The Income Tax Appellate Tribunal, Delhi, has delivered a pivotal ruling clarifying the jurisdictional threshold for assessments under Section 153C of the Income Tax Act, 1961, where searches are conducted after 1 April 2021. The decision invalidates assessments initiated against non-searched persons when the satisfaction note is recorded post the statutory cutoff, reinforcing the legislative intent behind the 2021 amendment.
Background & Facts
The Dispute
The appeals concern seven assessment years (2014-15 to 2020-21) of the assessee, Shri Rakesh Goel, who was not the direct subject of a search and seizure operation conducted on the Alankit Group on 18.10.2019. The Assessing Officer (AO) initiated proceedings against the assessee under Section 153C, relying on documents seized during that search. The AO recorded a satisfaction note on 08.08.2022, triggering the issuance of a notice under Section 153C and subsequent assessment orders. The assessee challenged the jurisdiction of the AO, arguing that the proceedings were barred by the amendment to Section 153C effective from 01.04.2021.
Key Facts
- Search and seizure operation conducted on Alankit Group on 18.10.2019
- Satisfaction note recorded by the AO against the assessee on 08.08.2022
- No record available of the date when seized documents were physically handed over to the AO having jurisdiction over the assessee
- Assessment orders issued under Section 153C for A.Y. 2014-15 to 2020-21
- CIT(A) upheld the assessments, rejecting jurisdictional objections
- The assessee filed seven appeals before ITAT Delhi, challenging both jurisdiction and merits
- The assessee relied on Ojjus Medicare Pvt. Ltd. v. Pr. CIT [2024] 465 ITR 101 (Delhi) to argue that the satisfaction note date governs in absence of handover records
Procedural History
- 18.10.2019: Search conducted on Alankit Group
- 08.08.2022: Satisfaction note recorded by AO against the assessee
- 28.01.2026: CIT(A) passed order upholding assessments under Section 153C
- 07.07.2026: Hearing before ITAT Delhi
- 10.07.2026: Coordinate Bench of ITAT Delhi delivered order in MLR Foods Pvt. Ltd. (ITA Nos. 1796-1799/2026), applying the Ojjus Medicare principle
- 15.07.2026: Judgment pronounced in the present batch
The Parties' Positions
For the Assessee
The assessee contended that:
- The amendment to Section 153C by the Finance Act, 2021, effective 01.04.2021, prohibits any assessment under Section 153C if the date of search (as defined for non-searched persons) falls after that date
- In the absence of any record of the date when seized documents were received by the AO, the date of the satisfaction note must be treated as the operative date under the first proviso to Section 153C(1)
- The satisfaction note was recorded on 08.08.2022, which is clearly after 01.04.2021, rendering the proceedings void-ab-initio
- The decision in Ojjus Medicare and subsequent coordinate bench rulings in Smt. Geetanjali Bhayana and Lekh Raj support this interpretation
For the Revenue
The Revenue contended that:
- The search occurred on 18.10.2019, and the proceedings were initiated within the statutory period
- The CIT(A) had correctly applied the law and confirmed the additions on merits
- The assessee failed to explain the source of unexplained money and expenditure under Sections 69A and 69C
- The jurisdictional challenge was a procedural technicality and should not override the substantive findings
Relief Sought
The assessee sought:
- Quashing of notices and assessment orders issued under Section 153C for all seven assessment years
- Setting aside of the CIT(A) order dated 28.01.2026
- Cancellation of all additions made under Sections 69A and 69C, as they were predicated on an invalid jurisdictional foundation
The Legal Issue
The central question was whether, for the purpose of determining jurisdiction under Section 153C of the Income Tax Act, the date of the satisfaction note recorded by the Assessing Officer against a non-searched person constitutes the operative "date of search" when the actual date of receipt of seized documents by the AO is not available in the record, and whether proceedings initiated after 01.04.2021 on such basis are void-ab-initio.
Arguments Presented
For the Assessee
The assessee relied on the judgment in Ojjus Medicare Pvt. Ltd. v. Pr. CIT [2024] 465 ITR 101 (Delhi), which held that in the absence of evidence regarding the date of handover of seized material to the AO of the non-searched person, the date of recording of the satisfaction note under Section 153C must be treated as the date of receipt of such material. The assessee further cited two coordinate bench decisions of ITAT Delhi - Smt. Geetanjali Bhayana v. DCIT [2026] 183 taxmann.com 95 and Lekh Raj v. DCIT - both of which applied the same principle. The argument was grounded in the plain language of the first proviso to Section 153C(1), which states that the date of search for a non-searched person is the date on which the seized material is received by the AO having jurisdiction over such person. Where that date is not ascertainable, the satisfaction note date becomes the only available and legally recognized proxy.
For the Respondent
The Revenue argued that the search occurred in 2019, and the assessment proceedings were initiated within the statutory time limit. It contended that the satisfaction note was merely an internal administrative step and should not override the actual date of the search. The Revenue also emphasized that the additions were substantiated by evidence of unexplained money and expenditure, and that jurisdictional objections were being raised as a tactic to avoid substantive tax liability. However, it did not dispute the absence of records regarding the handover date of seized documents to the assessee’s AO.
The Court's Analysis
The Tribunal observed that the Finance Act, 2021, introduced a critical amendment to Section 153C by inserting sub-section (3), which explicitly bars any assessment under Section 153C if the date of search falls after 01.04.2021. The Tribunal noted that the legislature’s intent was to curtail the use of Section 153C for retrospective assessments based on searches conducted after the specified cutoff.
The Tribunal then turned to the interpretation of the first proviso to Section 153C(1), which defines the date of search for a non-searched person as the date on which the seized material is received by the AO having jurisdiction over such person. The Tribunal held that where, as in the present case, no record exists of the actual handover date, the date of the satisfaction note becomes the only legally relevant date for determining jurisdiction.
"In the case of a person other than the searched person, the relevant date would be the date on which relevant documents or seized material is received by the AO of the person other than the searched person... In absence of specific date of handing over the seized material to AO of the assessee, the date of issue of order under section 127 has been wrongly assumed... the date of recording of satisfaction i.c., 11-10-2022 shall be considered as the date of receiving seized material by the AO of the assessee."
The Tribunal affirmed that the Ojjus Medicare precedent was binding on the jurisdictional High Court and had been consistently followed by coordinate benches. It further held that the Revenue’s failure to produce evidence of the handover date rendered the satisfaction note date the only viable benchmark. Since the satisfaction note was recorded on 08.08.2022 - well after 01.04.2021 - the proceedings under Section 153C were void-ab-initio.
The Tribunal explicitly rejected the Revenue’s attempt to separate jurisdictional validity from substantive merits, holding that an assessment initiated without jurisdiction cannot be validated by the correctness of the additions.
The Verdict
The assessee succeeded on all grounds. The Tribunal allowed all seven appeals, quashed the notices and assessment orders issued under Section 153C for A.Y. 2014-15 to 2020-21, set aside the CIT(A) order dated 28.01.2026, and directed that all additions made under Sections 69A and 69C be deleted. The proceedings were declared void-ab-initio due to lack of jurisdiction.
What This Means For Similar Cases
Jurisdictional Date Is Determinative
- Practitioners must now treat the date of the satisfaction note as the controlling date for Section 153C proceedings against non-searched persons if the handover date of seized documents is not documented
- Any notice issued after 01.04.2021 based on such a satisfaction note is void and cannot be cured by subsequent evidence
- Revenue authorities must maintain and produce records of document handover dates to avoid jurisdictional challenges
Procedural Compliance Overrides Substantive Findings
- Additions under Sections 69A and 69C cannot be sustained if the underlying assessment under Section 153C is invalid
- Courts and Tribunals will not validate assessments on merit if jurisdiction is defective
- Taxpayers may now successfully challenge assessments on jurisdictional grounds even where unexplained income appears substantial
Precedent Binding Across Benches
- The Ojjus Medicare principle is now firmly established as binding precedent in Delhi jurisdiction
- Coordinate benches of ITAT must follow this interpretation unless overruled by a larger bench or higher court
- Practitioners should cite Ojjus Medicare, Bhayana, and Lekh Raj in all Section 153C jurisdictional challenges post-2021
