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Facts
The assessee's appeal was filed against the order of the CIT(A) confirming additions made by the Assessing Officer for AY 2014-15. The proceedings were initiated under Section 153C based on a search conducted on a third party.
Held
The Tribunal held that the proceedings under Section 153C were initiated beyond the limitation period as per the law laid down by the Hon'ble Supreme Court in CIT vs. Jasjit Singh. Consequently, the assessment order was quashed.
Key Issues
Whether the initiation of proceedings under Section 153C for Assessment Year 2014-15 was within the limitation period. Whether the assessment order was passed in violation of principles of natural justice and without valid satisfaction.
Sections Cited
153C, 143(3), 153A, 69A, 28, 69C, 153D
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Income Tax Appellate Tribunal, DELHI BENCH, ‘A’: NEW DELHI
Before: SHRI C.N. PRASAD & SHRI M. BALAGANESH
Year: 2014-15] Quadra Infratel Synergies Vs. ACIT Pvt. LTd. B-6/1, Sector-05 Central Circle – 4 Rohini, Delhi Delhi PAN No. AAECP2894G Appellant Respondent Assessee by Sh. Saksham Singhal, Advocate Ms. Somay Jain, CA Revenue by Ms. Nimisha Singh, CIT DR Date of Hearing 18.09.2025 Date of Pronouncement 12.12.2025 ORDER
PER C.N. PRASAD, JM,
This appeal filed by the assessee is preferred against the order of the Commissioner of Income Tax (Appeals), Delhi - 110023 [herein after referred as “CIT(A)”] dated 29.06.2024 for A.Y. 2014-15.
The assessee has raised following grounds on validity of assessment proceedings :-
1. That on the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals) ['CIT(A)'] erred in not completely allowing the appeal filed by the appellant against the order dated 29.03.2023 passed by the assessing officer under section 1530 r.w.s 143(3) of the Income Tax Act, 1961 ('the Act").
1.1. That on the facts and circumstances of the case and in law, the initiation of proceedings under section 153C for assessment year 2014-15 is barred by limitation in terms of section 153C read with 4h proviso to section 153A, being assessment year falling beyond 6 years immediately preceding the assessment year relevant to the previous year of purported handing over of the seized material resulting in recording of satisfaction in January, 2022 (i.e., assessment year 2022-23) since the additional conditions of 4th proviso to section 153A are not satisfied in the present facts.
1.2. That on the facts and circumstances of the case and in law, the initiation of proceedings by issue of notice under section 153C of the Act without any valid, tangible and reliable incriminating material unearthed during the search action on third person is without jurisdiction, illegal and bad in law.
1.3. That on the facts and circumstances of the case and in law, the initiation of proceedings under section 153C of the Act was without jurisdiction inasmuch as the satisfaction was solely based on ex-parte unauthenticated/ unreliable loose sheets/ diaries/ digital data which cannot be considered as valid/ reliable evidence for the purpose of initiating proceedings under section 153C of the Act.
1.4. That on the facts and circumstances of the case and in law, the impugned proceedings could not have been initiated on the basis of post search enquiry/ material - which also substantiates that no valid and reliable material was unearthed from the search action of the third person.
1.5. That on the facts and circumstances of the case and in law, the assessing officer erred in initiating proceedings under section 153C of the Act without recording any valid and objective satisfaction, which is sine-qua-non for issue of notice under the said section.
1.6. That on the facts and circumstances of the case and in law, the CIT(A)/ assessing officer erred in not appreciating that the jurisdictional notice dated 01.03.2022 under section 153C of the Act was illegal and void-ab-inito inasmuch as the same was issued by ACII, Central Circle 4, Delhi who was not the jurisdictional assessing officer of the Appellant, 1.7. That the CIT(A) erred in not appreciating that the assessing officer passed the assessment order by relying upon ex-parte material/evidences/statements collected/recorded behind the back of the appellant, without allowing opportunity of rebuttal/ cross- examination to the appellant, in gross violation of principles of natural justice and consequently the assessment order is illegal and bad in law.
1.8. That the assessing officer erred on facts and in law in passing the assessment order without affording reasonable opportunity of being heard and without providing the requisite documents (such as satisfaction note recorded by assessing officer of the search person alongwith Proforma, alleged loose sheets, etc.) to the appellant and consequently, the assessment order is illegal and bad in law, 1.9. That on the facts and circumstances of the case and in law, the assessment order passed under section 143(3) 153C was passed in gross violation of provisions of section 153D of the Act inasmuch as copy of statutory approval was not provided to the appellant, and thus the assessment completed is beyond jurisdiction and bad in law.
The assessee has also raised following ground Nos. 2 to 3.3 on merits of the addition made u/s. 69A of the Act :-
Without prejudice, on merits 2. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition to the extent of Rs.28,17,113 made by the assessing officer under section 28/69A of the Act on account of alleged unaccounted sales made by the appellant to Sh. Satender Tyagi. Page | 3 2.1. That the CIT(A) erred in not appreciating that the there was no unaccounted cash sales inasmuch as the appellant had duly accounted total cash sale of Rs.1,44,27,427 made by it during the year under consideration and has not received any cash other than that recorded in the books of accounts.
2.2. That the CIT(A) further erred in not appreciating that the assessing officer erred in considering incorrect amounts for computing the amount of alleged unrecorded cash sales.
2.3. That the CIT(A) erred in not appreciating that no addition was made in the hands of Mr. Satender Tyagi during his assessment proceedings with respect to the alleged cash received by the appellant.
2.4. That the CIT(A)/ AO erred in not appreciating that the stock register and purchase register of the appellant was not disputed and therefore, no unrecorded sale could have taken place without any corroborating purchase of DG sets.
2.5. That the CIT(A) erred in confirming the addition made without providing ex-parte material/ information, in gross contravention of the principle of fair play and natural justice.
3. That on the facts and circumstances of the case and in law, the CIT(A) erred in confirming the addition to the extent of Rs.5, 17,336 made by the assessing officer under section 69C of the Act on account of alleged commission paid by the appellant to Sh. Satender Tyagi on the cash sales.
3.1. That the CIT(A) erred on faets and in law in estimating/ presuming that the appellant had paid commission @3% amounting to Rs.5,17,336, for the aforesaid unaccounted sale, without even a shred of documentary evidence in support of the same. 3.2. That the CIT(A) erred in not appreciating that the appellant had not paid any commission to Sh. Satender Tyagi for sale undertaken during the year under consideration.
3.3. That the CIT(A)/ AO erred on facts and in law in making the aforesaid addition of notional income simply on the basis of surmises and suspicion without any valid reason/evidence without even establishing the factum of payment of alleged cash by the appellant to such person.
The Ld. Counsel for the assessee at the outset submits search proceedings were carried out on A-Tek Enterprises on 28.06.2018 by the department and consequently proceedings u/s. 153C were initiated on the Assessee. The Ld. Counsel for the assessee submitted that date of handing over of documents by the AO of searched person to AO of non- searched person i.e. Assessee is on 26.10.2021. Thereafter, the AO of the assessee recorded satisfaction note on 24.01.2022. The Ld. Counsel for the assessee submitted that the block period for making assessment u/s.153C was considered by the AO taking the year of search in the case of A-Tek Enterprises Ltd. as first year and six preceding assessment years i.e. from A.Y.2019-20 to 2013-14 being six assessment years.
The Ld. Counsel for the assessee submits that in view of the decision of the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh reported in 155 taxmann.com 154 and the decision of the Hon’ble Delhi High Court in the case of PCIT Vs. Ojjus Medicare Ltd., reported in 465 ITR 101, the year of handing over documents to the AO of non-searched person shall be considered as year of search for the purpose of section 153C and in which case block period of six assessment years shall be from 2022-23 to 2016-17, since the date of handing over of documents by the AO of the searched person to the AO of the assessee who is the non searched person was 26.10.2021. Therefore, the Ld. Counsel for the assessee submitted that in view of the law laid down by the Hon’ble Apex Court in the case of Jasjit Singh the impugned proceedings initiated u/s. 153C of the Act for the A.Y.2014-15 in the case of the Assessee are barred by limitation.
On the other hand the Ld. DR placed reliance on the orders of the authorities below.
Heard rival submissions and perused the orders of the authorities below. In the case on hand the sequence of events right from the date of search in the case of A-Tek Enterprises and completion of assessment for the block period of six assessment years u/s.153C of the Act in the case of the assessee are as under :-
The above facts have not been controverted by the Ld. DR before us. Thus, respectfully following the decision of the Hon’ble Supreme Court in the case of CIT Vs. Jasjit Singh (supra) and the decision of the Hon’ble Delhi High Court in the case of Ojjus Medicare Ltd. (supra) we hold that the impugned proceedings initiated u/s.153C for the A.Y.2014-15 are barred by limitation and consequently the assessment framed u/s.153C of the Act for the A.Y.2014-15 is null and void. Accordingly, we quash the assessment order framed u/s.153C of the Act dated 29.03.2023 for the A.Y.2014-15 and allow legal ground raised at 1.1 of grounds of appeal.
9. Since we have quashed the assessment framed on a legal ground we are not adjudicating the grounds taken by the assessee on merits since it would be academic in nature at this stage and thus they are left open.
In the result, the appeal of the assessee is allowed as indicated above. Order pronounced in the open court on 12.12.2025.