PARSEE LEASING AND FINVEST LIMITED,DELHI V. DCIT, CENTRAL CIRCLE

ITA 3556/DEL/2025

AI Insights

The case involves Parsee Leasing and Finvest Limited, which appealed against the order of the Commissioner of Income Tax (Appeals)-24, New Delhi, concerning the assessment year 2016-17. The original assessment was framed under section 153C read with section 143(3) of the Income Tax Act, following a search action that revealed the assessee was a beneficiary of accommodation entries. The Tribunal's decision focused on the legal validity of the consolidated satisfaction note used to initiate the assessment for multiple years, which was found to be mechanically prepared without specific incriminating evidence for each year.

• Duration Of Justice: 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Delhi
• Assessment Year: 2016-2017
• Appeal Filed On: 29-05-2025
• Other Referred Cases: Shaksham Commodities Ltd. vs. ITO 464 ITR 01 (Del), Shaksham Industries vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT JAIN
• Assessee Lawyers: SACHIN JAIN
• Keywords: Unexplained cash credit; Unexplained expenditure; Principle of natural justice; Accommodation entries; Opportunity of cross examination
• Section: 143(3); 153A; 68; 69C

Judgement Text

"ITA_3556_Del_2025_Parsee Leasing and Finvest Limited IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, E: NEW DELHI BEFORE SHRI RAJ KUMAR CHAUHAN, HON’BLE JUDICIAL MEMBER AND SMT. RENU JAUHRI, HON’BLE ACCOUNTANT MEMBER ITA. No. 3556/Del/2025 [Assessment Year: 2016-17] Parsee Leasing and Finvest Limited E-10, Prashant Vihar, Rohini- 85 Delhi Vs DCIT, Central Circle-6 Delhi PAN- AAACP6846N Appellant Respondent Assessee by Sh. Sachin Jain, CA Revenue by Sh. Amit Jain, CIT DR Date of Hearing 10.03.2026 Date of Pronouncement 25.03.2026 ORDER PER RENU JAUHRI: The above captioned appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)-24, New Delhi [for short, Ld. CIT(A)] dated 12.03.2025 passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for A.Y. 2016-17. The assessment was framed by the Ld. AO u/s 153C r.w.s 143(3) of the Act. 2. The assessee has raised the following grounds in its appeal: Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 2 “1. That the assessment order passed u/s 153C by the Ld. AO and upheld by the CIT (A) deserves to be quashed since the same was passed without following the provisions of the Income Tax Act, 1961 on various legal issues including jurisdictional issue and also barred by limitation. 2. That the assessment order passed u/s 153C by the Ld. AO and upheld by the CIT (A) deserves to be quashed since the same was passed without following the Principals of Natural Justice, settled law as declared by various Courts and without due application of mind. 3. That under the facts and circumstances of the case, the assessment order and demand notice issued without Document Identification Number and the computation sheet also prepared well in advance i.e. before obtaining the approval and passing the assessment order and hence the three documents issued are nonest and without authority of law. 4. That the Ld. CIT (A) while adjudicating Ground no(s) 1 to 3 raised by the assessee, travelled beyond the issues raised in the grounds and completely ignored the facts of the case while rejecting the legal grounds casually. 5. That under the facts and circumstances of the case, the opportunity of cross examination was not provided despite requests made. 6. That under the facts and circumstances of the case, both the lower authorities failed to consider the detailed explanations and documentary evidences furnished to fulfill the three basic conditions to satisfy the provisions of Section 68 of the Income Tax Act, 1961. 7. That under the facts and circumstances of the case, both the lower authorities erred in making and upholding the addition amounting to Rs. 1,00,00,000/- u/s 68 of the Income Tax Act,1961. 8. That under the facts and circumstances of the case, both the lower authorities erred in making and upholding the addition amounting to Rs. 3,00,000/- u/s 69C of the Income Tax Act, 1961. Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 3 9. That the appellant craves leave to add, amend, alter or withdraw any ground of appeal at the time of hearing with the permission of the Hon'ble ITAT, Delhi Bench.” 3. Brief facts are that the assessee had filed his return for A.Y. 2016-17 on 30.09.2016 declaring total income of Rs. 3,62,387/-. Assessment was completed u/s 143(3) of the Act on 24.12.2018 at assessed income of Rs. 3,62,387/-. Consequent to a search action conducted in the case of Ashish Begwani Group on 22.10.2016, it was found that the assessee was also a beneficiary of accommodation entries provided by the entities of the searched group. Accordingly, a satisfaction note was recorded for proceedings u/s 153C in the case of the assessee for A.Ys. 2011-12 to 2017-18. Assessment was completed at an income of Rs. 1,06,62,390/- vide order u/s 153C r.w.s 143(3) dated 24.12.2021 after making the following additions: i. Addition on account of unexplained credit Rs. 1,00,00,000/- ii. Addition on account of unexplained expenditure Rs. 3,00,000/- 3.1 Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) challenging the assessment order on legal grounds as well as on merits. However, vide order dated 12.03.2025, Ld. CIT(A) dismissed the assessee’s appeal. Further aggrieved, the assessee has filed an appeal before the Tribunal. 3.2 In its appeal, the assessee has raised several grounds both on merits as well as legal issues. We first take up the legal issue regarding validity of consolidated satisfaction note recorded by the Ld. AO. Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 4 4. Before us, Ld. AR has argued that the recording of satisfaction u/s 153C has been done in a mechanical manner wherein all the 6 years i.e., from A.Y. 2011-12 to 2017-18, have been mentioned without specifying the incriminating evidence relating to each of these assessment years which was available with the Ld. AO. Thus the satisfaction note dated 24.03.2021 was not in accordance with the CBDT Circular. 4.1 Ld. AR has also placed reliance on various decisions including those of the Hon’ble Jurisdictional High Court in support of the claim that a consolidated satisfaction note recorded by the AO for multiple assessment years is invalid. Specifically reliance has been placed on the decision of Hon’ble Delhi High Court in Shaksham Commodities Ltd. vs. ITO 464 ITR 01 (Del) which has been followed by the co-ordinate benches in several cases whereby the proceedings initiated vide a consolidated satisfaction note have been quashed. 5. Ld. DR, on the other hand, relied on the orders of the lower authorities and argued that all the legal grounds raised by the assessee have been decided by the Ld. CIT(A) vide a speaking order, therefore, the same deserves to be upheld. 6. We have heard the rival submissions and perused the material placed on record in the light of relevant judicial pronouncements. Admittedly, the satisfaction note u/s 153C recorded on 24.03.2021 mentioned all the 6 assessment years i.e., 2011- Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 5 12 to 2017-18. Further it is stated therein that incriminating documents were seized from the premises of one of the searched persons showing that the assessee was one of the beneficiaries of the accommodation entries facilitated by Sh. Ashish Begwani. The satisfaction note neither mentions specific details of such entries nor any yearwise details of incriminating material to show as to how the same is relevant for computation of income for each of the assessment years. The satisfaction note as reproduced in the assessment order also is extracted below: “ ” Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 6 Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 7 6.1 In this regard, Hon’ble Jurisdictional High Court, in the case of Shaksham Industries (supra) have held as under: “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 Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 8 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 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. Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 9 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 obtained. The impugn the invocation of Section 153C in respect of AYs' for which no incriminating material had been gathered or 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.\"” 6.2 Further, the SLP filed by the Revenue against the decision has also been dismissed on 16.06.2025 as reported vide [2025] 175 taxmann.com 849 (SC). Hence, respectfully following the decision of the Hon’ble Jurisdictional High Court, we hold that the consolidated satisfaction note recorded by the Ld. AO without specifying as to how the material discovered is likely to have a bearing on the Printed from counselvise.com ITA_3556_Del_2025_Parsee Leasing and Finvest Limited 10 determination of total income for each of the assessment years from A.Y. 2011-12 to 2017-18 is invalid. Accordingly, the assessment framed on the basis of this note is liable to be quashed. Since the assessment order itself has been quashed, other grounds raised by the assessee become academic and hence are not being adjudicated upon. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25th March, 2026. Sd/- Sd/- [RAJ KUMAR CHAUHAN] [RENU JAUHRI] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated- 25 .03.2026. Pooja Mittal, Sr. PS. Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "