Arti Dhall Vs DCIT (ITAT Delhi)
In the case of Arti Dhall vs DCIT, the Income Tax Appellate Tribunal (ITAT) Delhi ruled on an appeal concerning the validity of an assessment order passed under section 143(3) of the Income Tax Act for Assessment Year (AY) 2021–22. The assessment was based on material recovered during a search operation under section 132 on a third party, the Hans Group, where WhatsApp chats allegedly linked to the assessee were found. The assessee challenged the legal validity of this assessment, arguing that since the information originated from a search on another person, the appropriate procedure under section 153C should have been followed instead. The assessee contended that the Assessing Officer (AO), having recorded satisfaction notes under section 153C, was obligated to proceed under that provision rather than section 143(3). The ITAT agreed that the AO had erred by not issuing a mandatory notice under section 153C, thereby rendering the assessment void.
The Tribunal supported the assessee’s position, citing Supreme Court and High Court judgments, including NTPC v. CIT and M.D. Overseas P. Ltd. v. Dy. CIT. It noted that the relevant year of search, as determined by the date of document handover from the AO of the searched person to the AO of the assessee, was AY 2023–24. Hence, AY 2021–22 fell within the six-year block period required to be assessed under section 153C. Since the AO had initiated assessment proceedings under section 143(3) instead—despite recording satisfaction under section 153C—the Tribunal found the process legally flawed. Similar precedent was found in Mukul Rani Thakur vs DCIT, another case tied to the same search operation, where the Tribunal had ruled likewise.
