NAVRANG THEATRES PRIVATE LIMITED,BHAGIRATH PALACE, CHANDNI CHOWK, DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 06, JHANDEWALLAN

This assessee’s appeal for Assessment Year 2015-16 arises against the Commissioner of Income Tax(Appeals)-24 (for short, ‘CIT(A)’),New Delhi’s order dated 17.07.2025 passed in case No. 11013/2014-15, involving proceedings u/s 153 r.w.s. 143(3) of the Income Tax Act, 1961; hereinafter referred to as, “the Act”.

Heard both the parties. Case file perused.

This what leaves the assessee aggrieved.

to record a separate satisfaction u/s 153C of the Act in respect of each of the respective assessment years.

has already settled the issue in the department’s favour that even a combined satisfaction note recorded u/s 153C of the Act does not vitiate an assessment, reading as under: “The Section 153C action is based on searches which were conducted upon four individuals in April, 2019. According to the writ petitioner, on the basis of the material which was gathered in the course of those searches, the Assessing Officer3 of the searched persons also drew corresponding Satisfaction Notes for initiation of proceedings against the petitioner in terms of Section 153C of the Act on various dates the details whereof are set out in a tabular fonn as under:-

could have extended only to six AYs' and that period undisputedly terminating on AY 2017-18. 4. The aforenoted submission additionally proceeds on the basis that since the AO had failed to invoke Section 153A, the ten permissible block assessment years which could be opened up by virtue of the definition of "relevant assessment year" would not apply. It was the submission of Dr. Singhvi that in the absence of the AO having alluded to the Fourth Proviso of Section 153 A and having recorded satisfaction of income exceeding INR 50 lakhs having possibly escaped assessment for each' of the relevant AY or AYs ' would constitute a sufficient ground for the impugned notices and proceedings being quashed. 5. It was also the submission of Dr. Singhvi that Section 153C obliges the AO to make specific reference to the incriminating material that may have been found in respect of each of the AY s' in respect of which proceedings under Section 153C are proposed to be initiated. According to learned senior counsel, in the absence of an explicit reference to the incriminating material or asset that may have been discovered year wise and a failure to establish a connection between such material and the total income of each of the six AYs1, invalidates the initiation of action under Section 153C of the Act. 6. It was then submitted by Dr. Singhvi that a combined Satisfaction Note as drawn by the AO in the present case would not satisfy the statutory requirements of Section 153C of the Act. According to learned senior counsel, for the purposes of undertaking an assessment in respect of the relevant AY or AYs 1 based on material gathered in the course of the search, the AO is obliged to draw a Satisfaction Note independently in respect of each of the AYs'. According to Dr. Singhvi, this would be the position which would flow from the judgment rendered by the Supreme Court in CITv. Singhad Technical Education Society [2017] 84 iaxmann.com 290/250 Taxman 225/397 ITR 344 (SC)/[2018] 11 SCC 490. (emphasis supplied) 7. It was then contended that the commencement of proceedings under Section 153C of the Act against the .writ

petitioner has been inordinately delayed and consequently the notices and the proceedings are liable to be quashed based on the principles enunciated by the Supreme Court in C/T v. Calcutta Knitwears [2014] 43 taxmann.com 446/223 Taxman 115 (Mag.)/362 ITR 673/6 SCC 444 read along with the Circular issued by the Central Board of Direct Taxes4 dated 31 December 2015. 8. Taking us through the decision in Calcutta Knitwears, Dr. Singhvi submitted that the Supreme Court had clearly held that the satisfaction liable to be recorded in the case of a person other than the one searched could have been drawn either at the time of or along with the initiation of proceedings against the searched person, alternatively in the course of assessment proceedings or "immediately after" the assessment proceedings had been completed. According to Dr. Singhvi, the recordal of satisfaction on the dates indicated above and the issuance of notices on 07 March 2023 would clearly not qualify or be compliant with the expression — immediately after" as the Supreme Court had observed. According to learned senior counsel, it was the aforesaid principles enunciated in Calcutta Knitwears which ultimately came to be accepted by the CBDT itself as would be evident from a reading of Circular No. 24/2015 which is reproduced hereinbelow:- "CIRCULAR NO.24/2015 [F.NO.279/MISC./140/2015/ITJ] SECTION 153C, READ WITH SECTION 158BD, OF THE INCOME-TAX ACT, 1961 - SEARCH AND SEIZURE - ASSESSMENT OF INCOME IN CASE OF OTHER PERSON - RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C OF SAID ACT CIRCULAR NO.24/2015 [F.NO.279/MISC./140/2015/ITJ], DATED 31-12-2015 The issue of recording of satisfaction for the purposes of section 158BD/53C has been subject matter of litigation. 2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No. 3958 of

2014 dated 123-[2014] 43 taxmann.com 446/267 CTR 105/362 ITR 673/223 Taxman 115 (SC) (available in NIRS at 2014-LL-03 12-51) has laid down that for the purpose of section 158BD of the Act. recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person u/s 158BD. The Hon’ble Court held that "the satisfaction note could be prepared at any of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under sectionl58BC of the Act: or (b) in the course of the assessment proceedings under section 158BC of the Act: or (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. 3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/pari- materia to the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon’ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT. 4. The guidelines of the Hon’ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and the same, then also he is required to record his satisfaction as has been held by the Courts. 5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court." 9. Dr. Singhvi has also relied upon certain decisions rendered by this Court, the Gujarat High Court, as well as the Income Tax Appellate Tribunal5 to submit that an inordinate delay in commencement of proceedings under Section 153C of the Act

would itself be sufficient for proceedings being invalidated. The aforesaid submission was also sought to be supplemented by way of the following chart:-

These petitions are, therefore, undisputedly not concerned with abated assessments. 11. Section 153C firstly contemplates the abatement of all inconclusive assessments and which may have been pending finalization on the date of commencement of action under the aforesaid provision. Insofar as concluded assessments" are concerned [and that expression being meant to describe those cases where regular assessment may have either been concluded or where the time for initiating action under Sections 143 or 153 would have passed], the AO must be satisfied that any money, bullion jewellery, valuable article or thing belonging to or any books of account, documents seized or requisition pertaining to a person other than the searched person found in the course of the search would have a bearing on the determination of the total income of that person for six assessment years or the relevant assessment year or years as defined in Section 153 A of the Act. 12. The argument of the proceedings being barred by limitation clearly falters and fails to impress us bearing in mind the indubitable position of the 153C power to assess or to reassess being available to be invoked cither for six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted as well as for the relevant assessment year or years as defined in Section 153A. Explanation 1 as placed in Section 153A defines the phrase "relevant assessment year" in the following words:- "Explanation 1.— For the purposes of this sub-section, the expression —relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made." 13. It would thus be wholly incorrect to read the First Proviso to Section 153C of the Act as constituting a bar of limitation or disabling the respondents from initiating assessment/reassessment for the entire block period of ten assessment years. Consequently,

and in our considered opinion, the submission that the power to assess would stretch only up to AY 2017-18 is misconceived. In light of the plain language and text in which Section 153C is couched, we are of tire considered opinion that the material gathered in the course of the search would have empowered and enabled the respondent to undertake an assessment for six assessment years immediately preceding the assessment year pertaining to the previous year in which the search was conducted and would also extend to the four additional AYs' which would stand included by virtue of Explanation 1 to Section 153 A of the Act. The aforesaid position cannot possibly be doubted bearing in mind Section 153C incorporating the phrase ".and for the relevant assessment year or years referred to in sub-section (1) of section 153A". For the purposes of understanding the meaning to be assigned to the expression relevant assessment year, we would have to necessarily travel back to Explanation 1 as placed in Section 153A. The submission, therefore, that Section 153C would only extend to six assessment years immediately preceding the AY relevant to the financial year in which the search took place is wholly untenable. 14. These aspects are in any case no longer res Integra having been duly considered by this Court as well as the Supreme Court right from the time judgment came to be rendered in SSP Aviation Ltd. v. Dy. CIT [2012] 20 taxmann.com 214/207 Taxman 260/346 ITR 177 (Delhi)/2012 SCC OnLine Del 1898 and ending with the authoritative pronouncement of the Supreme Court in CIT v. Jasjit Singh [2023] 155 taxmann.com 155/295 Taxman 612/458 ITR 437 (SC)/2023 SCC Online SC 1265. More importantly, the precedents rendered in the context of the First Proviso to Section 153C have unequivocally held the same not merely intended to deal with the subject of abatement but also determinative of the relevant date for the purposes of computation of the six or the ten assessment years as the case may be. The Supreme Court in Jasjit Singh has explained the scope and ambit of that provision in the following terms:- "8. In SSP Aviation (supra) the High Court inter alia reasoned as follows:— "14. Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable

assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under Section 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the, manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date." 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." 15. Though not so articulated, it appears that the contention of the respondent not being entitled to travel beyond the six assessment years immediately preceding the assessment year pertaining to the year of search proceeds perhaps on their understanding of Section 153A of the Act having not been invoked. We presume that the invocation of Section 153A was intended to refer to the Fourth Proviso as placed in that Section and which prescribes the conditions precedent for the purposes of the assessment or reassessment being undertaken for the four additional assessment years. For purposes of clarity, we extract the Fourth Proviso to Section 153A of the Act hercunder:- "Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh lupees or more in the

relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under Section 132 is initiated or requisition under Section 132-A is made on or after the 1st day of April, 2017."

Act. For the limited purposes of indicating the material on the basis of which we find, prima facie, that the Satisfaction Note refers to material pertaining to the three AY s' in question we set out a tabular statement with appropriate cross references:-

As is manifest from the above, there is specific reference to unaccounted transactions pertaining to AYs 2014-15, 2015-16

and 2016-17. The aforesaid chart correlates with the material which stands noticed and forms part of the Satisfaction Note. More importantly, the amounts identified as relevant to the AY s’ in question ex facie meet the prerequisites set out in the Fourth Proviso to Section 153A. We also take into consideration the indubitable fact that the cumulative figure attributed to income which has allegedly escaped assessment would stand at approximately INR 520 crores.

the course of four different searches. We find ourselves unable to sustain that submission bearing in mind the indubitable fact that Section 153C of the Act represents the power conferred upon the AO to commence a process of assessment or reassessment for a block period of ten assessment years in the maximum. The procedure as prescribed in Section 153C is part of a distinct statutory regime pertaining to search assessments which came to be introduced in the Act by virtue of Finance Act, 2003 and intended to act as a substitute to the procedure which was otherwise envisaged under Chapter XIV-B. (emphasis supplied)

rested its decision on incriminating material found for AYs 2014-15, 2015-16, 2016-17 and stretching up to AY 2020-21. 24. The provision only requires the AO to be satisfied that the material collated and handed over is likely to have an impact on the total income for the relevant AY or AY s'. While an assessment would necessarily have to be made in respect of each of the relevant AY or AYs', we find ourselves unable to read Section 153A or 153C as mandating separate Satisfaction Notes being drawn for each assessment year. Our conclusion in this respect stands fortified from the language of Section 153A(l)(a) which contemplates a notice being issued calling upon the person to furnish a return of income for each of the six AYs' or the relevant AY or AYs'. This too appears to suggest that while the notice could be composite and based on a common satisfaction note which encapsulates the incriminating material pertaining to the AY s' in question, it is only returns which must and mandatorily be filed separately. 25. Regard must be had to the indubitable fact that the Satisfaction Note merely forms the foundation for initiation of action and which would enable us to evaluate whether an opinion has been validly formed. As long as it rests on incriminating material which pertains to the AYs' in question, the same would qualify the requirement of Section 153C. We deem it apposite to observe that while it would be imperative for the Satisfaction Note to refer to the material pertaining to the AY s' which are sought to be reopened, a consolidated Satisfaction Note clearly does not appear to be an anathema provided it rests on material which pertains to the AYs'.which are sought to be reopened. 26. We in this respect also bear in mind the lucid explanation of the procedure liable to be adopted under Sections 153A and 153C as came to be enunciated by the Court in CIT v. Kabul Chawla [2015] 61 taxmann.com 412/234 Taxman 300/[2016] 380 ITR 573 (Delhi)/2015 SCC OnLine Del 11555.

"37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: (i) Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise.

(iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income" of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or infonnation available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material."

(v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess" in section 153A is relatable to abated proceedings (i.e., those pending on the

date of search) and the word "reassess" to the completed assessment proceedings. (vi) In so far as the pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer.

(vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 27. That leaves us only to evaluate the argument of inordinate delay. The submission of Dr. Singhvi essentially proceeded on the basis of Calcutta Knitwears and the expression 'immediately after' appearing in paragraph 41 of the report. We deem it apposite to extract paragraphs 35, 37, 38 and 41 of the said judgment hereinbelow;-

“35. Having said that, let us revert to the discussion of Section 158-BD of the Act. The said provision is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under Sections 132 or 132-A of the Act. Under Section 158-BD of the Act, if an officer is satisfied that there exists any undisclosed income which may belong to any other person other than the searched person under Sections 132 or 132-A of the Act, after recording such satisfaction, may transmit the records/documents/chits/papers, etc. to the assessing officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other person, the jurisdictional assessing officer may proceed to issue a notice for the purpose

of completion of the assessments under Section 158-BD of the Act, the other provisions of Chapter XIV-B shall apply- xxxx xxxx xxxx (37) The Tribunal and the High Court are of the opinion that it could only be prepared by the assessing officer during the course of the assessment proceedings under Section 158-BC of the Act and not after the completion of the said proceedings. The courts below have relied upon the limitation period provided in Section 158-BE(2)(6) of the Act in respect of the assessment proceedings initiated under Section 158-BD i.e. two years from the end of the month in which the notice under Chapter XIV-B was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after 1-1-1997. We would examine whether the Tribunal or the High Court are justified in coming to the aforesaid conclusion.

(38) We would certainly say that before initiating proceedings under Section 158-BD of the Act, the assessing officer who has initiated proceedings for completion of the assessments under Section 158-BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched under Section 132 or the books of accounts were requisitioned under Section 132-A of the Act. This is in contrast to the provisions of Section 148 of the Act where recording of reasons in writing are a sine qua non. Under Section 158-BD the existence of cogent and demonstrative material is germane to the assessing officers' satisfaction in concluding that the seized documents belong to a person other than the searched person is necessary for initiation of action under Section 158- BD. The bare reading of the provision indicates that the satisfaction note could be prepared by the assessing officer either at the time of initiating proceedings for completion of assessment of a searched person under Section 158-BC of the Act or during the stage of the assessment proceedings. It does not mean that after completion of the assessment, the assessing officer cannot prepare the satisfaction note to the effect that

there exists income tax belonging to any person other than the searched person in respect of whom a search was made under Section 132 or requisition of books of accounts was made under Section 132-A of the Act. The language of the provision is clear and unambiguous. The legislature has not imposed any embargo on the assessing officer in respect of the stage of proceedings during which the satisfaction is to be reached and recorded in respect of the person other than the searched person. ** ** ** 41. In the result, we hold that for the purpose of Section 158- BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158-BC of the Act; (b) along with the assessment proceedings under Section 158- BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158-BC of the Act of the searched person."

time contemplated and envisaged two separate and parallel assessments being undertaken, one in respect of undisclosed income based on material gathered in the course of the search and a regular assessment based on the return that may have been filed. Section 158BD of the Act empowered the AO to proceed against a person other than one searched and in respect of whom it may have found from material and documents gathered in the course thereof that income pertaining to that person had been discovered. It was while examining the correctness of the view expressed by the ITAT as well as the High Court that the Supreme Court spoke of the three stages at which a Satisfaction Note could have been prepared.

"Having regard to the decision in Manish Maheshwari v. Asst. CIT [2007] 208 CTR 97/289 ITR 341/159 Taxman 258 (SC) this court is of the opinion that the satisfaction note in the present case meets with the requirements of law. So far as the question of delay is concerned, the court is of the opinion that in the facts and circumstances of the present case, it cannot be held that there was any delay in recording the satisfaction note. The assessment of the searched person was completed on December 31, 2001. The satisfaction note was recorded on May 30, 2002, i.e., just about five months after the date of completion of the searched person. Notice was issued on June 3, 2002, immediately after the satisfaction note was recorded to the present assessee.

Having regard to the declaration of law made by the Supreme Court which specified three possible points in time when notice under section 158BD can be issued to third party/assessee, on the basis of material found on the premises of the searched person, the period of five months spent by the Assessing Officer of the searched person in finalizing the satisfaction note, can be said to have been proximate to the assessment proceedings. We also recollect the decision of this court in CIT v. Raghubir Singh Garg (I. T. A. No. 1420 of 2010, decided on August 27, 2014) (2015) 4 ITR-OL 256 (Delhi). In that case, the search took place on August 29, 2002, and the satisfaction note was recorded on January 16, 2003, i.e., within a period of four-and-half months. The court was of the opinion that the satisfaction note could be upheld. Following the said decision it is held that tliere was no delay in issuance of notice under section I58BD in the facts of the case."

is set aside on this aspect. The satisfaction note is held to be validly issued and within a reasonable time. In the light of the above observations of the Supreme Court in Calcutta Knitwears, particularly the contextual facts discussed (i.e., completion of the searched party's assessment on March 31, 2005, satisfaction note under section 158BD issued on July 15, 2005, and notice issued on February 10, 2006) it cannot be said that the delay in issuing the notice (although the satisfaction note was recorded within reasonable time) was fatal to the block assessment against the present assessee."

Section 153C notices came to be issued thereafter on 07 March 2023.

Faced with this situtation, learned counsel quotes Saksham 9. Commodities Ltd. Vs. ITO (2024) 464 ITR 1 (Delhi)(HC) that their lordships have adopted a different approach thereafter against the department as well. We, however, notice that the issue therein was in assessment year 2015-16 whereas the Assessing Officer had recorded a combined satisfaction note referring to the seized material pertaining to assessment years 2010-11 to 2012-13 only. The assessee’s case was that given the fact that there was no seized material relevant to A.Y. 2015- 16, section 153C proceedings could not have been initiated in its case; which stood accepted as under: “

”

any case, the dismissal would remain a dismissal by a non-speaking order where no reasons have been assigned and no law has been declared by the Supreme Court. The dismissal is not of the appeal but of the special leave petition. Even if the merits have been gone into, they are the merits of the special leave petition only. In our opinion, neither doctrine of merger nor article 141 is attracted to such an order. Grounds entitling exercise of review jurisdiction conferred by order 47, rule 1, of the Code or any other statutory provision or allowing review of an order passed in exercise of writ or supervisory jurisdiction of the High Court (where also the principles underlying or emerging from order 47, rule 1 act as guidelines) are not necessarily the same on which this Court exercises discretion to grantor not to grant special leave to appeal while disposing of a petition for the purpose. Mere rejection of special leave petition docs not take away the jurisdiction of the Court, Tribunal or forum whose order forms the subject-matter of petition for special leave to review its own order if grounds for exercise of review jurisdiction are shown to exist. Where the order rejecting a special leave petition is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order, still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of article 141. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other Court, Tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court. However, this would be so not by reference to the doctrine of merger.

appealed against. Any order passed thereafter would be an appellate order and would attract the applicability of doctrine of merger. It would not make a difference whether the order is one of reversal or of modification or of dismissal affirming the order appealed against. It would also not make any difference if the order is a speaking or non-speaking one. Whenever this Court has felt inclined to apply its mind to the merits of the order put in issue before it though it may be inclined to affirm the same, it is customary with this Court to grant leave to appeal and thereafter dismiss the appeal itself (and not merely the petition for special leave) though at times the orders granting leave to appeal and dismissing the appeal are contained in the same order and at times the orders are quite brief. Nevertheless, the order shows the exercise of appellate jurisdiction and therein the merits of the order impugned having been subjected to judicial scrutiny of this Court.

put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.

(ii) The jurisdiction conferred by article 136 is divisible into two stages. First stage is upto the disposal of prayer for special leave to file an appeal. The second stage commences if and when the leave to appeal is granted and special leave petition is converted into an appeal.

(iii) Doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger. The superior jurisdiction should be capable of reversing, modifying or affirming the order put in issue before it. Under article 136, the Supreme Court may reverse, modify or affirm the judgment, decree or order appealed against while exercising its appellate jurisdiction and not while exercising the discretionary jurisdiction disposing of petition for special leave to appeal. The doctrine of merger can, therefore, be applied to the former and not to the latter.

(iv) An order refusing special leave to appeal may be a non- speaking order or a speaking one. In either case it does not attract the doctrine of merger. An order refusing special leave to appeal does not stand substituted in place of the order under challenge. All that it means is that the Court was not inclined to exercise its discretion so as to allow the appeal being filed.

(v) If the order refusing leave to appeal is a speaking order, i.e., gives reasons for refusing the grant of leave, then the order has two implications. Firstly, the statement of law contained in the order is a W declaration of law by the Supreme Court within the meaning of article 141. Secondly, other than the,., declaration of law, whatever is stated in the order are the findings recorded by the Supreme Court

which would bind the parties thereto and also the Court, Tribunal or authority in any proceedings subsequent thereto by way of judicial discipline, the Supreme Court being the Apex Court of the country. But, this does not amount to saying that the order of the Court, Tribunal or authority below has stood merged in the order of the Supreme Court rejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties.

(vi) Once leave to appeal has been granted and appellate jurisdiction of the Supreme Court has been invoked, the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation.

(vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appear before the Supreme Court, the jurisdiction of the High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of rule (1) of order 47 of the Code.

of section 8C has not been challenged. Though, Shrt T.L.V. Iyer, the learned senior counsel for the appellant, made a feeble attempt a', raising such a plea at the time of hearing but unsuccessfully, such a plea has not so far been raised before the High Court also and not in the petition filed before this Court. No fault can be found with the approach of the High Court. The appeal is dismissed. No order as to the costs.”

regarding the aforesaid amount of cash benefits. We are of the considered view that mere filing of such documentary evidence does not itself discharge the assessee’s onus to prove genuineness thereof in light of Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC), CIT Vs. Durga Prasad More (1971) 82 ITR 540 (SC) and PCIT Vs. NRA Iron & Steel Co. (2019) 412 ITR 161 (SC). We thus find no reason to interfere with the learned CIT(A)’s above extracted detailed discussion upholding the impugned section 68 unexplained cash credits as well as the alleged commission component thereupon. His lower appellate findings under challenge are affirmed therefore.

No other ground or argument has been pressed before us.

Order Pronounced in the Open Court on 13.07.2026.

Sd/- Sd/- (NAVEEN CHANDRA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 13.07.2026 *Pooja Mittal, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR