DEPUTY COMMISSIONER OF INCOME TAX, NEW DELHI vs. JAIROLIA GEMS & JEWELLERY PRIVATE LIMITED, NEW DELHI

ITA 3831/DEL/2026Status: DisposedITAT Delhi25 September 2026AY 2021-2225 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessment order for Assessment Year 2022-23, which was based on a search initiated on January 31, 2023, could not be sustained for the preceding year (AY 2021-22) by merely issuing a notice under section 143(2). The legislative scheme introduced by Rajesh Kumar Jain, effective from April 1, 2021, confined the erstwhile section 153A regime to searches initiated on or before March 31, 2021, and brought subsequent searches under the redesigned reassessment framework. Explanation 2(i) to section 148 expressly deems initiation of search on or after April 1, 2021, as information suggesting escaped income. Therefore, jurisdiction for the preceding year should have been assumed under sections 147 and 148, subject to their conditions. Since no notice under section 148 was issued and the assessment was completed under section 143(3), the assumption of jurisdiction was not in accordance with the statutory scheme. Consequently, the assessment order was quashed. The additions made therein could not survive independently. The Tribunal admitted the additional grounds raised by the assessee and allowed the appeal. The grounds challenging the additions on merits were rendered academic and left undecided. The Revenue's appeal was dismissed, and the assessee's cross-objections were partly allowed.

What were the facts?

The Revenue filed an appeal against the order of the CIT(A) for Assessment Year 2021-22, which had granted partial relief by deleting or reducing most of the additions made by the Assessing Officer (AO). The AO had made additions totaling Rs. 5,77,12,022/- to the assessee's income after a search and seizure action on October 10, 2021. The assessee, Jairolia Gems & Jewellery Private Limited, had filed a return declaring an income of Rs. 34,86,238/-. The Revenue's grounds of appeal challenged the deletion of additions related to bogus purchases and the restriction of disallowances on other purchases. The assessee also filed cross-objections challenging the validity of the assessment proceedings, notice under section 143(2), and the assessment order under section 143(3), citing procedural defects and lack of jurisdiction. The Tribunal noted that the assessment for AY 2022-23 was based on a search initiated on January 31, 2023, and that the assessment for the preceding year (AY 2021-22) was completed under section 143(3) without issuing a notice under section 148.

What were the issues?

1. Whether the assessment order passed under section 143(3) for Assessment Year 2021-22 is valid, considering it was based on a search initiated after the stipulated date and without issuing a notice under section 148, thereby raising a question of jurisdiction and compliance with the statutory scheme for post-April 1, 2021 searches (mixed law and fact, concerning Sections 143(3), 147, 148, and 132). Assessee's Contentions: - The notice under section 143(2) and the assessment order under section 143(3) are illegal, invalid, without jurisdiction, barred by limitation, and void-ab-initio as they were passed without complying with the statutory conditions and procedures, particularly section 148 of the Act. - The assessment order was passed without obtaining valid prior statutory approval under section 148B and was based on borrowed satisfaction and without independent application of mind. - The assessment order was vitiated as it was passed under the directions of the Addl. CIT and the AO failed to exercise independent quasi-judicial discretion. - The CIT(A) erred in sustaining additions on an estimated basis, rejecting the assessee's submissions and evidence, and in confirming additions despite sales not being doubted and purchases being made in the regular course of business. - Additions were made without incriminating material found during search and on the basis of third-party statements without cross-examination. Revenue's Contentions: - The CIT(A) erred in deleting the addition of Rs. 1,77,13,964/- on account of bogus purchases, ignoring inspector reports, non-compliance with summons, sworn statements denying transactions, and the assessee's failure to establish the identity and genuineness of suppliers. - The CIT(A) erred in restricting the disallowance relating to M/s SRD Impex and M/s Giriraj Ji Jewellers to 3%, granting wrongful relief, despite findings that the parties were not traceable. - The CIT(A) erred in holding that disallowance of bogus purchases cannot be made without rejecting books of account under section 145(3), as additions were based on independent evidence.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 132,Section 148B,Section 145(3),Section 69A,Section 142(3),Section 119,Section 153A

AI-generated summary — verify with the full judgment below

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

Before: SHRI VIMAL KUMAR & SHRI MANISH AGARWAL

For Appellant: Shri Ved Jain, Adv. and Ms. Uma Upadhyay, CA, Shri Suraj Prasad, CA
For Respondent: Shri K. Hauthang, CIT-DR
Hearing: 21/07/2026Pronounced: 25/09/2026

PER MANISH AGARWAL, AM: This instant appeal is filed by the Revenue against the order of the Ld.

Commissioner of Income Tax (Appeals)-31, New Delhi [CIT(A), in short] dated C.O.256/Del/2026 DCIT vs. Jairolia Gems & Jewellery Pvt. Ltd. 12.12.2025 in Appeal No. CIT(A), Delhi-29/10066/2020-21 arising out of order passed u/s 143(3) of the Income Tax Act, 1961 (hereinaft

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →