Shri Shashi Kant Chaurasia vs DCIT

ITA No. 6739/Del/2025 [Assessment Year 2014-15]

1.

“That on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) ["CIT(A)"] erred in confirming the action of the assessing officer in - (i) initiating proceedings under section 153C; and (ii) passing impugned assessment order dated 27.03.2023 under section 153C of the Income tax Act, 1961 ("the Act").

2.. That on the facts and circumstances of the case and in law, jurisdictional notice dated 05.06.2023 purportedly issued under section 143(2) of the Act, not being in the mandatory format as prescribed by the CBDT, is bad in law and consequentially, the assessment order passed is without jurisdiction and liable to be quashed.

3.

That on the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that issuance of notice under section 153C of the Act, was without satisfying the prerequisite conditions of that section, more particularly the initiation and completion of proceedings de-hors any incriminating material found during search, is without jurisdiction, illegal and bad in law.

3.1.

That the CIT(A) erred on facts and in law in not appreciating that impugned assessment proceedings under section 153C of the Act were (a) initiated based on an invalid satisfaction note; and (b) completed by relying upon ex-parte material / statements collected/ recorded behind without allowing opportunity of rebuttal/cross examination.

3.2.

That the CIT(A) erred on facts and in law in not quashing the assessment order dated 27.03.2023 passed by the assessing officer without; (a) first adequately disposing of the legal objections raised by the appellant by way of separate speaking order; (b) supplying a copy of satisfaction note recorded by the assessing officer of the searched person; and (c) supplying a copy of statutory approval under section 153D of the Act to the appellant.

3.3.

That the CIT(A) erred on facts and in law in not appreciating that approval(s) under section 153D were accorded by the Additional Commissioner of Income Tax, Central Range-7, New Delhi ["Addl. CIT"] in case of multiple assessees for different assessment years on the very same day which makes it evident that such approval(s), including in the present case, were granted mechanically, without application of mind and in gross violation of statutory mandate of section 153D of the Act.

Without prejudice - on merits

4.

That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming addition of Rs.5,59,85,852 under section 69C of the Act on account of alleged unexplained travel expenditure allegedly incurred in cash.

4.1.

That the CIT(A) erred on facts and in law in upholding the addition without judiciously considering the factual and legal submissions of the appellant, that too, based on some rough/ dumb documents having no evidentiary value.

5.

That the CIT(A)/ assessing officer erred on facts and in law in levying interest under section 234B of the Act.

6.

That the CIT(A) erred on facts and in law in not quashing initiation of penalty proceedings under section 271(1)(c) of the Act. The appellant craves leave to add, to amend or vary the above grounds of appeal on or before the date of hearing.”

“…………..

F. IDENTIFICATION OF THE COMMENCEMENT POINT FOR THE PURPOSES OF COMPUTATION OF THE SIX AND TEN YEAR BLOCK

……………

80.

The aforesaid discussion thus renders a determinative quietus to the identification of the starting post from which the block of six AYs' or the "relevant assessment year" would have to be calculated. The contention of the respondents that the said block periods would have to be reckoned with reference to the date of search thus can neither be countenanced nor possibly accepted. That submission is clearly addressed contrary to a long and consistent line of precedents which have held to the contrary and which unequivocally accepted the point of commencement for the purposes of identifying the six or the "relevant assessment year" to be etched from the date of handover of documents, assets or things to the AO of the non-searched party.”

6.

“It is submitted on behalf of the revenue by Ms. Bagchi, learned counsel that the impugned order is erroneous because the date referred under proviso to Section 153(1) is relatable to the second proviso to Section 153A, only as far as it concerns abatement. The revenue relied upon the ruling of a Division Bench of the Delhi High Court, reported as “SSP Aviation Ltd. vs. Deputy Commissioner of Income Tax” reported in (2012) 346 ITR 177.

7.

Sections 153A and Section 153C of the Income Tax Act, 1961 to the extent they are relevant are extracted below:-

”153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 61[but on or before the 31st day of March, 2021], the Assessing Officer shall—

(a)

issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;

(b)

assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years:

Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years:

Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate:….” “153C.(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,—

(a)

any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or

(b)

any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A:

Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person :

Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated.”

8.

In SSP Aviation (supra) the High Court inter alia reasoned as follows:-

“14.

Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable assets or books of ac- count belonging to some other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under Section 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other per- son (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having juris- diction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the, manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other per- son, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or re- assessment to the six assessment years will be examined with reference to such date.”

9.

It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.

10.

This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under Section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts.

11.

For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs.”

“…………..

K. SUMMARY OF CONCLUSIONS

119.

We thus record our conclusions as follows: ……………

G. Insofar as the thresholds put in place by virtue of the Fourth Proviso to section 153A are concerned and the argument of the writ petitioners of the condition of INR 50 lakhs being an unwavering precondition, we find ourselves unable to sustain that submission bearing in mind the indubitable fact that proceedings for search assessment commence upon the issuance of a notice and the AO at that stage having really not had the occasion to undertake a detailed or in depth examination of the evidence collected or come to a definitive opinion with respect to the total income which may have escaped assessment. Since the computation and assessment of income that is likely to have escaped assessment would at this stage be provisional, it would be incorrect to strike down initiation of action on a mere ex facie examination of the Satisfaction Note. We also in this regard bear in mind the Fourth Proviso using the expression "amounts to or is likely to amount". The usage of the phrase "likely to" is indicative of the Legislature being conscious of the provisional character of the opinion that the AO may have formed at that stage.

H. However, and at the same time, even if the identified asset at that stage be quantified as less than INR 50 lakhs, the AO must for reasons to be duly recorded, be of the opinion that the ultimate computation of escaped income is likely to exceed INR 50 lakhs. The aforesaid satisfaction would have to be based on an assessment of the material gathered and the potentiality of the same being indicative of the escaped assessment exceeding INR 50 lakhs. The formation of opinion in this respect would have to be based not on mere ipse dixit but reflective of a fair assessment of the quantum of income likely to have escaped assessment as distinct from mere speculation and conjecture.

I. We further hold that since the precondition of INR 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself. We are also of the opinion that the precondition of INR 50 lakhs is not liable to be viewed as being the qualifying criteria for each "relevant assessment year" that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of INR 50 lakhs……………"

(emphasis supplied)

ITA No. 6740 & 6741/Del/2025 [Assessment Year 2015-16 & 2016-17]

ITA No. 6742/Del/2025 [Assessment Year 2018-19]

9.

For assumption of jurisdiction under section 153C, the assessing officer of 'other than searched person' must, on receipt of material, record a 'satisfaction note' which must clearly and explicitly reflect application of mind and he must perform all the following tasks:

10.

In the facts of the present case, it would first be relevant to note that the assessing officer of other than searched person, i.e., appellant, (@ pages 60 to 65 of PB) has recorded common/ vague satisfaction for period covering various assessment years, viz. AYs 2014-15 to 2020-21.

11.

The aforesaid satisfaction, being the very genesis of initiation of proceedings under section 153C of the Act, does not, in our submission, meet the mandatory statutory requirements and is clearly invalid, inter alia, for following reasons: The satisfaction is recorded on patently incorrect computation of the assessment years for which proceedings can be reopened

12.

As per the provisions of section 153C, assessment shall be made on similar lines as under section 153A of the Act with one modification i.e., the date of receipt of books of accounts, documents, assets etc., as the case may be, by the assessing officer of other than searched person from the assessing officer of the searched person shall be construed as 'date of initiation of search'.

13.

To put it simply, the period for which the proceedings can be reopened is computed/ determined with reference to the date of handing over of the documents found during the course of search by the assessing officer of the searched person to the assessing officer of the other person.

14.

In this regard, reliance is placed on the decision of Hon'ble jurisdictional Delhi High Court in the case of PCIT v. Ojjus Medicare (P.) Ltd.: [2024] 465 ITR 101 (Delhi) (@ pages 200 to 275 of CLPB) wherein the Court has clarified that for the purposes of section 153C of the Act, six assessment years shall be reckoned from the date of handover of material by the assessing officer of the searched person to the assessing officer of other than searched person. The relevant extracts of the judgment are hereby reproduced below for your Honour's ready reference:

F. IDENTIFICATION OF THE COMMENCEMENT POINT FOR THE PURPOSES OF COMPUTATION OF THE SIX AND TEN YEAR BLOCK

80.

The aforesaid discussion thus renders a determinative quietus to the identification of the starting post from which the block of six AYs' or the "relevant assessment year" would have to be calculated. The contention of the respondents that the said block periods would have to be reckoned with reference to the date of search thus can neither be countenanced nor possibly accepted. That submission is clearly addressed contrary to a long and consistent line of precedents which have held to the contrary and which unequivocally accepted the point of commencement for the purposes of identifying the six or the "relevant assessment year" to be etched from the date of handover of documents, assets or things to the AO of the non-searched party.

15.

Reliance in this regard is also placed on the following decisions, wherein it has been consistently held that the date on which seized documents are handed over and satisfaction is recorded by the jurisdictional assessing officer shall be construed as the relevant date for working out the period of six assessment years for the purposes of framing assessment under section 153C of the Act:

- CIT vs. Sh. Jasjit Singh: [2023] 458 ITR 437 (SC) – Review petition filed by the Revenue dismissed in 476 ITR 157

- PCIT vs. Raj Buildworth Pvt Ltd: [2020] 113 taxman.com 601 (SC)

- CIT vs. RRJ Securities: [2016] 380 ITR 612 (Del)

- ARN Infrastructure India Ltd. vs. ACIT: [2017] 394 ITR 569 (Del)

- CIT vs. RL Allied: ITA 370/2015 (Del) (order dated 28.01.2016)

- SSP Aviation vs. DCIT: [2012] 20 taxmann.com 214 (Del)

- PCIT vs. Sarwar Agency (P.) Ltd.: [2017] 397 ITR 400 (Del)

16.

In the present case, assessment proceedings u/s 153C were initiated against the appellant on the basis of a search purportedly carried out in SMG Group on 05.01.2020; the relevant documents purportedly found during search which were handed over by the assessing officer of the searched person to the assessing officer of the appellant on 24.03.2023 (Refer para 1 @ page 60 of PB).

17.

Accordingly, considering the date of handing over of material to the AO of other than searched person (appellant) as 24.03.2023, 6 assessment years, for which assessment proceedings were to be initiated u/s 153C of the Act would be AY 2017-18 to AY 2022-23 as tabulated under:

Assessment Year(s)	Computation of 6 years
AY 2023-24	-
AY 2022-23	1
AY 2021-22	2
AY 2020-21	3
AY 2019-20	4
AY 2018-19	5
AY 2017-18	6
AY 2016-17	-
AY 2015-16	-
AY 2014-15	-

18.

Considering the aforesaid, particularly the fact that the satisfaction note is in defiance to the law laid down by the apex Court and jurisdictional High Court, the satisfaction so recorded is grossly invalid and does not meet the statutory requirement for initiation of proceedings under section 153C of the Act.

19.

For the aforesaid reason alone, the satisfaction note is non-est and bad in law rendering the entire assessment as not sustainable.

Consolidated/ Common satisfaction note recorded is vague, without identification of documents and year wise income, invalid and bad in law

20.

It is vehemently submitted that common/ consolidated satisfaction note dated 27.03.2023 recorded by the assessing officer of other than searched person i.e., appellant, (@ pages 60 to 65 of PB) vaguely recorded for the entire block period covering assessment years 2014-15 to 2020-21 cannot be considered as valid, inter alia, for the following reasons:

- Section 153C mandates the AO of the “other person” to identify the documents received year-wise and then come to a conclusion, albeit prima facie, that such document is relevant for determination of taxable income of that other person for that particular year. Thus, the law mandates the AO to record separate satisfaction for each of the assessment year(s) and it is not permissible to lump together and record a satisfaction note for multiple years.

- In any case, the satisfaction note must clearly and specifically demonstrate year-wise identification of documents and relevant thereof for determination of taxable income of each year, which is clearly missing in the satisfaction recorded by the AO.

21.

Reliance in this regard is made on the following decisions wherein it has been held by Courts that the AO has to identify the 'income chargeable to tax' which has escaped assessment [refer Sanath Kumar Murali vs. ITO: 455 ITR 370 (Karnataka) [Revenue's SLP dismissed in [2024] 468 ITR 105]; Nitin Nema vs. PCIT: 458 ITR 690 (Madhya Pradesh) [Revenue's SLP dismissed in [2024] 468 ITR 105]].

22.

It has been specifically underscored by various appellate forums that recording of a consolidated satisfaction note under section 153C of the Act without adequate year-wise identification of the incriminating material shall be illegal and without jurisdiction and accordingly, the consequential assessment proceedings shall be liable to be quashed.

23.

In this regard, reliance is placed on the following judgements:

- DCIT v. Sunil Kumar Sharma: [2024] 159 taxmann.com 179 (Karnataka) – Revenue's SLP dismissed in CIT(A) v. Sunil Kumar Sharma: [2024] 165 taxmann.com 846 (SC) (@ pages 1 to 28 of CLPB)

- Saksham Commodities Ltd. v. ITO: [2024] 161 taxmann.com 485 (Delhi) – Revenue's SLP dismissed in [2025] 175 taxmann.com 849 (SC) (@ pages 29 to 65 of CLPB)

- JCIT (OSD) v. Narendra Aggarwal: ITA No.1017/Del/2025 (order dated 19.12.2025) (Del. Trib.)/ [2026] 182 taxmann.com 443 (Del. Trib.) (@ pages 66 to 94 of CLPB)

- SRS Panchratan Diamonds Pvt. Ltd. v. DCIT: ITA Nos.218 & 219/Del/2023 (order dated 14.11.2025) (Del. Trib.) (@ pages 95 to 109 of CLPB)

- Stercon Energy Pvt. Ltd. v. ACIT: ITA Nos.5796 to 5798/Del/2024 (order dated 17.10.2025) (Del Trib.) (@ pages 110 to 131 of CLPB)

- Olympus Realtors (P) Ltd. v. DCIT: ITA No.1207/Del/2023 (order dated 13.08.2025) (Del. Trib.) (@ pages 132 to 143 of CLPB)

- Aashrya Developers (P) Ltd. v. ACIT: ITA Nos.3461 to 3464/Del/2023 (order dated 31.12.2024) (Del. Trib.) (@ pages 144 to 157 of CLPB)

- ACIT v. Subhash Jivraj Jain: ITA No.1690/Pun/2024 (order dated 21.07.2025) (@ pages 158 to 174 of CLPB)

- Rangamani Krishnan v. DCIT: [2025] 176 taxmann.com 912 (Chennai – Trib.) (@ pages 175 to 199 of CLPB)

GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 27, DELHI

To,

SHASHI KANT CHAURASIA

575 FIRST FLOOR, DOUBLE STOREY FLATS, NEW RAJINDER NAGAR NEW DELHI 110060, Delhi India

PAN: AAGPC6395Q

Assessment Year: 2020-21

Dated: 17/05/2023

DIN & Letter No : ITBA/AST/F/17/2023-24/1052924628(1)

Sir/ Madam/ M/s,

Subject: Furnishing of Satisfaction Note -regarding-

Please find enclosed herewith satisfaction note for AY 2010-11 to 2020-21.

MANISH KUMAR DABAS CENTRAL CIRCLE 27, DELHI

(In case the document is digitally signed please refer Digital Signature at the bottom of the page)

Enclosed: Refer to attachment AAGPC6395Q_2020_ATTACHMENT_100062404847.pdf

Note: If digitally signed, the date of digital signature may be taken as date of document. NCC DIT(S) JHANDEWALA EXT, JHANDEWALA EXT, NEW DELHI, NEW DELHI, Delhi, 110055 Email: [email protected], This document is digitally signed

Note:- The website address of the e-filing portal has been changed from www.incometaxindiaonline.gov.in to www.incometax.gov.in

* DIN-Document Identification No.

Signed: MANISH KUMAR DABAS Date: Wednesday, 17.05.2023 7:00 PM Location: DIRECTORATE, India

CERTIFIED TRUE COPY

Satisfaction note for initiating proceedings u/s 153C of the Income Tax Act, 1961 in the case of Sh. Shashi Kant Chaurasia, (PAN: AAGPC6395Q), by the AO of the other than the searched person

1.

A search and seizure operation under section 132 of the Income Tax Act, 1961 was conducted on one residential premise of Ramesh Hemrajani and MunishHemrajani as part of Sushen Mohan Gupta & others (SMG Group) on 05.01.2020 at 38/19, East Patel Nagar, Delhi. This residential premise belonged to MunishHemrajani and Ramesh Hemrajani. M/s Blue Ocean Travels Private Limited is the company managed and headed by these two persons. The said company is a private limited company and having its registered office at 13-D, Gopala Tower, Rajendra Place, New Delhi-110008. The company is headed & managed by Mr. Ramesh Hemrajani and his son MunishHemrajani. It is primarily engaged in the business of Ticketing, Passport and Visa, Hotel Bookings, Customized Services, Car Bookings, Foreign Exchange Arrangements, Travel Insurance Arrangements. Incriminating documents and electronic data were found and seized and the same were annexurised from Sr. no. A-1 to A-23 to Annexure A to the Panchanama dated 08-01-2020.

2.

During the post search investigation, the details of the topmost clients to whom various services provided by the company M/s Blue Ocean Travels Private Limited was observed. On observation, it was found that the name of Shashi Kant Chaurasia was appearing along with other parties to whom such services were provided in lieu of cash receipts. During various financial years, the Chaurasia's (including Shashi Kant Chaurasia) have transacted with the company for which the amount has been paid to company in cash.

3.

Further, during the post search investigation statement of MunishHemrajani was recorded on oath u/s 131(1A) of the Income Tax Act, 1961 on 15.01.2020. In the said statement, he admitted that his masala group clients include Lalwanis (Vimal Pan Masala), Chaurasias (KamlaPasand), MukeshGarg (manufacturer of raw material of pan masala), Yogesh Jain (Woosh washing powder). He also stated that some of these transactions with the above clients were accounted for in the books of account of BOTPL and some were out of books transactions for the last 3-4 years. The relevant extract of said statement is reproduced below:

Q.24 Please give details of the business transactions carried out with HNIs, Pan Masala Group, Wedding catalogs, Event Planning, etc in the books of accounts of BOTPL, and your other companies including out of books transactions. Please give details.

A. BOTPL does not be related to the key, since, but is, and has no relation to wedding, event planning business. My Pan masala group clients include: Latham (Vand Pan Masala band), Chana (Kanda Purnah), Make & Camp (manufacture of one material of pan masala), Dinesh Iran Pan Haha band), Yogesh Jan (Worah washing powder). Prior to this I have also worked with Rupagandha (D's Group), Astragal Pan Masala (Owned by Makhijans). I also worked with Lallit Mosh (property broker), however all their business transactions were accounted for in the books of account of BOTPL. Further, for the last one year no business transactions have been carried out with them. Approximately 10 years per month is the total cash transactions with all the above mentioned pan masala group clients out of which some are accounted for in the books of account of BOTPL and some are out of books transactions for the last 3-4 years. The same I will reconcile and submit to you in a week's time.

3.1

Based on the analysis of these transactions, it is gathered that these transactions in the seized Annexures A1 to A-23 are related to booking of tickets, hotel booking etc. for which services were provided by BOTPL. These services were provided through third party service providers by the BOTPL.

4.

Few sample snapshots from different annexures having information/document pertaining to Shashi Kant Chaurasia are reproduced below.

Annexure A-3

Annexure A-4

Annexure A-9

Annexure A-10

5.

Seized documents having Annexure no. A-1 to A-23 to Annexure A to the Panchanama dated 08-01-2020, contain details of transactions made by Sh. Shashikant Chaurasia for which payments have been made in CASH. Further Sh. Munish Hemrajani during his statement recorded on oath u/s 131(1) has stated that the transactions mentioned on seized documents are related to Masala group clients include Lalwanis (Vimal Pan Masala), Chaurasia (KamlaPasand), MukeshGarg (manufacturer of raw material of pan masala), Yogesh Jain (woosh washing powder). It is pertinent to mention here that Sh. Shashi Kant Chaurasia is one of the member of Kamla Pasand Group. The name of the assessee i.e. Sh. Shashi Kant Chaurasia is clearly mentioned on seized documents to whom services in the form of booking of tickets, hotel booking etc. were provided by M/s Blue Ocean Travels Private Limited in lieu of cash receipts.

5.1

Further from the evidences seized during the course of search also reveal that the income which has escaped assessment amounts to fifty lakhs rupees or more in the relevant AYs. 2010-11 to A.Y 2013-14. Hence as per fourth proviso of section 153A r.w.s 153C, notice u/s 153C in the case of Sh. Shashikant Chaurasia should also be issued for the relevant AYs 2010-11 to A.Y 2013-14.

6.

Further in the case of the assessee, information has been received from Insight (RMS) portal of the Income Tax Department. The case of the assessee was reopened u/s 148 of the IT Act, 1961 on the basis of the Insight Information. However, in view of the seized material received in this office in the case of the assessee for relevant AYs (Para 1 to 5), the case of the assessee is liable to be opened u/s 153C of the IT Act, 1961. Hence, the proceedings u/s 148 of the IT Act of the assessee for AY 2013-14 stands abated. The information received from the Insight Portal shall also form the integral part of this Satisfaction Note and will be considered during assessment proceedings in the case of the assessee for relevant AYs. The information emanates from the search proceedings u/s 132(1) of the IT Act in the case of a PMC Fincorp Group conducted on 11.10.2018.

6.1

The company M/s PMC Fincorp Limited (formerly known as Priti Mercantile Company Limited) was registered at Registrar of Company, Kanpur on 04th February, 1985. The company was shown to be involved in the business of manufacturing of basic iron and steel. However, during the course of investigation, it was found that there was no business activity carried out at the given registered address and the company has not been involved in any business related to manufacturing or basic iron or steel.

7.

During the course search, statement of Mr. Rajkumar Modi, director cum operator of the company M/s PMC Fincorp Limited was recorded u/s 132(4) of the IT Act, wherein he admitted on oath that the scrip price of the company was rigged & managed by him to provide accommodation entry of Long Term Capital Gain to several persons including Sh. Shashikant Chaurasia in lieu of commission on such transactions. These transactions are accommodated entries mostly in lieu of cash of equal amount and commission charged over and above at certain fixed percentage for providing such accommodation entry provided to beneficiaries.

8.

During the search proceedings u/s 132(1), Sh. Raj Kumar Modi, Director cum operator of PMC Fincorp Ltd. admitted his role in providing accommodation entry of bogus LTCG to the concerned assessee along with his family members and also explained the entire modus operandi in detail. The relevant extract of the same is reproduced as under:

"Qus. 80: Who all were involved in this entire scheme?

Ans: The following major beneficiaries/persons were involved in this scheme:

S. No.	Major Beneficiary	Introducer/ Intermediary	Approx. Amount through this arrangement (in Rs.)
1.	Raghav Bahl	1. Mohan Lal Jain, CA Prabhat Kiran, Rajinder Place. 2. Madhu Sudan Goyal, CA Prabhat Kiran building, Rajinder Place, Delhi. His employee Kamlesh used to come for delivery of cash. His mobile number is in my mobile phone.	So far as I remember Ritu Kapoor and Raghav Bahl got 100 Crore converted
2.	Ritu Kapoor	Mohan Lal Jain, CA Prabhat Kiran, Rajinder Place.	So far as I remember, Ritu Kapoor and Raghav Bahl got 100 Crores Converted
3.	Chaurasiya family (Navneet Chaurasiya and 5-6 members of this family)	Shyam Saraf, CA At that time his office was in Chiranjeev Towers, Nehru place, Delhi. Later on, he was operating from his residence.	So far as I can remember, they got between 100-150 crores.
4.	Lalwani family (Ashok Lalwani and 4 other family members)	Anoop Jain, CA Bengali Market, Delhi	So far as I can remember, they got between 40-45 Crores
5.	Anoop Jain & family	Anoop Jain, CA Bengali Market himself	He converted more than 35 Crores.

As stated earlier, the above persons used to hand over cash through their staff or my staff (namely Jay Prakash Pal and Dhirendra Kumar Gupta) used to collect cash from them on my directions, a couple of days in advance for purchase of shares which were to be sold by them. The sale was carried out in a straggered manner spread over a period of about 2 years."

9.

Further, as per the details of the beneficiaries, the assessee was allotted 82500 equity shares of M/s PMC Fincorp Ltd. on 05.09.2011. It is clear from the statement of Sh. Raj Kumar Modi, director of M/s PMC Fincorp Ltd., that the company was engaged in the business of providing accommodation entry in the form of bogus long term capital gain in lieu of cash. It is further clear that member of Chaurasia family i.e. Sh. Shashikant Chaurasia is of the party who purchased the equity shares of M/s PMC Fincorp Ltd. for Rs. 30 per shares before listing on BSE. Afterwards, the shares of company were listed on BSE on 12.03.2012 after which Sh. Shashikant Chaurasia had placed a sell order of shares to earn exempt bogus Long Term Capital Gain and evaded tax provisions on the same, which was a premeditated affair in connivance with Sh. Raj Kumar Modi. Therefore, the whole transaction seems a prearranged transaction to route the unaccounted cash of Sh. Shashikant Chaurasia into the books without offering to taxation, and the same is above 50 Lakhs as mandated under fourth proviso of section 153A r.w.s 153C for AY 2013-14.

10.

In view of the above facts, I am satisfied that the seized documents and information contained therein forwarded by the AO of searched person (DCIT, Central Circle-15) and the information emanating from search proceedings u/s 132(1) of the IT Act in the case of a PMC Fincorp Group conducted on 11.10.2018 pertain to Sh. Shashi Kant Chaurasia, (PAN: AAGPC6395Q), and are incriminating in nature and have bearing on determination of his total income. Hence, proceedings u/s 153C r.w.s. 153A of the IT Act of 1961 are being initiated in the case of Sh. Shashi Kant Chaurasia, (PAN: AAGPC6395Q) for the AY 2010-11 to 2020-21 and notice u/s 153C are being issued.

11.

“Now coming to the issue of validity of the satisfaction note and initiation of the proceedings in the hands of assessee company based on such satisfaction note u/s 153C of the Act. Before us, the contention of the AR is that satisfaction note was recorded without referring to any incriminating material and collectively in assessment order for Assessment Year 2012-13 to 2018-19 without identifying any incriminating material having entries for each individual assessment year. From the perusal of the satisfaction note so recorded as reproduced hereinabove, we find that the satisfaction note had the reference of gross amounts of credit entries in the bank accounts maintained by the assessee company which are disclosed bank account and cannot be held as incriminating material. Therefore, the entries contained therein cannot be held as unexplained. Moreover, we are in agreement with the contention of the AR that in the satisfaction note no year wise transactions were reported which could be held as incriminating for which the proceedings u/s 153C were initiated. Identical issue was came before the Co-ordinate Bench for consideration in the case of Super Bazar Stores Pvt. Ltd. in ITA 9757/Del/2019 wherein the Co-ordinate Bench after considering the facts has held that the satisfaction note so recorded is vague and non-descriptive and quashed the consequent orders passed u/s 153C of the Act. The relevant observations of the Co-ordinate Bench wherein the Co-ordinate Bench has followed the judgment of the jurisdictional High Court in the case of Saksham Commodity Ltd. vs. ITO reported 161 txmann.com 483 and made the following observations:

“11.

The assessee contends that 'satisfaction note' which is the first step for assumption of jurisdiction under s. 153C of the Act and provides foundation for conferment of jurisdiction is plagued with multiple legal infirmities. Viz:

[i] the 'satisfaction note' has been recorded by the AO of assessee collectively for the period AYs 2010-11 to AY 2015-16 without identifying the incriminating material in respect of any particular Assessment Year. Besides, the assessee company itself has come into existence by Certificate of incorporation dated 03.01.2013 and therefore, the company was not in existence in AY 2010-11 to AY 2012-13 covered in the 'satisfaction note,

[ii] the AO has thrown upon whole basket of six months without giving reference to any concrete incriminating material of a particular Assessment Year and without taking note of commencement of activities of assessee;

[iii] the act of the AO making sweeping averment in the 'satisfaction note that documents in the form of hard disks have bearing on determination of total income of Super Bazar Stores Pvt. Ltd. for AYs 2010-11 to 2015-16, is without legal foundation and without application of mind, as the AO has even failed to name the alleged documents and further failed to mention as to how it is related/pertained to a given AY covered in the 'satisfaction note’;

[iv] the AO on receipt of material/documents from the AO of the searched person must necessarily apply his mind on the material received and ascertain precisely the specific year to which incriminating material relates. It is only when this determination/ascertainment is complete that the flood gates of an assessment would open qua those particular years. The issuance of notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by the AO in the light of judgement rendered in the case of Agni Vishnu Feature Put.Ltd. vs DCIT (2023) 157 taxmann.com 242 (Madras). In the instant case, non-application of mind on material supplied to AO is obvious as the company itself was not in existence for sizable period covered in proceedings under s. 153C of the Act;

[v] the 'satisfaction note' is clearly very generic and devoid of any basic detail of the transaction in question.

12.

We find ostensible potency in the plea of assessee towards allegation of legal infirmities in the 'satisfaction note'. The Hon'ble Delhi High Court in the case of Sakham Commodities Ltd. Vs ITO 161 taxmann.com 485 (Delhi) deftly expounded the imperatives of a 'satisfaction note', and observed that unearthing of incriminating material in respect of particular AY will not automatically confer jurisdiction to invoke section 153C of the Act in respect of all the AYs mentioned therein. The Hon'ble Delhi High Court further observed that discovery of material for a particular AY is not intended to trigger a chain reaction or have a water fall effect on all the AYs which can form part of the 'relevant AYs' under section 1530 Of the Act. The Hon'ble Delhi High Court underscored well settled distinction which the law recognizes between the existence of power and the exercise thereof and thus, held that unless the AO is satisfied that the material gathered can potentially impact the determination of total income, it will be abrupt exercise of powers in mechanically re-opening or assessing all over again of the AYs covered in the block that could possibly form part of block of relevant AYs. For holding so, the Hon'ble Delhi High Court relied upon the judgement delivered by the Hon'ble Supreme Court in the case of Sinhgad Technical Education Society wherein the Hon'ble Supreme Court held that the assessment under section 153C could be made only for the year to which material relates to and exercise of power under section 153C of the Act in respect of other AYs would not sustain. The Hon'ble Delhi High Court also noted that the AO is bound to ascertain and identify the AY to which the material recovered relates and relevant AYs which can then be subject to action under section 153C of the Act will have to be necessarily those in respect of which the assessment is likely to be influenced or impacted by the material discovered. The Hon'ble Delhi High Court went one step further to hold that where material discovered in the course of search has the potential of constituting incriminating material for more than one AYs, even in such a situation, it will be incumbent upon the AO to duly record reasons that material is likely to be incriminating for more than one AY and thus, warranting the action under section 153C of the Act for years in addition to those to which material may be directly relatable. Thus, a nuanced application of mind and recording of reasons for drawing satisfaction as contemplated under section 153C of the Act qua different AYs is paramount. The Hon'ble Delhi High Court noticeably held that issuance of a notice under section 153C of the Act is clearly not intended to be an inevitable consequence to the receipt of material by the Jurisdictional AO and that the initiation of action under section 153C of the Act will have to be founded on a formation of opinion by the Jurisdictional AO that the material handed over and received pursuant to a search is likely to influence the determination of total income and would be relevant for the purposes of assessment/re-assessment in terms of section 153C of the Act.

13.

The observation of the Hon'ble Delhi High Court noted above, clearly provides vehement support to the plea taken by the assessee on aspects of jurisdiction flowing from 'satisfaction note'. The 'satisfaction note' under scrutiny defies most of the parameters expected of him while drawing satisfaction. While exercising the power under section 153C of the Act, neither has the AO related the material found in the course of search with a particular AY while making a consolidated 'satisfaction note' for several years nor provided any requisite details of transaction to enable an independent person to ascertain and form any independent opinion on facts stated in Note that invocation of section 153C of the Act is indeed warranted in the facts of the case. The AO has not even bothered to relate the so-called documents etc. with the AYs covered. The assessee company was non-existent in AY 2010-11; AY 2011-12; AY 2012-13, which were also covered under s. 153C in a non-chalant manner. Mere drawing of a perfunctory satisfaction without meeting basic ingredients of providing some tangible & descript information and application of mind thereon has no standing in law and would not confer drastic jurisdiction of assessment u/s 153C of the Act on a person other than searched person. The jurisdiction assumed based on such lackadaisical 'satisfaction note' beset with vital infirmities cannot be countenanced in law. The objections raised on behalf of the assessee towards lack of jurisdiction based on a cryptic and non-descript satisfaction thus deserves to be sustained. While recording a consolidated 'satisfaction note' is not a bar in law per se as rightly contended on behalf of the revenue, but however, in the same vain, the documents/assets searched need to be specified against each year covered in the satisfaction note to depict application of mind and initiation of action under section 153C of the Act qua such assessment years. The AO has apparently failed to do so in the present case. As a corollary, the notice issued under section 153C of the Act and consequent assessment order passed under section 153C of the Act is vitiated in law and requires to be quashed.

14.

In this view of the matter, the jurisdiction assumed under s. 153C based on vague and non-descript 'satisfaction note' is vitiated at the threshold. The consequence assessment order passed under s 153C thus has no force of law. The first appellate order passed on non-est assessment order is thus set aside and the AO is directed to restore the position claimed by the assessee and delete the additions made.

15.

In the result, the appeal of the assessee is allowed.”

ITA No. 5790/Del/2025 [Assessment Year 2018-19] Arpit Chaurasia