DCIT Vs Transline Technologies Ltd (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi delivered a common order in the case of DCIT vs. Transline Technologies Ltd., arising out of appeals filed by the Revenue and cross-objections filed by the assessee for Assessment Years (AYs) 2011–12 and 2012–13. The appeals challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 28.02.2025, which had held that the block period for assessment under Section 153C of the Income Tax Act, 1961, must be reckoned from the date the books of accounts, documents, or assets seized are received by the Assessing Officer (AO) of the non-searched person, rather than from the date of initiation of search.
Since both the Revenue’s appeals and the assessee’s cross-objections involved common facts, they were heard together and disposed of by a single consolidated order. Both parties agreed that ITA No. 3693/DEL/2025 in the case of Transline Technologies Ltd. would serve as the lead case, and the Tribunal’s decision therein would apply equally to all connected matters, given the identical facts except for differences in figures.
Facts of the Case
The assessee, Transline Technologies Ltd., was part of the Ojjus Medicare group, in which a search had been conducted. The Assessing Officer initiated proceedings under Section 153C of the Income Tax Act, 1961, following a search at a third party—Alankit Group—on 18.10.2019 (previous year 2019–20, relevant to AY 2020–21). The Assessing Officer of the searched party recorded a satisfaction note on 14.02.2022 and handed over the seized material to the AO of the assessee (non-searched person) on 17.02.2022. Subsequently, the AO issued a notice under Section 153C to the assessee on 22.03.2022 for AYs 2010–11 to 2020–21 and made additions to the assessee’s income.
Aggrieved, the assessee filed appeals before the CIT(A), who held that the AO had no jurisdiction to assess AYs 2011–12 and 2012–13, as they were beyond the permissible block of ten assessment years. The Revenue appealed against this finding before the ITAT.
Assessee’s Submissions
The assessee argued that since the satisfaction note under Section 153C was recorded on 17.02.2022, the relevant assessment year for the previous year in which the search was conducted or the requisition was made should be AY 2023–24. Accordingly, the ten preceding assessment years would extend back only up to AY 2014–15. Therefore, AYs 2011–12 and 2012–13 were outside the permissible block period. It was contended that the Assessing Officer lacked jurisdiction to make assessments for those years. The assessee relied heavily on the Delhi High Court’s decision in Ojjus Medicare Pvt. Ltd. & Others [2024] 161 com 160 (Delhi), which had clarified the reckoning of the block period under Section 153C.
Revenue’s Grounds
The Revenue’s appeal centered on the argument that the CIT(A) erred in interpreting the law by holding that the block period under Section 153C should be computed from the date of receipt of the seized materials by the AO of the non-searched person rather than from the date of search.
Tribunal’s Findings
The Tribunal, after hearing both parties and perusing the record, noted that the legal issue regarding the relevant date for determining the block period for assessments under Section 153C was no longer res integra. The Tribunal referred to the Supreme Court’s decision in CIT v. Jasjit Singh (458 ITR 437, SC), which clarified that the period of six or ten years for which assessments could be reopened under Section 153C must be reckoned from the date the books or documents are received by the AO of the non-searched person.
The Supreme Court had explained that if the computation of the block period were to “relate back” to the date of the search, it would cause disproportionate prejudice to third parties (non-searched persons) who might have no connection with the seized material and yet be drawn into proceedings without adequate cause. Hence, Parliament’s intent behind the first proviso to Section 153C was to ensure fairness by reckoning the block period from the date of receipt of the seized material by the AO of the non-searched person.
The ITAT further referred to the Delhi High Court’s ruling in Ojjus Medicare Pvt. Ltd. [2024], which elaborated that the first proviso to Section 153C created a legal fiction shifting the reference point for calculating the six or ten-year block period. The High Court had explained that the relevant date for non-searched persons was not the date of search but the date when the books or documents were received by the AO having jurisdiction over the non-searched person. The decision had reaffirmed earlier judgments in SSP Aviation Ltd. v. Dy. CIT (2012) 346 ITR 177 (Delhi), CIT v. RRJ Securities Ltd. (2015), and ITO v. Vikram Sujitkumar Bhatia (2023 SCC OnLine SC 370), which consistently held that the date of receipt of documents governs the computation of the block period under Section 153C.
Tribunal’s Decision
Applying the settled legal principles, the ITAT held that in the present case, since the satisfaction note was recorded on 17.02.2022, the deemed date of search for the non-searched person (the assessee) would be 17.02.2022. The assessment year relevant to the previous year in which the satisfaction was recorded would thus be AY 2023–24. Consequently, the ten preceding assessment years would extend only up to AY 2014–15. As the impugned AYs 2011–12 and 2012–13 fell beyond this ten-year block, the assessments made by the AO were invalid and beyond jurisdiction.
The Tribunal upheld the CIT(A)’s decision, holding that the assessment orders were without legal sanction. Since the assessments themselves were quashed for want of jurisdiction, the Tribunal did not examine the merits of the additions made.
Outcome
The ITAT dismissed the Revenue’s appeals in ITA Nos. 3693/DEL/2025 (AY 2011–12) and 3694/DEL/2025 (AY 2012–13) and allowed the assessee’s cross-objections (CO Nos. 36/DEL/2025 and 37/DEL/2025).
The order was pronounced in open court on 07.11.2025.
FULL TEXT OF THE ORDER OF ITAT DELHI
