CHHOTHAMAL PARASMAL CHENNAI,CHENNAI vs. DCIT, CENTRAL CRICLE-3(4), CHENNAI

आदेश /O R D E R

PER S.R. RAGHUNATHA, AM :

This appeal has been preferred by the assessee against the order passed by the Learned Commissioner of Income Tax, Appeal (Appeals), Chennai – 20 [hereinafter referred to as “the Ld. CIT(A)”], dated 17.11.2025, arising from the assessment order dated 08.03.2025 for the Assessment Year (AY) 2017-18 passed by the Deputy Commissioner of Income-tax, Central Circle 3(4), Chennai [hereinafter referred to as “the AO”], u/s. 153C of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).

:-2-: ITA. No.4050/Chny/2025 2. The brief facts of the case emanating from the records are that the assessee is an individual and carrying on the business of trading of gold and silver articles in the name of M/s.Paras Jewellers (Ayanavaram). The assessee filed his return of income for the AY 2017-18 on 14.10.2017 by declaring a total income of Rs.7,36,500/-. The return of income was processed u/s.143(3) of the Act on 17.11.2017. A search action u/s.132 of the Act was initiated on 10.11.2020 in the case of M/s.Mohanlal Jewellers Private Limited, M/s.Mohanlal Jewellers Chennai (P) Limited, Shri.Suresh Kumar Khatri and others. During the course of search proceedings, certain incriminating materials were found, which have been bearing on the determination of the total income of the assessee. Subsequently, the case was centralized vide office order of PCIT Chennai-3 dated 23.06.2023. Accordingly, notice u/s.153C of the Act was issued on 19.08.2024 after recording satisfaction note. In response to notice u/s.153C of the Act, the assessee filed his return of income for the AY. 2017-18 on 13.08.2024 declaring a total income of Rs.7,36,500/-. Accordingly, statutory notices were issued to the assessee by the AO. Based on the seized material found in the search proceedings, the assessment was completed by making an addition of Rs.14,45,757/- on account of unaccounted transactions by estimating the gross profit at 6.69% of Rs.2,16,10,710/-. Accordingly, the AO passed an order u/s.153C of the Act dated 08.03.2025. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A). The ld.CIT(A) confirmed the order of the AO by passing of an order dated 17.11.2025. 4. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. Before us, the assessee has raised the following grounds of appeal:- “1. The order of the CIT(A) is erroneous as the same is opposed to the facts of the case and provisions of law. 2. Illegal Proceedings u/s. 153C:

2.1. The CIT(A) erred in failing to quash the proceedings u/s. 153C of the Act as the same are not applicable to the appellant's case after 01.04.2021.

:-3-: ITA. No.4050/Chny/2025 2.2. The very initiation of proceedings u/s. 153C of the Act being illegal and without jurisdiction, the CIT(A) went wrong in failing to quash the order of assessment. 2.3. Without prejudice to the above grounds, in any case, the notice u/s. 153C of the Act is barred by limitation. 2.4. The proceedings u/s. 153C of the Act having been initiated in absence of the satisfaction note of both the assessing officers, the CIT(A) erred in failing to quash the entire proceedings u/s. 153C of the Act as void ab-initio. 2.5. The CIT(A) despite having stated that he has obtained the satisfaction note recorded by "AO of searched person" and "AO of other person", the same having never been communicated to the appellant, the entire proceedings u/s. 153C of the Act gets vitiated. 3. No Incriminating Material 3.1. The addition having been made in the order of assessment in the absence of any incriminating material against the appellant, the same is illegal and liable to be quashed. 3.2. The material having been seized from the premises of a 3rd party, the AO grossly erred in holding the same to be incriminating against the appellant and making additions on that basis without even attempting to corroborate the information allegedly contained in the said material, and the CIT(A) erred in upholding the same. 3.3. The CIT(A) ought to have seen that the AO has grossly erred in denying the appellant's right to cross-examine the deponents, whose statements formed very basis of alleged incriminating material, thereby violating the principles of natural justice. 3.4. The CIT(A) further erred in upholding AO's refusal of cross-examination on erroneous premise that the deponents had not given statements against the appellant, despite their statements being relied upon to draw adverse inferences. 4. Incorrect Addition 4.1. The CIT(A) erred in upholding erroneous addition of Rs. 14,45,757/- by the AO on the basis of incorrect assumptions and surmises as there were neither purchases nor sales outside the appellant's books of accounts. 4.2. Without prejudice to the above grounds, the CIT(A) erred in confirming the AO's erroneous failure in not giving credit for accounted purchases while making addition on unaccounted purchases based on seized material. 4.3. Further alternatively, the CIT(A) erred in confirming the addition of gross profit from the alleged unaccounted sales when it is only the net profit that can be added as income. 5. Any other grounds raised at the time of hearing.”

:-4-: ITA. No.4050/Chny/2025 law. The proceedings u/s.153C of the Act by the AO for the AY 2017-18 is invalid since the impugned assessment year falls beyond six years and filed a dates and events chart as detailed below:-

Dates & Events

# Date Event 1. 10.11.2020 Search conduced u/s.132 of the Act in the case of M/s.Mohanlal Jewellers Pvt. Ltd. (searched person) 2. 23.06.2023 Centralisation of appellant’s case to DCIT, Central Circle 3(4), Chennai 3. 13.09.2023 Date of receipt of books of account or seized documents etc. by the AO of the appellant (FY 2023-24) (AY 2024-25) 4. 02.08.2024 Satisfaction note u/s.153C of the Act recorded by the AO of the appellant (FY 2024-25) (AY 2025026) 5. 19.08.2024 Notice u/s.153C of the Act issued by the AO for AY 2017-18 (FY 2024-25) (AY 2025-26)

A.Y. Years 2017-18 7 2018-19 6 2019-20 5 2020-21 4 2021-22 3 2022-23 2 2023-24 1 2024-25 (Year 0 of search)

:-5-: ITA. No.4050/Chny/2025 for A.Y. 2017-18 is without jurisdiction and liable to be quashed. In support of the aforesaid contention, the ld. AR placed reliance on the decision of the Co- ordinate Bench of the Chennai Tribunal in the case of DCIT v. Ans Dhivyam Jewells in ITA No.560/Chny/2026, vide order dated 05.06.2026, wherein the Tribunal held as under:-

“6. We have heard rival submissions and perused the material on record. The Hon'ble Apex Court in the case of Jasjit Singh (supra) after extracting the provisions of section 153C of the Act had confirmed the judgment of Hon'ble Delhi High Court wherein the assessment order for assessment year 2009-10 was quashed. The Hon'ble Apex Court had categorically held that the first proviso to section 153C(1) of the Act is not applicable 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 person other than the searched person. The relevant findings of the Hon'ble Apex Court read as follows:- "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 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(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 A.O. 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 A.O. In that event if 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 dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 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.” 7. In view of the said judgment of the Hon'ble Apex Court, the assessment proceedings u/s.153C of the Act can be initiated for the assessment year relevant to the financial year in which the books of accounts or documents or assets are seized or received by the AO of the other person and immediately preceding six years. In the present case, the AO of the assessee had received the documents from the AO of the searched person on 01.08.2023 and satisfaction was recorded by the AO of the assessee on 08.08.2023. Thereafter, notice u/s.153C of the Act was issued on 10.08.2023. Reckoning the said date in the case of the assessee as search date, the assessment can be completed u/s.153C of the Act only for assessment years 2018-19 to 2023-24. Therefore, the assessment order

:-6-: ITA. No.4050/Chny/2025 completed u/s.153C of the Act for assessment year 2017-18 has been rightly quashed by the FAA as void ab initio. Therefore, we see no reason to interfere with the order of the FAA and the appeal filed by the Department is dismissed.”

:-7-: ITA. No.4050/Chny/2025 10. The controversy before us is essentially with regard to the starting point for reckoning the six assessment years contemplated under the provisions of section 153C of the Act. In the case of a person other than the searched person, the relevant date for the purpose of determining the six assessment years is not necessarily the date on which the search was conducted in the case of the searched person. The first proviso to section 153C(1) creates a statutory deeming fiction whereby, for the purposes contemplated therein, the reference to the date of initiation of search u/s.132 or making of requisition u/s.132A has to be construed with reference to the date of receipt of the books of account, documents or assets seized or requisitioned by the AO having jurisdiction over such other person. 11. This legal position stands settled by the Hon'ble Supreme Court in the case of CIT v. Jasjit Singh (2023) 458 ITR 437 (SC), wherein it has been held that the first proviso to section 153C(1) is not confined merely to the question of abatement of pending assessments but is equally applicable for determining the date from which the period of six assessment years is required to be reckoned in the case of a person other than the searched person. Thus, in proceedings u/s.153C of the Act, the block period applicable to the other person has to be determined with reference to the statutorily relevant date in his case and cannot automatically be reckoned with reference to the date of search in the case of the searched person. 12. We further find that an identical issue has recently been considered by the Co-ordinate Bench of this Tribunal in the case of DCIT v. Ans Dhivyam Jewells, ITA No.560/Chny/2026, order dated 05.06.2026. After considering the decision of the Hon'ble Supreme Court in Jasjit Singh, the Co-ordinate Bench held that where the AO of the other person received the seized documents during the financial year relevant to A.Y.2024-25, proceedings u/s.153C of the Act could be validly taken for the six immediately preceding assessment years, i.e., A.Ys.2018-19 to 2023-24. Consequently, the assessment framed for A.Y.2017-18 was held to be beyond the permissible six-year period and was quashed as void ab initio.

:-8-: ITA. No.4050/Chny/2025 13. Coming to the facts of the present case, the position is materially identical. Even going by the date of centralization, i.e., 23.06.2023, as canvassed by the ld.AR, or, more appropriately, by the date of receipt of the seized books of account/documents by the AO of the assessee on 13.09.2023, both dates fall during the previous year relevant to A.Y.2024-25. Therefore, reckoning the six assessment years immediately preceding A.Y.2024-25, the permissible block would comprise A.Ys.2018-19, 2019-20, 2020-21, 2021-22, 2022-23 and 2023-24. The impugned A.Y.2017-18 thus falls outside the said block of six assessment years. 14. In this regard, the contention of the ld.DR that the assessee had participated in the assessment proceedings and, therefore, cannot subsequently challenge the validity of the proceedings does not persuade us to take a different view. The issue raised by the assessee goes to the very root of the jurisdiction assumed by the AO u/s.153C of the Act. Where the statute does not confer jurisdiction upon the AO to make an assessment for a particular assessment year, mere participation by the assessee in the assessment proceedings cannot enlarge the scope of jurisdiction otherwise not vested in the AO under the Act. Jurisdiction to assess an assessment year has to emanate from the statute and cannot be conferred by consent, acquiescence or participation of the assessee. 15. In the present case, once it is found that A.Y.2017-18 falls outside the six assessment years permissible for initiation of proceedings u/s.153C of the Act, the very assumption of jurisdiction by the AO for the impugned assessment year becomes unsustainable in law. Consequently, the assessment order dated 08.03.2025 passed u/s.153C of the Act for A.Y.2017-18 cannot be sustained. 16. In view of the foregoing discussion and respectfully following the ratio laid down by the Hon'ble Supreme Court in Jasjit Singh and the decision of the Co- ordinate Bench in DCIT v. Ans Dhivyam Jewells (supra), we hold that the proceedings initiated u/s.153C of the Act for A.Y.2017-18 are beyond the permissible period of six assessment years and are, therefore, without

:-9-: ITA. No.4050/Chny/2025 jurisdiction. Accordingly, we set aside the order of the ld. CIT(A) and quash the assessment order dated 08.03.2025 passed by the AO u/s.153C of the Act for A.Y.2017-18 as void ab initio. The legal ground raised by the assessee is, accordingly, allowed. 17. Since we have quashed the assessment itself on the jurisdictional ground, the other grounds raised by the assessee relating to absence of incriminating material, denial of cross-examination and the merits and quantum of the addition of Rs.14,45,757/- have become academic and, therefore, do not require separate adjudication. 18. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the court on 11th August, 2026 at Chennai.

Sd/- Sd/- (मनु कुमार गिरर) (एस. आर. रघुनाथा) (MANU KUMAR GIRI) (S. R. RAGHUNATHA) न्यागिक सदस्य/Judicial Member लेखासदस्य/Accountant Member

चेन्नई/Chennai, धदनांक/Dated, the 11th August, 2026. Devadas

आदेश की प्रधतधलधप अग्रेधर्त/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. धवभागीय प्रधतधनधि/DR 5. गार्ा फाईल/GF DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.08.12 15:32:12 +05'30'