SPARSH VYAPAAR PRIVATE LIMITED,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-32, NEW DELHI, NEW DELHI

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ITA 4337/DEL/2025Status: DisposedITAT Delhi07 October 2026AY 2019-2012 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee company was struck off from the Register of Companies. However, the AO had filed an appeal before the NCLT to restore the company, which was pending at the time of assessment order. The Tribunal found that the AO had initiated proceedings under Section 153C based on material found during a search of the Kuldeep Bishnoi Group. The assessee argued that the assessment was invalid due to the company being struck off, and that the additions were based on "dumb documents" and the statement of a deceased person without corroboration or opportunity for cross-examination. The Tribunal acknowledged the grounds raised by the assessee concerning the validity of the assessment on a non-existent entity and the reliance on uncorroborated evidence. The Tribunal also considered the additional grounds regarding the advance received for a future sale and the penalty proceedings. The Tribunal did not make a finding on the merits of the additions or the validity of the assessment itself, as the core issue of the company's existence and the validity of proceedings against it was central. The Tribunal's decision would hinge on the outcome of the NCLT proceedings or a definitive ruling on whether assessment can proceed against a struck-off company. The judgment does not record a final decision on the merits of the additions or penalties, focusing on the procedural and existence-related issues.

What were the facts?

The assessee, Sparsh Vyapaar Private Limited, filed an appeal against the order dated 19.03.2025 passed by the CIT(A)-30, New Delhi, for Assessment Year 2019-20. The original return declared a NIL loss. A search operation on the Kuldeep Bishnoi Group on 23.07.2019 led to the seizure of documents and recording of statements. The Assessing Officer (AO) recorded satisfaction on 15.12.2021 and issued a notice under Section 153C of the Income-tax Act, 1961. The assessee filed a revised return on 24.12.2021 declaring a loss of Rs. 9,40,264/-. The AO completed the assessment under Section 153C r.w.s. 143(3) at an income of Rs. 12,46,00,000/-, making an addition of Rs. 12,46,00,000/- as undisclosed capital gain on a property sale. The assessee contended that the company was struck off from the Register of Companies and had not been reinstated by the NCLT, making assessment impossible. The AO, however, obtained prior approval to file an appeal before the NCLT to restore the company.

What were the issues?

1. Whether the assessment proceedings completed by the AO under Section 153C r.w.s. 143(3) of the Income-tax Act, 1961, are valid, considering the assessee company was struck off from the Register of Companies and not reinstated by the NCLT, contrary to settled legal jurisprudence that assessment cannot be undertaken against a non-existent assessee. (Assessee's contention: Assessment is invalid as the company is non-existent. Revenue's contention: Not explicitly recorded, but implied by the AO's action to seek restoration of the company). 2. Whether the additions of Rs. 12,46,00,000/- made by the AO as unaccounted capital gain are valid, considering the essential ingredients are not satisfied. (Assessee's contention: Additions are not valid as essential ingredients are not satisfied. Revenue's contention: Not explicitly recorded). 3. Whether the assessment order passed under Section 153C r.w.s. 143(3) is perverse, erroneous, and bad in law for not being based on any "incriminating material" and relying on "dumb documents" (diary notings) found during the search of the Kuldeep Bishnoi Group, which is a condition sine qua non for additions under Section 153C. (Assessee's contention: Assessment is bad in law due to lack of incriminating material and reliance on dumb documents. Revenue's contention: Not explicitly recorded). 4. Whether the additions are valid when based on the statement of the late Sh. Sukumar Poria recorded under Section 132(4) on a stand-alone basis without corroborative evidence and without the possibility of cross-examination. (Assessee's contention: Additions are invalid due to lack of corroboration and inability to cross-examine. Revenue's contention: Not explicitly recorded). 5. Whether the AO discharged its burden of proof, and if not, are the additions arbitrary and liable to be quashed. (Assessee's contention: AO failed to discharge burden of proof, making additions arbitrary. Revenue's contention: Not explicitly recorded). 6. Whether the AO rightly rejected the retraction of the statement made by Sh. Kuldeep Bishnoi, stating that diary notings and statements of Late Sh. Sukumar Poria are false, without cogent reasoning. (Assessee's contention: Retraction was wrongly rejected without cogent reasoning. Revenue's contention: Not explicitly recorded). 7. Whether the addition of Rs. 1,98,00,000/- is correct, considering it was an advance for a future sale transaction pending completion due to ongoing litigation. (Assessee's contention: Advance is still an advance and not income. Revenue's contention: Not explicitly recorded). 8. Whether penalty proceedings under Section 271D and Section 270A are correct. (Assessee's contention: Penalties are incorrect. Revenue's contention: Not explicitly recorded).

Which sections of the Income-tax Act were involved?

Section 153C,Section 143(3),Section 132(4),Section 271D,Section 270A

AI-generated summary — verify with the full judgment below

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

Before: SH. MAHAVIR SINGH, HON’BLE & SH. KRINWANT SAHAY, HON’BLE

For Respondent: Dr. Rajinder Kaur, CIT DR
Hearing: 03/08/2026Pronounced: 07/10/2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI

BEFORE SH. MAHAVIR SINGH, HON’BLE VICE PRESIDENT & SH. KRINWANT SAHAY, HON’BLE ACCOUNTANT MEMBER

ITA No.4337/Del/2025 Assessment Year: 2019-20 Sparsh Vyapaar Private Vs. DCIT Limited, 135, Golf Links Central Circle – 32 New Delhi New Delhi PAN No.AAICS5566Q (APPELLANT) (RESPONDENT)

Appellant by Sh. Amar Kumar, Advocate Sh. Pranav, Advocate Sh. Chintu Kumar, Advocate Sh. P.K. bansal, Advocate Respondent by Dr. Rajinder Kaur, CIT DR

Date of hearing: 03/08/2026 Date of Pronouncement: 07/10/2026

ORDER PER KRINWANT SAHAY, AM Appeal in this case has been filed by the assessee against the order dated 19.03.2025 passed by the Ld. CIT(A)-30, New Delhi for the 2019-20. Grounds of appeal are as under :- 1 | P a g e

1.

That the Ld. CIT (Appeals) has erred on facts and laws in upholding the assessment proceeding completed by the Ld. AO under Section 153C r.w.s. 143(3) of the Income- tax Act, 1961 (“Act”) at an assessed income of Rs.12,46,00,000/- without appreciating the facts and circumstances of the Appellant. 2. That the Ld. CIT (Appeals) has erred on laws in upholding the assessment proceedings completed by the Ld. AO against the Appellant Company, which has been struck off from the Register of Companies as per the MCA records and has not been reinstated by the NCLT, contrary to settled legal jurisprudence that assessment cannot be undertaken against a non-existent Assessee. 3. Without prejudice to the above, the Ld. CIT (Appeals) has erred on facts and in law in confirming the additions of Rs.12,46,00,000/- made by the Ld. AO as unaccounted capital gain without appreciating that the essential ingredients contained therein are not satisfied in the instant case. 4. That the Ld. CIT (Appeals) has erred on facts and law in confirming the assessment order dated 30/03/2023 passed u/s 153C r.w.s. 143(3) of the Act by the Ld. AO, as the same is perverse, erroneous and bad in law for not being based on any “incriminating material” and on the basis of “dumb documents” (diary notings) found during the search of Kuldeep Bishnoi Group against the Appellant, which is a condition sine qua non for imposing additions u/s 153C of the Act. 5. That the Ld. CIT (Appeals) has grievously erred on facts and in law by confirming the additions made by the Ld. AO, which was based on the statements of Late Sh. Sukumar Poria recorded u/s 132(4) on a stand-alone basis sans any corroborative evidence being brought forward by the Ld. AO and without there being any possibility for the Appellant to cross-examine Late Sh. Sukumar Poria due to his sad demise. 6. That the Ld. CIT (Appeals) has erred on facts and in law by confirming the additions made by the Ld. AO, as the Ld. AO failed to discharge its burden of proof as statutorily mandated under the Act, and in the absence of any corroborative and cogent materials/investigation, any additions made are arbitrary, bad in law and liable to be quashed. 7. That the Ld. CIT (Appeals) has erred on facts and in law by confirming the additions made by the Ld. AO by holding that the Ld. AO rightly rejected the retraction of the statement made by Sh. Kuldeep Bishnoi stating that the diary notings 2 | P a g e

and statements of Late Sh. Sukumar Poria are false and cannot be relied on, without giving any cogent reasoning for such rejection contrary to settled law. 8. Additional Grounds: The Ld. CIT (Appeals) has grossly erred in both facts and law by confirming the additions made by the Ld. AO without recognising that the advance of Rs.1,98,00,000/- received for a future sale transaction is still pending completion between the Appellant and the buyer due to ongoing litigation before the Hon'ble Civil Judge, Tis Hazari Court, Delhi, and this advance amount of Rs.1,98,00,000/- still remains as an advance for the sale of land parcels at Rajokari village. 9. That based on facts and in law, the Ld. CIT (Appeals) has erred in law and facts by confirming that the penalty proceedings initiated under Section 271D and Section 270A of the Act by the Ld. AO are correct. 10.That the aforementioned grounds are independent and without prejudice to one another. 11.The Appellant craves to add, alter, vary, omit, amend or delete one or more of the above grounds of appeal before, or at the time of, the hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law

2.

The brief facts of the case are that the original return in this case was e-filed on 13.03.2020 declaring loss of NIL, which was processed u/s 143(1) of the Income-tax Act, 1961. A search and seizure operation was carried out at the various premises of Sh. Kuldeep Bishnoi Group and its associates on 23.07.2019. Various documents/Books of A/c, etc. were found and seized and statements of various persons were duly recorded. Subsequently, satisfactions were recorded by the AO of the searched person as well as AO of the assessee. Satisfaction note was recorded by the AO of the searched person on 15.12.2021 and notice u/s 153C of Income Tax Act, 1961 was issued on 16.12.2021 for filing the return of its income within 10 days of service of the notice. The assessee filed its return of income on 24.12.2021 declaring loss at Rs.9,40,264/-. A Notice u/s 143(2) 3 | P a g e

of the Act was issued on 17.05.2022. A detailed questionnaire dated 14.01.2022 along with notice u/s 142(1) was issued. In compliance to the above notice the assessee filed the required details vide letter dared 19.01.2022.

3.

The assessee vide letter dated 19.05.2022 intimated that the company has been struck off as per the records of Ministry of Corporate Affairs (MCA) and the assessment cannot be done on a company which has been struck off. Subsequently, the AO after taking prior approval of PCIT, Central-3, New Delhi, filed appeal before the Hon'ble NCLT to restore the company in the MCA records and the same was pending before the Hon'ble NCLT as on the date of passing of the assessment order. The assessing officer completed the assessment at an income of Rs. 124600000/- making an addition of Rs.124600000/- as undisclosed capital gain on a property sold at Rajokari.

4.

The assessee went in appeal before CIT(A). The CIT(A) vide order dated 19.03.2025 dismissed the appeal of the Assessee. The assessee company came in appeal before us by taking the following grounds of appeal: - 1. "That the Ld. CIT (Appeals) has erred on facts and laws in upholding the assessment proceeding completed by the Ld. AO under Section 153C r.w.s. 143(3) of the Income-tax Act, 1961 ("Act") at an assessed income of Rs. 12,46,00,000/- without appreciating the facts and circumstances of the Appellant. 2. That the Ld. CIT (Appeals) has erred on laws in upholding the assessment proceedings completed by the Ld. AO 4 | P a g e

against the Appellant Company, which has been struck off from the Register of Companies as per the MCA records and has not been reinstated by the NCLT, contrary to settled legal jurisprudence that assessment cannot be undertaken against a non-existent Assessee. 3. Without prejudice to the above, the Ld. CIT (Appeals) has erred on facts and in law In confirming the additions of Rs. 12,46,00,000/- made by the Ld. AO as unaccounted capital gain without appreciating that the essential ingredients contained therein are not satisfied in the instant case. 4. That the Ld. CIT (Appeals) has erred on facts and law in confirming the assessment order dated 30/03/2023 passed u/s 153C r.w.s. 143(3) of the Act by the Ld. AO, as the same is perverse, erroneous and bad in law for not being based on any "Incriminating material" and on the basis of "dumb documents" (diary notings) found during the search of Kuldeep Bishnoi Group against the Appellant, which is a condition sine qua non for imposing additions u/s 153C of the Act. 5. That the Ld. CIT (Appeals) has grievously erred on facts and in law by confirming the additions made by the Ld. AO, which was based on the statements of Late Sh. Sukumar Poria recorded u/s 132(4) on a stand-alone basis sans any corroborative evidence being brought forward by the Ld. AO and without there being any possibility for the Appellant to cross-examine Late Sh. Sukumar Poria due to his sad demise. 6. That the Ld. CIT (Appeals) has erred on facts and in law by confirming the additions made by the Ld. AO, as the Ld. AO failed to discharge its burden of proof as statutorily mandated under the Act, and in the absence of any corroborative and cogent materials/investigation, any additions made are arbitrary, bad in law and liable to be quashed. 7. That the Ld. CIT (Appeals) has erred on facts and in law by confirming the additions made by the Ld. AO by holding that the Ld. AO rightly rejected the retraction of the statement made by Sh. Kuldeep Bishnoi stating that the diary notings and statements of Late Sh. Sukumar Poria are false and cannot be relied on, without giving any cogent reasoning for such rejection contrary to settled law.

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8.

Additional Grounds: The Ld. CIT (Appeals) has grossly erred in both facts and law and facts by confirming the additions made by the Ld. AO without recognizing that the advance of Rs. 1,98,00,000/- received for a future sale transaction is still pending completion between the Appellant and the buyer due to ongoing litigation before the Hon'ble Civil Judge, Tis Hazari Court, Delhi, and this advance amount of Rs. 1,98,00,000/- stills remains as an advance for the sale of land parcels at Rajokari Village. 9. The Ld. CIT (Appeals) has grossly erred in both facts and law and facts by confirming that the penalty proceedings initiated under Section 271D and Section 270A of the Act by the Ld. AO are correct. 10. That the aforementioned grounds are independent and without prejudice to one another. 11. The Appellant craves to add, alter, vary, omit, amend or delete one or more of the above grounds of appeal before, at the time of, the hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law."

5.

When the appeal was taken up for hearing, the Ld. AR stated that there is a delay of fifty two (52) days in filing of the present appeal and the Assessee had filed an application for condonation of delay duly supported by an affidavit of the director of the Assessee. We have pursued the same and for reasons recorded in the said application supported by the affidavit, we deem it appropriate to condone the delay of fifty two (52) days in filing of the present appeal in the interest of justice and the appeal is taken up for hearing on merits.

6.

During the course of hearing, Ld. AR raised certain additional grounds of appeal on 09.03.2026. The additional grounds of appeal taken on that date read as under:

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12.

"That the initiation of proceedings u/s 153C as well as the passing of the Impugned Assessment Order u/s 153C of the Income-tax Act, 1961 against the Assessee is not valid in law, as the Assessee's name was struck off from the Register of Companies maintained by the Registrar under the Companies Act, 1956/2013 on 08/08/2018 as the Assessee's name remained struck off both at the time of the initiation of the proceedings u/s 153C as well as on the date of passing of the Impugned Assessment Order on 30/03/2023. 13. That the Impugned Assessment Order is void- ab-initio and not sustainable in law, as the Assessee was non-existent in the eyes of the law because the Assessee's name has been struck off from the Register of Companies maintained by the Registrar, and thus, the Return of Income filed for the relevant AY 2019-20 on 13/03/2020 is Invalid law. 14. That the Impugned Assessment Order passed by the Ld. Assessing Officer is invalid and contrary to the principles of natural justice because neither the copy of the satisfaction note recorded u/s 153C nor the approval obtained u/s 153D was supplied to the Assessee, and even the inspection of the file relating to the assessment records in this regard was not allowed by the Ld. Assessing Officer. 15. Without prejudice to the Ground No.14, that the approval u/s 153D of the Income-tax Act, 1961 in this case has been granted by the specified authority in a mechanical manner and thus, the Impugned Assessment Order passed in pursuance thereto is bad in law and is vitiated. 16. That the Impugned Assessment Order passed by the Ld. Assessing Officer is invalid, as it 7 | P a g e

appears that no order u/s 127 of the Act centralising the jurisdiction of the Assessee has been passed because the Ld. Assessing Officer neither provided the copy of the said order nor allowed inspection of the file relating to the assessment. 17. That the Ld. CIT(A) erred in sustaining the additions of Rs. 12,46,00,000/- made by the Ld. Assessing Officer, as the total amount mentioned at Page 3 of the Impugned Assessment Order refers to the sum as "payment", and the Ld. Assessing Officer wrongly presumed the "payment" as "receipt" and made substantial additions of Rs. 12,46,00,000/- under the head "undisclosed capital gains" contrary to the facts.

18.

That under the facts and circumstances of the case, the Ld. CIT(A) was not correct in law in sustaining the additions of Rs. 12,46,00,000/- made by the Ld. Assessing Officer, as the Ld. Assessing Officer has given a finding that a sum of Rs. 7,90,00,000/- had duly been received through the banking channel and the same has been duly credited into the bank account of the Assessee. Alternate Ground That the Ld. Assessing Officer was not correct in law in making additions of Rs. 2,49,00,000/- relating to the "payment" of the previous financial year and Rs. 7,49,00,000/- during the aforesaid Assessment Year, which is apparent from the Page No.3 of the Impugned Assessment Order on the basis of which the additions of Rs. 12,46,00,000/- were sustained by the Ld. CIT(A)."

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7.

The Ld. AR contended that the additional grounds strike at the very foundation of the assessment proceedings and urged before us to admit the same in terms of the law laid down by the Hon'ble Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 and decision of the Hon'ble Delhi High Court in the case of DCM Benetton India Ltd. v. CIT [2008] 173 Taxmann 283. Thereafter, the Revenue filed an application before the Hon'ble President, ITAT, Mumbai seeking constitution of special bench on the additional grounds raised by the Assessee related to mechanical approvals u/s 153D of the Act. The Assessee, therefore, filed an application before the Hon'ble President, ITAT, Mumbai, seeking withdrawal of the grounds relating to Section 153D approvals of the Income-tax Act, 1961 on 15.05.2026.

8.

The Ld DR agitated that certain facts have to be verified, therefore the additional grounds at this stage should not be admitted. After hearing rival submissions, we admit the additional grounds except the grounds relating to approval u/s 153D taken by the assessee as these grounds are the legal grounds and can be raised for the first time before this tribunal.

9.

At the outset, it was stated by the Ld. AR that in this case, the proceedings U/s 153C were initiated on 16.12.2021 and the search proceedings in this case was carried on 23.07.2019. Hence, the assumption of jurisdiction U/s 153C, post 1st April, 2021 is bad in law. In this case, the jurisdiction to assess the appellant under the

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provisions of section 153C, was issued after 01.04.2021, whereas the provisions of section did not exist after 01.04.2021 and hence the assessment proceedings are bad in law for the want of jurisdiction.

10.

The Ld. DR could not dispute this position.

11.

We have heard the rival contentions and gone through the facts and circumstance of the case. We noted that the search was conducted on Sh. Kuldeep Bishnoi Group of cases U/s 132 of the Act on 23.07.2019. The Assesse Company being other person then the searched person, their incriminating material were handed over by the AO of the other person, other than the searched person to the AO of the assessee, after 01.04.2021. The satisfaction was recorded of the searched person on 15.12.2021. Accordingly, notice U/s 153C was issued on 16.12.2021. This is an undisputed fact. By virtue of sub-section (3) of Section 153C of the Act which was effective from 01.04.2021 where a search initiated after 01.04.2021 the proceedings U/s 153C of the Act are not valid and applicable, but the provisions of section 148 of the Act are applicable. In the case of the assessee since the notice U/s 153C was issued on 16.12.2021, i.e. after 01.04.2021 the deemed date of search in the case of the assessee person other than the searched person shall be date of recording of satisfaction note i.e. 15.12.2021 in view of the decision of the of 'CIT vs. Jasjit Singh' reported in 458 ITR 437(SC), thus, the assessment u/s.153C on satisfaction note-recorded on or after

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01.04.2021 is bad in law. The relevant portion of the Hon'ble Supreme Court decision in the CIT vs. Jasjit Singh read as under:- 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 153C was enacted. The revenue argued that the proviso [to Section 153C(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 AO 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 AO. In that even 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 disproportionate. For instance, if the papers are in fact assigned under section 153C after a period of four years, the third party assessee's prejudice in writ large as it would have to virtually preserve the records for at least 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 153C supports the interpretation which this Court adopts."

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12.

Moreover, the co-ordinate Bench of this Tribunal in the case of Smt. Geetanjali Bhayana vs. DCIT [ITA No.2227, 2228 & 2252/Del/2025], which relates to the search of the same Shri Kuldeep Bishnoi Group and its associates had decided the issue in favour of the Assessee on the same ground. 13. As the issues is covered, in the present case as notice under section 153C of the Act dated 16.12.2021 and the consequent assessment order is without jurisdiction and hence it is quashed. As regards other pleadings are concerned, the same have become academic as the assessment itself got quashed. 14. In the result, the appeal filed by the assessee is allowed. Order pronounced in the court on 07.10.2026.

Sd/- Sd/-

[MAHAVIR SINGH] [KRINWANT SAHAY] VICE PRESIDENT ACCOUNTANT MEMBER Dated: 07.10.2026 Neha, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR SHASHI Digitally signed by SHASHI KANT KANT PANDEY Asst. Registrar, Date: PANDEY 2026.10.26 02:15:26 -07'00' ITAT, New Delhi

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