Loading judgment…
Facts
The Revenue filed appeals challenging the deletion of additions made under Section 153C by the CIT(Appeals). The additions were related to assessment years 2013-14 to 2015-16, which the CIT(Appeals) found to be outside the six-year period stipulated in Section 153C.
Held
The Tribunal held that the CIT(Appeals) correctly deleted the additions made under Section 153C, as the assessment years in question (2013-14 to 2015-16) were beyond the six-year limitation period, computed with reference to the date of recording of satisfaction as the date of search, as per judicial pronouncements.
Key Issues
Whether the assessment years 2013-14 to 2015-16 are covered within the six-year period for invoking Section 153C, and how the 'date of search' for the purpose of computing this period should be determined.
Sections Cited
153C, 153A, 132, 132A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI M BALAGANESH
आदेश /O R D E R PER C.N. PRASAD, J.M.
Revenue has filed these appeals challenging the order of the Ld. CIT(Appeals) in deleting the addition made in the assessment order passed u/s 153C observing that assessment years under consideration i.e. 2013-14 to 2015-16 are not covered within six assessment years as per section 153C of the Act and the Assessee has filed the Cross Objections.
2. Ld. DR strongly placed reliance on the orders of the Assessing Officer and on the other hand, the Ld. Counsel for Assessee relied on the order of the Ld. CIT(A). Ld. Counsel for the assessee also submitted that the cross objections filed by the assessee are not pressed. Thus, in view of the submissions of the Ld. Counsel for the assessee the cross objections filed by the assessee for AYs 2013-14 to 2015-16 are dismissed as not pressed.
Heard rival submissions, perused the orders of the authorities below. On perusal of the order of the Ld. CIT(A) it is noticed that the additions made u/s 153A/153C was deleted by the Ld. CIT(Appeals) on the ground that the assessment years i.e. AY 2013-14 to 2015-16 under consideration are not covered within six assessment to 2363/DEL/2025 & CO Nos.90 to 92/Del/2025 KAMALKUNJ COMMERCIAL PVT. LTD., KOLKATA years as per the provision u/s 153C of the Act. The relevant portion of the Ld. CIT(A) order for AY 2015-16 is as under: -
“Findings/ Determination are as hereinafter- 4.1 I have considered the material on record including written submission of the appellant filed in the course of appellate proceedings. I have perused the assessment order u/s 153C of the Income Tax. Act In the present, appeal, the appellant has raised the following grounds of appeal. 4.1.1 In Additional Ground No, 1, the appellant has contended that under the facts and circumstances, deemed search Year for proceedings u/s 153C is A.Y. 2022-23, consequently A.Y. 2015-16 since beyond 06 years immediately preceding the A.Y. 2022-23, hence barred by limitation and without jurisdiction. 4.1.2 The brief facts of the case ore that search and seizure operation u/s 132 of the IT Act, was carried out on Net Ram Group from 12.03.2019 to 13.03.2019. During the course of search; various documents were seized related to unaccounted cash by layering of funds in several Kolkata based entities and by using a complex cross holding structure. During the course of assessment proceedings, the Assessing Officer found that the appellant was one of the entities involved in layering of funds. Based on the satisfaction recorded by the Assessing Officer of the searched person and any other person, notice u/s 153C of the Act was issued to the appellant on 09.08.2021. 4.1.3 The appellant submitted that the position of law has been very clearly laid down by Hon’ble High Court of Delhi in the case of CIT vs. RRJ Securities Pvt. Ltd. and by Hon’ble Supreme Court in the case of CIT vs Jasjit Singh. In these cases, Hon’ble Courts have held that the six-year period as referred in section 133C(1) shall be computed with reference to the date of recording of the satisfaction as date of search. The relevant extract of the decision of the Hon’ble Supreme Court and the Jurisdictional High Court are reproduced below for ready reference;
1. In Jasjit Singh (supra), the Hon’ble Supreme Court held as under: “8. In SSP Aviation (supra) the High Court inter alia reasoned as follows: to 2363/DEL/2025 & CO Nos.90 to 92/Del/2025 KAMALKUNJ COMMERCIAL PVT. LTD., KOLKATA "14. Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted may be found. In such case, the Assessing Officer has to first be satisfied u/s 153C, which provides the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the AO having jurisdiction over the other person. Thereafter, the AO having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search u/s 132 or the requisition u/s 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.”
It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the 4 to 2363/DEL/2025 & CO Nos.90 to 92/Del/2025 KAMALKUNJ COMMERCIAL PVT. LTD., KOLKATA specific provision under Section 153C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is confined in its application to the question of abatement.
This Court is of the opinion that the revenue’s argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation -which SSP Aviation adopted, the AO, seized of the materials — of the search party, under section 132— would take his own time to forward the papers and materials belonging to the third party, to the concerned AO. In that event if the date would virtually “relate back" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceeding as it were, unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under, Section 153-C after a period of four years, the third party assessee’s prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of section 153-C supports the interpretation which this Court adopts.
For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs.
In RRJ Securities (Supra), the Hon’ble Delhi High Court held as under: “24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further proceedings, by virtue of section 153C(1) of the Act, would have to be in accordance with sec. 153A of the Act and the reference to the date of search would hjave to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made u/s 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the assessee. In this case, it would be the to 2363/DEL/2025 & CO Nos.90 to 92/Del/2025 KAMALKUNJ COMMERCIAL PVT. LTD., KOLKATA date of the recording of satisfaction u/s 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of AYs 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent ot the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of sec 153A of the Act. We, therefore, accept the contention that in any view of the matter, AY 2003-04 and 2004-05 were outside the scope of sec. 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee’s income for that year.” 4.1.4 The submission of the appellant and the judicial position on the facts of the case have been carefully perused. Since the satisfaction was recorded in the FY 2021-22, deemed search year for proceedings u/s 153C should be FY 2021-22 and therefore six 6 to 2363/DEL/2025 & CO Nos.90 to 92/Del/2025 KAMALKUNJ COMMERCIAL PVT. LTD., KOLKATA assessment years immediately preceding the assessment year relevant to the previous year as referred in sec. 153C(1) should have been from AY 2016-17 to 2021-22. 4.1.5 Relying on the above mentioned case laws, I hold that AY 2015-16 is not covered within six AYs as per sec. 153C of the Act; therefore the Additional Ground No.1 of appeal is allowed. Accordingly, the addition made by the AO is deleted. 4.2 Since Additional Ground No.1 of the appeal has been allowed and relief granted to the appellant, Ground Nos. 1 to 12 raised by the appellant are now purely academic in nature. Therefore, there is no need to adjudicate these grounds separately.”
On careful perusal of the order of the Ld. CIT(Appeals), we do not see any valid reason to interfere with the findings of the Ld. CIT(Appeals) in holding that the assessment years under appeals are out of the block of six assessment years as per the provision of section 153C of the Income Tax Act. Thus, the order of the Ld. CIT(A) is sustained and the grounds raised by then Revenue are rejected.
The facts in the appeals for the assessment years 2013-14 & 2015-16 are identical to the facts situation for the AY 2015-16 which was decided in the preceding paragraphs. Therefore, the decision taken for the AY 2015-16 applies mutantis mutandis to the appeals for the assessment years 2013-14 & 2014-15 and we order accordingly. The grounds raised
by the Revenue for the assessment years 2013-14 & 2014-15 are rejected. to 2363/DEL/2025 & CO Nos.90 to 92/Del/2025 KAMALKUNJ COMMERCIAL PVT. LTD., KOLKATA
6. In the result, appeals of the Revenue are dismissed and the cross objections of the assessee are dismissed as not pressed.
Order pronounced in the open court on 28.10.2025