NAKUL RAJGARHIA,NEW DELHI vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-32, NEW DELHI, JHANDEWALAN

ITA 3134/DEL/2026Status: DisposedITAT Delhi29 September 2026AY 2019-2011 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the initiation of proceedings under Section 153C of the Income Tax Act, 1961, was invalid. The reasoning was based on the principle that for Section 153C proceedings to be valid, the AO must be satisfied that the seized or requisitioned material pertains to the assessee and has a bearing on the determination of their total income. The Tribunal noted that the satisfaction notes recorded by the AO were mechanical and lacked specific reasons as to how the discovered material was likely to have a bearing on the determination of the total income of the assessee for the relevant assessment years. Reliance was placed on the jurisdictional Delhi High Court's decision in the case of Saksham Commodities, which clearly held that seized books of accounts, documents, or assets must pertain to the assessee and have a bearing on the determination of their total income. Consequently, the Tribunal quashed the proceedings initiated under Section 153C and the consequent assessment orders. The grounds of appeal related to the invalid initiation of proceedings were allowed. As the legal grounds were allowed, other grounds became academic and were not adjudicated. The appeals were allowed.

What were the facts?

The appeals before the Income Tax Appellate Tribunal (ITAT) were filed by the Assessee (Nakul Rajgarhia and Sons HUF and Nakul Rajgarhia) against orders of the Commissioner of Income Tax (Appeals) confirming assessment orders passed by the Assessing Officer (AO) under Section 153C of the Income Tax Act, 1961. The assessment years involved were 2018-19 and 2019-20. The proceedings were initiated based on documents seized during a search action under Section 132 in the case of Alankit Group. The AO of the searched entity referred a ledger account from an employee's laptop, which was then used by the assessee's AO to record satisfaction and initiate proceedings under Section 153C. The AO made additions on account of alleged undisclosed transactions and commission for accommodation entries. The CIT(A) confirmed these additions.

What were the issues?

The Tribunal had to decide the following questions: 1. Whether the initiation of assessment proceedings under Section 153C of the Income Tax Act, 1961, was valid in the absence of any alleged incriminating material belonging to or pertaining to the assessee? 2. Whether the satisfaction notes recorded by the AO, dated 24.06.2022 and 16.08.2022, were invalid due to the absence of a DIN, thereby violating CBDT Circular No. 19/2019? 3. Whether the assessment proceedings initiated under Section 153C were bad in law, barred by limitation, and without jurisdiction due to the non-satisfaction of statutory preconditions? 4. Whether the additions of Rs. 18,35,306/- and Rs. 55,060/- were erroneously confirmed by the CIT(A) without confronting incriminating material and based on surmises? Assessee's contentions: - Proceedings under Section 153C were initiated without any incriminating material or assets bearing on the assessee's undisclosed income. - The satisfaction notes lacked DIN, violating CBDT Circular No. 19/2019. - The statutory preconditions for Section 153C were not met, rendering the proceedings invalid. - The additions were based on surmises and conjecture, without confronting material and were double-counted in one instance. - The approval under Section 153D was mechanical. Revenue's contentions: - The judgment records no specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 153C,Section 69C,Section 153A,Section 153D,Section 132,Section 65A,Section 65B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL

For Appellant: Shri Arun Jain, CA
For Respondent: Shri Virender Singh, CIT- DR
Hearing: 22/07/2026Pronounced: 29/09/2026

PER MANISH AGARWAL, AM: These are three appeals filed by the Assessee against the common order(s) of Learned Commissioner of Income Tax (Appeals)-25, New Delhi (‘the CIT(A)’ in short) all dated 21.01.2026 arising out of the assessment orders passed by the AO u/s153C of the Income Tax Act, 1961 (‘the Act’ for short) for Assessment Years 2018- 19 and 2019-20 respectively.

2.

The captioned appeals filed by the Assessee are tabulated as under:

S. Appeal Nos. Name of Asstt. CIT(A)’s A

The order continues below.

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