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Judgment
PER S. RIFAUR RAHMAN, AM :
These appeals are filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-26, New Delhi [“Ld. CIT(A)”, for short] dated 21.01.2026 for the Assessment Years 2017-18 to 2021-22.
Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee’s appeal being ITA No.2431/Del/2024 for AY 2015-16 as lead case to adjudicate the issues under consideration.
At the time of hearing, the ld. AR of the assessee pressed Ground No.1 which read as under :-
"That on the facts and circumstances of the case and in law, the notice issued by the Ld. AO under Section 153C of the Act is bad in law, illegal, without jurisdiction, barred by limitation and thus void ab initio;"
With regard to aforesaid ground, the ld. AR of the assessee submitted as under :-
1.No Notice under section 153C of the Act could have been issued in the facts of the present case.
It is respectfully submitted that the impugned notice(s) issued under Section 153C of the Act are wholly without jurisdiction and liable to be quashed as being void ab initio, A search under Section 132 of the Act was conducted in the case of a third party on 12.08.2020, the present proceedings have been initiated against the assessee as an "other person" under Section 153C on the basis of the said search, The assumption of jurisdiction under Section '153C is contingent upon the recording of satisfaction by the Assessing Officer of the searched person, the handing over of the seized material to the Assessing Officer having jurisdiction over the other person, and the recording of an independent satisfaction by the Assessing Officer of such other person.
In the present case, the satisfaction note recorded by the Assessing Officer is admittedly dated 15.03.2024, i.e. much after 01.04.2021.
Once the jurisdictional satisfaction has been recorded after 01.04.2021, recourse to Section 153C is impermissible, Any action against the assessee could have been initiated, if at all, only under the substituted reassessment regime contained in Sections 147, 148 and 148A of the Act after complying with the mandatory jurisdictional safeguards prescribed therein.
The relevant date for invoking Section 153C is not the date of search, but the date on which the seized material is handed over to the Assessing Officer of the other person, the date of recording of satisfaction. Consequently, where such jurisdictional event occurs after 01.04.2021, proceedings under Section 153C are legally unsustainable.
The aforesaid principle has thereafter been consistently upheld by this Hon'ble Tribunal in Geetanjali Bhayana v. DClT [[2026J ~83 taxmann.com 95 (Delhi - Trib.)], Abhisar Estates {P.} Ltd. v. DClT (ITA No. l033/Del/2025, order dated 10.02.2026), Parvesh Kumar vs. DCIT [2026] 187 taxmann.com 1100 (Delhi - Trib.), Shri Lekh Raj Versus DClT, Central Circle-2, 2026 (5) TMI 600 -ITAT Delhi, and Snivdtwm Buildtech (P.) Ltd. v. JCIT (ITA Nos. 109 to 111/De//2026, order dated 24.06.2026), wherein it has been held that where the deemed date of search/satisfaction falls after 01.04.2021, proceedings initiated under Section 153C are without jurisdiction and liable to be quashed.
The same principle has also been laid down by the Hon'ble Madras High Court in Harigovind & G. Ravindran (HUF) v. ACIT [[2025] 180 taxmann.com 197 (Madras], wherein it was held that once the jurisdictional event under Section 153C occurs after 01.04.2021, proceedings cannot be initiated under Section 153C and must necessarily conform to the substituted reassessment provisions.
The Revenue, therefore, could not have invoked a statutory provision which ceased to govern the assumption of jurisdiction in the factual matrix of the present case merely because the original search was conducted prior to 01.04.2021.
Accordingly, since the jurisdictional satisfaction admittedly arose only in March, 2024, the impugned notices' issued under Section 153C are ex facie without jurisdiction, contrary to the statutory scheme introduced by the Finance Act, 2021, and deserve to be quashed along with all consequential proceedings.
Satisfaction Recorded After an Inexplicable Delay of Nearly Forty-Four Months Contrary to the decision of the Hon'ble Supreme Court in the case of Calcutta Knitwears and the Statutory Scheme of Section 153C of the Act.
It is respectfully submitted that the impugned proceedings under Section 153C are vitiated on account of the extraordinary and unexplained delay of nearly forty-three months between the date of search (11.08.2020) and the recording of satisfaction (16.03.2024). Such inordinate delay is contrary to the statutory scheme of Section 153C and renders the assumption of jurisdiction void ab initio.
The recording of satisfaction is the very foundation for assumption of jurisdiction under Section 153C. The statutory scheme contemplates that such satisfaction must be recorded contemporaneously with.ior immediately upon, the handing over of the seized material by the Assessing Officer of the searched person to the Assessing Officer of the other person.
The date of search is 11.08.2020 and thus the assessment of Searched person as per provision of 153B of the Act, had to be concluded till 30.09.2022 and from that date there is a delay of 18 months in recording satisfaction from the date of presumed conclusion of assessment in the case of the searched person.
The Hon'ble Supreme Court in CIT v. Calcutta Knitwears [(2014) 3621TR 673 (SC) : (2014) 6 SCC 444] authoritatively held that the satisfaction contemplated under Section 153C must be recorded at the time of initiation of proceedings against the searched person, during the course of such proceedings, or immediately upon their conclusion. The satisfaction contemplated under the Act is therefore contemporaneous in nature and cannot be deferred indefinitely at the convenience of the Revenue.
The aforesaid principle has been expressly adopted by the CBDT in Circular No. 24/2015 dated 31.12.2015, which mandates that the satisfaction note should be recorded "at the earliest point of time." The Circular, being binding upon the Revenue under Section 119 of the Act, leaves no scope for recording satisfaction after an unreasonable lapse of time.
In the present case, the satisfaction note has been recorded almost forty-three months after the search without any explanation whatsoever. Such an extraordinary delay completely destroys the statutory nexus between the search and the proceedings under Section 153C and demonstrates that the satisfaction is merely an afterthought recorded to confer jurisdiction where none otherwise existed.
The aforesaid principle has been consistently reiterated by various Courts and Tribunals. The Hon'ble Gujarat High Court in Parag Rameshbhai Gathani v. ITO (Common CAV Judgment dated 18.11.2025) quashed proceedings where satisfaction was recorded after a delay of about twenty-two months, holding such delay to be contrary to the ratio laid down in Calcutta Knitwears and CBDT Circular No. 24/2015. SLP stands dismissed by the Hon'ble Apex Court in 2026 (4) TMI 349 - SC Order.
Likewise, in Pro CIT V. Jitendra H. Modi (HUF) [(2018) 92 taxmann.com 510 (Guj.) : 2018 (2) TMI 673 (Guj.)], the Hon'ble Gujarat High Court held that satisfaction cannot be recorded after an unreasonable lapse of time and must remain contemporaneous with the search proceedings.
Similarly, the Pune Bench of the Tribunal in Boob Pradip Kisanlal V. ACIT [2019 (1) TMI 1493 (ITAT Pune)] held that even an eleven-month delay in recording satisfaction vitiated the assumption of jurisdiction under Section 153C.
Likewise in Gurmukh Das Versus ACIT,. Central Circle-B. 2026 (5) TMI 88 - ITAT Delhi, the Jurisdiction tribunal quashed the satisfaction note being drawn almost 4 years after completion of search.
The delay in the present case is not of a few months but forty-three months, far exceeding the delay held impermissible by the aforesaid authorities. The satisfaction recorded after such an inordinate lapse of time cannot be regarded as the jurisdictional satisfaction contemplated under Section 153C.
Accordingly, the impugned notices issued under Section 153C and all consequential proceedings deserve to be quashed as being wholly without jurisdiction.”
On the other hand, ld DR of the Revenue relied on the orders of the authorities below.
Considered the rival submissions and material placed on record. We observed that the search was conducted in the case of other person, Sh. Charlie Peng Group of cases and the assessee on 11.08.2020, the searched persons and the relevant satisfaction note was prepared only on 16.03.2024, which is after 43 months of issue of notices in the above cases. Since the satisfaction note recorded by the Assessing Officer only on 16.03.2024, the relevant search year for the assessee is AY 2024-25. The provisions applicable for this case is the amended provisions introduced in the Finance Act, 2021. Accordingly, the assessment should have been completed u/s 147 instead of section 153C. The submissions of the assessee has merit, as held by Hon’ble Madras High Court in the case of Harigovind & G. Ravindran (HUF) vs. ACIT (2025) 180 taxmann.com 197 (Madras). The ratio of the decision is, once the jurisdictional event under section 153C occurs after 01.04.2021, proceedings cannot be initiated u/s 153C and must necessarily conform to the substituted provisions. In the present case, no doubt, the search was conducted prior to 01.04.2021 but the satisfaction relevant for other person was recorded only on 16.03.2024. The reassessment proceeding has to be adopted under substituted provisions i.e. u/s 147 r.w.s. 148. The relevant provisions of section 153C(3) of the Act applies in the present case. Therefore, we are inclined to allow Ground No.1 raised by the assessee.
The other grounds raised by the assessee are not adjudicated at this stage and the same are kept open.
According, the assessee’s appeal being ITA No.2431/Del/2026 for AY 2017-18 is allowed.
Since the facts in AYs 2018-19 to 2021-22 are exactly similar to Assessment Year 2017-18, our above findings in AY 2017-18 are applicable mutatis mutandis in Assessment Years 2018-19 to 2021-22. Accordingly, the appeals filed by the assessee for AYs 2018-19 to 2021-22 are allowed.
In the result, all the appeals filed by the assessee are allowed.