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Facts
The assessee filed appeals against CIT(A) orders for Assessment Years 2015-16 and 2017-18. The assessments were framed under Section 153C, initiated based on a search conducted on a third party. The assessee contended that these assessments were time-barred due to undated satisfaction notes recorded by the AOs of both the searched person and the assessee, impacting the calculation of the limitation period for the block assessments.
Held
The Tribunal, admitting the legal grounds, held that given the undated satisfaction notes, the date of issuance of the Section 153C notice (10.05.2023) should be considered for determining the block of six assessment years. This resulted in the relevant block being Assessment Year 2024-25 to 2018-19, placing Assessment Years 2015-16 and 2017-18 outside the permissible period. Consequently, the assessments for these years were quashed as barred by limitation.
Key Issues
The key legal issue was the determination of the limitation period for assessments under Section 153C when satisfaction notes by the AOs were undated, and whether the assessments for the specific assessment years were therefore barred by limitation.
Sections Cited
153C, 153A
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Income Tax Appellate Tribunal, DELHI BENCH, ‘C’: NEW DELHI
Before: SHRI C.N. PRASAD & SHRI MANISH AGARWAL
ORDER PER C.N. PRASAD, JM, These two appeals are filed by the assessee against the common orders of the Ld. CIT(A)-3, Gurgaon vide order dated 24.11.2024 for the A.Ys 2015-16 and 2017-18. 2. The assessee has raised following technical grounds of appeal in both these assessment years except for the figures :-
1. That in view of handing over of seized material/ recording of satisfaction by the A.O. of assessee in A.Y.24-25, hence the impugned A.Y.15-16 since beyond the period of 06 Yrs immediate preceding the asstt. Year relevant to search year (i.e. immediate preceding 9th Yr), hence barred by limitation and without jurisdiction.
That without prejudice, even in case of assuming A.Y.15-16 as the “relevant assessment year/s” within the definition of Expln-1 below 4th Proviso to Sec.153A, then also, since the alleged escaped income, in total, of all 03 Yrs covered in the definition of “relevant assessment year/s” being A.Y. 2015-16 is barred by limitation from this angle also.”
The assessee has also filed an application for admission of additional grounds which are as under :-
That the following additional grounds are taken which are also taken in Form-36: Addl. G.No.1 (Taken as G.No.1 in F-36) That in view of handing over of seized material/recording of satisfaction by the A.O. of assessee in A.Y.24-25, consequently the deemed search Yr for proceeding U/s.153C being A.Y.24-25, hence the impugned A.Y.15-16 since beyond the period of 06 Yrs immediate preceding asstt. Yr relevant to search Yr (ie. immediate preceding 9th Yr), hence barred by limitation and without jurisdiction. Addl. G.No.2 (Taken as G.No.2 in F-36) That without prejudice, even in case of assuming A.Y.15-16 as the "relevant assessment year/s" within the definition of Expln.-1 below 4th Proviso to Sec. 153A, then also, since the alleged escaped income, in total, of all 03 Yrs covered in the definition of "relevant assessment year/s" being A.Y.15-16, Α.Υ.16-17 & Α.Y.17-18 is only Rs.25,65,650/- i.e. less than Rs.50,00,000/- as provided in 4th Proviso to Sec. 153A, the A.Y.15-16 is barred by limitation from this angle also. 4. Referring to the above additional grounds Ld. Counsel for the assessee stated that these grounds were taken for the first time before the Tribunal and since these grounds are purely legal grounds the same be admitted and adjudicated. Reliance was placed on the decision of Hon’ble Supreme Court in the case of Page | 2 National Thermal Power Company Ltd.Vs. CIT reported in 229 ITR 383 and CIT Vs. Sinhgad Technical Education Society reported in 397 ITR 344 (SC). 5. On hearing both the parties we admit the additional grounds filed by the assessee following the decision in the case of National Thermal Power Company Ltd. Vs. CIT (229 ITR 383) since the grounds raised
by the assessee are purely legal grounds.
6. Coming to merits of these grounds the Ld. Counsel for the assessee submitted that the proceedings u/s.153C in the case of the assessee were initiated on the basis of search on third party on 15.01.2021 relevant to the A.Y. 2021-22. The Ld. Counsel for the assessee referring to page 3 to 5 of the paper book submitted that a satisfaction note u/s.153C of the Act was recorded by the AO of the assessee which is undated and similarly referring to page-6 of the paper book Ld. Counsel for the assessee submitted that an undated satisfaction note was recorded by the AO of the searched person. The Ld. Counsel submitted that neither in the case of the searched person nor in the case of the assessee, satisfaction note recorded were dated. The Ld. Counsel for the assessee further submits that since the satisfaction notes recorded by the AO of the searched person as well as the AO of the assessee are undated, the date of issuance of notice u/s. 153C should be relevant for the purpose of calculating period of block of assessments for completing the assessments u/s. 153C of the Act. Reliance was placed on the decision of the Hon’ble Jurisdictional High Court in the case of PCIT Vs. Ojjus Medicare Pvt. Ltd. (2024) 161 taxmann.com 160 Delhi.
7. The Ld. Counsel further referring to page-7 of the paper book submitted that in the case of the assessee notice u/s. 153C was Page | 3 issued on 10.05.2023 for the A.Y. 2015-16 and, therefore, the search year for the purpose of completing the assessments for block of six assessment years shall commence from A.Y.2024-25 and six preceding assessment years i.e. from A.Y.2024-25 to 2018- 19 and, therefore, the assessments framed u/s.153C for the A.Y’s 2015-16 and 2017-18 are barred by limitation. The Ld. Counsel for the assessee also referred to the application submitted by the assessee before the AO under RTI requiring to provide date of handing over of seized materials by the AO of the searched person to the AO of the assessee alongwith evidences. The Ld. Counsel submitted that there was no reply furnished by the Public Information Officer in response to the RTI application to this query.
On the other hand the Ld. DR placed reliance on the orders of the authorities below.
Heard rival submissions, perused the orders of the authorities below and materials placed before us. Perusal of the satisfaction note recorded by the AO of the searched person and also the satisfaction note recorded by the AO of the assessee, we noticed that both of the satisfaction notes are undated. It is also not known from the record when the AO of the searched person handed over the seized materials belonging to the assessee to the AO of the Assessee so as to record satisfaction and initiate proceedings u/s.153C of the Act.
We observed that the Hon’ble Jurisdictional High Court in the case of PCIT Vs. Ojjus Medicare Private Ltd. 465 ITR 101 held as under :- “86. In the present batch, List I pertains to writ petitions which have Satisfaction Notes recorded or section 153C notices issued between the period 01 April 2021 to 31 March 2022. Undisputedly, the First Proviso το section Page | 4 153C, and which has been consistently recognized to also embody the commencement point for reckoning the six or the ten AYs', shifts the relevant date from the date of initiation of search or a requisition made to the date of receipt of books of account or documents and assets seized by the jurisdictional AO of the non-searched person. Consequently, the block of six or ten AYs would have to be reckoned bearing the aforesaid date in mind. Although in the present batch of writ petitions, the date of actual handing over has not been explicitly mentioned in a majority of the writ petitions, learned counsels for respective sides had addressed submissions based on the assumption that it would be the date of issuance of the Satisfaction Note by the AO of the non-searched person and in the case of nonavailability of such a note, the date of issuance of the section 153C notices which would be pertinent for the purposes of the First Proviso to section 153C.”
As could be seen from the above the Hon’ble Jurisdictional High Court held that in the case of non availability of satisfaction note the date of issuance of notice u/s.153C would be pertinent for the purpose of first proviso to section 153C of the Act. In the case on hand we observe that though satisfaction notes were recorded by the AO of the searched person as well as the AO of the assessee who is non searched person, both the satisfaction notes are undated. In the circumstances the date of notice u/s.153C shall have to be considered for the purpose of computing the block of six years for completion of assessment u/s.153C of the Act and in which case of the assessee for the A.Y. 2015-16 the notice u/s.153C is dated 10.05.2023 and, therefore, the block of six years shall commence from A.Y.2024-25 and six preceding assessment years i.e. from A.Y.2024-25 to 2018-19 and the A.Ys 2015-16 and 2017-18 are out of the block. In the circumstances we hold that the assessment framed u/s. 153C for the A.Y.2015-16 is barred by limitation and the same is hereby quashed. Additional grounds are allowed.
Facts for the A.Y.2017-18 being identical we hold that the decision taken therein shall apply mutatis mutandis to A.Y.2017- 18. Accordingly, we hold that the assessment year A.Y.2017-18 is barred by limitation and the assessment framed u/s.153C is hereby quashed. Additional grounds are allowed.
Since we have quashed the assessments for the A.Y.2015-16 and 2017-18 on technical ground by allowing additional ground of appeal
we need not go into the merits of the addition/ disallowance made by the AO and all other grounds are left open.
14. In the result, the appeals of the assessee are partly allowed. Order pronounced in the open court on 17.12.2025.