ASHA GUPTA,NEW DELHI vs. DCIT CENTRAL CIRCLE 30, NEW DELHI

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ITA 2069/DEL/2024Status: DisposedITAT Delhi06 February 2026AY 2021-226 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessment proceedings for AY 2021-22 were initiated without complying with the provisions of Section 153C of the Income Tax Act, 1961. The Tribunal noted that the satisfaction was recorded by the AO of the assessee on 24.05.2022, which falls in the Financial Year 2022-23, relevant to AY 2023-24. As per the first proviso to Section 153C(1), the date of search should be construed from the date when satisfaction is recorded by the AO of the assessee. This view is supported by the judgment of the Hon'ble Apex Court in Jasjit Singh (supra) and followed by the Tribunal in the cases relied upon by the assessee. Consequently, the six assessment years preceding the search year (AY 2023-24) for initiating proceedings under Section 153C would be AY 2017-18 to AY 2022-23. Therefore, the assessment for AY 2021-22 should have been completed by issuing a notice under Section 153C, not under Section 143(2). The Tribunal quashed the assessment order passed under Section 143(3) by issuing notice under Section 143(2) without initiating proceedings under Section 153C, holding it to be bad in law. Grounds of appeal Nos. 1 to 3 were allowed. Other grounds became academic and were not adjudicated. The appeal of the assessee was allowed.

What were the facts?

The assessee, Asha Gutpa, filed her return of income for Assessment Year (AY) 2021-22 declaring an income of INR 4,13,910/-. Proceedings under Section 153C of the Income Tax Act, 1961, were initiated for AYs 2015-16 to 2021-22 based on incriminating material found during a search operation on 'Sanjay Jain and Mehtas' on 26.10.2020. The Assessing Officer (AO) recorded satisfaction on 24.05.2022. A notice under Section 143(2) was issued for AY 2021-22, and an assessment order was passed on 21.12.2022 under Section 143(3), making an addition of INR 76,65,659/- under Section 69A as unexplained money. The assessee's appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed by an order dated 22.02.2024.

What were the issues?

1. Whether the assessment proceedings initiated under Section 153C of the Income Tax Act, 1961, for AY 2021-22 were bad-in-law and without jurisdiction, considering the date of satisfaction recorded by the AO. (Question of law) 2. Whether the assessment order passed under Section 143(3) of the Act for AY 2021-22 was bad-in-law, without jurisdiction, and barred by limitation. (Question of mixed law and fact) 3. Whether the notice issued under Section 143(2) of the Act for AY 2021-22 was bad-in-law and without jurisdiction. (Question of law) Assessee's Contentions: The assessee argued that the satisfaction note was recorded by the AO on 24.05.2022, which falls in AY 2023-24. Therefore, the search year should be AY 2023-24, and the assessment for AY 2021-22 should have been completed under Section 153C, with the six preceding assessment years being AY 2017-18 to AY 2022-23. The assessee relied on the judgments of the Hon'ble Supreme Court in CIT vs Jasjit Singh and various ITAT Delhi Bench decisions, including Esha Kedia v. ACIT, Sanjeev Gupta v. DCIT, Prashant Kansal v. DCIT, Raja Varshney v. DCIT, and Akansha Gupta v. ACIT. Revenue's Contentions: The revenue supported the orders of the lower authorities, arguing that the limitation for serving the notice under Section 143(2) had not expired on the date of receiving the seized documents. Therefore, the AO rightly issued the notice under Section 143(2) and passed the order under Section 143(3).

Which sections of the Income-tax Act were involved?

Section 153C,Section 143(3),Section 143(2),Section 69A,Section 115BBE,Section 153D,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI “A” BENCH: NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

For Appellant: Shri Pranav Yadav, Adv
For Respondent: Shri Krishna Kumar
Hearing: 04.12.2025Pronounced: 06.02.2026

ORDER

PER MANISH AGARWAL, AM :

1.

The present appeal is filed by assessee against the order dated 22.02.2024 by Ld. Commissioner of Income Tax (A)-30, New Delhi [“Ld.CIT(A)”] in Appeal No. 10154/2020-21 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 21.12.2022 passed u/s 143(3) of the Act pertaining to Assessment Year 2021-22.

2.

Brief facts of the case are that assessee has filed her return of income on 14.03.2022, declaring total income of INR 4,13,910/-. A search and seizure operation was carried out in the case of “Sanjay Jain and Mehtas” on 26.10.2020 wherein during the course of search, various incriminating material / documents were found and seized. Thereafter, AO of the person searched has supplied the material after recording his satisfaction that certain documents pertained to the assessee. Thereafter, the AO of the assessee has recorded his satisfaction on 24.05.2022 and initiated the proceedings u/s 153C of the Act for Assessment Years 2015-16 to 2021-22. Notice u/s 143(2) of the Act was issued on 24.05.2022 for the year under appeal and consequently, the order was passed u/s 143(3) of the Act by making addition of INR 76,65,659/- u/s 69A of the Act by holding the same as unexplained money of the assessee company, being the amount of loan to BCC Cement Pvt. Ltd. as accommodation entries and total income was assessed at INR 80,79,569/-.

3.

Against the said order, the assessee preferred appeal before Ld.CIT(A) who dismissed the appeal in terms of the impugned order dated 22.02.2024.

4. Aggrieved by the order of Ld.CIT(A), the assessee preferred appeal before the Tribunal by taking following grounds of appeal:-

1. “On the facts and circumstances of the case and in law, the assessment proceedings initiated without complying with the provisions of section 153C of the Act is bad-in-law and without jurisdiction and therefore, the assessment order passed by the assessing officer is liable to be quashed and CIT(A) erred in not holding so.

2. On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is bad-in- law, without jurisdiction and barred by limitation and CIT(A) erred in not holding so.

3. On the facts and circumstances of the case and in law, the notice issued u/s 143(2) issued in this case is bad-in-law and without jurisdiction and CIT(A) erred in not holding so.

4.

On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is non-est as it does not have valid DIN.

5. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition made by the assessing officer of Rs. 76,65,660/- on account of alleged unexplained money u/s 69A r.w.s 115BBE of the Act, and, therefore, the addition made by the AO is liable to be deleted.

6.

On the facts and circumstances of the case and in law, the assessment order passed by the assessing officer is contrary to the provisions of section 153D of the Income Tax Act, 1961.

7. On the facts and circumstances of the case and in law, the CIT (A) erred in passing the order without providing proper opportunity of being heard.

8. On the facts and circumstances of the case and in law, the CIT(A) erred in passing ex-parte order.

9. On the facts and circumstances of the case and in law, the CIT (A) erred in not adjudicating the grounds of appeal

on merit.

10. On the facts and circumstances of the case and in law, the order passed by CIT (A) is against the principles of natural justice.”

5.

In support of the Ground of appeal Nos.1 to 3, Ld.AR for the assessee submits that in the present case, satisfaction note was recorded by the AO of the assessee on 24.05.2022 and thus the search year should be AY 203-24 and accordingly, the assessment for the year under appeal should have been completed u/s 153C, where six Assessment Years starts from AY 2017-18 to AY 2022-23 and assessment for AY 2023-24 has to be completed u/s 143(3) of the Act.

6. In support of his claim, the Ld.AR for the assessee placed reliance on the judgment of Hon’ble Jurisdictional High Court in the case of Jasjit Singh which stood confirmed by Hon’ble Supreme Court in the case of CIT vs Jasjit Singh [2023] (10) TMI 572 (SC) and further placed reliance on the judgments of Co-ordinate Bench of ITAT, Delhi Tribunal in following cases:- 1. Esha Kedia v. ACIT, Central Circle - 3, New Delhi 2025 (3) TMI 1214 - ITAT Delhi 2. Sanjeev Gupta v. DCIT, Central Circle - Meerut 2025 (3) TMI 40-ITAT Delhi 3. Prashant Kansal v. DCIT, Central Circle - Noida 2025 (5) TMI 107- ITAT Delhi 4. Raja Varshney v. DCIT, Central Circle - 31 New Delhi 5. Akansha Gupta v. ACIT, Central Circle 04, Delhi

7.

On the other hand, Ld. Sr.DR for the Revenue vehemently supported the orders of the lower authorities and submits that limitation of serving the notice u/s 143(2) of the Act was since not expired on the date of receiving books of accounts or documents or assets seized or re-acquisitioned by the AO having jurisdiction over the assessee. Therefore, in terms of the provisions of section 153C(2) of the Act, the AO has rightly issued the notice u/s 143(2) and subsequently, passed the order u/s 143(3) of the Act which deserves to be upheld.

8.

Heard the contentions of both the parties and perused the material available on record. In the present case, admittedly, the satisfaction was recorded by the AO of the assessee on 24.05.2022 which is falling in the Financial Year 2022-23 relevant to AY 2023- 24. As per First proviso to section 153C(1), the date of search should be construed from the date when satisfaction is recorded by the AO of the assessee upon receiving the books of accounts or other documents or assets seized or re-questioned from the AO of the person searched. This view is supported by the judgement of Hon’ble Apex Court in the case of Jasjit Singh (supra) and followed by the Tribunal in the cases relied upon by the assessee as stated herein above.

9.

In the present case, as per the date of satisfaction recorded by the AO, the year under which search is conducted will be AY 2023- 24 and 06 Assessment Years immediately preceding AY relevant for the previous year in which search was conducted for initiating proceedings u/s 153C of the Act will be AY 2017-18 to AY 2022-23. Therefore, by respectfully following the judgement of Hon’ble Supreme Court in the case of Jasjit Singh (supra) and of Delhi Tribunal, we hold that the assessment for AY 2021-22 should have been completed by issuance of notice u/s 153C of the Act and not by issuing notice u/s 143(2) of the Act.

10.

With respect to the arguments of Ld.AR that time limit for issue of notice u/s 143(2) has not been expired when the satisfaction was recorded is of no help as the assessee has already filed the return of income, therefore, the assessment should have been completed u/s 153C of the Act for the Assessment Year 2021-22.

11.

In view of the above facts, we hold that assessment order passed u/s 143(3) dated 21.12.2022 by issuing notice u/s 143(2) without initiating proceedings u/s 153C is bad in law and thus, quashed. Grounds of appeal Nos. 1 to 3 are accordingly, allowed.

12.

Other Ground of appeal Nos.4 to 10 raised by the assessee on merits became academic hence, not adjudicated.

13.

In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 06.02.2026.

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