JAIDEEP HALWASIYA,INDIA vs. ACIT, CENTRAL CIRCLE-4(3), KOLKATA, INDIA

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ITA 2217/KOL/2025Status: DisposedITAT Kolkata20 January 2026AY 2019-2010 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 condoned the delay of 326 days in filing the appeal, finding the reasons to be bonafide and genuine, and adopting a pragmatic and liberal approach as per the decision in Collector, Land Acquisition vs. Mst. Katiji & Ors. The Tribunal admitted the additional ground regarding the validity of Section 153C proceedings, as it was a purely legal issue with all facts available. The Tribunal held that the proceedings initiated under Section 153C were not valid. The Tribunal referred to the Supreme Court's decision in Jasjit Singh, which clarified that the first proviso to Section 153C(1) is not confined to abatement but also applies to reckoning the period for filing returns and other practical purposes. The Tribunal found that the date of initiation of search for the assessee (the 'other person') was the date the seized material was handed over to the assessee's AO, which was 25.11.2022. As Section 153C(3) states that the provisions of Section 153C will not apply for any search initiated on or after 01.04.2021, and the initiation date in this case was subsequent to 01.04.2021, the provisions of Section 153C were inapplicable. Consequently, the impugned notices and the consequent assessment framed by the AO were quashed. The appeal of the assessee was allowed.

What were the facts?

The assessee, Jaideep Halwasiya, an NRI, filed an appeal before the ITAT against the order of the CIT(A) for AY 2019-20. The appeal was filed with a delay of 326 days. The assessee attributed the delay to being outside India, inability to access the IT portal, and his accountant's failure to timely check the portal and inform him of the CIT(A)'s order. The revenue opposed the condonation of delay. The assessee also raised an additional ground challenging the validity of proceedings initiated under Section 153C of the Income-tax Act, 1961, via a notice dated 13.12.2022. This challenge was based on the proviso to Section 153C(3). The AO had initiated proceedings under Section 153C based on incriminating materials seized during a search on Shri Avtar Singh Kochar, which included digital evidence and WhatsApp chats with the assessee. The AO received a satisfaction note on 31.01.2022 and issued the notice on 13.12.2022. The assessment order under Section 153C was passed on 30.03.2023, with additions of ₹10,63,000 and ₹7,90,955.

What were the issues?

1. Whether the delay of 326 days in filing the appeal is liable to be condoned on the grounds of reasonable and bona fide cause, considering the assessee is an NRI and the delay was due to issues with portal access and communication with his accountant? (Question of fact and law) 2. Whether the proceedings initiated under Section 153C of the Income-tax Act, 1961, vide notice dated 13.12.2022, are valid in terms of Section 153C(3) of the Act, considering the date of initiation of search for the other person? Assessee's arguments: - For delay condonation: The delay was unintentional, for bona fide and reasonable cause, not due to negligence or mala fides. Relied on Collector, Land Acquisition vs. Mst. Katiji & Ors. and Royal Airways Ltd. vs. ADIT. - For Section 153C validity: The notice was barred by limitation as per the first proviso to Section 153C. The date of initiation of search for the purpose of Section 153C should be the date the AO of the other person receives the seized documents. The AO received the soft copy of WhatsApp chats via email on 26.09.2022. Relied on Principal Commissioner of Income-tax vs. Shalimar Town Planners (P.) Ltd., Commissioner of Income-tax vs. Jasjit Singh, and Harigovind vs. Assistant Commissioner of Income-tax Non-corporate. Revenue's arguments: - For delay condonation: The delay was not explained with reasons, opposing the maintainability of the appeal.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153C(3),Section 132,Section 143(1),Section 143(2),Section 142(1),Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM

For Appellant: Shri S.K. Tulsiyan, &, Ms. Lata Goyal, ARs
For Respondent: Shri Mohit Mrinal, DR
Hearing: 07.01.2026Pronounced: 20.01.2026

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals) Kolkata-27, (hereinafter referred to as the “Ld. CIT (A)”] dated 31.08.2024 for the AY 2019- 20.

2.

At the outset, we note that the appeal of the assessee is barred by limitation by 326 days. At the time of hearing the counsel of the assessee submitted that the assessee is a Non-Resident Indian (NRI) and assessed to tax in India under PAN AAWPH1706L. The 2.1. The Ld. D.R on the other hand strongly opposed the maintainability of the appeal as the delay was not explained with reasons.

2.2. After hearing the rival contentions and perusing the materials available on record, we find that the delay is for bonafide and genuine reason, hence, we condone the delay and adjudicate the appeal after respectfully following the decisions. The Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. 1167 1.T.R. 471 (SC), has held that the Courts should have a pragmatic and liberal approach while considering the petition for condonation of delay. Their Lordships have also held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice should be preferred. Similarly, the Hon'ble ITAT Delhi in the case of Royal Airways Ltd. vs. ADIT reported in [2006] 98 ITD 259 (ITAT Del]) has condoned the delay of 9 to 11 years in filing appeals by holding that it is a settled legal position that any delay caused on account of legal advice received or while perusing an abortive remedy should be treated as sufficient cause for such delay.

3.

At the time of hearing the ld. Counsel for the assessee pressed additional ground, which is extracted below:-

that the proceedings u/s 153C of the Act initiated vide notice dated 13.12.2022 is not valid in terms of section 153C(3) of the Income-tax Act, 1961 (the Act).

3.1. After hearing the rival contentions and perusing the material on record, we find that the assessee has raised an additional ground of

4.

The facts in brief are that the assessee filed the return of income on 29.08.2019, declaring total income of ₹25,22,240/-, which was processed u/s 143(1) the Act on 29.10.2019. The Director of Income Tax (Investigation) Delhi conducted a search action u/s 132 of the Act on 06.02.2019, in the case of Shri Avtar Singh Kochar during which certain incriminating materials were found and seized. These materials were in the form of digital evidences, conversations and WhatsApp Chats, etc. between Shri Avtar Singh Kochar and Shri Jaideep Halwasiya, the assessee having bearing on the determination of total income of the assessee (the other person) for the purpose of invoking the Provisions of Section 153C of the Act which were received by email on 26.09.2022, from the AO of the searched person i.e. DCIT CC-25, New Delhi. A satisfaction note dated 4.1. The Ld. Authorized Representative vehemently submitted before us that the notice issued by the Ld. AO is hopelessly barred by limitation in terms of first proviso to Section 153C of the Act. The Ld. Authorised Representative argued that according to the said proviso to Section 153C of the Act , the date of initiation of search in case of other person u/s 153C of the Act is the date on which the Ld. AO of such other person receives the books of account or documents seized during the course of search. The Ld. Authorised Representative submitted by referring to the satisfaction note dated 21.10.2021 that the soft copy of the WhatsApp Chats which was seized documents in this case for the purpose of invoking Section 153C of the Act in the case of the assessee was received by the Ld. AO vide email dated 26.09.2022 via email. Therefore, the proceedings u/s 153C of the Act initiated vide notice dated 13.12.2022, is not valid in terms of section 153C(3) of the Act. The Ld. Authorised Representative in defense of his argument relied on 4.2. The Ld. DR on the other hand relied on the orders of the authorities below.

5.

After hearing the rival contentions and perusing the materials available on record, we find that in this case the proceedings were initiated u/s 153C of the Act vide notice dated 13.12.2022, after a search was conducted on Shri Avtar Singh Kochar on 06.02.2019. During the course of search certain incriminating materials were found and seized which were in the form of conversation and WhatsApp Chats between Shri Avtar Singh Kocar and the assessee. We note that the satisfaction note of the Ld. AO of the searched person dated 21.10.2021, was received by the Ld. AO of the assessee on 31.01.2022. We find that the satisfaction note mentioned the seized documents in the form of soft copy of WhatsApp Chats. The said seized materials were received by email on 26.09.2022 by the AO of assessee. The observations ande notings of the AO of the assessee in para 2.2 page 2 are extracted below for the sake of ready reference:-

“44. Certainly, there cannot be two different dates for initiation of search for the other person. Hence, for all practical purpose, the initiation of search would be the same date and it is apparent upon reading the provisions of Section 153C of the Act. In the provision of Section 153C(1) of the Act, the date of initiation of search is mentioned as the date of handing over of materials and as per the first proviso, the same date would apply for the purpose of abatement also. When such being the case, no other date will come into picture for the purpose of determination of initiation of search for other

6.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 20.01.2026.

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