Case Law Details
DCIT Vs Excel Insurance Outsourcing Pvt. Ltd. (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) dismissed two appeals filed by the Revenue against the order of the Principal Commissioner of Income Tax (Appeals) pertaining to Assessment Years (AYs) 2010-11 and 2011-12. The dispute concerned the validity of assessments framed under Sections 153C read with 144 of the Income-tax Act, 1961, and the determination of the relevant block period applicable to a non-searched person.
The Assessing Officer initiated proceedings under Section 153C against the assessee following a search conducted on the Alankit Group on 18.10.2019. A satisfaction note under Section 153C was recorded by the Assessing Officer of the searched party on 24.06.2022, and the seized material was handed over to the Assessing Officer having jurisdiction over the assessee on the same date. Subsequently, the Assessing Officer of the assessee recorded satisfaction under Section 153C on 31.11.2022 and issued notice under Section 153C on 05.07.2023.
The assessee challenged the proceedings before the CIT(A), who allowed the appeal. The Revenue contested this decision before the ITAT, arguing against the CIT(A)’s finding that the block period under Sections 153C and 153A should be computed from the date on which the books of account, documents, or assets seized were received by the Assessing Officer of the non-searched person, rather than from the date of initiation of the search.
Before the Tribunal, the assessee contended that since satisfaction in the case of the non-searched person was recorded on 31.11.2022, the relevant assessment year became AY 2023-24 under the first proviso to Section 153C. Consequently, the ten assessment years immediately preceding the relevant assessment year would extend only from AY 2014-15 onwards. Therefore, AYs 2010-11 and 2011-12 fell outside the permissible block period, and the Assessing Officer lacked jurisdiction to initiate proceedings for those years. Reliance was placed on the decision of the Delhi High Court in Ojjus Medicare Pvt. Ltd. & Others.
The ITAT observed that the issue was no longer res integra in view of the Supreme Court’s decision in CIT v. Jasjit Singh. Referring to that judgment, the Tribunal noted that the first proviso to Section 153C was enacted not only to address the issue of abatement but also to determine the date from which the relevant block period should be reckoned in the case of a third party whose premises had not been searched. The Supreme Court had recognized that delays in forwarding seized materials to the jurisdictional Assessing Officer of the non-searched person could prejudice such persons if the computation were linked back to the original date of search.
The Tribunal further referred to the Delhi High Court’s ruling in Ojjus Medicare Pvt. Ltd., which held that the first proviso to Section 153C creates a legal fiction under which the commencement date for computing the six-year or ten-year block period is deemed to be the date of receipt of the books of account, documents, or assets by the jurisdictional Assessing Officer of the non-searched person. The High Court had clarified that, unlike proceedings under Section 153A, where the year of search is the reference point, proceedings under Section 153C require substitution of the year of search with the year in which the seized materials are handed over to the jurisdictional Assessing Officer.
Applying these principles, the Tribunal held that in the present case, the deemed date of search for the assessee, being a non-searched person, was the date on which satisfaction was recorded, namely 31.11.2022. Accordingly, the relevant assessment year was AY 2023-24. As a result, AYs 2010-11 and 2011-12 fell beyond the ten-year block period permissible under Section 153C.
FULL TEXT OF THE ORDER OF ITAT DELHI
These two appeals by the Revenue are directed against the order of the learned Pr. Commissioner of Income Tax (Appeals) – 25, New Delhi under section 250 of the Income Tax, 1961 (hereinafter referred as ‘the Act’) dated 10.10.2025 arising from the Assessment order dated 28.03.2024 under section 153C r.w.s 144 of the Act by the Assessing Officer, DCIT, Circle – 32, New Delhi pertaining to Assessment Years 2010-11 and 2011-12 respectively.
2. Since the above captioned appeals were heard together and facts in issues are identical, both the appeals are being disposed of by this common order for the sake of convenience and brevity.
3. The challenge in the grounds raised by the Revenue is in respect of the ld. CIT(A)’s action in holding that block periods for assessment u/s 153C r.w. 153A of the Act have to be calculated from the date of receipt of the books of account, documents or assets seized by the Assessing Officer of the non-searched person and not from the date of initiation of search by relying upon the first proviso to section 153C of the Income-tax Act, 1961.
4. Representatives of both the sides were heard at length. Case records carefully perused. Relevant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules.
5. Brief facts of the case are that the Assessing Officer initiated proceedings u/s 153C r.w.s 144 of the Income-tax Act, 1961 [the Act, for short] on the assessee due to search conducted at third party i.e., Alankit Group on 18.10.2019. For this purpose, satisfaction note u/s 153C was recorded by the Assessing Officer of the searched party on 24.06.2022 and handed over the seized materials to the AO of the assessee on the same date. Thereafter, the Assessing Officer of the assessee recorded his satisfaction u/s 153C on 31.11.2022 and issued notice u/s 153C of the Act to the assessee on 05.07.2023.
6. Aggrieved, the assessee went in appeal before the ld. CIT(A) who allowed the appeal of the assessee. Now the Revenue is aggrieved against the order of the ld. CIT(A) and has come in appeal before us.
7. Before us, the ld. counsel for the assessee vehemently stated that as the satisfaction of the AO of the non-searched person i.e., the assessee was recorded on 31.11.2022, the assessment year relevant to the previous year in which search is conducted or requisition is made, as per the first proviso of section 153C, becomes A.Y. 2023-24. The ten assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made, begins from A.Ys. 2014-15 to 2023-24. The ld AR vehemently argued that the impugned AYs 2010-11 and 2011-12, is therefore, out of the block of ten assessment years for which assessment could be made and therefore the Assessing Officer cannot assume jurisdiction for making assessment u/s 153C of the Act. The ld. counsel for the assessee also strongly relied upon the latest decision of the Hon’ble Delhi High Court in the case of Ojjus Medicare Pvt Ltd & Others [2024] 161 taxmann.com 160 (Delhi) order dated 03.04.2024.
8. We have heard the rival submissions and have perused the relevant material on record. We find that this issue of the date of search for persons covered under section 153C, is no longer res-integra and is now been well settled by the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh 458 ITR 437(SC). The relevant law laid down by the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh 458 ITR 437(SC) are read as under:
“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 153C was enacted. The revenue argued that the proviso [to Section 153(c)(l)] is confined in its application to the question of abatement. It is quite plausible that the AO seized of the materials….would take his own time to forward the papers and materials belonging to the third party, to the concerned AO. In that event if the date would virtually ‘relate back’ as is sought to be contended by the revenue, (to the date of 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), is disproportionate.”
9. The Hon’ble Delhi High Court has further elaborated the legal dictum in the case of Ojjus Medicare Pvt Ltd [2024] [supra] wherein it has held as under:
“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 153A(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 153C(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 Ltd v. Dy.CIT (2012) 346 ITR 177 ( Delhi)( HC) and CIT v. RRJ Securities Ltd 2015 SCC Online Del 13085 as well as the decision of the Supreme Court in CIT v Jasjit Singh 2023 SCC Online SC1265. The aforesaid legal position also stood reiterated by the Supreme Court in ITO v. Vikram Sujitkumar Bhatia 2023 SCC Online SC 370. The submission of the revenue, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. 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.”
10. The law as interpreted by the Hon’ble Supreme Court and the Delhi High Court as above, declares that as per first proviso of section 153C of the Act, the commencement date for computation of the six assessment years is deemed to be the date of receipt of books of account/materials/asset, belonging/pertaining to non-searched person, by the jurisdictional Assessing Officer of the non-searched person. In other words, date of recording of the satisfaction u/s 153C in the case of the searched person qua the non-searched person becomes date of search in the case of non-searched person [the assessee in the present case].
11. In the instant case of the assessee (non-searched person), the deemed date of search would become the date of recording of satisfaction i.e., 31.11.2022. The assessment year relevant to the previous year in which the search is deemed to have been executed in the case of the assessee would be A.Y. 2023-24. In light of the decision of the Hon’ble Supreme Court and Delhi High Court [supra], the impugned A.Y 2010-11 and AY 2011-12 would, therefore, fall beyond the period of ten assessment years as reckoned with reference to the date of recording of satisfaction by the assessing officer of the searched person. We therefore, have no hesitation in upholding the decision of the CIT(A) and quashing the impugned assessment order having been made without legal and valid assumption of jurisdiction. The ground is dismissed.
12. In the result, both the appeals of Revenue in ITA Nos. 1355 & 1356/DEL/2026 is dismissed.
Order pronounced in open court on 10.06.2026
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