DCIT Vs Richfield Goods Pvt. Ltd. (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi heard an appeal filed by the Revenue challenging the order of the Commissioner of Income Tax (Appeals) [CIT(A)] that had deleted an addition made under Section 153C of the Income Tax Act, 1961. The CIT(A) had held that the assessment year 2013–14 was not covered within the block of six assessment years as prescribed under Section 153C of the Act.
The Departmental Representative (DR) relied on the assessment order passed by the Assessing Officer (AO), while the Counsel for the assessee supported the CIT(A)’s decision. The assessee also stated that its cross-objection was not being pressed, leading to its dismissal as not pressed.
On examining the case records and arguments, the ITAT noted that the CIT(A) had deleted the additions under Sections 153A/153C after observing that the year under consideration was not within six years from the relevant date as required under Section 153C. The CIT(A)’s findings were as follows:
The CIT(A) considered all materials and written submissions and noted that the search and seizure operation under Section 132 of the Act was conducted on the Net Ram Group from 12–13 March 2019. During the search, various documents were seized relating to unaccounted cash and complex fund layering through several Kolkata-based entities. The AO found that the appellant was one of the entities involved in this fund layering structure. Based on the satisfaction recorded by the AO of the searched person and other relevant persons, a notice under Section 153C was issued to the appellant on 26 July 2021.
The assessee contended that, in light of judicial precedents, the six-year period under Section 153C should be computed from the date of recording of satisfaction and not the date of search. The assessee relied on the decisions of the Hon’ble Delhi High Court in CIT v. RRJ Securities Pvt. Ltd. and the Hon’ble Supreme Court in CIT v. Jasjit Singh.
In Jasjit Singh, the Supreme Court discussed that when documents belonging to a person other than the one searched are found, the AO must first record satisfaction under Section 153C that such documents belong to the other person. The AO of the searched person then hands over the documents to the AO having jurisdiction over that other person. The assessment proceedings against such other person are to be initiated from the date of receipt of those documents, which becomes the relevant “date of search” for determining the six-year block period.
The Court in Jasjit Singh further noted that if the Revenue’s argument — that the period should be reckoned from the date of search on the original person — were accepted, it would lead to disproportionate consequences. This is because there could be a delay of several years between the date of search and the date on which documents are transferred to the AO of the other person. Such an interpretation would unfairly compel the other person to preserve records far beyond the legally required period. Hence, the Court concluded that the six-year period must be reckoned from the date of receipt of documents or the recording of satisfaction, not the original search date.
In RRJ Securities, the Delhi High Court also held that, under Section 153C, the six-year period should be counted from the date when assets or documents belonging to the “other person” are handed over to the AO having jurisdiction over that person. The Court emphasized that this date must be treated as the “date of search” for the purposes of applying Section 153A. Therefore, assessments for years beyond this six-year period would be invalid.
Applying these principles, the CIT(A) in the present case observed that since the satisfaction under Section 153C was recorded during the financial year 2021–22, the deemed search year for such proceedings would be FY 2021–22. Accordingly, the six assessment years immediately preceding the assessment year relevant to FY 2021–22 would cover AYs 2016–17 to 2021–22. As AY 2013–14 falls outside this block of six years, the assessment made for this year was held to be time-barred and without jurisdiction.
The CIT(A) therefore allowed Additional Ground No. 1 and deleted the addition made by the AO. Since relief was granted on this ground, the remaining grounds raised by the appellant became academic and were not adjudicated.
The ITAT, after reviewing the findings of the CIT(A), found no valid reason to interfere with the decision. It upheld that the assessment year under appeal (AY 2013–14) was outside the permissible six-year block period as per Section 153C. Consequently, the Revenue’s grounds were rejected.
The Tribunal concluded that the CIT(A)’s order deleting the addition was justified and sustained it in full. The appeal filed by the Revenue was dismissed, and the assessee’s cross-objection was dismissed as not pressed.
The order was pronounced in open court on 28 October 2025.
FULL TEXT OF THE ORDER OF ITAT DELHI
