ASHOK JAIN,HARYANA V. DCIT, CENTRAL CIRCLE-31, NEW DELHI, NEW DELHI

ITA 1185/DEL/2024

AI Insights

The case involves Shri Ashok Jain, who appealed against the assessment order passed under section 143(3) of the Income-tax Act, 1961 for the Assessment Year 2021-22. The assessment was contested on the grounds that it should have been made under section 153C, following a search and seizure operation that occurred in a related case. The Tribunal examined the procedural history of the assessment, including the satisfaction notes recorded by the Assessing Officer and the subsequent legal interpretations applied in similar cases. The Tribunal's decision to quash the assessment under section 143(3) was influenced by the Supreme Court's ruling in CIT vs Jasjit Singh and similar Tribunal decisions, which clarified the applicability of section 153C in such contexts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470222 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2021-2022
• Other Referred Cases: CIT vs Jasjit Singh reported in 458 ITR 437 (SC), Raja Varshney vs DCIT Central Circle 31, New Delhi in ITA No. 1459/Del/2024, Mukul Rani Thakur vs DCIT Central Circle 31, New Delhi in ITA No. 1483/Del/2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Document seized; Documents seized; Capital Gains
• Section: 143(3); 143(2); 132; 153A; 43; 153C

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 1185/Del/2024 (Assessment Year: 2021-22) Shri Ashok Jain, 816, Sector-15, Part-2, Gurgaon, Haryana-122 001 Vs. DCIT, Central Circle-31, New Delhi (Appellant) (Respondent) PAN: AAIPJ6793M Assessee by : Dr. Rakesh Gupta, Adv Shri Somil Agarwal, Adv Revenue by: Mr. Javed Akhtar, CIT DR Date of Hearing 21/01/2025 Date of pronouncement 29/01/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.1185/Del/2024 for AY 2021-22, arises out of the order of the Commissioner of Income Tax (Appeals)-30, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 10111/2020- 21 dated 07.02.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 30.12.2022 by the Assessing Officer, DCIT, Central Circle-31, New Delhi (hereinafter referred to as „ld. AO‟). 2. The assessee vide Ground Nos. 2 &3 had specifically raised the grounds that assessment in the instant case for the instant year had been wrongly made under section 143(3) of the Act instead of section 153C of ITA No. 1185/Del/2024 Shri Ashok Jain Page | 2 the Act. Since this is a preliminary legal ground, we deem it fit to address the same first. 3. We have heard the rival submissions and perused the materials available on record. For the assessment year 2021-22, the assessee had filed his return of income showing income under the head „income from salary‟, „income from house property‟, „income from capital gains‟ and „income from other sources‟. It was submitted that the assessee was not doing any business during the year under consideration and hence no books of accounts were required to be maintained by the assessee. The return of income for the assessment year 2021-22 was filed by the assessee on 30-12-2021 declaring total income of Rs 17,03,960/-. The Learned AO observed in Para 3 of the assessment order that a search and seizure operation under section 132 of the Act was carried out at the premises of Shri Parveen K Jain / M/s Jainco Ltd on 6-1-2021 wherein mobile phone of Shri Vaibhav Jain was seized. On perusal of WhatsApp chats of Shri Vaibhav Jain with Asyush Jain, it was observed that there was an image of agreement to sell relating to sale of property at D-60, Preet Vihar, Delhi-110092 was found. On perusal of the said image, it was observed that total sale consideration of the property was fixed for Rs 7,40,00,000/- and advance payment of Rs 50,00,000/- was received on 26-09-2020. The Learned AO of the searched person on perusal of the income tax return of the assessee found that assessee had declared only Rs. 2,51,00,000/- as sale consideration of the above mentioned property and accordingly concluded that a sum of Rs 4,89,00,000/- (7,40,00,000/- minus 2,51,00,000/-) represent cash consideration received by the assessee which was not disclosed by him in the income tax return. Accordingly, the Learned AO [DCIT Central Circle 31, New Delhi (who was the assessing officer of the searched person)] recorded a ITA No. 1185/Del/2024 Shri Ashok Jain Page | 3 satisfaction note on 23-08-2022 that the said information contained in the mobile phone represent seized document belonging to Ashok Kumar Jain and accordingly handed over the said seized document to the assessing officer of the assessee herein to take action under Section 153C of the Act. This satisfaction note is recorded in pages 43 to 44 of the paper book. Later, the assessing officer of the assessee who is same as the assessing officer of the searched person recorded a separate satisfaction note on 25- 11-2022 for initiating proceedings against the assessee under Section 153C read with Section 153A of the Act for assessment years 2015-16 to 2021-22. This satisfaction note is enclosed in Page 45 of the Paper Book. The law as laid down by the Hon‟ble Supreme Court in the case of CIT vs Jasjit Singh reported in 458 ITR 437 (SC) is very clear that the date of handing over of the seized document by the AO of the searched person to the AO of the third party (i.e assessee herein) shall become the date of search qua the third person. Accordingly, the date of search qua the assessee becomes 25-11-2022 relevant to assessment year 2023- 24. Hence, the year under consideration i.e assessment year 2021-22 falls within the block period of assessments to be framed under Section 153C of the Act, whereas, the learned AO for the assessment year 2021-22 had framed the assessment under Section 143(3) of the Act based on the original date of search of 6-1-2021 (relevant to Assessment Year 2021-22) conducted in Hans group of cases. 4. The Ld AR before us placed on record the orders passed by the Co- ordinate Benches of Tribunal in connection with the same search wherein similar assessments framed under section 143(3) of the Act on the third person was declared void abinitio as under:- ITA No. 1185/Del/2024 Shri Ashok Jain Page | 4 a) Decision of Delhi Tribunal in the case of Raja Varshney vs DCIT Central Circle 31, New Delhi in ITA No. 1459/Del/2024 dated 26-9-2024 for Assessment Year 2021-22 wherein it was held as under:- “13. From the above discussion the date of recording of the satisfaction will be the deemed date for the possession of the seized documents which is 03-10-2022 and six years would be reckoned from this date. The submission made by Ld AR is tenable that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and six years immediately preceding the assessment year relevant for u/s 153C of the Act will be AY 2018-19 to 2022-23. The assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act. Therefore the assessment order dated 29-12-22 passed u/s 143(3) of the Act is bad in law and liable to be quashed and quashed accordingly. The additional grounds filed by the assessee are allowed. “ b) Decision of Delhi Tribunal in the case of Mukul Rani Thakur vs DCIT Central Circle 31, New Delhi in ITA No. 1483/Del/2024 dated 20-11-2024 for Assessment Year 2021-22 wherein it was held as under:- “14. We find substantial force in the plea raised on behalf of the assessee. While search in the instant case was carried on 06-01-2021 ie. Previous year relevant to Assessment Year 2021-22, the documents were handed over in the previous year relevant to Assessment Year 2022-23. Based on such matrix, the assessment upto Assessment Year 2021-22 stood covered within ambit of section 153C of the Act. This being so, domain for assessment qua undisclosed income for Assessment Year 2021-22 falls within sweep of section 153C of the Act. The AO has committed substantive error in proper appreciation of jurisdictional provisions of section 153C of the Act by excluding Assessment Year 2021-22 from the ambit of section 153C of the Act erroneously based on actual date of search rather than based on date of receipts of incriminating documents. In order to frame assessment based on the searched document, the notice ought to have been issued under section 153A r.w.s. 153C of the Act. 15. The regular assessment passed by issuance of notice u/s 143(2) of the Act without aid of section 153C of the Act despite „satisfaction note‟ from AO of searched person thus, is not supportable in law. The impugned assessment framed under section 143(3) of the Act thus, is void ab-initio as rightly pleaded on behalf of the assessee. Hence, the ITA No. 1185/Del/2024 Shri Ashok Jain Page | 5 assessment order passed is vitiated in law and requires to be quashed at the threshold.” 5. The ratio laid down in the aforesaid decisions qua the same search squarely applies to the facts of the instant case before us. Respectfully following the said decisions, we quash the assessment framed under section 143(3) of the Act for the Assessment Year 2021-22 as it ought to have been framed under section 153C of the Act. Accordingly, the Ground Nos. 2 & 3 raised by the assessee are allowed. 6. Since the entire assessment is quashed, the other legal ground and grounds raised on merits need not be gone into as it would be academic in nature. Hence they are left open. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 29/01/2025. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 29/01/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "