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Judgment
PER MANISH AGARWAL, AM:
This appeal is filed by assessee against the order dated 08.12.2025 passed by Ld. Commissioner of Income Tax (A)-25, New Delhi [“Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 04.03.2024 passed u/s 153C of the Act pertaining to Assessment Year 2014-15.
Brief facts of the case are that the assessee filed his return of income on 30.07.2014, declaring total income of Rs.7,96,710/-. A search and seizure operation was carried out at various premises of Shri Alok Kumar Agarwal, his son Ankit Agarwal and some of the close associates and their key employees on 18.10.2019. Various documents/books of accounts etc. were found and seized and statements of various persons were recorded. It was found that some incriminating material found and seized contained some entries related to the assessee thus the AO of the searched person has recorded his satisfactions on05.04.2022 handed over the relevant material/documents alongwith the satisfaction note to the AO of the assessee. Thereafter the AO of the assessee recorded his satisfaction note on 02.05.2022 and initiated the proceedings u/s 153C of the Act for AYrs 2010-11 to AY 2020-21 and, notice u/s 153C was issued on 02.05.2022 for AY 2014-15 i.e. the year before us. In compliance to the notice issued u/s 153C, assessee filed return on 30.07.2024 declaring total income of Rs.7,96,710/- i.e. the same income as was declared in the return filed u/s 139(1) of the Act. Thereafter, notice u/s 143(2) followed by statutory notices u/s 142(1) were issued alongwith detailed questionnaire from time to time to the assessee. After considering the submissions made and material furnished by the assessee, the AO assessed the income of the assessee at 4,13,23,910/- vide assessment order dated 04.03.2024 passed u/s 153C r.w.s. 143(3) of the Act wherein total additions of Rs. 4,05,27,204/- was made.
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 08.12.2025, dismissed the appeal of the assessee.
Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:
“1.That the notice issued and the assessment order passed under Section 153C of the Income Tax Act, 1961 ('the Aet') 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.That the notice issued under Section 153C of the Act and the consequent assessment proceedings and CIT(A) order 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, in view of the facts and the circumstances of the case and in law, 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, in view of the facts and circumstances of the case and in law, the proceedings initiated under section 153C of the Act are bad in law as the seized material neither has any bearing on the determination of the total income of the assessee nor is there any valid and detailed satisfaction recorded by the Assessing Officer to this effect in the satisfaction note.
5.That, in view of the facts and circumstances of the case and in law, 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, in view of the facts and circumstances of the case, the approval under Section 153D of the Act is bad in law as both the proposal and the approval under Section 153D were invalid as they were issued without a Document Identification Number (DIN) in violation of CBDT Circular No. 19/2019 dated 14.08.2019.
7.That, in view of the facts and circumstances of the case 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.That the CIT(A) erred in upholding the validity of the notice and assessment under Section 153C of the Act 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.
9.That, in view of the facts and circumstances of the case and in law, the CIT(A) failed to appreciate the fact that the additions/disallowances made by the AO are beyond the scope of the satisfaction note.
10.That, in view of 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.4,13,23,910/-.
11.That, in view of the facts and circumstances of the case and in law, AO has wrongly invoked the provisions of Section 68 of the Act, and the CIT(A) has erred in upholding the same.
12.That, in view of the facts and circumstances of the case and in law, AO has wrongly made addition of Rs 3,58,46,800/- under Section 68 of the Act and CIT(A) has erred in upholding the same.
13.That, in view of the facts and circumstances of the case and in law, AO has wrongly invoked the provisions of Section 69A of the Act, and the CIT(A) has erred in upholding the same.
14.That in view of the facts and circumstances of the case and in. law, AO has wrongly made addition of Rs. 35,00,000/- under Section 69A of the Act and CIT(A) has erred in upholding the same.
15.That, in view of the facts and circumstances of the case and in law, AO has wrongly invoked the provisions of Section 69C of the Act, and the CTT(A) has erred in upholding the same.
16.That in view of the facts and circumstances of the case and in. law, AO has wrongly made addition of Rs. 11,80,404/- under Section 69C of the Act and CTT(A) has erred in upholding the same.
17.That in view of the facts and circumstances of the case and in law, the AO/CTT(A) has erred in passing the impugned orders without giving the Appellant a reasonable opportunity of being heard and the same is in clear violation of principles of natural justice.
18.That in view of the facts and circumstances of the case and in law, the evidence filed and materials available on record have not been properly construed and judiciously interpreted, hence the additions made are uncalled for.
19.That in view of the facts and circumstances of the case and in law, the observation and the additions made are unjust, illegal, arbitrary, bad in law and based on surmise and conjecture.
20.That in view of the facts and circumstances of the case and in law, the AO has erred in initiation of penalty proceedings under section 271(1)(C) of the Act.
21.That in view of the facts and circumstances of the case and in law, the AO has erred in charging interest as per applicable provisions of S.234A/234B/234C/234D.”
In Grounds of appeal Nos. 1 to 4, the assessee has challenged the legality of the order passed /s 153C of the Act being barred by imitations and also without jurisdiction and further challenged the satisfaction recorded by the AO of the assessee contrary to the provisions of section 153C of the Act.
Before us, Ld.AR for the assessee submits that proceedings u/s 153C of the Act were initiated in the case of the assessee on the basis of the documents found and seized during the course of search on third person where the satisfaction was recorded on 05.04.2022 by the AO of the person searched and such material was handed over to the AO of the assessee. The AO of the Assessee thereafter recorded his satisfaction on 02.05.2022 and initiated the proceedings u/s 153C of the Act for AYrs 2010-11 to 2020-21. Accordingly, notice u/s 153C was issued to the assessee. Ld.AR submits as per the judgement of Hon’ble Jurisdictional High Court in the case of PCIT Vs. Ojjus Medicare Pvt. Ltd. reported in (2024) 465 ITR 101(Delhi), the date of search should be taken the date when the AO of the person searched handed over the material to the AO of the assessee which in the present case is 05.04.2022 relevant to AY 2023-24. As per the Finance Act, 2021, amendment was made w.e.f. 01.04.2021, according to which no proceedings could be initiated u/s 153C of the Act for the search conducted u/s 132 of the Act on or after 01.04.2021 and thus provisions of section 153C of the Act could not be applied and as per the ld. AR proceedings u/s 148 of the Act should have been initiated. For this reliance is placed on the judgement of hon’ble Madras High court in the case of Harigovind v. ACIT reported in [2025] 180 taxmann.com 197 (Madras). He thus submits that the assessment order passed u/s 153C of the Act is invalid order.
Ld. AR further submits that from the perusal of the satisfaction note recorded by the AO of the assessee available at pages 4-5 of the paper book, it could be observed that no satisfaction was recorded that the said documents pertained to assessee and the entries contained therein “have a bearing on the determination of total income of assessee” as provided in section 153C of the Act. For this reliance is placed on the judgement of hon’ble jurisdictional High court in the case of Saksham Commodities Ltd Vs. ITO reported in 464 ITR 1(Del.).
In the last, Ld. AR stated that as submitted above, satisfaction was recorded by the AO of person searched on 05.04.2022 which falls in AY 2023-24 therefore, Six (06) preceding AYs for which the proceedings u/s 153C could be initiated were from AY 2017-18 to 2022-23 and AY 2023-24 would be the search year. This being so, the AY 2014-15 i.e. the AY before us, falls in the extended period outside the period of 06 years. Ld. AR submits that as per Explanation 1 to 4th proviso to section 153A(1), scope of assessment beyond Six years is extended to four more assessment years which can be assessed in search cases, i.e. “relevant assessment year or years”. This term “relevant assessment year or assessment years” has been defined in Explanation 1 to section 153A(1), according to which Assessing officer:
- has to compulsorily assess/re assess the total income for the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted; and
- can assess total income for relevant assessment year, which is beyond six assessment years as stated above but which cannot be later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made and the proposed escaped income should exceed by Rs. 50.00 lakhs in one or all the years so extended.
He thus submitted that that the period of 10 Assessment years that can be assessed/ reassessed by virtue of amended provisions, is inclusive of assessment year (relevant to the previous year) in which search is conducted meaning thereby the scope is extended for nine previous assessment years and the tenth assessment year would be the assessment year relevant to previous year in which search is conducted and not beyond that. Ld. AR thus prayed that the Assessment year under appeal is out of the extended period of Ten years and the AO is not entitled to pass the order u/s 153C for A.Y. 2014-15 by virtue of amended section 153A and thus the assessment order passed u/s 143(3) r.w.s.153C of the Act for AY 2014-15 be quashed.
On the other hand, ld. CIT DR submits that the assessment was carried out based on the entries found noted in the documents seized from the possession of the third person and accordingly the AO has recorded his satisfaction and initiated the proceedings u/s 153C of the Act which are valid proceedings. As per ld. CIT DR, search was conducted on 18.10.2019 in the case of Anil Agarwal from whose possession, documents containing the transaction carried out by the assessee were found thus for the purpose of initiating the proceedings us/ 153C of the Act in the case of assessee, the date of search in the case of Anil Agarwal has to be considered. Ld. CIT DR thus submits that the AO has rightly initiated the proceedings u/s 153C of the Act which deserves to be held as valid proceedings. It is thus prayed for the confirmation of the initiation of proceedings u/s 153C of the Act in the present case. Alternatively, he submits that even if the date of satisfaction note recorded by AO of person searched is taken as date of search, the extended period as per 4th Proviso to section 153A(1) of the Act come into play and accordingly, the AO has rightly invoked the provisions of section 153C for the year under appeal which falls with the period of Ten years.
Heard the parties at length and perused the material available on record. Claim of the assessee is that the AO of the person searched has recorded his satisfaction after 01.04.2021 when the material was handed over to the AO of the assessee thus, the date of search should be reckoned from that date only. Assessee further claimed that the law was amended w.e.f. 1.4.2021 by Finance Act, 2021, and as per the amended law, no assessment order could be passed u/s 153C of the Act for the search actions carried out u/s 132 of the Act on or after 01.04.2021 and the assessment should have been completed u/s 148 of the Act as per the amended provisions. Before going further, we examine the provisions of section 153C of the Act, which reads as under:
153C.Assessment of income of any other person.—
(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 subsection (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. ( 2) Where books of account or documents or assets seized or requisitioned as referred to in subsection (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year—
(a)no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or
(b)a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or
(c)assessment or reassessment, if any, has been made, before 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, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.
(3)Nothing contained in this Section shall apply in relation to a search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132A on or after the 1st day of April, 2021.”
As per first proviso to Section 153C(1), the date of initiation of search u/s 132 or making requisition u/s 132A in terms of 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. As observed above, in the present case, the AO of the assessee has received the seized material from the AO of the person searched on 05.04.2022 thus the date of search in the case of assessee should be 05.04.2022. This view is supported by the judgement of Hon’ble Jurisdictional High Court in the case of Ojjus Medicare (supra), the headnote reads as under:
“Section 153C of the Income-tax Act, 1961 - Search and seizure - Assessment of any or person (Block assessment) - Assessment years 2010-11 to 2013-14 - Whether first proviso to section 153C, and which has been consistently recognized to also embody commencement point for reckoning six or ten assessment years’, shifts relevant date from date of initiation of search or a requisition made to date of receipt of books of account or documents and assets seized by jurisdictional Assessing Officer of non-searched person - Held, yes Whether furthermore where date of handing over of documents was not available, date of issuance of satisfaction Note by Assessing Officer under section 153C would be pertinent for purpose of First Proviso to section 153C -Held, yes - Whether significant difference between computation of relevant assessment year for identification of six assessment years and to construct a block of ten assessment years is that while six assessment years’ hinge upon phrase “immediately preceding” assessment year pertaining to search year, ten assessment years’ are liable to be computed or reckoned from end of assessment year relevant to year of search - Held, yes - Whether thus, in instant case where satisfaction note were issued between 1-4-2021 and 31-3-2022, relevant assessment year would be 2022-23 and assessment years’ 2010-11, 2011-12 and 2012-13 would clearly fall outside block period of ten assessment years as provided under section 153C read with section 153A - Held, yes [Paras 85, 86, 96 and 97] [In favour of assessee].”
Now coming to the sub-section (3) of section 153C of the Act which provides that provisions of section 153C are not applicable to the search initiated on or after 1st day of April,2021. Since in the present case, date of search is to be taken as 05.04.2022 i.e. the date when the satisfaction note was recorded by the AO of the person searched and relevant seized material was handed over to the AO of the Assessee and such date (05.04.2022) has fallen after 01.04.2021, therefore, as per sub-section (3) of section 153C, subsequent assessment order passed us/ 153C of the Act is invalid and without jurisdiction. The hon’ble Madras High court after considering these facts under identical circumstances, in the case of Harigovind v ACIT (supra) has held as under:
35.“A reading of the second proviso to Section 153A(1) would show that the 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, 153C(1) 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. Therefore, any pending proceedings shall be abated as per the above proviso.
36.On the strength of the above second proviso to Section 153A(1), the respondents had strongly contended that the first proviso to Section 153C is only with regard to the abatement of proceedings and not for anything else.
37.On the other hand, the petitioners had contended that it is not only for abatement but for all the other purposes. According to the petitioner, if a particular date is determined for the purpose of abatement of proceedings, then the same would be applicable for all the purposes, including the date of initiation of proceedings under Section 153C against the other person.
38.Even a reading of Section 153C makes it clear that determination of total income of such other person for 6 assessment years immediately preceding the assessment year relevant to the previous year, in which the search was conducted or requisition was made and for the relevant assessment year or years, referred in sub Section (1) of Section 153C of the Act.
39.As far as the other person is concerned, the six years period would be calculated, the date on which the requisition was made and that would be the date, for the purpose of determination of assessment of income. On the other hand, as far as the searched person is concerned, this 6 years period would vary and the same would be calculated from the date of search made in the premises of searched person. Therefore, for the purpose of initiation and determination of income for 6 assessment years, two different dates have been fixed by the Statute, i.e., for the searched person, it was taken the date of search, whereas, for the other person, it was taken the date, on which the requisition is made to the JAO of the other person.
40.Thus, as far as the searched person is concerned, the date of initiation of search is the date, on which the search was conducted in his premises. The said date would be the date of initiation of search for searched person for all purposes. As far as the other person is concerned, the date of initiation of search would be the date, on which the materials, books of accounts, etc., are handed over to the JAO of the other person and this date would be considered as the date of initiation of search for other person for all purposes. Thus, there cannot be two different date of initiation of search, either for the searched person or for the other person.
41.The provisions of Sub-Section (3) of Section 153C states that "153C(3).nothing contained in this Section shall apply in relation to a search initiated under Section 132 or books of account, other documents or any assets requisition under Section 132A on or after the 1st day of April, 2021" which means, if the search is initiated subsequent to 01.04.2021, the provision of Section 153C will not apply and accordingly, no proceedings can be initiated against the other person.
42.According to the petitioner, the date of handing over of the seized materials, i.e., 25.11.2022, is the date of initiation of search. If the said contention of the petitioner is accepted, obviously, the issuance of impugned notices dated 07.02.2023 by the 2nd respondent is without any authority and contrary to Sub-Section (3) of Section 153C of the Act and thus, the same is liable to be quashed.
43.In terms of Sub-Section (1) of Section 153C of the Act, for the purpose of calculating the six years period, the date of handing over of the materials to the petitioner's JAO has to be construed as the date of initiation of search for other person. Further, in terms of first proviso to Sub-Section (1) of Section 153C, for the purpose of abatement also, the date of handing over of the materials to the petitioner's JAO has to be construed as the date of initiation of search for the other person. In such view of the matter, this Court is unable to comprehend the submissions made by the learned counsel for respondents that yet another date is available for the purpose of initiation of search in respect of the other person.
44.Certainly, there cannot be two different dates for initiation of search for the other person. Hence, for all practical purpose, the initiation of search would be the same date and it is apparent upon reading the provisions of Section 153C of the Act. In the provision of Section 153C(1) of the Act, the date of initiation of search is mentioned as the date of handing over of materials and as per the first proviso, the same date would apply for the purpose of abatement also. When such being the case, no other date will come into picture for the purpose of determination of initiation of search for other person. At this juncture, it would be apposite to refer the judgement rendered by the Hon'ble Apex Court in Jasjit Singh (supra), wherein, it was held on the aspect as to whether the first proviso to Section 153C would apply only for the purpose of abatement of pending proceedings or otherwise.
45.When a similar contention was raised before the Hon'ble Supreme Court in the aforesaid case of Jasjit Singh (supra), the same was recorded in the said judgement as "..The revenue argued that the proviso to Section 153C(1), is confined in its application to the question of abatement". However, while deciding the said issue, the Hon'ble Apex Court had arrived at a conclusion and rendered its judgement by stating that ".the revenue's argument is insubstantial and without merit".. When such being the case, it is clear that the Hon'ble Apex Court had rejected the contention of the revenue that "the first proviso to Section 153C(1), is confined in its application to the question of abatement", which means, as per the law laid down by the Hon'ble Apex Court, the said provision is not only for the purpose of abatement but also for all the other practical purposes.
46.For ready reference, the relevant portion of the judgement rendered in the case of Jasjit Singh (supra) is extracted hereunder:
"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. [**Emphasis supplied]
47.A reading of the above shows that the Hon'ble Apex Court had rejected the contention of the respondent and hence, it is clear that the first proviso to Sub-Section (1) of Section 153C is not only for the purpose of abatement but also for all other purposes, viz., initiation of search for other person in terms of Section 153C(3) of the Act. In such case, the date of initiation of search for the petitioner is the date, on which the documents were handed over to the JAO of the petitioner, i.e., 25.11.2022 is the date of initiation of search for the petitioner.
48.In terms of Sub-Section (3) of Section 153C, the provision of Section 153C will not apply for any search, which is initiated on or after 01.04.2021.
49.As stated above, in this case, the date of handing over of seized material to the petitioner's JAO is on 25.11.2022 and the said date is the date of initiation of search for the petitioner. Thus, in the present case, it is crystal clear like cloudless sky that the initiation of search was subsequent to 01.04.2021, for which, the provisions of Section 153C will not apply. Therefore, the impugned notices dated 07.02.2023 is unsustainable and the same were issued without authority and against the provisions of Sub-Section (3) of Section 153C of the Act.
50.In such view of the matter, all the impugned notices are liable to be quashed and accordingly, all the impugned notices dated 07.02.2023 issued by the 2nd respondent are quashed.”
The facts of the aforesaid case of hon’ble Madras High court are squarely applicable to the facts of the present case. Thus, by respectfully following the judgement of Hon’ble Madras High court in the case of Harigovind vs ACIT (supra), we set aside the notice issued u/s 153C on the assessee as the date of handing over the material i.e. 05.04.2022 would be taken as the date of initiation of search u/s 132 of the Act in the case of assessee. The issuance of notice us 153C dt. 02.05.2022 is without any authority and contrary to the provisions of sub-section (3) of section 153C of the Act and thus the consequent order passed u/s 153C of the Act is quashed. The grounds of appeal Nos. 1 & 2 are allowed.
Regarding the Ground of appeal No. 4 of the assessee, from the perusal of the satisfaction note available at pages 4-5 of the paper book, it is observed that the AO has not recorded the satisfaction that “have bearing on the total income of the assessee” as provided in section 153C of the Act. The same is reproduced herein below:
Satisfaction note for initiating proceedings u/s 153C of the Income Tax Act 1961 in the case of Sh. Vaibhav Garg (PAN- AKWPG7039B)
1.A search and seizure operation was carried out in the Alankit Group of cases on 18.10.2019 subsequently the said group was centralized to the jurisdiction of the undersigned. Accordingly, during the course of assessment proceedings u/s 153A of Alankit Group, material/ documents related to case of Sh. Vaibhav Garg have been found.
2.During the course of search and seizure operation, a ledger maintained in the name of “CALCUTTA CO.” has been obtained from “Anarkali Complex” in Tally found in folder named DATA 24 in the laptop of Sh. Sunil Kumar Gupta found and seized from the residence of Sh. Sunil Kumar Gupta, at 3584/4, Narang Colony, Gali No. 4, Tri Nagar Delhi. (Path: F:\SKGR A-32\SUNIL KUMAR GUPTA HP LAPTOP\EXTRACTED DATA\Tally\root\Local Disk\ANARKALI\BACKUP\DATA24\DATA24)
3.Further, the entries in the HDFC Bank Ledger of Diwakar, Vijay Bank Ledger of Diwakar and ledger named “CALCUTTA CO.”, have been RECONCILED. From the analysis of these ledgers, the details of persons/entities making cash payments and receiving the benefits against these unaccounted cash transactions in the form of Bogus Loans and Advances, has been compiled and produced below:
Column A Column B Column C Column D Column E Column F DATE FY Beneficiary Cash Entry recorded in ledger Cash Paid as per ledger Amount received against cash 02.06.2009 2009-10 Vaibhav Garg VINOD GARG 80,00,000 80,00,000 4.Ledger of Vinod Garg has been obtained from laptop of Sh. Sunil Kumar Gupta found and seized from the residence of Sh. Sunil Kumar Gupta, at 3584/4, Narang Colony, Gali No. 4, Tri Nagar, Delhi (Path: F:\SKGR A-32\SUNIL KUMAR GUPTA HP LAPTOP\EXTRACTED DATA\Tally\root\Local Disk\ANARKALI\BACKUP\DATA24\DATA24).
5.The transactions entered into by various beneficiaries with various shell entities controlled by Alok K Agarwal, against unaccounted cash or otherwise to take accommodation entries, are as tabulated below:
Name of beneficiary F.Y. Transaction done with Amount debited to beneficiary Amount credited to beneficiary Vaibhav Garg 2009-10 AAL-NSE 17,28,397 DCPL 50,00,000 EFL 50,00,000 2010-11 DCPL 15,00,000 15,00,000 2013-14 DCPL 35,00,000 Vaibhav Garg Sale of EFL 2013-14 EFL 3,58,46,800 6.The assessment proceedings are required to be taken u/s 153C of the Income Tax Act.
Diwakar and ledger named CALCUTTA CORP. analysis of these ledgers, the details of persons/entities making cash payments and receiving the benefits against these unaccounted cash transactions in the form of Bogus Loans and Advances, has been compiled and produced below:
Column A Column B Column C Column D Column E Column F DATE FY Beneficiary Cash Entry recorded in ledger Cash Paid as per ledger Amount received against cash 02.06.2009 2009-10 Vaibhav Garg VINOD GARG 80,00,000 80,00,000 4.Ledger of Vinod Garg has been obtained from laptop of Sh. Sunil Kumar Gupta found and seized from the residence of Sh. Sunil Kumar Gupta, at 3584/4, Narang Colony, Gali No. 4. Tri Nagar, Delhi (Path: F:\SKGR A-32\SUNIL KUMAR GUPTA HP LAPTOP\EXTRACTED DATA\Tally\root\Local Disk\ANARKALI\BACKUP\DATA24\DATA24).
5.The transactions entered into by various beneficiaries with various shell entities controlled by Alok K Agarwal, against unaccounted cash or otherwise to take accommodation entries, are as tabulated below:
Name of beneficiary F.Y. Transaction done with Amount debited to beneficiary Amount credited to beneficiary Vaibhav Garg 2009-10 AAL-NSE 17,28,397 DCPL 50,00,000 EFL 50,00,000 2010-11 DCPL 15,00,000 15,00,000 2013-14 DCPL 35,00,000 Vaibhav Garg Sale of EFL 2013-14 EFL 3,58,46,800 6.The assessment proceedings are required to be taken u/s 153C of the Income Tax Act, 1961 as the warrant issued in the name of Sh. Alok Kumar Aggarwal, Sh. Ankit Aggarwal, M/s Alankit Ltd. and M/s Alankit Assignment. After examination of documents, I am satisfied that it is a fit case for initiating proceedings u/s 153C of the Income Tax Act, for the A.Y. 2010-11 to A.Y. 2020-21.
Dated: 02/05/2022 Place: New Delhi
(Hemminlun Haokip) Income Tax Officer Ward-44(6), New Delhi
The Hon’ble Jurisdictional High Court in the case of Saksham Commodities Ltd (supra) has held as under:-
G. CONCLUSIONS
63.On an overall consideration of the structure of Sections 153A and 153C, we thus find that a reopening or abatement would be triggered only upon the discovery of material which is likely to "have a bearing on the determination of the total income" and would have to be examined bearing in mind the AYs' which are likely to be impacted. It would thus be incorrect to either interpret or construe Section 153C as envisaging incriminating material pertaining to a particular AY having a cascading effect and which would warrant a mechanical and inevitable assessment or reassessment for the entire block of the "relevant assessment year".
64.In our considered view, abatement of the six AYs' or the "relevant assessment year" under Section 153Cwould follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs' that may form part of the block of ten AYs'. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a notice would inevitably be issued the moment a search is undertaken or documents requisitioned, whereas in the case of the latter, the proceedings would be liable to be commenced only upon the AO having formed the opinion that the material gathered is likely to inculpate the assessee. While in the case of a Section 153A assessment, the issue of whether additions are liable to be made based upon the material recovered is an aspect which would merit consideration in the course of the assessment proceedings, under Section 153C, the AO would have to be prima facie satisfied that the documents, data or asset recovered is likely to "have a bearing on the determination of the total income". It is only once an opinion in that regard is formed that the AO would be legally justified in issuing a notice under that provision and which in turn would culminate in the abatement of pending assessments or reassessments as the case maybe.
65.We would thus recognize the flow of events contemplated under Section 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may have on the total income for the six AYs' immediately preceding the AY pertaining to the year of search and the "relevant assessment year". It is only once the AO of the non-searched entity is satisfied that the material coming into its possession is likely to "have a bearing on the determination of the total income" that a notice under Section 153C would be issued. Abatement would thus be a necessary corollary of that notice. However, both the issuance of notice as well as abatement would have to necessarily be preceded by the satisfaction spoken of above being reached by the jurisdictional AO of the non-searched entity.
66.Therefore, and in our opinion, abatement of the six AYs' or the "relevant assessment year" would follow the formation of that opinion and satisfaction in that respect being reached.
67.On an overall consideration of the aforesaid, we come to the firm conclusion that the "incriminating material" which is spoken of would have to be identified with respect to the AY to which it relates or may belikely to impact before the initiation of proceedings under Section 153C of the Act. A material, document or asset recovered in the course of a search or on the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search or the "relevant assessment year" would not justify a sweeping or indiscriminate invocation of Section 153C.
68.The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs' and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only beconsequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments.
H. OPERATIVE DIRECTIONS
69.When tested in light of the aforesaid principles, we find that except for a few exceptions which were noticed in the introductory parts of this judgment, the writ petitions forming part of this batch, impugn the invocation of Section 153C in respect of AYs' for which no incriminating material had been gathered or obtained. The Satisfaction Notes also fail to record any reasons as to how the material discovered and pertaining to a particular AY is likely to "have a bearing on the determination of the total income" for the year which is sought to be abated or reopened in terms of the impugned notices. The respondents have erroneously proceeded on the assumption that the moment any material is recovered in the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs' years immediately preceding the assessment correlatable to the search year or the "relevant assessment year" as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed above.”
The Hon’ble Jurisdictional Delhi High Court in the aforesaid judgement has held that for initiation of proceedings u/s 153C of the Act, the AO should satisfy that books of accounts or documents or assets seized or requisition pertained to the assessee and the entries contained therein must “have bearing on the determination of the total income of such other person”.
As could be observed from the satisfaction note as reproduced herein above, the AO nowhere has recorded the satisfaction that entries contained documents seized “pertained to the assessee” and further such entries “have the bearing on the determination of the income of the assessee”. Therefore, by respectfully following the judgement of Hon’ble Delhi High Court in the case of Saksham Commodities (supra), we hold that satisfaction note recorded before initiation of the proceeding’s u/s 153C of the Act is not a valid satisfaction. Accordingly, we allow Ground of appeal No. 4 raised by the assessee and quashed the proceedings initiated u/s 153C of the Act based on such invalid satisfaction.
Since we have allowed the legal grounds of appeal No. 1,2 & 4 of the assessee, the remaining Grounds of appeal including other legal grounds of appeal left open and not adjudicated.
In the result, appeal of the assessee is allowed.