Section 153C Jurisdiction Invalid in Absence of Incriminating Material — Commission Allegation Based on Dumb Excel Sheet Rejected:

DCIT Vs Udai Shanker Awasthi (ITAT Delhi)

Revenue filed appeals against deletion of additions made u/s 153C r.w.s.143(3) alleging undisclosed commission income routed through overseas entities. The Tribunal dismissed Revenue’s appeals holding that assumption of jurisdiction itself was invalid due to absence of incriminating material belonging or relating to the assessee.

The alleged case was built mainly on statements of third parties and an excel sheet created by staff of another person during investigation. ITAT noted that:

• The excel sheet was merely a working paper prepared later for investigation and not a seized document.
• Assessee’s name did not appear in the excel sheet; many entries were vague such as “to be identified”.
• No direct evidence or foreign enquiry linked the assessee to alleged commission income.
• Even statements relied upon were retracted or lacked corroboration.

Further, Tribunal held that identical satisfaction notes were recorded for assessee and his son, showing AO himself was unsure about real beneficiary. Protective vs substantive additions indicated lack of certainty, rendering initiation u/s 153C mechanical and invalid.

Key Legal Findings:

• For non-searched person, incriminating material must specifically belong/pertain to assessee; suspicion or third-party statements are insufficient.
• Working papers created during investigation cannot be treated as seized incriminating material.
• Consolidated satisfaction note for multiple years also vitiates proceedings.

FULL TEXT OF THE ORDER OF ITAT DELHI

1. These are the appeals filed by the revenue in ITA Nos. 4649, 4691 & 5343 to 5347/Del/2025 for AYs 2011-12 to 2018-19, arises out of the order of the ld. Commissioner of Income Tax (Appeals)-23, New Delhi [hereinafter referred to as ^„ CIT(A)’, in short] dated 07-05-2025 against the order of assessment passed u/s 153C r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ^„the Act’) dated 31-03-2023 by the Assessing Officer, Dy/ ACIT, Circle-1, New Delhi (hereinafter referred to as ^„ld. AO’). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience.

2. Both the parties mutually agreed that the assessments framed for the Assessment Years 2011-12 and 2012-13 by the Learned AO would be outside the block period of 6 years and in view of the decision of the Hon’ble Jurisdictional High Court in the case of PCIT vs Ojjus Medicare Pvt Ltd reported in 161 taxmann.com 160 (Del HC). Let us now see how the aforesaid decision of Hon’ble Delhi High Court would apply to the facts of the instant case before us for the Assessment Years 2011-12 and 2012-13. A search and seizure operation was carried out u/s 132 of the Act on Shri Rajeev Saxena and Shri Sanjay Jain on 30-06-2019 wherein, many incriminating documents / information were found by the Revenue based on which necessary satisfaction u/s 153C of the Act was recorded on 29-09-2021 by the Learned AO of the assessee on receipt of a satisfaction note dated 25­09-2021 from the AO of Shri Rajiv Saxena. Thereafter, notices u/s 153C r.w.s. 153A of the Act were issued to the assessee on that very date for the 10 AYs 2011-12 to 2020-21. Hence, the date of search qua the assessee herein would be the date of recording of satisfaction note by the Learned AO of the assessee which is 29-09-2021 which falls in Assessment Year 2022-23. Hence applying the ratio decidendi of Hon’ble Delhi High Court referred supra, the 10 Assessment Years would be as under:-

3. Hence the search assessments framed for the Assessment Years 2011- 12 and 2012-13 would be outside the block period of 10 Assessment Years. Hence the search assessments framed for AYs 2011-12 and 2012-13 had been rightly quashed by the Learned CIT(A), on which we do not find any infirmity. Accordingly, the grounds raised by the revenue for these two assessment years are hereby dismissed.

4. As stated in earlier part of this order, the issues involved in all the assessment years are identical. Accordingly, the facts relevant for Assessment Year 2013-14 are taken up for adjudication and the decision rendered thereon shall apply mutatis mutandis for other assessment years also except with variance in figures.

5. The common issues raised by the revenue for the remaining Assessment Years are summarized as under:-

a) CIT(A) erred in quashing the assessment order without appreciating valid satisfaction recorded and statutory compliance.

b) CIT(A) wrongly held that no incriminating material was found, ignoring material evidence establishing undisclosed commission income routed through third parties.

c) CIT(A) ignored further corroboration provided by witness statements and cross-examination.

d) CIT(A) relied uncritically on the PJSC Uralkali letter, failing to note it was unauthenticated and self-serving.

e) CIT(A) placed undue reliance on the absence of direct admission, without considering the chain of evidence showing the assessee as ultimate beneficiary.

f) CIT(A) failed to appreciate addition of unexplained credits was based on cogent evidence from seized material, not on conjecture.

g) CIT(A) erred in deleting the addition of unexplained credits u/s 68.

h) CIT(A) did not properly appreciate the remand report and accepted assessee‟s contention without thorough review.

6. We have heard the rival submissions and perused the materials available on record. The ld. CIT DR lead the arguments in all the above appeals filed by the Revenue and stated that during the course of income-tax search on Shri Rajeev Saxena and Shri Sanjay Jain on 30-06-2019, many incriminating documents / information was found by the Revenue based on which necessary satisfaction u/s 153C of the Act was recorded on 29-09-2021 by the AO of the assessee on receipt of a satisfaction note dated 25-09-2021 from the AO of Shri Rajeev Saxena. Thereafter, notices u/s 153C r.w.s. 153A of the Act were issued to the assessee on that very date for the 10 AYs 2011­12 to 2020-21. She then referred to the information copied in all the assessment orders which are identical except wherein in different amount have been assessed as escaped income in the assessment orders passed u/s 153C r.w.s. 143(3) of the Act. The assessee was the Managing Director of IFFCO, one of the premier fertilizer manufacturing entities in the country for more than past 3 decades and accordingly it was alleged that he was in a dominant position to control the prices of the raw material supplied by foreign producers to Indian market. However, during her submissions, she fairly admitted that the entire case of the Revenue is only in respect of some supply of Muriate of Potash (MOP) supplied by one producer Uralkali, Russia and for no other supply of any raw fertiliser. The allegation of the Revenue is that being in the dominant position, the assessee took advantage by manipulating the supplies and prices of the same and obtained an undisclosed consideration by way of commission through the services of Shri Rajeev Saxena, a NRI Chartered Accountant, practising in Dubai and got those funds transferred through his assistance, to some companies under the control of Mr Amol Awasthi, son of the assessee, also a Dubai based NRI for the last two decades. Though she admitted that there is no direct evidence impugning the assessee in these transactions, nor anybody ever stated in their respective statements the involvement of the assessee nor any document found was in any of the income-tax searches where name of the assessee was appearing except in a quote made by Shri Rajeev Saxena in his statement recorded u/s 132(4) of the Act on 2-7-2019 in Q. No. 13 and its response as below:

Q.13 Please refer to your statement dated 23.06.2019 recorded u/s 131(1A) of the Income Tax Act, 1961 and the details of beneficiaries provided by you during the course of your statement today. It is seen from the above that Indian Potash Limited has paid to Uralkali on various dates and Uralkali has further paid a percentage of such funds to Midas Metals International LLC. These funds have further been transferred to beneficiaries like Amol Awasthi, Vivek Gahlaut and Pankaj Jain. Please explain why such transactions have been structured like that.

Ans. It can be seen from the structure of the transactions that the funds paid from Uralkali which have been further transferred to Amol Awasthi and Vivek Gahlaut are related to the payment for imports by Indian Potash Limited (IPL) from Uralkali. It is to be noted that Amol Awasthi is the son of U.S. Awasthy who is the Managing Director of IFFCO and Vivek Gahlaut is the son of P.S. Gahlaut who is the CEO of Indian Potash Ltd. As already stated in my statement dated 23.06.2019 that the payments from Uralkali could not be directly paid to Pankaj Jain as he was the authorized dealer for Uralkali. As can be seen from the above facts, significant part of the payments received by my group companies from Uralkali as commission for Pankaj Jain and Sanjay Jain were for the ultimate beneficial use of Amol Awasthy and Vivek Gahlaut as these funds were subsequently transferred to entities controlled by Amol Awasthy and Vivek Gahlaut, who were the sons of persons holding key decision-making positions in IFFCO and IPL.

7. The Learned CIT DR further stated that even another accomplice, Shri A D Singh, a partner of Shri Sanjay Jain, both being the partners of a firm which was the agent of Uralkali, Russia for the Indian market besides other countries, though denied any such involvement of Shri Awasthi (the assessee herein) initially, but later on after seeing the statement of Shri Rajeev Saxena recorded u/s 132(4) of the Act as above on 03-07-2019, accepted that said considerations were paid overseas for the benefit of the assessee through his son. Per Contra, the Learned AR immediately responded that Shri A D Singh had later denied the contents of his statement dated 3-7-2019 by retracting the same not only before the income-tax department by way of an affidavit dated 29-07-2019 but also in his cross-examination allowed by the Learned AO to the assessee on 10-01-2025 on the instructions of the Learned CIT(A) who followed the observations of the Coordinate Bench in the appellate order of Shri Amol Awasthi, the son of the assessee, given in para nos. 26 and 27 of the appellate order dated 13-09-2024 in ITA Nos. 1342-1348/Del/2024. This submission of the Learned AR was not disputed by the Learned DR and she fairly admitted that the statement of Shri A D Singh was indeed retracted.

8. The Learned DR took us to the various questions posted to Shri Rajeev Saxena by the Enforcement Directorate and the Investigation Wing of the Income Tax Department and the replies given by him thereon and the contents of the seized documents which was the basis of making the addition in the hands of the assessee herein for the various Assessment Years. She also build up a narrative that this is a very sensitive case wherein the Income Tax Department was trying to treat the assessee as a beneficiary of various commission income for various Assessment Years in respect of transactions carried out by India Potash Ltd with Uralkali, Russia through various intermediaries and the Income Tax Department was also able to obtain information from various countries by making 37 references through FT & TR Division of CBDT. The Learned CIT DR submitted that even though the name of the assessee herein is nowhere reflected in the excel sheet found from Shri Rajeev Saxena, but the name of the assessee‟s son Shri Amol Awasthi is mentioned in the said excel sheet. The Learned CIT DR submitted that Shri Amol Awasthi is a non-resident and since the Income Tax Department could not make any assessment of his overseas income in India, it could be presumed that the overseas collections were made by Shri Amol Awasthi at the behest of the assessee herein and since the assessee herein is a resident, the amounts collected overseas by his son would be liable to tax in India in the hands of the assessee. Accordingly, substantive addition has been made in the hands of the assessee and protective addition has been made in the hands of Shri Amol Awasthi by the Income Tax Department. The Learned CIT DR also placed on record the submission of the ld AO together with her written submissions on the validity of assumption of jurisdiction u/s 153C of the Act in the hands of the assessee.

9. Per contra, the Learned AR vehemently submitted that the very basis of assumption of jurisdiction u/s 153C of the Act by the Learned Assessing Officer of the assessee herein is totally flawed inasmuch as there was absolutely no incriminating material or information pertaining or relating or belonging to the assessee herein which was found during the income tax search conducted on Shri Rajeev Saxena, based on which the assessment proceedings under section 153C of the Act stood initiated on the assessee vide satisfaction note dated 29-09-2021. He vehemently submitted that materials on record received by the Assessing Officer of the assessee from the Assessing Officer of Shri Rajeev Saxena did not reflect the name of the assessee in any manner as a beneficiary of any amount. The ld AR placed reliance on the decision of Hon‟ble Jurisdictional Delhi High Court in the case of Saksham Commodities vs ITO reported in 101 taxmann.com 485 (Del HC). Against this decision, the Special Leave Petition (SLP) of the revenue was dismissed by the Hon’ble Supreme Court reported in 170 taxmann.com 87 (SC). He also submitted that in the absence of any incriminating material pertaining to the assessee found in any income tax search elsewhere, no action under section 153C of the Act is permissible in the hands of the assessee for which he placed reliance on the decision of the Hon’ble Supreme Court in the case of DCIT Vs. U K Paints (Overseas) Ltd reported in 150 taxmann.com 108 (SC).

10. The Learned AR submitted that admittedly no satisfaction under section 153C of the Act was recorded at all by the Assessing Officer of Shri Sanjay Jain in the case of the assessee, though the assessment orders begin with the search on Shri Sanjay Jain and not with the search on Shri Rajeev Saxena besides using the material found by the Enforcement Directorate in searches conducted later in the year 2021 on Shri Sanjay Jain, despite the fact that no such material could be used in the proceedings based on the income-tax searches conducted upto 30-06-2019 by the income-tax department. In the satisfaction note dated 29-09-2021 recorded by the Learned AO of the assessee, there is no reference to the income-tax search conducted on Shri Sanjay Jain and thus, the revenue could not use any such material in the assessment orders passed by initiating proceedings u/s 153C of the Act based on searches conducted on Shri Rajeev Saxena as both are separate assessees and were not searched on the joint search warrants. He further stated that the assessment proceedings u/s 153C of the Act were initiated mainly on the statement of Shri Rajeev Saxena recorded u/s 132(4) of the Act on 02-07­2019 by the DDIT Investigation, New Delhi at his Mumbai premises wherein in response to Q. No. 13 he stated as below:-

“Q.13 Please refer to your statement dated 23.06.2019 recorded u/s 131(1A) of the Income Tax Act, 1961 and the details of beneficiaries provided by you during the course of your statement today. It is seen from the above that Indian Potash Limited has paid to Uralkali on various dates and Uralkali has further paid a percentage of such funds to Midas Metals International LLC. These funds have further been transferred to beneficiaries like Amol Awasthi, Vivek Gahlaut and Pankaj Jain. Please explain why such transactions have been structured like that.

Ans. It can be seen from the structure of the transactions that the funds paid from Uralkali which have been further transferred to Amol Awasthi and Vivek Gahlaut are related to the payment for imports by Indian Potash Limited (IPL) from Uralkali. It is to be noted that Amol Awasthi is the son of U.S. Awasthy who is the Managing Director of IFFCO and Vivek Gahlaut is the son of P.S. Gahlaut who is the CEO of Indian Potash Ltd. As already stated in my statement dated 23.06.2019 that the payments from Uralkali could not be directly paid to Pankaj Jain as he was the authorized dealer for Uralkali. As can be seen from the above facts, significant part of the payments received by my group companies from Uralkali as commission for Pankaj Jain and Sanjay Jain were for the ultimate beneficial use of Amol Awasthy and Vivek Gahlaut as these funds were subsequently transferred to entities controlled by Anmol Awasthy and Vivek Gahlaut, who were the sons of persons holding key decision-making positions in IFFCO and IPL.

11. The Learned AR submitted that during the course of assessment proceedings, the Learned AO did not offer any opportunity of cross examination of Shri Rajeev Saxena to the assessee. This opportunity of cross examination was provided to the assessee at the behest of the Learned CIT(A) on 25.02.2025 wherein, the Learned AR himself cross examined Shri Rajeev Saxena on behalf of the assessee. He relied on the relevant questions posted to Shri Rajeev Saxena and answers given by Shri Rajeev Saxena therein which are as under:-

“Q. 21 I appreciate. It can be taken my suggestion is that you did not make any such statement that the money was given because Mr Awasthi is in a key position of IFFCO.

Ans. I am not in a position to come to any such conclusion.

Q. 22 My next question. In none of your statements, you ever said that Mr Amol Awasthi was ever engaged in any commission agency business, particularly when his accounts and audit assignments were being handled by you and when the amounts were remitted by you to companies under his control. It is because you did not have any such factual information with you. Yes or no.

Ans. I have no information on what business Mr Amol Awasthi was doing. My transactions with him were limited to giving him some advice on how to structure for inheritance purposes in all his companies and also make payments to his companies on the instructions of Mr Pankaj Jain.

Q.23 My next question. In Question 13 of your statement u/s 132(4) on 02/07/2019, there is mention that your one statement was recorded on 23/06/2019 u/s 131(1A) and also in answer 65 that another statement was also recorded by Income Tax Authority earlier on 05/05/2019. Thus, the revenue officers were recording your statements in the case of Awasthi before the said date. Yes or no.

Ans. This was the first investigation which were doing in February, in relationship with the Augusta Westland and all these statements were taken from me for Augusta Westland case.

12. The Learned AR drew our attention to the statement of Shri Rajeev Saxena recorded by the Enforcement Directorate on 14-06-2021 and relevant extract thereon are as under:-

“Q. 7 Have you ever met father of Amol Awasthi, Anupam Awasthi, Vivek Gahlaut?

Ans. I have not met father of Amol Awasthi & Anupam Awasthi. I met Sh. P. S. Gahlaut who is the father of Vivek Gahlaut in 2017 when Sanjay Jain, A. D. Singh & P. S. Gahlaut visited my residence in Dubai while I was keeping ill. After that I did not meet P. S. Gahlaut.

Q.9 Did you meet Amol Awasthi, Anupam Awasthi, Vivek Gahlaut, Pankaj Jain, Sanjay Jain and A. D. Singh in India?

Ans. I have never met them in India.

Q.14 Please provide transaction wise details of money received from Uralkali Trading Gibraltar in the books of Midas Metals International LLC and Pacific International FZC and transaction wise payments made out of those funds. Please also provide details of bank accounts used for these receipts and payments.

Ans. I state that I do not have this data readily available since all documents and electronic data were seized by ED, IT and CBI in search and seizure proceedings. However, I would try to locate the same and provide it to you by 18.06.2021.

Q 15. Please provide transaction wise details of money received from Rare Earth Group in the entities under your control and transaction wise payments made out of those funds. Please also provide details of bank accounts used for these receipts and payments.

Ans. I state that I do not have this data readily available since all documents and electronic data were seized by ED, IT and CBI in search and seizure proceedings. However, I would try to locate the same and provide it to you by 18.06.2021. “

13. The Learned AR further relied on yet another statement of Shri Rajeev Saxena recorded by Enforcement Directorate on 5-6-2021 which is enclosed in pages 258 to 260 of the Paper Book wherein, when Shri Rajeev Saxena was confronted with the documents numbering pages 1 to 131 taken out from digital device/ data given by him u/s 50 of PMLA in another case. Out of these 131 pages, only pages 121 to 131 of the said documents would be relevant for the income tax assessment framed in the case of the assessee herein. Shri Rajeev Saxena had explained the contents of the pages 121 to 131 and also confirmed the fact that the said documents were created by his staff in order to give details to Enforcement Directorate during FEMA Investigation. The relevant extract of the statement of Shri Rajeev Saxena given before the Enforcement Directorate on 05-06-2021 which is also enclosed in pages 258 to 263 of the Paper Book filed before us are reproduced below:-

“Q No. 6 You are being shown documents page numbered 1 to 131 which were taken out from digital device / data given by you u/s 50 of PMLA in another case being investigated by Enforcement Directorate. It is requested to go through them and explain in the same.

Ans. ………………..

Page 121 to 131 is a working paper created by my staff to give the details to Enforcement Directorate during the FEMA investigation as stated in my answer no. 1.”

13.1. The Learned AR placed special emphasis on the word ^„CREATED‟ mentioned by Shri Rajeev Saxena in the above statement and stated that the creation is always a fresh bringing into existence, something not existing earlier, for the first time. The Learned AR also drew our attention to the order of the Hon‟ble Jurisdictional Delhi High Court in connection with the Bail Application No. 3807/2022 dated 07-03-2024 in the case of Sanjay Jain Vs. Enforcement Directorate ( which is enclosed in pages 39 to 113 of the Paper Book filed before us) wherein in para 78 to 79, the Hon’ble Delhi High Court had taken due cognizance of the statement of Shri Rajeev Saxena given before the Enforcement Directorate on 05-06-2021 relating the contents of pages 121 to 131 of the documents by observing as under:-

“78. It is the case of the prosecution that the proceeds of crime after being in the hands of Rajeev Saxena have flowed to Rayon Trading, however, the ED has not placed on record a single bank statement to show the flow of money from Rajeev Saxena’s entities to Rayon Trading. The only document relied upon by the ED is the plain paper entry/excel sheet, the genesis of which has been explained by Rajeev Saxena in his statement dated 05.06.2021, wherein it has been clarified that the said document has been created by his staff to answer the questions by the ED. The relevant part of the statement dated 05.06.2021 reads as under:

“Page 121 to 131 is a working paper created by my staff to give the details to Enforcement Directorate during the FEMA investigation as stated in my answer no.1.”

79. The paper/Excel sheet which has been handed over by Rajeev Saxena to the respondent is not a document or regularly kept accounts in the course of business according to a set of rules or system in terms of Section 34 of the Evidence Act but it is simply a paper created by the staff of Rajeev Saxena for the investigating agencies. It is thus, not a contemporaneous document and the entries contained therein are prima facie not admissible.”

14. The Learned AR also placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Shri Amol Awasthi Vs. DCIT in ITA Nos. 1342 to 1348/Del/2024 consisting for Assessment Years 2011-12 to 2018-19 except AY 2017-18 dated 13-09-2024 wherein identical facts were involved and the appeals of the assessee were allowed both on merits as well as on invalid assumption of jurisdiction u/s 153C of the Act. The relevant operative portion of the said order is reproduced below:-

“33. At this stage, it would be apposite to look into the satisfaction note recorded by the Assessing Officer of Sh. Rajiv Saxena as well as the Assessing Officer of the assessee and Sh. Uday Shankar Awasthi. On a perusal of the said satisfaction notes, it is observed that the Assessing Officer of Sh. Rajiv Saxena has primarily relied upon the statement recorded from Sh. Rajiv Saxena and certain documents recovered from him or submitted by him. The concerned authority after analyzing the documents has recorded that such documents and information may have a bearing on the income of the assessee. After receiving the satisfaction note and the seized documents from the Assessing Officer of the searched person, the Assessing Officer of the assessee recorded a satisfaction note stating that the seized documents relate to the assessee and may have a bearing on his income. Accordingly, he issued notice u/s 153C of the Act. Interestingly, the Assessing Officer of Sh. Uday Shankar Awasthi recorded verbatim identical satisfaction note stating that the very same documents related to Sh. Uday Shankar Awasthi and may have a bearing on his income.

34. It is further relevant to note that the Assessing Officer who recorded satisfaction note for initiating proceedings u/s 1 53C of the Act in case of the assessee and Sh. Uday Shankar Awasthi is the same person. The aforesaid facts reveal that the Assessing Officer, while initiating proceedings u/s 153C of the Act was himself not sure, whether the seized documents belong/pertain to the assessee or Sh. Uday Shankar Awasthi and whether such documents would have a direct bearing on the income of either the assessee or Sh. Uday Shankar Awasthi. Since, the Assessing Officer was ambivalent as to whether the seized materials belong/pertain to the assessee or Sh. Uday Shankar Awasthi, he was not certain whether such information/document would have a direct bearing on the income of either the assessee or Sh. Uday Shankar Awasthi. That is why, the Assessing Officer has stated that such information/documents ^„MAY’ (emphasis by us) have a bearing on the income of the assessee or Sh. Uday Shankar Awasthi. In fact, such uncertainty in the mind of the Assessing Officer has percolated into the assessment proceedings and while framing assessment u/s 153C of the Act in case of the assessee, as, he was doubtful as to whether the assessee is the real beneficiary of the alleged commission income found from the information/documents seized from Sh. Rajeev Saxena. At this stage, we must observe, learned Departmental Representative has relied upon a judicial precedent to submit that identical satisfaction note can be made in case of two persons. However, on careful examination we have found that the said decision refers to satisfaction notes recorded by the Assessing Officers of searched person and non searched person and not by Assessing officers of two non searched persons.

35. In fact, to put it simply, the Assessing Officer has recorded a finding of fact that the assessee is not the real owner of the income and only a pass-through entity. Thus, when the Assessing Officer was himself not sure as to whether the information/seized document reveal any of undisclosed income of the assessee and when he himself has expressed the view that the assessee is merely a pass-through entity, he could not have assumed jurisdiction u/s 153C of the Act at all. Inasmuch as, proceedings u/s 153C of the Act could not have been initiated for merely making protective additions.

36. Thus, in our considered opinion, the satisfaction note recorded by the Assessing Officer, while assuming jurisdiction u/s 153C of the Act, is mechanical without making any inquiry or investigation and by merely relying upon the statement recorded from Sh. Rajeev Saxena and the information/document submitted by him and such information also fails to meet the test of a seizure. Each and every material found and seized from the searched person cannot be considered to be incriminating material to initiate proceedings u/s 153C of the Act in respect of a non-searched person unless the seized information/material would have a direct bearing on the income of the non-searched person. In the facts of the present case, the very action of the Assessing Officer in treating the assessee as a passthrough entity and making protective addition proves that the information/seized material received from the Assessing Officer of the searched person cannot be considered as incriminating material to implicate the assessee. Thus, in our view, not only the addition made u/s 69A of the Act on protective basis is unsustainable, but the proceeding initiated u/s 1 53C of the Act itself is without jurisdiction.

37. One more issue which has been raised before us by the assessee is regarding the completion of assessment u/s 153C read with section 143(3) of the Act. It is the say of the assessee that though the Assessing Officer can initiate proceedings in case of non- searched person u/s 1 53C of the Act, however, he has to pass the assessment order u/s 153A read with section 153C of the Act.

38. In the context of these submissions of assessee, on perusal of the satisfaction note recorded u/s 1 53C of the Act, the notice issued u/s 1 53C of the Act and the final assessment order, we have noted that the Assessing Officer has nowhere referred to section 153A of the Act. After carefully considering the submissions of learned counsel for the assessee, we find some merit in them. On a conjoint reading of section 153A, 153C and 153D of the Act, it becomes clear that in case of non-searched persons, the Assessing Officer has to initiate assessment proceedings u/s 1 53C of the Act. However, after initiating the proceedings, he has to assess or reassess the income of the non-searched person in accordance with the provisions of section 153A of the Act. While considering somewhat similar issue, the Hon‟ble Delhi High Court in case of Indian National Congress Vs. DCIT, [2024] 160 taxmann.com 606 (Del) has observed as under:

“16. It must at the outset be noted that the Satisfaction Note which has been drawn in unambiguous terms, and more particularly in paragraph 140 thereof, recites that the AO was satisfied that this was a fit case for initiating proceedings u/s 153C read with Section 153A of the Act for AY 2014-15 to AY 2020-21. There is thus an explicit reference not only to Section 153A but also to the block of ten assessment years which were proposed to be made subject matter of the impugned proceedings. The submission, therefore, that Section 153A was not invoked is untenable. ”

39. In case of M/s. Nilesh Bharani Vs. DCIT, ITA No. 612/Mum/2020, dated 28.03.2020, the Coordinate Bench analyzing the provisions contained u/s 153C and 1 53A of the Act has held as under:

“55. Thus, on a bare perusal of the plain language of the above explanation in respect of the amendment introduced in the section 153C of the Act w.e.f 01/06/2015, we find that it mandates that in case any information is found during the course of any search anywhere in respect of a person not searched, then for the purpose of reassessment of income on the basis of the same, it can only be considered by taking recourse to the provisions of the section 153C to make a reassessment of income u/s 153A of the Act and not u/s 148 of the Act to make an assessment u/s 147 of the Act.

……………

64. The law as culled out from these amendments and as we have understood, the revenue officer can initiate the proceedings u/s 147 or u/s 153C

– Firstly, in case, where some material is received from the AO of another person, the AO of the assessee verifies it from the information on his record of the assessee, determines its character whether incriminating or not and being an escaped income, then records a satisfaction by way of reasons—n different circumstances; u/s 148 of the Act, issues a notice u/s 148 of the Act to file a return of income and then makes a reassessment u/s 147

– Secondly, in the case of the person searched, after the search, the AO of the person searched transmits the relevant information as found by the revenue which even relates to another person not searched to the AO of the non-searched person who thereafter conducts his proceedings under same—f the Act. I .T . A . No . 6 1 2 / M u m / 2 0 2 0 Mr. Nilesh Bharaniprocedure, i.e., the AO of the said assessee verifies it from the information on his record, determines its character, whether incriminating or not and being an escaped income, then records satisfaction by way of a note u/s 153C of the Act, issues a notice u/s 153C to file a return of income for reassessment, then he makes an assessment / reassessment of such income u/s 153A of the Act.

85. Further, it is also not disputed that as per the order of the CIT (A) in this case, the Revenue came in possession of the said information in some searches carried out by the Investigation Unit on the brokers / operators of the listed scrip DB International (Stockbrokers) Ltd. Further, as noted by AO in his reasons recorded in para 2 of reasons that, this information surfaced from the search of M/s Evergreen Enterprises, so all the more it was an information pertaining to the assessee found during the course of search of a person covered u/s 153A. On perusal of the provisions of the section 153C of the Act, it is apparent that after the amendment w.e.f. 01/06/2015 therein, if the AO of the person not searched comes into possession of any information, which may not be the books of account but by way of any other document pertaining to or any information contained therein relating to the assessee not searched, then the only course available with the AO of the said non-searched person is to only proceed by recording a satisfaction u/s 153C of the Act to make a reassessment of income u/s 153A of the Act even for an extended assessment year after 31/03/2017.

86. During the course of hearing of this appeal, the above facts were not at all disputed by the CIT DR, because the CIT (A) has mentioned those very explicitly in his appellate order. It has also been observed that when an amendment in the section 153C of the Act was made by the law makers therein w.e.f. 01/06/2015, changing applicability of the provisions of the said section, no simultaneous corresponding amendment in any manner was made u/s 153A of the Act. It has also been noted that whenever amendments were made in the section 153C of the Act on other occasions, then simultaneous amendments were also made u/s 153A of the Act to make applicability of the both the provisions harmonious for the period to which these two non-obstante sections applied. For example, in the years 2003 and 201 7, substantial amendments were made in the search assessment provisions and applicability of dates of those amendments were specifically inserted therein for the searches conducted after 31/05/2003 and 31/03/2017 respectively.

87. However, while amending the provisions of the section 153C of the Act applicable w.e.f. 01/06/2015 there was no reference at all that the same is to be applied only in respect of the searches conducted after 31/05/2015 as has been specifically provided therein by the legislature on two other occasions as above. Thus, the provisions of the section 153C of the Act have to be seen by the AO as on the date when he receives the material from the AO of the person searched may be at any date and then apply accordingly. Therefore, it is also held that application of the provisions of the section 153C of the Act will be compulsory for all the assessment years extendable up to 10 years in the case of a non-searched person as is compulsorily for the assessee searched till 31/03/2021, even for the searches conducted prior to 01/06/2015 where the AO of the person not searched receives the alleged incriminating information after 31/5/2015.

88. However, in the case of a person not searched, the AO is permitted to issue the said notice u/s 153C r.w.s. 153A of the Act, only for the assessment year for which any definite incriminating information was found during the course of search for any of the preceding 6 assessment years. But for the extended 4 relevant assessment years therein, the said notice u/s 153C of the Act can be issued only when the incriminating material points escapement of income backed by an undisclosed asset of Rs 50 lakh and above and the said incriminating may not be the seized material in physical form belonging / pertaining to the assessee not searched.

89. Further, since the section 153C of the Act begins with a non-obstante wording overriding the application of the sections 147/148/149/151 of the Act, the AO is legally bound to take recourse to section 153C of the Act only in case of receipt of any information about any undisclosed income in any material found/ seized during the course of search in the premises of some other assessee. This is a jurisdictional fact which needs to be strictly adhered to and any lapse on jurisdictional issue cannot validate the action.

90. Even for the sake of argument, we do not go by the proposition that no such intimation can be passed on or given by the Investigation Unit of the income-tax department to the AO of the person not searched as the sole domain for remitting the said information to the said AO is only with the AO of the person searched as discussed above in terms of section 13(9A); but then also, if the information has otherwise been received by the AO of the person not searched from the Investigation Unit or any other AO which has come into the knowledge of the Revenue in a search conducted, then in that case, the only course available to the AO of the person not searched is to take recourse to the provisions of the section 153C of the Act for any assessment or reassessment of the said amount. Any proceedings initiated based on the said information u/s 148 of the Act cannot be held to be legal as it will be beyond the codified provisions of the law. Because, the legislature has mandated assumption of jurisdiction in such cases to assess or reassess any alleged undisclosed income found during the course of search anywhere u/s 153C of the Act, by carving out non-obstante clause for applicability of section 147 and other sections.

91. We have already observed in our earlier paragraphs that the entire procedure to make an assessment or reassessment of income of the alleged escaped income either u/s 148 or section 153C of the Act practically is the same except the jurisdiction and root cause which are different. The legislature has specifically carved out scope of assessment / reassessment of income of a person not searched of such alleged escaped income based on some incriminating information found during a search on some other person searched by taking recourse to the section 153C of the Act. The AO has not been empowered to extend the scope of an assessment/ reassessment u/s 153A read with the section 153C of the Act beyond the alleged incriminating material found during the course of search in the case of some other person, because assessment / reassessment in such case is specifically restricted to the income based on the said incriminating information only. Whereas, in the proceedings initiated u/s 148 of the Act, the AO may extend the scope of the assessment / reassessment on other amounts also if any information about those is on his record over and above the alleged escaped income as per the reasons recorded. The purpose of restriction of assessment for amount of income by taking recourse to the provisions u/s 153C of the Act to alleged incriminating material and not on suspicion has been upheld by the Hon”ble Supreme Court in the case of Sinhgad Technical Education Society (supra).

92. Accordingly, we hold that any incriminating information of any undisclosed income of the person not searched which was found during the course of a search having taken place up to 31/03/2021 on some other assessee, can only be taken into consideration for an assessment / reassessment in the hands of the said person not searched through the domain of the section 153C of the Act. Thus, any assessment / reassessment proceedings-initiated u/s 148 of the Act in respect of the said incriminating information found during the course of a search up to 31/03/2021 on some other assessee is illegal and is ab initio as the same can be considered only by taking recourse to the provisions of the section 153C r.w.s. 153A of the Act. Thus, the assessment of the said amount of LTCG, which was claimed to be exempt u/s 10(38) of the Act by the assessee, made u/s 147 of the Act is beyond the scope of section 147, albeit it can be roped in only u/s 153C.

93. If on overall appreciation of the scheme of assessment / reassessment of income after the income-tax searches on the assessee searched and also for the persons not searched based on detection of some incriminating information during the said searches conducted upto 31/03/2021, the following legal course of action is open for the AOs, which can be summed up, in the following manner:

“(i) It is mandatory for the AO of the person searched to make an assessment / reassessment of income of the said assessee u/s 153A of the Act for the 6 assessment years prior to the date of search and also for the extended 4 relevant assessment years, subject to fulfillment of the prescribed conditions for the same, on the basis of an income-tax search conducted on him.

(ii) However, in the assessment / reassessment orders passed within the scope of section 153A of the Act, the AO cannot consider any undisclosed income detected by way of an incriminating information pertaining / relating to the said assessee, during an income-tax search conducted in the premises of some other assessee(s), even conducted at the same time or in some connected matter. In such a case where AO gets any information or material about any assessee from the search of some other person, he can, make assessment of the undisclosed income/ amount emanating from such information or material for the assessment / re assessment vide separate assessment / reassessment orders to be passed u/s 153A by taking recourse to the provisions of the section 153C of the Act. Because the cause of action for the said incriminating information for different amounts had originated in different search(es) in the different premises of other assessees and for the same, the mandatory route legislated u/s 153C of the Act must be followed.

(iii) Further, an assessee can also be assessed multiple times u/s 153C r.w.s 153A of the Act, despite having already been assessed u/s 153A of Act on the basis of an income-tax search in his premises, where the incriminating information has been received u/s 153C of the Act by the AOs of the searched person as well as of the person not searched, which information originates in different searches at different times on different persons as well. ”

40. Viewed in the context of observations made by the Hon‟ble Jurisdictional High Court and the Coordinate Bench in the decisions referred to above, the Assessing Officer assuming jurisdiction u/s 153C of the Act in case of a non-searched person, though has power to initiate proceedings u/s 1 53C of the Act upon receipt of incriminating material from the Assessing Officer of the searched person, however, he has to complete the assessment u/s 1 53C read with section 153A of the Act. An assessment order passed in any other manner, in our view, may not muster judicial scrutiny.

41. Thus, on overall consideration of facts and materials on record and keeping in view the principles laid down in the judicial precedents cited before us by both the parties we hold that not only the additions are unsustainable, but, the assumption of jurisdiction u/s 1 53C of the Act, itself, is invalid. We order accordingly.”

15. The ld AR on merits of the addition further submitted that the excel sheet which has been the basis of addition by the ld AO in the hands of the assessee for various Assessment Years, admittedly does not contain the name of the assessee. The excel sheet in several places mentioned “to be identified”. While this is so, it is not known how the revenue is able to attribute the transaction reported by the staff of Shri Rajeev Saxena as “to be identified” to be attributable to assessee herein. Further, it is a fact that name of the assessee‟s son Shri Amol Awasthi has been mentioned in the excel sheet. But the excel sheet reflects payment made by Shri Amol Awasthi to Shri Rajeev Saxena, whereas the Income Tax Department is alleging that monies have been received by Shri Amol Awasthi from Shri Rajeev Saxena on behalf of the assessee in order to make addition in the hands of the assessee. He submitted that the entire excel sheet is a dumb document which was given in person by Shri Rajeev Saxena which had no corroborative evidence in support of the allegations that the same represents commission received by Shri Amol Awasthi at the behest of assessee herein from Shri Rajeev Saxena in connection with import of goods by India Potash from Uralkali, Russia. Further, he submitted that excel sheet contains transactions prepared for 7 years in one go which is prepared by staff of Shri Rajeev Saxena. It cannot be construed as formal books of account as it is unusual phenomenon to maintain accounts for 7 years in a single excel sheet which itself makes the said excel sheet lacking evidentiary value and further the very fact that the excel sheet is compiled for 7 years go to prove that the same have been prepared and handed over to Enforcement Directorate as per the request of Enforcement Directorate by Shri Rajeev Saxena through his staff. The same, in any manner whatsoever, cannot be construed as an incriminating material found during the course of income tax search of Shri Rajeev Saxena or Sanjay Jain and consequentially initiating the proceedings u/s 153C of the Act in the hands of the assessee on the assumption that this excel sheets pertains, belong or relate to the assessee herein become invalid and void ab initio.

16. On perusal of the aforesaid contentions of both the sides and the relevant documents placed on record together with the relevant judicial precedents relied upon by the parties, we find that there is absolutely no document or any evidence which show or reflect the name of the assessee as a beneficiary or in any other manner. Even the enquiries that were sought to be conducted by FT & TR Division of CBDT by making as many as 37 references to various countries to ascertain the involvement of assessee qua the import transactions from Uralkali, Russia did not reveal any information adverse to the assessee. The assessee was only Managing Director of IFFCO and not Indian Potash Ltd. The ld DR had candidly admitted that the transactions of payment of commission allegedly to assessee are with regard to the import transactions of Indian Potash Ltd from Uralkali, Russia. Thus, the transaction pertaining to Indian Potash Ltd obviously could not be under the control of the assessee herein who has nothing to do with Indian Potash Ltd. The information in the form of excel sheet was created by the staff of Shri Rajeev Saxena and provided to Enforcement Directorate. Hence, by any stretch of imagination, it cannot be construed as a seized material. Further it is not in dispute that the name of the assessee was not even reflected in the said excel sheet which is the prime basis for making the addition on account of alleged commission in the hands of the assessee. Hence, the said excel sheet cannot be construed as incriminating in nature qua the assessee as it does not belong, pertain or relate to the assessee. Accordingly, it cannot have any bearing on the determination of total income of the assessee. Hence, the very basis of assumption of jurisdiction u/s 153C of the Act qua the assessee is totally flawed. It is very strange to note that the income tax department while recording the statement u/s 132(4) of the Act from Shri Rajeev Saxena on 02-07-2019 during the course of his income tax search, had, vide Question No. 4 had put a direct question seeking details about Uralkali, Russia trading transactions. It is pertinent to note that the first three questions are very general in nature. This very question vide Q. No. 4 thereon itself goes to prove that there was absolutely no seizure of any information or any material or any document made by the Income Tax Department during the course of Income Tax Search and that the income tax department was only trying to seek clarifications from Shri Rajeev Saxena on the information already available with it in the statement recorded u/s 132(4) of the Act. Accordingly, the fact of existence of no incriminating material found during the course of income tax search of Shri Rajeev Saxena stand established beyond reasonable doubt and consequentially initiation of proceedings u/s 153C of the Act on the assessee could not have been validly made. Further, Shri Rajeev Saxena during the course of cross examination on 25-02-2025 had categorically replied that he does not know the assessee at all. Further, he had also said that he was not aware and he does not have any information as to what business Shri Amol Awasthi was doing. There is absolutely no direct evidence or any document which shows the name of the assessee as a beneficiary in any other manner. Further, we find that the identical satisfaction note u/s 153C of the Act were recorded by the ld AO for initiation of proceedings u/s 153C of the Act for assessee as well as for his son Shri Amol Awasthi. This itself goes to prove that the ld AO himself was not sure as to whether the transactions pertain or relate or belong to assessee herein or of Shri Amol Awasthi. This is further fortified by the fact that the additions has been made on substantive basis in the hands of the assessee herein on account of commission income and on protective basis in the hands of Shri Amol Awasthi. This action has been held to be a nullity on very assumption of jurisdiction itself by this Tribunal in the case of Shri Amol Awasthi vide order dated 13-09-2024 referred supra. The relevant paragraphs have already been reproduced while recording the arguments of the ld AR supra. The contents of the excel sheet, at the cost of repetition, does not contain the name of the assessee and also contains various narrations in the form – “to be identified”, “Trf Sanjiv Nanda” , “details awaited” etc. These expressions clearly depict that the said excel sheet cannot be relied upon at all and it lacks complete evidentiary value and had to be construed to be merely a dumb document. Further, we find that one common satisfaction note was recorded on 29-09­2021 for AYs 2011-12 to 2020-21 by the ld AO which itself would make the entire search assessment proceedings qua the assessee fatal to the revenue as held by the Hon‟ble Karnataka High Court in the case of DCIT Vs. Sunil Kumar Sharma reported in 159 taxmann.com 179 (Kar HC). The relevant operative portion of the said order is as under:-

“53. Further, satisfaction note is required to be recorded under Section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue.”

16.1 It is pertinent to note that the Special Leave Petition filed by the revenue against this decision was dismissed by the Hon’ble Supreme Court reported in 165 taxmann.com 846. Similar view is taken by Hon‟ble Jurisdictional High Court in the case of Saksham Commodities Ltd Vs. ITO supra reported in 464 ITR 1 (Del).

17. In view of the aforesaid detailed observations and respectfully following the various judicial precedents, we find that the ld CIT(A) was duly justified in holding that the materials referred to by the ld AO lacks any evidentiary value and the assumption of jurisdiction u/s 153C of the Act is flawed as there was no existence of any incriminating material or information qua the assessee. Accordingly, grounds raised by the revenue are dismissed.

18. In the result, the appeals of the revenue are dismissed.

Order pronounced in the open court on 06/02/2026.