Delhi HC Quashes Section 153C Notice for Failure to Meet ₹50 Lakh Threshold

Misha Gupta Vs ACIT Central Circle 26 (Delhi High Court)

Summary: The Delhi High Court considered a writ petition challenging notices dated 29 June 2022 issued under Section 153C of the Income Tax Act, 1961 for Assessment Year 2016-17 and the consequential proceedings. The Court noted that the Satisfaction Note recorded by the jurisdictional Assessing Officer was dated 23 June 2022 and held that, on that basis, AY 2016-17 fell beyond the window of six preceding assessment years contemplated under Section 153C. The Court further examined the Satisfaction Notes recorded by the Assessing Officer of the searched person and the jurisdictional Assessing Officer and found that the income alleged to have escaped assessment for the relevant assessment year did not exceed INR 50 lakhs. The jurisdictional Assessing Officer had also failed to record satisfaction that the escaped income was likely to exceed INR 50 lakhs or more cumulatively for the relevant assessment year so as to fulfil the threshold requirement under the Fourth Proviso to Section 153A.

The Court relied upon its decision in Principal Commissioner of Income Tax Central – 1 vs. Ojjus Medicare Pvt. Ltd. [2024 SCC Online Del 2439], which had examined the statutory threshold and held that although the ₹50 lakh requirement is a substantive precondition for invoking the extended ten-year block, the Assessing Officer may form a provisional opinion at the initiation stage; however, where the identified asset is below ₹50 lakhs, the Assessing Officer must record reasons showing that the ultimate escaped income is likely to exceed ₹50 lakhs.