ADITI INFRABUILD AND SERVICES LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 30, DELHI & ANR.

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W.P.(C)/3079/2025HC DelhiDLHC01012698202511 March 2025Bench: HON'BLE MR. JUSTICE TUSHAR RAO GEDELA,HON'BLE CHIEF JUSTICE DEVENDRA KUMAR UPADHYAYA3 pages
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What did the High Court hold?

The Delhi High Court allowed the petition and set aside the notice issued under Section 153C of the Income Tax Act, 1961, for AY 2018-19. The Court found that the satisfaction note, which formed the basis for issuing the notice, did not contain any information that could possibly lead to the conclusion that the petitioner's income for AY 2018-19 had escaped assessment. The ledgers found during the search were not considered incriminating material pertaining to the petitioner for the said AY. The Court relied on the principles laid down in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society and its own recent decisions in Saksham Commodities Ltd. and Landcraft Developers Private Limited. The ratio decidendi is that for invoking Section 153C, the AO must be satisfied that the material found is likely to have a bearing on the total income of the assessee for the relevant assessment year(s), and absent such material, the power under Section 153C cannot be invoked. The impugned notice was set aside, and pending applications were disposed of.

What were the facts?

The petitioner, Aditi Infrabuild and Services Limited, filed a writ petition challenging a notice dated 30.08.2024 issued under Section 153C of the Income Tax Act, 1961, and the subsequent reassessment proceedings for Assessment Year (AY) 2018-19. The impugned notice was based on a satisfaction note of the Assessing Officer (AO) of searched persons, Mr. Samir Modi and Ms. Shivani Modi, who were searched on 03.02.2021. The satisfaction note indicated that documents pertaining to the petitioner were found during the search. However, the petitioner contended that the satisfaction note did not contain any information relevant to determining its income for AY 2018-19, 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 2018-19 is valid, given that the satisfaction note of the AO of the searched persons allegedly does not contain any information bearing on the petitioner's income for the said AY? Assessee's Contention: The assessee argued that the satisfaction note and the documents found during the search (ledgers) did not contain any incriminating material that could have a bearing on the determination of the petitioner's income for AY 2018-19. Therefore, the invocation of Section 153C was unjustified. The assessee relied on the Supreme Court decision in Commissioner of Income Tax-III, Pune v. Sinhgad Technical Education Society and this Court's decisions in Saksham Commodities Ltd. vs. Income Tax Officer Ward 22 (1), Delhi & Anr. and Landcraft Developers Private Limited vs. Assistant Commissioner of Income Tax, Central Circle 27, Delhi & Anr. Revenue's Contention: The revenue's learned counsel concurred with the assessee's view.

Which sections of the Income-tax Act were involved?

Section 153C

AI-generated summary — verify with the full judgment below

$~245 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 3079/2025 & CM APPL. 14523-24/2025

ADITI INFRABUILD AND SERVICES LIMITED .....Petitioner Through: Ms. Ananya Kapoor, Mr. Sanath Kapoor, Mr. Shivam Yadav and Mr. Tarun Channana, Advocates.

versus

ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 30, DELHI & ANR

.....Respondent Through: Mr. Gaurav Gupta, SSC with Mr. Shivendra Singh and Mr. Yojit Prateek, JSCs for Income Tax Department.

CORAM:

HON'BLE THE CHIEF JUSTICE

HON'BLE MR. JUSTICE TUSHAR RAO GEDELA

O R D E R %

11.03.2025 1. The petitioner has filed the present petition, inter alia, impugning a notice dated 30.08.2024 (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) 2018-19. 2. The impugned notice is premised on the satisfaction note of the Assessing Officer (AO) of Mr. Samir Modi and Ms. Shivani Modi (searched persons), which recorded that documents containing information 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 18:43:04

pertaining to the petitioner were found during the search conducted in the case of searched persons on 03.02.2021. 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 2018-19. 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 26.06.2024 entered by the AO of the searched persons and satisfaction note dated 30.08.2024 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 2018-19 had escaped assessment. The ledgers found cannot be considered as containing any incriminating material pertaining to the petitioner in respect of AY 2018-19. 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 decisions of this Court in Saksham Commodities Ltd. vs. Income Tax Officer Ward 22 (1), Delhi & Anr.: 2024:DHC:2836-DB and Landcraft Developers Private Limited vs. Assistant Commissioner of Income Tax, Central Circle 27, Delhi & Anr., W.P.(C) 1935/2025 decided on 28.02.2025. 6. It is relevant to set out paragraph 68 of the decision in Saksham Commodities (supra) which reads as under:- 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 18:43:04

“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 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 2018-19 is set aside. 9. Pending applications also stand disposed of.

DEVENDRA KUMAR UPADHYAYA, CJ

TUSHAR RAO GEDELA, J

MARCH 11, 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 18:43:04

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