Section 153C Reassessments Beyond Six-Year Limit Held Invalid; ITAT Quashes Rs. 1.15 Crore Addition
The tribunal held the Assessing Officer’s section 153C reassessments invalid on the grounds that the AO wrongly extended assessments beyond six years, relying on an improper satisfaction note, leading to the quashing of the Rs. 1.15 crore addition.
Zenith Portfolio and Insurance Advisors Private Limited has filed the present appeals in the ITAT Delhi, challenging a common order dated August 16, 2023, passed by the CIT(A) Delhi, arising out of an assessment order dated March 31, 2023, passed by the Assessing Officer, ACIT, Central Circle-3, Delhi. All three appeals are based on a common issue, hence heard simultaneously by the tribunal. The appeals are related to the assessment years 2013-14 to 2015-16.
The assessee company had filed its income tax return (ITR) for the assessment year 2013-14, declaring the total income at Rs. 5,01,890. The AO started proceedings in the case of the assessee under section 153C of the Income Tax Act, 1961, following a search operation in the Dinesh Tyagi group in 2018, where documents allegedly linked to the company were seized from Ram Avatar Agarwal’s residence.
In conclusion, the AO began proceedings under section 153C against the assessee and declared the total income of the assessee at Rs. 1,20,90,390, making an addition of Rs. 1,15,88,500 on grounds of alleged cash payment made against the purchase of properties.
The company challenged the assessments’ validity, arguing they fell outside the six-year limit from when documents reached their tax officer in 2021, making 2013-14 to 2015-16 too old. To support this argument, the assessee cited an earlier ruling of the Delhi High Court in the case titled Pr. CIT vs. Ojjus Medicare (2024).
When the tribunal analysed the facts of the case, it endorsed the arguments served by the assessee, noting the “search year” for the company was 2022-23, so only 2017-18 to 2022-23 qualified. The AO’s 2021 satisfaction note also wrongly used the 2018 group search date and lacked specifics on incriminating materials, year-wise links, or income amounts.
The Tribunal referred to earlier decisions in the assessee’s case and other judgments, noting that the satisfaction note was invalid and did not comply with legal requirements. As a result, the reassessments for AYs 2013-14 to 2015-16 under section 153C were quashed. Since the assessments were cancelled, other grounds raised by the assessee were left undecided. Accordingly, the tribunal partly allowed the appeals, effectively cancelling the reassessments for all three years.
Citation: Zenith Portfolio and Insurance Advisors Private Limited Vs DCIT (ITAT Delhi); ITA Nos. 2506, 2507 & 2508/Del/2023; 12/01/2026; 2013-14 to 2015-16
