Vidur Chharia Vs DCIT/ACIT (ITAT Delhi)
ITAT Delhi Quashes Section 153C Assessments for Consolidated Satisfaction Note & Absence of Incriminating Material
The Delhi Bench of the ITAT allowed the appeals of Vidur Chharia, Rakesh Chharia & Sons (HUF) and Pole-Ads Advertising Pvt. Ltd. for AY 2017-18, holding that the assumption of jurisdiction under section 153C was legally unsustainable.
The Tribunal found that the Assessing Officer recorded a single consolidated satisfaction note covering multiple assessment years (AYs 2014-15 to 2020-21) instead of recording year-specific satisfaction. Relying on the Karnataka High Court decision in Sunil Kumar Sharma (affirmed by the Supreme Court) and the Delhi High Court ruling in Saksham Commodities Ltd., the ITAT held that such consolidated satisfaction is fatal to jurisdiction, as section 153C requires the AO to be satisfied that seized material has a bearing on the determination of total income for each specific assessment year.
On merits as well, the Tribunal held that no incriminating material existed for AY 2017-18, which was an unabated assessment year. The only material relied upon by the Revenue was a confirmation/ledger of a loan from Diwakar Commercial Pvt. Ltd., an RBI-registered NBFC, found in a third party’s laptop. The Tribunal noted that the loan of ₹70 lakh was received and repaid through banking channels, duly examined and accepted in an earlier scrutiny assessment under section 143(3), and fully supported by confirmations, bank statements and audited accounts. A third-party statement relied upon by the AO neither alleged any wrongdoing in respect of this loan nor survived, having been promptly retracted and not subjected to cross-examination.
Applying the Supreme Court rulings in Abhisar Buildwell and Jasjit Singh, the ITAT held that completed assessments cannot be disturbed in the absence of incriminating material. Consequently, additions under sections 68, 69C and related disallowances were deleted.
Accordingly, the Tribunal quashed the assessments framed under section 153C and allowed the appeals, both on jurisdictional grounds and on merits.
FULL TEXT OF THE ORDER OF ITAT DELHI
