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Facts
The assessee preferred appeals against the common order of the CIT(A) concerning assessment years 2014-15 and 2015-16, arising from assessment orders passed under Section 153C of the Income-tax Act. The core issue was whether the notices issued under Section 153C were time-barred.
Held
The Tribunal held that the notice issued under Section 153C, the assessment order, and the additions/disallowances were illegal, bad in law, without jurisdiction, and barred by limitation. The Tribunal relied on the Delhi High Court's decisions in Vartex Image Creation Pvt. Ltd. and Principal Commissioner of Income Tax Central-1 vs. Ojjus Medicare Pvt. Ltd., which established that the satisfaction note and the consequent notice under Section 153C were not in compliance with the provisions of the Act, particularly concerning the time window and the threshold limit for escaped income.
Key Issues
Whether the notices issued under Section 153C of the Income-tax Act, 1961, and consequential assessment orders were barred by limitation and bad in law due to non-compliance with the statutory requirements, including the time window and the threshold for escaped income.
Sections Cited
153C, 153A, 132
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Income Tax Appellate Tribunal, DELHI BENCH, G: NEW DELHI
Before: MS. MADHUMITA ROY & SHRI BRAJESH KUMAR SINGH
PER BRAJESH KUMAR SINGH, AM, These two appeals have been preferred by the assessee against the common order dated 28.04.2025 of the Commissioner of Income Tax (Appeals)-25, New Delhi-110055 [hereinafter referred to as the ‘Ld. CIT(A)], pertaining to Assessment Years 2014-15 and 2015-16, arising out of respective Assessment orders both dated 31.03.2024 passed under Section 153C of the Income-tax Act, 1961(hereinafter
ITA- 4044 & 4045/Del/2025 Neha Gupta referred to as ‘the Act’) passed by the ACIT, Central Circle-32, Noida (hereinafter referred to as the ‘AO’). Since the issues involved in both the appeals of the same assessee are related, they are disposed of by this consolidated order, for the sake of convenience and brevity.
1.1 The assessee has raised several grounds of appeal but we take up the Ground no. 1 of both the appeals, which are identical and challenges the proceedings being time barred which goes to the root of the matter.
1. That the notice issued under Section 153C of the Income TaxAct, 1961 ('the Act'), the assessment order passed under Section 153C of the Act and the additions/disallowances made therein are illegal, bad in law, without jurisdiction, barred by time limitation and not in accordance with provisions of the Act.
The Ld. AR relying upon the decision of the Hon’ble Delhi High Court in the case of Vartex Image Creation Pvt. Ltd. vs. Deputy Commissioner of Income Tax, Central Circle 26 & Anr. W.P. (C) 2646/2024 & CM Appl. 10878/2024 submitted that in this case the proceedings initiated vide notice u/s 153C of the Act dated 29.06.2022 on the basis of satisfaction note dated 23.06.2022 for both the AYs. 2014- 15 and 2015-16, are barred by limitation and are bad in law. The Ld. AR submitted that the Hon’ble Delhi High Court in the above cited case had relied upon the decision of the same court in the case of Principal Commissioner of Income Tax
ITA- 4044 & 4045/Del/2025 Neha Gupta Central-1 vs. Ojjus Medicare Pvt. Ltd. [2024 SCC Online Del 2439]. In this regard, the assessee furnished a chart which is reproduced as under:
“
Date of 153C Notice: 29.06.2022 i.e. AY 2023-24 date of Satisfaction note recorded by the JAO: 23.06.2022 Therefore, we presume that the date of issuance of notice is the date of handing over the documents. S. No. AY 1. 2023-24 2. 2022-23 3. 2021-22 4. 2020-21 5. 2019-20 6. 2018-19 7. 2017-18 8. 2016-17 “The aggregate amount in the relevant assessment years does not 9. 2015-16 exceed the limit” prescribed 10. 2014-15 ”
2.1 The Ld. AR submitted that the satisfaction note recorded by the AO dated 23.06.2022 for A.Ys. 2014-15 and 2015-16 makes it evident that the said assessment years fall beyond the window of six preceding AYs' as provided under Section 153C of the Act. The Ld. AR further submitted that the Satisfaction Note dated 23 June
ITA- 4044 & 4045/Del/2025 Neha Gupta 2022 recorded further indicates that the income which is alleged to have escaped assessment for the A.Ys. 2014-15 and 2015-16 does not exceed INR 50 lakhs. The Ld. AR further submitted that the satisfaction note has also failed to record that the escaped income is likely to exceed INR 50 lakhs or more cumulatively for the A.Ys. 2014-15 and 2015-16 and thereby fulfilling the threshold requirement as prescribed by the Fourth Proviso to Section 153A. In view of these facts, the Ld. AR submitted that on similar facts the Hon’ble Delhi High Court in the above cited decisions had quashed the similar notice issued u/s 153C of the Act.
The Ld. CIT(DR) relied upon the orders of the authorities below and the amendment in section 153C of the Finance Act, 2017 w.e.f. 01.04.2017.
We have heard both the parties and perused the material available on record. 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, after recording satisfaction on 23.06.2022, the AO issued notice u/s 153C of the Act dated 4
ITA- 4044 & 4045/Del/2025 Neha Gupta 29.06.2022 to the assessee asking to file her return of income for the relevant assessment year for AYs 2014-15 and 2015-16.
4.1 On similar facts, the Hon’ble Delhi High Court vide its order dated 28.05.2024 in the case of the Vartex Image Creation Pvt. Ltd. vs. Deputy Commissioner of Income Tax, Central Circle 26 & Anr. (supra), had quashed the notice u/s 153C of the Act dated 04.11.2022 for AY 2015-16. In this case, the Hon’ble Court noted that the Satisfaction Note recorded by the jurisdictional Assessing Officer ["AO"] was dated 29 September 2022, and it was ex facie evident that the aforenoted A.Y. 2015-16 would fall beyond the window of six preceding AYs' as provided under Section 153C. Further, the Hon’ble Court noted that an ex facie perusal of the aforenoted Satisfaction Note and the Satisfaction Note dated 23 June 2022 recorded by the AO of the searched person further indicated that the income which is alleged to have escaped assessment for the "relevant assessment year" does not exceed INR 50 lakhs. In view of these facts, the Hon’ble Court held that the said satisfaction note failed to fulfill the threshold requirement as prescribed by the Fourth Proviso to Section 153A and therefore, the notice u/s 153C of the Act dated 04.11.2022 based on the said satisfaction was bad in law. The relevant extract of the order of the Hon’ble Delhi court is reproduced as under:
“ 1. This writ petition has been preferred against the impugned notice dated 04 November 2022 issued under Section 153C of the Income Tax Act, 1961 ["Act"] for Assessment Year ["AY"] 2015-16 and all consequential proceedings. 5 ITA- 4044 & 4045/Del/2025 Neha Gupta 2. Bearing in mind the undisputed fact that the Satisfaction Note recorded by the jurisdictional Assessing Officer ["AO"] was dated 29 September 2022, it is ex facie evident that the aforenoted AY would fall beyond the window of six preceding AYs' as provided under Section 153C. An ex facie perusal of the aforenoted Satisfaction Note and the Satisfaction Note dated 23 June 2022 recorded by the AO of the searched person further indicates that the income which is alleged to have escaped assessment for the "relevant assessment year" does not exceed INR 50 lakhs. The jurisdictional AO has also failed to record its satisfaction that the escaped income is likely to exceed INR 50 lakhs or more cumulatively for the "relevant assessment year", and thereby fulfilling the threshold requirement as prescribed by the Fourth Proviso to Section 153A.
3. The issue in any case stands answered and covered in favour of the writ petitioner in light of the judgment rendered in Principal Commissioner of Income Tax Central - 1 vs. Ojjus Medicare Pvt. Ltd [2024 SCC Online Del 2439). The relevant paragraphs of the aforesaid decision read as under:- "G. Insofar as the thresholds put in place by virtue of the Fourth Proviso to Section 153A are concerned and the argument of the writ petitioners of the condition of INR 50 lakhs being an unwavering precondition, we find ourselves unable to sustain that submission bearing in mind the indubitable fact that proceedings for search assessment commence upon the issuance of a notice and the AO at that stage having really not had the occasion to undertake a detailed or in depth examination of the evidence collected or come to a definitive opinion with respect to the total income which may have escaped assessment. Since the computation and assessment of income that is likely to have escaped assessment would at this stage be provisional, it would be incorrect to strike down initiation of action on a mere ex facie examination of the Satisfaction Note. We also in this regard bear in mind the Fourth Proviso using the expression "amounts to or is likely to amount". The usage of the phrase "likely to" is indicative of the Legislature being conscious of the provisional character of the opinion that the AO may have formed at that stage. H. However, and at the same time, even if the identified asset at that stage be quantified as less than INR 50 lakhs, the AO must for reasons to be duly recorded, be of the opinion that the ultimate computation of escaped income is likely to exceed INR 50 lakhs, The aforesaid satisfaction would have to be based on an assessment of the material gathered and the potentiality of the same being indicative of the escaped assessment exceeding INR 50 lakhs. The formation of opinion in this respect would have to be based not on mere ipse dixit but reflective of a fair assessment of the quantum of income likely to have escaped assessment as distinct from mere speculation and conjecture. I. We further hold that since the precondition of INR 50 lakhs or more constitutes a sine qua non for initiating action for the extended ten year block, the aforesaid satisfaction and the reasons in support thereof would have to borne out from the Satisfaction Note itself. We are also of the opinion that the precondition of INR 50 lakhs is not liable to be viewed as being the qualifying 6 ITA- 4044 & 4045/Del/2025 Neha Gupta criteria for each "relevant assessment year" that may be thrown open and that the said condition would stand satisfied if the escaped income cumulatively or in the aggregate meets the minimum benchmark of INR 50 lakhs."
4. Accordingly, and for reasons assigned in our decision in Ojjus Medicare Private Limited, while we allow the instant writ petition and quash the impugned notice issued under Section 153C of the Act dated 04 November 2022 insofar as it relates to AY 2015-16, we leave it open to the jurisdictional AO to examine the issue afresh bearing in mind the observations appearing in para 3 above.
5. In case the jurisdictional AO be of the opinion that the income alleged to have escaped assessment is likely to exceed INR 50 lakhs in the "relevant assessment year", it would be open to it to draw proceedings afresh, if otherwise permissible in law.” (emphasis supplied by us)
In the present case also, the satisfaction note was recorded on 23.06.2022 by the JAO and the notice u/s 153C of the Act was issued on 29.06.2022 and on both the dates the assessment years 2014-15 and 2015-16 fall beyond the window of six preceding assessment years as provided u/s 153C of the Act. Further, in the satisfaction note dated 23.06.2022 the alleged escaped income amounts to Rs. 2,47,774/- and Rs. 1,52,207/- for A.Y. 2014-15 and 2015-16 respectively which does not exceed INR 50 lakhs for each of such ‘relevant assessment year’ and also does not exceed INR 50 lakhs either cumulatively or in the aggregate and thus fail to meet the threshold requirement of escapement of alleged income of Rs. 50 lakhs or likely to exceed to Rs. 50 lakhs as prescribed by Fourth Proviso to section 153A of the Act.
5.1 Therefore, in view of the above decisions of the Hon’ble Delhi High Court, we hold that the notices u/s 153C of the Act dated 29.06.2022 u/s 153C of the Act
ITA- 4044 & 4045/Del/2025 Neha Gupta for A.Y. 2014-15 and 2015-16 are bad in law and liable to be quashed. Accordingly, we quash the impugned notices and the respective assessment order u/s 153C of the Act both dated 31.03.2024 for A.Ys. 2014-15 and 2015-16.
In view of the above findings, the other grounds raised in the appeal are rendered academic and are therefore left open in this case.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 14th January, 2026