, Central-1, Delhi on 12.04.2023 and accordingly, the time limit of 12 months from the end of the month in which order is received by the Pr.CIT is relevant to complete the assessment would expire on 30.04.2024 and accordingly, the assessment order passed on 26.04.2024 is well within the time limit prescribed under clause (i) of sub-section (6) of section 153 of the Act. He essentially relied on the orders of the lower authorities.

Considered the rival submissions and material placed on record. First, we shall deal with the limitation issue, we observed that the order of ITAT was handed over to the Ld DR after the pronouncement of the order by the registry, this is confirmed by the registry on the application filed by the assessee under RTI, the relevant confirmation under RTI is place on record. In our considered view, as per the provisions of section 153(6) of the Act, the period of limitation to pass the assessment order of 12 months commences from the date of receipt or passes the impugned order to the AO by the PCCIT or CCIT or PCIT or CIT. In the given case, the same was handed over to the Department Representative instead of dispatching the order to the above-mentioned officials as a special case by the ITAT registry. The relevance as per the provisions is that the receipt of order by the above-mentioned officials of the income tax department, since in the given case the order was delivered to the Ld DR, the relevant date of handing over of the above said order to the above said officials are relevant, not the date of handing over to the Ld DR. The case law relied by the Ld AR on this issue are distinguishable. It can only be treated as another mode of transfer of information; it cannot be concluded that the order was handed over to the proper officials of the income tax department as per law. In our considered view, the handing over of the above order to the proper officials is not recorded by any officer in this case. Since the order was handed over to the Ld DR on 23.03.2023, we noticed that there were 205 orders bunched together and handed over, we cannot expect the Ld DR office to collate all the abovesaid to hand over once, he would have handed over on piecemeal basis. We can only give benefit of doubt to the department that the same was handed over to the proper official by the Ld DR on or after 31.03.2023, therefore the order passed by the AO with the delay of 26 days, it can only be considered as the order passed by the AO was within time. Therefore, we are not inclined to accept the submissions of Ld AR on this count.

Coming to the merits in this case, we observed that the coordinate Bench had remitted the issue back to the file of Assessing Officer to verify the three parties, namely, M/s. Krizz Unit of Kanishk Gold Pvt. Ltd. (KGP Ltd. in short), M/s. Shreyansh Industries and M/s. Wellknown Jewellers Pvt. Ltd. Assessing Officer, after issuing notice to the assessee and after considering the submissions, sustained the whole addition u/s 69C of the Act on the basis that no response to the summons issued to them. It was found that KGP Ltd. was under liquidation and they were in the business prior to FY 2015-16. We observed that the Assessing Officer had added the whole purchase as unsubstantiated. It is fact on record that the assessee had declared purchase and proceeded to make further sales. We notice that erstwhile ld. CIT (A) in his order had observed that purchases made from the above party are verifiable from the verification reports, Annexure 2A & 2B generated from the website of VAT Department. In the same report, it was observed that all the three parties purchases were found to be in the list of verification report. Based on the above verification reports, the purchases were accepted and only suppressed profit were estimated at 2 & 3% respectively.

In the reassessment proceedings, the Assessing Officer had not considered any of the above findings. The same was not appreciated on the above facts on record in the impugned order and decided the issue against the assessee.

Further, ld. CIT (A) observed that the addition was made u/s 69C of the Act. It was observed that the assessee had already brought on record the details of quantity details, and its movements. Further, we observed that proceedings were initiated u/s 153A of the Act and during the original proceedings, and during remand proceedings, the Assessing Officer had accepted the fact that all the purchases were accepted as verified except abovesaid three parties. With regard to Shreyansh Industries, we observed that they have appeared before the Assessing Officer, which can be treated as verified. With regard to other two parties, both parties purchases were already verified in the verification report generated from VAT website. Since these parties were in existence in the year under consideration and the assessee also demonstrated that they have made the purchases and subsequent sales through the stock registers, with the above facts on record, the contention of the assessee cannot be rejected. Therefore, we do not see any reason to disturb the findings of the ld. CIT (A). In the result, the grounds raised by the Revenue are dismissed and accordingly, the grounds raised by the assessee in the cross objections are also dismissed.

In the result, the appeal of the Revenue and cross objections filed by the assessee are dismissed.