Mahavir Fincon Pvt. Ltd. Vs DCIT (ITAT Delhi)
Delhi ITAT Quashes Section 153C Assessments as Time-Barred—Where AO of Searched and “Other Person” Is Same After Section 127 Transfer, Limitation Runs From Date of Transfer, Not Later Satisfaction Note
The Delhi ITAT quashed seven assessments framed u/s 153C read with Section 143(3) as barred by limitation, holding that where the cases of the “other persons” had already been transferred u/s 127 to the same AO who was handling the searched group and possessed the seized material, limitation could not be postponed merely by recording the Section 153C satisfaction note at a later date.
The proceedings arose from a search on the Alankit Group on 18.10.2019, during which incriminating material allegedly relating to the assessees was found. Their cases were subsequently centralised on 20/27.10.2020 under Section 127. However, the Section 153C satisfaction was recorded only on 24.12.2021, notices under Section 153C were issued on 28.12.2021, and the assessments were ultimately completed on 30.03.2023.
The assessees contended that once their cases were transferred under Section 127 to the Central Circle which was also handling the searched person, the seized material was already with the same Assessing Officer. Therefore, for limitation purposes, the Revenue could not rely upon the much later date of recording the satisfaction note.
The Revenue argued that recording satisfaction under Section 153C is a substantive jurisdictional requirement, even where the AO of the searched person and the other person is the same. It therefore contended that limitation should run from the satisfaction note dated 24.12.2021, in which case the assessments completed on 30.03.2023 would be within time.
The Tribunal, however, followed its recent decisions arising from substantially the same Alankit Group search, particularly Sudhir Agrawal v. DCIT, as well as the reasoning adopted in Ajay Gupta v. DCIT. In Ajay Gupta, the Tribunal had relied upon the Supreme Court ruling in Super Malls Pvt. Ltd. for the proposition that where the AO of the searched person and the other person is the same, there is no question of physically handing over or transmitting seized documents to oneself.
The Tribunal noted that in Ajay Gupta, once the assessee’s case had been transferred under Section 127 to the same Central Circle, the entire seized material was deemed to be with the AO of the other person. Consequently, limitation was reckoned from the Section 127 transfer date, and the later assessment was held time-barred.
Applying the same principle, the ITAT held that in the present cases the assessee’s records stood transferred to DCIT, Central Circle-28 on 20.10.2020 pursuant to the Section 127 order. Therefore, limitation commenced from 20.10.2020, rather than from the subsequent satisfaction note dated 24.12.2021. Consequently, the assessments completed only on 30.03.2023 were barred by limitation.
Importantly, the Tribunal invoked judicial consistency, observing that the Revenue could not point out any material distinction either on facts or in law from the earlier decisions arising out of the very same search action. It therefore quashed all the impugned Section 153C assessments.
