Case Law Details
ACIT Vs Kishore Kumar Kaya (ITAT Delhi)
The Delhi ITAT dismissed the Revenue’s appeal and upheld the CIT(A)’s order holding that assessment for AY 2021-22 ought to have been framed u/s 153C and not u/s 143(3), since the year fell within the six-year block period reckoned from the date of recording satisfaction note. The Tribunal noted that in the case of a non-searched person, the relevant date for computing the six assessment years under section 153C is not the date of search, but the date on which seized material is handed over or satisfaction is recorded by the Assessing Officer having jurisdiction over such other person.
Relying extensively on the Supreme Court ruling in CIT vs. Jasjit Singh and Delhi High Court judgments in Ojjus Medicare Pvt. Ltd. and Pavitra Realcon Pvt. Ltd., the Tribunal observed that the satisfaction note in the assessee’s case was recorded on 23.08.2022. Therefore, the correct six-year block period for section 153C extended from AY 2017-18 to AY 2022-23, within which AY 2021-22 squarely fell. Since the AO nevertheless completed assessment u/s 143(3) instead of invoking section 153C, the assessment proceedings were held to be legally unsustainable. The ITAT affirmed the CIT(A)’s conclusion that the assessment framed under the wrong statutory provision was invalid in law.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed by the revenue against the order of Ld. CIT(A)-30 dated 25.04.2025 for the A.Y. 2021-22.
2. In spite of issue of notice none appeared on behalf of the assessee nor any adjournment was moved. Since the issue is no more res-inte-gra the appeal is disposed off on hearing the Ld. DR.
3. We have perused the order of the Ld. CIT(A) wherein the assessee had raised an additional ground and contended that the date of deemed search in the case of the assessee shall be the date on which the satisfaction note recorded by the AO of the assessee or the materials handed over to the AO of the assessee.
4. The assessee contended that the date of handing over all the materials or the date of satisfaction recorded by the AO is taken as deemed search in the case of the assessee, in view of the decision of the Hon’ble Supreme Court in the case of Jasjit Singh (458 ITR 437) and the Hon’ble jurisdictional High Court in the case of Ojjus Medicare Pvt. Ltd. (161 com160), the assessment year under consideration shall fall within the block period of six assessment years and therefore, the assessment should have been completed u/s.153C of the Act and not u/s.143(3) of the Act as was done by the AO. This contention of the assessee was accepted by the Ld. CIT(A) and allowed additional ground raised by the assessee. The correct block period of six assessment years for the purpose of making assessment u/s.153C of the Act in the case of the assessee would be from A.Y. 2017-18 to A.Y.2022-23 and therefore, the assessment year under consideration i.e. 2021-22 falls within the block period of six years and in which the case the assessment for the impugned assessment year i.e. 2021-22 should have been carried out in accordance with law u/s.153C of the Act and not under the provisions u/s.143(3) of the Act. While holding so the Ld. CIT(A) observed as under :-
10. Legal position regarding the contentions raised by the assessee through additional grounds:
10.1 The assessee submitted that the issue of the “terminal date” or “relevant date,” being the date of handing over the seized documents or the date of recording satisfaction by the JAO, for computing the six-year block period in the case of a non-searched person, is no longer res integra.
Appellant mainly relied on the Hon’ble Supreme Court judgment in the case of CIT 14 vs. Jasjit Singh [2023] 458 ITR 437 (SC)[26-09-2023] which has interpreted the legislative intent behind inserting the first proviso to Section 153C(1) of the Act and stated that 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 153-C was enacted. The Hon’ble Supreme Court has finally concluded that in are not searched and in respect of whom the specific provision under Section case of non-searched person, the date of receipt of books of accounts by the jurisdictional officer of such other person shall be the date of reference for calculation of six assessment years for which the Assessing Officer may initiate assessment in terms of section 153C of the Act.
10.2 case Further, appellant relied on the very recent decision of Hon’ble Delhi In the of OJJUS MEDICARE 161 taxmann.com 160 (Delhi)[03-04-2024] which has dealt this issue in PVT. LTD. [2024] length after considering the history of amendments made in Section 153A and 153C by various Finance Acts including the Finance Act, 2017 and also took into consideration the various decisions on this issue including the decision of the Hon’ble Supreme Court in the case of Jasjit Singh [2023 SCC Online SC 1265] and held that Block period of six preceding AYs u/s 153C shall be computed from the date of receipt by the AO of the non-searched person of the books or documents or assets seized or requisitioned.
10.3 In view of the aforesaid decisions of the Hon’ble Supreme Court and the Jurisdictional Hon’ble High Court of Delhi, the assessee submitted that the terminal date for counting six preceding assessment years for the purpose of making assessment u/s 153C in the case of person other than searched person shall be the date of handing over of the seized documents/date of recording satisfaction by the AO of that other person,
10.4 In the case of the assessee satisfaction note is recorded is on 23.08.2022, Therefore, the six preceding assessment years for the purpose of making an assessment under Section 153C will be counted from this date, i.e., 23.08.2022 and the six preceding assessment years will cover the AY 2017-18 to AY 2022-23.
10.5 The assessee, thus, submitted that since AY 2021-22, the year under consideration, falls within the block of six preceding assessment years, the assessment for this year should have been conducted in accordance with the provisions of Section 153C, rather than Section 143(3) of the Act.
10.6 I have considered the facts of the case, the legal contentions raised by the assessee through the additional ground, the written submissions made in this regard, and the order passed by the Assessing Officer.
10.7 The following dates and events are relevant to resolve this controversy. The primary issue raised by the assessee through the additional grounds is whether the assessment order for the relevant assessment year (AY 2021-22) should have been passed under Section 153C of the Act, supported by a recorded satisfaction note and a notice under Section 153C.
10.8 Another important fact is that the AO calculated the six-year block period for assessments under Section 153C of the Act from the date of the search on 06.01.2021, which is clearly not the correct position in law.
10.9 This issue as to what will be the terminal date for computing six assessment years block period in case of a non-searched person is no longer res integra. The Hon’ble Supreme Court in the case of CIT 14 vs. Jasjit Singh [2023] 458 ITR 437 (SC)[26-09-2023] has in very clear terms held that in case of non-searched person, the date of receipt of books of accounts by the jurisdictional officer of such other person shall be the date of reference for calculation of six assessment years for making assessment under section 1530 of the Act.
10.10 The relevant extract of the judgement is reproduced herewith for reference:
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-[to Sectioof 153(c)(1)] is confined hue argued thaion 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, its 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.”
10.11 Further, the Hon’ble Jurisdictional High Court of Delhi also in the case of OJJUS MEDICARE PVT. LTD. [2024] 161 taxmann.com 160 (Delhi)[0 04-2024] after taking into consideration the various decisions on this is including the decision of the Hon’ble Supreme Court in the case of Jas Singh (supra) held that Block period of six preceding AYs u/s 153C shall computed from the date of receipt by the AO of the non-searched person of books or documents or assets seized or requisitioned which falls under A.Y. 2023-24 for year under consideration (present case).
Relevant conclusion para of this decision is reproduced as below:
D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 1534(1), while defining the point from which the period of the “relevant assessment year” is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 1530(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesald legal position also stood reiterated by the Supreme Court in Vikram Sufitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted.
E. The reckoning of the six AYs’ would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs’ would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A.”
Further, similar controversy arose before the Hon’ble ITAT Delhi in the case of Akansha Gupta vs ACIT Central Circle 04 Delhi in ITA no. 3074/Del/2023; dated 10.07.2024 where the facts were exactly similar as present in the case of the assessee. A search and seizure operation occurred on 06.01.2021 involving the Hans Group, Praveen Jain, and Jainco Limited. During the search, the AO seized various documents, including cloned data from Praveen Kumar Jain’s mobile phone, which provided evidence of unaccounted cash receipts amounting to 194 lakhs and a commission payment of Rs.2.50 lakhs related to a property sale by the assessee to Ms. Navita Malhotra and Mr. Gurdeep Singh.
Before the ITAT, the assessee presented an additional ground, contesting the validity of the assessment order under Section 143(3) dated 29.12.2022, which followed a notice under Section 143(2) issued on 30.06.2022. The assessee contended that the assessment for the relevant year should have been conducted under Section 153C, as the satisfaction note was recorded on 30.06.2022. Consequently, the six-year block for assessments under Section 153C runs from this date, covering AY 2017-18 to AY 2022-23. Since the assessment year in question, 2021-22, falls within this block, the assessment should have been carried out under Section 153C rather than Section 143(3).
The ITAT accepted the additional ground and concluded that the assessment for AY 2021-22 should have been conducted under Section 153C instead of Section 143(3). As a result, the ITAT quashed both the notice under Section 143(2) and the assessment order issued under Section 143(3) of the Act.
Relevant paras of the decision are reproduced as follows:
“4. The assessee is an individual and filed her return of income on 24.12.2021 declaring total income of Rs.63,67,760/-. The return was processed u/s 143(1) of the Act on 29.03.2022. A search and seizure action was carried out on 06.01.2021 in the cases of Hans Group/Praveen Jain/Janco Limited and the close associates and few transacting parties with whom the assessee Ms. Akansha Gupta had entered into unaccounted cash transactions. According to the AO, during the course of search action u/s 132 of the Act, conducted at C-42, C block, Preet Vihar, Delhi-110092, certain documents/digital evidences in from of clone data of Praveen Kumar Jain’s mobile were seized. In this clone data, a Kachi Parchi was found from where the AO found evidence of receipt of unaccounted cash of Rs.94 lakhs and payment of commission of Rs.2.50 lakhs in respect of sale of a property situated at E-92, 2nd Floor, Preet Vihar, Delhi-110092 by the assessee to Ms. Navita Malhotra and Shri Gurdeep Singh. This property was registered on 28.01.2021. After considering the submissions of the assessee, the Assessing Officer passed an assessment order u/s 143/3) of the Act on 29.12.2022 determining total income at Rs. 1,60,17,760/-after making an addition of Rs.94,00,000/- towards undisclosed sales consideration and Rs.2.50 lakhs as unexplained expenditure.
8. We have considered the rival submissions and perused the material available on record. We find merit in the submission of the assessee that the legal ground raised by way of additional ground goes to the root of the matter as it challenges the legal validity of the order u/s 143(3) dated 29.12.2022 passed in pursuance of notice u/s 143(2) of the Act issued on 30.06.2022. Therefore, we first take up the additional ground for adjudication. These additional grounds were not raised before the Ld. CIT(A) nor any similar plea was taken before the AO, but since the additional grounds are purely legal ground and all the facts relating to the same are already part of record, therefore, the same is admitted in view of the decision of the Hon’ble Apex Court in the case of National Thermal Power Corporation [1998] 229 ITR 383(SC) and is hereby adjudicated.
8.1. On perusal of the satisfaction note, it is seen that the same was recorded on 30.06.2022 by the AO after giving a finding that the clone data of Pravin Kumar Jain’s Mobile marked as Annexure-5 belongs to the assessee, which has bearing on the determination of total income of the assessee for the relevant assessment years referred to in sub section-1 of section 153A of the Act and it was a fit case for initiating proceedings in the case of the assessee for AY 2015-16 to 2020-21 u/s 153C of the Act and for AY 2021-22 u/s 143(2) of the Act. Thereafter, he issued a notice u/s 143(2) on 30.06.2022 for AY 2021-22. On similar facts, the Coordinate Bench of the Tribunal in the case of Jasjit Singh (supra) referred to the decision in the case of Co-ordinate Bench in the case of V.K. Fiscal Services Pvt. Ltd. ITA Nos. 5460 to 5465/Del/2012, wherein, it was held that the date of receiving of the seized documents would become the date of search and six years period would be reckoned from this date…….
9. Therefore, in view of the above decision, the date of recording of the satisfaction will be the deemed date for the possession of the seized documents, which is 30.06.2022 in the present case and the date of search and six years period would be reckoned from this date Le. 30.06.2022. Therefore, there is merit in the submission of the assessee that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2018-19 to 2022-23. Therefore, respectfully following the decision of the cited case, it is held that in the present case, the assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143/2) of the Act as done by the AO in this case. No other contrary facts or decision was brought on record by the Ld. DR Therefore, it is held that the assessment order dated 29.12.2022 passed u/s 143(3) of the Act by the issuance of notice u/s 143(2) of the Act dated 30.06.2022 is bad in law and hence the notice u/s 143(2) of the Act, dated 30.06.2022 and the consequent assessment order dated 29.12.2022 passed u/s 143(3) of the Act are hereby quashed. The additional grounds filed by the assessee are allowed.”
10.12 Further, the above view has been affirmed by the Hon’ble Delhi High Court, where the Hon’ble Court decided the aforementioned issue in favour of the assessee and quashed the order passed for the year of search under Section 143(3) of the Act, which fell within the block period of six assessment years from the date of recording satisfaction under Section 153C, holding that the order should have been passed under Section 153C of the Act.
10.13 In this context, it is important to highlight the fact that the Hon’ble Delhi High Court in the case of PCIT (Central)-3 v. M/s Pavitra Realcon Pvt Ltd in ITA nos. 579, 587 590/2018; dated 29.05.2024 took similar view. In this case, the assessee challenged the validity of the assessment proceedings through additional ground before the ITAT that the assessment being wrongly framed u/s 143(3) of the Act, whereas assessment should have been framed u/s 153C since the period under consideration (AY 2011-12) falls in six years block period prescribed u/s 153C of the Act. The ITAT admitted the aforesaid additional ground and set aside the assessment order passed u/s 143(3) of the Act vide order dated 04.10.2017 by holding that the assessment proceedings should have been conducted as per the provisions of Section 153C of the Act since the AY 2011-12 fell into the block period of six years from the date of recording satisfaction on 27.07.2012, which was the deemed date of search u/s 153C of the Act. The Hon’ble High Court affirmed the order of the ITAT by holding at para 36 that we find no reason to intermeddle with the order of the ITAT which has rightly set aside the assessment order and deleted the additions made therein.”
10.14 Respectfully following the decisions of the Hon’ble Supreme Court in the case of Jasjit Singh(supra) and the Hon’ble Delhi High Court in the case of OJJUS MEDICARE PVT. LTD. (supra) and M/s Pavitra Realcon Pvt. Ltd. (supra), I concur with the contention of the assessee that the six preceding assessment years in his case should be calculated from the date of recording satisfaction note by the AO on 23.08.2022 and not from the date of search. Appellant has furnished satisfaction note, wherein in appellant’s case, satisfaction note and notices have been issued for on A.Υ. 2015-16 to 2021-22 only.
However, the correct six assessment years block period for the purpose c making assessment u/s 153C in case of the assessee would be the AY 2017-1 to AY 2022-23. Admittedly, the year under consideration (A.Y. 2021-22) falls this correct block period of six AYs, therefore, the assessment for the impugn AY 2021-22 should have been carried out in accordance with the provisions Section 153C of the Act and consequent order should also be passed under that section only no under sec. 143(3) of the Act. Accordingly, the additional grounds raised by the assessee are allowed.”
5. On careful perusal of the Ld. CIT(A)’s order we do not find any infirmity in holding that the impugned assessment year i.e.2021-22 shall fall under the block period of six years and the assessment should have been made under the provisions of section153C of the Act and not u/s.143(3) of the Act. Ground Nos. 4 to 9 raised by the revenue in ground of appeal are dismissed.
6. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 15.05.2026.
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