PRAVESH KUMAR GARG,DELHI vs. DCIT CC-15, DELHI

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ITA 3113/DEL/2026Status: DisposedITAT Delhi21 October 2026AY 2014-156 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 penalty proceedings, though separate, can be challenged based on the validity of the assessment order, especially when the penalty is founded on allegations of concealment of income. The Tribunal noted that the AO of the searched person recorded satisfaction on 22.07.2022, and the AO of the assessee recorded satisfaction on 03.03.2023, issuing a notice under Section 153C on the same date. The Tribunal found that the assessment year 2014-15 falls beyond the six-year period permissible under Section 153C, considering the satisfaction date. Relying on the case law cited by the assessee, the Tribunal concluded that the foundation of the assessment order was vitiated. Consequently, the penalty proceedings were held to be void-ab-initio and liable to be set aside. The appeal of the assessee was allowed, and the impugned penalty was quashed.

What were the facts?

The assessee, Pravesh Kumar Garg, is in appeal against the penalty order dated 28.02.2026 passed by the CIT(A)-26, Delhi, which upheld a penalty of Rs. 15,81,310/- levied under Section 271(1)(c) of the Income Tax Act, 1961. This penalty arose from additions of Rs. 46,52,281/- made in an assessment order dated 31.05.2023 for Assessment Year (AY) 2014-15. The assessment was conducted under Section 153C following a search operation on the Sushen Mohan Gupta group on 05.01.2020. The Assessing Officer (AO) of the searched person recorded satisfaction on 22.07.2022, and the AO of the assessee recorded satisfaction on 17.03.2023, leading to the issuance of a notice under Section 153C on 03.03.2023.

What were the issues?

1. Whether the notice issued under Section 271(1)(c) is bad-in-law, without jurisdiction, and barred by limitation, rendering the assessment and penalty liable to be quashed, as argued by the assessee. The assessee contends that the assessment year 2014-15 falls outside the permissible six-year period for assessment under Section 153C, citing the satisfaction date of 22.07.2022 and relying on *CIT-14 vs. Jasjit Singh* (SC) and *PCIT Central 1 vs. Ojjus Medicare Pvt. Ltd* (Delhi HC). The assessee also argues that the assessment order lacks a DIN, making it non-est and the penalty void. The revenue, represented by the Sr. DR, relied on the impugned orders. 2. Whether the penalty imposed under Section 271(1)(c) of Rs. 15,81,310/- is liable to be confirmed, as held by the CIT(A). The assessee argues that the foundation of the assessment order is vitiated due to jurisdictional and limitation issues under Section 153C, making the consequent penalty proceedings void-ab-initio.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 153C,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES, NEW DELHI

Before: SHRI ANUBHAV SHARMA & SHRI MANISH AGARWAL

Pronounced: 21.10.2026

INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI BENCH: G BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER

ITA 3113/DEL/2026 (निर्धारणवर्ा/AssessmentYear:2014-15) PRAVESH KUMAR GARG DCIT CC-15 284-285, KATRA PERAN - TILAK BAZARCENTRAL NEW DELHI-110055, DELHI DELHI CHANDNI CHOWK Vs. DELHI, NEW DELHI-110006, DELHI अपीलधर्थीAppellant प्रत्यर्थी Respondent

Permanent Account Number of AAAPG2583J Assessee:

अपीलधर्थीद्वारा/Appellant represented CA Amit Goel & Adv. Pranav Yadav by: प्रत्यर्थीद्वारा/Respondentrepresented by: Shri Ravinder Singh Yadav, Sr. DR सुनवाईकीतारीख/Date of conclusion of hearing: 22.07.2026 घोषणाकीतारीख/Date of pronouncement: 21.10.2026 आदेश / ORDER

PERSHRI ANUBHAV SHARMA, JUDICIAL MEMBER:

This appeal is preferred by the assessee against the order dated 28.02.2026 of the Ld. Commissioner of Income Tax (Appeal)-26, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN & Order No: ITBA/APL/S/250/2025-26/1086692988(1) arising out of the penalty order dated 27.03.2024 u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by DCIT, Central Circle – 15, New Delhi for AY: 2014-15 and has raised following grounds;

“1. On the facts and circumstances of the case and in law, the notice u/s 271(1)(c) issued in this case is bad-in-law, without jurisdiction and barred by limitation and, therefore, the said notice u/s 271(1)(c) along with assessment order passed are liable to be quashed and CIT(A) erred in not holding so.

2.

On the facts and circumstances of the case and in law, the assessment order passed in this case is bad-in-law/non-est as it does not bear DIN and, therefore, penalty-imposed u/s 271(1)(c) on the foundation of such notice is liable to be cancelled/quashed and CIT(A) erred in not holding so.

3.

On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is bad-in- law without jurisdiction and barred in limitation and CIT(A) erred in not holding so.

4.

On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the penalty imposed by the Ld. Assessing Officer of Rs. 15,81,310/- u/s 271(1)(c) of the Act.”

2.

Heard and perused the grounds. A search and seizure operation u/s 132 of the Income Tax, Act 1961 was carried out on Sushen Mohan Gupta group (SMG group) on 05.01.2020. The AO of the search person (SMG) recorded satisfaction u/s 153C of the Act on 22.07.2022 and AO of the assesse recorded satisfaction on 17.03.2023 and accordingly, the case of the assessee was taken up for assessment u/s 153C of the Act. The assessment u/s 153C was completed on 31.05.2023 after making additions of Rs. 46,52,281/- on account of alleged unexplained expenditure.Thereafter, the AO has levied penalty u/s 271(1)(c) amounting to Rs. 15,81,310/- in respect of the aforesaid addition of Rs. 46,52,281/-. The said penalty is subject matter of present appeal.

3.

Ld. Counsel has submitted that the year involved i.e. A.Y. 2014-15 is beyond the scope of jurisdiction u/s 153C of the Act. The date of satisfaction recorded by AO of search person is 22.07.2022 and therefore, the immediate preceding six years that could be taken up for assessment u/s 153C are A.Y. 2017-18 to A.Y. 2022-23. Thus, the A.Y. 2014-15 is out of block of permissible 6 assessment years. Reliance is placed on apex court decision in case of The Commissioner of Income Tax-14 Vs. Jasjit Singh 2025 (4) TMI 54 SC order and Hon'ble Delhi High Court decision in case of The PCIT Central 1 Vs. Ojjus Medicare Pvt. Ltd 2024 (4) ΤΜΙ 268 - Delhi High Court.

4.

At the same time it was contend that in fact the assessment u/s 153C could have been initiated after 01.04.2021. Reliance is placed decision in Shri. Harigovind Vs ACIT Non-corporate, Circle 3 (1), Chennai, ACIT Central Circle 2 (3) Chennai 2025(11) TMI 103- Madras High Court, RPG Nirman Pvt. Ltd. Vs DCIT, Central Circle Meerut New Delhi 2026(6) TMI 1075- ITAT Delhi, M/s Shivdham Buildtech Pvt. Ltd. Vs JCIT, Central Circle 27, New Delhi 2026(6) TMI 1395- ITAT Delhi, Sh. Ashutosh Agarwal Vs DCIT Central Circle 28 ITA No.6624/Del/2025, Lalit Kumar Nagar Vs DCIT Central Circle 27 ITA No.2532 to 2538/Del/2025, Shaminder Singh Vs ACIT Central Circle 8 ITA No.4627 to 4629/Del/2025, Shri Lekh Raj Versus DCIT, Central Circle-27, New Delhi 2026 (5) TMI 600-ITAT DELHI, Smt. Geetanjali Bhayana Versus DCIT, Central Circle-32, New Delhi 2026 (1) TMI 1591 - ITAT DELHI,

5.

Ld. DR has relied the impugned orders.

6.

After giving thought full consideration to material on record and the submissions of Ld. DR that penalty proceedings are separate in nature, we are of considered view that where penalty has its substantive foundation in the form of allegation of concealment of income, then challenge to the validity of assessment order can be made even in penalty proceedings,. Reliance is placed on the decision in Jainarayan Babulal Vs. CIT [1988] 170 ITR 399, Bombay High Court, Jaidayal Pyarelal Vs. CIT [1973] TLR 880, Allahabad High Court, Dhiraj Suri Vs. ACIT, Sr-1 2005 (4) TMI 261 - ITAT Delhi-A, Smt. Dipikadevi Todi Vs. ITO Ward-1 (3), Thane 2011 (7) TMI 1287- ITAT Mumbai, SVR Creations Pvt Ltd Vs. The PCIT, Delhi-7, 2025 (3) TMI 401 ITAT Delhi, as cited by ld. Counsel.

7.

It comes up from the material on record that assessee’s return of income was filed on 28.11.2014 declaring total income of Rs.1,02,52,180/- in consequent to the search conducted in the Sushen Mohan Gupta group. The case of assesse was subject of assessment u/s 153C of the Act and if the assessment order itself is observed it is mentioned that AO of the searched person has recorded satisfaction on27.07.2022 handed over the relevant material to the AO of the other person i.e. assesse and subsequently satisfaction was recorded by the AO the assesse on 03.03.2023 that the referred documents seized during the search pertained to assesse who has a bearing on the determination of the total income in the case of assesse and consequently notice dated 03.03.2023 u/s 153C of the Act was issued.

8.

On the basis of these admitted facts appearing from the assessment order the contentions of ld. counsel that provision of Section 153C(3) of the Act are applicable have to be sustained by relying the case law cited by ld. Counsel.

9.

At the same time, if date of search in case of assesse arising out of handing over of the search material considered to be date of search and the search assessment year happens to be 2024-25 and the assessment year before us falls beyond the period of 6 hears. The case law relied in that regard also help the assesse.

10.

Thus, though assesse has duly paid the tax as determined and as per the demand notice issued with the assessment order, however, for the reason cited above as the foundation of the assessment order is vitiated, consequent penalty proceedings are void-ab-initio and are liable to be set aside. Accordingly, appeal of assesse is allowed and the impugned penalty is quashed.

Order pronounced in the open court on 21.10.2026

Sd/- Sd/- MANISH AGARWAL ANUBHAV SHARMA ACCOUNTANT MEMBER JUDICIAL MEMBER Delhi Dated: 21.10.2026 Rohit, Sr. PS

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