DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-17, NEW DELHI, DELHI V. M/S MANI CAPITAL LIMITED, KANPUR

ITA 3860/DEL/2025

AI Insights

The case involves appeals by the Deputy Commissioner of Income Tax against Mani Capital Limited, concerning assessments for four consecutive assessment years. The core issue revolved around the legality of the assessments made under Section 153C of the Income-tax Act, 1961, following a search and seizure operation. The Revenue challenged the Commissioner of Income Tax (Appeals)'s decision, which had provided relief to the assessee by questioning the validity of the assessments based on the timing and the nature of the incriminating materials used. The tribunal's decision was heavily influenced by precedents set by the Supreme Court and the Delhi High Court, which clarified the interpretation of the relevant sections concerning the limitation period for assessments following a search.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788348 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 12-06-2025
• Other Referred Cases: Ojjus Medicare Pvt. Ltd. and Others, CIT vs. Jasjit Singh, DCIT Vs. U. K. Paints (Overseas) Ltd., PCIT Vs Abhisar Build well (P.) Ltd, CIT VS. Kabul Chawla, CIT VS. SINGHAD TECHNICAL EDUCATION SOCIETY, DEV TECHNOFAB LTD. Vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA SINGH
• Assessee Lawyers: SANDEEP CHADHA
• Keywords: Set aside; Period of limitation; Reopening of assessment; Search and seizure
• Section: 144; 143(3); 132; 153A; 37

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.3860/Del./2025, A.Y. 2010-11 ITA No.3861/Del./2025, A.Y. 2011-12 ITA No.3862/Del./2025, A.Y. 2012-13 ITA No.3863/Del./2025, A.Y. 2013-14 Deputy Commissioner of Income Tax, Central Circle-17, ARA Building, Jhandewalan Extn. New Delhi Vs. Mani Capital Limited 14, Ratan Mahal, 15/197, Civil Lines, Kanpur,Uttar Pradesh PAN: AAACD4969L (Appellant) (Respondent) Appellant by Ms. Monika Singh, CIT-DR Respondent by Shri Sandeep Chadha, CA Date of Hearing 17/11/2025 Date of Pronouncement /11/2025 ORDER PER AVDHESH KUMAR MISHRA, AM Common grounds and facts arise in the above captioned appeals of Revenue; therefore, these appeals were heard together and are being disposed off by this common order. 2. These appeals for Assessment Years (‘AYs’) 2010-11, 2011-12, 2012- 13 and 2013-14 filed by the Revenue are directed against orders dated 23.12.2024 of the Commissioner of Income Tax (Appeals)-26, New Delhi [‘CIT(A)’]. Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 2 3. Grounds raised by the Revenue in ITA No. 3860/Del/2025 of AY 2010-11, as lead case, read as under: - “1. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in allowing relief to the assessee by holding that the additions were not based on seized/incriminating material when the order the Assessing Officer contains exhaustive details of incriminating material and the information regarding the assessee extracted from it? 2. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) erred in holding that transactions of the assessee recorded in unaccounted/parallel books of accommodation entry provider do not constitute incriminating document of the assessee? 3. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) is correct in allowing relief to the assessee by holding 3 that the additions were not based on seized/incriminating material when the disallowance of interest u/s 37 of the Act is directly linked to the incriminating material? 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in relying on jurisdictional High Court's decision in case Ojjus Medicare in holding that block periods for assessment under Section 153C of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents OR assets seized, by the jurisdictional AO of the non-searched person and not from the date of initiation of search by relying on First Proviso to Section 153C, even when this Proviso specifically deals only with the abatement of proceedings (as referred to second proviso of Section 153(A) and does not deal with the calculation of block periods? 5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that block periods for assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents OR assets seized, by the jurisdictional AO of the non-searched person and not from the date of initiation of search by relying on First Proviso to Section 153C, even when this Proviso cannot override the main provision of Section 153C(1), Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 3 which clearly mentions that calculation of block period has to be done from the year of search? 6. Whether on the facts and under the circumstances of the case and in law, the Ld. CIT(A) was justified in holding that block periods for assessment u/s 1530 of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents OR when the assets seized, by the jurisdictional AO of the non-searched person, even position have of law is clarified after the amendment introduced by Finance Act, 2017, that the block period of 6AYs and 10AYS as mentioned in sub-section (1) of Section 153C and Section 153A same meaning and have to be calculated from the \"assessment year relevant to the previous year in which search is conducted\"? 7. Whether on the facts and circumstances of the case and in law, Ld. CTT(A) justified in relying on the judgment of Hon'ble Supreme Court in the case of CIT vs. Jasjit Singh (2023 SCC Online SC 1265) even though the facts of the present case are different from that of Jasjit Singh case, since the decisions rendered by the Court in Jasjit Singh had dealt with pre-2017 position (i.e. for search conducted before 1st April, 2017) and hence are clearly distinguishable? 8. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that block periods for assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents OR assets seized, by the jurisdictional AO of the non-searched person, even this interpretation in contrary to the legislative intent since for the years after the search there can never be incriminating seized material and as when such assessment in years cannot be made u/s 153C of the Act? 9. The appellant craves leave to add, amend any/all the grounds of appeal before OR during the course of hearing of the appeal.” 3.1 Similar grounds have been raised in all appeals. In nutshell, these grounds challenge the jurisdictional issue of assumption of jurisdiction by Ld. Assessing Officer (‘AO’). Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 4 ITA No.3860/Del./2025, A.Y. 2010-11: 4. The relevant facts for the AY 2010-11, as a lead case, are that the assessee filed its original Income Tax Return (‘ITR’) of the relevant year on 29.09.2010 declaring income of Rs.3,25,32,529/-. Search and seizure operations under section 132 of the Income Tax Act, 1961 (‘Act’) carried out On Alankit Group of cases on 18.10.2019 resulted seizure of some incriminating material including digital data. Based on the seized incriminating material/data/documents relating to the assessee, proceedings under section 153C of the Act were initiated on 23.06.2022 and the consequential assessment was completed under section 144 r.w.s 153C of the Act. In the said assessment, the Ld. Assessing Officer (‘AO’) made addition of Rs.22,53,696/-. 5. The Ld. CIT-DR placing emphasis on the assessment order, contended that the assessment order should be restored after setting aside the impugned order. 6. At the outset, the Ld. AR raised the issue of jurisdiction. He challenged the issuance of notice under section 153C of the Act for AY 2010-11 on the reasoning that the said notice had been issued beyond the period of limitation. Hence, the assessment completed under section 144 r.w.s 153C of the Act was invalid being barred by limitation. Placing emphasis on the Explanation 1 to section 153A of the Act, it was submitted that the assessment beyond the period of 10 years from the end of the Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 5 relevant AY in which search had been carried out could not be initiated. This time limitation under section 153A of the Act also applied to section 153A of the Act. The Explanation 1 to section 153A of the Act reads as under: - “For the purposes of this sub-section, the expression “relevant assessment year” shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made.” 7. It was further submitted by the Ld. AR that the search on Alankit Group of cases took place on 18.10.2019 relevant to AY 2020-21. Alankit Group is the searched person here as the incriminating material relating to the respondent assessee was sent by the Ld. Assessing Officer (‘AO’) of searched person to the Ld. AO of the respondent assessee in June, 2022. Thereafter, the satisfaction note to initiate proceedings under section 153C of the Act was recorded in FY 2022-23 relevant to A.Y. 2023-24. The Ld. AR further submitted that the AYs falling in the period of 10 years for issuance of notice under section 153C of the Act from the end of the relevant previous year in which search conducted on the assessee (the satisfaction note to initiate proceedings under section 153C of the Act was recorded in FY 2022-23 relevant to A.Y. 2023-24) were as under: S. No. Assessment Year 1. 2023-24 2. 2022-23 3. 2021-22 Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 6 4. 2020-21 5. 2019-20 6. 2018-19 7. 2017-18 8. 2016-17 9. 2015-16 10. 2014-15 8. In view of above, the Ld. AR argued that AYs 2010-11, 2011-12, 2012-13 & 2013-14 were beyond the period of 10 years ceiling prescribed under section 153C r.w.s. 153A of the Act. Hence, he prayed for all these assessments to be held bad in the eyes of law. 9. For the above contention/argument, the Ld. AR placed reliance on the decision of Hon’ble Supreme Court in the case of Jasjit Singh [2023] SCC Online SC and the decision of Hon’ble Delhi High Court in the case of Ojjus Medicare Pvt. Ltd. and Others, 2024 (4) TMI 268, order dated April 3, 2024. 10. We have heard both parties and have perused the material available on records. The Relevant finding of the Ld. CIT(A) reads as under: “5.13 As per the Hon'ble Delhi High Court, while the identification and computation of the six assessment years hinges upon the phrase \"immediately preceding the assessment year relevant to the previous year\" of search, the ten-year period would have to be reckoned from the 31st day of March of the Assessment Year relevant to the year of search because of wording \"from the end of the assessment year\" used in Explanation 1 of Section 153A(1). This is extremely important to decide the ground in the instant case. Accordingly, the jurisdictional High Court in Ojjus Medicare Pvt. Ltd.(supra) had held as under. Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 7 \"96. The petitions forming part of List I pertain to AYs' 2010-11, 2011- 12 and 2012-13. So far as the aforenoted writ petitions are concerned, undisputedly AYs' 2010-11, 2011-12 and 2012-13 fall beyond the maximum period of ten AYs'. Since the ten AYs' when computed from the end of AY 2022-23 would terminate upon AY 2013-14, AYs' 2010- 11, 2011-12 and 2012-13 would clearly fall outside the block period of ten AYs' and cannot be legally or justifiably be reopened under Section 153C read with Section 153A of the Act. 97. Proceeding then to List II, we find that the petitions placed in that list pertain to cases where the hand over occurred in FYs 2022-23 and 2023-24. Consequently, the relevant AYs' would be AY 2023-24 and AY 2024-25 respectively. In light of the principles enunciated by us and which explain how the period of six and ten AYs' is liable to be computed, the reopening of assessments pertaining to AYs' 2010-11, 2011-12. 2012-13 and 2013-14 would clearly fall beyond the ambit of ten AYs' as provided under Section 153C read with Section 153A. We note in this behalf that all of the writ petitions forming part of List Il pertain to the aforenoted AYs' 2010-11, 2011-12, 2012-13 and 2013- 14. 98. We are therefore of the opinion that the Section 153C notices issued against the writ petitioners placed in List I and insofar as they pertain to AYs' 2010-11, 2011-12 and 2012-13 would not sustain being beyond the \"relevant assessment year\" which could have possibly formed the basis for initiation of action under that provision. Similarly, the Section 153C notices impugned by the writ petitioners placed in List II and insofar as they pertain to AYs' 2010-11, 2011-12, 2012-13 and 2013-14 and which have been found to fall outside the net of \"relevant assessment year\", being the ten year block, would be liable to be set aside on this score alone. In the present case, notice u/s 153C was issued on 22.06.2022 accordingly, the assessment proceedings for AYs' 2010-11, 2011,12, 2012-13 and 2013-14 falls outside the net of \"relevant assessment year\" as held by the Hon'ble Delhi High Court vide the aforesaid order. Therefore, the assessment order passed u/s 153C r.w.s 143(3) dated 31/03/2023 for AY 2010-11 is void-ab-initio and deserves to be quashed.” Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 8 5.14 In view of the above, the assessment year 2010-11, which is under consideration, clearly falls outside the scope of application of section 153C of the Act. Therefore, the contention of the appellant is found to be correct on this count. Accordingly, by following the aforesaid decisions of the Hon'ble Supreme Court and the decisions of jurisdictional High Court, the impugned assessment order is beyond the limitation prescribed under section 153C of the Act, and therefore, the jurisdiction assumed by the Assessing Officer is not tenable in the light of aforesaid legal positions. Hence, the appeal on this ground is allowed. 5.15 The next ground is whether assumption of jurisdiction under section 153C of the Act would be legally sustainable when there was no incriminating material found/seized. Apparently, the additions are emanated from the regular books of account maintained by the appellant and from the audited financial statements. Alternatively, the additions have not been made on the basis of any incriminating material. In such a situation, assumption of jurisdiction to initiate proceedings is held to be bad in law by the Hon'ble Supreme Court in the case of DCIT Vs. U. K. Paints (Overseas) Ltd. [2023] 150 taxmann.com 108 (SC), Dtd. 25.04.23. has held, while confirming the decision of the High Court in setting aside the Assessment order, that where no incriminating material was found in case of any of assessee either from assessee or from third party, the assessment made under section 153C of the Act is invalid. Similar view was taken by the Hon'ble Apex court in PCIT Vs Abhisar Build well (P.) Ltd [2023] 149 taxmann.com 399 (SC) and the jurisdictional High Court in the case of CIT VS. Kabul Chawla, 380 ITR (Delhi) 573. 5.16 Further, as per the legal provision under section 153C of the Act, the incriminating material found/seized, if any during the course of search on a third person should have a bearing on the determination of the total income of the concerned Assessment year. Accordingly, the incriminating materials seized from the searched tool4 bus person need to pertain to the appellant and should be related to the assessment year a20011-ie under consideration which is AY 2010-11. Apparently, there is no incriminating document relating to the Assessment year 2010-11. This is evidenced from the assessment order as the additions are based on books of accounts and not on the basis of any incriminating Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 9 document. This issue has now been settled by Hon'ble Supreme Court in the case of CIT VS. SINGHAD TECHNICAL EDUCATION SOCIETY 397 ITR 344 (SC) wherein the Apex court has held that incriminating material seized must pertain to assessment years in question in order to assume jurisdiction to issue notice under section 153C of the Act. Similar view has been taken by the Hon'ble Jurisdictional High Court in the case of DEV TECHNOFAB LTD. Vs. DCIT [2024] 166 taxmann.com 514 (DHC) - Dtd.24.05.24. 5.17 In view of the of the above, the appellant succeeds on this ground of appeal. Accordingly, this ground on validity of assumption of jurisdiction is allowed. 5.18 As the appellant succeeds on these jurisdictional grounds, other grounds on legal validity on assumption jurisdiction as well as the substantive grounds on the quantum addition are not adjudicated at this stage being infructuous. 6. In result, the appeal is \"allowed\".” 11. We are of the considered view that this case is squarely covered by the decision of Hon’ble Delhi High Court in the case of Ojjus Medicare (supra). In view of the above, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue of assumption of jurisdiction by the Ld. AO as the impugned order is a reasoned order. We therefore, decline to interfere in this regard. In view of this finding, other grounds are not being specifically adjudicated here. Thus, the Revenue’s appeal is dismissed as above. 12. In the result, the appeal of AY 2010-11 is allowed. ITA No.3861, 3862 & 3863/Del./2025: Printed from counselvise.com ITA No.3860-63/Del/2025 Mani Capital Limited, Kanpur 10 13. The above finding in ITA No.3860/Del./2025 shall apply mutatis mutandis in these appeals also. Hence, these appeals of Revenue also stand dismissed as above. 14. In the result, all three appeals of Revenue are dismissed as above. ITA No.3860 to 3863/Del./2025: 15. In the result, all four appeals of Revenue are dismissed as above. Order pronounced in open Court on 25th November, 2025 Sd/- Sd/- (VIKAS AWASTHY) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:25th /11/2025 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT/CIT 4. CIT(Appeals) 5. CIT-DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "