Case Law Details
DCIT Vs Ankit Gupta HUF (ITAT Delhi)
Delhi ITAT Upholds Quashing of 153C Notices Beyond 6 Years – Unless Escaped Income Exceeds ₹50 Lakh, Extended 10-Year Window Cannot Be Invoked
The Delhi ITAT dismissed the Revenue’s appeals and upheld the CIT(A)’s order annulling assessments framed u/s 153C for AYs 2014-15 and 2015-16, holding that proceedings initiated beyond six assessment years were invalid where the alleged escaped income did not cross the statutory threshold of ₹50 lakh required for invoking the extended ten-year block.
The Tribunal noted that the assessee had challenged the very jurisdiction of proceedings u/s 153C on the ground that the notices were barred by limitation under the amended provisions of sections 153A/153C. The assessee argued that for “other persons”, reopening beyond six years is permissible only where income represented in the form of assets exceeds ₹50 lakh.
The ITAT observed that the issue stood squarely covered by the Delhi High Court ruling in Ojjus Medicare Pvt. Ltd. and the coordinate bench ruling in Alok Agarwal & Sons HUF. In the present case, the satisfaction recorded by the AO pertained to alleged undisclosed income of only about ₹34.71 lakh, which was below the statutory threshold contemplated for invoking proceedings for the extended ten-year period.
The Tribunal reproduced and relied upon the Delhi High Court observations in Pratishtha Garg v. ITO explaining that while the AO may initially form a provisional opinion regarding escaped income, the satisfaction note itself must indicate reasons showing that escaped income is likely to exceed ₹50 lakh for invoking the extended period. Mere speculation or conjecture would not suffice.
Accordingly, the ITAT held that AY 2014-15 fell beyond the permissible six-year block and the conditions for extending the period to ten years were not satisfied. Since the facts for AY 2015-16 were identical, both Revenue appeals were dismissed and the assessments stood annulled.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. These appeals are filed by the Revenue against the order of Learned Commissioner of Income Tax (Appeals)-25, New Delhi [“Ld. CIT(A)”, for short] dated 13.02.2025 for the Assessment Years2014-15 & 2015-16.
2. At the time of hearing of the appeals, it is brought to our notice there is a delay of 3 days in filing the appeals. In response thereof, the ld. counsel for the assessee submitted that there was a reasonable cause for the delay in filing the appeal. Accordingly, he prayed that the delay in filing the appeal be condoned. We have heard both the counsels on the issue of condonation of delay. In our considered opinion, there was a reasonable cause for the delay in filing the appeals. Therefore, we condone the delay in filing the appeals before the Tribunal.
3. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee’s appeal being ITA No.3696/Del/2025 for AY 2014-15 as lead case to adjudicate the issues under consideration.
4. Ld. AR made a submission that the issue under consideration is squarely covered in assessee’s own favour. He prayed that he may be heard first. At the time of hearing, ld. AR of the assessee brought to our notice the relevant facts of the case, that the assessee has challenged the assessment order before the ld. CIT (A) on a legal ground raised by it stating that the notice issued u/s 153C of the Act for the year under consideration and the assessment order passed u/s 153C is time-barred by limitation and hence invalid and bad in law and without jurisdiction and that the jurisdictional requirement as contemplated under the fourth proviso to Section 153A(1) of the Act is not satisfied. Further the assessee has stated before ld. CIT (A) that in cases where the escaped income is less than Rs. 50 Lakhs, the notice under section 153C of the Act can be issued for upto 6 assessment years from the end of the AY relevant to the previous year in which the books of accounts or documents or assets seized are received by the AO, and hence in the instant case under consideration (AY 2014-15), the proceedings were barred by limitation.
5. He further submitted that ld. CIT (A) observed that the position of the statute has been clear in so far as the amount of income that has escaped assessment for which the reopening can be done for the ‘relevant assessment years’, i.e. beyond six years and up to ten years, is concerned. Accordingly, ld. CIT (A) observed that in the instant case, there are two issues arising by virtue of the grounds of appeal taken before him, and summarized the same below:
i. Relating to the date of reckoning for calculating six AYs backwards that can be thrown open for assessment/reassessment after search/handing over of seized material to the AO of the non-searched person; and
ii. Relating to whether the assessment/reassessment can be carried out in the instant case being beyond six years but within ten years of the date of search/handing over of seized documents/material to the AO of the non-searched entity.
6. He further submitted that the ld. CIT (A) relying on the decision of Hon’ble jurisdictional Delhi High Court in the case of Principal Commissioner of Income-tax (Central-1) v. Ojjus Medicare (P.) Ltd reported in [2024] 465 ITR 101 (Delhi) observed that it is clear that A.Y. 2014-15 is not covered within six AYs as per section 153C of the Act and held that notice issued for instant assessment year, AY 2014-15 would fall beyond the ambit of six AYs as provided under section 153C read with section 153A, and hence the impugned assessment order framed for the instant assessment year 2014-15 cannot be upheld and is annulled, being beyond the period of 6 years and accordingly, allowed the appeal of the assessee.
7. He further submitted that the issue is also squarely covered by the decision of the coordinate Bench in the case of Alok Agarwal & Sons HUF in ITA No.4989/Del/2025 vide order dated 29.01.2026, wherein the Accountant Member herein is the Author of the order, in favour of the assessee. Accordingly, he pleaded that the order of the ld. CIT (A) may be upheld and the appeal of the Revenue be dismissed.
8. On the other hand, ld. DR of the Revenue relied on the findings of the AO but could not controvert the decisions of the Hon’ble Courts/Tribunal.
9. Considered the rival submissions and material placed on record. We observed that this issue is squarely covered by the decision of Hon’ble Delhi High Court in the case of Ojjus Medicare Pvt. Ltd. (supra). Further we observed that the coordinate Bench in the case of Alok Agarwal & Sons HUF (supra), exactly on similar facts and circumstances, decided the issue in favour of the assessee by observing as under :-
“Considered the rival submissions and material placed on record. We observed that the AO of the assessee recorded the satisfaction based on the satisfaction recorded by the searched person only on 10.05.2022. Based on the above facts on record, the searched assessment year for the assessee is AY 2023-24. As per the Fourth Proviso to section 153A, AO can proceed to make assessment u/s 153A only upon the undisclosed assets found during 7 to 10th year over and above Rs.50 lakhs. In the given case, we observed that the amount of which the satisfaction was recorded by the AO of the searched person is only Rs.34,71,289/-. In the case of Pratishtha Garg vs. ITO in WP (C) 1046/2024 order dated 24.05.2024, Hon’ble Delhi High Court held as under :-
“3. The issue in any case stands answered and covered in favour of the writ petitioner in light of the judgment rendered in Principal Commissioner of Income Tax Central – 1 vs. Ojjus Medicare Pvt. Ltd [2024 SCC Online Del 2439]. The relevant paragraphs of the aforesaid decision read as under:-
“G. Insofar as the thresholds put in place by virtue of the Fourth Proviso to Section 153A are concerned and the argument of the writ petitioners of the condition of INR 50 lakhs being an unwavering precondition, we find ourselves unable to sustain that submission bearing in mind the indubitable fact that proceedings for search assessment commence upon the issuance of a notice and the AO at that stage having really not had the occasion to undertake a detailed The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/01/2026 at 10:45:23or in depth examination of the evidence collected or come to a definitive opinion with respect to the total income which may have escaped assessment . Since the computation and assessment of income that is likely to have escaped assessment would at this stage be provisional, it would be incorrect to strike down initiation of action on a mere ex facie examination of the Satisfaction Note. We also in this regard bear in mind the Fourth Proviso using the expression “amounts to or is likely to amount”. The usage of the phrase “likely to” is indicative of the Legislature being conscious of the provisional character of the opinion that the AO may have formed at that stage.
H. However, and at the same time, even if the identified asset at that stage be quantified as less than INR 50 lakhs, the AO must for reasons to be duly recorded, be of the opinion that the ultimate computation of escaped income is likely to exceed INR 50 lakhs. The aforesaid satisfaction would have to be based on an assessment of the material gathered and the potentiality of the same being indicative of the escaped assessment exceeding INR 50 lakhs. The formation of opinion in this respect would have to be based not on mere ipse dixit but reflective of a fair assessment of the quantum of income likely to have escaped assessment as distinct from mere speculation and conjecture.
I. We further hold that since the precondition of INR 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself . We are also of the opinion that the precondition of INR 50 lakhs is not liable to be viewed as being the qualifying criteria for each “relevant assessment year” that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of INR 50 lakhs.”
4. Accordingly, and for reasons assigned in our decision in Ojjus Medicare Private Limited, while we allow the instant writ petitions and quash the impugned notices issued under Section 153C of the Act dated 29 June 2022 insofar as it relates to AYs’ 2016-17, 201415 and 2015-16, we leave it open to the AO to examine the issue afresh bearing in mind the observations appearing in para 3 above.
5. In case the AO be of the opinion that the income alleged to have escaped assessment is likely to exceed INR 50 lakhs in the “relevant assessment year”, it would be open to it to draw proceedings afresh, if otherwise permissible in law.”
10. Respectfully following the above decision, we are inclined not to disturb the findings of the ld. CIT (A) and dismiss the grounds raised by the Revenue and dismissed the appeal filed by the Revenue.
11. Since the facts in AY 2014-15 are exactly similar to AY 2015-16, our above findings in AY 2014-15 are applicable mutatis mutandis in Assessment Year 2015-16. Accordingly, the appeal filed by the Revenue for AY 2015-16 is dismissed.
12. In the result, both the appeals filed by the Revenue are dismissed.
Order pronounced in the open court on this 22nd day of May, 2026.
Author Bio
