Naval Kishor Rajgarhia vs The ACIT

1.

That the Commissioner of Income Tax (Appeals) ['CIT(A)'], vide order dated 20.01.2026 has erred both on facts and in law in not quashing the assessment order dated 31.03.2024 passed under Section 153C of the Income-tax Act, 1961 ('the Act') by the Assessing Officer ('AO') on the ground of being illegal, bad in law, without jurisdiction, barred by time limitation and not in accordance with the provision of the Act.

2.

The notice issued under Section 153C of the Act and the consequent assessment proceedings are illegal, void ab initio, barred by time limitation 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 circumstances of the case and in law, the CIT(A) erred in uplolding the validity of proceedings initiated under section 153C of the Act, without appreciating that the AO had already issued a notice under section 148 on the very same issue. The subsequent initiation of proceedings under section 153C on the identical cause of action amounts to an impermissible assumption of jurisdiction and is therefore illegal, without authority of law and liable to be quashed.

4.

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.

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 AO/CIT(A) 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.

7.

That on the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the total income of the Appellant at Rs. 14,04,330/- as against the returned income of Rs. 3,40,930/-.

8.

That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in upholding the addition of Rs. 9,45,000/- made by the AO under Section 69A of the Act as unexplained money, on the alleged ground of cash receipt by the Appellant and by treating the same as an accommodation entry, without appreciating that no such cash was in fact received by the Appellant.

9.

That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in upholding the addition of Rs. 28,350/- made by the AO under Section 69C of the Act on the alleged account of commission expenditure at 3% purportedly paid by the Appellant on the aforesaid addition of Rs. 9,45,000/-, without appreciating that the Appellant had not undertaken any such transaction.

10.

That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in invoking the provisions of Section 150(1) of the Act by directing the AO to protect the interest of revenue by exploring the possibility or feasibility of taking remedial action to tax alleged escaped income arising from accommodation entry transactions, contingent upon the non-survival of assessments in the relevant years, which is arbitrary, beyond jurisdiction, and bad in law.

11.

That on the facts and circumstances of the case and in law, the AO has erred in wrongly invoking the provisions of Section 115BBE of the Act.

12.

That the documents and the material available on record have not been properly considered and judicially interpreted and have been wrongly ignored.

13.

On the facts and circumstances of the case and in law, the AO has erred in charging the interest under Section 234A/234B/234C/234D of the Act.

14.

On the facts and circumstances of the case and in law, the AO has erred in initiating the penalty proceedings against the Appellant under Section 271(1)(c) of the Act.”

“48.**********However, the spectre of abatement insofar as the "other person" is concerned would arise only after the jurisdictional AO has formed the requisite satisfaction of the material having "a bearing on the determination of the total income of such other person" and having formed the opinion that proceedings under Section 153C are liable to be initiated.

50.

What we seek to emphasise is that merely because Section 153C confers jurisdiction upon the AO to commence an exercise of assessment or reassessment for the block of years which are mentioned in that provision, the same alone would not be sufficient to justify steps in that direction being taken, unless the incriminating material so found is likely to have an impact on the total income of a particular AY forming part of the six AYs' immediately preceding the AY pertaining to the search year or for the "relevant assessment year".