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Facts
A search operation was conducted on the Purushottam Lal Soni Group on 16.12.2016, leading to the seizure of incriminating documents related to the assessee. The Assessing Officer (AO) of the searched person recorded satisfaction on 26.03.2019 and subsequently handed over the seized material pertaining to the assessee. The AO made an addition of Rs. 44,77,00,000/- for AY 2017-18.
Held
The Tribunal held that the assessment for AY 2017-18, which falls within the period that should have been assessed under Section 153C of the Income Tax Act, 1961, was wrongly made under Section 143(3). The relevant date for reckoning the assessment period under Section 153C is the date of receipt of seized material by the jurisdictional AO, not the date of the original search.
Key Issues
Whether the assessment for AY 2017-18 was validly made under Section 143(3) when it should have been under Section 153C, based on the date of receipt of seized material by the jurisdictional AO.
Sections Cited
153C, 143(3), 250, 132, 153A, 153B, 151, 147, 148, 149, 153
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI VIMAL KUMAR
O R D E R PER VIMAL KUMAR, JM:
The appeal filed by the Department of Revenue is against the order dated 16.08.2025 of the Ld. Commissioner of Income Tax (Appeals)-26, New Delhi (hereinafter referred to as “Ld. CIT(A)”), u/s 250 of the Income
P a g e | Shyam Sunder Verma (AY 2017-18) Tax Act, 1961 (hereinafter referred to as “the Act”), arising out of order dated 31.12.2019 of the Ld. Assessing Officer/ACIT Central Circle-14, New Delhi(hereinafter referred to as “Ld. AO”), u/s 143(3) of the Act for Assessment Year 2017-18.
Brief facts of the case are that, a search operation u/s 132 of the Act was carried out on 16.12.2016 and on subsequent dates at different business and residential premises of Purushottam Lal Soni Group of cases. Various incriminating papers and documents, related to the assessee, were found and seized. The case was centralized with the ACIT, Central Circle-14, New Delhi vide order dated 29.10.2018 and subsequently order u/s 127 of the Act was passed. After examination of seized material related to the assessee and recording satisfaction, the case of the assessee was taken up for scrutiny u/s 153C of the Act for the A.Y. 2011-12 to 2016-17 and u/s 143(3) for the A.Y. 2017-18. The assessee filed his Return of Income on 03-08-2017 declaring total income of Rs.12,90,010/-. Notice u/s 143(2) was issued on 02.09.2018. Questionnaire along with notice u/s 142(1) of the Act was issued on 09-11- 2019. Sh. Niranjan Lal Gupta, CA, AR of the assessee attended the hearings and filed submissions
P a g e | Shyam Sunder Verma (AY 2017-18) 3. On completion of proceedings, Ld. AO, vide order dated 31.12.2019 made addition of Rs.44,77,00,000/-.
Against order dated 31.12.2019 of Ld. AO, assessee filed appeal before Ld. CIT(A) which was allowed vide order dated 16.08.2025.
Being aggrieved, the appellant-Department of revenue preferred present appeal on following grounds of appeal:-
Whether on the facts and circumstances of the case and in law, Ld. CITIA) is correct in allowing relief on addition of Rs 44,77,00,000 by relying on decision of Hon'ble Delhi High Court in case of Ojjus Medicare P Ltd? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in holding that when date of search was 16.12.2016, then AY 2017-18, which pertains to search year, should be assessed u/s 153C and not u/s 143(3) of the Act? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in not appreciating that date of receipt of seized material has been considered as deemed date of search by Hon'ble Apex Court in case of Jasjit Singh only for purposes of counting number of years that can be re-opened u/s 153C and not for application of section for assessment purposes? 4. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) was justified in holding that block periods tor assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents or assets seized, by the jurisdictional AO of the non-searched person, even when this interpretation in contrary to the legislative intent since the assessment for the years after the search i.e. 2018-19 & 2019-20 would be redundant as there will be no incriminating seized material and as such assessment in years cannot be made u/s 153C of the Act? 5. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.
P a g e | Shyam Sunder Verma (AY 2017-18) 6. Ld. Authorized Representative for respondent-assessee filed application under Rule 27 of the ITAT Rules raising following jurisdictional grounds:-
1 "that impugned assessment order passed u/s 143(3) of 1961 Act is invalid as assessment order is passed without as based upon invalid and mechanical approval u/s 153D given in combined and consolidated manner without giving any independent reasoning qua each year in the approval memo. 2 Without prejudice to revenue's challenge, that impugned assessment order passed u/s 143(3) on dated 31.12.2019 is time barred as per plain reading of second clause of third provisio of section 153B as per which time limit stood expired on 31.03.2018 only.
Ld. Departmental Representative submitted that, search was conducted on 16.12.2016, Ld. CIT(A) incorrectly allowed relief on addition of Rs.44,77,00,000/- by relying on decision of Hon'ble Delhi High Court in case of Ojjus Medicare P Ltd. Ld. CIT(A) failed to appreciate that the date of receipt of seized material has been considered as deemed date of search by Hon'ble Apex Court in case of Jasjit Singh only for purposes of counting number of years that can be re-opened u/s 153C and not for application of section for assessment purposes.
Ld. Authorized Representative for respondent-assessee submitted that, a jurisdictional ground relating to validity of instant reopening u/s 147/148 was duly raised and pleaded before Ld. CIT(A) and jurisdictional aspect of mechanical approval u/s 151 of Addl CIT qua impugned assessment framed
P a g e | Shyam Sunder Verma (AY 2017-18) u/s 143(3)/147 of the Act were raised. Copy of consolidated common approval dated 29.12.2019, regarding 11 different assessees’ for several years is attached with the application. Hon’ble High Court of Bombay in Vijay Bihari Kandhari Vs. ACIT had set aside proceedings u/s 153C for AY 2014-15 to 2019-20 as time barred, wherein search took place on 21.08.2019 and the Ld. AO of searched party, as well as the third party was one and the same.
From examination of record, in light of aforesaid rival contention, it is crystal clear that, Ld. CIT(A) in para No.5.1 observed as under:-
5.1 The issue raised by the appellant is considered. A Search operation was carried out on 16.12.2016 at the residential and business premises of Purushottam Lal Soni Group cases. Various incriminating documents pertaining to the appellant were found and seized during the Search operation The AO of the searched person recorded the satisfaction in the case of searched person i.e. Sh. Purushottam Lal Soni on 26.03.2019 and thereafter handing over the documents/material of the other persons i.e. the appellant. The appellant submitted that the date of search in case of other person is to the date when the seized material was handed over to the AO of other person As per section 153C of the Act, relevant portion of which is as under: 153C. (1) Notwithstanding anything contained in section 139, section 147 section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that- (a) any money, bullion jewellery or other valuable article or thing, seized or requisitioned, belongs to or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person
P a g e | Shyam Sunder Verma (AY 2017-18) and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person: Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub- section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub- section (2) of section 143 has been served and limitation of serving the notice under sub- section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.
P a g e | Shyam Sunder Verma (AY 2017-18) Hence, as per section 153C of the Act, in case of other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person. In the instant case being the appellant as other person, date of search would be 26.03.2019 i.e. the date of handing over of the seized material. As per the legal framework under section 153C read with section 153A of the Act, the assessment years for which these notices under section 153C of the Act could be issued are six years preceding the assessment year relevant to the such deemed year of search being the year in which the seized assets/ documents are handed over by the AO of searched person to the AO of the other person. Further, in case the income having bearing on determination of total income is Rs. 50 lakh or more and represented by an asset, then analogous to section 153A, the AO of other person is authorised to issue notice under section 153C for 3 more years also. Reliance has placed on the recent judgment of Hon'ble Supreme Court in the case of CIT-14 vs. Jasjit Singh [2023] 458 ITR 437 (SC) dated 26.09.2023 The Hon'ble Supreme Court in the aforesaid case has reproduced the amended provisions of Section 153C by the Finance Act, 2017 and interpreted the legislative intent behind inserting the first proviso to Section 153C(1) of the Act by stating that 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 Hon'ble Supreme Court finally concluded that in case of non-searched person, the date of receipt of books of accounts by the jurisdictional officer of such other person shall be the date of reference for calculation of six assessment years for which the Assessing Officer may initiate assessment in terms of section 153C of the Act. Relevant extracts of such judgment are also accorded hereinbelow: "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 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)) is confined in its application to the question of abatement.
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 A.O. 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 P a g e | Shyam Sunder Verma (AY 2017-18) concerned A.O. In that event 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 dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third-party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 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 153-C supports the interpretation which this Court adopts.
For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs," Further, reliance is placed in the case of Principal Commissioner of Income-tax (Central- 1) vs. Ojjus Medicare (P.) Ltd. [2024] 161 taxmann.com 160 (Delhi)/[2024] 465 ITR 101 (Delhi) [03-04-2024]wherein the Hon'ble Delhi High Court has held that "In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A." Relevant portion of the above said judgement is as under: B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. These included, inter alia, the search assessment block being enlarged to ten AYs consequent to the addition of the stipulation of "relevant assessment year" and which was defined to mean those years which would fall beyond the six-years block period but not later than ten AYs' The block period for search assessment thus came to be enlarged to stretch up to ten AYs' The 2017 Amending Act also put in place would have to inevitably be shown satisfied before the search assessment could stretch to the "relevant assessment year". The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or "likely to amount to" INR 50 lakhs or more in the "relevant assessment year" or in aggregate in the "relevant assessment years". C. Section 153C, on the other hand, pertains to the non-searched entity and in respect of whom any material, books of accounts or documents may have been seized and were found to belong to or pertain to a person other than the searched person. As in the case of Section 153A, Section 153C was also to apply to all searches that may have been undertaken between the period 01 June 2003 to 31 March 2021. In terms of that P a g e | Shyam Sunder Verma (AY 2017-18) provision, the AO stands similarly empowered to undertake and initiate an assessment in respect of a non-searched entity for the six AYs as well as for the relevant assessment year". The AYs', which would consequently be thrown open for assessment or reassessment under Section 153C follows lines as par material with Section 153A D. The First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the "relevant assessment year" is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 1530(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs hinges upon the phrase "immediately preceding the assessment year relevant to the previous year" of search, the ten-year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it "from the end of the assessment year". This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology "immediately preceding".
P a g e | Shyam Sunder Verma (AY 2017-18) In the case of Sanjeev Gupta vs. DCIT, Hon'ble ITAT has given decision about the wrong assessment made by the AO u/s 143(3) in place of u/s 153C of the Act. Hon'ble ITAT in its decision, dated 27.02.2025 held: “as in the case of the assessee also the satisfaction note for initiating the proceedings u/s 153C were recorded by the AO of the assessee on 10-10-2-2022 thus assessment year relevant for previous year in which search was conducted in the case of the assessee should be the Assessment Year AY 2023-24 and the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2017-18 to 2022-23 and the impugned year ie. AY 2021-22 is fallen in such block period thus the assessment should have been completed u/s 153C and not u/s 143(3) as has been done in the present case. In view of this discussion and by respectfully following the judgement of referred and also in the case of Jasjit Singh Vs. ACIT reported in 2014 (11) TMI 1012 which has been affirmed by the Hon'ble jurisdictional High Court as reported in 2015(8) TMI 982, the assessment order passed u/s 143(3) dt. 28.12.22 is hereby quashed." Same view was taken by the Hon'ble ITAT in the case of Akansha Gupta Vs. ACIT, CC- 4 Delhi in order dt. 10-07-2024. In the instant case being the appellant as other person, date of search would be 26.03.2019 i.e. the date of handing over of the seized material by the AO of the searched person to the AO of the other person (appellant). The AO has completed the assessment u/s 143(3) of the Act in place of section 153C of the Act. The calculation for initiation of proceeding u/s 153C of the Act is as under: 1st Year AY 2019-20 (Current Year) Section 143(3) 2nd Year AY 2018-19 Section 153C 3rd Year AY 2017-18 Section 153C 4th Year AY 2016-17 Section 153C 5th Year AY 2015-16 Section 153C 6th Year AY 2014-15 Section 153C 7th Year AY 2013-14 Section 153C
From the above given table, it can be seen that the AO can made assessment of the cases u/s 153C of the Act for the AY 2013-14 to 2018-19 and u/s 143(3) for AY 2019-20. However, the AO has made assessment u/s 143(3) of the Act for AY 2017-18 in place of section 153C of the Act. Hence, the assumption of jurisdiction by the AO u/s 143(3) is not valid, hence, the proceedings completed for the year under consideration are invalid. Therefore, the grounds raised by the appellant are allowed.
P a g e | Shyam Sunder Verma (AY 2017-18)
From perusal of above, discussion and finding, it is evident that search operation was carried out on 16.12.2016. The Ld. AO of searched person recorded the satisfaction in the case of searched person i.e. Purshottam Lal Soni on 26.03.2019 and handed over documents material of the other persons i.e. appellant. So Ld. AO could make assessment u/s 153C for AY 2013-14 to 2018-19 and for AY 2019-20. Ld. AO make assessment u/s 143(3) of the Act for AY 2017-18 in place of Section 153C of the Act. Therefore, the assumption of jurisdiction by Ld. AO u/s 143(3) was null and void.
Therefore, the grounds of appeal being devoid of merit are rejected.
In the result, the appeal filed by the Department of Revenue is dismissed.
Order pronounced in the open court on 09.04.2026
Sd/- Sd/- (S. Rifaur Rahman) (Vimal Kumar) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 09.04.2026 *Mittali, Sr. PS