ACIT CC-30, NEW DELHI V. E HOMES INFRASTRUCTURE PVT LTD, CENTRAL DELHI

CO 212/DEL/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) which had allowed the appeal of E-Homes Infrastructure Private Limited, the respondent. The primary contention was regarding the deletion of additions made by the Assessing Officer under section 153C of the Income Tax Act, 1961, which pertained to unaccounted cash receipts and undisclosed commission expenses. The Tribunal's decision was heavily influenced by precedents that criticized the mechanical application of section 153C across multiple assessment years without specific incriminating material for each year.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841089 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2020-2021
• Appeal Filed On: 22-09-2025
• Other Referred Cases: Saksham Commodities Ltd vs ITO, SRS Panchratan Diamonds Pvt. Ltd., Vegetable Products vs ITO, RRJ Securities vs ITO, Sinhgad Technical Education Society vs ITO
• Laws Referred To: Income Tax Act, 1961, Indian Evidence Act, 1872
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KAUR
• Assessee Lawyers: RAJKUMAR GUPTA
• Keywords: Document seized; Documents seized
• Section: 143(3); 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘E’: NEW DELHI BEFORE SHRI VIMAL KUMAR, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTNAT MEMBER ITA No.5260/DEL/2025 [Assessment Year: 2020-21] Assistant Commissioner of Income Tax, CC-30, Room No.320, 3rd Floor, ARA Centre, Jhandewalan Extension, New Delhi-110055 Vs E-Homes Infrastructure Private Limited, DASNA Annexe I ECE House, 28A, Connaught Place, S.O. Central Delhi New Delhi-110001 PAN-AABCE9129Q Appellant Respondent CO No.212/Del/2025 [IN ITA No.5260/DEL/2025] [Assessment Year: 2020-21] E-Homes Infrastructure Private Limited, M/s Raj Kumar & Associates, Chartered Accountatns, L-7A (LGF), South Ext. Part-2, New Delhi-110049 Vs Assistant Commissioner of Income Tax, CC-30, Room No.320, 3rd Floor, ARA Centre, Jhandewalan Extension, New Delhi-110055 PAN-AABCE9129Q Appellant Respondent Appellant/Assessee by Shri Rajkumar Gupta, CA, Shri J.P. Sharma, CA Respondent/Revenue by Ms. Rajinder Kaur, CIT-DR Date of Hearing 23.02.2026 Date of Pronouncement 25.02.2026 Printed from counselvise.com ITA No.5260/Del/2025 Page 2 of 10 ORDER PER AMITABH SHUKLA, AM, This appeal by the Revenue is directed against the order of learned Commissioner of Income Tax(Appeals)-30, New Delhi [hereinafter referred to as ‘ld. CIT(A)] dated 29.04.2025 arising out of assessment order dated 30.03.2024 passed under section 153C of the Income Tax Act, 1961, for the Assessment Year 2020-21. The word ‘Act’ herein this order would mean Income Tax Act, 1961. The assessee has also filed cross objection. 2. The Revenue has raised following grounds of appeal:- 1. Whether on the facts and in the circumstances of the case and in the provisions of the law, the Ld. CIT(A) is correct in allowing the appeal of the assessee without appreciating, the facts of the case. 2. Whether on the facts and in the circumstances of the case and in the provisions of the law, the Ld. CIT(A) is correct in allowing the appeal of the assessee and deleting the addition of Rs. 5,29,60,000/- relying upon the decision of Hon'ble ITAT 3. Whether on the facts and in the circumstances of the case and in the provisions of the law, the Ld. CIT(A) is correct in not considering the facts mentioned in the assessment order that Sh. Arihant Jain (Director of E-Homes) has accepted in the statement that he had sent a calculation to Sh. Vaibhav Jain w.n.t. the amount received in cash and amount of outstanding dues after due dates of instalments. This shows that the assessee received cash in lieu of booking of flats. 4. Whether on the facts and in the circumstances of the case and in the provisions of the law, the Ld. CIT(A) is correct in not considering the fact that the Hon'ble ITAT has not established that the amount so received from the applicant of flats have been returned to them. Further, the assessee has also not provided any documentary evidence which can . establish that the amount was returned to the applicant. 5. Whether on the facts and in the circumstances of the case and in the provisions of the law, the Ld. CIT(A) is correct in deleting addition of Rs. 11,04,580/- relying upon the decision of the Hon'ble ITAT wherein it was held that the booking of flats through Sh. Praveen Jain have been Printed from counselvise.com ITA No.5260/Del/2025 Page 3 of 10 cancelled. However, it was not established that that the amount so received e from the applicant of flats have been returned to them. 3. The assessee has raised following grounds of appeal in its Cross Objection are as under:- 1. That the SAT Note suffers from various fatal defects and deficiencies and also being a single consolidate SAT Note from A.Y.15-16 to A.Y.21-22, being not as per law, hence all consequential proceedings including impugned asstt. order is illegal and unsustainable in law. 2. That under the facts and circumstances approval Us.153D by Addl. CIT is mechanical, without application of mind, without verifying the relevant records and since not as per law, therefore illegal making the consequential asstt. order also illegal and unsustainable in law. 3. That under the facts and circumstances, Ld. CIT(A) has been fully justified in deleting the addition of Rs.5,29,60,000/- made by the A.O. as unaccounted cash receipts against booking of flats. 4. That under the facts and circumstances, Ld. CIT(A) has been fully justified in deleting the addition of Rs.11,04,580/- made by the A.O. as alleged undisclosed commission expn. paid to P.K. Jain (broker) against sale of flats calculated @1% of Rs.11,04,58,000/- being total of payments recd. through cheques/banking + alleged unaccounted cash receipts, recd. in A.Y.20-21 and A. Y.21-22. 5. That under the facts and circumstances, certificate issued U/s.65B of Indian Evidence Act, 1872, since fatally defective and not as per law, hence the documents/information taken out from such electronic devices is not admissible in law. 4. The Revenue is contesting the action of the ld. CIT(A) in terms of deletion of additions made by the ld. AO. We have also noted that the Cross Objection of the assessee aims to strike at the very roots of the foundation of the assessment order on the premise that the satisfaction note drawn by the Assessing Officer to initiate assessment proceedings under section 143(3) is faulty making the assessment order per se void ab initio. Accordingly, we proceed to consider the cross objection of the assessee first. Printed from counselvise.com ITA No.5260/Del/2025 Page 4 of 10 5. At the outset, the assessee submitted that it wishes to not press the ground of appeal no.2 challenging the validity of approval under section 153D. Accordingly, ground of appeal no.2 is dismissed. 6. It is the case of the assessee raised through its ground of appeal no.1 that the satisfaction note drawn in its case dated 30.09.2022 by the ld. AO is suffers from incurable defects and deficiencies making consequential assessment proceedings under section 153C r.w.s. 153A illegal and unstainable. 7. We have heard rival submission in the light of materials placed on records. The assessee drew our attention to the impugned satisfaction note drawn in its case dated 30.09.2022 placed on page-1 of the paper book filed. The ld. Counsel for the assessee submitted that it is a consolidated approval for AYs.2015-16 to 2021-22. The ld. Counsel argued that there is no analysis of seized documents on the basis of which its proceedings were initiated. It was submitted that there is no mention of any amount of income which has escaped assessment. The ld. Counsel pressed reliance upon the decision of a Co- ordinate Bench of this Tribunal in the case of SRS Panchratan Diamonds Pvt. Ltd. dated 14.11.2025 vide ITA No.218, 219/Del/2023. It was vehemently argued that its case is fully covered by the cited judicial precedent. 8. Per Contra, the ld. DR placed reliance on the order of the lower authorities. Printed from counselvise.com ITA No.5260/Del/2025 Page 5 of 10 9. We have noted that in the case of SRS Panchratan Diamonds Pvt. Ltd.(supra), the Hon’ble Co-ordinate Bench has, on identical facts, observed as under:- 9. But we find that the Hon’ble Jurisdictional High Court in the case of Saksham Commodities Ltd vs ITO reported in 464 ITR 1 (Del) dated 09-04-2024 (judges of equal strength) had passed an order in favour of the assessee on the very same issue. The relevant operative portion of the said order is reproduced below:- “50. What we seek to emphasise is that merely because Section 153C confers jurisdiction upon the AO to commence an exercise of assessment or reassessment for the block of years which are mentioned in that provision, the same alone would not be sufficient to justify steps in that direction being taken, unless the incriminating material so found is likely to have an impact on the total income of a particular AY forming part of the six AYs' immediately preceding the AY pertaining to the search year or for the \"relevant assessment year\". 51. Ultimately Section 153C is concerned with books, documents or articles seized in the course of a search and which are found to have the potential to impact or have a bearing on an assessment which may be undergoing or which may have been completed. The words \"have a bearing on the determination of the total income of such other person\" as appearing in Section 153C would necessarily have to be conferred pre-eminence. Therefore, and unless the AO is satisfied that the material gathered could potentially impact the determination of total income, it would be unjustified in mechanically reopening or assessing all over again all the ten AYs' that could possibly form part of the block of ten years. 53. Sinhgad Technical Education Society also constitutes a binding precedent in respect of the aforesaid proposition as would be evident from the Supreme Court noticing that the material disclosed pertained only to AY 2004-05 or thereafter and that consequently the Section 153C action initiated for AYs' 2000-01 to 2003-04 would not sustain. It was this position in law as enunciated in that decision which came to be reiterated by our Court in Index Securities. 55. Take for instance a case where the material gathered in the search is contemplated to have an adverse impact on the declarations and disclosures made by an assessee pertaining only to AYs' 2016-17 and 2017-18. What we seek to emphasise is that pending assessments for those two years could validly form subject matter of action under Section 153C and pending assessments in that respect would surely abate. However, that by itself would not be sufficient to either reopen or issue notices in respect of AYs' prior to or those falling after those Printed from counselvise.com ITA No.5260/Del/2025 Page 6 of 10 two AYs' and which may otherwise fall within the maximum block period of ten years merely because the statute empowers the AO to do so. Unless the material gathered and recovered is found to have relevancy to the AY which is sought to be subjected to action under Section 153C, it would be legally impermissible for the respondents to invoke those provisions. Consequently, the AO would be bound to ascertain and identify the year to which the material recovered relates. The years which could be then subjected to action under Section 153C would have to necessarily be those in respect of which the assessment is likely to be influenced or impacted by the material discovered. Section 153C neither mandates nor envisages a mechanical or an en blanc exercise of power, or to put it differently, one which is uninformed by a consideration of the factors indicated above. 56. We also bear in mind the pertinent observations made in RRJ Securities when the Court held that merely because an article or thing may have been recovered in the course of a search would not mean that concluded assessments have to \"necessarily\" be reopened under Section 153C and that those assessments are not liable to be revised unless the material obtained have a bearing on the determination of the total income. This aspect was again emphasised in para 38 of RRJ Securities with the Court laying stress on the existence of material that may be reflective of undisclosed income being of vital importance. All the aforenoted judgments thus reinforce the requirement of incriminating material having an ineradicable link to the estimation of income for a particular AY. 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being placed on notice to furnish ROIs' for the six AYs' or the \"relevant assessment year\". All that the two provisions mandate is that notwithstanding the submission of those ROIs', the AO would frame one assessment order in respect of each of the years which were made subject matter of the notice and which would deal with both disclosed and undisclosed income. This too reinforces our view that Section 153C would apply only to such AYs' where the jurisdictional AO is satisfied and has incriminating material for those AYs' and which may be concerned with disclosed and undisclosed income. 60. Before concluding, we also deem it imperative to briefly notice certain aspects which emerge from a reading of the Satisfaction Notes themselves. As is manifest from a reading of the Satisfaction Note drawn by the jurisdictional AO of the assessee in W.P. (C) 1459/2024, after noticing the material which was recovered during the search and related to FYs' 2009-10, 2010-11 and 2011-12 [corresponding AYs' thus being AYs' 2010-11, 2011-12 and 2012-13], it has proceeded to observe that the assessments which were liable to abate or be reopened would be AYs' 2010-11 to 2020-21. A similar note appears in W.P. (C)1117/2024. Here again, after referring to the material pertaining to FY 2009-10 [and thus relating to AY 2010-11], the AO proceeded to seek approval for initiating action under Section 153C in respect of AYs' 2010-11 up to 2020-21. Printed from counselvise.com ITA No.5260/Del/2025 Page 7 of 10 61. A reading of the aforesaid Satisfaction Notes would establish that jurisdictional AOs' appear to have proceeded on the premise that the moment incriminating material is unearthed in respect of a particular AY, they would have the jurisdiction and authority to invoke Section 153C in respect of all the assessment years which could otherwise form part of the \"relevant assessment year\" as defined in Section 153A. In our considered opinion, the aforesaid understanding of Section 153C is clearly erroneous and unsustainable. As explained hereinabove, the discovery of material likely to implicate the assessee and impact the assessment of total income for a particular AY is not intended to set off a chain reaction or have a waterfall effect on all AYs' which could form part of the \"relevant assessment year\". This, more so since none of the Satisfaction Notes record any reasons of how that material is likely to materially influence the computation of income for those AYs'. 62. Hypothetically speaking, it may be possible for the material recovered in the course of a search having the potential or the probability of constituting incriminating material for more than one assessment year. However, even if such a situation were assumed to arise, it would be incumbent upon the AO to duly record reasons in support of such a conclusion. The Satisfaction Notes would thus have to evidence a formation of opinion that the material is likely to be incriminating for more than a singular assessment year and thus warranting the drawl of Section 153C proceedings for years in addition to those to which the material may be directly relatable. G. CONCLUSIONS 63. On an overall consideration of the structure of Sections 153A and 153C, we thus find that a reopening or abatement would be triggered only upon the discovery of material which is likely to \"have a bearing on the determination of the total income\" and would have to be examined bearing in mind the AYs' which are likely to be impacted. It would thus be incorrect to either interpret or construe Section 153C as envisaging incriminating material pertaining to a particular AY having a cascading effect and which would warrant a mechanical and inevitable assessment or reassessment for the entire block of the \"relevant assessment year\". 64. In our considered view, abatement of the six AYs' or the \"relevant assessment year\" under Section 153C would follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs' that may form part of the block of ten AYs'. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a notice would inevitably be issued the moment a search is undertaken or documents requisitioned, whereas in the case of the latter, the proceedings would be liable to be commenced only upon the AO having formed the opinion that the Printed from counselvise.com ITA No.5260/Del/2025 Page 8 of 10 material gathered is likely to inculpate the assessee. While in the case of a Section 153A assessment, the issue of whether additions are liable to be made based upon the material recovered is an aspect which would merit consideration in the course of the assessment proceedings, under Section 153C, the AO would have to be prima facie satisfied that the documents, data or asset recovered is likely to \"have a bearing on the determination of the total income\". It is only once an opinion in that regard is formed that the AO would be legally justified in issuing a notice under that provision and which in turn would culminate in the abatement of pending assessments or reassessments as the case may be. 65. We would thus recognize the flow of events contemplated under Section 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may have on the total income for the six AYs' immediately preceding the AY pertaining to the year of search and the \"relevant assessment year\". It is only once the AO of the non-searched entity is satisfied that the material coming into its possession is likely to \"have a bearing on the determination of the total income\" that a notice under Section 153C would be issued. Abatement would thus be a necessary corollary of that notice. However, both the issuance of notice as well as abatement would have to necessarily be preceded by the satisfaction spoken of above being reached by the jurisdictional AO of the non-searched entity. 66. Therefore, and in our opinion, abatement of the six AYs' or the \"relevant assessment year\" would follow the formation of that opinion and satisfaction in that respect being reached. H. OPERATIVE DIRECTIONS 69. When tested in light of the aforesaid principles, we find that except for a few exceptions which were noticed in the introductory parts of this judgment, the writ petitions forming part of this batch, impugn the invocation of Section 153C in respect of AYs' for which no incriminating material had been gathered or obtained. The Satisfaction Notes also fail to record any reasons as to how the material discovered and pertaining to a particular AY is likely to \"have a bearing on the determination of the total income\" for the year which is sought to be abated or reopened in terms of the impugned notices. The respondents have erroneously proceeded on the assumption that the moment any material is recovered in the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs' years immediately preceding the assessment correlatable to the search year or the \"relevant assessment year\" as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed above.” Printed from counselvise.com ITA No.5260/Del/2025 Page 9 of 10 10. Hence respectfully applying the construction that is favourable to the assessee by taking shield from the decision of the Hon’ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC), we would like to follow the decision of the Hon’ble Jurisdictional High Court supra in the case of Saksham Commodities Ltd reported in 464 ITR 1 (Del) and the decision of the Hon’ble Karnataka High Court in the case of Sunil Kumar Sharma supra and hold that recording of consolidated satisfaction note for various assessment years by the Learned AO would become fatal to the very assumption of jurisdiction and consequential framing of assessment under section 153C of the Act for the assessment years 2015-16 and 2016-17 in the instant case. Accordingly the assessments framed under section 153C of the Act for the assessment years 2015- 16 and 2016-17 are hereby quashed. 10. Thus, we have noted that the Hon’ble Co-ordinate Bench has relied upon the binding judicial precedent of the jurisdictional High Court. We have also noted that the Department has not succeeded on its SLP before the Hon’ble Apex Court in Saksham Commodities Ltd. (supra). Accordingly, in respectful compliance to the decision of the Hon’ble jurisdictional High Court, it is held that recording of consolidated satisfaction note for various assessment years by the Learned AO would become fatal to the very assumption of jurisdiction and consequential framing of assessment under section 153C of the Act for the assessment year 2020-21 in the instant case. Accordingly, the assessments framed under section 153C of the Act for the assessment years 2020-21 is hereby quashed. The Cross Objection raised by the assessee is therefore allowed. 11. Since, the entire assessment proceedings stands quashed grounds of appeal raised by the assessee no.3 to 5 need not gone into and they are left open. 12. As the assessee has succeeded in its cross objection and the entire assessment proceedings stands quashed, the appeal raised by the Revenue vide ITA No.5260/Del/2025 becomes infructuous and the same stands dismissed. Printed from counselvise.com ITA No.5260/Del/2025 Page 10 of 10 13. In the result, the appeal of the Revenue is dismissed and Cross Objection of the assessee is allowed. Order pronounced in the open court on 25th February, 2026. Sd/- Sd/- [VIMAL KUMAR] [AMITABH SHUKLA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25.02.2026 f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "