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

ITA 2068/DEL/2022

AI Insights

The case involves multiple appeals by the assessee, 3D Tradex P. Ltd., and one by the Revenue, concerning assessments made under section 153C of the Income Tax Act, 1961, for the assessment years 2010-11 to 2015-16. The primary legal contention revolved around the jurisdictional validity of the assessments following a search and seizure operation under section 132 of the Act. The Tribunal examined whether the assessments were barred by limitation and whether the 'Satisfaction Note' used to initiate these assessments was sufficiently specific to meet the legal requirements for invoking section 153C. The Tribunal's decision emphasized the need for clear identification of undisclosed income related to specific assessment years, rejecting the generic approach taken in the 'Satisfaction Note'.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37094 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Other Referred Cases: Pr.CIT vs Ojjus Medicare (P.) Ltd. [2024] 161 taxmann.com 160 (Del.), CIT vs Sinhgad Technical Education Society (2017) 397 ITR 344(SC), DCIT vs Manglam Multiplex Pvt.Ltd. in ITA No.1093/Del/2024 & CO-75/Del/2024, Dev Technofab Ltd. vs. DCIT (2024) 166 Taxmann.com 514 (Del), Sakham Commodities Ltd. vs ITO 161 taxmann.com 485 (Delhi)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALJEET KAUR
• Assessee Lawyers: GUNJAN JAIN
• Keywords: Period of limitation; Search and seizure; Validity of assessment; Time period of passing order
• Section: 143(3); 132; 153A; 69C; 153C

Judgement Text

"ITA Nos.2065 to 2070 & 2074/Del/2022 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “E” BENCH: NEW DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA Nos.2065 to 2070/Del/2022 [Assessment Years : 2010-11 to 2015-16] 3D Tradex P.Ltd 224, 2nd Floor, I.SC, BLG-A Samrat Enclave, Near Mother Dairy, Pritampura Delhi-110034 PAN-AADCG6612L vs ADIT, CPC, Bengaluru and ACIT, Circle-1(1)(1) Meerut, U.P APPELLANT RESPONDENT ITA No. 2074/Del/2022 [Assessment Year : 2010-11] ADIT, CPC, Bengaluru and ACIT, Circle-1(1)(1) Meerut, U.P vs 3D Tradex P.Ltd 224, 2nd Floor, I.SC, BLG-A Samrat Enclave, Near Mother Dairy, Pritampura Delhi-110034 PAN-AADCG6612L APPELLANT RESPONDENT Appellant by Ms. Gunjan Jain, CA Respondent by Ms. Baljeet Kaur, CIT DR Date of Hearing 15.01.2025 Date of Pronouncement 12.02.2025 ORDER PER PRADIP KUMAR KEDIA, AM : The captioned six appeals by the assessee in ITA Nos. 2065 to 2070/Del/2022 for the AYs 2010-11 to 2015-16 and one appeal by the Revenue in ITA No.2074/Del/2022 for the AY 2010-11 arise from the consolidated order dated 30.06.2022 of the Commissioner of Income Tax (Appeals)-28, New Delhi [CIT(A)] passed under s. 250(6) of the Income Tax Act, 1961 [the Act] emanating from assessment order dated 28.12.2018 passed under s. 153C r.w.s 143(3) of the Act. 2. When the matter was called for hearing, the Ld. Counsel for the assessee adverted to the grounds raised and contended that certain legal grounds ITA Nos.2065 to 2070 & 2074/Del/2022 Page | 2 touching the jurisdictional aspects have been raised and therefore calls for primacy in adjudication. 3. The issues also stated to be common, interlinked and similar in all appeals arising by the assessee for AYs 2010-11 to 2015-16 and by the Revenue for AY 2010-11. Hence, all these cases have been heard together and accordingly adjudicated by a common order. ITA Nos.2065 to 2066/Del/2022 [Assessment Years : 2010-11 to 2011-12] [Assessee’s appeals] 4. To support the challenge to the assumption of jurisdiction under s. 153C of the Act, the Ld. Counsel for the assessee submitted that in the instant case, search and seizure operation under s. 132 of the Act was carried out on 23.07.2015 at the premises of “Shri Deepak Aggarwal, Shri Mukesh Kumar & Others” Group of cases based at Delhi. In pursuance thereof, the combined ‘Satisfaction Note’ dated 23.03.2018 was prepared by the AO in the case of the assessee and the proceedings under s. 153C were set in motion covering AYs 2010-11 to 2015-16. 5. Adverting further, the Ld. Counsel for the assessee pointed out that ‘Satisfaction Note’ was drawn in the name of 3d Portfolio Pvt Ltd. (name now changed to ‘3D Tradex Private Limited’) on 23.03.2018 and therefore, the relevant assessment year in which the books/records were requisitioned and ‘Satisfaction Note’ was drawn is AY 2018-19 and therefore, six years preceding such AYs to which documents or assets seized requisitioned ends in AY 2012- 13. This being so, the AY 2010-11 & AY 2011-12 in question falls outside the limitation period of six years and thus is barred by limitation and hence cannot be subjected to proceedings under s. 153C of the Act. On being enquired by the Bench, the Ld. Counsel for the assessee submitted that the amendment carried in s. 153C are to the main provision of s. 153C effective from 01.04.2017 i.e. AY 2018-19 and therefore, the amendment shall not apply in view of the fact that search date under s. 132 in the instant case is 23.07.2015 and on that day, the amendment under s. 153C relating to extended limitation period was not in force. The Ld. Counsel for the assessee referred to the judgment rendered by the Hon’ble High Court in the case of Pr.CIT vs Ojjus ITA Nos.2065 to 2070 & 2074/Del/2022 Page | 3 Medicare (P.) Ltd. [2024] 161 taxmann.com 160 (Del.) and several other decisions of the Co-ordinate Benches to support the case of the assessee towards exclusion of AY 2010-11 & AY 2011-12 from the ambit of limitation. 6. The Ld. Counsel for the assessee thereafter pointed out that without prejudice to the plea that AY 2010-11 & AY 2011-12 are grossly time barred, the ‘Satisfaction Note’ itself as recorded by the AO does not pass the test of law being vague and non-descript. The ‘Satisfaction Note’ does not identify the undisclosed income qua the different AYs spanning over AY 2010-11 to AY 2015-16 and it is not known as to what is the amount ultimately remaining undisclosed qua AY 2010-11 to AY 2015-16 under challenge. The Ld. Counsel for the assessee submitted that it is well settled that additions under s. 153C of the Act can be made only in relation to the particular AY to which incriminating material relates to. It is trite that each year falling between the limitation period cannot automatically become subject matter of assessment under s. 153C of the Act merely because of enabling provisions under s. 153C of the Act as per the scheme of the Act as expounded by the Hon’ble Supreme Court in the case of CIT vs Sinhgad Technical Education Society (2017) 397 ITR 344(SC). The existence of material indicating presence of undisclosed income is paramount to invoke the provisions of s. 153C of the Act. 7. Adverting further, the Ld. Counsel for the assessee finally submitted that the additions made by the AO on merit under challenge are otherwise also not sustainable owing to the facts of the present case. The Ld. Counsel for the assessee pointed out that the additions made under s. 153C are in the realm of regular assessment without any influence of any incriminating material. 8. The Ld.CIT DR for the Revenue, on the other hand, relied upon the orders of the lower authorities. The Ld.CIT DR further pointed out that the limitation period should be reckoned as the date of ‘Satisfaction Note’ falls in AY 2018-19 on which date the limitation period for search assessment stood enhanced from six years basket to ten years basket for the purposes of s. 153A of the Act. 9. We have considered the rival submissions and perused the material available on record. ITA Nos.2065 to 2070 & 2074/Del/2022 Page | 4 10. The ‘Satisfaction Note’ being germane to determination of challenge to assumption of jurisdiction under s. 153C is reproduced hereunder:- 11. We shall first address ourselves to the objections raised by the assessee seeking to challenge the propriety and legality of assessment for AY 2010-11 & AY 2011-12 in question having regard to the embargo of limitation placed under Section 153C of the Act. It is the case of the assessee that the limitation ITA Nos.2065 to 2070 & 2074/Del/2022 Page | 5 period of 6 years has to be counted with reference to the date of requisition of books and other documents etc. seized from the custody of searched person. The date of search is not relevant for the purposes of limitation for the purposes of Section 153C. What is relevant is the date of receipt of seized assets, documents by the AO of the non-searched person i.e. assessee in the instant case. When the limitation is counted from the date of requisition of books, documents by the AO falling in A.Y. 2018-19, the assessment, the AY 2010-11 & AY 2011-12 in question is clearly found to be outside the period of limitation assigned for invocation of s. 153C of the Act. Similar view has been taken by the Co-ordinate Bench in the case of DCIT vs Manglam Multiplex Pvt.Ltd. in ITA No.1093/Del/2024 & CO-75/Del/2024 for the AY 2011-12 order dated 30.09.2024 in identical set of facts. We thus find potency in the plea of the assessee for holding the assessment for AY 2010-11 & AY 2011-12 in question under s. 153C of the Act to be barred by limitation. The assessment order passed under s. 153C of the Act being barred by limitation and thus a non-est order and nullity in the eyes of law, the assessment orders for AYs 2010-11 & 2011-12 giving rise to present proceedings thus, is required to be quashed being barred by limitation. 12. In the result, appeals of the assessee in ITA Nos. 2065 & 2066/Del/2022 are allowed. ITA Nos.2067 to 2070/Del/2022 [Assessment Years : 2012-13 to 2015-16] [Assessee’s appeals] 13. With respect to the remaining AYs 2012-13 to 2015-16, the assessee contends that ‘Satisfaction Note’ recorded for the purposes of jurisdiction of assumption under s. 153C of the Act which is the genesis of assessment framed under s. 153C is clearly vague and non-descript. It is not known from the ‘Satisfaction Note’ as to what is the quantum of undisclosed income qua different Assessment Years mentioned in the ‘Satisfaction Note’. The ‘Satisfaction Note’ recorded is evidently generic and encompasses several years from AY 2010-11 upto AY 2015-16 in a composite manner. No seized material has been identified qua each assessment year and thus ‘Satisfaction Note’ drawn by the AO without reference to seized material pertaining to different ITA Nos.2065 to 2070 & 2074/Del/2022 Page | 6 AYs i.e. AY 2010-11 to AY 2015-16, is illusory and unsustainable in law. A reference was made to the judgement rendered in the case of Dev Technofab Ltd. vs. DCIT (2024) 166 Taxmann.com 514 (Del) & Sakham Commodities Ltd. vs ITO 161 taxmann.com 485 (Delhi). 13.1. It is evident from the ‘Satisfaction Note’ that the alleged undisclosed income is not identifiable with any assessment year. In the absence of any particular of incriminating material available with reference to AYs specified in the ‘Satisfaction Note’, such obscure and vague ‘Satisfaction Note’ does not entitle the AO to assume jurisdiction under s. 153C of the Act. Neither the income assessed under s. 153C of the Act appears to relate to any incriminating material nor the so called incriminating material has been shown to be attributable to different AYs 2010-11 to 2015-16. The plea of the assessee towards non-maintainability of jurisdiction under s. 153C in such facts is squarely covered in favour of the assessee by the judgement in Sakham Commodities Ltd.(supra). 13.2. Hence, the action of the Revenue for assessment with the aid of s. 153C is unfounded in law. The respective appeals of the assessee are thus allowed. 14. In the result, all the captioned appeals of the assessee are allowed. ITA No. 2074/Del/2022 [Assessment Year : 2010-11] [Revenue’s appeal] 15. As per the grounds of appeal, the Revenue has challenged the relief granted by the CIT(A) towards addition of INR 11,95,50,000/- under s. 68 of the Act on account of receipts of share capital and share premium and estimated 2% commission under s. 69C thereon. 16. As discussed in above-mentioned paras 4 to 12(supra), the AY 2010-11 is outside the ambit of provisions of s.153C as AY 2010-11 in question do not fall within the basket of six years when computed from the year in which the AO of the assessee received ‘Satisfaction Note’ together with books, documents etc. pertaining to the assessee from the AO of the searched person. The AY 2010- 11 being outside the sweep of s. 153C of the Act, the assessment order giving rise to the additions in question in itself is bad in law. Therefore, the additions ITA Nos.2065 to 2070 & 2074/Del/2022 Page | 7 made in such assessment framed under s. 153C do not carry any legitimacy. Hence, when the additions made itself becoming infructuous by operation of law, the merits of the additions in such non-maintainable assessment order is rendered academic and does not call for any adjudication. 17. In the result, the appeal of the Revenue is dismissed. 18. In the combined result, captioned appeals of the assessee in ITA Nos.2065 to 2070/Del/2022 (AYs 2010-11 to 2015-16) are allowed and appeal of the Revenue in ITA No.2074/Del/2022 (AY 2010-11) is dismissed. Order pronounced in the open Court on 12.02.2025. Sd/- Sd/- (SUDHIR KUMAR) JUDICIAL MEMBER *Amit Kumar, Sr.P.S* (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "