DCIT Vs BSES Yamuna Power Limited (ITAT Delhi)
TEN-YEAR ROPE CANNOT REACH AY 2010-11—DEEMED SEARCH IN 2023 ALSO HITS SECTION 153C SUNSET
The Delhi ITAT has held that, in the case of a person other than the searched person, the block period u/s 153C must be reckoned from the date on which seized material is received by his jurisdictional AO. Since the satisfaction was recorded & notice u/s 153C was issued only in December 2023, AY 2010-11 fell beyond even the permissible ten-year block. Further, the deemed date of search being after 01.04.2021, section 153C(3) independently prohibited issuance of the notice. The Revenue’s appeal was accordingly dismissed.
Facts of the case
The assessee, BSES Yamuna Power Limited, was a distribution licensee engaged in supplying electricity to parts of Delhi NCR.
For AY 2010-11, it filed its original return on 01.10.2010 declaring nil income. A revised return was subsequently filed on 30.03.2012 declaring a loss of ₹86,32,86,992.
A search & seizure action u/s 132 was conducted on the Alankit Group on 18.10.2019. During the search, the Department allegedly discovered that the assessee had received bogus accommodation entries from concerns belonging to the group, which were stated to be engaged in providing such entries in return for commission.
The satisfaction for initiating proceedings against the assessee was recorded on 18.12.2023. Notice u/s 153C was issued on the following day, namely 19.12.2023.
In response, the assessee requested the AO to treat its original return as the return filed pursuant to the notice.
The assessment was completed on 29.03.2024 u/s 153C r.w.s. 153A. The AO determined the assessee’s total loss at ₹58,04,61,725 & computed book profit of ₹76,85,33,695 u/s 115JB.
CIT(A) annuls the assessment
The assessee challenged the validity of the proceedings before the CIT(A).
It relied upon the Delhi High Court’s decision in PCIT v. Ojjus Medicare Pvt. Ltd. [2024] 465 ITR 101 (Delhi), which held that, for a person other than the searched person, the relevant date for reckoning the six-year or ten-year block is shifted from the date of the original search to the date on which the seized material is received by the jurisdictional AO of such other person.
The CIT(A) observed that the deemed date in the assessee’s case fell in December 2023. Reckoned from that point, the permissible ten-year period extended backwards only up to AY 2014-15.
Since the impugned AY 2010-11 fell outside even this extended block, notice u/s 153C could not legally be issued for that year.
The CIT(A) accordingly annulled the assessment order as being without jurisdiction. Once the assessment was quashed on this legal ground, all other grounds relating to the additions on merits were treated as academic & left unadjudicated.
Revenue’s appeal
The Revenue challenged the CIT(A)’s decision primarily on the ground that Ojjus Medicare had not been accepted by the Department & an SLP had been filed before the Supreme Court.
According to the Revenue, after the amendment introduced by the Finance Act, 2017, the block period of six or ten assessment years u/ss 153A & 153C had to be computed from the year in which the actual search took place.
The first proviso to section 153C(1), according to the Revenue, could not override the main provision or shift the commencement of the block from the original search date to the date of the satisfaction note or issuance of notice.
The Revenue also sought to distinguish earlier decisions such as CIT v. Jasjit Singh & CIT v. RRJ Securities Ltd. on the ground that they dealt with the law existing before the Finance Act, 2017 amendment.
ITAT follows jurisdictional High Court
The Tribunal noted the undisputed chronology. The search upon the Alankit Group occurred on 18.10.2019. However, satisfaction for initiating proceedings against the assessee was recorded only on 18.12.2023 & notice u/s 153C was issued on 19.12.2023.
Following Ojjus Medicare, the relevant date for the assessee, being a person other than the searched person, was the date of receipt of seized material or, in its absence, the date connected with the recording of satisfaction.
On that basis, AY 2010-11 was plainly outside the maximum period of ten assessment years for which proceedings u/s 153C could be initiated.
The Tribunal therefore agreed with the CIT(A) that the AO had no jurisdiction to assess AY 2010-11 & upheld the annulment of the assessment order.
A second jurisdictional failure u/s 153C(3)
The ITAT identified an additional reason why the proceedings could not survive.
Under the proviso to section 153C(1), the deemed date of search in the assessee’s case was linked to the receipt of seized material by its AO. Since the satisfaction & notice were issued in December 2023, the deemed date was necessarily after 01.04.2021.
Section 153C(3) expressly provides that section 153C shall not apply to searches initiated after 31.03.2021. Therefore, once the deemed date crossed the statutory cut-off, notice u/s 153C could not be issued at all.
Thus, the proceedings failed on two independent grounds: AY 2010-11 was beyond the ten-year block &, in any event, the deemed search date fell after the statutory sunset of section 153C.
Finding no reason to interfere with the CIT(A)’s order, the ITAT dismissed the Revenue’s appeal.
Author’s comments
The decision strengthens the principle that an “other person” has a separate statutory timeline under section 153C. The Department cannot indefinitely retain seized material & later compute limitation from the much earlier date of the original search.
The mere filing of an SLP does not dilute the binding force of a jurisdictional High Court judgment unless its operation is stayed or the ruling is reversed. The ITAT was therefore bound to follow Ojjus Medicare.
The Revenue invoked the extraordinary search-assessment machinery for a thirteen-year-old assessment year. But even the extended ten-year rope had a statutory end—and AY 2010-11 stood well beyond the knot.
Cases Discussed
- PCIT, Central-1, Delhi vs. Ojjus Medicare Pvt. Ltd. [2024] 465 ITR 101 (Delhi)
- CIT vs. Jasjit Singh [2023] 458 ITR 437 (SC); 2023 SCC Online SC 1265
- CIT vs. RRJ Securities Ltd. [2015] SCC Online Del 13085
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, DELHI BENCH
This appeal by the Revenue is directed against the order dated 13.10.2025 of the Ld. Commissioner of Income Tax (Appeal)-25, New Delhi, [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the assessment order dated 29.03.2024 passed under section 153C r.w.s. 153A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Assessing Officer, ACIT, Central Circle-32, New Delhi, (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2010-11.
2. The Revenue has raised the following grounds of appeal:
“1. 1. Whether on the facts and under the circumstances of the case and in law, the Ld. CIT(A) was justified in relying upon the judgement of Hon’ble Delhi High Court in the case of PCIT, Central-1, Delhi vs Ojjus Medicare Pvt. Ltd. (ITA No. 52 of 2024), even when the Revenue has filed a SLP against this decision of the Hon’ble Delhi High Court?
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that 10 years block periods for assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the relevant AY in which date of satisfaction note drawn or from the date of issue of Notice u/s 153C of the Act and not from the date of initiation of search even when Section 153C(1) of the Act clearly mentions that calculation of block period has to be done from the year of search?
3. Whether on the facts and under the circumstances of the case and in law, Ld. CIT(A) was justified was justified in holding that block periods for assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the date of satisfaction note drawn or date of Notice issued u/s 153C of the Act, even when the position of law is clarified after the amendment introduced by Finance Act, 2017, that the block period of 6AYs and 10AYs as mentioned in sub-section (1) of Section 153C and Section 153A have same meaning and have to be calculated from the “assessment year relevant to the previous year in which search is conducted”?
4. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) was justified in relying on the judgment of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (2023 SCC Online SC 1265) and of Hon’ble High Court in the case of CIT vs. RRJ Securities Ltd. (2015 SCC Online Del 13085), even though the facts of the instant case are different from that of Jasjit Singh case and RRJ Securities case, since the decisions rendered by the Court in Jasjit Singh as well as in RRJ Securities had dealt with a pre-2017 position (i.e. for search conducted before 1st April, 2017) and hence are clearly distinguishable?
5. The present case involves organized tax evasion and accommodation entries, falling squarely within Exception (h) of Para 3.1 of CBDT Circular No. 5/2024. The Ld. CIT(A) failed to appreciate the gravity of the case, requiring strict scrutiny rather than unwarranted relief.
6. That the order of the CIT (A) is perverse, erroncous and is not tenable on facts and in law.
7. That the grounds of appeal are without prejudice to each other.
8. That the appellant craves leave to add, amend, alter or forgo any ground(s) of appeal either before or at the time of hearing of the appeal.”
3. Brief facts are that the assessee is a distribution licensee supplying electricity to parts of the Delhi NCR and had filed its return for A.Y. 2010-11 on 01.10.2010 declaring NIL income. The return was revised on 30.03.2012 declaring loss of Rs. 86,32,86,992/-. During the course of search conducted on 18.10.2019 on Alankit Group of cases, it was found that the assessee had also taken bogus accommodation entries from the group entities which were found to be engaged in the activity of providing bogus entries in lieu of commission. Accordingly, a notice u/s 153C was issued on 19.12.2023 in response to which the assessee requested to consider the original return as return filed by it in response to the notice. The assessment was finalized u/s 143(3) at a total loss of Rs. 58,04,61,725/- and book profit of Rs. 76,85,33,695/- u/s 115JB of the Act vide order dated 29.03.2024.
3.1 Aggrieved, the assessee preferred an appeal before the CIT(A), who allowed relief to the assessee on the legal ground challenging validity of the order following the decision of the jurisdictional High Court in the case of PCIT vs. Ojjus Medicare Pvt. Ltd. [2024] 405 ITR 101 (Del), with the following observations:
“ 12.3 Accordingly, on the aforesaid facts in the instant case of the appellant, following the judgement of the Hon’ble jurisdictional High Court, it is held that the period of ten AYs’ would commence being counted w.e.f the AY 2023-24, which, by backward counting, would terminate in AY 2014-15. Accordingly, respectfully following the aforesaid judgment of the jurisdictional High Court in the case of Ojjus Medicare (P.) Ltd (supra), it is held that notice issued on 19.12.2023 for the instant assessment year, AY 2010-11, would fall beyond the ambit of ten AYs’ as provided under section 153C read with section 153A, and hence the impugned assessment order dated 29.03.2024 passed u/s 153C of the Act for the year in pursuance of such notice would not survive, having no legs to stand, and is thus annulled, being beyond the period of 10 years.
12.3 As it is held that the Assessing Officer did not have the jurisdiction to assess the appellant’s case for the A.Y 2010-11, therefore, all the other grounds raised by the appellant are rendered academic in nature, and hence not required to be adjudicated upon. There is hence no adjudication on merits in this case.”
3.2 Aggrieved by the order of the ld. CIT(A), the Revenue is in appeal before the Tribunal, for the reason that the decision of the Hon’ble Delhi High Court in the case of Ojjus Medicare Pvt. Ltd. [ITA No.- 52 of 2024] has not been accepted and an SLP against the same has been filed.
4. We have heard the rival submissions and carefully considered the facts of the case in the light of the decision of the Hon’ble jurisdictional High Court in the case of Ojjus Medicare Pvt. Ltd. (supra). Relevant dates with regard to the initiation of proceedings as submitted by the Ld. AR are as under:
| Date | Event | Remarks |
|---|---|---|
| 18.10.2019 | Search and seizure operation | Search and seizure operation purportedly carried out in the case of some third party viz., ‘ Alankit Group’ (Panchnama @ pg 103-109 of PB) |
| 19.12.2023 | Issuance of notice under section 153C of the Act | Proceedings initiated u/s 153C of the Act (pg 92 of the PB) |
4.1 Admittedly, in this case, the recording of satisfaction and consequent issue of notice u/s 153C was done on 18.12.2023 and 19.12.2023 respectively and therefore, the impugned A.Y. 2010-11 was outside the ambit of ten A.Ys. for which notice u/s 153 of the Act, could have been issued. We note that the CIT(A) has on this ground rightly quashed the assessment order dated 29.03.2024 passed u/s 153C of the Act. Further, we observe that as per the provisions of section 153C(3), no notice could have been issued in case of search conducted after 1.4.2021. Since the deemed date of search in the instant case was 19.12.2023 as per the proviso to section 153C(1), therefore, notice u/s 153C could not have been issued. Accordingly, the proceedings deserve to be quashed on this ground as well. In view of these facts and circumstances, we find no reason to interfere with the order of the Ld. CIT(A).
5. In the result, appeal of the Revenue is hereby dismissed.
Order pronounced in the open court on 09.09.2026
