Income Tax Act Doesn't Contemplate Hiatus Between Handing Over & Receipt Of Documents By AO Of Non-Searched Entity: Delhi High Court

For context, Section 153C allows the Revenue department to proceed against a party other than the person who is being searched, if incriminating articles belonging to the other person are found during the search.

In terms of proviso to Section 153C, the date of search for non-searched entity is required to be construed in reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the non-searched entity.

It is in this context, that the division bench of Justices Vibhu Bakhru and Tejas Karia observed,

“The main body of Section 153C(1) of the Act and the proviso do not contemplate a hiatus between the handing over of the documents by the AO having jurisdiction over such person and receipt of the same by the AO having jurisdiction over person other than the searched person.”

The observation was made while hearing a challenge to a Section 153C proceedings initiated against the Petitioner-assessee, in respect of Assessment Year 2015-16.

As per facts, search and seizure operations were conducted in respect of persons belonging to the Alankit Group on 18.10.2019. Thereafter, on 19.12.2023, the notice under Section 153C of the Act was issued to the Petitioner.

The AO of the searched person had recorded a satisfaction note on 24.06.2022 to the effect that incriminating material relating to Petitioner were found during the course of search. The satisfaction note also recorded that the documents in question were handed over to the AO exercising jurisdiction in the case of the assessee.

It was the Petitioner's case however that no proceedings under Section 153C can be continued pursuant to the impugned notice in respect of AY 2015-16 because an assessment order cannot be passed pursuant to the impugned notice as the time limit for framing an assessment order has since lapsed.

In terms of Section 153B(1) of the Act, search executed in financial year commencing 01.04.2019, the period of limitation for assessment under Section 153C is twelve months from the end of financial year during which the last authorisation to search under section 132 was executed (in this case, 12 months from end of FY 2023).

Counsel appearing for the Revenue sought to contend that the material and documents were received by the AO exercising jurisdiction in the case of the assessee on 09.06.2023 and, therefore, the time for passing the assessment order had not elapsed.

Disagreeing, the High Court observed,

“In terms of proviso to Section 153C of the Act, the date of receiving of the documents or material by the AO having jurisdiction over the other person [the person other than the one searched] from the AO having jurisdiction over the searched person is required to be considered as the date of initiation of search under Section 132 of the Act or the date of requisition under Section 132A of the Act. In the present case, the said date is required to be considered as 24.06.2022.

Thus, the period available for making an assessment pursuant to the impugned notice dated 19.12.2023 had lapsed on the expiry of twelve months from the end of the financial year in which the documents were handed over, that is, on 31.03.2024, the twelve months from the end of the FY 2022-23. 13.”

Since the present petition was filed on 22.03.2025, the Court held that the time for passing the assessment order had expired on the date on which the present petition was filed.

As such, it allowed the petition.

Appearance: Mr Sumit Lalchandani, Ms Ananya Kapoor, Mr Shivam Yadav, Mr Aanjul Dalela, Advocates for Petitioner; Mr Gaurav Gupta, SSC, Mr Shivendra Singh, Mr Yojit Pareek, JSCs and Ms Prakriti Rastogi, Advocate for Respondents

Case title: Carol Infrastructure Private Limited v. Assistant Commissioner Of Income Tax, Central Circle 27, Delhi & Anr.

Citation: 2025 LiveLaw (Del) 605

Case no.: W.P.(C) 3927/2025

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