Section 153C proceedings quashed as inordinate delay in recording satisfaction note barred action by limitation.

ORDER

S. Rifaurrahman, Accountant Member. – These appeals are filed by the assessee against the order passed by the ld. Commissioner of Income-tax (Appeals)-30, New Delhi dated 15.09.2025for the Assessment Years 2016-17 and 2017-18.

2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee’s appeal being ITA No.7276/Del/2025 for AY 2016-17 as lead case to adjudicate the issues under consideration.

3. At the time of herring, ld. AR of the assessee submitted that he is pressing only Ground No.4 which reads as under :-

“That the proceedings initiated u/s 153C of I.T. Act, 1961 on 22.12.2020 are barred by limitation on the basis of decision of Supreme Court in the case of CIT-III v. M/s. Calcutta Knitwears, Ludhiana 2014 (6) SCC 444 and CBDT Circular no.24/2015 DATED 31.12.2015.”

4. At the time of hearing, ld. AR submitted the facts and his submissions which are given below :-

5. Further, the ld. AR of the assessee submitted list of dates and events which are reproduced below :-

6. On the other hand, ld. DR of the Revenue heavily relied on the findings in the cases of Hon’ble Supreme Court in the case of CIT v. Jasjit Singh 458 ITR 437 (SC) and Hon’ble Delhi High Court in the case of PCIT v. Ojjus Medicare (P.) Ltd. Ojjus and Jasjit Singh and finally relied on the orders of lower authorities.

7. Considered the rival submissions and material placed on record. We observed that the search was conducted in the case of Smt. Gouri Madan and Sh. Naveen Madan on 22.10.2016, the searched persons and the relevant satisfaction note was prepared only on 07.12.2020, which is after 38 months of issue of notices in the above cases. It is also fact on record that the above satisfaction note was recorded after 24 months of completion of assessment u/s 153A in the above searched persons. The issue raised by the assessee before us is whether the above satisfaction note recorded is beyond jurisdiction or not. After considering the detailed submissions on this issue, we observed that the issue raised by the assessee under consideration is exactly similar to the facts in the case of Rajdeo Singh & Shishir v. DCIT [IT Appeal No. 8205 (DEL) of 2025, dated 29-4-2025] in which Accountant member is the author of the above decision. The relevant findings are given below:

9. Considered the rival submissions and material placed on record. The Ld. AR for the assessee have submitted before us that the assessment orders so framed u/s 153C of the Act dated 13.03.2024 are liable to be quashed. The relevant arguments so made by the Ld. AR for the assessee are summarized hereunder:

10. Having considered to the facts and the legal position involved in the matter coupled with the submissions made by both the parties, we are in complete agreement with the arguments so raised by the assessee and we find that the contentions of the Ld. DR are devoid of any merit. The contention of the Ld. DR that the grounds which have not been raised before the Ld. CIT(A) cannot be raised before the Hon’ble Tribunal has no legs to stand in the eyes of law as the law with regard to the admission of additional grounds is no longer res integra rather well-settled by the Hon’ble Supreme Court of India in the case of NTPC v. CIT   (SC) and the said settled position of law has been unanimously followed by various judicial forums consistently. We are vested with the power to adjudicate any issue which goes to the root of the matter and it is bound to decide the issues raised before us as per the law. In the instant case, the additional ground so raised by the assessee that the notice u/s 153C of the Act is time barred goes to the root of the matter and keeping in view the facts, the said additional ground deserves to be admitted. Hence, admitted for adjudication.

11. We are of the view that the instant appeal before us are squarely covered by the ratio of the judgement delivered by the Hon’ble Jurisdictional High Court of Delhi in the case of Bharat Bhushan Jain (supra) since, there is an inordinate delay of about 15 months in issuance of notices u/s 153C of the Act on 12.12.2022 from the date of framing of assessment in the case of the person searched, namely, Mr. Ram Avtar Agarwal on 28.09.2021 and the said delay is not covered by the relaxations provided in the limitation period keeping in view the COVID-19 Pandemic as rightly argued by the Ld. AR for the assessee as mentioned at Paras 11(a) to 11(c) above that if the original limitation for framing of assessment u/s 153A of the Act in case of the person searched, namely, Sh. Ram Avtar Agarwal is considered as prescribed under Second Proviso to Clause (b) to Sec. 153B of the Act (as the date of search was 16.05.2018), i.e., 18 months from the end of the financial year in which the last of the authorization for search was executed, i.e., 30.09.2020 then the delay in issuance of notices u/s 153C of the Act in case of Sh. Rajdeo Singh and Sh. Shishir, would have been more than two years & two months’ time, however, due to relaxations provided by the CBDT on account of COVID-19 Pandemic, that inordinate delay of more than two years & two months’ time has fallen down to 15 months after exhausting the benefit of COVID-19 Pandemic relaxations as last extended vide CBDT’s Press Release dated 25th June, 2021 till 30.09.2021. Therefore, even after considering and allowing the benefit of COVID-19 Pandemic to the Revenue as pleaded by the Ld. DR, there is an inordinate delay of about 15 months in issuance of notices u/s 153C of the Act dated 12.12.2022 from the date of framing of assessment in case of person searched, namely, Mr. Ram Avtar Agarwal on 28.09.2021 and thus, we find merit in the arguments and submissions of the assessee.

12. In view of the above, we are bound by the binding judgement of the Hon’ble Jurisdictional High Court of Delhi in the case of Bharat Bhushan Jain (supra) keeping in view the principles of judicial discipline and accordingly, following the view taken by the Hon’ble Jurisdictional High Court of Delhi in the case of Bharat Bhushan Jain (supra), since in the instant two appeals before us in case of Sh. Rajdeo Singh in ITA No. 8205/DEL/2025 and in case of Sh. Shishir in ITA No. 156/DEL/2026, the notices so issued u/s. 153C of the Act both dated 12.12.2022 after a delay of 15 months are barred by limitation and consequently, the assessment orders passed by the Assessing Officer u/s 153C of the Act both dated 13.03.2024 are invalid, void ab initio and accordingly, are hereby quashed being non-est in the eyes of law and therefore, the additional ground so raised by the assessees are allowed.”

8. Respectfully following the above decision, we are inclined to decide the above issue in favour of the assessee. In the result, relevant grounds raised by the assessee are allowed. The other grounds and issues raised by the assessee are kept open.

9. The facts on the other appeal is also similar to the fact in ITA No. 7276/Del/2025, the findings are applicable mutatis mutandis, therefore, appeal filed by the assessee vide ITA No. 7277/Del/2025 is allowed.

10. In the result, both the appeals filed by the assessee are allowed.