Farooqi Gulam Samdani Vs DCIT (ITAT Heyderabad)
ITAT Hyderabad Quashes 153C Assessment for 22-Month Delay in Recording Satisfaction; ₹1.50 Cr Cash Addition Rendered Academic
The Hyderabad ‘B’ Bench of the ITAT, in Shri Farooqi Gulam Samdani vs. DCIT, Central Circle-1(3), Hyderabad (ITA No. 814/Hyd/2025, AY 2019-20), vide order dated 24-12-2025, quashed the assessment framed u/s 153C on the ground of inordinate delay in recording satisfaction and issuing notice.
A search u/s 132 was conducted on 22-11-2018 in the case of a third party, during which an agreement of sale allegedly showing cash payment of ₹3 crore was found. The assessment of the searched person was completed on 23-04-2021. However, satisfaction u/s 153C was recorded only on 17-11-2022 and notice u/s 153C was issued on 16-12-2022—after a gap of about 22 months.
Relying on the Supreme Court judgment in CIT v. Calcutta Knitwears (362 ITR 673), CBDT Circular No. 24/2015, and decisions of the Delhi & Gujarat High Courts, the Tribunal held that satisfaction must be recorded at the time of, during, or immediately after completion of assessment of the searched person. A notice issued after such a long delay is barred by limitation and invalid.
Accordingly, the entire assessment order passed u/s 153C dated 13-03-2024 was held to be void ab initio. Since the assessee succeeded on the legal issue, the addition of ₹1.50 crore made as unexplained investment/cash payment u/s 69/69A, based on the seized agreement of sale, was treated as academic and infructuous. The appeal was allowed in full
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
