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Judgment
Per Renu Jauhri, Accountant Member:
These two appeals by the assessee are directed against the orders dated 28.02.2025 of the Ld. Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the assessment orders dated 29.03.2023 passed under section 153C r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by Assessing Officer, DCIT, CC-30, New Delhi (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Ys.) 2019-20 and 2020-21 respectively. Due to common facts and circumstances involved, both the appeals are being disposed of vide a common order.
The grounds of appeal in ITA No. 2824/Del/2025 for A.Y. 2020-21 filed by the assessee are reproduced as under:
“1.On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is bad-in-law, barred by limitation and without jurisdiction and, therefore, the said notice along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
2.On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is illegal and without jurisdiction. The assessing officer has not complied with the provisions of section 153C and other allied provisions for issuance of such notice. Accordingly, the notice u/s 153C along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
3.On the facts and circumstances of the case and in law, the satisfaction note(s) recorded u/s 153C of the Act are bad-in-law and without jurisdiction and, accordingly, the assessment proceedings initiated on the foundation of such satisfaction note(s) and also the consequent assessment order passed are liable to be quashed and CIT(A) erred in not holding so.
4.On the facts and circumstances of the case and in law, the addition of Rs. 2,99,37,891/- made by the assessing officer on account of disallowance of purchases u/s 37 of the Act, is beyond the scope/jurisdiction of provisions of section 153C read with section 153A of the Income Tax Act, 1961 and CIT(A) erred in not holding so.
5.On the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming the addition made by the assessing officer of Rs. 2,99,37,891/- on account of disallowance of purchases u/s 37 of the Act.
6.On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is non-est as it does not have DIN on the body of the assessment order and CIT(A) erred in not holding so.
7.On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is contrary to the provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so.
The grounds of appeal in ITA No. – 2825/Del/2025 filed by the assessee are reproduced as under:
“1.On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is bad-in-law, barred by limitation and without jurisdiction and, therefore, the said notice along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
2.On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is illegal and without jurisdiction. The assessing officer has not complied with the provisions of section 153C and other allied provisions for issuance of such notice. Accordingly, the notice u/s 153C along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding SO.
3.On the facts and circumstances of the case and in law, the satisfaction note(s) recorded u/s 153C of the Act are bad-in-law and without jurisdiction and, accordingly, the assessment proceedings initiated on the foundation of such satisfaction note(s) and also the consequent assessment order passed are liable to be quashed and CIT(A) erred in not holding so.
4.On the facts and circumstances of the case and in law, the addition of Rs. 2,61,30,000/- made by the assessing officer on account of disallowance of purchases u/s 37 of the Act, is beyond the scope/jurisdiction of provisions of section 153C read with section 153A of the Income Tax Act, 1961 and CIT(A) erred in not holding so.
5.On the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming the addition made by the assessing officer of Rs. 2,61,30,000/- on account of disallowance of purchases u/s 37 of the Act.
6.On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is non-est as it does not have DIN on the body of the assessment order and CIT(A) erred in not holding so.
7.On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is contrary to the provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so.”
The assessee has raised the additional grounds of appeal which are reproduced below:
“1.On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is bad-in-law, barred by limitation and without jurisdiction and, therefore, the said notice along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
2.On the facts and circumstances of the case and in law, the notice u/s 153C issued by the assessing officer is illegal and without jurisdiction. The assessing officer has not complied with the provisions of section 153C and other allied provisions for issuance of such notice. Accordingly, the notice /s 153C along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so.
3.On the facts and circumstances of the case and in law, the satisfaction note(s) recorded u/s 153C of the Act are bad-in-law and without jurisdiction and, accordingly, the assessment proceedings initiated on the foundation of such satisfaction note(s) and also the consequent assessment order passed are liable to be quashed and CIT(A) erred in not holding so.
4.On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is contrary to the provisions of section 153D of the Income Tax Act, 1961 and CIT(A) erred in not holding so.”
As the grounds of appeal and facts involved are identical, both the appeals are being disposed off by a common order and A.Y. 2019-20, (ITA No.-2824/Del/2025) is taken as the lead case.
Brief facts are that the company had filed its original return for A.Y. 2019-20 declaring income of Rs. 11,31,580/-. An order u/s 143(3) was passed accepting assessee’s returned income. Subsequently, a search action u/s 132 of the Act was conducted on Sh. Sanjay Jain, an entry operator and his associates and beneficiaries on 26.10.2020. Since, the assessee was one of the beneficiaries, having made bogus purchases of Rs. 3,83,20,500/- from these entities, its case was also centralised and proceedings u/s 153C were initiated. A notice u/s 153C was issued on 30.12.2022 pursuant to which assessment was finalised at an income of Rs. 2,72,61,580/- vide order dated 29.03.2023.
Aggrieved, the assessee preferred an appeal before the CIT(A), who dismissed the appeal vide his order dated 28.02.2025.
Further, aggrieved, the assessee has filed present appeal before the Tribunal.
As the additional grounds raised by the assessee are purely legal in nature, after hearing both the parties, these are hereby admitted, in view of settled position of law in this regard. We, first, take up the legal grounds relating to validity of section 153C proceedings.
Before us, the Ld. AR has, at the outset, submitted that Ground no. 6 & 7 pertaining to DIN and 153D are not being pressed. With regard to the remaining legal grounds, it has been submitted by him that the notice u/s 153C was issued on 30.12.2022, and the proceedings initiated after 1.4.2021 are invalid and liable to be quashed.
In support of his contentions, the Ld. AR has placed on record, the following documents:
Copy of the Satisfaction Note recorded by the AO of the searched person which is undated.
Copy of notice issued u/s 153C for A.Y. 2019-20 dated 30.12.2022.
Ld. AR has argued that though the satisfaction note is undated, it is clear from the assessment order that the assessee’s case was centralized vide order u/s 127 dated 22.12.2022, with the present AO and, therefore, the handing order of seized material and recording of satisfaction u/s 153C would have taken place only after 22.12.2022.
Ld. AR has further placed reliance on the decision of the Hon’ble jurisdictional High Court in the case of PCIT vs. Ojjus Medicare Pvt. Ltd. (2024) 465 ITR 101 (Del.), wherein it has been affirmed that the date of search in the case of ‘other person’ is the date of handing over of seized material as per the proviso of sub-section (1) of section 153C of the Act.
Further, in the case of Harigovind vs. ACIT (2025) 180 taxmann.com 197, it has been held that no notice u/s 153C could be issued if the date of deemed search is after 1.4.2021, in view of provision of section 153C(3) of the Act. Accordingly, Ld. AR has argued that the order u/s 153C dated 30.12.2022 is invalid in view of the factual matrix of the case and in the light of legal position as above.
Ld. DR, on the other hand, argued that the date of search being before 1.4.2021, the proceedings have been validly initiated. He filed, a written submission enclosing a report of the AO, wherein only the details of transactions and a copy of the ledger account of assessee have been furnished and no comments on the relevant dates of handing over of seized material etc. have been furnished.
We have heard the rival submissions and perused the material available on record. We note that pursuant to the search conducted on 26.10.2020, case of the assessee, being a beneficiary, was centralized with Central Circle 30, New Delhi vide order u/s 127 dated 22.12.2022.
Thereafter, notice u/s 153C was issued on 30.12.2022 based on satisfaction recorded by the AO, which is undated. In view of the fact, that the AO acquired the jurisdictional over the case of the assessee on or after 22.12.2022, it can be safely presumed that the condition of handing over of seized material before 1.4.2021 was not satisfied in the instant case for initiating proceedings u/s 153C of the Act.
Further, Ld. DR was given an opportunity to controvert the above factual position but he could not bring requisite documents to prove his contentions regarding the date of deemed search being prior to 1.4.2021.
In view of above facts and circumstances, the provisions of section 153C and the judicial pronouncements in the case of Ojjus Medicare (supra) and Harigovind (supra), we hold that the notice u/s 153C dated 30.12.2022 was invalid and hence the same is liable to be quashed. Since the proceedings u/s 153C have been quashed, rest of the legal and factual grounds are rendered academic and hence not being adjudicated upon.
In the result, appeal of the assessee is allowed.
In ITA No. 2825/Del/2025 for 2020-21, issues involved and the facts and circumstances are identical and hence above order shall apply mutatis mutandis to this appeal also.