Case Law Details
DCIT Vs Ashwani Kumar Gupta (ITAT Delhi)
ITAT Delhi: Section 153C block period reckoning must be from date of receipt of seized material by AO of other person — not from date of search
Delhi ITAT dismissed Revenue’s appeals, holding that assessment u/s 153C was barred by limitation since the block period had to be counted from the date of receipt of seized documents by AO of other person, not from the date of search.
A search was conducted on Alankit Group on 18-10-2019 & certain seized papers were later found to pertain to the Assessee. These were handed over to AO of the Assessee on 22-06-2022 & notice u/s 153C was issued on 23-06-2022. CIT(A) quashed the assessment, holding that under the first proviso to section 153C(1), the reference point for computing the six-year or ten-year block is the date when the AO of the other person actually receives the seized material.
Tribunal, following Supreme Court in CIT v. Jasjit Singh & Delhi High Court in PCIT v. Ojjus Medicare (P) Ltd., upheld that since the material was received in FY 2022-23, the permissible ten-year block extended only up to A.Y. 2013-14. Therefore, A.Y. 2012-13 lay outside the permissible block, rendering the assessment void.
ITAT affirmed that AO had wrongly assumed jurisdiction, upheld CIT(A)’s order, & dismissed both departmental appeals, reiterating that the date of receipt of seized material governs limitation u/s 153C, not the date of search.
FULL TEXT OF THE ORDER OF ITAT DELHI
These appeals by the Revenue are directed against the separate orders of the Ld. CIT(A)-26, New Delhi pertaining to A.Y. 2012-13 & 2013-14 arising out the separate assessment orders passed u/s.153C r.w.s. 143(3) of the Income Tax Act, 1961, (in short ‘the Act’). Since identical grounds have been raised in both the appeals, hence, appeals were heard together and disposed off by this common order for the sake of convenience, by dealing with the facts of the assessment year 2012-13, being lead case wherein, the following grounds have been raised:-
1. The Ld. CIT(A) erred in relying on the judgement of Hon’ble Delhi High Court in the case of Ojjus Medicare Pvt. Ltd. that block periods for assessment u/s. 153C of the Income Tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents or assets seized, by the jurisdictional AO of the non-searched person and not from the date of initiation of search by relying on First Proviso to Section 153C, even when this Proviso specifically deals only with the abatement of proceedings (as referred to second proviso of Section 153A) and does not deal with the calculation of block periods.
2. The Ld. CIT(A) erred in relying on the judgement of Hon’ble Delhi High Court in the case of Ojjus Medicare Pvt. Ltd. that block periods for assessment u/s. 153C of the Income Tax Act, 1961 have to be calculated from the date of receipt of the books of accounts, documents or assets seized, by the jurisdictional AO of the non-searched person and not from the date of initiation of search by relying on First Proviso to Section 153C, even when this Proviso cannot override the main proviso of Section 153C(1), which clearly mentions that calculation of block period has to be done from the year of search.
3. The Ld. CIT(A) erred in holding that block periods for assessment u/s. 153C of the Income Tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents or assets seized, by the jurisdictional AO of the non-searched person, even when the position of law is clarified after the amendment introduced by Finance Act, 2017 that the block period of 6 AYs and 10 AYs as mentioned in sub-section (1) of Section 153C and 153A have same meaning and have to be calculated from the “assessment year relevant to the previous year in which search is conducted.”
4. The ld. CIT(A) erred in relying on the judgement of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (2023 SCC Online SC 1265) and of Hon’ble High Court in the case of CIT vs. RRJ Securities Ltd. (2015 SCC Online Del 13085), even though the facts of the instant case are different from that of Jasjit Singh case and RRJ Securities case, since the decisions rendered by the Court in Jasjit Singh as well as in RRJ Securities had dealt with a pre-2017 position (i.e. for search conducted before 1st April, 2017) and hence, are clearly distinguishable.
2. At the threshold, it is noted that there is a delay of 35 days in filing the appeal by the Revenue. The Revenue has filed the application for condonation the delay stating therein that due to statutory date of limitation for assessment and penalty proceedings being 31.3.2025, there was significant pressure of pendency causing a delay in filing the appeal. Hence, it was requested that the delay may be regretted and be condoned. The revenue has shown the sufficient cause for not filing the appeal within time. We find the merit in the contention of the Revenue, and condoned the delay in filing the appeal and admit the appeal for adjudication.
3. Briefly stated, facts are that in this case, the assessee filed his original return of income on 19.09.2012 declaring income of Rs. 93,64,400/-. A search and seizure operation u/s. 132 of the Income Tax Act, 1961 was carried out on 18.10.2019 in the case of M/s Alankit Limited, Sh. Alok Kumar Aggarwal, Sh. Ankit Aggarwal, M/s alankit Assignments Limited at 3584/4, Narang Colony, Gali No. 4, Tri Nagar, Delhi as part of Alankit Group. During the search proceedings some documents including digital data were found and seized. On perusal of the seized data / documents it was found that certain documents and information contained therein pertains to the assessee. Thereafter, assessment proceedings under section 153C of the Income Tax Act. In appeal, Ld. CIT(A) allowed the appeal of the assessee. Aggrieved, the Revenue is in appeal before the Tribunal.
4. At the time of hearing, Ld. DR reiterate the contention raised in the aforesaid grounds of appeal and requested to allow the appeal of the Revenue.
5. Per contra, Ld. AR for the assessee submitted that Ld. CIT(A) has passed a well-reasoned order which does not need any interference on our part.
6. We have heard the rival contentions and gone through the facts of the case. We find that Ld. CIT(A) has allowed the appeal of the assessee by holding as under:-
“5.1 I have gone through the submissions made by the appellant, the contention of the AO and the legal positions and decided the appeal as under. The appellant has taken several grounds including grounds on legal validity of assumption of jurisdiction to initiate proceeding under section 153C of the Act. So, before deciding the grounds on merit, the technical grounds are decided first.
Grounds 1 & 2
5.2 These grounds are on validity of assumption of jurisdiction by the AO to initiate proceedings under section 153C of the Act. The primary ground is that the assumption of jurisdiction by the AO under section 153C of the Act is invalid and contrary to the provisions of law as issue of notice under section 153C of the Act is barred by limitation. A.O of the searched person (Alankit Group) handed over the seized document/information to the AO of the appellant on 22.06.22. Subsequently, the AO of the appellant after recording his satisfaction issued notice under section 153C of the Act on 23.06 22. Therefore, the deemed search year for proceedings under section 153C of the Act is A Y 2023-24. Consequently for A. Y 2012-13, a notice under section 153C of the Act could not have been issued being barred by limitation in view of Explanation-1 to Sec. 153A of the Act. The appellant has relied on several decisions of Hon’ble Supreme Court and jurisdictional High Court in the case of PCIT Vs Ojjus Modicaro (P.) Ltd-[2024] 161 taxmann.com 160 (Delhi) (6-25) to support its grounds.
5.3 Before delving into the legal grounds, it is essential to go through the facts and the legal provisions under section 153C of the Act. In the instant case, the proceeding under section 153C of the Act was initiated consequent to a search & seizure action conducted under section 132 of the Act in the case of Alankit Group on 18.10.2019 wherein certain documents/information pertaining to the appellant was found and seized. Thereafter, the AO of the searched person handed over the said seized document after recording the satisfaction to the AO of the appellant on 22.06.2022. Subsequently, the AO of the appellant recorded his satisfaction and issued notice under section 153C of the Act to the appellant on 23.06.2022. The assessment order was passed under section 153C read with section 143(3) of the Act on 31.03.2023.
Legal framework for initiation of proceeding under section 153C 5.4 Section 153C of the Act provides as under:
“(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A.
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person.
Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated.
5.5 Further, section 153A of the Act provides that
153A. Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall-
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b) referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made:
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years:
Further, Explanation-1 to section 153A(1) with effect from 01.04.2017 states as under:
“Explanation 1. —For the purposes of this sub-section, the expression “relevant assessment year shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.”
5.6 Fourth Proviso to section 153A(1) which was inserted w.e.f 01-04-2017 extends the period of assessment up to 10 years if certain conditions are met. The provision is as under:
“Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless-
(a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years;
(b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and
(c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017.”
5.7 A collective reading of the aforesaid provisions would provide the legal framework of application of section 153C of the Act where search is conducted after 01.04.2017. In brief, in the case of person other than the searched person, assessment or reassessment under section 153C of the Act was not automatic unlike the case of searched person. Such assessment or reassessment could take place only when firstly, the AO of searched person was satisfied that the seized assets/documents belong/pertain/relate to a person other than the searched person and hands over the seized assets/documents to the AO of other person, and secondly, thereafter, the AO of such other person should also be satisfied that seized assets/ documents forwarded to him have bearing on the determination of total income of the other person for the year under consideration. Assessing Officer of the such other person shall issue notice to such person requiring him to furnish return of income in respect of each assessment year falling within six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A for assessing or reassessing the total income. As per first proviso to section 153C, in case of such other person, the reference to the date of initiation of the search or making of requisition shall be construed as reference to the date of receiving of such books of account or documents or assets by the jurisdictional AO. Therefore, for the purposes of section 153C, the date of search is not relevant. Here, the date of receiving of books of account or documents or assets by the jurisdictional AO is the reference point for deciding the assessment years for which an assessment or reassessment is required to be made. This legal position has also been confirmed by Hon’ble Supreme court CIT VS Jasjit Singh [2023] 155 taxmann.com 155 (SC) and the jurisdictional High Court in PCIT Vs Ojjus Medicare (P.) Ltd- [2024] 161 taxmann.com 160 (Delhi) (6-25). The details of finding of the aforesaid Courts are discussed in succeeding paragraphs.
5.8 In this regard, the appellant has placed reliance on the recent judgment of Hon’ble Supreme Court in the case of CIT-14 vs Jasjit Singh (SLP (C) No. 6644 of 2016) dated 26.09.2023. Relevant extracts of such judgment are also accorded hereinbelow:
“9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.
10. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials – of the search party, under Section 132 would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, it the papers are in fact assigned under Section 153-C after a period of four years, the third-party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts.
11. For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs.”
Similar view has been by the Jurisdictional High Court in the following cases:
* CIT-7 vs RRJ Securities Ltd. [2016] 380 ITR 612
* ARN Infrastructure India Ltd. vs ACIT, Central Circle-28 2017 (4) TMI 1194
* Pr. CIT vs Sarwar Agency Pvt. Ltd. 2017 (8) TMI 733.
The Courts have held that the date on which documents are handed over and satisfaction is recorded by the AO shall be considered to be the ‘deemed date of search’ in case of other person under first proviso to section 153C(1), and accordingly, the computation of 10 assessment years under section 153C r.w.s 153A shall start from such date. Further, it has been has clarified that the reference date for the purposes of application of section 153C is date on which documents are handed over and satisfaction is recorded by the AO of the non-searched person.
5.9 The appellant had also preferred a writ petition before the Hon’ble Delhi High Court against the validity of assumption of jurisdiction under section 153C of the Act for this assessment year. This writ petition has been disposed along with several other cases by the Jurisdictional High Court in the case of Pr. CIT, Central-1 vs. Ojjus Medicare Pvt. Ltd. 2024 (4) TMI 268 wherein the contention of the appellant was accepted. The relevant portions of the said decision are reproduced as under:
96. The petitions forming part of List I pertain to AYs’ 2010-11, 2011-12 and 2012-13. So far as the afore-noted writ petitions are concerned, undisputedly AYs’ 2010-11, 2011-12 and 2012-13 fall beyond the maximum period of ten AYs. Since the ten AYs, when computed from the end of AY 2022-23 would terminate upon AY 2013-14, AYs’ 2010-11, 2011-12 and 2012-13 would clearly fall outside the block period of ten AYs’ – and cannot be legally or justifiably be reopened under Section 153C read with Section 153A of the Act.”
97. Proceeding then to List II, we find that the petitions placed in that list pertain to cases where the hand over occurred in FYs 2022-23 and 2023-24. Consequently, the relevant AYs’ would be AY 2023-24 and AY 2024-25 respectively. In light of the principles enunciated by us and which explain how the period of six and ten AYs’ is liable to be computed, the reopening of assessments pertaining to AYs’ 2010-11, 2011-12, 2012-13 and 2013-14 would clearly fall beyond the ambit of ten AYs’ as provided under Section 153C read with Section 153A. We note in this behalf that all of the writ petitions forming part of List Il pertain to the aforenoted AYS’ 2010-11, 2011-12, 2012-13 and 2013-14.”
98. We are therefore of the opinion that the Section 153C notices issued against the writ petitioners placed in List / and insofar as they pertain to AYs’ 2010-11, 2011-12 and 2012-13 would not sustain being beyond the “relevant assessment year” which could have possibly formed the basis for initiation of action under that provision. Similarly, the Section 153C notices impugned by the writ petitioners placed in List Il and insofar as they pertain to AYs’ 2010-11, 2011-12, 2012-13 and 2013-14 and which have been found to fall outside the net of “relevant assessment year”, being the ten year block, would be liable to be set aside on this score alone.
In the present case, notice u/s 153C was issued on 22.06.2022 accordingly, the assessment proceedings for AYs’ 201011, 2011,12, 2012-13 and 2013-14 falls outside the net of “relevant assessment year” as held by the Hon’ble Delhi High Court vide the aforesaid order. Therefore, the assessment order passed u/s 153C r.w.s 143(3) dated 31/03/2023 for AY 2010-11 is void-ab-initio and deserves to be quashed.
5.10 In view of the above, the assessment year 2012-13, which is under consideration, clearly falls outside the scope of application of section 153C of the Act. Therefore, the contention of the appellant is found to be correct on this count. Accordingly, by following the aforesaid decisions of the Hon’ble Supreme Court and the decisions of jurisdictional High Court, the impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and therefore, the jurisdiction assumed by the Assessing Officer is not tenable in the light of aforesaid legal positions. Hence, the appeal on this ground is allowed.
5.11 As the appellant succeeds on these jurisdictional grounds, other grounds on legal validity on assumption jurisdiction as well as the substantive grounds on the quantum addition are not adjudicated at this stage being infructuous.
6. In result, the appeal is “allowed”.
7. In view of the aforesaid facts and circumstances of the case, and binding precedents of the Hon’ble Supreme Court and Hon’ble High Court, in the instant case the impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and, therefore, the jurisdiction assumed by the AO is not tenable in light of the aforesaid legal positions. Hence, the appeal on this ground was rightly allowed by the Ld. CIT(A), which does not need any interference on our part, therefore, we affirm the action of the Ld. CIT(A) and rejects the grounds raised by the Revenue. Resultantly, the appeal filed by the Revenue for the assessment year 2012-13 stands dismissed.
8. Our aforesaid decision for assessment year 2012-13 will apply mutatis mutandis to other appeal relevant to assessment year 2013-14 also.
9. In the result, both the Revenue appeals stand dismissed.
Order pronounced on 28.10.2025.
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