PARIJATHA MIRYALA,HYDERABAD vs. ACIT, CENTRAL CIRCLE -2(2), HYDERABAD

Succinctly stated, the assessee had filed his return of income for AY 2021- 22 under section 139(4) of the Act on 01/03/2022, declaring an income of Rs. 2,15,08,600/-.

Search and survey operations were conducted on “Spectra Group of cases” on 23/03/2021, which, as observed by the AO, were concluded on 21/05/2021.

During the search and seizure operations conducted on the residential premises of Sri Arun Kumar Gampa, Director of M/s. Spectra Group, certain incriminating material pertaining to the assessee was found and seized.

The AO, during the course of the assessment proceedings, observed that as per the seized document, viz., Pages 14-27 of Annexure-A/GAR/RES/05, which is an agreement of sale, dated 03/03/2020 between Shri Miryala Mallikarjun (the assessee), Smt. Miryala Parijatha (the assessee’s wife) and M/s. Spectra India Eco Projects Pvt. Ltd., the assessee, and his spouse have sold a residential flat admeasuring 183.25 sq. yds., situated at Uppal Bhagath Village, Medchal District, at a price of Rs. 1,06,000/- per sq. yd. to M/s. Spectra Group, as per which the entire sale consideration worked out to Rs. 1,19,24,500/-. It was observed by the AO that as per the registered sale deed, the subject property, which was an open plot, was registered in the name of M/s. Spectra Group by the assessee and his wife, viz., Smt. Miryala Parijatha, vide Document No.7880/2020, with SRO: Uppal for a consideration of Rs.75,00,000/- only. Also, it was observed that the assessee considered an amount of Rs. 37,50,000/- (50% of Rs. 75,00,000/-) for short-term capital gain (STCG) on sale of the property during the subject year.

The AO based on the contents of the aforesaid seized document, viz., Page 14-27 of Annexure-A/GAR/RES/05, which revealed that the subject property was sold by the assessee and his wife for a total consideration of Rs.1,19,24,500/- called upon the assessee vide a show cause notice (SCN), dated 03/03/2023 to put forth an explanation regarding the short STCG of Rs.59,62,250/- (50% of Rs.1,19,24,500/-) and explain as to why the same may not be added to his returned income. In reply, the assessee submitted that he had offered the sale proceeds of the subject property, received by him through the banking channel, for capital gain. However, as observed by the AO, the assessee had failed to come forth with any proper explanation regarding the cash component of the sale consideration while computing the short-term capital gains on the transfer of the subject property; therefore, he added the same amounting to Rs.59,62,250/- as the assessee’s undisclosed income arising out of transfer of the capital asset. Thereafter, the AO, vide his order dated 26/03/2023, passed under section 143(3) of the Act, determined the assessee's income at Rs. 2,74,70,850/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A) but without success.

The assessee, aggrieved with the order of the CIT(A), has carried the matter in appeal before us.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions.

Shri Kumar Pal Tated, CA, Learned Authorized Representative (for short, “Ld. AR”) for the assessee, at the threshold of hearing of the appeal submitted that the same involves a delay of 36 days. Elaborating the reason leading to the delay, the Ld. AR submitted that the same had crept in because the CIT(A)-12, Hyderabad, who had disposed of the appeal vide his order, dated 13/10/2025, had uploaded on the e-filing portal a system generated “Intimation Letter for Order u/s 250 of the Income Tax Act, 1961” bearing DIN: ITBA/APL/S/91/2025- 26/1081697033(1), wherein it was stated that the aforesaid order, dated 13/10/2025 bearing DIN: ITBA/APL/M/250/2025-26/1081693746(1) had been passed, but neither the contents, findings, or outcome of the said order were disclosed nor the actual order was annexed thereto or otherwise made available alongwith the same. It is stated by the assessee that he had no occasion to gather about the contents of the adverse outcome in the aforementioned appeal order and in a bona fide manner awaited the service of the actual order. It is further stated that it was only when a physical/signed copy of the order, dated 13/10/2025, was received by an employee of the assessee, and the same was brought to the latter’s notice on 30/01/2026, that the assessee had learned about the dismissal of his appeal. The assessee had further stated that on learning about the aforesaid fate of his appeal, he had, without involving any further loss of time, engaged a Chartered Accountant, who had thereafter deposited the appeal fees on 04/02/2026 and filed the appeal with the Tribunal on 05/02/2026, which by the time involved a delay of 36 days.

The Ld. AR had drawn our attention to the application filed by the assessee seeking condonation of delay a/w his affidavit, dated 27/07/2026, wherein the aforesaid facts were deposed by him, and submitted that as the delay in filing the present appeal had crept in for bona fide reasons and not for any lackadaisical approach on his part, the same, in all fairness and in the interest of justice, be condoned.

Per contra, Shri K Prasad, Learned Senior Departmental Representative (for short, “Sr. DR”) vehemently objected to the seeking of condonation of the delay involved in the present appeal.

We have given thoughtful consideration and are of the view that considering the totality of the facts as had been deposed by the assessee appellant in his affidavit, there appears to be a justifiable reason leading to the delay in filing the present appeal, which in our view cannot be attributed to any lackadaisical conduct of the assessee appellant. We thus, in terms of our aforesaid observations, condone the delay of 36 days involved in the present appeal. Our aforesaid view is fortified by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. ITO (2025) 305 Taxman 83 (SC). The Hon'ble Apex Court, while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, had observed that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal.

Coming to the facts involved in the present case, the Ld. AR at the threshold of hearing of the appeal, assailed the validity of the assessment framed by the AO vide his order passed under section 143(3) of the Act, dated 26/03/2023. The Ld. AR submitted that the AO in the present case had assumed jurisdiction for framing the impugned assessment based on certain incriminating material that was found and seized in the course of the search proceedings conducted on M/s. Spectra Group on 23/03/2021. Elaborating on his contention, the Ld. AR submitted that the incriminating material was handed over by the AO of the searched party to the AO of the assessee on 05/01/2022. The Ld. AR, to buttress his contention, had placed on record a copy of the satisfaction note recorded under section 153C of the Act, dated 05/01/2022.

The Ld. AR submitted that as the incriminating material in the case of the assessee was handed over to the AO of the assessee, who thereafter recorded his satisfaction on 05/01/2022; thus, it can safely be concluded that such handing over of the seized documents had taken place in the period relevant to AY 2022-23.

The Ld. AR submitted that the Hon’ble Apex Court had categorically observed that as per the “proviso” to section 153C(1) of the Act, the date from which the six years period was to be reckoned, in respect of which the returns were to be filed by the third party, i.e., “other person” shall be construed as a reference to the date of receiving of books of accounts or documents or assets seized or requisitioned by the AO having jurisdiction over such other person.

The Ld. AR referring to the facts involved in the present case, submitted that as the incriminating documents pertaining to the assessee which had formed the very basis for framing of the impugned assessment had been received by the AO of the assessee, i.e., “other person” on 05/01/2022, hence the date of the initiation of the search under section 132 in the case of the assessee was to be construed by referring to the date of receiving of the aforesaid incriminating material which fell in the period relevant to the assessment year 2022-23. The Ld. AR submitted that based on the aforesaid settled position of law as had been looked into by the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra), the year in which the search was conducted on M/s. Spectra Group, i.e., AY 2021-22 could not have been taken as the year of search in the case of the assessee, which, going by the fact that the incriminating documents were delivered to the AO in the period relevant to AY 2022-23, the latter year was to be treated as the year of search as per the “proviso” to section 153(1) of the Act. Elaborating further on his contention, the Ld. AR submitted that now when AY 2022-23 was to be construed as the year of search in the case of the assessee, therefore, the assessment in his case for AY 2021-22 would fall within the block of the six years preceding AY 2022-23. The Ld. AR, based on his contention, submitted that the assessment in the case of the assessee for AY 2021-22 being one of the years falling in the block of six years preceding the year of search could have only been framed under section 153C r.w.s. 153A of the Act and not under section 143(3) of the Act. The Ld. AR in support of his contention had relied upon certain orders of the coordinate Benches of the Tribunal (copies placed on record).

The Ld. AR further pressed into service the order of the ITAT, Mumbai “D” Bench in the case of DG Land Developers Pvt. Ltd. Vs. Asst. CIT, Central Circle-4(4), Mumbai, ITA No.411/Mum/2024 and Ors., dated 22/08/2024, wherein, the Tribunal after relying upon the judgment of the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra) had held that as in the case of the assessee, the AY 2017-18 falls within the “six-years” which should be assessed under section 153C r.w.s. 153A of the Act, but the AO has wrongly assessed under section 143(3) of the Act, which being an invalid action, thus, cannot be sustained in law and is accordingly quashed.

The Ld. AR, based on his aforesaid contention, submitted that as the AO in the present case had wrongly assumed jurisdiction and framed the assessment for the subject year, i.e., AY 2021-22 under section 143(3) of the Act, which could have only been framed under section 153C r.w.s. 153A of the Act; the same, thus, cannot be sustained and is liable to be quashed for want of valid assumption of jurisdiction.

Per contra, Shri K Prasad, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) relied upon the orders of the authorities below.

We have heard the Learned Authorized Representatives of both parties, perused the orders of the authorities below and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 10

Admittedly, it is a matter of fact borne from record that the search in the case of the present assessee was initiated on 23/03/2021, i.e., prior to 01/04/2021, and accordingly, the provisions of section 153C of the Act were applicable in its case.

We have given thoughtful consideration and find substance in the Ld. AR’s contention that as per the “first proviso” to section 153C of the Act as had been looked into by the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (2023) 458 ITR 437 (SC), the reference to the date of initiation of 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(whose premises are not searched and in respect of whom proceedings under section 153C of the Act are initiated). Accordingly, going by the aforesaid observation of the Hon’ble Supreme Court r.w. “first proviso” to section 153C(1) of the Act, we are of the view that as in the case of the present assessee before us, the satisfaction note has been recorded by the AO of the assessee on 05/01/2022, therefore, it can safely be concluded that in absence of any material proving to the contrary that the incriminating material, viz., Pages 14-27 of Annexure-A/GAR/RES/05, i.e., the impugned agreement of sale executed between the assessee and his wife on one hand with M/s. Spectra Group, on the other hand, was delivered to the assessee's AO during the period relevant to AY 2022-23.

We thus, based on our aforesaid observations read in light of the settled position of law as can safely be gathered from the judgment of the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra), are of the view that the year of handing over of the incriminating material to the assessee’s AO, i.e., the period relevant to AY 2022-23, shall be taken as the year of search in the case of the assessee. Accordingly, the subject year before us, i.e., AY 2021-22, would fall within the block of six years preceding the year of search, which would be spread over AY 2016-17 to AY 2021-22. Accordingly, as the AY 2021-22 falls within the block of six years preceding the year of search, therefore, as stated by the Ld. AR and rightly so, the assessment in the case of the assessee for the said year could have only been framed under section 153C r.w.s 153A of the Act and not under section 143(3) of the Act as has been done by the AO.

We find that our aforesaid view is supported by the judgment of the Hon’ble High Court of Delhi in the case of Pr. Commissioner of Income Tax v. Ojjus Medicare Pvt. Ltd. reported at [2024] 465 ITR 101 (Delhi). In the said case, the Hon’ble High Court following its earlier view in the case of SSP Aviation Ltd. v. Dy. CIT [2012] 346 ITR 177 (Delhi) and CIT v. RRJ Securities Ltd. [2015] 380 ITR 612 (Delhi) and judgment of the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (2023) 458 ITR 437 (SC) has held that, in case of non-searched person the date of the receipt of the books of account, documents or asset seized by the Jurisdictional Assessing Officer, and not the actual date of search in the case of the searched person, is the relevant date for determining the block of assessment years under section 153C of the Act.

We also find that the Hon’ble High Court of Karnataka in the case of Pr. CIT vs. M/s. VSL Mining Company Pvt. Ltd, ITA No.32 of 2020, dated 20/09/24 has held that, where the material pursuant to a search is sought to be relied upon in the assessment of a person other than the person searched, the AO is required to follow the procedure contemplated under section 153A, 153B and 153C of the Act. It was further held that it was impermissible for the AO to continue with the regular assessment under section 143(3) by bypassing the procedure under section 153C of the Act.

We thus, in terms of our aforesaid observations are of a firm conviction that as the case of the assessee for the subject year, i.e., AY 2021-22 as per our aforesaid observations read in light of the settled position of law cannot be construed as the year of search but as the immediately preceding year falling in the block of six assessment years, therefore, the assessment in its case ought to have been framed under section 153A of the Act and not under section 143(3) of the Act, dated 26/03/2023 as had been done by the AO. Accordingly, as the assessment framed in the hands of the assessee is based on an invalid assumption of jurisdiction, it cannot be sustained and is liable to be quashed on the said count itself.

We thus, in terms of our aforesaid observations, quash the assessment framed by the AO vide his order passed under section 143(3) of the Act, dated 26/03/2023 for want of valid assumption of jurisdiction.

As we have quashed the assessment for want of valid assumption of jurisdiction, we refrain from adverting to other grounds of appeal based on which the impugned assessment has been assailed before us, which, thus, are left open.

Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations. ITA No. 357/Hyd/2026 AY: 2021-22 31. We shall now take up the appeal filed by the assessee in ITA No.357/Hyd/2026, viz., Parijatha Miryala vs. ACIT, Central Circle-2(2), Hyderabad.

Apropos the issue in so far the same pertains to the assumption of jurisdiction by the AO for framing the impugned assessment vide his order passed under section 143(3) of the Act, dated 26/03/2023, as well as the reason leading to the delay of 36 days in filing the present appeal before us, remain the same as were there before us in ITA No.359/Hyd/2026, in Miryala Mallikarjun vs. ACIT, Central Circle-2(2), Hyderabad, we, thus, on the same terms condone the delay in filing of the present appeal, as well as quash the assessment framed by the AO vide his order passed under section 143(3) of the Act, dated 26/03/2023 for want of valid assumption of jurisdiction.

Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.

In the result, both the aforementioned appeals filed by the assessees are allowed in terms of our aforesaid observations.