Deputy Commissioner Of Income Tax vs Nutshell Vyapaar Pvt. Ltd.

“1.

Ld. CIT(A) erred in not considering the fact that evidences in the form of incriminating ledgers shows that assessee has paid cash of Rs. 3,61,00,000/- against accommodation entries. Further, same is corroborating with excel sheet i.e 'KISHAN GOYAL FINAL.xlsx'. Moreover, the credits received in appellant bank account maintained with HDFC Bank in lieu of cash confirms the same.

2.

The details of cash paid is also reflecting in excel file' Rakesh sharma.xlsx' which also have details of accommodation entries taken against cash paid.

3.

Ld. CIT(A) has erred in not considering that bank account entries recorded by Sh. Sunil Kumar Gupta in excel and tally are duly reflected in the bank account statements and hence the corresponding cash entries recorded by Sh. Sunil Kumar Gupta in the same excel and tally cannot be denied. The reliance in this regard can be placed upon the decision of Hon'ble Jurisdictional High Court of Delhi in the case of Karun Dube vs. ACIT, Central Circle-9, New Delhi (ITA NO. 134 OF 2008 Dated March 10, 2008) wherein the Hon'ble Court held that a document is to be accepted or rejected in totality and it cannot be said that part of the document is true and other part is false.

4.

Ld. CIT(A) has erred in not considering the fact that appellant failed to furnish relevant details for the nature of credits received in its bank account to establish that assessee is not the beneficiary against the cash paid for receipts in its bank account.

5.

That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.

6.

That the grounds of appeal are without prejudice to each other.

7.

That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal.”

“1.

That the notice issued and the assessment order passed under Section 153C of the Income Tax Act, 1961 (the Act') by the Assessing Officer ('AO') are fundamentally flawed, being without jurisdiction, barred by limitation, and passed in violation of the statutory framework governing such proceedings, thereby rendering them legally unsustainable.

2.

The notice issued under Section 153C of the Act and the consequent assessment proceedings are illegal, void ab initio, and without jurisdiction, as the statutory preconditions for invoking Section 153C of the Act were not satisfied, rendering the proceedings bad in law and liable to be quashed.

3.

That on the facts and in the circumstances of the case, the AO has erred in failing to record the requisite satisfaction as mandated under law, thereby rendering the impugned proceedings invalid, bad in law, and without jurisdiction.

4.

On the facts and circumstances of the case and in law, the proceedings initiated under section 153C of the Act are bad in law as the seized material neither has any bearing on the determination of the total income of the assessee nor is there any valid satisfaction recorded by the Assessing Officer to this effect.

5.

That the approval granted under Section 153D of the Act for passing the assessment order under Section 153C is invalid, as it has been granted in a mechanical manner, without independent application of mind, rendering the assessment order bad in law.

6.

That on the facts and in law, the approval under section 153D stands vitiated due to non-application of mind, as both the proposal and the approval are mere carbon copies across years and group entities, issued in the fag end, in breach of the statutory mandate.

7.

That the approval under Section 153D of the Act is bad in law as both the proposal and the approval under Section 153D were invalid being issued without a Document Identification Number (DIN) in violation of CBDT Circular No. 19/2019 dated 14.08.2019.

8.

On the facts and in law, the AO failed to appreciate that, in the absence of incriminating material found during the search, the interference with a completed assessment and additions under Section 153C of the Act are unsustainable and without jurisdiction.

9.

That the Ld. AO has erred on the facts and in law in framing the assessment for the relevant year on the basis of certain dumb documents which are not related to the appellant and is the personal working of a third unknown person containing details best known to him.

The Assessee craves leave to add to, alter, amend, and/or withdraw any ground or grounds of appeal either before or during the course of hearing the appeal.”

“10.

A co-ordinate Bench in ITA No. 3823 to 3830/Del/2026 para 9 to 12 observed as under:

“9.

From examination of record in light of aforesaid rival contentions, it is crystal clear that Ld. CIT(A) vide order dated 10.02.2026 upheld validity of assessment order u/s 153C of the Act dated 30.03.2023 of ld. AO.

9.1

From sequence of events, it is evident that search u/s 132 of the Act on Alankit Group was carried out on 18.10.2019, order u/s 127 of the Act in the case of assessee was passed on 20.10.2020, date of Satisfaction Note in the case of assessee by AO of other than searched person was recorded on 24.12.2021 page No. 184-207 of paper book. Notice issued u/s 153C of the Act in the case of assessee is dated 28.12.2021, page No. 317 of paper book and assessment order u/s 153C of the Act in the case of assessee dated 30.03.2023 is on page No. 100-157 of paper book.

10.

A co-ordinate Bench of ITAT in ITA No. 5149/Del/2025 titled as Ajay Gupta vs. DCIT in order dated 16.02.2026 in para No. 2 to 7 is reproduced as under:

“2.

At the outset, the ld counsel for the assessee drew our attention to the first ground that the order passed by the ld AO u/s 144 r.w.s. 153C of the Act is barred by limitation and hence, without jurisdiction. The relevant grounds reads as under:-

“1.

That, the notice dated 29.06.2022 issued under Section 153C of the Income Tax Act, 1961 ('the Act') and the assessment order dated 16.03.2024 passed under Section 144 r.w.s. 153C of the Act by the Assessing Officer ('AO') are illegal, bad in law, barred by limitation and without jurisdiction.”

3.

The ld counsel for the assessee explained that search u/s 132 of the Act was conducted on M/s. Hans Group on 06.01.2021. During the course of search incriminating documents were seized in relation to assessee herein also. The AO while completing the assessment in M/s. Hans Group of cases noted that certain seized documents pertained to an information contained thereon relevant to Ajay Gupta i.e. person other than searched person, hence, a satisfaction note was drawn on 28.06.2022 to initiate proceedings u/s 153C r.w.s. 153A of the Act in the case of the assessee for AYs. 2015-16 to 2020-21. The relevant assessment year before us is AY 2015-16. The ld counsel for the assessee stated that the assessee’s case was transferred to the Central Circle31, New Delhi by the order passed by the ld PCIT u/s 127 of the Act on 14.02.2022. The ld counsel for the assessee further stated that notice u/s 153C of the Act was issued to the assessee by ACIT, Central Circle-31, Delhi dated 29.06.2022. The original return of income was filed by the assessee u/s 139(1) of the Act on 29.09.2015 and in response to the notice u/s 153C of the Act, the assessee stated that the return originally filed may be treated as a return in response to the notice u/s 153C of the Act. Accordingly, the assessment was completed by the ld DCIT, Central Circle-31, New Delhi vide order dated 16.03.2024. According to the ld counsel, the assessment order passed u/s 153C r.w.s. 144 of the Act is barred by limitation. Ld counsel for the assessee stated that in terms of provisions of Section 153B(1)(b)(ii) of the Act, there are two limbs provided in this Clause (ii). Ld counsel for the assessee explained that as per Clause (ii), there are two limbs that provides the time limit for completion of assessment u/s 153C of the Act and the first limb of Clause (ii) of the said provision provides the time limit for completion of assessment within 12 months from the end of the Financial Year in which last authorization of search u/s 132 of the Act is executed. According to the ld counsel, as per this, time limit of assessment u/s 153C of the Act in the assessee’s case should have been completed by 31.03.2022 as date of search u/s 132 of the Act is dated 06.01.2021. The second limb of Clause (ii) of the said provision provides that time limit is 12 months from the end of the FY in which books of account or documents seized are handed over u/s 153C of the Act of that 3rd party. According to the ld counsel, the order passed u/s 127 of the Act dated 14.02.2022 with the same AO of the searched person as well as other than the searched person i.e. the assessee herein, is the same AO i.e. DCIT, Central Circle-31, Delhi. The ld counsel for the assessee stated that this issue now stands covered by the decision of the Hon’ble Bombay High Court in the case of Vijay Bihari Kandhari Vs. ACIT in Writ Petition No. 2764 of 2022 dated 17.11.2025 wherein, the Hon’ble Bombay High Court considered the decision of the Hon'ble Supreme Court in the case of Super Malls Pvt. Ltd Vs. PCIT 423 ITR 281 wherein, it is held that the requirement of transmitting the documents seized from the searched person would not arise if the AO of the searched person and the other person is one and same. There is no question of transmitting such seized documents to oneself. The ld counsel for the assessee drew our attention to the decision of the Hon'ble Supreme Court in the case of Super Malls (supra) wherein, it is held in para 6 as under:-

"6.

This Court had an occasion to consider the scheme of Section 153C of the Act and the conditions precedent to be fulfilled/complied with before issuing notice under Section 153C of the Act in the case of Calcutta Knitwears (supra) as well as by the Delhi High Court in the case of Pepsi Food Pvt. Ltd. (supra). As held, before issuing notice under Section 153C of the Act, the Assessing Officer of the searched person must be "satisfied" that, inter alia, any document seized or requisitioned "belongs to" a person other than the searched person.

That thereafter, after recording such satisfaction by the Assessing Officer of the searched person, he may transmit the records/documents/things/ papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessment under Section 158BD of the Act and the other provisions of Chapter XIV-B shall apply.

6.1

It cannot be disputed that the aforesaid requirements are held to be mandatorily complied with. There can be two eventualities. It may so happen that the Assessing Officer of the searched person is different from the Assessing Officer of the other person and in the second eventuality, the Assessing Officer of the searched person and the other person is the same. Where the Assessing Officer of the searched person is different from the Assessing Officer of the other person, there shall be a satisfaction note by the Assessing Officer of the searched person and as observed hereinabove that thereafter the Assessing Officer of the searched person is required to transmit the documents so seized to the Assessing Officer of the other person. The Assessing Officer of the searched person simultaneously while transmitting the documents shall forward his satisfaction note to the Assessing Officer of the other person and is also required to make a note in the file of a searched person that he has done so. However, as rightly observed and held by the Delhi High Court in the case of Ganpati Fincap (supra), the same is for the administrative convenience and the failure by the Assessing Officer of the searched person, after preparing and dispatching the satisfaction note and the documents to the Assessing Officer of the other person, to makea note in the file of a searched person, will not vitiate the entire proceedings under Section 153C of the Act against the other person. At the same time, the satisfaction note by the Assessing Officer of the searched person that the documents etc. so seized during the search and seizure from the searched person belonged to the other person and transmitting such material to the Assessing Officer of the other person is mandatory. However, in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153C of the Act is fulfilled. In case, where the Assessing Officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. "

(Emphasis supplied)

4.

Hon'ble Supreme Court held that where the AO of the searched person and other than the searched person is the same, it is sufficient by the AO to note in the satisfaction note that the documents seized from the searched person belonged to the other person and once the notice was sent then requirement of Section 153C of the Act is fulfilled. In case where the Assessing Officer of the searched person and the other person is the same there can be one satisfaction note prepared by the Assessing Officer as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other person. The ld counsel for the assessee before us filed a chart of chronology of dates which reads as under:-

Sl No. Particulars ITA No. 5149/Del/2025 Remakrs, if any

1.	Search under Section 132 of the IncomeTax 06.01.201 Act, 1961 (‘the Act’)	06.01.2021
2.	Order passed under Section 127 of the Act	06.01.2021
3.	Date of Satisfaction note drawn in the present case	28.06.2022	Issued by DCIT, Cenral Circle-31, Delhi
4.	Notice issued under section 153C of the Act	29.06.2022	Issued by ACIT, Cetral Circle-31, Delhi
5.	Assessment order passed under Section 153C/144 of the Act	16.03.2024	Passed by DCIT, Central Circle-31, Delhi

5.

From the above chart, the ld counsel explained that once the order u/s 127 of the Act is passed and the assessee’s case is transferred to the AO with whom the searched assessee’s case i.e. in the present case Hans Group are lying including the seized material of the assessee, the requirement as envisaged in provisions of Section 153C of the Act are fulfilled. Hence, he stated that limitation starts with date of 14.02.2022. Ld counsel for the assessee hence stated that the assessee’s case is squarely covered by the decision of the Hon'ble Supreme Court in the case of Super Malls (supra) and the decision of the Hon’ble Bombay High Court supra. When these facts are confronted with the ld CIT DR he stated that the Hon’ble Supreme Court in the case of Jasjit Singh reported in 2023 INSC 882 had held that the date of search of the third party would be the date on which the documents were handed over by the AO of the searched person to the AO of the third party. In the instant case, the date of handing over of seized documents to the AO of the assessee was 28-06-2022 on which date satisfaction note was recorded. Hence considering the limitation as per Clause(ii) of Section 153B of the Act, the AO of the assessee has got time to complete the assessment upto 31.3.2024 and hence the assessment framed on 16.3.2024 is not barred by limitation.

6.

We have heard the rival contentions and gone through the material available on record. In the present case admittedly search was conducted on M/s. Hans Group on 06.01.2021, from where certain seized documents/ data pertain to an information contained thereon related to the present assessee Shri Ajay Gupta (person other than searched person) and accordingly initiated proceedings u/s 153C read with Section 153A of the Act in the case of the present assessee for AYs 2015-16 to 2020-21. Now the question arise what is limitation in this case. The case records of the present assessee was transferred to DCIT, Central Circle-31, New Delhi by the ld PCIT vide order passed u/s 127 of the Act dated 14.02.2022, on which date, the entire seized material came to be handed over to the AO of the assessee in terms of decision of the Hon'ble Supreme Court in the case of Super Malls (supra). Hence, reckoning the due date from 14.2.2022, the assessment order passed on 16.03.2024 is clearly barred by limitation.

7.

In view of the aforesaid observations, we quash the search assessment framed u/s 153C of the Act for the AY 2015-16 for more than one reason. Accordingly, the ground No. 1 raised by the assessee is allowed for the year under consideration.”

11.

From perusal of above material facts i.e. search dated 18.10.2019, order u/s 127 of the act dated 20.10.2020, recording of satisfaction note dated 24.12.2021, issuance of notice u/s 153C of the act dated 28.12.2021, it is evident that the records of assessee were transferred to DCIT, Central Circle-28, Delhi as per order dated 20.10.2020 page No. 314 to 316 of paper book. Hence, by respectfully following the judicial precedents, the limitation started from 20.10.2020 i.e. date of order u/s 127 of the Act, the assessment order dated 30.03.2023 is held to be barred by limitation. Accordingly, ground of appeal No. 1 is allowed.

12.

Since, entire assessment is quashed on legal ground and other grounds of appeal No. 2 to 15 having become academic in nature are left open.”