Ishita Varshney Jain Vs ACIT (Delhi High Court)
Delhi High Court recently addressed a petition filed by Ishita Varshney Jain challenging notices issued against her under Section 153C of the Income Tax Act, 1961. The notices, dated October 18, 2023, pertained to assessment years 2015-16 through 2021-22. Ms. Jain contended that these notices were issued without proper jurisdiction, arguing that no incriminating material belonging to her or containing information specifically related to her was discovered during any search operation conducted under Section 132 or requisition under Section 132A of the Act.
The Revenue department, in response to the court’s inquiry, submitted an affidavit detailing the basis for the notices. It stated that a search was conducted on January 10, 2021, at the residence of Praveen K. Jain. During this search, an image of an “Agreement to Sell” concerning a property in Nirman Vihar, Delhi, was found on the mobile phone of Vaibhav Jain, who is the petitioner’s husband. This image originated from a WhatsApp chat dated January 5, 2021, between Vaibhav Jain and Shashi Chawla. The agreement involved third parties (Praveen Mahajan and Dinesh Mahajan as sellers, Shashi Chawla as purchaser) for a consideration of ₹4.97 crore for two floors of the property.
The Revenue attempted to link this discovery to the petitioner, Ishita Varshney Jain. Their reasoning highlighted that Vaibhav Jain is her husband and that one of the sellers in the agreement, Dinesh Mahajan, later sold one floor of the same property to Ms. Jain on June 14, 2021. Crucially, the sale deed involving Ms. Jain reflected a much lower consideration (₹81 lakh) compared to the implied price per floor (approximately ₹2.485 crore) in the Agreement to Sell found via WhatsApp. The Revenue inferred that the difference might represent an unaccounted cash transaction, potentially facilitated by the petitioner’s father-in-law, Praveen K. Jain, who was allegedly involved in similar dealings.
However, the High Court determined that the core requirement for invoking Section 153C had not been met. The court focused on whether any asset, document, or information belonging to or pertaining to the petitioner herself was unearthed during the search. It found that the “Agreement to Sell” discovered was fundamentally a transaction between entirely different parties. The mere presence of its image on her husband’s phone did not make the information contained within it – specifically, the sale price agreed upon by third parties – information “pertaining to” Ms. Jain in the context required by the Act. The court viewed the Revenue’s attempt to impute the value from that agreement onto Ms. Jain’s separate, later transaction as based on assumption and inference, rather than direct evidence found during the search relating to her.
Consequently, the Delhi High Court ruled in favour of the petitioner. It concluded that since no material belonging to or pertaining to Ishita Varshney Jain was found during the search operation as mandated by Section 153C, the jurisdictional prerequisite for issuing the assessment notices was absent. The court, therefore, allowed the petition and set aside the Section 153C notices for all the concerned assessment years.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
