3D TRADES P.LTD,DELHI V. ACIT, CENTRAL CIRCLE-13, NEW DELHI

ITA 2071/DEL/2022

AI Insights

The case involves 3D Tradex Pvt. Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals)-28, New Delhi. The original assessment was made under Section 143(3) following a search operation that identified incriminating documents related to the company. The primary legal contention was whether the assessment for AY 2016-17 should have been conducted under Section 153C, which deals with the assessment of income of a person other than the one searched, based on the seized documents. The Tribunal referenced several precedents, including decisions from the Supreme Court and Delhi High Court, to clarify the correct procedural application post-search.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474556 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2016-2017
• Other Referred Cases: CIT Vs. Jasjit Singh, Ojjus Medicare Pvt Ltd, SSP Aviation Ltd v. Dy.CIT, CIT v. RRJ Securities Ltd, ITO v. Vikram Sujitkumar Bhatia
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KAUR
• Assessee Lawyers: GUNJAN JAIN
• Keywords: Accommodation entries
• Section: 143(3); 153C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.2071/Del/2022 Assessment Year: 2016-17 3D Tradex Pvt. Ltd., 224, 2nd Floor, LSC, BLG-A Samrat Enclave, Near Mother Diary, Pitampura, Delhi – 110 034. PAN: AADCG6612L Vs ACIT, Central Circle-13, New Delhi. (Appellant) (Respondent) Assessee by : Ms Gunjan Jain, CA Revenue by : Ms Rajinder Kaur, CIT-DR Date of Hearing : 18.03.2025 Date of Pronouncement : 26.03.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 30.06.2022 of the Commissioner of Income-tax (Appeals)-28, New Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeals No.28/10382/2019-20 arising out of the appeal before it against the order dated 28.12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ACIT, Central Circle-13, New Delhi (hereinafter referred to as the Ld. AO). ITA No.2071/Del/2022 2 2. Heard and perused the record. Apart from grounds on merits, the assessee has raised following ground which goes on the alleged wrongful assumption of jurisdiction; “1. Under the facts and circumstances of the case, the orders passed by the Ld. A.O dated 28.12.2018 u/s 143(3) of the Act is not tenable as the order should have been passed u/s 153C of the Act. 3. On hearing both the sides we find that the Ld. A.O made an addition amounting to Rs. 34,15,943/- on account of commission @ 1% on bank entries and 2% on Share capital, Loans and Investments. The assessee in this case is a company registered under The Companies Act, 2013 by the name of M/s 3D Tradex Private Limited, formally known by the name of M/s 3D Portfolio Private Limited. Consequent to the search operation conducted on 23.07.2015 and subsequent dates in the premises of “Shri Deepak Aggarwal, Shri Mukesh Kumar and others”. The ld. A.O. initiated proceedings u/s 153C of the Act. The said proceedings culminated in the form orders passed u/s 153C of the Act for AY 2010-11 to 2015-16 and an assessment order passed u/s 143(3) of the Act for AY 2016-17 by the Ld. A.O alleging that assessee company is only a shell company operated and managed by Shri Deepak Agarwal for providing accommodation entries in lieu of commission. The Ld. A.O alleged the same on the basis that incriminating papers/documents were found in the search operations which pertains to assessee Company i.e. M/s 3D Tradex Private Limited. The assessee was in appeal for all the aforesaid assessment years before from AY 2010-11 to AY 2016-17. It is pertinent to mention here that ITA No.2071/Del/2022 3 vide order dated 12.02.2025 co-ordinate bench vide ITA No. 2065 to 2070/Del/2022, has quashed the orders u/s 153C of the Act for the A.Y 2010-11 to A.Y 2015-16, for want of incriminating material for relevant AY 2012-13 to 2015-16 and for AY 2010-11 and 2011-12, for the reasons that same is beyond the six year period to be reckoned from the date of deemed search i.e 23.03.2018, when the satisfaction note was drawn in case of the assessee. 4. In regard to the present AY, ld. AR has submitted that the Ld. A.O has grossly erred in passing the order u/s 143(3) of the Act whereas the same should have been passed u/s 153C of the Act. 5. We find that this issue of the date of search for persons covered under section 153C is no longer res-integra as now well settled by the Hon'ble Supreme Court in the case of CIT Vs. Jasjit Singh 458 ITR 437(SC), as under: \"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 specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(l)] is confined in its application to the question of abatement. It is quite plausible that the AO seized of the materials....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 seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is disproportionate.\" ITA No.2071/Del/2022 4 6. The Hon'ble Delhi High Court has further elaborated the legal dictum in the case of Ojjus Medicare Pvt Ltd [2024] 61 taxmann.com 160 (Del) wherein it has held as under: \"First Proviso to Section 153C introduces a legal fiction on the basis of which the commencement date for computation of the six year or the ten- year block is deemed to be the date of receipt of books of accounts by the jurisdictional AO. The identification of the starting block for the purposes of computation of the six and the ten year period is governed by the First Proviso to Section 153C, which significantly shifts the reference point spoken of in Section 153A(1), while defining the point from which the period of the \"relevant assessment year\" is to be calculated, to the date of receipt of the books of accounts, documents or assets seized by the jurisdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation Ltd v. Dy.CIT (2012) 346 ITR 177 ( Delhi)( HC) and CIT v. RRJ Securities Ltd 2015 SCC Online Del 13085 as well as the decision of the Supreme Court in CIT v Jasjit Singh 2023 SCC Online SC1265. The aforesaid legal position also stood reiterated by the Supreme Court in ITO v. Vikram Sujitkumar Bhatia 2023 SCC Online SC” 370. The submission of the revenue, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. 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 or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A.\" 7. In the present case, the date of initiation of search admittedly is 23.07.2015 however the satisfaction note, alleging that the material found in the search person premises have bearing on the determination of the total income of ITA No.2071/Del/2022 5 the assessee, is recorded on 23.03.2018. Hence, the date of search for the purpose of calculating the six assessment year shall be 23.03.2018 thus the Ld. A.O could have opened A.Y 2012-13 to A.Y 2017-18 u/s 153C of the Act and A.Y 2018-19 u/s 143(3) of the Act. Thus as the present A.Y 2016-17 falls within the block of 6 assessment years, the assessment proceedings for the same could have been conducted only u/s 153C of the Act and not u/s 143(3) of the Act. 8. Thus we sustain this ground no. 1 and remaining grounds become superfluous, so need no separate determination. The appeal is allowed and impugned assessment is quashed. Order pronounced in the open court on 26.03.2025. Sd/- Sd/- (M. BALAGANESH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 26th March, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "