Ajay Goenka Vs DCIT (ITAT Delhi)
Old Search, New Satisfaction — Section 153C Misses the Cut-Off; Delhi ITAT Quashes Assessments &; Says 147/148 Was the Only Route
Summary:
The Delhi ITAT dealt with an interesting transitional issue concerning section 153C after its amendment by Finance Act, 2021. Though the original search on the Alankrit Group had taken place way back on 18.10.2019, the satisfaction in the case of the assessee, who was an “other person”/non-searched person, was recorded only on 12.05.2023. The Tribunal held that for such other person, the relevant search date shifts to the date of handing over of seized material or, where that date is unavailable, the date of recording satisfaction. Consequently, the post-01.04.2021 regime applied & assessment could not be made u/s 153C.
Search Was in 2019 — But That Was Not the Relevant Date
The assessee challenged assessments for AYs 2017-18 to 2020-21 as being without jurisdiction, barred by limitation & contrary to the statutory framework of section 153C.
The Revenue’s case originated from a search on the Alankrit Group on 18.10.2019. However, the AO recorded satisfaction for initiating proceedings against Ajay Goenka only on 12.05.2023. Thereafter, upon receipt of the relevant material from the AO of the searched person, notice u/s 153C was issued & assessments were completed under that provision.
The assessee’s argument was deceptively simple: by the time the jurisdictional event occurred in his case, section 153C(3) had already shut the door on section 153C proceedings. The AO ought to have proceeded under the substituted reassessment regime u/s 147/148.
For an “Other Person”, Search Date Travels With the Seized Material
The crucial distinction made by the Tribunal was between the searched person & the other/non-searched person.
For the searched person, the actual date of search is naturally relevant. But under the first proviso to section 153C(1), in the case of the other person, the corresponding date is the date on which the seized books, documents or assets are received by the AO having jurisdiction over such other person.
Where the actual date of handing over the material is unavailable from the record, the date on which the AO records the satisfaction note assumes significance.
The Tribunal relied upon the Delhi High Court decision in PCIT v. Ojjus Medicare (P.) Ltd. [2024] 161 taxmann.com 160 (Delhi). Since satisfaction in the present case was recorded on 12.05.2023, the Tribunal treated AY 2023-24 as the relevant search year for the assessee.
Thus, although the physical search had happened in October 2019, the statutory clock for this non-searched assessee effectively pointed to May 2023.
Section 153C(3) — The 01.04.2021 Cut-Off Changes Everything
Finance Act, 2021 inserted sub-section (3) in section 153C w.e.f. 01.04.2021. It provides that section 153C shall not apply in relation to a search initiated u/s 132 or requisition u/s 132A on or after 01.04.2021. The Finance Act, 2021 contains the relevant amendments to the reassessment framework.
This amendment became decisive.
Once 12.05.2023 was taken as the relevant date for the non-searched person, proceedings necessarily fell within the post-01.04.2021 statutory regime. Therefore, section 153C was no longer the permissible route.
The ITAT followed its coordinate Bench decision in Lekh Raj v. DCIT [2026] 187 taxmann.com 1104 (Delhi-Trib.), which had applied Ojjus Medicare & held that where the relevant date for an “other person” falls after 01.04.2021, a notice issued u/s 153C is non est & the resultant assessment is liable to be quashed for want of jurisdiction.
Date of Search Cannot Be Borrowed Forever From the Searched Person
The ruling highlights a subtle but extremely important feature of section 153C.
Revenue cannot merely point to the original physical search date in the case of another person & say that the old section 153C regime automatically governs the non-searched assessee.
The statutory fiction applicable to an “other person” has to be respected. The relevant date is linked to transfer/receipt of seized material, & where such date is not available, the date of satisfaction becomes pertinent.
This principle can produce a striking result: a search conducted before 01.04.2021 may nevertheless fall into the post-01.04.2021 regime for the non-searched person if the jurisdictional event in his case occurs after the statutory cut-off.
That is precisely what happened here.
Shivdham Buildtech Reinforces the Principle
The Tribunal also relied upon its decision in Shivdham Buildtech Pvt. Ltd., which arose from the same Alankrit Group search.
There too, the physical search was conducted on 18.10.2019, but satisfaction for the other person was recorded only on 11.10.2022. Applying Ojjus Medicare, the Tribunal treated the satisfaction date as the relevant date where the actual handing-over date was unavailable.
Since that date fell after 01.04.2021, the amended section 153C(3) applied & the proceedings u/s 153C were held unsustainable.
Correct Route Was Sections 147/148
Having concluded that section 153C was unavailable, the ITAT specifically held that the AO ought to have adopted the substituted reassessment provisions u/s 147 r.w.s. 148. The Finance Act, 2021 substituted the reassessment framework, including sections 147 and 148. :contentReference[oaicite:1]{index=1}
Accordingly, the assessee’s fundamental jurisdictional ground was allowed.
Once the assessment failed at the jurisdictional threshold, the Tribunal did not consider it necessary to adjudicate the remaining grounds. Those grounds were kept open.
The ruling for AY 2017-18 was applied mutatis mutandis to AYs 2018-19, 2019-20 & 2020-21, since the facts were identical. All four appeals of the assessee were consequently allowed.
Takeaway
This decision assumes considerable importance in cases involving section 153C proceedings against non-searched persons arising from pre-01.04.2021 searches where satisfaction or transfer of material occurred subsequently.
The first question should not merely be: “When was the original search?”
One must additionally ask: “When was the seized material handed over to the AO of the other person?” And if that date is unavailable: “When was satisfaction recorded?”
If the relevant date falls on or after 01.04.2021, section 153C(3) can knock out the old search-assessment machinery & Revenue must travel through the substituted 147/148 route.
The search may belong to 2019, but jurisdiction cannot live in the past – satisfaction recorded in 2023 brought the case into the new regime, & section 153C became an expired ticket.
Cases Discussed
- PCIT v. Ojjus Medicare (P.) Ltd. [2024] 161 taxmann.com 160 (Delhi)
- Lekh Raj v. DCIT [2026] 187 taxmann.com 1104 (Delhi-Trib.)
- Shivdham Buildtech Pvt. Ltd.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, DELHI BENCH
1. These appeals are filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-25, New Delhi [“Ld. CIT(A)”, for short] dated 20.01.2026 for the Assessment Years 2017-18 to 2020-21.
2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee’s appeal being ITA No.1992/Del/2026 for AY 2017-18 as lead case to adjudicate the issues under consideration.
3. At the time of hearing, the ld. AR of the assessee pressed the legal issue vide ground no.1 of grounds of appeal that “That the notice issued and the assessment order passed under section 153C of the Income Tax Act, 1961 (‘the Act’) by the Assessing Officer (‘Assessing Officer’) are fundamentally flawed, being without jurisdiction, barred by limitation, and passed in violation of the statutory framework governing such proceedings, thereby rendering them legally unsustainable.”
4. With regard to above ground, ld. AR of the assessee submitted that AO has recorded the reasons to initiate proceedings for issue of notice u/s 153C of the Income-tax Act, 1961 (for short ‘the Act’) on 12.05.2023. He submitted that no doubt, the original search was conducted on the Alankrit Group on 18.10.2019, however, the AO of the searched person has recorded the satisfaction on 12.05.2023. For the sake of brevity, the satisfaction note is reproduced below :-
5. He submitted that after recording the above satisfaction and on receipt of relevant material from the AO of the searched person, the proceedings were initiated by the AO by issue of notice u/s 153C of the Act and completed the assessment u/s 153C of the Act. He submitted that as per the amended provisions and in specific, he brought to our notice section 153C (3) of the Act which is squarely applicable in this case and he submitted that the AO should have initiated proceedings u/s 148 and not u/s 153C of the Act. The facts are exactly similar to the appeals filed by the assessee for AYs 2018-19 to 2020-21 as well and he submitted that this issue is squarely covered in favour of the assessee.
5. On the other hand, ld DR of the Revenue relied on the orders of the authorities below.
6. Considered the rival submissions and material available on record. We observe that the assessment year 2017-18 under consideration clearly falls outside the scope of application of section 153C of the Act, for the reason that the date of search for the unsearched parties are the date on which the documents were handed over to the Assessing Officer of such other person or from the date on which the satisfaction was recorded by the Assessing Officer of the other person. In the given case, we noticed that the original search was conducted in Alankrit Group on 18.10.2019. The proceedings were initiated based on the material found in the above search in the case of the assessee recording the satisfaction only on 12.05.2023. Since the satisfaction was recorded subsequently, as held in the case of Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd. (2024) 161 taxmann.com 160 (Delhi) that the searched AY for the unsearched person would be the date of handing over of the searched material for recording of satisfaction, that being the case, the year of search in the present case of the assessee would be AY 2023-24 of amended search proceedings would apply. The facts in the present case is exactly similar to the facts in the case of coordinate Bench in Lekh Raj vs. DCIT (2026) 187 taxmann.om 1104 (Delhi-Trib.) and the coordinate Bench held as under :-
“7. We have heard submissions made by rival sides and have examined the orders of authorities below. We have also considered the decision on which ld. Counsel for the assessee has vehemently placed reliance to buttress her arguments. The assessee in appeal has assailed validity of the assessment order passed u/s 153C r.w.s. 143(3) of the Act. It is an undisputed fact that addition has been made in the hands of the assessee on protective basis consequent to search in the case of Navin Mahipal Group on 16.09.2019. The satisfaction note in case of the assessee was drawn by the AO on 28.09.2021. As per the first proviso to section 153C(1), the date of search in the case of person other than the searched person shall be the date on which books of account or documents or assets seized or requisitioned by the
Assessing Officer having jurisdiction over such other person are received by the AO of other person. Thus, in the case of a person other than the searched person, the relevant date would be the date on which relevant documents or seized material is received by the AO of the person other than the searched person. The CIT(A) in Para 14 of the impugned order has recorded that:
“it does not emanate from record as to when the seized material was handed over to AO, it is seen that the case of the appellant was centralised u/s 127 of the Act from Faridabad to New Delhi on 21.01.2021. Therefore, the date 21.01.2021 may be taken as the date on which the material was handed over to the AO, that is to say, that the material was handed over to the AO in F.Y. 2020-21.” We are of the considered view that in absence of specific date of handing over the seized material to AO of the assessee, the date of issue of order u/s 127 of the Act has been wrongly assumed by the CIT(A) as the date on which seized material was received by the AO of assessee. The Hon’ble Jurisdictional High Court in the case of PCIT vs. Ojjus Medicare(P.) Ltd (supra) has held that where the date of handing over of documents is not available, date of issuance of satisfaction note by the Assessing Officer u/s 153C of the Act would be pertinent for the purpose of first proviso to section 153C of the Act. In the present case, the AO had recorded satisfaction on 28.09.2021. Since, the date of handing over of seized material is not emanating from the records, the date of recording of satisfaction i.e., 28.09.2021 shall be considered as the date of receiving seized material by the AO of the assessee.
8. Section 153C was amended by the Finance Act, 2021 with effect from 01.04.2021 whereby sub-section(3) was inserted. The relevant subsection is reproduced hereinbelow:
“(3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, 2021.”
By virtue of above amendment to section 153C, no assessment u/s 153C can be made in the case of other person under section 153C of the Act if the date of search falls beyond 01.04.2021. As a corollary, any notice issued for making assessment u/s 153C of the Act in the case of a non-searched person after 01.04.2021 would be non est.
9. Thus, applying the amended provisions of section 153C of the Act and the law explained by the Hon’ble Jurisdictional High Court in the case of Ojjus Medicare(P.) Ltd. (supra), to facts of the instant case, we find that the notice u/s 153C of the Act issued by the AO to assessee and thereafter, assessment order passed u/s 153C is unsustainable and is liable to be quashed on the ground of jurisdiction. We hold accordingly.
10. In the result, impugned order is set-aside and appeal of the assessee is allowed.”
7. Similarly in ITA No.111/Del/2026 for AY 2017-17 in the case of M/s. Shivdham Buildtech Pvt. Ltd., the coordinate Bench, wherein the Accountant Member is also the party to it, had held as under :-
“19. Considered the rival submissions and material placed on record. The assessee in appeal has assailed validity of the assessment order passed u/s 153C r.w.s. 143(3) of the Act. It is an undisputed fact that addition has been made in the hands of the assessee on protective basis consequent to search in the case of Alankit Group on 18.10.2019. The satisfaction note in case of the assessee was drawn by the AO on 11.10.2022. As per the first proviso to section 153C(1), the date of search in the case of person other than the searched person shall be the date on which books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person are received by the AO of other person. Thus, in the case of a person other than the searched person, the relevant date would be the date on which relevant documents or seized material is received by the AO of the person other than the searched person.
20. We are of the considered view that in absence of specific date of handing over the seized material to AO of the assessee, the date of issue of order u/s 127 of the Act has been wrongly assumed by the CIT(A) as the date on which seized material was received by the AO of assessee. The Hon’ble Jurisdictional High Court in the case of Ojjus Medicare (P.) Ltd (supra) has held that where the date of handing over of documents is not available, date of issuance of satisfaction note by the Assessing Officer u/s 153C of the Act would be pertinent for the purpose of first proviso to section 153C of the Act. In the present case, the AO had recorded satisfaction on 11.10.2022. Since, the date of handing over of seized material is not emanating from the records, the date of recording of satisfaction i.e., 11.10.2022 shall be considered as the date of receiving seized material by the AO of the assessee.
21. Section 153C was amended by the Finance Act, 2021 with effect from 01.04.2021 whereby sub-section(3) was inserted. The relevant sub-section is reproduced hereinbelow:
“(3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, 2021.”
22. By virtue of above amendment to section 153C, no assessment u/s 153C can be made in the case of other person under section 153C of the Act if the date of search falls beyond 01.04.2021. As a corollary, any notice issued for making assessment u/s 153C of the Act in the case of a non-searched person after 01.04.2021 would be non-est.
23. Thus, applying the amended provisions of section 153C of the Act and the law explained by the Hon’ble Jurisdictional High Court in the case of Ojjus Medicare (P.) Ltd. (supra), to the facts of the instant case, we find that the notice u/s 153C of the Act issued by the AO to assessee and thereafter, assessment order passed u/s 153C is unsustainable and is liable to be quashed on the ground of jurisdiction. In this regard, we also find force from the decisions of coordinate Benches in the case of Geetanjali Bhayana (supra) and Lekh Raj (supra). We hold accordingly.”
8. Respectfully following the aforesaid decision, we are of the opinion that the reassessment proceeding has to be adopted under substituted provisions i.e. u/s 147 r.w.s. 148 and the relevant provisions of section 153C(3) of the Act apply in the present case. Therefore, we are inclined to allow Ground No.1 raised by the assessee.
9. The other grounds raised by the assessee are not adjudicated at this stage and the same are kept open.
10. According, the assessee’s appeal being ITA No.1992/Del/2026 for AY 2017-18 is allowed.
11. Since the facts in AYs 2018-19 to 2020-21 are exactly similar to Assessment Year 2017-18, our above findings in AY 2017-18 are applicable mutatis mutandis in Assessment Years 2018-19 to 2020-21. Accordingly, the appeals filed by the assessee for AYs 2018-19 to 2020-21 are allowed.
7. In the result, all the appeals filed by the assessee are allowed.
Order pronounced in the open court on this 3rd day of September, 2026
