DAVESH CHANDER ,DELHI vs. DCIT CENTRAL CIRCLE -28 , DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, A: NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No.- 3316/Del/2026 [Assessment Year: 2018-19] ITA No.- 3317/Del/2026 [Assessment Year: 2019-20] Davesh Chander, DCIT, 2/46, Malka Ganj, Roop Nagar, Central Circle-28, North Delhi, Delhi-110007. Vs Delhi. PAN- AAAPG4857F Assessee Revenue Assessee by Sh. Ved Jain, Adv. & Sh. Ayush Garg, CA Revenue by Ms. Pooja Swaroop, CIT(DR) Date of Hearing 22.07.2026 Date of Pronouncement 22.07.2026 ORDER Per Renu Jauhri, Accountant Member:

These two appeals by the assessee are directed against the orders both dated 11/02/2026 of the ld. Commissioner of Income Tax (Appeal), Delhi-25, [hereinafter referred to as the ‘Ld. CIT(A)] arising out of the assessment order dated both 29.03.2024 passed under section 153C of the Income Tax Act, 1961 (hereinafter

ITA No. 3316 and 3317/Del/2026 Davesh Chander referred to as ‘the Act’) Assessing Officer, DCIT /ACIT, Central Circle-28, New Delhi, (hereinafter referred to as the ‘AO’) pertaining to Assessment Years (A.Y.) 2018-19 and 2019-20 respectively. These two appeals are heard together, for the sake of convenience and brevity, we disposed these two appeals in a consolidated order. 2. The assessee has raised the following grounds of appeal (ITA No.- 3316/Del/2026):

“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeal) (hereinafter referred to as CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the assessment order passed by the AO is illegal, without jurisdiction, non-est and hence liable to be quashed as the same has been passed by the AO beyond the statutory time limit prescribed under the Act. 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that, the proceedings initiated under section 153C of the Act and consequently the order passed by the learned AO under section 153C r.w.s 143(3) of the Act are illegal, invalid, without jurisdiction, and hence liable to be quashed. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the assessment order has been passed in clear violation of the statutory procedure and conditions prescribed under section 153C read with section 153A of the Act and as such the same is bad in the eyes of law and liable to be quashed. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made by the AO in the assessment order passed under section 153C of the Act are illegal, without jurisdiction and hence unsustainable in the absence of any incriminating material belonging to the assessee being found during the course of the search of the searched person.

ITA No. 3316 and 3317/Del/2026 Davesh Chander 6. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C of the Act and the assessment order passed under the said section is illegal, without jurisdiction and hence liable to be quashed in the absence of any valid satisfaction being recorded by the assessing officer of the searched person as well as assessing officer of the assessee. 7. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the learned AO has erred in issuing notice under section 153C of the Act and completing the assessment under the said section without recording any valid independent satisfaction upon the material or document relied upon by him, that has bearing on the determination of the total income of the assessee. 8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law confirming the action of the AO despite the fact that the satisfaction recorded by the assessing officer for initiating proceeding under section 153C is illegal, invalid, mechanical in 4 nature and has been recorded without application of mind. 9. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C of the Act and consequential assessment order are illegal, barred by limitation and thus. liable to be quashed as the satisfaction note has been recorded beyond the stipulated time limit. 10. On the facts and circumstances of the case, the proceedings under section 153C initiated against the assessee are beyond the permissible period as held by the Hon'ble Supreme Court in the case of Commissioner of Income Tax-III vs Calcutta Knitwears [2014] 362 ITR 673 (SC) dated 12.03.2014 and accepted by the Central Board of Direct Taxes vide Circular No. 24/2015 dated 31.12.2015. 11. On the facts and circumstances of the case, the assumption of jurisdiction under section 153C and the consequential reassessment order passed under section 153C r.w.s 143(3) are invalid. illegal, unsustainable and liable to be quashed, as the satisfaction note has been recorded by the Assessing Officer of the searched person and that of the assessee collectively for various Assessment Years and without identifying or linking alleged material to any specific Assessment Year 12. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the learned AO has erred in passing the order under section 153C r.w.s 143(3) of the Act without obtaining valid prior approval under section 153D of the Income Tax Act. (ii) That the purported approval is illegal, mechanical in nature and has been given without application of mind.

ITA No. 3316 and 3317/Del/2026 Davesh Chander

ITA No. 3316 and 3317/Del/2026 Davesh Chander indulging in surmises and conjectures without bringing on any direct evidence against the assessee, only on the basis of presumption and assumption. 19. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in sustaining the additions made under sections 68 and 69C of the Act despite the said provisions are not applicable to the facts of the case and consequently provisions of section 115BBE of the Act are not applicable. 20. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the additions made by the AO based on the basis of statements recorded at the back of the assessee without providing opportunity of cross- examination of those statements. 21. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the additions made by the AO on the basis of material collected at the back of the appellant without affording adequate opportunity to rebut the same, in violation of the principles of natural justice 22. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the additions despite the fact that the same has been made AO without concluding the independent enquiry conducted during the course of assessment proceedings to the logical end. 23. That the appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal.”

2.1 The assessee has raised the following grounds of appeal (ITA No.- 3317/Del/2026):

“1. On the facts and circumstances of the case, the order passed by the leamed Commissioner of Income Tax (Appeal) (hereinafter referred to as CIT(A)] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the assessment order passed by the AO is illegal, without jurisdiction, non-est and hence liable to be quashed as the same has been passed by the AO beyond the statutory time limit prescribed under the Act. 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that, the proceedings initiated under section 153C of the Act and consequently the order passed by the

ITA No. 3316 and 3317/Del/2026 Davesh Chander learned AO under section 153C r.w.s 143(3) of the Act are illegal, invalid, without jurisdiction, and hence liable to be quashed. 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the assessment order has been passed in clear violation of the statutory procedure and conditions prescribed under section 153C read with section 153A of the Act and as such the same is bad in the eyes of law and liable to be quashed. 5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the additions made by the AO in the assessment order passed under section 153C of the Act are illegal, without jurisdiction and hence unsustainable in the absence of any incriminating material belonging to the assessee being found during the course of the search of the searched person. 6. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C of the Act and the assessment order passed under the said section is illegal, without jurisdiction and hence liable to be quashed in the absence of any valid satisfaction being recorded by the assessing officer of the searched person as well as assessing officer of the assessee. 7. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the learned AO has erred in issuing notice under section 153C of the Act and completing the assessment under the said section without recording any valid independent satisfaction upon the material or document relied upon by him, that has bearing on the determination of the total income of the assessee. 8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the AO despite the fact that the satisfaction recorded by the assessing officer for initiating proceeding under section 153C is illegal, invalid, mechanical in nature and has been recorded without application of mind. 9. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the proceedings initiated under Section 153C of the Act and consequential assessment order are illegal, barred by limitation and thus, liable to be quashed as the satisfaction note has been recorded beyond the stipulated time limit. 10. On the facts and circumstances of the case, the proceedings under section 153C initiated against the assessee are beyond the permissible period as held by the Hon'ble Supreme Court in the case of Commissioner of Income Tax-III vs Calcutta Knitwears

ITA No. 3316 and 3317/Del/2026 Davesh Chander [2014] 362 ITR 673 (SC) dated 12.03.2014 and accepted by the Central Board of Direct Taxes vide Circular No. 24/2015 dated 31.12.2015. 11. On the facts and circumstances of the case, the assumption of jurisdiction under section 153C and the consequential reassessment order passed under section 153C r.w.s 143(3) are invalid, illegal, unsustainable and liable to be quashed, as the satisfaction note has been recorded by the Assessing Officer of the searched person and that of the assessee collectively for various Assessment Years and without identifying or linking alleged material to any specific Assessment Year 12. (i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the learned AO has erred in passing the order under section 1530 r.w.s 143(3) of the Act without obtaining valid prior approval under section 153D of the Income Tax Act. (ii) That the purported approval is illegal, mechanical in nature and has been given without application of mind. 13. (i) On the facts and in the circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the order of AO despite the fact that the notice issued under section 153C of the Act and the consequent reassessment proceedings are illegal, invalid and void ab initio in law, as the alleged "deemed date of search" under section falls on or after 01.04.2021, and therefore, in view of the amendments made by the Finance Act, 2021, the provisions of section 153C are not applicable and the AO was mandatorily required to follow the procedure prescribed under section 148 read with section 148A of the Act. 14. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the satisfaction notes recorded by AO of searched person and AO of other person under section 153C of the Act have been issued without there being valid Document Identification Number (DIN) quoted on the body of the satisfaction note, violating the CBDT Circular No. 19/2019, 15. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee assessment order passed by the AO is illegal, without jurisdiction and hence liable to be quashed in the absence of any valid notice issued under section 143(2) of the Act. 16. (1) On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the addition of Rs. 7,00,000/- as unsecured loan from M/s Nutshell Vyapar Private Limited under section 68 of the Act. (1) That the abovesaid addition has been confirmed rejecting the detailed submissions and explanations along with the evidences brought on record by the assessee to justify the amount received by the assessee from Nutshell Vyapar Private Limited is on account of consultancy services provided by the assessee and same has already been considered by the assessee as professional receipts while filing his return of income.

ITA No. 3316 and 3317/Del/2026 Davesh Chander

(i) That the abovesaid addition has been made despite the fact that the same will results in double taxation of the same amount in the hands of the assessee. 17. (1) On the facts and in the circumstances of the case, the learned CIT(A) has erred in confirming the addition of Rs. 21,000/- made by the AO on account of alleged commission under section 69C of the Act (ii) That the abovesaid addition has been confirmed despite the fact that no such expenditure was incurred by the appellant and the abovesaid addition has been made merely on presumptions and assumptions without appreciating the fact that the above alleged amount of Rs. 7,00,000/- is not in the nature of loan rather an income which has already been taxed in the hands of the assessee. 18. On the facts and circumstances of the case, the learned CIT (A) has grossly erred both on facts and in law in confirming the abovesaid additions made by the AO by indulging in surmises and conjectures without bringing on any direct evidence against the assessee, only on the basis of presumption and assumption. 19. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in sustaining the additions made under sections 68 and 69C of the Act despite the said provisions are not applicable to the facts of the case and consequently provisions of section 115BBE of the Act are not applicable. 20. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the additions made by the AO based on the basis of statements recorded at the back of the assessee without providing opportunity of cross- examination of those statements. 21. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the additions made by the AO on the basis of material collected at the back of the appellant without affording adequate opportunity to rebut the same, in violation of the principles of natural justice. 22. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the additions despite the fact that the same has been made AO without concluding the independent enquiry conducted during the course of assessment proceedings to the logical end. 23. That the appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal.”

2.2. Both these appeals are emanating from the assessments made on the basis of incriminating material found during the course of search on Alankrit Group and 8

ITA No. 3316 and 3317/Del/2026 Davesh Chander therefore, facts and circumstances being identical, these are being disposed off vide a common order. ITA No. 3316/Del/2026 for A.Y. 2018-19 is taken as the lead case. 3. Although the assessee has raised multiple legal and factual grounds, the sole substantive issue pertains to addition made on account of Rs. 14,00,000/- received from M/s Nutshell Vyapar Pvt. Ltd. by treating the same as an accommodation entry. 3.1 Brief facts are that the assessee filed his return for A.Y. 2018-19 on 24.08.2018 declaring income of Rs. 28,38,570/-. Subsequently, during the course of search action u/s 132 conducted on 18.10.2019 in the case of Alankrit Group and associates, certain incriminating material was found which indicated that the assessee had made transactions with the group entities. 3.2 Accordingly, the assessee’s case was centralized and a notice u/s 153C was issued on 7.03.2024, in response to which the assessee filed its return declaring income of Rs. 16,69,150/-. Since the assessee did not furnish any reply to the show cause notice issued by the AO with regard to transaction totaling Rs. 14 lakhs made by him, the AO treated the same as unsecured loans taken from M/s Nutshell Vyapar Pvt. Ltd. and added the same u/s 68 of the Act as unexplained credits. Further, addition of Rs. 42,000/- on account of commission @ 3% on adhoc basis on these transactions was also added u/s 69C and assessment was finalized at an income of Rs. 42,80,570/- vide order u/s 153C dated 29.03.2024.

ITA No. 3316 and 3317/Del/2026 Davesh Chander 3.3 Aggrieved, the assessee preferred an appeal before the CIT(A). After considering the assessee’s submission, the appeal was dismissed by the CIT(A) vide order dated 11.02.2026. Further aggrieved, the assessee is in appeal before us. 4. Before us, with regard to the merits of the addition, Ld. AR has submitted that the assessee is a qualified professional and has received consultancy charges of Rs. 14,00,000/- during the year from M/s Nutshell Vyapar Pvt. Ltd. This amount has been duly reflected in the I.T. return filed on 24.08.2018. 4.1 In support of his arguments, Ld. AR has filed a paper book containing copy of the ITR and other relevant documents as well as copies of submissions made before the lower authorities. 5. On the other hand, Ld. DR has strongly relied on the orders of the authorities below. 6. We have heard the rival submissions and perused the material available on record. It is seen that in the original Income tax return was filed before the date of search and the receipts of Rs. 14,00,000/- have been duly declared therein. TDS of Rs. 14,000/- had been deducted thereupon and the assessee has also offered presumptive income u/s 44ADA @ 50% in respect of these receipts. 6.1 Accordingly, we are of the considered view that the addition of Rs. 14,00,000/- u/s 68 of the Act and further addition of Rs. 42,000/- on account of

ITA No. 3316 and 3317/Del/2026 Davesh Chander commission @ 3% alleged to have been paid by the assessee on the accommodation entry is totally uncalled for and are hereby deleted. 6.2 Since, the entire additions stand deleted, remaining legal grounds are rendered academic and hence not being adjudicated upon. 7. In the result, appeal of the assessee is allowed. 8. In ITA No. 3317/Del/2026 for A.Y. 2019-20, issues involved and the facts and circumstances are identical and hence above order shall apply mutatis mutandis to this appeal also. 9. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 22.07.2026

Sd/- Sd/- [SATBEER SINGH GODARA] [RENU JAUHRI] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated- 07.08.2026. Pooja, Sr. PS. Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR

Asst. Registrar, ITAT, New Delhi,