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Facts
A search operation was conducted, and incriminating documents pertaining to the assessee were found at a third party's premises. These documents were handed over to the AO having jurisdiction over the assessee. An assessment order was passed under Section 153C based on these documents.
Held
The Tribunal held that for Section 153C proceedings, the year in which the material is received or handed over is the 'deemed year of search'. As the assessment year in question was unabated, and the jurisdictional High Court's decision in PCIT Vs. Ojjus Medicare Pvt. Ltd. was relied upon, the assessment framed by the AO and the order of the CIT(A) were quashed.
Key Issues
Whether the assessment framed under Section 153C for an unabated assessment year was valid when the incriminating material was received in a subsequent year?
Sections Cited
132, 153C, 143(3), 43B, 153A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
PER YOGESH KUMAR, U.S. JM: The present Appeal is filed by the Assessee against the order of Ld.
Commissioner of Income Tax (Appeals)-26, New Delhi (Ld. CIT(A)’ for short), dated 12/03/2025 for the Assessment Year 2018-19.
Brief facts of the case are that, a search operation u/s 132 of the Income Tax Act, 1961 ('Act' for short) was carried out on 10/01/2018 and on subsequent dates at a different business and residential premises of Nagpal Group cases, wherein various incriminating papers/documents were found and seized in the Group cases. During the course of search, various incriminating documents were also found and seized from the 72, Ground Floor, Saket, New Delhi. During the course of assessment proceedings in the case of Karma Kitchen and Bar Private Limited the seized material was verified and it came to light that certain documents and information contained therein wee pertaining to the Assessee herein.
The Assessing Officer of the searched person recorded his satisfaction on 17/09/2020 and handed over the 11 seized material to the A.O. of the other person/Assessee. The A.O. of the searched person recorded the satisfaction on 09/11/2020 that the seized document during the search conducted in the case of Karma Kitchen and Bar Private Limited pertaining to the Assessee which have a bearing on determination of the total income of the Assessee. An assessment order came to be passed on 30/12/2021 under Section 143(3) r.w. Section 153C of the Act by disallowing Rs. 32,002/- u/s 43B of the Act on account of TDS liability which was deposited beyond the due date. Aggrieved by the assessment order dated 30/12/2021, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 12/03/2025 dismissed the Appeal filed by the Assessee. As against the order of the Ld. CIT(A), the Assessee preferred the present Appeal. alleged incriminating material found during the search conducted at a third party’s premises, which was handed over by the A.O of the ‘other person’ to the A.O. having jurisdiction over the Assessee on 17/09/2020.
Therefore, A.Y 2021-22 is to be treated as the “deemed year of search” in the case of the Assessee and the year under consideration i.e. A.Y 2018-19 being an unabated or completed assessment, no addition or disallowance can be made in proceedings under Section 153C of the Act unless it is directly based on incriminating material seized as a result of the search or requisition proceedings. The Ld. Counsel relying on the ratio laid down by the Hon'ble High Court of Delhi in the case of PCIT Vs. Ojjus Medicare Pvt. Ltd. vide Judgment dated 03.04.2024,sought for allowing the Appeal.
Per contra, the Ld. Department's Representative relying on the order of the Lower Authorities sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. In the present case, admittedly incriminating material found during the search conducted at a third party’s premises was handed over by the A.O of the ‘other person’ to the A.O. having jurisdiction over the Assessee on 17/09/2020. As per the provisions of Section 153C of the the previous year in which such material is so received or handed over i.e. A.Y 2021-22 is to be treated as the “deemed year of search” in the case of the Assessee. Therefore, for the year under consideration (A.Y 2018-19), being an unabated or completed assessment, no addition or disallowance can be made in proceedings under Section 153C of the Act unless it is directly based on incriminating material seized as a result of the search or requisition proceedings. The Jurisdiction under Section 153C is triggered solely with reference to such material, and any additions falling outside its purview are impermissible. The Hon'ble High Court of Delhi in the case of PCIT Vs. Ojjus Medicare Pvt. Ltd. (supra) held as under:-
“ In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date of the y ear in which the books of account or documents and assets seized are handed over to the jurisdictional A.O. as opposed to the year of search which constitutes the basis for an assessment under Section 153A.”
In view of the above facts and circumstances, by relying on the ratio laid down by the Jurisdictional High Court, we are of the opinion that the Jurisdiction exercised by the A.O. u/s 153C of the Act falls outside the purview, therefore, the assessment framed by the A.O. and the order of the Ld. CIT(A) are hereby quashed.
In the result, Appeal of the Assessee is allowed.