AI Structured Summary
Not yet generated for this judgment
Judgment
Per Renu Jauhri, Accountant Member:
This appeal by the assessee is directed against the order dated 24.11.2025 of the Ld. Commissioner of Income Tax, Appeal, Delhi-25 [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the assessment order dated 08.03.2024 passed under section 153C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Assessing Officer, DCIT, Central Circle-26, (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2014-15.
The assessee has raised the following grounds of appeal
“1.The Ld. AO erred in law and on facts in initiating the proceedings u/s 153C of the Act and the Ld. CIT(A) erred in confirming the action of the AO in the facts and circumstances of the case.
1.1The Ld. AO erred in law and on facts in framing the assessment u/s 153C of the Act for the instant year and the Ld. CIT(A) erred in confirming the action of the AO in the facts and circumstances of the case. The instant year was also beyond the block period permissible in the facts of the case.
2.The Ld. AO erred in law and on facts in framing the assessment based on invalid foundational notice u/s 143(2) issued in contravention of CBDT Instruction dated 23.06.2017 and the Ld. CIT(A) erred in confirming the action of the AO in the facts and circumstances of the case.
3.The Ld. AO erred in law and on facts in making addition of Rs. 80,00,000/- u/s 69A of the Income Tax Act and the Ld. CIT(A) erred in sustaining the addition in the facts and circumstances of the case.
4.The Ld. AO erred in law and on facts in making addition of Rs. 2,40,000/- u/s 69C of the Income Tax Act and the Ld. CIT(A) erred in sustaining the addition in the facts and circumstances of the case.
5.The Ld. AO erred in law and on facts in not following principles of natural justice. Neither copies of any statements relied on for making additions were confronted to the assessee nor opportunity of cross examination provided. The Ld. CIT(A) erred in confirming the action of the AO in the facts and circumstances of the cases.
6.The Ld. AO erred in law and on facts in charging interest of Rs. 30,55,320/- u/s 234B of the Income Tax Act and the Ld. CIT(A) erred in confirming the action of the AO in the facts and circumstances of the case. The appellant denies its liability towards interest charged u/s 234B of the Income Tax Act.
7.The appellant craves leave to amend or alter all or any of the aforesaid grounds of appeal and amend, alter or add any other ground of appeal.”
Brief facts of the case are that the assessee company had filed its original return of income for A.Y. 2014-15 on 30.03.2016 declaring Nil income.
Subsequently, during the course of a search conducted u/s 132 of the Act on Alankit Group of cases, it was found that the group was engaged in providing accommodation entries to different entities. Some incriminating documents in the name of the assessee were also found from the searched premises and, therefore, its case was centralized vide order u/s 127(1) of the Act dated 15.01.2024.]
On 29.06.2022, a notice u/s 153C was issued to the assessee in response to which return declaring Nil income was filed on 12.07.2022. Subsequently, the assessment was completed u/s 153C vide order dated 8.3.2024 at assessed income of Rs. 82,40,000/- after making addition of Rs. 80,00,000/- u/s 69A and Rs. 2,40,000/- u/s 69C of the Act. Assessee’s appeal against this order was dismissed by the CIT(A) by order dated 24.04.2025.
Aggrieved, the assessee has filed appeal before the Tribunal. Several legal and factual grounds have been raised by the assessee.
We first take up the legal ground challenging the validity of 153C proceedings.
Before us, both the parties have argued at length and filed written submissions which have been taken on record. Copy of the satisfaction note u/s 153C have also been filed by the Revenue.
Ld. AR has submitted that the date of search in this case would be the date of handing over of the seized material by the AO of the searched entity to the AO of the assessee in view the proviso to section 153C(1) of the Act. Since the satisfaction u/s 153C by the AO of the searched person was recorded on 24.06.2022, therefore, the date of handing over of seized material can safely be presumed to be 24.06.2022 or thereafter. Hence, the date of search is after 1.4.2021.
In view of the provisions of section 153C(3) of the Act, no notice u/s 153C could have been issued on or after 1.4.2021. In view of above facts and the legal provisions, proceedings u/s 153C in the case of the assessee are liable to be quashed.
In this regard, Ld. AR has placed reliance on several decisions of the Hon’ble jurisdictional and other High Courts and also of the coordinate benches in support of his arguments.
On the other hand, Ld. DR has submitted that the satisfaction note based on the seized material was recorded on 24.06.2022. The same was approved by the Joint Commissioner of Income Tax on 27.06.2022 and, vide F. No. DCIT (CC-28) / Misc./2022-23/819 dated 24.06.2022, the satisfaction note along with the related annexures / seized material was forwarded by the DCIT, Central Circle-28, New Delhi to the ITO, ward-16(3), New Delhi for initiating proceedings under section 153C. Notice dated 29.06.2022 was issued which fully with the requirements of section 153C and, therefore, the appeal of the assessee deserves to be dismissed.
We have heard the rival submissions and perused the material available on record. Admittedly, the deemed date of search in the case of assessee as per the proviso to section 153C(1) of the Act is on or after 24.06.2022 on which the date, AO of the searched person recorded his satisfaction and forwarded the same alongwith seized material to the AO of the assessee. This legal position has been affirmed by the Hon’ble jurisdictional High Court in the case of PCIT v. Ojjus Health Care Pvt. Ltd. 161 taxmann.com 160 (Delhi).
Further, the date of search being after 1.4.2021, the provisions of section 153C would not apply in view of subsection (3) of section 153C of the Act. Thus, in the present case, date of search being after 1.4.2021, no notice u/s 153C could have been issued as has also been held by the Hon’ble Madras High Court in the case of Harigovind vs. ACIT [2025] 180 taxmann.com 197 (Madras).
In view of above, we hereby quash the notice u/s 153C dated 29.06.2022 and the consequent assessment order dated 08.03.2024. Since the proceedings have been quashed, other grounds are rendered academic and hence not being adjudicated upon.
In the result, appeal of the assessee is allowed.