Delhi ITAT Upholds Quashing of Time-Barred Section 153C Assessment

DCIT Vs Ishwar Gupta (ITAT Delhi)

ONCE HIGH COURT QUASHES NOTICE u/s 153C, CONSEQUENTIAL ASSESSMENT HAS NO LEGS—AY 2010-11 ALSO BEYOND TEN-YEAR BLOCK

The Delhi ITAT has held that once the Delhi High Court had quashed the foundational notice dated 22.08.2022 issued u/s 153C as time-barred, the consequential assessment order could not independently survive. The Tribunal further found that AY 2010-11 fell outside even the maximum ten-year block computed with reference to the satisfaction recorded in FY 2022-23. The CIT(A)’s order annulling the assessment was upheld & the Revenue’s appeal was dismissed.

Parallel appeal & writ proceedings

The assessee, Shri Ishwar Gupta, was subjected to proceedings u/s 153C for AY 2010-11 through notice dated 22.08.2022.

Against the consequential assessment order, the assessee filed a statutory appeal before the CIT(A). Simultaneously, he challenged the very notice u/s 153C before the Delhi High Court by filing a writ petition.

During the appellate proceedings before the CIT(A), notices u/s 250 were issued. In response, the assessee informed the appellate authority about the pending writ petition & subsequent order of the Delhi High Court.

The assessee produced a copy of the High Court’s order dated 03.04.2024 passed in W.P.(C) No. 2017/2024 & CM Application No. 8476/2024.

High Court quashes the foundational notice

The Delhi High Court quashed the notice dated 22.08.2022 issued u/s 153C on the ground that it was barred by limitation.

In granting relief, the High Court relied upon its decision in Vineeta Gupta v. ITO, Ward 46(4), Delhi & Anr. [2024:DHC:2629-DB].

The effect of the High Court’s decision was that the very jurisdictional foundation upon which the AO had initiated proceedings ceased to exist.

A valid assessment u/s 153C necessarily depends upon a legally sustainable notice. Once that notice is struck down, all subsequent proceedings founded upon it become incapable of survival.

CIT(A) annuls the assessment

The CIT(A) took note of the binding High Court order & observed that the notice u/s 153C had already been quashed.

Consequently, the assessment proceedings & assessment order passed pursuant to that notice had “no legs to stand”. The CIT(A) therefore annulled the assessment for AY 2010-11.

The Revenue challenged this relief before the ITAT.

Assessee demonstrates limitation separately

Apart from relying upon the High Court order, the assessee furnished a chronological chart before the Tribunal demonstrating that AY 2010-11 was independently outside the permissible block period.

The satisfaction note relating to the assessee was recorded by the jurisdictional AO on 16.07.2022, falling in the previous year relevant to AY 2023-24.

When the assessment years were counted backwards from AY 2023-24, the ten-year period extended only up to AY 2014-15.

Accordingly, AYs 2013-14, 2012-13, 2011-12 & the impugned AY 2010-11 fell outside the ten-year block.

Thus, even without relying exclusively upon the High Court’s quashing order, notice u/s 153C for AY 2010-11 was beyond the outer statutory time limit.

Revenue does not dispute the chronology

Before the Tribunal, the Revenue relied heavily upon the findings of the AO.

However, the Departmental Representative did not controvert the crucial factual position that the Delhi High Court had already quashed the notice dated 22.08.2022 or that AY 2010-11 fell beyond the ten-year block shown in the assessee’s computation.

There was therefore no surviving jurisdictional basis upon which the assessment could be sustained.

ITAT’s decision

The Tribunal observed that the assessee had challenged the notice u/s 153C before the Delhi High Court & that the High Court, by order dated 03.04.2024, had quashed the notice as time-barred.

The CIT(A) had merely given effect to the legal consequence flowing from that binding order. Once the notice stood quashed, the consequential assessment proceedings & assessment order could not remain alive.

The ITAT also examined the assessee’s limitation chart. Since satisfaction was recorded during FY 2022-23, the maximum ten-year block ended with AY 2014-15 on the older side. AY 2010-11 was clearly outside that period.

The Tribunal therefore found no reason to interfere with the CIT(A)’s order. The annulment of the assessment was upheld & the Revenue’s appeal was dismissed.

Author’s comments

The ruling applies a foundational principle of jurisdiction: when the root falls, the branches cannot survive. Notice u/s 153C is not an independent procedural formality; it is the source of the AO’s authority to assess the other person. If the notice is quashed, the consequential assessment automatically collapses.

The decision is also significant because the assessment failed on limitation independently. Even the extraordinary search-assessment mechanism cannot travel beyond the outer period prescribed by Parliament.

The order contains certain drafting inconsistencies. Paragraph 1 describes the proceeding as an appeal filed by the assessee, whereas the cause title & operative result clearly show that it was the Revenue’s appeal. The narration also mentions the High Court writ in connection with AY 2015-16 at one place, although the discussion & decision concern AY 2010-11. The precise scope of the High Court order should therefore be verified from its certified copy.

Subject to that clarification, the principle remains clear: the Department cannot appeal an assessment back to life after the High Court has already signed its death certificate.

Cases Discussed

• Vineeta Gupta v. Income Tax Officer, Ward 46(4), Delhi & Anr. [2024:DHC:2629-DB]

FULL TEXT OF THE JUDGMENT/ORDER OF ITAT DELHI BENCH

1. This appeal is filed by the assessee against the order passed by the ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short ‘ld. CIT (A)] dated 12.12.2025 for the Assessment Year 2010-11.

2. At the time of hearing, with the permission of the Bench, ld. AR of the assessee brought to our notice the relevant facts of the case and his submissions as under. He submitted that during the course of appellate proceedings, notices u/s 250 of the Act were issued to the assessee and in response, the assessee filed submission informing that while he had filed appeal before the CITA) against the impugned assessment order, he had also filed a Writ petition before the Hon’ble Delhi High Court against the notice u/s 153C of the Income-tax Act, 1961 (for short ‘the Act’) dated 22.08.2022 for the impugned AY 2010-11. He further submitted that the Hon’ble Delhi High Court vide Order dated 03.04.2024 in W.P.(C) 2017/2024 & CM APPL. 8476/2024 has allowed the Writ Petition filed by the assessee for the AY 2015-16 and quashed the impugned notice dated 22.08.2022 issued u/s 153C of the Act being time barred and a copy of the order is placed on record. He further submitted that Hon’ble Delhi High Court has duly disposed of the writ petition and quashed the impugned notice on April 03, 2024, by relying on the findings in the case of Vineeta Gupta v. Income Tax Officer Ward 46(4) Delhi and Anr (2024:DHC:2629-DB].

3. He further submitted that ld. CIT (A), relying on the aforesaid decision of Hon’ble Delhi High Court in the case of the assessee, observed that the notice u/s 153Cof the Act dated 22.08.2022 already stands quashed and respectfully following the same, he held that the consequential assessment proceedings and the impugned assessment order passed u/s 153C of the Act for the AY 2010-11 also cannot be sustained having no legs to stand and are annulled.

4. Ld. AR of the assessee, however, submitted a chart showing that the notice u/s 153C issued on 22.08.2022 is time barred as under :-

5. He submitted that in the light of the above, it is prayed that the impugned notice is already quashed by the Hon’ble Delhi High Court and the impugned order passed by the AO is consequential and also barred by limitation, hence the Revenue’s appeal may be dismissed.

6. On the other hand, ld. DR of the Revenue, however, did not controvert the factual position and heavily relied on the findings of the AO.

7. Considered the rival submissions and material placed on record. We observed that assessee has filed Writ petition before Hon’ble Delhi High Court against the notice u/s 153C of the Act dated 22.08.2022 for the impugned AY under consideration i.e. 2010-11. We further observed that Hon’ble Delhi High Court vide Order dated 03.04.2024 (supra) quashed the impugned notice dated 22.08.2022 issued u/s 153C of the Act being time barred. We further find that ld. CIT (A), relying on the aforesaid decision of the Hon’ble Delhi High Court, observed that notice u/s 153C already stands quashed and accordingly, he held that the consequential assessment proceedings and the impugned assessment order passed u/s 153C of the Act for the AY 2010-11 also cannot be sustained having no legs to stand and are annulled. Further, from the chart reproduced above filed by the assessee, we observed that the notice u/s 153C is time barred as per law. Accordingly, we are not inclined to disturb the findings of the ld. CIT(A) and uphold the same.

8. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on this 9th day of September, 2026.