B H TRADING CO,DELHI vs. DCIT, CENTRAL CIRCLE-29, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL

DELHI BENCH: ‘E’ NEW DELHI

BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER ITA NO. 3601/DEL/2025 (AY : 2020-21) B.H. TRADING, Vs. DCIT, CC-29, NEW DELHI 2113, KHARI BAOLI, DELHI – 110006 (PAN: AAAFN2870P) (Appellant) (Respondent)

ITA NO. 3602/DEL/2025 (AY : 2020-21) BABOO RAM HARI CHAND, Vs. DCIT, CC-29, NEW DELHI 2114, KHARI BAOLI, DELHI – 110006 (PAN: AAAFN2868D) (Appellant) (Respondent)

Assessee by Sh. Pratap Gupta, CA Department by Dr. Rajinder Kaur, CIT(DR) Date of Hearing 10.08.2026 Date of Pronouncement 14.08.2026

ORDER PER MAHAVIR SINGH, VP: These appeals filed by the different Assessees are directed against the

respective orders of the Ld. First Appellate Authority relevant to assessment year

2020-21. Since common issue have been raised in both the appeals, hence, the

appeals were heard together and are being disposed of by this common order for the

sake of convenience by dealing with facts of ITA No. 3601/Del/2021 (AY 2020-21) –

B.H. TRADING CO.

confirming the action of the AO in assuming jurisdiction for framing assessment u/s.

153C of the Income Tax Act, 1961 (hereinafter referred as Act) which is bad in law,

illegal and against the facts and circumstances of the case.

on 23.12.2020. A search operation was conducted on Shri Sushil Goel and group on

30.1.2020. During the search operation Shri Sushil Goel and his family were found

involved in the business of sale and purchase of foreign currency as well as his group

persons and entities operated hawala operating networks on domestic as well as

international levels. They assisted various people in arranging hawala/ telegraphic

transfers for all types and in many countries particularly in Dubai, Middle East,

China and Hong Kong. During the course of search and seizure action on Sushil Goel

group of cases, an image was found from the mobile of Sh. Sanjay Goel in which

some amounts were mentioned. The amounts were the purchase/ commission paid

amounts from certain parties. In this image the name of the assessee firm is reflecting

as ‘BH’. During the course of the post search proceedings Sh. Sanjay Goel in his

statement dated 31.01.2020 has identified the beneficiary of transaction ‘BH’ as BH

Trading Company. In his statement Sh. Sanjay Goel has also accepted that ‘from BH

companies we buy tobacco’. The Assessing Officer after going through the contents of

incriminating documents recorded satisfaction note dated 04.02.2022 and issued

notice under section 153C of the Act on 04.04.2022 requiring the assessee to file

return of income for relevant assessment year 2020-21 and in response to the same,

the assessee filed the return of income on 20.02.2023. According to the Ld. Counsel

for the Assessee as per first proviso to section 153C, the period of six assessment

years relevant for issuance of notice u/s. 153C would be reckoned from the date of

recording of satisfaction note in the case of the person other than the person searched

in view of the decision of the Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh reported in 458 ITR 437 (SC) wherein search conducted at 3rd party premises

and seized material were handed over, the date of handing over of the seized material

was to be construed as date of initiation of search action, the other person in terms of

provisions of section 153C of the Act. It was further argued that in the present case the

satisfaction note in terms of section 153C was recorded on 4.2.2022 which falls in FY

2021-22 and as such the block of six years would be counted from FY 2021-22.

Accordingly, the FY 2015-16 to 2020-21 /AYrs 2016-17 to 2021-22 would fall within

the block of six years. However, the block of seven years from AYs 2014-15 to 2020-

21 has been taken for assessment u/s. 153C. Ld. Counsel further argued that as there

is amendment in the provisions of sub-section 3 of section 153C whereby as per first

proviso there is a bar for invoking the provisions of section 153C of the Act with

effect from 1 April 2021 thus, the the AO issued notice u/s. 153C of the Act is bad in

law whereas assessment should have been framed u/s. 148 read with section 143(3) of

the Act. For this proposition, Ld. Counsel for the assessee relied on the decision of

the CIT vs. Jasjit Singh (Supra) and the also the decision of the Hon’ble Madras

High Court in the case of Harigovvind vs. ACIT 485 ITR 509 (Madras).

the above fact situation, but she relied on the assessment order and the order of the

learned CIT.

circumstance of the case. We noted that the search was conducted on Sushil Goel

group of cases under Section 132 of the Act on 30.01.2020. In the present case

satisfaction note was recorded by the AO of searched person and of the assessee on

4.2.2022 i.e. after 1.4.2021 and notice u/s. 153C was issued on 4.4.2022 i.e. for non

existing provision of section 153C read with section 153A. There is no dispute about

these facts. Admittedly, assessment was also framed by the AO of the assessee u/s.

153C of the Act for the assessment year 2020-21 on 31.3.2023. The above

proposition is very clear and squarely covered by the decision of the Hon’ble

Supreme Court in the case of Jasjit Singh that when initiation of search capacity in the

case of other person other than the searched person. The Hon’ble Supreme Court in

the case of CIT vs. Jasjit Singh held that searched in the other person other than the

searched person is to be considered to have been initiated when the seized material

was handed over to the assessee’s AO and satisfaction note was not drawn. Hon’ble

Supreme Court of India in the case of CIT vs. Jasjit Singh (supra) observed as under:-

“9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under section 153C was enacted. The revenue argued that the proviso [to Section 153©(1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the AO seized of the materials – of the search party, under section 132 – would take his own time to forward the papers and materials belonging to the third party, to the concerned AO. In that even if 4

the date would virtually “relate back” as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is disproportionate. For instance, if the papers are in fact assigned under section 153C after a period of four years, the third party assessee’s prejudice in writ large as it would have to virtually preserve the records for at least 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of section 153-C supports the interpretation which this Court adopts. 6. Further, Hon’ble Madras High Court in the case of Harigovind vs. ACIT

(Supra) has considered this issue and held that in case where search is initiated after 1st April 2021 the provisions of section 153C will not apply and assessment can only

be framed in terms of section 148 of the Act. Hon’ble Madras High Court considered

decision of Honorable Supreme Court in the case of CIT versus Jasjit Singh (supra)

and has held as under:-

not apply. Therefore, the impugned notices dated 7.2.2023 is unsustainable and the same were issued without authority and against the provisions of sub-section (3) of Section 153C of the Act. 50. In such view of the matter, all the impugned notices are liable be quashed and accordingly, all the impugned notices dated 7.2.2023 issued by the 2nd respondent are quashed.” 7. As the issues are covered, in the present case notice under section 153C of the Act dated 4.4.2022 is without jurisdiction and hence the same is quashed and its consequent assessment is also quashed. As regards other pleadings are concerned the same have become academic. Resultantly, the ITA No. 3601/Del/2025 (AY 2020-21) in respect of BH Trading Co. is allowed

Sd/- Sd/- (KRINWANT SAHAY) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT “SRBHATNAGGAR” Date: 14-8-2026 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR

Asstt. Registrar, ITAT, New Delhi