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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:
The above captioned three appeals are filed by the assessee against the order of Ld. Commissioner Of Income Tax (Appeals), Delhi - 25 dated 27.08.2025 arising from the following assessment orders tabulated herein below. Since common issues are involved in all these appeals therefore, for the sake of convenience, these appeals are clubbed together for the purpose of hearing and adjudication.
| ITA Nos. 5988 & 5989/Del/ 2025 for the Assessment Years 2017-18 & 2018-19 | : | Arising from the assessment order dated 15.03.2024 passed by the Assessing Officer, DCIT, Central Circle-25, New Delhi (hereinafter referred as "the AO") u/s 153C of Income Tax Act, 1961 (hereinafter referred to as "the Act"). |
| ITA No.5990/Del/2025 for the A.Y. 2019-20 | : | Arising from the assessment order dated 18.03.2024, passed by the Assessing Officer, DCIT, Central Circle-25, New Delhi u/s 153C of the Act. |
The grounds of appeal raised by the Assessee in above captioned appeals are identical mutatis mutandis, except for the change in figures; which read as under:
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.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.
5.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.
6.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.
7.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.
8.On the facts and in law, excel sheets and tally data retrieved from electronic devices are inadmissible as evidence due to non-compliance with Section 65B of the Indian Evidence Act, 1872 and the CBDT Manual, rendering the additions made by the AO liable to be deleted.
9.On the facts and circumstances of the case and in law, the AO has erred in relying upon the retracted statements and material seized from the residential premises of Mr. Sunil Kumar Gupta without providing an opportunity to cross-examine despite specific request.
10.On the facts and circumstances of the case and in law, the AO erred in passing the assessment order under Section 153C of the Act without generating, allotting, quoting, and communicating a valid DIN, in contravention of Circular No. 19 of 2019 dated 14.08.2019, rendering the entire proceedings and assessment order invalid.
11.That the CIT(A) erred in upholding the validity of the notice and assessment under Section 153C and in sustaining the additions, without independent application of mind and without properly considering the detailed submissions filed, rendering the order arbitrary and legally unsustainable.
12.On the facts and circumstances of the case, the CIT(A) failed to appreciate the fact that the additions/disallowances made by the AO are beyond the scope of the satisfaction note.
13.On the facts and circumstances of the case and in law, the AO erred in making illegal additions and completing the assessment at income of Rs.1,24,64,403/-.
14.On the facts and circumstances of the case, AO has wrongly made addition of Rs.8,41,000/- under Section 69A of the Act and CIT(A) has erred in upholding the same.
15.On the facts and circumstances of the case, AO has wrongly made addition of Rs. 1,08,56,753/- under Section 68 of the Act and CIT(A) has erred in upholding the same.
16.On the facts and circumstances of the case and in law, the AO erred in charging interest and initiating penalty proceedings under Section 271AAC of the Act.”
Brief facts of the case are that the a search and seizure operation was mounted covering the Alankit Group, its key promoters Sh. Alok Kumar Agarwal, his son Ankit Agarwal and some of his close associates and key employees of Sh. Alok Kumar Agarwal on 18.10.2019. Further, the case of Alankit Group has been centralized with Central Circle-28, Delhi. Evidences recovered during the course of search proceedings and its analysis showed that Sh. Alok Kumar Agarwal, the key promoter of the Alankit Group, is involved in providing accommodation entries to various beneficiaries in shape of bogus Long Term Capital Gain / Short Term Capital Loss / Unsecured Loan / bogus speculation income / loss. Ms Pratishtha Garg was one of the beneficiary, who has taken bogus accommodation entry through Sh. Alok Kumar Agarwal and his controlled allies / entities. On 10.05.2022, the DCIT, Central Circle-28, New Delhi, the Assessing Officer of the searched person has recorded the satisfaction note to re-open the case of Ms Pratishtha Garg for the A.Y. 2017-18 u/s 153C of the Income Tax Act, 1961. Subsequently, the jurisdictional Assessing Office i.e. the ITO Ward-34(1), New Delhi recorded his satisfaction dated 23.06.2022 to re-open the case u/s 153C of the Act. After, recording of reasons, a notice u/s 153C was issued to the assessee on 29.06.2022. In response to the notice u/s 153C of the Act, the assessee has filed his return of income declaring total income of Rs.7,66,650/-. However the assessing officer has completed the assessment at income of Rs.1,24,64,403/- after making addition of Rs.1,16,97,753/-. Details of additions are given hereunder :-
Addition of Rs.8,41,000/- u/s 69A of the Act on account of unexplained money.
Addition of Rs.1,08,56,753/- u/s 68 of the Act on account of unexplained credit.
Aggrieved, assessee was in appeal before the ld. CIT(A). The ld. CIT(A) dismissed the appeal of the assessee. Aggrieved, assessee is now in appeal before us.
Before us, learned Counsel for the assessee submitted that the satisfaction note recorded for initiating proceedings under section 153C of the Act in the case of the assessee, a non-searched person is invalid as the same has not recorded the mandatory reference to the seized material having a bearing on the total income of the assessee.
Per contra, ld. DR relied on the order of the AO/CIT(A).
We have heard the rival submissions and perused the material available on record. The assessee in the grounds has raised the issue of invalid proceedings initiated under section 153C of the Act as no incriminating material belonging to the assessee, which has a bearing on total income of the assessee, was found during the course of the search and there being absence of any valid satisfaction being recorded as per law.
For adjudicating the issues at hand, it would be relevant to reproduce the Satisfaction note dated 23.06.2022 recorded by the AO of the assessee, i.e., non-searched person as under:
From the reading of paragraph 1 to 7 of the above satisfaction note dated 23.06.2022, as recorded by the AO of the assessee, the non-searched person, we find that the AO has not properly recorded that the documents seized, pertains or any information contained therein, relates to the assessee, a person other than person searched. More importantly, the AO has not recorded that the seized material found during the course of search, have a bearing on determination of the total income of the assessee, as statutorily mandated in the provisions of section 153C of the Act. Consequently, we apply the decision of Hon’ble Delhi High Court in the case of Saksham Commodities Ltd. v. ITO (2024) 464 ITR 1/ 338 CTR 418/161 taxmann.com 485 (Delhi), which held as under:
“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".
In such facts and circumstances therefore, we hold that the satisfaction note is invalid which vitiates the assumption of jurisdiction u/s 153C of the Act. Consequently, the notice u/s 153C as well as order under section 153C is not sustainable in law. We, accordingly, quash the order under section 153C of the Act. The appeals are allowed in aforesaid terms.
In the result, all the three appeals filed by the assessee in ITA Nos.5988, 5989 & 5990/Del/2025 are allowed.