Loading judgment…
Facts
A search conducted on Rakesh Jain Group led to the discovery of documents pertaining to M/s Somani Worsted Limited. Assessment proceedings were initiated under Section 153C of the Act, resulting in an addition of Rs. 15,50,46,195/-. The Revenue filed appeals against the order of the CIT(A) which had allowed the assessee's appeal on legal grounds.
Held
The Tribunal held that the assessment year 2011-12 falls outside the scope of Section 153C of the Act, as the relevant date for reckoning the period should be from when the seized material was handed over or satisfaction was recorded, not the search date. Consequently, the assessment was beyond the prescribed limitation.
Key Issues
Whether the assessment proceedings initiated under Section 153C of the Act for Assessment Year 2011-12 were barred by limitation and without jurisdiction.
Sections Cited
153C, 144, 271(1)(c), 153A, 60
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, DELHI BENCHES ‘E’: NEW DELHI.
Before: SHRIS.RIFAUR RAHMAN & SHRI YOGESH KUMAR U.S.
(Assessment Year: 2011-12) DCIT, vs. Somani Wordsted Limited, Delhi. 301, Bakshi House, 40-41, Nehru Place, New Delhi – 110 019. (PAN :AACCS1758G) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Raj Kumar Gupta, CA REVENUE BY : Ms. Suman Malik, CIT DR Date of Hearing : 10.09.2025 Date of Order : 26.11.2025 ORDER PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :
The Revenue has filed appeal against the order of the Learned Commissioner of Income-tax (Appeals)-26, New Delhi [“Ld. CIT(A)”, for short] dated 23.12.2024 for the Assessment Year 2011-12 in the quantum addition and the Revenue has also filed appeal against the order of ld. CIT (A) dated 23.12.2024 rejecting the penalty order dated 30.06.2023 passed u/s 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’).
Since the issues are common and the appeals are connected, hence the same are heard together and are being disposed off by this common order. First we take up the Revenue’s appeal in quantum addition.
Brief facts of the case are, in this case a search u/s 132 of the Act was conducted in the case of Rakesh Jain Group on 02.11.2017 which included the premises of Prahlad Kumar Aggarwal. During the course of assessment proceedings u/s 153A in the case of Prahlad Kumar Aggarwal and on perusal of seized data/documents in the case of Rakesh Jain Group of cases, certain documents were found pertaining to M/s Somani Worsted Limited and information contained in such documents pertained to M/s Somani Worsted Limited. The AO of the searched persons had recorded his satisfaction on 24.05.2021 and handed over the seized material to AO of the non-searched person i.e., M/s Somani Worsted Limited. In view of the above, assessment proceedings were initiated u/s 153C of the Act in the case of the assessee. Thereafter, assessment was completed u/s 144 r.w.s 153C of the Income Tax Act on 30.12.2023 at income of Rs.15,50,46,195/-.
Aggrieved against the above order, assessee preferred an appeal before the ld. CIT (A) and raised grounds of appeal
. The assessee has also taken additional grounds before the ld. CIT (A) on the legal issues also as under:- Additional G.No.1 That in view of handing over of seized material/recording of satisfaction by the AO of the searched person on 24.05.21, deemed search year for proceedings is 153C is A.Y.2022-23, consequently A.Y.2011-12 is even beyond the ”relevant asstt. year” as defined in Expln-1 below
4. Proviso to Sec.153A, consequently barred by limitation and without jurisdiction. Additional G.No.2 That consolidate/single satisfaction note by the AO of the assessee for asstt. years 2008-09 to 2018-19, since legally invalid and cannot be acted upon, hence, the impugned asstt. framed in pursuance to said illegal satisfaction note is without jurisdiction, illegal and liable to be quashed. Additional G.No.3 That under the facts and circumstances, A.Y. 2011-12 being unabated year, hence in the absence of any incriminating material found/seized during the course of search of a third party, the addition of Rs.1,03,45,883 u/s 60 for bank credits and Rs.17,648/- is outside the scope of proceedings u/s.153C.
5. Before the ld. CIT (A), assessee filed detailed submissions on the legal issue raised in the additional grounds and relied on the decision of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (2023) 155 taxmann.com 155 and Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd. (2024) 161 taxmann.com 160 (Delhi). Ld. CIT (A), after going through the detailed submissions of the assessee and relying on the aforesaid decisions, held that the assessment year 2011-12, which is under consideration, clearly falls outside the scope of application of section 153C of the Act, therefore, the contention of the assessee is found to be correct on this count. Accordingly, following the aforesaid decision and in view of principles of judicial discipline, he held that the impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and therefore, the jurisdiction assumed by the Assessing Officer is not tenable in the light of aforesaid legal positions. Accordingly, he allowed the appeal on the legal grounds.
6. Aggrieved against the above order, Revenue is in appeal before us challenging legal grounds taken by the assessee in the order of the ld. CIT (A) which was allowed by the ld. CIT (A).
At the outset, ld. AR of the assessee submitted that the issue involved in the appeal is squarely covered by the decision of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra) and Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd. in favour of the assessee being the AY 2011-12 barred by limitation and the ld. CIT (A) is fully justified in holding the impugned assessment as barred by limitation.
On the other hand, ld. DR of the Revenue relied on the findings of the AO but could not controvert the aforesaid decisions relied on by the assessee and ld. CIT(A).
Considered the rival submissions and material available on record. We observe that the assessment year 2011-12 under consideration clearly falls outside the scope of application of section 153C of the Act, for the Assessing Officer of such other person or from the date on which the satisfaction was recorded. Therefore, the contention of the assessee is found to be correct on this count. Further we observe that the impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and therefore, the jurisdiction assumed by the Assessing Officer is not tenable in the light of aforesaid legal positions in view of the decision of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh (supra) and Hon’ble Delhi High Court in the case of PCIT vs. Ojjus Medicare (P.) Ltd. For the sake of brevity, we reproduce the Head Note of the aforesaid decisions :- “CIT vs Jasjit Singh-[2023| 155 taxmann.com 155 (SC) From Headnote "On appeal, Tribunal held that period for which assessee were required to file returns, commenced only from date when materials were forwarded to their jurisdictional Assessing officers - High Court upheld said order" PCIT Vs Ojjus Medicare (P.) Ltd- [2024] 161 taxmann.com 160 (Delhi)
From Headnote “Whether first proviso to section 153C, and which has been consistently recognized to also embody commencement point for reckoning six or ten assessment years, shifts relevant date from date of initiation of search or a requisition made to date of receipt Assessing Officer of non-searched person - Held, yes"
Respectfully following the aforesaid decisions, we are inclined to uphold the order of the ld. CIT (A) who has passed the well-reasoned and speaking order relying on the aforesaid decisions. Accordingly, the grounds taken by the Revenue are dismissed.
In the result, the appeal of the Revenue in quantum addition is dismissed.
With regard to appeal filed by the Revenue in the penalty proceedings u/s 271(1)(c) of the Act, since we have dismissed the Revenue’s appeal on the quantum addition, the appeal filed in the penalty proceedings does not survive, hence the same is dismissed as such.
To sum up : both the appeals filed by the Revenue are dismissed. Order pronounced in the open court on this 26th day of November, 2025.