MOHIT KUMAR GUPTA,DELHI vs. DEPUTY COMMISSIONER CENTRAL CIRCLE 7 DELHI, DELHI

PER SHRI M BALAGANESH, ACCOUNTANT MEMBER: The appeal in ITSSA 8029/DEL/2025 for AY 2021-22, arises out of the 1. order of the ld Commissioner of Income Tax (Appeals)-24, Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 24.10.2025 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 26.02.2023 by the Assessing Officer, DCIT, Central Cirlce-07, New Delhi (hereinafter referred to as ‘ld. AO’).

The Ground Nos. 4 and 5 raised by the assessee were stated to be not 2. pressed by the Learned AR at the time of hearing. Necessary endorsement has been made by the Learned AR in our files. Accordingly, the Ground Nos. 4 and 5 raised by the assessee are hereby dismissed as not pressed.

The Ground No. 3 raised by the assessee is challenging the action of the 3. Learned CITA in not quashing the assessment on the ground that mechanical approval has been granted by the Learned Additional Commissioner for the assessment. The Ground No. 2 raised by the assessee is challenging the validity of assessment to be barred by limitation. Since these two grounds go to the root of the matter, we deem it fit to take up the same first for adjudication.

We have heard the rival submissions and perused the materials 4. available on record. The return of income for the assessment year 2021-22 was filed by the assessee on 14-03-2022 declaring total income of Rs 22,64,080. The assessee is engaged in the business of retail sale of other products and one of the distributors of M/s Sakarni Plaster India Private Limited. The source of income of the assessee is income from business and profession and income from other sources. A search and seizure operation under section 132 of the Act was conducted in Sakarni group and others on 2-2-2022. During the course of search proceedings, incriminating handwritten documents containing hisab of various properties and expenses incurred in cash were found at residential and office premises. The case of the assessee was centralized to the office of Assistant Commissioner of Income Tax, Central Circle 7, Delhi. vide order under section 127 of the Act dated 8- 3-2022. In fact, the learned AO noted in para 3 of the assessment order that search warrant was also issued in the name of the assessee and accordingly the case of the assessee was selected for compulsory scrutiny for assessment year 2021-22 with prior approval of competent authority and notice under section 143(2) of the Act stood issued to the assessee on 30-6-2022. 2 Thereafter, notice under section 142(1) of the Act was issued to the assessee on 10-9-2022. Since there was no compliance made by the assessee to the various statutory notices, summons under section 131 of the Act stood issued to the assessee on 4-11-2022. In response to the summons and the previous notices, the assessee attended office on 11-11-2022 and submitted partial reply. The assessment was completed for the assessment year 2021-22 under section 143(3) of the Act on 26-2-2023. determining total income of the assessee at Rs. 56,39,080 after making an addition of Rs. 33,75,000 on account of unexplained money under section 69C, read with section 115 BBE of the Act. The learned AO in paragraph 14 of the assessment order had noted that the provisions of clause (xii) of Explanation 1 to sub-section (9) of section 153 of the Act applies to the instant case and accordingly the limitation date was extended in the case of Sakarni group of cases from 31-12-2022 to 26-2- 2023, vide approval from Additional CIT Central Range to New Delhi dated 28- 12-2022. Hence, it was pleaded that the present assessment framed by the learned AO on 26-2-2023 is well within the time from the side of the revenue . The case of the assessee is that the provisions of section 153(1) 3rd proviso would apply in the instant case, basis which, the assessment ought to have been framed on or before 31-12-2022. On plain reading of the third proviso to section 153(1) of the Act, it is 5. very clear that assessment need to be completed within 9 months for all assessment years commencing from assessment year 2021-22 onwards. We find that the Learned AO had sought to apply Clause (xii) of Explanation 1 to Section 153 which reads as under:- “The following period shall be excluded – (xii) the period (not exceeding one hundred and eighty days) commencing from the date on which a search is initiated under section 132 or a requisition is made under section 132A and ending on the date on which the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing seized under section 132 or requisitioned under section 132A, as the case may be, are handed over to the Assessing Officer having jurisdiction over the assessee, - (a) in whose case such search is initiated under section 132 or such requisition is made under section 132A ; or (b) to whom any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to ; or (c) to whom any books of account or documents seized or requisitioned pertains or pertain to, or any information contained therein, relates to”

In our considered opinion, the said clause (xii) would be applicable only 6. in the event of handing over of seized documents from one AO to another AO. No handing over whatsoever happened in the instant case as the assessee was searched by way of separate warrant which is conceded by the learned AO in para 3 of the assessment order. No evidence has been brought on record by the revenue in this regard as to whether any documents were handed over to the AO having jurisdiction over the assessee by any party. Hence the assessment need to be framed within the outer time limit prescribed in the 3rd proviso to section 153(1) of the Act. If the view of the revenue is to be entertained, then in every search case, similar extension of time for framing the assessment would be sought and that would open a Pandora box giving lead to fresh litigation. That cannot be the intention of the legislature. The legislature in its wisdom had consciously reduced the time limit from 21 months to 9 months for completing the assessment. Hence we hold that the assessment ought to have been framed within that time limit i.e. on or before 31.12.2022. Since the assessment is framed in the instant case on 26.2.2023, the same is to be treated as barred by limitation. Accordingly, the assessment framed is hereby quashed. Since the entire assessment is quashed, the adjudication of other 7. grounds raised by the assessee become academic in nature and they are left open.

In the result, the appeal of the assessee is partly allowed. 8.

Order pronounced in the open court on 21st -August, 2026.

-Sd/- -Sd/- VIMAL KUMAR M BALAGANESH JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi Dated: 21/08/2026 AK Keot Copy to: MOHIT KUMAR GUPTA, F-82 MAIN ROAD JAGAT PURI DELHI, 1 NEW DELHI-110051, DELHI DEPUTY COMMISSIONER CENTRAL CIRCLE 7 DELHI, 2 ARA CENTRE JHANDEWALAN EXTENSION, NEW DELHI-110055, DELHI 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE