DCIT vs A.G. Universal Limited & Anr.

Per Kavitha Rajagopal, JM:

The captioned appeals are filed by the Revenue challenging the orders passed by the Ld. Commissioner of Income Tax (Appeals) [‘the Ld. CIT(A)’, for short] passed under Section 250 of the Income Tax Act, 1961 ('the Act' for short) for Assessment Years (‘AYs’, for short) 2010-11, 2011-12 & 2013-14. As the facts are identical, we hereby dispose of these appeals by a consolidated order taking ITA No.1470/Del/2026 relevant to AY 2013-14 as a lead case.

The Revenue has raised the following grounds of appeal:-

It is observed that the Revenue has filed the present appeals belatedly with a delay of ten days beyond the period of limitation for which an application for condonation of the delay has been filed. Upon perusal of the same, we deem it fit to condone the delay there being ‘sufficient cause’ for the said delay. Delay is hereby condoned.

Brief facts are that the assessee company filed its return of income dated 26.09.2013 declaring total income at Rs.1,25,880/- for the year under consideration. Pursuant to search and seizure proceedings u/s 132 of the Act carried out on Alankit Group, Shri Alok K. Agarwal, Ankit Agarwal and in some of the close associates and key employees of Shri Alok K. Agarwal dated18.10.2019, certain incriminating materials were seized which revealed that Shri Alok K. Agarwal has provided accommodation entries by way of bogus short-term capital loss to various persons through several entities managed and controlled by him and his associates in which the assessee was also one of the beneficiaries of such accommodation entries. The Ld. AO issued notice u/s 153C of the Act dated 15.06.2022 in response to which the assessee filed its return of income dated 11.10.2023 declaring total income as the same as that of the returned income. The Ld. AO issued notices u/s 143(2) and 142(1) of the Act which was duly issued and served upon the assessee. The Ld. AO, then, passed the assessment order dated 29.02.2024 determining total income at Rs.1,04,25,880/- as against the returned income after making addition of Rs.1 crore u/s 68 of the Act and Rs.3 lakh u/s 69C of the Act as unexplained income and unexplained expenditure, respectively. Aggrieved, the assessee was in appeal before the first appellate authority, who, vide order dated 10.10.2025, allowed the appeal filed by the assessee on the legal ground that the impugned assessment order would fall beyond the ambit of ten assessment years as per the provisions of Section 153C of the Act by relying on the judgement of the Hon’ble jurisdictional High Court in the case of Ojjus Medicate Private Ltd. [2024] 161 taxmann.com 160 (Delhi High Court). Aggrieved, the Revenue is in appeal before us challenging the impugned order of the Ld.CIT(A).

We have heard the rival submissions and perused the material available on record. It is observed that the assessee has raised several grounds, both of legal as well as on the merits of the case before the Ld. CIT(A), who, then, allowed the legal grounds raised by the assessee thereby quashing the assessment order on the ground that the impugned assessment order is beyond the period of ten years for which the Ld. AO cannot assume jurisdiction to assess the same and thereby rendering the other grounds of appeal as academic in nature. Before us, the limited issue was with regard to the challenge of the legal ground decided by the Ld.CIT(A) by extensively relying on the decision of the Hon’ble jurisdictional High Court in the case of Ojjus Medicare Pvt. Ltd. (supra).

The ld. DR contended that the Ld.CIT(A) ought not to have relied on the decision in the case of Ojjus Medicare Pvt. Ltd. (supra) for the reason that the Revenue has filed an SLP against the said decision before the Hon’ble Apex Court which is pending adjudication. Further, the Ld. DR submitted that the Ld.CIT(A) has erred in reckoning the relevant assessment year from the date of satisfaction note drawn or from the date of issue of notice u/s 153C of the Act and has failed to take into consideration that the same has to be reckoned from the date of initiation of search. The Ld. DR relied on the amendment introduced by the Finance Act, 2017 stating that in the block period of six years/ten assessment years has to be reckoned from the assessment year relevant to the previous year in which search is conducted as per Section 153C(1) of the Act. The Ld. DR prayed that the order of the Ld. AO be upheld and that of the Ld. CIT(A) be set aside.

Per contra, the Ld. AR for the assessee controverted the said fact and stated that it is now a settled proposition of law by the decision of the Hon’ble jurisdictional High Court in the case of Ojjus Medicare Pvt. Ltd. (supra), which is now the prevailing law as the same has not been reversed by the Hon’ble Apex Court. The ld. AR contended that the date of recording of satisfaction note by the AO of the searched person as well as the date of handing over of the incriminating documents to the AO of the other person are the same which is 09.06.2022 and, hence, there is no dispute with regard to the same. The ld. AR argued that the Hon’ble High Court has categorically given a finding that in case of Section 153C of the Act, the date for reckoning the said assessment years has to be from the date of handing over of the documents to the AO of the other person and, if that is not available, then, it has to be the date of satisfaction note by the AO of the searched person. Here, in the assessee’s case, both are on the same date and, hence, there is no dispute with regard to the same. The Ld. AR objected to the Ld. DR’s interpretation that for Section 153C of the Act, the date of search has to be considered for the purpose of reckoning the assessment year which is contrary to the decision of the Hon’ble High Courts. The Ld. AR relied on the decision of the Ld.CIT(A) and prayed that the order of the Ld.CIT(A) be upheld.

In the above facts of the case, the moot issue that requires adjudication is whether for the purpose of determining the block period of six/ten assessment years, the issue to be considered is whether it has to be reckoned from the date of search or the date of handing over of the document to the AO of the searched person and whether filing of SLP against the order of the Hon’ble jurisdictional High Court would disentitle the Tribunal to follow the judgement of the Hon’ble High Court even before the final outcome of the SLP and whether in the absence of the finality of the issue, the binding precedent of the jurisdictional High Court would prevail. Before getting into the said issue as to whether the impugned assessment year would fall beyond the ambit of ten assessment years, it is an undisputed fact which was also not controverted by the Ld. DR that as per the order of the ld. CIT(A) who had, in turn, relied on the assessment records, the date of recording of the satisfaction note by the AO of the searched person, as well as the date of handing over of the documents to the AO of the other person as mentioned in the satisfaction note was on 09.06.2022, subsequent to which the notice u/s 153C of the Act was issued on 15.06.2022. The Ld.CIT(A) has also in his order has reproduced the relevant portion of the satisfaction note dated 09.06.2022 which is also cited hereinunder for ease of reference:-

On the aforesaid facts, we would now delve into the findings of the Hon’ble jurisdictional High Court in the case of Ojjus Medicare Pvt. Ltd. (supra) with regard to the computation of six/ten block assessment year, where it has been held categorically that as per the first proviso to Section 153C of the Act, the reckoning of six/ten assessment years shall be from the date of handing over of the documents to the AO of the other person and not from the date of initiation of search or requisition made. It was further held that when the date of actual handing over is not available, then, there would be a presumption that the date of issuance of satisfaction note by the AO of the non-searched person would be the date of handing over of the documents for the purpose of the first proviso to Section 153C of the Act. The relevant extract of the said decision is cited hereinunder for ease of reference:-

From the above observation, it is evident that this position flows from the statutory claim of Section 153C of the Act which stands affirmed by the decision of the Hon’ble Apex Court in the case of CIT vs. Jasjit Singh, 458 ITR 437 (SC), following the principle laid down by the Hon’ble jurisdictional High Court in the case of CIT vs. RRJ Securities Ltd., 380 ITR 612 (Del). Accordingly, for the purpose of computing the prescribed block assessment years, the Revenue cannot mechanically adopt the date of search and, rather, has to take into consideration the relevant date of receipt/handing over of the seized material by the AO of the searched person to the AO having jurisdiction over the other person and where the actual date of handing over is not determinable from the record, then, the date of recording of the satisfaction note may assume significance, subject to the facts and the applicable statutory regime. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) having decided this issue in favour of the assessee by holding that the impugned assessment year falls beyond the scope of ten assessment years as per the provisions of Section 153C of the Act, thereby holding the impugned assessment order to be invalid and bad in the eyes of law. On the above observation, we dismiss the grounds of appeal raised by the Revenue.

In the result, the appeal filed by the Revenue hereby stands dismissed.

In these cases, as the facts are identical to those for the AY 2013-14, the findings given in ITA No.1470/Del/2026 would apply, mutatis mutandis, to these two appeals also.

In the result, both the appeals of the Revenue are hereby dismissed.

To sum up, all the appeals of the Revenue are hereby dismissed.