Brilliant Metals Private Limited vs DCIT, Central Circle 7, Delhi

ITA No. 5887/Del/2026

“1.

That under the facts and circumstances of the case, the impugned order dated 11.05.2026 passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), dismissing the grounds of appeal and sustaining the addition of Rs. 8,15,75,981/- in place of returned income, as filed by the assessee, is bad in law on account of several grounds and assessee/appellant denies its liability to be assessed for any income other than the income already returned by the assessee and the consequential demand.

2.

That under the facts and circumstances of the case, the assessment proceedings initiated are contrary to provisions of section 153C of the Act and therefore, the assessment order passed is liable to be quashed.

3.

That under the facts and circumstances of the case the Ld. CIT(A) has erred in law as much as in fact while passing the impugned order in violation of principle of natural justice as the impugned order has been passed without affording the appellant an opportunity to be heard.

4.

That under the facts and circumstances of the case, the Ld. AO, has erred in law as much as in facts, while making addition of Rs. 8,15,75,981/-, based merely on assumptions and presumption and without properly appreciating the submissions filed by the appellant and the Ld. CIT(A) has also erred in sustaining the same.

5.

That under the facts and circumstances of the case, the Ld. AO has erred in law as much as in facts, while making an addition of Rs. 8,15,75,981/- u/s 68 r.w.s 115BBE without appreciating the provisions of section 68 of the Act, and the Ld. CIT(A) has also erred in sustaining the same.

6.

That under the facts and circumstances of the case, the Ld. CIT(A) has erred in law as much as in fact while sustaining the impugned additions, made by the Ld. AO on the basis of third-party statements recorded u/s 132(4) without giving the assessee any opportunity of cross-examination, which is a clear violation of the principles of natural justice and renders the addition unsustainable.

7.

That under the facts and circumstances of the case, the Ld. CIT(A) has erred in law as much as in fact in sustaining the addition made by the Ld. AO merely on the basis of electronic records, WhatsApp chats and digital material, independent evidence on record to establish that the transactions entered into by the appellant were non-genuine and further without there being any valid certificate u/s 65B of the Indian Evidence Act, 1872 in support of such alleged electronic evidence.

8.

That under the facts and circumstances of the case, the Ld. CIT(A) has erred in law as much as in fact in sustaining the addition made by the Ld. AO as the Ld. AO has completed the assessment proceedings without adhering to the prescribed procedures outlined in the Digital Evidence Investigation Manual issued by the CBDT under Section 119 of the Income Tax Act, 1961, for the conduct of search and seizure operations, thereby rendering the assessment legally infirm.

9.

That the appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal before or during the course of hearing.

10.

That each ground is independent and without prejudice to each other.”

“49.

As stated above, in this case, the date of handing over of seized material to the petitioner's JAO is on 25.11.2022 and the said date is the date of initiation of search for the petitioner. Thus, in the present case, it is crystal clear like cloudless sky that the initiation of search was subsequent to 01.04.2021, for which, the provisions of Section 153C will not apply. Therefore, the impugned notices dated 07.02.2023 is unsustainable and the same were issued without authority and against the provisions of Sub-Section (3) of Section 153C of the Act.

50.

In such view of the matter, all the impugned notices are liable to be quashed and accordingly, all the impugned notices dated 07.02.2023 issued by the 2nd respondent are quashed.”

“4.

We have considered the rival submissions and have gone through the records before us. We find that a similar issue arose in the case of MLR Foods Pvt. Ltd. Vs. DCIT in ITA No. 1796 to 1799/Del/2026 and 1800 to 1802/Del/ 2026, order dated 10.07.2026. This order has been authored by this Bench only and since the legal issues raised before us in these appeals have been adjudicated, we may extract the relevant portions from this order for reference:

"3.

We have carefully considered the rival submissions and have gone through the records before us. It is clear by now that, in the case of a person, who is potentially a subject matter of section 153C of the Act, the date of search in his case would be the date of the recording of satisfaction, which in this case is 18.08.2023. Since, this date is clearly beyond the date of 01.04.2021, hence, there is no hesitation in holding that the proceedings u/s 153C of the Act are void-ab-initio. For this purpose, we can do no better than to extract certain portions from the head-note of the decision in the case of Shivdham Buildtech (P) Ltd. (supra) as under:

"Considered the rival submissions and material placed on record. The assessee in appeal has assailed validity of the assessment order passed under section 153C read with section 143(3). It is an undisputed fact that addition has been made in the hands of the assessee on protective basis consequent to search in the case of Alankit Group on 18-10-2019. The satisfaction note in case of the assessee was drawn by the AO on 11-10-2022. As per the first proviso to section 153C(1), the date of search in the case of person other than the searched person shall be the date on which books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person are received by the AO of other person. Thus, in the case of a person other than the searched person, the relevant date would be the date on which relevant documents or seized material is received by the AO of the person other than the searched person. [Para 19] It is viewed that in absence of specific date of handing over the seized material to AO of the assessee, the date of issue of order under section 127 has been wrongly assumed by the CIT(A) as the date on which seized material was received by the AO of assessee. The Jurisdictional High Court ITA No.- 1772 to 1778/Del/2026 Rakesh Goel in the case of Pr. CIT (Central-1) v. Ojjus Medicare (P.) Ltd. [2024] 161 taxmann.com 160/465 ITR 101 (Delhi) has held that where the date of handing over of documents is not available, date of issuance of satisfaction note by the Assessing Officer under section 153C would be pertinent for the purpose of first proviso to section 153C. In the present case, the AO had recorded satisfaction on 11-10-2022. Since, the date of handing over of seized material is not emanating from the records, the date of recording of satisfaction i.c., 11-10-2022 shall be considered as the date of receiving seized material by the AO of the assessee. [Para 20] Section 153C was amended by the Finance Act, 2021 with effect from 1-4-2021 whereby sub-section (3) was inserted. [Para 21] By virtue of above amendment to section 153C, no assessment under section 153C can be made in the case of other person under section 153C if the date of search falls beyond 1-4-2021. As a corollary, any notice issued for making assessment under section 153C in the case of a non-searched person after 1- 4-2021 would be non-est. [Para 22] Thus, applying the amended provisions of section 153C and the law explained by the Jurisdictional High Court in the case of Ojjus Medicare (supra), to the facts of the instant casc, it is found that the notice under section 153C issued by the AO to assessee and thereafter, assessment order passed under section 153C is unsustainable and is liable to be quashed on the ground of jurisdiction. In this regard, force is also drawn from the decisions of coordinate Benches in the case of Smt. Geetanjali Bhayana v.DCIT [2026] 183 taxmann.com 95 (Delhi - Trib.) and Lekh Raj v. DCIT [ITA No.3181/Del/2025, dated 30-3-2026]. It is held accordingly. [Para 23]" Accordingly, all the seven appeals filed by the assessee are allowed."

3.1

Considering the clear legal position regarding searches conducted after 1.4.2021, the assessment orders cannot be treated as being sustainable in the eyes of law. Accordingly, the assessee succeeds with respect to the grounds challenging assumption of jurisdiction.”