Sanchar Nest Sahakari Awas Samiti Limited Vs DCIT/ACIT (ITAT Delhi)
Delhi ITAT Quashes Section 153C Proceedings: For ‘Other Person’, Date of Search is Date of Handing Over of Seized Material
The Delhi ITAT quashed assessments framed under section 153C for AYs 2014-15 to 2016-17, holding that in the case of an “other person”, the relevant date of initiation of search is the date on which the seized material is handed over to the jurisdictional Assessing Officer. Since the seized material was handed over after 1 April 2021, section 153C itself was inapplicable by virtue of section 153C(3).
The assessee challenged the jurisdiction of the Assessing Officer on the ground that although the search on the Alankit Group was conducted on 18.10.2019, the satisfaction note and seized material were handed over to the jurisdictional Assessing Officer only on 24.06.2022 (and ultimately received on 19.12.2022). Therefore, for the assessee, being a non-searched person, the proceedings were barred by section 153C(3), which excludes searches initiated on or after 1 April 2021.
The Tribunal relied extensively on the Madras High Court’s decision in Harigovind v. ACIT (485 ITR 509), which held that for an “other person”, the date of handing over of seized material to the jurisdictional Assessing Officer is the date of initiation of search for all purposes, including the applicability of section 153C(3). It also noted the Supreme Court’s observations in CIT v. Jasjit Singh while approving the High Court’s reasoning.
Applying the above principle, the ITAT held that since the seized material was first handed over on 24.06.2022, no proceedings under section 153C could legally be initiated thereafter. Consequently, the notices issued under section 153C and the consequential assessment orders were quashed for lack of jurisdiction.
As the jurisdictional issue itself was decided in favour of the assessee, the Tribunal did not adjudicate the additions on merits and allowed all three appeals solely on the ground of invalid assumption of jurisdiction.
Cases Discussed
- Harigovind vs. ACIT (Mad. HC), 485 ITR 509 (Mad.) [2025]
- CIT vs. Jasjit Singh (SC), [2023] 155 com 155 (SC)/ [2023] 295 Taxman 612 (SC)/ [2023] 458 ITR 437 (SC)
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This a batch of three appeals pertaining to the same assessee for AYs 2014-15, 2015-16 and 2016-17. For the sake of convenience, all these three appeals are being disposed of through a single order.
1.1 In all these three appeals there is a certain similarity of facts and ITA No.1868/Del/2026, pertaining to AY 2014-15, will be taken as the lead case. ITA No.1868/Del/2026 arises from order dated 28.01.2026, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A)-3, NOIDA.
1.2 From the records it is visible that a search was conducted on the Alankit Group on 18.10.2019 and thereafter a common satisfaction note was recorded for AYs 2014-15 to 2020-21 for initiating proceedings u/s 153C of the Act. While this satisfaction note was dated 22.06.2022, the seized material and the satisfaction note was handed over to the Assessing Officer vide letter dated 24.06.2022. It is seen from the records that the satisfaction note and the seized material ended up in the hands of the AO having jurisdiction vide letter dated 19.12.2022. At this stage, the points in dispute may be briefly captured: (i) AY 2014-15 an addition of Rs.4,33,50,000/- was made on account of a loan taken from several parties which was added in the hands of the assessee; (ii) AY 2015-16 three additions of Rs.20,00,000/-, Rs.60,000/- and Rs.6,75,000/- have been made on account of alleged bogus loan and interest/commission thereon; (iii) AY 2016-17 the Ld. AO is seen to have made an addition of Rs.11,35,148/- by way of interest on alleged non-genuine loan.
1.3 Aggrieved with these additions the assessee approached the CIT(A) where he could not succeed and all the additions made by the Ld. AO in all the assessment years under consideration were confirmed. The aggrieved assessee has now approached the ITAT with grounds which challenge the addition on merits and also on an alleged illegal assumption of jurisdiction. For the sake of reference, the grounds for AY 2014-15 are extracted as under: –
1. “Because, the order of Ld. Lower Authority is bad in law as well as is against the facts and circumstances of the case.
2. Because Ld. CIT(A) erred in upholding the validity of notice u/s 153C being:
a. Issued against the provision of Section 153C(3) as being issued in pursuance to search initiated on and after 01.04.2021, which is 24.06.2022 (date of handing over of document to AO of assessee).
b. Issued based on consolidated satisfaction note for AY 201415 to AY 2020-21 contrary to law of land as pronounced by apex court.
c. Issued beyond the parameters of Section 153C, whereby neither Ld. AO had any seized material which could have any bearing on the income of assessee nor he demonstrated so thus notice is without requisite satisfaction, which is also without recording any satisfaction in terms of Fourth proviso to Section 153A(1).
d. No satisfaction note/ notice u/s 153C is issued by JAO to whom the seized material was handed over i.e. DCIT, Circle 2(1)(1), GZB., in terms of Section 153C(1) of the Act.
e. Based on satisfaction note not bearing any DIN as mandated.
3. Because, without prejudice to above, notice u/s 153C is void being issued by ACIT, Central Circle, GZB, who assumed jurisdiction based on order u/s 127 issued without communicating any reason for such transfer.
4. Because, without prejudice to above, in alternative, the Ld. CIT(A), manifestly erred in sustaining addition of Rs.4,33,50,000/- u/s 68 r.w.s. 11588E, being interest-bearing/TDS suffered loan received during the year, which is duly repaid in subsequent year (repayment accepted by revenue in relevant years) and supported with all the possible and required evidences, none of which are rejected by revenue that too without any evidence in support of addition u/s 68.
5. Because, Ld. Lower Authority manifestly wrong in solely relying on a statement recorded behind the back of assessee/AO that too without providing any opportunity to cross the same and in any case said statement specifically denied the knowledge of questioned transaction beside retracted later on, thereby addition was without any material.
6. Because, Ld. Lower Authority further erred in not appreciating the fact that assessee fully discharged onus lay upon him and AO failed to discharge onus shifted upon him and addition is made on flimsy basis merely on conjectures, beside issues are held in favour of other assessee with identical facts in ITA No.207-209/DEL/2025.
7. Because, Ld. Lower Authority further erred in sustaining the addition of interest of Rs.3,71,398/- and imaginative addition of alleged commission of Rs.13,00,500/- u/s 69C of the Act against all the known parameters of law.
8. Therefore, it is very humbly prayed that notice u/s 153C and consequent order may kindly be declared void, however, alternatively prayed that addition of Rs.4,50,21,898/- may kindly be deleted.”
2. Before us the Ld. AR made a statement at the bar that the assessee was not interested in pursuing grounds 2(d) and 2(e), along with ground no.3. The Ld. AR requested that the Bench may consider ground no.2(a) before proceeding any further in the matter. The Ld. AR argued with the help of a paper book containing relevant material utilized by the Ld. AO to make the impugned additions. The Ld. AR drew our attention to the satisfaction note dated 22.06.2022 and also the letter indicating the handing over of the seized material and the satisfaction note, dated 24.06.2022. It was the submission that there was a considerable body of judicial decisions through which it was clear that the date of search on a non-searched person would be the date on which the seized material was handed over to the AO having jurisdiction. It was pointed out that in this case this date was 24.06.2022 or even 19.12.2022, as the AO ultimately having jurisdiction received the said material and satisfaction note only on 19.12.2022. Thereafter, the Ld. AR argued and pointed out that through the case of Harigovind vs. ACIT reported in 485 ITR 509 (Mad.) [2025], it was clear that in the case of a non-searched person the date of handing over of seized material to the AO of such non searched person would be the date on which it would be presumed that the search was initiated, hence, considering 153C(3) of the Act no action was permissible under the provisions of Section 153C of the Act after 01.04.2021.
2.1 The Ld. DR relied on the orders of the authorities below and stated that notwithstanding the Hon’ble Madras High Court’s case [Harigovind (supra)] the date of search would only be the date on which the punchnama has been drawn and it could not be artificially altered to bring it within the mischief of the amended Section 153C(3) of the Act. It was the submission that the date of search was 18.10.2019 and not 24.06.2022. Thereafter, the Ld. DR requested that the Bench may want to consider the case on merits.
3. We have considered the rival submissions and have gone through the records before us including the case law relied upon by the Ld. AR. We find that through the case of Harigovind (supra) the Hon’ble Madras High Court has clarified the situation regarding the operation of Section 153C(3) of the Act as under: –
- “Thus, as far as the searched person is concerned, the date of initiation of search is the date, on which the search was conducted in his premises. The said date would be the date of initiation of search for searched person for all purposes. As far as the other person is concerned, the date of initiation of search would be the date, on which the materials, books of account, etc., are handed over to the JAO of the other person and this date would be considered as the date of initiation of search for other person for all purposes. Thus, there cannot be two different date of initiation of search, either for the searched person or for the other person. [Para 40]
- The provisions of sub-section (3) of section 153C states that nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisition under section 132A on or after the 1st day of April, 2021 which means, if the search is initiated subsequent to 1.4.2021, the provision of section 153C will not apply and accordingly, no proceedings can be initiated against the other person. (Emphasis added) [Para 41]
- According to the assessee, the date of handing over of the seized materials, i.e., 25.11.2022, is the date of initiation of search. If the said contention of the assessee is accepted, obviously, the issuance of impugned notices dated 7.2.2023 by the revenue is without any authority and contrary to sub-section (3) of section 153C and thus, the same is liable to be quashed. [para 42]
- In terms of sub-section (1) of section 153C, for the purpose of calculating the six years period, the date of handing over of the materials to the assessee’s JAO has to be construed as the date of initiation of search for other person. Further, in terms of first proviso to sub-section (1) of section 153C, for the purpose of abatement also, the date of handing over of the materials to the assessee’s JAO has to be construed as the date of initiation of search for the other person. In such view of the matter, High Court is unable to comprehend the submission made by the revenue that yet another date is available for the purpose of initiation of search in respect of the other person. [Para 43]
- Certainly, there cannot be two different dates for initiation of search for the other person. Hence, for all practical purpose, the initiation of search would be the same date and it is apparent upon reading the provisions of section 153C. In the provision of section 153C(1), the date of initiation of search is mentioned as the date of handing over of materials and as per the first proviso, the same date would apply for the purpose of abatement also. When such being the case, no other date will come into picture for the purpose of determination of initiation of search for other person. [Para 44]
- The CIT vs. Jasjit Singh [2023] 155 com 155 (SC)/ [2023] 295 Taxman 612 (SC)/ [2023] 458 ITR 437 (SC) had rejected the contention of the revenue that the first proviso to sub-section (1) of section 153C is not only for the purpose of abatement but also for all other purposes, viz., initiation of search for other person in terms of section 153C(3). In such case, the date of initiation of search for the assessee is the date, on which the documents were handed over to the JAO of the assessee, i.e., 25.11.2022 is the date of initiation of search for the assessee. [Para 47]”
Considering the undoubted fact regarding the date on which the seized material was handed over to the Assessing Officer falling outside of 01.04.2021, and following the Hon’ble Madras High Court’s judgment (supra), it deserves to be held that no proceedings u/s 153C were possible on 24.06.2022 when the seized material and the satisfaction note were handed over for the first time to the Ld. AO. Accordingly, the subsequent proceedings culminating in the impugned assessment order are hereby quashed.
3.1 Since the fact of handing over of seized material and satisfaction note are identical in the remaining two cases also, hence, the decision in ITA No.1868 shall apply mutatis mutandis to the remaining two appeals.
4. In the result, the appeal of the assessee are allowed on the ground of assumption of jurisdiction. We make it clear that none of the other grounds are being adjudicated at present.
5. In the result, all the three appeals are allowed. Order pronounced in the open court on 05.08.2026
