PRASHANT KANSAL,G B NAGAR V. DCIT, CENTRAL CIRCLE, NOIDA

ITA 5577/DEL/2019

AI Insights

The case involves an appeal by Prashant Kansal against the order of the CIT(A)-IV, Kanpur, which confirmed an addition of Rs. 3,70,00,000 to his income for the assessment year 2015-16. This addition was initially made by the Assessing Officer (AO) following a search and seizure operation under section 132 of the Income Tax Act, 1961, conducted on the Tirupati-Sunworld Group of companies, which included incriminating documents related to Kansal. The primary legal contention in the appeal was the improper issuance of notices under section 143(3) instead of section 153C, which was argued to be a jurisdictional error rendering the assessment void ab initio.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126746 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Other Referred Cases: COMM/ISSIONER OF INCOME TAX 14 VERSUS JASJIT SINGH, AKANSHA GUPTA VERSUS ACIT, CENTRAL CIRCLE-04, DELHI, RAJA VARSHNEY VERSUS DCIT, CENTRAL CIRCLE-31 NEW DELHI, Vaibhav Jain Vs. DCIT, Central Circle-31
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: VED JAIN; AMAN; WAY OF OTHER; WAY
• Keywords: Document seized; Documents seized; Period of limitation; Search and seizure; Block assessment
• Section: 143(3); 142(1); 143(2); 11; 132; 153A; 22; 13; 153C; 2

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA NO. 5577/Del/2019 A.YR. : 2015-16 Prashant Kansal, B-15, Sector-3, Gautam Budh Nagar, Uttar Pradesh-201301 (PAN: AKSPK5844N) VS. DCIT, CENTRAL CIRCLE, NOIDA UTTAR PRADESH (APPELLANT) (RESPONDENT) Appellant by : Shri Ved Jain, Adv. & Shri Aman Garg, CA Respondent by : Ms. Suman Malik, CIT(DR) Date of hearing : 22.04.2025 Date of pronouncement : 25.04.2025 ORDER PER SHAMIM YAHYA, AM: The Assessee has filed the instant Appeal against the Order of the Ld. CIT(A)-IV, Kanpur dated 09.05.2019, relating to assessment year 2015-16. 2. Brief facts of the case are that a search and seizure operation u/s. 132 of the Income Tax Act, 1961 was conducted on 11.11.2014 in the case of Tirupati- Sunworld Group of companies where certain incriminating documents were found and seized relating to the assessee. Assessee e-filed return of income on 04.01.2016, disclosing total income of Rs. 90,75,560/-. Accordingly, notices u/s. 143(2) of the Act was issued on 13.12.2016. Further notices u/s. 143(2) & 2 | P a g e 142(1) were also issued and AO completed the assessment by making of addition of Rs. 3,70,00,000/- on account of undisclosed income. 3. Upon assessee’s appeal, Ld. CIT(A) confirmed the addition of Rs. 3,70,00,000/-. 4. Against the above order, assessee is in appeal before us and only argued the legal ground no. 2 & 3, which reads as under:- “2. On the facts and circumstances of the case, the Ld.CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the assessment framed under section 153C/143(3) is bad and liable to be quashed as no valid notice under section 153C as required under the law has been issued and served on the assessee. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under section 153C and assumption of jurisdiction by AO are illegal and void ab initio.” 5. We have heard both the parties and perused the records. At the time of hearing, Ld. Counsel for the assessee submitted the following submissions :- “1. The present appeal is for assessment year 2015-16 is against CIT(A) order dated 09.05.2019, wherein CIT(A) confirmed the addition of Rs.3,70,00,000/- made by AO via order dated 31.12.2016. However, the assessment order passed by the AO was without issue of notice under section 153C of the Act is bad in law and liable to be quashed. Legal issue (Ground 2-3) 2. In the present case a search and seizure operation u/s 132 of the Act was conducted on Tirupati assessee under section 153C of the Act by recording satisfaction on 02.12.2016 for AY 2009-10 to AY 2014-15. Copy of satisfaction note recorded by the assessing officer of the assessee (PB Page 7-8) assuming the date of search as 11.11.2014. 3. However, the deemed date of search in the present case will be 02.12.2016 in view of apex court judgement in the case of COMM/ISSIONER OF INCOME TAX 14 VERSUS JASJIT SINGH, 3 | P a g e 2023 (10) TMI 572 - SUPREME COURT, Dated.- September 26, 2023 and hence the period of block assessment of six years immediately preceding assessment year relevant to previous year in which search was conducted has to be reckoned from 02.12.2016, as under:- S.No. Assessment Year 1 2016-17 2 2015-16 3 2014-15 4 Hence, in the present case assessment proceedings for AY 2015-16, assessment should have been framed under section 153C of the Act after issuing notice under section 153C of the Act. However, proceedings in the case of the assessee were wrongly framed under section 143(3) of the Act without issue of notice under section 153C of the Act assuming the date of search as 11.11.2014 instead deemed date of search of 02.12.2016 and hence, the assessment order is bad in the eyes of the law on account of jurisdictional error and therefore liable to be quashed. The issue is squarely covered by Hon'ble ITAT Delhi judgement in the below mentioned cases- > AKANSHA GUPTA VERSUS ACIT, CENTRAL CIRCLE-04, DELHI, 2024 (7) TMI 1133 - ITAT DELHI, Dated. - July 10, 2024- \"9. Therefore, in view of the above decision, the date of recording of the satisfaction will be the deemed date for the possession of the seized documents, which is 30.06.2022 in the present case and the date of search and six years period would be reckoned from this date i.e. 30.06.2022. Therefore, there is merit in the submission of the assessee 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 the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding us 153C of the Act will be AY 2018-19 to 2022-23. Therefore, respectfully following the decision of the cited case, it is held that in the present case, 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 as done by the A in this case. No other contrary facts or decision was brought on record 4 | P a g e by the Ld. DR Therefore, it is held that the assessment order dated 29.12.2022 passed us 143(3) of the Act by the issuance of notice u/s 143(2) of the Act dated 30.06.2022 is bad in law and hence the notice us 143(2) of the Act, dated 30.06.2022 and the consequent assessment order dated 29.12.2022 passed u/s 143(3) of the Act are hereby quashed. The additional grounds filed by the assessee are allowed. > RAJA VARSHNEY VERSUS DCIT, CENTRAL CIRCLE-31 NEW DELHI, 2024 (9) TMI 1625 - ITAT DELHI, Dated.- September 26, 2024- 12. On perusal of the satisfaction note it reveals that same was recorded on 10-10-2022 by the AO after giving the findings that the seized assets and documents /digital data and information relates to assessee and it is a fit case for initiating proceedings us 153C r.w.153A of the Act for the A. Y. 2015-16 to 2020-21. The AO has issued the notice u/s. 143(2) of the Act. On the similar facts, the coordinate Bench of the Tribunal in the case of Jasjit Singh (supra), it was held that the date of receiving of the seizes documents would become the date of search and six years period would be reckoned from this date. In the case of Jasjit Singh 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 us 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. 14. In the result, the appeal of assessee is allowed.\" > Vaibhav Jain Vs. DCIT, Central Circle-31, ITA No.1334/Del/2024, ITAT Delhi, Dated- 15.10.2024 5 | P a g e \"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 us 153C of the Act and not us 143(2) of the Act. The case is squarely covered by the Hon'ble ITAT judgment passed in the case of Akanksha Gupta vs ACIT, Contral circle -04 Delhi ITA No 3074/Del/2023. Therefore, tho assessment order dated 27-12-22 passed us 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.” In view of the above-mentioned submissions and judicial pronouncements, the assessment framed is not sustainable in the eyes of law on account of jurisdictional error and therefore liable to be quashed.” 6. Per contra, Ld. DR relied upon the order of the authorities below. 7. We have heard both the parties and perused the records. We find that in the present case a search and seizure operation u/s 132 of the Act was conducted on Tirupati assessee under section 153C of the Act by recording satisfaction on 02.12.2016 for AY 2009-10 to AY 2014-15. The copy of satisfaction note recorded by the Assessing Officer of the assessee has been placed at page no. 7-8 assuming the date of search as 11.11.2014. However, the deemed date of search in the present case will be 02.12.2016 in view of the Apex Court judgement in the case of COMMISSIONER OF INCOME TAX 14 VERSUS JASJIT SINGH, 2023 (10) TMI 572 - SUPREME COURT, Dated.- September 26, 2023 and hence the period of block assessment of six years immediately preceding assessment year relevant to previous year in which search was conducted has to be reckoned from 02.12.2016. Therefore, in the present case 6 | P a g e assessment proceedings for AY 2015-16, assessment should have been framed under section 153C of the Act after issuing notice under section 153C of the Act. However, proceedings in the case of the assessee were wrongly framed under section 143(3) of the Act without issue of notice under section 153C of the Act assuming the date of search as 11.11.2014 instead deemed date of search of 02.12.2016 and hence, the assessment order is bad in the eyes of the law on account of jurisdictional error and therefore liable to be quashed. We find that the Coordinate Bench of the Delhi Tribunal has exactly dealt the similar issue in the case of Akansha Gupta vs. ACIT in ITA No. 3074/Del/2023 (AY 2021-22) vide order dated 10.07.2024 and allowed the legal ground by observing as under:- “8. We have considered the rival submissions and perused the material available on record. We find merit in the submission of the assessee that the legal ground raised by way of additional ground goes to the root of the matter as it challenges the legal validity of the order u/s 143(3) dated 29.12.2022 passed in pursuance of notice u/s 143(2) of the Act issued on 30.06.2022. Therefore, we first take up the additional ground for adjudication. These additional grounds were not raised before the Ld. CIT(A) nor any similar plea was taken before the AO, but since the additional grounds are purely legal ground and all the facts relating to the same are already part of record, therefore, the same is admitted in view of the decision of the Hon’ble Apex Court in the case of National Thermal Power Corporation [1998] 229 ITR 383(SC) and is hereby adjudicated. 8.1 On perusal of the satisfaction note, it is seen that the same was recorded on 30.06.2022 by the AO after giving a finding that the clone data of Pravin Kumar Jain’s Mobile marked as Annexure-5 belongs to the assessee, which has bearing on the determination of total income of the assessee for the relevant assessment years referred to in sub section-1 of section 153A of the Act and it was a fit case for initiating proceedings in the case of the assessee for AY 2015-16 to 2020-21 u/s 153C of the Act and for AY 2021-22 u/s 143(2) of the Act. Thereafter, he issued a notice u/s 143(2) on 30.06.2022 for AY 2021-22. On similar facts, the Co- ordinate Bench of the Tribunal in the case of Jasjit Singh (supra) 7 | P a g e referred to the decision in the case of Co-ordinate Bench in the case of V.K. Fiscal Services Pvt. Ltd. ITA Nos.5460 to 5465/Del/2012, wherein, it was held that the date of receiving of the seized documents would become the date of search and six years period would be reckoned from this date. The findings of the Tribunal in the case of Jasjit Singh (supra) in para-15 to para -20 is reproduced as under:- \"15. We find that an identical issue has been decided by Delhi Bench of the Tribunal in the case of DSL Properties P. Ltd. (supra) in favour of the assessee accepting the similar contention of the assessee. Similar view has been expressed by the Delhi Bench of the Tribunal in the case of V.K. Fiscal (supra) holding that the date of receiving of the seized documents would become the date of search and six years period would be reckoned from this date. For a ready reference para no. 19, 21, 22 & 23 of the decision of Delhi Bench of the Tribunal in the case of DSL Properties (supra) are being reproduced hereunder: 19. \"We have carefully considered the rival submissions. Proviso to section 153C reads as under: \"Provided that in case of such other person, the reference to the date of initiation of the search u/s 132 or making of requisition u/s 132A in the second proviso to [sub-section (1) off section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the AO having jurisdiction over such other person.\" 20. The above proviso refers to second proviso to sub- section (1) of section 153A. That section 153(1) and its first and second provisions read as under: - \"153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated u/s 132 or books of account, section 132A after the 31st day of May, 2003, the AO shall - 8 | P a g e (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished u/s 139; (b) Assess or reassess the total income or six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made : Provided that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this [sub-section) pending on the date of initiation of the search u/s 132 or making of requisition u/s 132A, as the case may be, shall abate.\" 21. From the above, it is evident that as per clause (b) of subsection (1) of section 153A and second proviso, the AO can be issue notice for assessment or reassessment of total six assessment years immediately preceding the assessment year relevant to previous year in which search is conducted. As per proviso to section 153C, the date of search is to be substituted by the date of receiving the books of account or documents or assets seized by the AO having jurisdiction over such other person. Ld. DR has stated that since the AO of the person searched and the AO of such other person was the same, no handing over or taking over of the document was required. That section 153C(1) and its proviso have to be read together in a harmonious manner. While 9 | P a g e interpreting section 153C, we have already held that for initiating valid jurisdiction u/s 153C, even if the AO of the person searched and the AO of such other person is the same, he has to first record the satisfaction in the file of the person searched and thereafter, such note alongwith the seized document/books of account is to be placed in the file of such other person. The date on which this exercise is done would be considered as the date of receiving the books of account or document by the AO having jurisdiction over such other person. Though while examining the facts of the assessee's case we have arrived at the conclusion that no such exercise has been properly carried out and, therefore, initiation of proceedings u/s 153C itself is invalid, however, since both the parties have argued the issue of period of limitation also, we deem it proper to adjudicate the same. Since in this case satisfaction is recorded on 21st June, 2010 and notice u/s 153C is also issued on the same date, then only conclusion that can be drawn is that the AO of such other person has taken over the possession of seized document on 21st June, 2010. Accordingly, as per section 153(1), the AO can issue the notice for the previous year in which search is conducted (for the purpose of Section 153C the document is handed over) and six assessment years preceding such assessment year. Now, in this case, the previous year in which the document is handed over is 1st April, 2010 to 31st March, 2011. The assessment year would be A.Y. 2011-12. Six preceding previous years and relevant assessment year would be as under: 10 | P a g e Previous Year Assessment Year 1.4.2009 to 31.3.2010 2010-11 1.4.2008 to 31.3.2009 2009-10 1.4.2007 to 31.3.2008 2008-09 1.4.2006 to 31.3.2007 2007-08 1.4.2005 to 31.3.2006 2006-07 1.4.2004 to 31.3.2005 2005-06 22. The Assessing Officer has issued notice u/s 153C for A.Y. 2004-05 which is clearly barred by limitation. Therefore, issue of notice u/s 153C issued by the Revenue cannot be sustained on both the above counts, i.e., it is legally not valid as conditions laid down u/s 153C has not been fulfilled and it is barred by limitation. In view of the above, we quash the notice issued u/s 153C and consequently, the assessment completed in pursuance to such notice, is also quashed. 23. Since we have quashed the assessment order itself, the additions challenged by the assessee by way of other grounds of appeal do not survive, and, therefore, do not require any adjudication.\" 16. We thus, find that the issue raised in the additional ground has been answered in favour of the assessee, by the Coordinate Delhi Bench of the Tribunal in the case of DSL Properties (supra). 17. So far as decision of Hon'ble Delhi High Court in the case of SSP Aviation Ltd. vs. DCIT (supra) relied upon by the Id. CIT(DR) is concerned, we find that it is not helpful to the revenue as in that case also in para no. 14 of the judgment it has been held as under: 14. \"Now there can be a situation when during the search conducted on one person u/s 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the AO has to first be satisfied u/s 153C, 11 | P a g e which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the AO having jurisdiction over the other person. Thereafter, the AO having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the manner contemplated by the provisions of section 153A. Now a question may arise as to the applicability of the second proviso to section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search u/s 132 or the requisition u/s 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the AO having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.\" 18. In view of the above finding, the assessment framed u/s 143(3) of the Act for the A.Y. 2009-10 in the present case is not valid. Respectfully following the above cited decisions on an identical issue, the additional ground no. 4 in the present case is decided in favour of the assessee and in the result the assessment order is quashed as void. 19. Since in the above finding on the issue raised in Additional ground no. 4 we have quashed the assessment order itself, the additions questioned by the assessee by way of other grounds of the appeal do not survive and, therefore, do not require any adjudication. 20. In the result, the appeal of the assessee is allowed.” 12 | P a g e 9. Therefore, in view of the above decision, the date of recording of the satisfaction will be the deemed date for the possession of the seized documents, which is 30.06.2022 in the present case and the date of search and six years period would be reckoned from this date i.e. 30.06.2022. Therefore, there is merit in the submission of the assessee 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 the six assessment years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act will be AY 2018-19 to 2022-23. Therefore, respectfully following the decision of the cited case, it is held that in the present case, 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 as done by the AO in this case. No other contrary facts or decision was brought on record by the Ld. DR Therefore, it is held that the assessment order dated 29.12.2022 passed u/s 143(3) of the Act by the issuance of notice u/s 143(2) of the Act dated 30.06.2022 is bad in law and hence the notice u/s 143(2) of the Act, dated 30.06.2022 and the consequent assessment order dated 29.12.2022 passed u/s 143(3) of the Act are hereby quashed. The additional grounds filed by the assessee are allowed.” 8. In the background of the aforesaid discussions and respectfully following the precedent, as aforesaid, the assessment order passed in this case dated 31.12.2016 is bad in law in as much as no notice u/s. 153C has been issued, hence, the said assessment order deserve to be quashed and accordingly, the same is quashed. Accordingly, the legal grounds raised by the assessee are allowed in the aforesaid manner. 13 | P a g e 9. Since we have allowed the legal grounds by quashing the assessment order, as aforesaid, the other remaining grounds have become academic, therefore, need not be adjudicated. 10. In the result, the appeal of the assessee is allowed. Order pronounced on 25/04/2025. Sd/- (SUDHIR KUMAR) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SR Bhatnagar Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "