Kishor Kumar Aggarwal Vs ACIT (ITAT Delhi)
Search in 2020, Documents Received in 2022: Section 153C Proceedings Fail
The controversy
Can a search conducted before 1 April 2021 justify proceedings under section 153C against another person when the seized documents reach that person’s Assessing Officer after that date?
The Delhi ITAT answered this question in favour of the assessee. It held that, for the non-searched person, the relevant date was the date of receipt of the seized material by his jurisdictional Assessing Officer. Since the documents were received on 17 November 2022, the Tribunal applied section 153C(3) and held that proceedings ought to have been taken under sections 147 and 148, rather than section 153C.
Both appeals were allowed on this jurisdictional ground, leaving the other grounds open.
The background
A search was conducted on 26 October 2020 in the cases of Sanjay Jain, Girdhari Lal Construction Pvt. Ltd., Inderjit Mehata Constructions Pvt. Ltd., BCC Cement Pvt. Ltd. and their key persons.
Material found during that search was subsequently used to initiate proceedings against Kishor Kumar Aggarwal, who was not himself the searched person. The seized documents were received by his jurisdictional Assessing Officer on 17 November 2022. The assessee’s representative submitted that the Assessing Officer recorded reasons for initiating proceedings under section 153C on 19 June 2023.
Assessments were completed on 29 March 2024, and the CIT(A), by orders dated 27 February 2026, sustained the additions in dispute. Before the Tribunal, the assessee pressed the legal ground challenging the very authority to proceed under section 153C.
The assessee’s objection: Which date controls?
The assessee argued that the date of the original search could not automatically govern proceedings against a non-searched person.
For such a person, the statutory reference to the search date had to be read with the first proviso to section 153C(1), which identifies the date on which the seized books, documents or assets are received by the Assessing Officer having jurisdiction over that other person.
Accordingly, the relevant financial year was 2022-23, corresponding to AY 2023-24, because the documents were received on 17 November 2022.
This distinction became decisive because the Finance Act, 2021 inserted section 153C(3) with effect from 1 April 2021, excluding the application of section 153C in relation to searches initiated or requisitions made on or after that date. The assessee therefore contended that the Department had invoked the wrong statutory mechanism.
The Revenue relied on the orders of the lower authorities.
The Tribunal’s reasoning
The Tribunal accepted the assessee’s jurisdictional objection. It relied on PCIT v. Ojjus Medicare (P.) Ltd. (2024) 161 taxmann.com 160 (Delhi) for determining the relevant date in the case of a non-searched person.
Applying that principle, it treated 17 November 2022, when the jurisdictional Assessing Officer received the documents, as the operative date in the assessee’s case. Consequently, it held that the amended restriction under section 153C(3) applied.
The Tribunal also followed the coordinate Bench decision in Lekh Raj v. DCIT (2026) 187 taxmann.com 1104 (Delhi-Trib.). In that case, the actual date of handing over the seized material was unavailable. The Tribunal treated the date of recording satisfaction as the relevant date and rejected the CIT(A)’s assumption that the date of centralisation under section 127 could be substituted for the date of receipt.
It further relied on Shivdham Buildtech Pvt. Ltd., ITA No. 111/Del/2026, where a similar approach had been adopted and section 153C proceedings were held unsustainable on jurisdictional grounds.
The decision
Following these authorities, the Tribunal held that the appropriate assessment route was under section 147 read with section 148, subject to the applicable statutory requirements.
It allowed Ground No. 2 challenging the section 153C proceedings. Since the facts for AY 2020-21 were identical, the same conclusion applied to that year.
Both appeals were allowed. The remaining grounds were not adjudicated and were expressly kept open. Thus, the relief rested on the jurisdictional defect, rather than a determination of the merits of the additions.
Author’s comments
The decision highlights the importance of examining when seized material actually reached the Assessing Officer of the non-searched person. The original search date alone may not answer the jurisdictional question.
However, the ruling should not be reduced to the proposition that every section 153C notice issued after 1 April 2021 is invalid. The reasoning turns on the operative date attributed to the non-searched person and its interaction with section 153C(3), rather than merely the date printed on the notice.
Likewise, the reference to sections 147 and 148 does not grant the Department an unconditional right to reopen. Any fresh proceedings must independently satisfy the applicable limitation, sanction and procedural requirements.
The order contains an apparent typographical reference to AY 2018-19 in paragraph 9; its cause title, discussion and concluding findings identify the appeals as concerning AYs 2019-20 and 2020-21.
A search may supply the material; a valid statutory route must still supply the jurisdiction.
Cases Discussed
- PCIT v. Ojjus Medicare (P.) Ltd. (Delhi High Court), [2024] 161 taxmann.com 160 (Delhi)
- Lekh Raj v. DCIT (Delhi Tribunal), [2026] 187 taxmann.com 1104 (Delhi-Trib.)
- Shivdham Buildtech Pvt. Ltd., ITA No. 111/Del/2026, AY 2017-18
- Smt. Geetanjali Bhayana v. DCIT (ITAT Delhi), referred to in the Shivdham Buildtech passage reproduced in the order
FULL TEXT OF THE ORDER OF ITAT, DELHI
These appeals of the assessee are directed against the orders, both dated 27.02.2026 of ld. CIT(A)-30, New Delhi passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) wherein addition made vide assessment order dated 29.03.2024 was confirmed and the appeals of the assessee were partly allowed.
2. By this common order, we propose to decide the ITA Nos. 2304 & 2305/Del/2026 as the parties are same and factual matrix is also same and in order to avoid multiplicity of decision, the same are being disposed off accordingly. ITA No. 2304/Del/2026 is taken as lead case.
3. At the time of hearing, the ld. AR of the assessee pressed the legal issue vide ground no. 2 of grounds of appeal “that on facts and circumstances of the case and in law, the Ld. CIT (A) erred in confirming the proceeding initiated u/s.153C and failed to consider the fact that search year in the case of non searched person is governed by the date or the year in which the seized documents are handed over to the jurisdictional assessing officer and the seized documents was received by the JAO of the assessee on 17/11/2022, accordingly the year of search for the assessee is FY.2022-23, thus by virtue of section 153C(3) the proceeding u/s,153C cannot be initiated rather proceeding u/s.147 shall be initiated against the assessee, hence the proceeding initiated u/s,153C against the assessee is vitiated in law and the assessment is liable to be quashed”.
4. With regard to above ground, ld. AR of the assessee submitted that AO has recorded the reasons to initiate proceedings for issue of notice u/s 153C of the Act on 19.06.2023. He further submitted that no doubt, the original search was conducted on Sanjay Jain and Girdhari Lal Construction Pvt. Ltd., Inderjit Mehata Constructions Pvt. Ltd., BCC Cement Pvt. Ltd. and their key persons on 26.10.2020, however, the AO of the searched person has recorded the satisfaction, for the sake of brevity, the satisfaction note is reproduced below:
viewOrder (1) 
5. He further submitted that after recording the above satisfaction by AO of searched person and on receipt of relevant material from the AO of the searched person, the proceedings were initiated by the AO of the assessee by issue of notice u/s 153C of the Act and completed the assessment u/s 153C of the Act. He also submitted that as per the amended provisions and in specific, he brought to our notice section 153C (3) of the Act which is squarely applicable in this case and he submitted that the AO should have initiated proceedings u/s 148 and not u/s 153C of the Act. The facts are exactly similar to the appeals filed by the assessee for AYs 2019-20 and 2020-21 as well and he submitted that this issue is squarely covered in favour of the assessee.
6. On the other hand, ld. DR of the Revenue relied on the orders of the authorities below.
7. We have considered the rival submissions and examined the material available on record. We observed that the assessment year 2019-20 under consideration clearly falls outside the scope of application of section 153C of the Act, for the reason that the date of search for the unsearched parties are the date on which the documents were handed over to the Assessing Officer of such other person or from the date on which the satisfaction was recorded by the Assessing Officer of the other person. In the given case, we noticed that the original search was conducted in Sanjay Jain and Girdhari Lal Construction Pvt. Ltd., Inderjit Mehata Constructions Pvt. Ltd., BCC Cement Pvt. Ltd. and their key persons on 26.10.2020. The proceedings were initiated based on the material found during the aforesaid search in the case of the assessee by recording the satisfaction subsequently to handing over the said material. Since, the satisfaction was recorded subsequently, the Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd. (2024) 161 taxmann.com 160 (Delhi) has held that the searched assessment year for the unsearched person would be the date of handing over of the searched material for recording of satisfaction, that being the case, the year of search in the present case of the assessee would be A.Y. 2023-24 because the said documents were received by JAO of assessee on 17.11.2022. Consequently, the amended provisions of section 153C(3) of the Act would be applicable. The facts in the present case are identical to the facts in the case of co-ordinate Bench in Lekh Raj vs. DCIT (2026) 187 taxmann.com 1104 (Delhi-Trib.) wherein the co- ordinate Bench held as under:
“7. We have heard submissions made by rival sides and have examined the orders of authorities below. We have also considered the decision on which ld. Counsel for the assessee has vehemently placed reliance to buttress her arguments. The assessee in appeal has assailed validity of the assessment order passed u/s 153C r.w.s. 143(3) of the Act. It is an undisputed fact that addition has been made in the hands of the assessee on protective basis consequent to search in the case of Navin Mahipal Group on 16.09.2019. The satisfaction note in case of the assessee was drawn by the AO on 28.09.2021. As per the first proviso to section 153C(1), the date of search in the case of person other than the searched person shall be the date on which books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person are received by the AO of other person. Thus, in the case of a person other than the searched person, the relevant date would be the date on which relevant documents or seized material is received by the AO of the person other than the searched person. The CIT(A) in Para 14 of the impugned order has recorded that:
“it does not emanate from record as to when the seized material was handed over to AO, it is seen that the case of the appellant was centralised u/s 127 of the Act from Faridabad to New Delhi on 21.01.2021. Therefore, the date 21.01.2021 may be taken as the date on which the material was handed over to the AO, that is to say, that the material was handed over to the AO in F.Y. 2020-21.” We are of the considered view that in absence of specific date of handing over the seized material to AO of the assessee, the date of issue of order u/s 127 of the Act has been wrongly assumed by the CIT(A) as the date on which seized material was received by the AO of assessee. The Hon’ble Jurisdictional High Court in the case of PCIT vs. Ojjus Medicare(P.) Ltd (supra) has held that where the date of handing over of documents is not available, date of issuance of satisfaction note by the Assessing Officer u/s 153C of the Act would be pertinent for the purpose of first proviso to section 153C of the Act. In the present case, the AO had recorded satisfaction on 28.09.2021. Since, the date of handing over of seized material is not emanating from the records, the date of recording of satisfaction i.e., 28.09.2021 shall be considered as the date of receiving seized material by the AO of the assessee.”
8. Section 153C was amended by the Finance Act, 2021 with effect from 01.04.2021 whereby sub-section(3) was inserted. The relevant subsection is reproduced hereinbelow:
“(3) 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 requisitioned under section 132A on or after the 1st day of April, 2021.”
By virtue of above amendment to section 153C, no assessment u/s 153C can be made in the case of other person under section 153C of the Act if the date of search falls beyond 01.04.2021. As a corollary, any notice issued for making assessment u/s 153C of the Act in the case of a non-searched person after 01.04.2021 would be non-est.
9. Thus, applying the amended provisions of section 153C of the Act and the law explained by the Hon’ble Jurisdictional High Court in the case of Ojjus Medicare(P.) Ltd. (supra), to facts of the instant case, we find that the notice u/s 153C of the Act issued by the AO to assessee and thereafter, assessment order passed u/s 153C is unsustainable and is liable to be quashed on the ground of jurisdiction. We hold accordingly.
10. In the result, impugned order is set-aside and appeal of the assessee is allowed.”
8. Similarly, in ITA No.111/Del/2026 for AY 2017-18 in the case of M/s. Shivdham Buildtech Pvt. Ltd., the ld. co-ordinate bench, wherein it was held as under:
“19. Considered the rival submissions and material placed on record. The assessee in appeal has assailed validity of the assessment order passed u/s 153C r.w.s. 143(3) of the Act. It is an undisputed fact that addition has been made in the hands of the assessee on protective basis consequent to search in the case of Alankit Group on 18.10.2019. The satisfaction note in case of the assessee was drawn by the AO on 11.10.2022. As per the first proviso to section 153C(1), the date of search in the case of person other than the searched person shall be the date on which books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person are received by the AO of other person. Thus, in the case of a person other than the searched person, the relevant date would be the date on which relevant documents or seized material is received by the AO of the person other than the searched person.
20. We are of the considered view that in absence of specific date of handing over the seized material to AO of the assessee, the date of issue of order u/s 127 of the Act has been wrongly assumed by the CIT(A) as the date on which seized material was received by the AO of assessee. The Hon’ble Jurisdictional High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd (supra) has held that where the date of handing over of documents is not available, date of issuance of satisfaction note by the Assessing Officer u/s 153C of the Act would be pertinent for the purpose of first proviso to section 153C of the Act. In the present case, the AO had recorded satisfaction on 11.10.2022. Since, the date of handing over of seized material is not emanating from the records, the date of recording of satisfaction i.e., 11.10.2022 shall be considered as the date of receiving seized material by the AO of the assessee.
21. Section 153C was amended by the Finance Act, 2021 with effect from 01.04.2021 whereby sub-section(3) was inserted. The relevant sub-section is reproduced hereinbelow:
“(3) 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 requisitioned under section 132A on or after the 1st day of April, 2021.”
22. By virtue of above amendment to section 153C, no assessment u/s 153C can be made in the case of other person under section 153C of the Act if the date of search falls beyond 01.04.2021. As a corollary, any notice issued for making assessment u/s 153C of the Act in the case of a non-searched person after 01.04.2021 would be non-est.
23. Thus, applying the amended provisions of section 153C of the Act and the law explained by the Hon’ble Jurisdictional High Court in the case of Ojjus Medicare (P.) Ltd. (supra), to the facts of the instant case, we find that the notice u/s 153C of the Act issued by the AO to assessee and thereafter, assessment order passed u/s 153C is unsustainable and is liable to be quashed on the ground of jurisdiction. In this regard, we also find force from the decisions of co-ordinate Benches in the case of Geetanjali Bhayana (supra) and Lekh Raj (supra). We hold accordingly.”
9. Respectfully following the aforesaid decision, we are of the opinion that the reassessment proceeding has to be adopted under substituted provisions i.e. u/s 147 r.w.s. 148 and the relevant provisions of section 153C(3) of the Act apply in the present case. Therefore, we are inclined to allow Ground No.2 raised by the assessee. Accordingly, the appeal of the assessee in ITA No. 2304/Del/2026 for AY 2018-19 is allowed.
10. The other grounds raised by the assessee are not adjudicated at this stage and the same are kept open.
11. Since, the facts in A.Y . 2020-21 are exactly similar to Assessment Year 2019-20, our above findings in AY 2019-20 are applicable mutatis mutandis in Assessment Year 2020-21 also. Accordingly, the appeal filed by the assessee for A.Y. 2020-21 is allowed.
12. In the result, the appeals of the assessee in ITA Nos.2304 & 2305/Del/2026 are allowed.
Order Pronounced in the Open Court on 07/10/2026.
