ASM MANAGEMENT CONSULTANTS PRIVATE LIMITED,DELHI vs. DCIT CC-28, DELHI

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ITSSA 3445/DEL/2026Status: DisposedITAT Delhi04 August 2026AY 2019-207 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the satisfaction note recorded by the AO of the non-searched person was invalid. The AO had not recorded that the seized material found during the course of the search had a "bearing on the determination of the total income of the assessee," as statutorily mandated by Section 153C of the Act. The Tribunal applied the decision of the Hon'ble Delhi High Court in Saksham Commodities Ltd. v. ITO, which emphasized that the AO must form the requisite satisfaction that the material has a bearing on the determination of the total income of the other person before initiating proceedings under Section 153C. Consequently, the Tribunal found that the notice under Section 153C and the consequent assessment order were not sustainable in law. The Tribunal quashed the order under Section 153C for the assessment year under consideration. The appeals were allowed on this basis, and the other grounds were not adjudicated.

What were the facts?

The assessee, ASM Management Consultants Pvt. Ltd., is appealing against an order dated 21.01.2026 passed by the CIT(A), Delhi-25, which upheld the assessment order dated 15.02.2024 by the DCIT, Central Circle-28, Delhi for Assessment Year 2019-20. The assessee, engaged in consultancy and real estate, filed a return showing a loss. The Income Tax Department conducted a search and seizure under Section 132 on Alankit Group. Subsequently, the AO issued a notice under Section 153C to the assessee, alleging unexplained money of Rs. 5,00,000/- under Section 69A and commission of Rs. 15,000/- under Section 69C. The assessee claimed these amounts related to a return of advance taken in FY 2012-13. The CIT(A) dismissed the assessee's appeal, leading to the present appeal before the ITAT.

What were the issues?

1. Whether the notice dated 30.06.2022 issued by the Ld. AO under Section 153C(1) of the Income-tax Act, 1961, is void ab initio for want of jurisdiction, considering the date of search initiation and amendments to Section 153C. The assessee argued that the notice is void due to want of jurisdiction, citing the date of search initiation and amendments to Section 153C. It also contended that the notice contravenes Section 153C(3) and that Section 153C is a machinery provision applicable to searches prior to the amendment date as per Supreme Court's decision in ITO v. Vikram Sujitkumar Bhatia. Furthermore, the assessee argued that the jurisdiction was assumed at the behest of the AO of the searched person without independent satisfaction. The revenue did not record any arguments in the judgment. 2. Whether the Ld. CIT(A) erred in upholding the assumption of jurisdiction by the Ld. AO under Section 153C without the existence of any incriminating material qua the appellant found during the search, and whether the assessment order is bad in law. The assessee contended that no incriminating material belonging to it was found during the search, and the satisfaction note was recorded mechanically without application of mind, lacking any bearing on the total income. The revenue did not record any arguments in the judgment. 3. Whether the Ld. CIT(A) erred in sustaining the addition of Rs. 5,00,000/- under Section 69A and Rs. 15,000/- under Section 69C, and whether the additions were made in violation of the principles of natural justice. The assessee argued that the additions were based on suspicion and conjecture, without corroborative evidence, and that the principles of natural justice were violated by not providing full statements of third parties and an opportunity for cross-examination. The revenue did not record any arguments in the judgment.

Which sections of the Income-tax Act were involved?

Section 153C,Section 132,Section 250,Section 69A,Section 69C,Section 153D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI NAVEEN CHANDRA

For Appellant: Shri Vaibhav Goel, C.A
For Respondent: Shri Zafarul Haque Tanweer, CIT-D.R
Hearing: 04.08.2026Pronounced: 04.08.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER And SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER IT(SS)A No.3445/Del/2026 [Assessment Year : 2019-20] ASM Management Vs DCIT Consultants Pvt. Ltd. CC-28 C/o. CA Vaibhav Goel 75 Delhi - 55 Navyug Market, 1st Floor, Ghaziabad, UP-201 001 PAN : AAGCA 2028 M (APPELLANT) (RESPONDENT) Assessee by Shri Vaibhav Goel, C.A. Revenue by Shri Zafarul Haque Tanweer, CIT-D.R. Date of Hearing 04.08.2026 Date of Pronouncement 04.08.2026 ORDER PER NAVEEN CHANDRA [ACCOUNTANT MEMBER]: The above-captioned appeal is preferred by the assessee against the order dated 21.01.2026, passed by the Learned Commissioner of Income Tax (Appeals), Delhi - 25 (hereinafter referred to as ‘ld. CIT(A)’) under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), arising out of the assessment order dated 15.02.2024 passed by the Assessing Officer, DCIT/ACIT, Central Circle – 28, Delhi for A.Y. 2019-20. 2. The grounds of appeal raised by the assessee are as under: Provisions of section 153C of the Income Tax Act 1961 is not applicable

IT(SS)A No.3445/Del/2026 [for A.Y 2019-20] ASM Management consultant pvt ltd. v DCIT

1.

"That the notice dated 30.06.2022 issued by Ld. Assessing Officer ("Ld. AO") under Section 153C(1) of the Income-tax Act, 1961 ("the Act") is void ab initio for the want of jurisdiction as the date of initiation of search as per 1st proviso thereto is 21.06.2022 viz., the date of receipt of material vide PCIT vs. Ojjus Medicare (P.) Ltd. [2024] 465 ITR 101 (Delhi)." 1.1 That the issuance of impugned notice dated 30.06.2022 grossly contravenes Section 153C(3) of the Act, which renders the said provision inapplicable in relation to search initiated with 1st proviso to Section 153C(1) of the Act vide Harigovind v. ACIT or after 01.04.2021 read [2025] 180 taxmann.com 197 (Madras), Smt Geetanjali Bhayana v DCIT (2026) 183 taxmann.com 95 (Delhi DCIT Shanmugasundaram Manoharan v. taxmann.com786 (Chennai - Trib.). Trib) and [2025] 181 1.2 That Section 153C of the Act being a machinery provision is to effectuate the object and purpose of the statute and amendment brought therein with a cutoff date shall be applicable to a search prior to the date of amendment as per the law decided by Hon'ble Supreme Court in ITO v. Vikram Sujit kumar Bhatia (2023) 453 ITR 417. 1.3 Without prejudice to the foregoing grounds, the issuance of notice dated 30.06.2022 and the consequent assumption of jurisdiction under Section 153C(1) of the Income-tax Act, 1961 is bad in law and liable to be quashed, inasmuch as the jurisdiction has been assumed at the behest and on the direction of the Assessing Officer having jurisdiction over the searched person, who, while recording satisfaction, impermissibly directed initiation of proceedings under Section 153C in the case of the appellant. Such assumption of jurisdiction, being without independent satisfaction of the jurisdictional Assessing Officer of the appellant and contrary to the scheme of Section 153C, renders the impugned proceedings void ab initio." No incriminating material qua the appellant found 2. That on the facts and in the circumstances of the case, and in law, the learned CIT(A) erred in upholding the assumption of jurisdiction by the learned Assessing Officer under Section 153C of the Income-tax Act, 1961, for the assessment year under consideration, without the existence of any incriminating material qua the appellant, found during the course of search conducted on Alankit Group. That the assessment order passed under section 153C of the Income Tax Act, 1961 is bad in law, void ab initio, and without jurisdiction, and therefore deserves to be quashed. Non-supply of incriminating material 3. That in the facts and circumstances of the case, the Ld. CIT(A) erred in law in sustaining the action of Ld AO in completing the assessment proceedings u/s 153C of the Act for the assessment year under consideration without bringing on record incriminating material qua the appellant seized during search on Alankit Group. That, the assessment order passed u/s 153C without satisfying the mandatory jurisdiction condition is not valid in law;

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IT(SS)A No.3445/Del/2026 [for A.Y 2019-20] ASM Management consultant pvt ltd. v DCIT Mechanical recording of facts in satisfaction note satisfaction of impact or bearing on total income Carbon Copy and no 4. That in the facts and circumstances of the case and in law, Ld CIT(A) erred in sustaining the assumption of jurisdiction based on the satisfaction note recorded by Ld DCIT, Central Circle - 28 Delhi & Ld ITO Ward 3(1) Delhi in mechanical and ritualistic manner; That, the satisfaction note does not reflect any application of mind towards evidence available on record; 5.1. That, the satisfaction note has been prepared on the basis of mere suspicion; That Ld AO failed to record the satisfaction that the material seized during search had any bearing on the total income of the appellant; That neither the identity of Sh Sunil Kumar Gupta or Sudhir Gupta has been established nor has the nature of accommodation entry been specified in the satisfaction note. 5.2. That in the facts and circumstances of the case, that Ld AO had not recorded the separate satisfaction note detailing/highlighting the incriminating material seized qua the appellant and the satisfaction note is a mere carbon copy of the satisfaction recorded by Ld AO having jurisdiction over the appellant; 5.3. That in the facts and circumstances of the case, that the reassessment proceedings initiated u/s 153C based on satisfaction note which does not bear DIN is invalid; Addition u/s 69A of the Income Tax Act, 1961 not attracted 6. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in sustaining the addition of Rs. 5,00,000/- u/s 69A of the applicable on facts of the case when the transaction is found duly recorded in the books of accounts maintained by the appellant and no incriminating or corroborative evidence found to implicate appellant as owner of any money. Addition u/s 69C of the Income Tax Act, 1961 not attracted 7. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) in sustaining addition of Rs. 15,000/- u/s 69C of the Act being notional commission estimated @ 3 percent adducing any corroborative evidence on record which could prove the unsecured loan without payment of alleged commission by the appellant company. Hence, addition made u/s 69C of the Act on the basis of doubt, suspicion, conjecture and surmises is bad in law and is liable to be deleted. Violation of principle of natural justice 8. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in sustaining addition made on the basis of un-substantiated statement of third persons without providing complete copy of their Page 3 of 8

IT(SS)A No.3445/Del/2026 [for A.Y 2019-20] ASM Management consultant pvt ltd. v DCIT statement and also without providing opportunity of cross-examination of said deponents even though specifically requested by the appellant. That, addition made without disclosing the information and material in the possession of Ld AO is per se violative of the principles of fairness. Hence, addition made u/s 69A & 69C of the Act in violation of principle of natural justice, is bad in law and is liable to be deleted. 9. That on facts and circumstances of the case and in law, Ld CIT(A) erred in sustaining the action of the Ld AO without appreciating that no show cause notice was issued during the course of the assessment proceedings in terms of CBDT Instruction No 20/2015 (Para 4) dated 29.12.2015. 10. That, on facts and circumstances of the case, the Ld AO erred in completing the assessment proceedings without supplying the copy of approval u/s 153D of the Income Tax Act, 1961 along with the assessment order. That, the order of assessment is vitiated in law as the Assessing Officer consults or seeks approval of the assessment time to time from his superior officers. 11. That the appellant craves leave to add, to alter or to amend grounds of appeal before the appeal is heard and disposed off.” 3. Brief facts of the case are that the assessee is a private limited company engaged in the business of consultancy and real estate. During the year the Assessee filed return of income at Loss of Rs.59,788/-. It purchased a plot during F.Y 2012-13 against which it received advances from certain persons including M/s New wave Commercial Pvt. Ltd. of Rs.25,00,000/-. The Income tax department carried out a search and seizure proceedings under Section 132 of the Act on Alankit Group of Companies in which name of M/s New Wave Commercial Pvt. Ltd. appeared. The Id. AO has added the amount of Rs. 5,00,000/- during F.Y 2018-19 (A.Y 2019-20) in the income of Assessee considering the amount as unexplained money u/s 69A of the Act. The AO further added an amount of Rs.15,000/- towards Commission paid on

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IT(SS)A No.3445/Del/2026 [for A.Y 2019-20] ASM Management consultant pvt ltd. v DCIT the aforesaid transaction. The assessee on the other hand, claimed the same as return of advance taken in F.Y 2012-13. 4. Aggrieved, assessee was in appeal before the ld. CIT(A) who dismissed the appeal of the assessee. Aggrieved, assessee is now in appeal before us. 5. Before us, learned Counsel for the assessee questioned the validity of satisfaction note u/s 153C being recorded mechanically and does not record that the seized material has a bearing on determination of total income. The Ld AR has raised the issue of invalid proceedings initiated under section 153C of the Act as no incriminating material belonging to the Assessee which has a bearing on total income of the assessee, was found during the course of the search and there being absence of any valid satisfaction being recorded as per law. 6. We have heard the rival submissions and perused the material available on record. For adjudicating the issues at hand, it would be relevant to reproduce the Satisfaction note dated 30.06.2022 recorded by the AO of the assessee, i.e., non-searched person as under:

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IT(SS)A No.3445/Del/2026 [for A.Y 2019-20] ASM Management consultant pvt ltd. v DCIT

From the reading of paragraph 2 to 4 of the above satisfaction note dated 30.06.2022, as recorded by the AO of the assessee, the non-searched person, we find that the AO has not recorded that the seized material found during the course of search, have a “bearing on determination of the total income of the assessee”, as statutorily mandated in the provisions of section 153C of the Act. Consequently, we apply the decision of Hon’ble Delhi High Court in the case of Saksham Commodities Ltd. v. ITO (2024) 464 ITR 1/ 338 CTR 418/161 taxmann.com 485 (Delhi), which held as under: “48.**********However, the spectre of abatement insofar as the "other person" is concerned would arise only after the jurisdictional AO has formed the requisite satisfaction of the material having "a bearing on the determination of the total income of such other person" and having formed the opinion that proceedings under Section 153C are liable to be initiated. 50. What we seek to emphasise is that merely because Section 153C confers jurisdiction upon the AO to commence an exercise of assessment or reassessment for the block of years which are mentioned in that provision, the same alone

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IT(SS)A No.3445/Del/2026 [for A.Y 2019-20] ASM Management consultant pvt ltd. v DCIT would not be sufficient to justify steps in that direction being taken, unless the incriminating material so found is likely to have an impact on the total income of a particular AY forming part of the six AYs' immediately preceding the AY pertaining to the search year or for the "relevant assessment year".

In such facts and circumstances therefore, we hold that the satisfaction note is invalid which vitiates the assumption of jurisdiction u/s 153C of the Act. Consequently, the notice u/s 153C as well as order under section 153C is not sustainable in law. We, accordingly, quash the order under section 153C of the Act for both the years. The appeals are allowed in aforesaid terms. 7. In the result, the appeal filed by the assessee in IT(SS)A No. 3445/Del/2026 is allowed. Order pronounced in the open court on 04.08.2026.

Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 24.08.2026 Priti Yadav, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi

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