KARAN VIJHANI,DELHI vs. DCIT, CENTRAL CIRCLE - 1, FARIDABAD, FARIDABAD

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA Nos. 8518 to 8521/Del/2025; Assessment Year: 2019-20 to 2022-23 SCL Healthcare Private Limited, Vs Deputy Commissioner of 6/4, Ground Floor, Jungpura B, Income Tax, Jungpura, South Delhi-110014 Central Circle-01, Delhi CGO Complex, B Block, 3rd Floor, Faridabad, Haryana- 121001 (APPELLANT) (RESPONDENT) PAN No. AAZCS4927Q

ITA No. 8634/Del/2025; Assessment Year: 2023-24 Prabal Roy, Vs Deputy Commissioner of House No. 334, Sector-16A, Income Tax, Faridabad- 121002, Central Circle-01, Haryana CGO Complex, B Block, 3rd Floor, Faridabad, Haryana- 121001 (APPELLANT) (RESPONDENT) PAN No. ACXPR6872Q

ITA Nos. 8809 to 8811/Del/2025; Assessment Years: 2022-23, 2020-21 & 2019-20 Karan Vijhani, Vs Deputy Commissioner of A-2/6, Model Town, Delhi- 09 Income Tax, Central Circle-01, CGO Complex, B Block, 3rd Floor, Faridabad, Haryana- 121001 (APPELLANT) (RESPONDENT) PAN No. AESPV0541H

Appellant/Assessee by: Sh. Ashwani Kumar, CA, Sh. Ankur Agarwal, CA Sh. Akshat Goel, CA

Respondent/Revenue by : Sh. Zafarul Haque Tanweer, CIT(DR)

Date of Hearing: 12.08.2026 Date of Pronouncement: 14.09.2026

ORDER PER BENCH:

The instant batch of eight appeals involves the three assessees; a company; namely, M/s SCL Healthcare Private Limited , its director Sh. Karan Vijhani & Shri Prabal Roy, directed against the Commissioner of Income Tax (Appeals)-3 [in short, the “CIT(A)”], Gurgaon’s as many orders dated 28.10.2025, involving proceedings u/s 147 r.w.s. 143(3) & 143(3) of the Income Tax Act, 1961; hereinafter referred to as, “the Act”; respectively.

All other relevant details thereof, tax-payer wise read as under: Sl. ITA No. (A.Y) Appellant Respondent Order appealed against No. Name Name (Order No.) 01 8518/Del/2025 Commissioner of Income Tax (A.Y. 2019-20) (Appeals)-03, Gurgaon’s order appealed against passed in 11032/CIT(A)- 3/GGN/2018-19 02 8519/Del/2025 Commissioner of Income Tax (A.Y. 2020-21) (Appeals)-03, Gurgaon’s Deputy SCL Commissioner order appealed against Healthcare of Income passed in 11079/CIT(A)- Tax, 3/GGN/2019-20

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03 8520/Del/2025 Private Central Circle- Commissioner of Income Tax 01, Limited, (A.Y. 2021-22) (Appeals)-03, Gurgaon’s order appealed against passed in 10362/CIT(A)- 3/GGN/2020-21 04 8521/Del/2025 Commissioner of Income Tax (A.Y. 2022-23) (Appeals)-03, Gurgaon’s order appealed against passed in 101142/CIT(A)- 3/GGN/2021-22 05 8634/Del/2025 Prabal Roy Deputy Commissioner of Income Tax Commissioner (A.Y. 2023-24) (Appeals)-03, Gurgaon’s of Income order appealed against Tax, passed in 10102/CIT(A)- Central Circle- 3/GGN/2022-23 01, 06 8809/Del/2025 Deputy Commissioner of Income Tax Commissioner (A.Y. 2022-23) (Appeals)-03, Gurgaon’s of Income order appealed against Karan Vijhani Tax, passed in 10093/CIT(A)- Central Circle- 3/GGN/2021-22 01, 07 8810/Del/2025 Commissioner of Income Tax (A.Y. 2020-21) (Appeals)-03, Gurgaon’s order appealed against passed in 11089/CIT(A)- 3/GGN/2019-20 08 8811/Del/2025 Commissioner of Income Tax (A.Y. 2019-20) (Appeals)-03, Gurgaon’s order appealed against passed in 11095/CIT(A)- 3/GGN/2018-19

Heard all these three assessees/appellants as well as the department at length. Case files perused.

the parties that the learned departmental authorities carried out section 132 search action at the company’s premises “Accord Hospital” and other business residential premises on 27.07.2022. They found/seized the alleged incriminating material in the nature of diaries and documents marked as “A” indicating varying sums, as expenditure and income in respect of construction at the project site of the hospital and certain other transactions. Learned Assessing Officer thereafter completed his impugned assessments inter alia making various additions/stand upheld in the CIT(A) lower appellate discussion. It would indeed be appropriate for us to tabulate the various additions made in the assessee’s hands as under: Sl. Assessee/ Assessmen ITA No. Addition (s) No. Appellant t Year 01 M/s SCL 2019-20 8518/Del/ section 69B Healthcare 2025 unexplained investment Private addition of Rs. Limited 2,91,35,000/- section 68 unexplained cash credits addition of Rs. 1,23,02,000/-, representing income from sale of mitti therein and other items learmed CIT(A) has converted the Assessing Officer’s section 68 r.w.s. 115BBE addition to that under the head business income in the lower appellate discussion. 2020-21 8519/Del/ “Business” income 2025 addition of Rs. 1,84,70,900/- derived from sale of mitti and other items 2021-22 8520/Del section 68 ‘Business’ /2025 Income addition of Rs. 2,72,39,900/- representing receipts

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from sale of mitti and other items. 2022-23 8521/Del Amount of Rs. /2025 5,79,12,000/- representing doctor’s OPD receipts treated as the company’s business income. 2 Prabal Roy 2023-24 8634/Del/ Section 69 r.w.s/ 2025 115BBE unexplained investment in gold jewellery of Rs. 37,78,854/- cash seized Rs. 6,32,890/- 3 Karna 2022-23 8809/Del/ Section 69A r.w.s. Vijhani 2025 115BBE addition of Rs. 2,26,588/- 2019-20 8811/Del/ section 69B 2025 “protective” addition of Rs. 4 Lakhs of contribution to the company Section 69A r.w.s 115BBE loans addition of Rs. 8,34,38,989/- 2020-21 8810/Del/ Section 68 r.w.s. 2025 115BBE addition of unexplained cash credits amounting to Rs. 1,06,50,000/-

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assessment even after a search takes place as proceedings in both these cases were pending as on the date of search i.e., 27.07.2022.

approval under section 148B of the Act in light of Homelife Buildcon (P.) Ltd. Vs. DCIT, (2025) 176 taxmann.com 614 (Chandigarh – Trib.) as relied in Jamna Das Nikkamal Jain Saraf Pvt. Ltd. Vs DCIT (ITA No. 403/Chd./2025) decided on 04.11.2025, adjudicating the very issue against the department as under: “11.4 In conclusion, it was submitted that since the year under appeal formed part of the three assessment years immediately preceding the year in which search was conducted, the assessment ought to have been framed under section 148 with approval u/s 148B. The framing of the assessment u/s 143(3) and approval taken only for the purposes of section 143(3) was thus asserted to be fundamentally defective, non-compliant with statutory mandate, and consequently void ab initio. On these grounds, following the ratio in Homelife Buildcon Pvt. Ltd., it was prayed that the impugned assessment be quashed.

12.1 He contended that section 148B applies only to “reassessment” and not to “regular assessments.” The AO’s approval from Addl. CIT, being in line with the CBDT Instruction No. 7/2022 dated 15.07.2022, fulfils the supervisory requirement. The DR also submitted that 7 | P a g e

Homelife Buildcon is distinguishable, as the AO therein relied on third- party search data, whereas the present case is based on assessee’s own seized material.

13.1 Therefore, the only permissible statutory course was to issue notice u/s 148 and obtain prior approval u/s 148B before passing assessment order.

13.2 As the Assessing Officer completed the assessment under section 143(3) of the Act without issuing the notice under section 148 of the Act. Therefore, the question before us is whether the assessment proceedings initiated under section 143(3) of the Act can be validly continued and completed after a search under section 132 has been conducted in the case of the same assessee, without following the procedure prescribed under section 148 (Explanation 2) of the Act.

13.3 In our considered opinion, the answer lies in the scheme of the Act itself. Section 143 provides the general framework 8 | P a g e

for regular assessment, whereas sections 147–148 (post- 2021 regime) deal with reassessment based on information suggesting escapement of income, including that unearthed during a search.

13.4 A plain reading of section 143(2) shows that such notice can be issued only when a return of income is furnished under section 139 or in response to a notice under section 142(1). It empowers the Assessing Officer to scrutinize that return if he considers that income has been understated or tax underpaid. However, when a search under section 132 takes place and materials are found indicating possible escapement of income, the statute envisages a different route for carrying out assessment or reassessment under section 147 read with section 148, which is the special mechanism for bringing to tax the income discovered in consequence of a search.

13.5 Although section 148 (inserted w.e.f. 01.04.2021) does not begin with a non-obstante clause similar to the erstwhile section 153A, its context and Explanation 2 make it clear that where a search is initiated, the jurisdiction thereafter must flow through this special channel, subject to prior satisfaction and approval of the Principal Commissioner or Commissioner. The legislative intent is to ensure that when a search is carried out, the assessment is framed under the specific provisions meant for such cases and not under the general provision of section 143(3). Further we may mention that no notice under section 143(2) could have been issued after 3 months from the from the end of the financial year in which the return is furnished. In the present case the original return of income was filled on 4/11/2022 for the assessment year 202223 and 143 (2) was issued on 21/6/2023 , therefore also the assessment was framed under 143(3) of the Act is not sustainable. In other words the time required for issuing the notice under 143(2) had already expired, and the revnue can not be allowed to issued issue 143(2) on 21.6.2023 after the search was carried out and notice had been issued on 21.6.2023 and assessment was framed under 143(3) of the Act. The relevant portion of section 143(3) reads as under:-

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“143(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income- tax authority, as the case may be, if considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub- section shall be issued after the expiry of three months from the end of the financial year in which the return is furnished.” 13.6 This position finds substantial support from the ratio of various decisions of Hon'ble High Court and Hon'ble Supreme Court. The Courts unanimously held that once a search has been conducted and proceedings are triggered under section 153A, the Assessing Officer cannot continue parallel proceedings under section 143(3) or section 147 for the same assessment year, because the entire assessment for that year stands merged in the search assessment. The Courts emphasized that the existence of a special procedure for assessment consequent to a search is a complete code in itself; therefore, ordinary assessments abate and cannot coexist with the search-based assessment.

13.7 Drawing this analogy to the current regime, it is evident that when a search takes place and information is unearthed suggesting escapement of income, the Assessing Officer must act under section 148 (which now performs the role formerly assigned to section 153A) rather than continuing with a pending section 143(3) proceeding. The legislative intent remains the same — to prevent multiplicity of proceedings and ensure that only one comprehensive order is passed, factoring in both the pre-search and postsearch materials.

13.8 The rationale is further reinforced by the well-settled principle of generalia specialibus non derogant — the special provision overrides the general. Section 148 (as a special provision triggered by search information) must prevail over section 143 (the general provision for regular scrutiny). 10 | P a g e

Allowing the Assessing Officer to continue and conclude proceedings under section 143(3) after a search would defeat this legislative scheme and render the safeguards, such as prior approval of the Principal Commissioner, redundant.

13.9 Accordingly, we hold that once a search is initiated under section 132 and material is found relating to the assessee, the pending assessment under section 143(3) cannot validly continue, as the time for issuing the 143(2) in response to original return of income had already expired, therefore the Assessing Officer must necessarily proceed in accordance with the special provisions contained in section 148 of the Act.” 4. Learned CIT(DR) representing the Revenue vehemently supports the impugned assessment that the Assessing Officer had rightly finalized the same under the normal provision once the entire issue was pending before him as on the date of search.

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framed by the learned Assessing Officer on 30th March, 2024 in very terms.

We adopt the above detailed discussion mutatis mutandis to quash the learned Assessing Officer’s impugned assessments in both these assessees’ cases framed u/s 143(3) of the Act for want of initiation of section 148 proceedings in very terms. These instant twin appeals ITA Nos. 8521 & 8809/Del/2025 succeed therefore.

that it was all along in the process of setting up the “Accord Super Speciality Hospital” after acquisition of plot of land in village Budena, Faridabad. And that it had to excavate and remove the soil thereupon in order to make it fit for the hospital construction. We must make it clear that even the learned lower authorities do not raise any dispute once they have treated the assessee’s receipts as business income. The assessee’s plea accordingly is that such a receipt derived before the commencement of its actual business activity; and, which is inextricably connected with the setting up of a new capital asset, is capital in nature only thereby reducing the cost of construction than forming taxable income. We find in this factual backdrop that hon’ble Bombay high court’s latest decision in PCIT vs Tata Power Company Limited in ITA No. 21/2020 decided on 23.07.2016; has rejected the Revenue’s very stand assessing such receipts as business income, as under:

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learned lower authorities’ have nowhere granted benefit of the CBDT’s benevolent circular/instructions dated 11.05.1994 for his entire family comprising of seven members. We thus direct the learned Assessing Officer to recompute and verify the assessee’s impugned investments in gold and jewellery etc in light of the said circular as per law in very terms.

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A copy of this common order be placed in the respective case files. Order pronounced in the open court on 14.09.2026.

Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:14.09.2026 *Pooja Mittal, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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