DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE SALEM vs. ANS DHIVYAM JEWELLS, SALEM

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ITA 560/CHNY/2026Status: DisposedITAT Chennai05 June 2026AY 2017-187 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, following the Supreme Court ruling in Jasjit Singh. It confirmed that the assessment under Section 153C could only be initiated for the year of receipt of documents and the preceding six years.

What were the facts?

The Revenue appealed against the CIT(A)'s order quashing the assessment under Section 153C for AY 2017-18. The CIT(A) held that the assessment was void ab initio as it was initiated beyond the permissible period.

What were the issues?

Whether assessment proceedings under Section 153C for AY 2017-18 were validly initiated based on the date of receipt of documents by the AO of the 'other person'.

Which sections of the Income-tax Act were involved?

Section 153C,Section 132,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO

Hearing: 04.06.2026Pronounced: 05.06.2026

Heard together (2 matters)

C.O. No.12/CHNY/2026
I.T.A.No.560/CHNY/2026

Read from the judgment's own cause title. This page is filed under one of them.

आदेश /O R D E R

PER GEORGE GEORGE K, VICE PRESIDENT:

This appeal filed by the Revenue and the cross objection preferred by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Chennai-20 dated 20.11.2025, passed under section 250 of the Income Tax Act, 1961

- 2 - ITA No.560/CHNY/2026 & CO No.12/CHNY/2026 Ans Dhivyam Jewells (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.

2.

We shall first adjudicate the appeal filed by the Revenue. The grounds raised read as follows:- 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.

2.

The Ld.CIT(A) erred in holding that the facts of Jasjit Singh [2023 ] 458 ITR 437 (SC) are same and applicable to the issue involved in the facts of the present case, when the date for initiation of proceedings u/s 153C of the Act in the case of the "other person” are involved, as it would defeat the very rationale legis of the provision by bringing into play different sets of provisions for initiation of proceedings in view of the intervening amendment to the section involved in the Finance Act?

3.

For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the Order of Ld.CIT(Appeals) may be set aside and that of Assessing Officer may be restored.

3.

The First Appellate Authority (FAA) had quashed the assessment completed u/s.153C of the Act for the assessment year 2017-18 as void ab initio as it was beyond the scope of the said section. The FAA by following the judgment of the Hon’ble Apex Court in the case of CIT vs. Jasjit Singh reported in [2023] 458 ITR 437 (SC) had held that 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

- 3 - ITA No.560/CHNY/2026 & CO No.12/CHNY/2026 Ans Dhivyam Jewells which the returns were to be filed by the third party (person other than searched person). It was concluded by the FAA that in the present case, the AO of the assessee had received the seized documents on 01.08.2023, which has to be reckoned as the date of initiation of search u/s.132 of the Act for the purpose of assessing or reassessing the total income of six years immediately preceding the assessment year relevant to the previous year in which the search is initiated. Accordingly, it was held that the proceedings u/s.153C of the Act can be initiated only for assessment years 2018-19 to 2023- 24 and quashed the assessment order passed u/s.153C of the Act for assessment year 2017-18. The relevant finding of the FAA reads as follows:- 7.2. As per provisions of section 153C(1) of the Act, assessment proceedings u/s 153C of the Act can be initiated for (i) six assessment years immediately preceding the assessment year relevant to the year in which search is conducted, and (ii) relevant assessment year(s) referred to in section 153A(1) of the Act. Further, as per first proviso to sub-section (1) of section 153C of the Act, the reference to date of initiation of search in the second proviso to section 153A(1) (which deals with abatement of proceedings) shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person. However, the Hon’ble Supreme Court has held in the case of Jasjit Singh (supra) that the said proviso 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 third party. In view of the said judgment, 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 account or documents or assets seized are received by the AO of the ‘other person’ and immediately preceding six years.

- 4 - ITA No.560/CHNY/2026 & CO No.12/CHNY/2026 Ans Dhivyam Jewells

7.3. It is seen that in the present case, the AO of the appellant had received the seized documents on 01.08.2023, which has to be reckoned as the date of initiation of search u/s 132 of the Act for the purpose of assessing or reassessing the total income of six years immediately preceding the assessment year relevant to the previous year in which the search is initiated. Accordingly, the assessment proceedings u/s 153C of the Act can be initiated only for AY 2018-19 to 2023-24. By respectfully following the decision of the Hon’ble Supreme Court in the case of Jasjit Singh (supra), it can be concluded that the AO did not have jurisdiction to assess the total income for the AY 2017-18, which is the year under consideration. Accordingly, the assessment order passed by the AO for AY 2017-18 is held as void ab initio.

4.

Aggrieved by the order of the FAA, the Revenue has filed the present appeal. The Ld.DR relied on the grounds raised.

5.

The Ld.AR on the other hand apart from reiterating the submissions made before the FAA, placed on record the judgments relied on, the satisfaction recorded by the AO of the assessee and the notices issued u/s.153C of the Act.

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

- 5 - ITA No.560/CHNY/2026 & CO No.12/CHNY/2026 Ans Dhivyam Jewells 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

- 6 - ITA No.560/CHNY/2026 & CO No.12/CHNY/2026 Ans Dhivyam Jewells 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 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.

CO No.12/CHNY/2026 8. The Ld.AR submitted that the cross objection filed by the assessee would be rendered infructuous in the event of the Revenue's appeal being dismissed. In light of the submission of the Ld.AR, the cross objection filed by the assessee is dismissed.

- 7 - ITA No.560/CHNY/2026 & CO No.12/CHNY/2026 Ans Dhivyam Jewells

9.

In the result, the appeal filed by the Revenue and the cross objection preferred by the assessee are dismissed.

Order pronounced in the open court on 5th June, 2026 at Chennai.

Sd/- Sd/- (इंटूर� रामा राव) (जॉज� जॉज� के) (INTURI RAMA RAO) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 5th June, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. िनधा�रती /Assessee 2. राज� /Revenue 3. आयकर आयु�त /CIT, Salem 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.06.08 17:29:25 +05'30'

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