LANDCRAFT DEVELOPERS PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX,CENTRAL CIRCLE 27, DELHI & ANR.

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W.P.(C)/3509/2025HC DelhiDLHC01014344202521 April 2025Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA4 pages
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What did the High Court hold?

The Delhi High Court held that the impugned notice dated 19.12.2023 issued under Section 153C of the Income Tax Act, 1961, for AY 2018-19 was invalid. The Court observed that a plain reading of the satisfaction note dated 08.11.2023 indicated that the Assessing Officer (AO) did not find any incriminating material that had a bearing on the petitioner's income for AY 2018-19. The Court noted that absent any such material for the relevant assessment year, proceedings under Section 153C could not be initiated. The Court found this issue to be covered by its own decision in Saksham Commodities Ltd. v. Income Tax Officer and the Supreme Court's decision in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society, as well as the decision in Deputy Commissioner of Income Tax Central Circle 20 v. M/s U.K. Paints (Overseas) Ltd. Consequently, the impugned notice and all consequential proceedings initiated by the AO were set aside. The challenge to the assessment being barred by limitation was not examined, as the primary ground of challenge was sustained.

What were the facts?

The petitioner, Landcraft Developers Private Limited, filed a writ petition challenging a notice dated 19.12.2023 issued under Section 153C of the Income Tax Act, 1961, for Assessment Year (AY) 2018-19. The petitioner had previously filed its return for AY 2018-19 on 28.10.2018. A notice under Section 148A(b) was issued on 24.03.2022, followed by an order under Section 148A(d) on 25.04.2022, deeming it a fit case for reassessment. Separately, a search under Section 132 was conducted on the Alankrit Group, leading to panchnamas on 18.10.2019 and 21.10.2019. Material seized was handed over to the petitioner's Assessing Officer (AO), who recorded a satisfaction note on 08.11.2023, indicating that certain documents belonged to the assessee and had a bearing on its income. The satisfaction note detailed transactions for various financial years, including FY 2009-10 to 2015-16, involving amounts credited and debited to the petitioner.

What were the issues?

1. Whether the notice issued under Section 153C of the Income Tax Act, 1961, for AY 2018-19 is valid, considering the absence of incriminating material pertaining to that specific assessment year. The assessee contended that the satisfaction note dated 08.11.2023 did not reveal any incriminating material having a bearing on the petitioner's income for AY 2018-19. Therefore, proceedings under Section 153C could not be initiated for that year. The assessee relied on the decisions in Saksham Commodities Ltd. v. Income Tax Officer, Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society, and Deputy Commissioner of Income Tax Central Circle 20 v. M/s U.K. Paints (Overseas) Ltd. The revenue's contentions were not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 153C,Section 139(1),Section 148A,Section 148,Section 132

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~110 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 3509/2025 and CM APPL. 16394/2025 LANDCRAFT DEVELOPERS PRIVATE LIMITED .....Petitioner Through: Mr Salil Kapoor, Mr Sumit Lalchandani, Ms Ananya Kapoor and Mr Shivam Yadav, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 27, DELHI & ANR. .....Respondents Through: Mr Gaurav Gupta, senior standing counsel with Mr Shivendra Singh and Mr Yojit Pareek, Advocates. CORAM: HON'BLE MR. JUSTICE VIBHU BAKHRU HON'BLE MR. JUSTICE TEJAS KARIA

O R D E R % 21.04.2025

1.

The petitioner has filed the present petition impugning a notice dated 19.12.2023 issued under Section 153C of the Income Tax Act, 1961 [the Act] in respect of Assessment Year 2018-19. The petitioner also prays that the respondents be restrained from proceeding further with the aforesaid impugned notice.

2.

The petitioner had filed its return of income under Section 139(1) of the Act in respect of Assessment Year [AY] 2018-19 on 28.10.2018. 3. On 24.03.2022, a notice under Section 148A(b) of the Act was issued by the Assessing Officer [AO] calling upon the petitioner to show cause why proceedings for re-assessment of income chargeable to tax in respect of AY 2018-19 not be initiated. This was followed by an order dated 25.04.2022 passed under Section 148A(d) of the Act holding that it was a fit This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 02/07/2025 at 00:17:45

case for issuance of a notice under Section 148 of the Act. The petitioner was served with the said order along with a notice under Section 148 of the Act.

4.

In the meanwhile, a search was conducted under Section 132 of the Act in respect of entities belonging to the Alankrit Group and panchnamas dated 18.10.2019 and 21.10.2019 were prepared. Thereafter, the AO of the searched entities prepared a satisfaction note recording his satisfaction that certain documents, which were found and seized during the course of the search conducted under Section 132 of the Act belong to the Assessee. The relevant documents and material found during the search were also handed over by the AO exercising jurisdiction in respect of the searched person(s) to the AO exercising jurisdiction in respect of the Assessee. On receipt of the said material, the AO also examined the same and recorded his satisfaction that the documents and material handed over had a bearing on the income of the Assessee. Paragraph 3 of the said satisfaction note recorded by the AO on 08.11.2023 is relevant and is set out below:

“3. From the analysis of ledgers related to Sh. Sudhir Gupta, the following beneficiary is seen to have taken accommodation entry against unaccounted cash or otherwise as tabulated below: Beneficiary FY Particulars as per Ledger Amount Debited in Ledger Amount Credits in Ledger Landcraft Developers Pvt. Ltd. 2009-10 Vijaya Bank-Diwakar- 190 1,00,00,000 2010-11 Vijaya Bank- Diwakar 1,00,00,000 2011-12 HDFC Bank – Diwakar (38263) 30,00,000 2012-13 Vijaya Bank- Diwakar 88,32,310 2013-14 Axis Bank – AFL (2682) 1,69,00,000 Axis Bank Diwakar 2,05,00,000 80,00,000 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 02/07/2025 at 00:17:45

2014-15 Axis Bank – AFL (32682) 1,48,44,280 Axis Bank – Diwakar 2,63,00,000 2,62,83,277 Axis Bank – New Wave - 6118 2,95,00,000 35,00,000 Vijaya Bank – Diwakar 15,00,000 Vijaya Bank – New wave 20,00,000 2015-16 Axis Bank – Diwakar 52,00,000 Axis Bank – EURO Finmart (22444) 35,00,000 Axis Bank-Newwave- 6118 25,00,000 Cash 35,00,000 Landcraft Developers Pvt. Ltd. 2012-13 Cash 48,32,000

5.

A plain reading of the aforementioned satisfaction note dated 08.11.2023 indicates that the AO did not find any incriminating material having a bearing on the income of the petitioner for AY 2018-19. Concededly, absent any material for the relevant assessment year, the proceedings under Section 153C of the Act could not be initiated for the said year.

6.

The aforesaid issue is covered by the decision of this Court in Saksham Commodities Ltd. v. Income Tax Officer: [2024] 161 taxmann.com 485 (Delhi) and the decision of the Supreme Court in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society: [2017] 8 S.C.R. 463 as well as the decision in the case of Deputy Commissioner of Income Tax Central Circle 20 v. M/s U.K. Paints (Overseas) Ltd.: Civil Appeal No.6634/2021, decided on 25.04.2023. 7. The petitioner also challenged assessment as being barred by limitation. However, it is not necessary to examine that question since This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 02/07/2025 at 00:17:45

admittedly, the challenge to the impugned notice is required to be sustained on the ground that it had been issued without any incriminating material in respect of the relevant assessment year.

8.

In view of the above, the impugned notice is set aside. All proceedings initiated by the AO pursuant to the said notice are also set aside. The pending application is also disposed of. VIBHU BAKHRU, J TEJAS KARIA, J APRIL 21, 2025 RK Click here to check corrigendum, if any This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 02/07/2025 at 00:17:45

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