The Delhi Income Tax Appellate Tribunal (ITAT) has made a significant ruling regarding the jurisdiction of assessing officers under Section 153C of the Income Tax Act, 1961. The tribunal emphasised that assessing officers cannot assume or extend their jurisdiction to assessment years that fall outside the specified statutory block defined by this provision. Section 153C is particularly focused on the assessment of income related to individuals other than the person who is subject to a search.
This provision allows for the assessment of income if materials seized during the search are determined to be connected to these other individuals. The tribunal’s decision underscores the importance of adhering to the defined parameters of this provision when conducting assessments.
A Bench, Accountant Member S. Rifaur Rahman and Judicial Member Sunil Kumar Singh, carried the orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in favour of Royal Sales Private Limited and dismissed the Revenue’s appeals for assessment years (AYs) 2010-11 and 2011-12. The Tribunal stated that:
“We observe that the assessment years 2010-11 and 2011-12 under consideration clearly fall outside the scope of application of section 153C of the Act, for the reason that the date of search for the unsearched parties are the date on which the documents were handed over to the Assessing Officer of such other person or from the date on which the satisfaction was recorded by the Assessing Officer of the other person.”
The dispute originated from search proceedings conducted against the Alankrit Group on October 18, 2019. Although the search took place in 2019, the Assessing Officer for the searched individual only recorded satisfaction regarding the findings on June 14, 2022. Following this, the relevant material was transferred to the Assessing Officer responsible for Royal Sales. This Assessing Officer recorded his satisfaction on June 30, 2022, and subsequently initiated proceedings against the company u/s 153C.
Royal Sales said that the revised Section 153C, especially its first proviso, regulated the computation of the block of assessment years applicable to it. The applicable date for deciding the block was the date on which the seized material was transferred to the assessing officer having jurisdiction over the non-searched person or the date on which such assessing officer recorded satisfaction.
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Before the Tribunal, the revenue contested the orders of CIT(A). It questioned the CIT(A)’s reliance on the Delhi High Court’s decision in PCIT v. Ojjus Medicare Pvt. Ltd., claiming that the Revenue had contested that decision before the Apex Court.
The argument presented indicated that the decisions cited by the CIT(A), including CIT v. Jasjit Singh and CIT v. RRJ Securities Ltd., were based on searches conducted before April 1, 2017, and therefore did not apply to the current case.
The Tribunal dismissed the Revenue’s arguments and instead relied on the legal principles established by the courts concerning the appropriate block of assessment years for a non-searched person u/s 153C.
It placed reliance on the decision of the Apex Court in Jasjit Singh, which confirmed that, in the matter of a non-searched person, the determination of the block period is associated with the date on which the seized material comes into the possession of the Assessing Officer having jurisdiction over that person. The Bench followed the ruling of the Delhi High Court in Ojjus Medicare, which considered the operation of the first proviso to Section 153C.
Based on these principles, it was determined that the assessment years 2010-11 and 2011-12 did not fall within the allowable range of assessment years specified in Section 153C. As a result, it was concluded that the assessments exceeded the time limit established by this provision, making the jurisdiction claimed by the Assessing Officer invalid.
| Case Title | ACIT vs. Royal Sales Private Limited |
| Case No. | ITA No.2401/DEL/2026 |
| For Petitioner | Shri Pratap Gupta, CA |
| For Respondent | Shri Vikram Singh Sharma, CIT DR |
| Delhi ITAT | Read Order |
