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Facts
A search and seizure operation was conducted on Alankit Group and its associates. Incriminating documents were found related to the assessee. Notice under Section 153C was issued to the assessee for AY 2014-15. The Assessing Officer passed an assessment order making additions. The assessee appealed to the CIT(A).
Held
The CIT(A) noted that the notice under Section 153C was issued beyond the six-year period prescribed by law, based on decisions of the High Court. The aggregate income escaping assessment was also found to be less than Rs. 50 lakhs for the relevant assessment years. Therefore, the CIT(A) annulled the assessment order.
Key Issues
Whether the notice issued under Section 153C of the Income-tax Act, 1961, was within the prescribed time limit and whether the CIT(A) erred in annulling the assessment order.
Sections Cited
153C, 153A, 69C
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Income Tax Appellate Tribunal, DELHI BENCH: “C” NEW DELHI
Before: SHRI VIKAS AWASTHY & SHRI BRAJESH KUMAR SINGH
ORDER PER BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER
This appeal has been preferred by the Revenue against order dated 31.07.2025 of the Commissioner of Income-tax (Appeals)-25, New Delhi (hereinafter referred to ‘ld. CIT(A)’) pertaining to Assessment Years 2016-17 arising out of the Assessment Order dated 26.03.2024 passed under Section 153C of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ACIT, Central Circle-27, Delhi (hereinafter referred to as the ‘AO). 1.1 In this appeal there is a delay of 4 days. The Ld. CIT(DR) submitted that the nominal delay may kindly be condoned. The Ld. AR did not object to the same. Considering the nominal delay of four days, the same is condoned.
Brief facts of the case: In this case, a search and seizure proceeding u/s 132 of the Act was carried out on the Alankit Group, Shri Alok Kumar Agarwal his son Shri Ankit Agarwal and some of the close associates and key employees of Sh. Alok K Agarwal on 18.10.2019. The AO had noted that during the course of search & seizure operation carried out on 18.10.2019 at the premise of Shri Alok K Agarwal, Ankit Agarwal, Alankit Ltd. and Alankit Assignments Ltd. at 3584, third floor, Gali no. 4, Narang Colony, Trinagar, Delhi some incriminating documents were found from the premises in the name of the assessee at the premises of assessee. Accordingly, notice u/s 153C of the Act was issued on 15.11.2022 to the assessee asking her to file her return of income for the relevant assessment year for AYs 2014-15. In response to notice issued u/s 153C of the Act, the assessee filed her return of income on 17.11.2022 declaring income of Rs. 8,30,850/- 2.2 The AO issued served notices during the assessment proceedings and after considering the reply of the assessee passed the assessment order on 26.03.2024 2 | P a g e at a total income of Rs. 9,74,680/- wherein addition under Section 69C of the Act- Rs. 2,25,000/- was made.
Aggrieved with the said order the assessee filed an appeal before the Ld. CIT(A) and contested proceedings on legal ground that the notice issued under Section 153C of the Act was bad in law, without jurisdiction and barred by time limitation and accordingly, said notice and the assessment order passed on the foundation of such liable notice was liable to be quashed.
The Ld. CIT(A) noted that the notice under Section 153C of the Act was issued on 15.11.2022. The Ld. CIT(A) thereafter examining decision of the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh 458 ITR 437(SC) and of the Hon’ble Delhi High Court in the case of Principal Commissioner of Income-tax (Central-1) vs. Ojjus Medicare (P.) Ltd. & Others dated 03.04.2024 in ITA 52/2024 noted that the period of six assessment years as per the decision of the Hon'ble jurisdictional High Court of Delhi in the case of Ojjus (supra) means six years prior to the assessment year in which the seized material was handed over to the AO of the 'other" (non-searched) person / satisfaction note u/s 153C was recorded by the concerned AO. The Ld. CIT(A) further noted that as per records and copies of documents submitted by the assessee the satisfaction note was recorded by the AO of the searched person on 14.06.2022, i.e. in the F.Y. 2022-23 relevant to AY 2023-24. Therefore, by this yardstick, the Ld. CIT(A) noted that the six years period as referred to in section 153C(1) of 3 | P a g e the Act would be from AY 2017-18 to 2022-23.
Thereafter, the Ld. CIT(A) in order to ascertain whether income escaping assessment in the relevant assessment year or the aggregate of the assessment order amounted to was likely to amount to Rs. 50 lakhs or more perused the copy of satisfaction note as submitted by the assessee {details are placed at page 17 to 18 of the ld. CIT(A)} and noted that aggregate of the income having escaped for the relevant assessment year i.e. A.Y. 2016-17 (FY 2015-16) assessment year 2015-16 (FY 2014-15) and A.Y. 2014-15 (FY 2013-14) was seen to be less than Rs. 50 lakhs and also noted that the addition made vide the impugned assessment order to the returned income for A.Y 2016-17 was Rs. 2,25,000/- only.
Thereafter, Ld. CIT(A) following ratio of the decision supra the Hon’ble jurisdictional High Court in the case of Ojjus Medicate (supra) held that the impugned notice dated 15.11.2022 falls beyond the period of six assessment years as provided u/s 153C r.w.s. 153A of the Act and hence, the impugned assessment order dated 24.03.2024 passed u/s 153C of the Act for assessment year 2014-15 in pursuance of such notice would not survive, having no legs to stand and thus annulled the impugned assessment order. The relevant extracts of the order of the ld. CIT(A) is reproduced as under: -
“17. From the above, it is seen that the aggregate of the income having escaped 4 | P a g e assessment for the *relevant assessment years' as per the satisfaction note recorded falls short of Rs. 50 lakhs. The amount of escapement in the relevant assessment years, i.e. AY 2016-17 (FY 2015-16), AY 2015-16 (FY 2014-15) and AY 2014-15 (FY 2013-14) is seen to be less than Rs. 50 lakhs. [It may be mentioned here that the addition made vide the impugned assessment order to the returned income for the year is Rs. 13,52,501/-; additions of Rs. 15,000/- each in AY 2015- 16 and AY 2016-17.] 17.1 Following the ratio of decision as per the Hon'ble jurisdictional High Court in the case of Ojjus Medicare (supra), there is nothing in the satisfaction note to show that the income, represented in the form of asset which has escaped assessment amounted to or was likely to amount to Rs. 50 Lakhs or more in the 'relevant assessment year' or in aggregate in the 'relevant assessment years' in the case of the appellant under consideration.
Thus, the condition spelt out in the statute and as interpreted by the Hon'ble Courts for permitting reopening beyond six years was not fulfilled in the instant case. Accordingly, the AO could have reopened the case of the appellant up to the AY 2017-18 only. The case of the impugned A.Y 2014-15 falls beyond the period of six years preceding the assessment year relevant to the previous year in which the satisfaction note was drawn/notice u/s 153C issued. The period of six years therefore, terminates with the AY 2017-18. The contention of the appellant therefore bears merit.
Relying on the above-mentioned case laws and respectfully following the judgments of the Hon'ble Courts, it is clear that A.Y. 2014-15 is not covered within six AYs as per section 153C of the Act and the condition/s for assessing it as part of the relevant assessment year/s was not existent. Accordingly, respectfully following the aforesaid judgment of jurisdictional High Court in the case of Ojjus Medicare (P.) Ltd (supra), it is held that notice issued for instant assessment year, AY 2014-15 would fall beyond the ambit of six AYs' as provided under section 153C read with section 153A, and hence the impugned assessment order dated 24.03.2024 passed u/s 153C of the Act for the instant AY 2014-15 in pursuance of such notice would not survive, having no legs to stand, and is thus annulled.
As it is held that the Assessing Officer did not have the jurisdiction to assess the appellant's case for the A.Y 2014-15, therefore, all the other grounds raised by the appellant are rendered academic in nature, and hence not required to be adjudicated upon. There is hence no adjudication on merits in this case.”
Aggrieved with the said order the department is in appeal before us on the following ground of appeal:- “1. Whether, on the facts and in the circumstances of the case and in law, the Ld. 5 | P a g e
CIT(A) erred in annulling the assessment completed u/s 153C of the Income-tax Act, 1961, by relying on the judgment of the Hon'ble Delhi High Court in the case of PCIT, Central-1, Delhi vs. Ojjus Medicare Pvt. Ltd. (ITA No. 52 of 2024), despite the fact that the Revenue has filed Special Leave Petitions (SLPs) against the said judgment, which are currently pending before the Hon'ble Supreme Court and the matter is sub judice? 2. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the block period for assessment u/s 153C of the Act is to be calculated from the date of receipt of books of accounts, documents or assets seized by the jurisdictional Assessing Officer of the non-searched person, or from the date of issuance of notice u/s 153C, instead of from the date of initiation of search? 3. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in relying on the First Proviso to Section 153C to conclude that the block period of six assessment years must be reckoned from the date of receipt of seized material or issuance of notice, when the main provision under Section 153C(1) clearly states that the block period has to be determined from the assessment year relevant to the previous year in which the search was conducted? 4. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in interpreting the provisions of Section 153C of the Act in isolation, without giving due effect to the amendment made by the Finance Act, 2017, which clarifies that the computation of block period under Sections 153A and 153C are to be made from the assessment year relevant to the previous year in which the search is conducted? 5. That the appellant craves leave to add, amend, modify, or withdraw any ground(s) of appeal at the time of hearing or prior thereto.”
At the time of hearing before us, Ld. CIT(DR) relied upon the grounds of appeal but neither contradicted the finding of the Ld. CIT(A) that income escaping in the relevant Assessment Year or the aggregate of the assessment years beyond six years was less than Rs. 50 lakhs nor could not bring any contrary decision to the decisions relied upon by the Ld. CIT(A) in quashing the assessment order.
9. Having heard both the parties and upon perusal of the material on record, we, uphold the order of the Ld. CIT(A) and dismiss the appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed.