Delhi HC: Section 153C of IT Act Requires AO’s Satisfaction, Not Tax Portal Uploads

It was carried by the Delhi High Court that the provision u/s 153C of the Income Tax Act, 1961 for the Assessing officer of a searched person to record ‘satisfaction’ and handover documents for undisclosed income of another person cannot be replaced by just uploading such information on the insight portal of the department.

It was cited by the provision that where the Assessing Officer(AO) of the person searched gets fulfilled with the records of undisclosed assets pertinent to the other person, the AO may hand over the materials to the assessing officer of that other person.

The assessing officer of that other individual is been authorized to proceed against the other person to evade tax on these income that has not been revealed.

It was noted by a division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela

“Uploading of information by the investigation wing of the Income Tax department would not be a substitute for the recording of a satisfaction note by the AO of a searched person and handing over the assets, books of accounts or other material to the AO of the person other than the searched person for initiation of proceedings under Section 153C of the Act.”

Builders ATS Township petition has been heard by the bench contesting the initiation of reassessment proceedings on the foundation of being restricted by limitation.

Revenue counsel claimed that the date of placing the material on the insight portal was needed to regard the search date for the objectives of calculating limitation under section 153C of the Act.

The court said that the claim of the revenue is opposite to its decision in Dinesh Jindal v. Assistant Commissioner of Income Tax, Central Circle 20, Delhi & Others (2024).

It was carried that in the matter of a search after 31.03.2021 post legislation of Finance Act 2021, there shall be no actual handover of the material to the jurisdictional assessing officer, and hence it shall not be allowable to revert to section 153A of the Act for the objectives of calculating the period of limitation from the search date.

The High Court expressed “prima facie, this reasoning would also hold good in case of assuming the date of placing information on insight portal as the date of search for the proviso to Section 153C of the Act.”

For the case, the court said that no reference is there of any asset depicting the income escaping the assessment. Therefore the reopening of the assessments for 10 years as mentioned u/s 153A of the Act may not be applicable.

As per that, the appeal was permitted.