DCIT Vs Davanam Constructions Pvt. Ltd. (ITAT Bangalore)
ITAT Bangalore: Revenue’s Appeals Dismissed as Section 153C Assessments Already Quashed by High Court
The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the Revenue’s appeals for AYs 2014-15, 2017-18 and 2018-19 in the case of Davanam Constructions Pvt. Ltd., upholding the order of the CIT(A) which had quashed the assessments framed under section 153C of the Income-tax Act.
The Tribunal noted that the assessments against the assessee company arose pursuant to a search conducted in the case of third parties, including a director of the assessee. Notices under section 153C and consequential assessments were challenged by the assessee before the Hon’ble Karnataka High Court. The High Court, relying on its earlier Division Bench decision in Sunil Kumar Sharma, had categorically held that initiation of proceedings under section 153C was invalid in the facts of the case and consequently quashed the notices as well as the assessment orders.
The CIT(A), taking note of the High Court’s judgment, allowed the assessee’s appeals by holding that once the jurisdictional notices and assessments were quashed by the High Court, nothing survived for adjudication at the appellate level. The Revenue carried the matter in appeal before the ITAT contending that incriminating material was found from the premises of the director and that section 153C was rightly invoked.
The Tribunal rejected the Revenue’s contentions, observing that the CIT(A)’s order was strictly in conformity with and based on the binding judgment of the jurisdictional High Court, which had attained finality, as even the SLP filed by the Revenue had been dismissed. In the absence of any further proceedings against the High Court’s order, the ITAT held that there was no infirmity in the order of the CIT(A).
Accordingly, all three appeals filed by the Revenue were dismissed, reaffirming that assessments under section 153C cannot survive once the foundational jurisdiction itself has been quashed by the High Court.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These are the appeals filed by the revenue challenging the common order of the Ld.CIT(A)-11, Bengaluru dated 11/07/2025 in respect of the A.Ys. 2014-15, 2017-18 and 2018-19 and raised the following grounds:
