The Income Tax Appellate Tribunal, Delhi Bench, has held that assessment proceedings under Section 153C of the Income Tax Act, 1961, initiated against a non-searched person based on a satisfaction note recorded after 1 April 2021, are without jurisdiction and must be quashed. The Tribunal ruled that the amended Section 153C(3), inserted by the Finance Act, 2021 with effect from 1 April 2021, expressly excludes searches initiated on or after that date from the scope of Section 153C. Consequently, the Assessing Officer was required to invoke the reassessment provisions under Section 147 read with Section 148.
Background & Facts
The Dispute
The appellant, Ajay Goenka, a resident of Shakti Nagar, Delhi (PAN: AAOPG0965E), filed four appeals against orders passed by the Commissioner of Income-tax (Appeals)-25, New Delhi, dated 20.01.2026 for Assessment Years 2017-18 to 2020-21. The appeals challenged assessment orders framed under Section 153C of the Act, which were based on material allegedly found during a search conducted on the Alankrit Group.
Key Facts
- The original search was conducted on the Alankrit Group on 18.10.2019 under Section 132 of the Act.
- The Assessing Officer (AO) having jurisdiction over the appellant recorded a satisfaction note under Section 153C on 12.05.2023.
- Based on this satisfaction, the AO issued notice under Section 153C and completed the assessment for AYs 2017-18 to 2020-21.
- The appellant contended that since the satisfaction was recorded after 01.04.2021, the amended Section 153C(3) applied, rendering the Section 153C proceedings non est.
- The facts were identical across all four assessment years under appeal.
Procedural History
- 18.10.2019: Search conducted on Alankrit Group under Section 132.
- 12.05.2023: AO recorded satisfaction note under Section 153C for the appellant.
- Subsequent: Notice issued and assessment completed under Section 153C r.w.s. 143(3) for AYs 2017-18 to 2020-21.
- 20.01.2026: CIT(A)-25, New Delhi, passed appellate orders upholding the assessments.
- Appeals filed: ITA Nos. 1992-1995/Del/2026 filed before ITAT, Delhi Bench.
- 06.07.2026: Hearing before the Tribunal.
- 03.09.2026: Order pronounced.
Relief Sought
The appellant sought quashing of the assessment orders passed under Section 153C on the ground that the proceedings were without jurisdiction in view of Section 153C(3) as amended by the Finance Act, 2021, and that the AO ought to have proceeded under Section 147 read with Section 148.
The Legal Issue
The central question was whether assessment proceedings under Section 153C can be validly initiated against a non-searched person when the satisfaction note is recorded by the Assessing Officer after 1 April 2021, given the insertion of Section 153C(3) by the Finance Act, 2021 with effect from that date.
Arguments Presented
For the Appellant
The learned Authorised Representative submitted that the original search on the Alankrit Group was conducted on 18.10.2019, but the satisfaction note in the appellant's case was recorded only on 12.05.2023. Relying on the Delhi High Court decision in PCIT vs. Ojjus Medicare (P.) Ltd. (2024) 161 taxmann.com 160 (Delhi), it was argued that for a non-searched person, the "date of search" is the date on which seized material is received by the AO or the date of recording satisfaction. Since the satisfaction was recorded on 12.05.2023, the "date of search" for the appellant falls after 01.04.2021. Section 153C(3), inserted w.e.f. 01.04.2021, provides that nothing in Section 153C shall apply to a search initiated on or after 01.04.2021. Therefore, the assessment under Section 153C is without jurisdiction and the AO should have proceeded under Section 147 r.w.s. 148. The appellant also placed reliance on coordinate Bench decisions in Lekh Raj vs. DCIT (2026) 187 taxmann.com 1104 (Delhi-Trib.) and M/s. Shivdham Buildtech Pvt. Ltd. (ITA No. 111/Del/2026).
For the Respondent
The learned Departmental Representative relied on the orders of the authorities below and contended that the assessment under Section 153C was validly initiated based on the search conducted on 18.10.2019.
The Court's Analysis
The Tribunal examined the first proviso to Section 153C(1), which defines the "date of search" for a person other than the searched person as the date on which books of account, documents, or assets seized are received by the AO of such other person. In the absence of a specific date of handing over of seized material, the Tribunal followed the Delhi High Court's ruling in PCIT vs. Ojjus Medicare (P.) Ltd. that the date of issuance of the satisfaction note by the AO under Section 153C would be the pertinent date.
"The Hon'ble Jurisdictional High Court in the case of PCIT vs. Ojjus Medicare(P.) Ltd (supra) has held that where the date of handing over of documents is not available, date of issuance of satisfaction note by the Assessing Officer u/s 153C of the Act would be pertinent for the purpose of first proviso to section 153C of the Act."
Since the satisfaction note was recorded on 12.05.2023, this date constitutes the "date of search" for the appellant. The Tribunal then analysed Section 153C(3), inserted by the Finance Act, 2021 with effect from 01.04.2021, which states:
"(3) Nothing contained in this section shall apply in relation to a search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A on or after the 1st day of April, 2021."
The Tribunal held that by virtue of this amendment, no assessment under Section 153C can be made in the case of a non-searched person if the date of search falls on or after 01.04.2021. Any notice issued for making assessment under Section 153C after that date would be non est. The proper recourse for the Revenue is to initiate reassessment proceedings under Section 147 read with Section 148. The Tribunal respectfully followed the coordinate Bench decisions in Lekh Raj and Shivdham Buildtech, which had reached identical conclusions on materially similar facts.
The Verdict
The appellant succeeded on Ground No. 1. The Tribunal allowed all four appeals (ITA Nos. 1992-1995/Del/2026 for AYs 2017-18 to 2020-21), set aside the impugned orders of the CIT(A)-25 dated 20.01.2026, and quashed the assessment orders passed under Section 153C. The Tribunal held that the reassessment proceedings, if any, must be adopted under Section 147 read with Section 148 and the relevant provisions of Section 153C(3). The remaining grounds of appeal were kept open for adjudication. The order was pronounced in open court on 03.09.2026.
What This Means For Similar Cases
Satisfaction Date Determines Jurisdiction Under Section 153C
For non-searched persons, the "date of search" under the first proviso to Section 153C(1) is the date of receipt of seized material by the AO or, where that date is not ascertainable, the date of recording of satisfaction. Practitioners must verify the satisfaction note date to determine whether Section 153C(3) applies.
- If satisfaction is recorded on or after 01.04.2021, Section 153C proceedings are non est regardless of when the original search was conducted.
- The Revenue must then proceed under Section 147 r.w.s. 148, subject to the conditions and limitations applicable to reassessment.
Coordinate Bench Precedents Provide Strong Persuasive Value
The Tribunal's reliance on Lekh Raj and Shivdham Buildtech (both involving the Alankrit Group search and satisfaction dates post-01.04.2021) demonstrates that coordinate Bench decisions on identical factual matrices carry significant persuasive weight. Practitioners should cite these decisions when challenging Section 153C assessments based on post-amendment satisfaction notes.
Procedural Remedy Remains Available to Revenue
The judgment does not bar the Revenue from reassessing the income; it only mandates the correct procedural route. Lawyers advising clients should anticipate notices under Section 148 and be prepared to challenge them on merits, limitation, or procedural grounds specific to the reassessment framework.
