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Judgment
Per Raj Kumar Chauhan, Judicial Member:
These appeals o f the assessee are directed against the orders, both dated 27.02.2026 of ld . CIT(A)-30, New Delhi passed u/s 250 of the Inco me Tax Act, 1961 (hereinafter referred to as “the Act”) wherein addition made vide assessment order dated 29 .03.2024 was confirmed and the appeals of the assessee were partly allowed.
By this common order, we propose to decide the ITA Nos. 2304 & 2305/Del/2026 as the parties are same and factual matrix is also same and in order to avoid multiplicity of decisio n, the same are being disposed off accordingly. ITA No. 2304/Del/2026 is taken as lead case.
At the time o f he aring, the ld. AR of the assessee pressed the legal issue vide ground no. 2 of grounds o f appeal “that on facts and circ umstanc es of the case and i n law, the Ld. C IT (A) err ed i n confirmi ng the proc eedi ng initiated u/s.153C and failed to consider t he fact that search year i n the case of non searc hed person is gover ned by the da te or t he year in whi ch the s eiz ed doc uments a re handed over to the jurisdicti onal ass essing officer and t he seized documents was rec ei ved by the JAO of the assessee on 17/11/2022, accordi ngly the year of s earch fo r t he assesse e is FY.2022-23, thus by vi rtue of secti on 153C(3) t he proceedi ng u/s ,153C cannot be i nitiat ed r ather proceedi ng u/s.147 shall be initiated against the assesse e, he nce the proceedi ng initiat ed u/s ,153C agai nst the assessee is viti ated i n la w and t he assessment is liable t o be quashed".
With regard to above ground, ld. AR of the assessee submitted that AO has recorded the reasons to initiate proceedings for issue o f notice u/s 153C of the Act on 19.06.2023. He fur ther submitted that no doubt, the original search was co nducted o n Sanjay Jain and Girdhari Lal Construction Pvt. Ltd., Inderjit Mehata Constructions Pvt. Ltd., BCC Ceme nt Pvt. Ltd. and their key persons on 26.10.2020, however, the AO of the sear ched person has recorded the satisfaction, for the sake of brevity, the satisfaction note is reproduced below:
He further submitted that after recording the above satisfaction by AO of searched person and o n rece ipt of relevant mater ial from the AO of the searched person, the proceedings were initiated by the AO of the assessee by issue of no tice u/s 153C of the Act and completed the assessment u/s 153C of the Act. He also sub mitted that as per the amended provisions and in specific, he broug ht to our notice section 153C (3) of the Act which is squarely applicable in this case and he submitted that the AO should have initiated proceedings u/ s 148 and not u/s 153C of the Act. The facts are exactly similar to the appeals filed by the assessee for AYs 2019-20 and 2020-21 as well and he submitted that this issue is squarely covered in favour of the assessee.
On the other hand, ld. DR of the Revenue relied on the orders of the authorities below .
We have considered the rival submissions and examined the material available on record. We observed that the assessment year 2019-20 under consideration clear ly falls outside the scope of application of section 153C of the Act, for the re aso n that the date of search for the unsearched parties are the date on which the documents were handed over to the Assessing Office r of such other person or fro m the date o n which the satisfaction was recorded by the Assessing Officer of the other person. In the g iven case, we noticed that the original search was conducted in Sanjay Jain and Girdhar i Lal Construction Pvt. Ltd., Inderjit Mehata Constructions Pvt. Ltd., BCC Ceme nt Pvt. Ltd. and their key persons on 26.10.2020. The proceedings were initiated based on the mater ial found during the afore said search in the case of the assessee by recording the satisfaction subsequently to handing over the said material. Since, the satisfaction was recorded subseque ntly, the Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd. ( 2024) 161 taxmann.com 160 (Delhi) has held that the searched assessment year for the unsearched person would be the date of hand ing over of the searched material for recording o f satisfaction, that being the case, the year of search in the present case of the assessee would be A.Y. 2023-24 because the said documents were received by JAO of assessee on 17.11.2022. Consequently, the amended provisions o f section 153C(3) of the Act would be applicable. The facts in the present case are identical to the facts in the case of co-ordinate Bench in Lekh Raj vs. DCIT (2026) 187 taxmann.co m 1104 (Delhi-Trib.) wherein the co-ordinate Bench held as under:
“7 . We have heard submissi ons m ade by r ival sides and hav e exami ned t he orders of aut hor ities bel ow. We have also c onsider ed the decision on which l d. C ouns el for the assessee has ve hementl y placed rel iance to buttress her arguments . T he assessee in appeal has assailed validity of the ass essment order passed u/s 1 53C r.w.s . 143(3) of the Act. It is an undisputed fac t that addition has been made i n the hands of the assessee o n prot ective basis consequent to s earc h i n the c as e of Navi n Mahipal Group on 16.09.2019. The satisfaction note in c as e of the assessee was drawn by the AO on 28.09.2021. As per the first pro viso to sec tion 153C(1 ), the dat e of search in the cas e of person other t han the searc hed per son shall be the date on whic h bo oks o f account or doc uments or assets seiz ed or requisitioned by the Assessi ng Officer having jurisdic tion over s uch other person are received by the AO of ot her pers on. Thus , in the case of a person ot her than the searched pe rson, the r el evant dat e would be the da te on which relevant documents or s eized mat erial is received by the A O of the person other t han the searched person. T he C IT(A ) in Para 14 of t he impugned or der has r ecorded t hat:
“it does not emanate from rec or d as t o when t he seized mat erial was handed over to AO, it is se en that the case of the app ellant was c entralised u/s 127 of the Act fr om Fari dab ad to New Del hi on 21.01.2021. Ther efore, the date 21.01.2021 may be taken as t he dat e on whic h the materi al was ha nded ov er to t he AO, that i s to s ay, that the mate rial was handed ov er to the AO in F.Y. 2020-21.” We are of the co nsidered view t hat in absence of specific date of handing ov er the seized material to A O of the assesse e, the date of issue of order u/s 127 of the Act has been wr ongl y assumed by the CIT(A ) as t he dat e on which seiz ed mat erial was r eceived by t he A O of assessee. The Ho n’bl e Jurisdictional Hi gh Court i n the case of PC IT vs. Ojjus Medicare(P.) Ltd (supra) has hel d that whe re the dat e of handi ng o ver of doc uments is not availabl e, date of issuanc e of satisfactio n note by t he Assessi ng Offic er u/s 153C of the Act would be perti nent for the purpos e of first pro viso to section 153C of t he Act. In the pres ent case, t he AO had rec orde d satisfac ti on on 28.09.2021. Since , the dat e of handing o ver of seiz ed mat erial is not emanati ng from t he records , t he dat e of recording of s atisfacti on i.e., 28.09.2021 shall be co nsidered as t he date of rec eiving s eized m ateri al by the AO of the assessee.”
8.Secti on 153C was amended by the Finance Act, 2021 with effect from 01.04.2021 whereby sub-s ecti on(3 ) was inser ted. The rel eva nt subsection is re produced herei nbelow:
“(3 ) Nothi ng contained in this s ection shall apply i n rela tion to a s earch i nitiated under secti on 132 or books of account, other documents or any ass ets requisitio ned under section 132A on or after t he 1s t day of April , 2021.” By vir tue of above am endment t o s ec tion 153C, no assessment u/s 1 53C can be made in the cas e of ot her person under s ection 153C of the Act if the da te of searc h falls beyo nd 01.04.2021. As a corollar y, any notice iss ued for maki ng assessment u/s 153C of the Act in t he case of a non-searched pers on after 01.04.2021 woul d be non-est.
9.Thus, applyi ng the ame nded provisions of s ecti on 153C of the Act and t he l aw ex plained by the H on’bl e Jurisdictional High Court i n the case of Ojjus Medicare(P .) Ltd. (supra), to facts of the i nstant cas e, we find that t he notice u/s 153C of the Act issued by t he AO to assess ee and ther eaft er, as sessment order pass ed u/s 153C is unsus tai nable and is liable to be quas hed on t he ground of j urisdicti on. We hold accordingl y.
10.In the resul t, impugned order is set-aside and appeal of the ass essee i s al lowed.”
Similarly, in IT A No.111/Del/ 2026 for AY 201 7-18 in the case of M/s. Shivdham Buildtech Pvt. Ltd., the ld. co-ordinate bench, wherein it was held as under:
“19.Considered the rival submissions and mat erial placed on record. The ass essee i n appeal has assailed validity of t he ass essment order passed u/s 153C r.w.s. 143(3) of the Act. It is an undisputed fact that additi on has been made in the hands of t he assess ee on prot ec tive basi s consequent to search i n the case of Alankit Group on 18.10.2019. The satisfaction note in case of the as sessee was drawn by the AO on 11.10.2022. As per the first pr ovis o to secti on 153C(1), the date of s earc h i n the ca se of person other t han the searc hed person shall be the date on whic h bo oks of acco unt or documents or assets seized or requisiti oned by the Assessi ng Officer having j urisdiction over suc h ot her pers on are received by the AO of other person. Thus, in the case o f a pers on ot her t han the searched person, the relevant date wo ul d be the date on which rel evant documents or s eiz ed mat erial is receiv ed by the AO of the pers on other than t he searched person.
20.We are of t he considered vi ew that in abs ence of specific da te of handi ng over the s eize d material to A O of the ass essee, the date of issue of order u/s 127 of the Act has been wr ongly assumed by the C IT(A ) as t he date on which s eiz ed material was received by the AO of assessee. The Hon’ble Juri sdictional High Co urt in t he case of PC IT vs. Ojjus Medicar e (P. ) Ltd (s upra) has he ld tha t where the date of handing over of d ocume nts is not availabl e, date of issuance of sati sfaction note by the Assessi ng Offic er u/s 153C of t he A ct woul d be perti nent for the purpose of first pro viso to sec tion 153C of t he Act. In the present c as e, the AO had recor ded satisfacti on on 11.10.2022. Since, the dat e o f handing over of seized mat erial is not emanati ng from t he rec ords, t he date of r ecordi ng of satisfaction i. e., 11.10.2022 shall be c onsidered as the date of r eceiving seized material by the AO of the assessee.
21.Secti on 153C was amended by t he Fi nanc e Act , 2021 with effect from 01.04.2021 whereby sub-s ecti on(3 ) was inser ted. The rele vant sub-s ecti on is re produced herei nbelow:
“(3 ) Not hi ng contai ned in this section shall apply i n rela tion to a s earch i nitiated under secti on 132 or books of account, other documents or any ass ets requisitio ned under section 132A on or after t he 1s t day of April , 2021.”
22.By virtue of above amendment t o section 153C, no assessment u/s 1 53C can be made in the cas e of ot her person under s ection 153C of the Act if the dat e of searc h falls beyo nd 01.04.2021. As a corollar y, any notice iss ued for maki ng assessment u/s 153C of the Act in t he case of a non-searched pers on after 01.04.2021 woul d be non-est.
23.Thus, a pplyi ng the ame nded provisions of s ection 153C of the Act and t he l aw ex plained by the H on’bl e Jurisdictional Hi gh Court i n t he case of Ojj us Medicare (P.) Ltd. (s upra), to the facts of the ins tant c ase, we find tha t the notice u/s 153C of the Act issued by t he AO to assessee and thereafter, assessment order passed u/s 153C is unsus tai nable and is liable to be quas hed on t he ground of jurisdiction. In t his r egard, we also fi nd force from the decisi ons of c oordinate B enc hes in the case of Geetanj ali Bhayana (supra) and L ekh Raj (s upra). We hold accordi ngly.”
Respectfully following the aforesaid decision, we are of the opinion that the reassessment proceed ing has to be adopted under substituted provisions i.e. u/s 14 7 r.w.s. 148 and the relevant provisio ns of section 153C(3) of the Act apply in the present case. Therefore, we are inclined to allow Ground No.2 raised by the assessee. Accordingly, the appeal of the assessee in ITA No. 2304/Del/2026 for AY 2018-19 is allowed.
The other grounds raised by the assessee are not adjudicated at this stage and the same are kept open.
Since, the facts in A.Y . 2020-21 are exactly similar to Assessment Year 2019-20, our above findings in AY 2019-20 are applicable mutatis mutandis in Assessment Year 2020-21 also. Accord ing ly, the appeal filed by the assessee for A.Y. 2020-21 is allow ed.
In the result, the appeals of the assessee in IT A Nos.2304 & 2305/Del/2026 are allowed .