B.H. Trading Vs DCIT (ITAT Delhi)
Delhi ITAT: Section 153C Cannot Be Invoked Where “Search” of Other Person Is Deemed Initiated After 1 April 2021 – Notice and Assessment Quashed
A search under Section 132 was conducted on the Sushil Goel Group on 30.01.2020. During the search, an image recovered from the mobile phone of Sanjay Goel contained certain transaction details in which the assessee B.H. Trading was referred to as “BH.” Sanjay Goel subsequently identified “BH” as B.H. Trading Company. Based on the seized material, the AO recorded satisfaction under Section 153C on 04.02.2022 and issued notice under Section 153C on 04.04.2022.
The assessee challenged the very jurisdiction under Section 153C. It argued that, following the Supreme Court decision in CIT v. Jasjit Singh, in the case of a person other than the searched person, the relevant date for Section 153C is not necessarily the original date of search but the date when the seized material is handed over/satisfaction is recorded for the other person. Here, that event occurred only on 04.02.2022, i.e. after 1 April 2021.
The Tribunal noted that the material facts were undisputed: although the original search took place on 30.01.2020, the satisfaction in the assessee’s case was recorded only on 04.02.2022, and the Section 153C notice was issued on 04.04.2022.
The ITAT relied upon the Supreme Court’s ruling in Jasjit Singh that, for an “other person” under Section 153C, the relevant date for reckoning the search period is linked to the handing over of the seized material to the AO having jurisdiction over such other person, rather than mechanically relating it back to the date of the original search.
More importantly, the Tribunal followed the Madras High Court decision in Harigovind v. ACIT, which, after considering Jasjit Singh, held that Section 153C does not apply where the search in the case of the “other person”, determined on this basis, is initiated on or after 01.04.2021. In such cases, the reassessment has to proceed under the post-2021 reassessment regime rather than Section 153C.
Accordingly, the ITAT held that the Section 153C notice dated 04.04.2022 was without jurisdiction and quashed both the notice and the consequential assessment. All other grounds became academic. The same ruling was applied mutatis mutandis to Baboo Ram Hari Chand, and both appeals were allowed.
Key takeaway: For an “other person” covered by Section 153C, the crucial date is the deemed date of initiation of search determined with reference to handing over of seized material/satisfaction—not merely the date of search on the searched person. If that relevant date falls on or after 1 April 2021, Section 153C cannot be invoked; proceedings must conform to the post-2021 reassessment regime.
Cases Discussed:
- B.H. Trading Co. (ITAT Delhi), ITA No. 3601/Del/2025 (AY 2020-21)
- Baboo Ram Hari Chand vs. DCIT (ITAT Delhi), ITA No. 3602/Del/2025 (AY 2020-21)
- Harigovvind vs. ACIT (Madras HC), 485 ITR 509 (Madras)
- CIT vs. Jasjit Singh (Supreme Court), 458 ITR 437 (SC)
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals filed by the different Assessees are directed against the respective orders of the Ld. First Appellate Authority relevant to assessment year 2020-21. Since common issue have been raised in both the appeals, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience by dealing with facts of ITA No. 3601/Del/2021 (AY 2020-21) – B.H. TRADING CO. Assessee by Sh. Pratap Gupta, CA Department by Dr. Rajinder Kaur, CIT(DR)
