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

PDF · subscribers
W.P.(C)/1936/2025HC DelhiDLHC01007196202528 February 2025Bench: HON'BLE CHIEF JUSTICE DEVENDRA KUMAR UPADHYAYA,HON'BLE MR. JUSTICE TUSHAR RAO GEDELA3 pages
AI SummaryAllowed

What did the High Court hold?

The Delhi High Court allowed the writ petition and set aside the impugned notice issued under Section 153C of the Income Tax Act, 1961, for AY 2017-18. The Court found that the satisfaction note did not contain any information that could possibly lead to the conclusion that the petitioner's income for AY 2017-18 had escaped assessment. The ledgers found during the search of other persons could not be considered incriminating material pertaining to the petitioner for the relevant assessment year. The Court relied on the principles laid down in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society and Saksham Commodities Ltd. v. Income Tax Officer Ward 22 (1), Delhi & Anr. The ratio decidendi is that for a notice under Section 153C to be valid, the satisfaction note must clearly indicate material that has a bearing on or impact on the total income of the assessee for the years in question. Absent such material, the AO is not justified in invoking powers under Section 153C. The operative direction was to set aside the notice.

What were the facts?

The petitioner, Landcraft Developers Private Limited, filed a writ petition challenging a notice dated December 19, 2023, issued under Section 153C of the Income Tax Act, 1961, and the subsequent reassessment proceedings for Assessment Year (AY) 2017-18. The impugned notice was based on a satisfaction note of the Assessing Officer (AO) concerning a search conducted on October 18, 2019, on individuals and entities including Sh. Alok Kumar Agarwal, Sh. Ankit Agarwal, M/s Alankit Limited, and M/s Alankit Assignments Limited. The satisfaction note indicated that documents pertaining to the petitioner were found during this search. However, the petitioner contended that the satisfaction note did not contain any information relevant to determining their income for AY 2017-18, and the ledgers found could not be considered incriminating material for that year.

What were the issues?

1. Whether the notice issued under Section 153C of the Income Tax Act, 1961, for AY 2017-18 is valid, given that the satisfaction note does not contain any information bearing on the petitioner's income for that year? The Assessee (Petitioner) argued that the notice under Section 153C was invalid because the satisfaction note, which formed the basis for issuing the notice, did not contain any material that could have a bearing on determining the petitioner's income assessable for AY 2017-18. They contended that the ledgers found during the search of other persons could not be considered incriminating material pertaining to the petitioner for the said AY. The Assessee relied on the Supreme Court decision in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society and the Delhi High Court's decision in Saksham Commodities Ltd. v. Income Tax Officer Ward 22 (1), Delhi & Anr. The Revenue (Respondents) did not record any specific arguments against the petitioner's contentions but concurred with the view presented by the Court.

Which sections of the Income-tax Act were involved?

Section 153C

AI-generated summary — verify with the full judgment below

$~6 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 1936/2025 and CM APPL. 9062/2025, & CM APPL. 9063/2025

LANDCRAFT DEVELOPERS PRIVATE LIMITED .....Petitioner Through: Mr. Salil Kapoor, Mr. Sumit Lal Chandani and Ms. Ananya Kapoor, Advocates.

versus

ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 27, DELHI & ANR. .....Respondents Through: Mr. Shlok Chandra, Sr. Standing Counsel alongwith Ms. Naincy Jain and Ms. Madhavi Shukla, JSCs for Revenue.

CORAM:

HON'BLE THE CHIEF JUSTICE

HON'BLE MR. JUSTICE TUSHAR RAO GEDELA

O R D E R %

28.02.2025

1.

The petitioner has filed the present petition, inter alia, impugning a notice dated 19.12.2023 (hereafter the impugned notice) issued under 153C of the Income Tax Act, 1961 (hereafter the Act) as well as the proceedings for re-assessment of the petitioner’s income in respect of Assessment Year (AY) 2017-18. 2. The impugned notice is premised on the satisfaction note of the Assessing Officer (AO) of Sh. Alok Kumar Agarwal, Sh. Ankit Agarwal, M/s Alankit Limited and M/s Alankit Assignments Limited (searched persons), which recorded that documents containing information pertaining to the petitioner were found during the search conducted in the case of searched persons on 18.10.2019. 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 01/07/2025 at 23:45:23

3.

Admittedly, the satisfaction note does not contain any information which may have a bearing on determining the petitioner’s income assessable in the AY 2017-18. The note indicates that in view of the description of the documents found and seized during the course of the search, the documents belong to the petitioner. 4. It is clear from the information provided in the satisfaction note dated 22.06.2022 entered by the AO of the searched persons and satisfaction note dated 08.11.2023 entered by AO of the other than the searched person could not possibly lead to the conclusion that the income of the Assessee for AY 2017-18 had escaped assessment. The ledgers found cannot be considered as containing any incriminating material pertaining to the petitioner in respect of AY 2017-18. Thus, the petitioner’s assessment for the said year could not be reopened under Section 153C of the Act.. 5. Concededly, the aforesaid issue is covered by the decision of the Supreme Court in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society: [2017] 84 taxmann.com 290 as well as the recent decision of this court in Saksham Commodities Ltd. v. Income Tax Officer Ward 22 (1), Delhi & Anr.: 2024:DHC:2836-DB. 6. It is relevant to set out paragraph 68 of the said decision which reads as under: 68. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs’ and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice 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 01/07/2025 at 23:45:23

would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments. [Emphasis added]

7.

The learned counsel for the respondent concurs with the aforesaid view. 8. In view of the above the present petition is allowed and the impugned notice issued under Section 153C of the Act in respect of AY 2017-18 is set aside. 9. Pending applications also stand disposed of.

DEVENDRA KUMAR UPADHYAYA, CJ

TUSHAR RAO GEDELA, J FEBRUARY 28, 2025/rl 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 01/07/2025 at 23:45:23

More judgments on Section 153C

All 9,619 judgments and leading authorities on Section 153C →

Recent GST High Court judgments

Search GST case law →