TaxTMI 
TaxTMI 
2026 (6) TMI 146
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....h M/s M K Traders and Rs. 1,77,11,209/- with M/s Luxmi Agencies during the year under consideration. On the basis of the information, order u/s 148A(d) was passed in the case of the assessee on 05.04.2022 with the prior approval of PCIT-07, Delhi wherein it was held that transaction amounting to Rs. 2,83,24,949/- has escaped assessment and it is a fit case for issuance of notice u/s 148 of the Income Tax Act, 1961. Accordingly, the case of the assessee was reopened and a notice u/s 148 was issued to the assessee on 05.04.2022. 2.2 A search and seizure proceedings u/s 132 of the Act was carried out on the Alankit Group, Sh. Alok K Agarwal, his son Ankit Agarwal and some of the close associates and key employees of Sh. Alok K Agarwal on 18.10.2019. During the course of search and seizure operation carried out on 18.10.2019 at the premise of Sh. Alok Agarwal, Ankit Agarwal, Alankit Limited and Alankit Assignments Limited at 3584, Third Floor, Gali no. 4, Narang Colony, Trinagar, Delhi, some incriminating documents were found from the premises which are related to the assessee. Accordingly, the case of the assessee was also opened under Section 153C and the proceedings under S....
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....s PCIT -[2026] 184 taxmann.com 745 (Mumbai- Trib.)sought for allowing Additional Ground No. 1 of the Assessee. 7. Per contra, the Ld.DR submitted that the assessee cannot challenge the legality or otherwise of original assessment proceedings in the appeal challenging the order passed u/s 263 of the Act. Therefore sought for not to admit the Additional Ground No. 1 of the assessee. Further submitted that the satisfaction note has been rightly issued by the authority in accordance with law and the legality or otherwise of the satisfaction note cannot be challenged before the tribunal. Thus, sought for dismissal of additional Ground No. 1 of the Assessee. 8. We have heard both the parties perused the material available on record. It is well settled law that the validity or otherwise of the original assessment proceedings can be challenged in the consequential revisionary proceedings u/s 263 of the act before the Tribunal. 9. The Co-ordinate Bench of the Tribunal in the case of Shailesh Asalraj Jain Vs PCIT held as under:- "6. We have heard rival submissions of the parties and perused the relevant materials on record. The objection raised by the Revenue that the valid....
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.... show cause notice issued u/s. 148A(b) of the Act or the period during which proceeding u/s. 148 is stayed by an order of injunction of any court shall be excluded. The fourth proviso to Section 149(1) of the Act provided that immediately after exclusion of period referred in third proviso, if the period of limitation available to the AO for passing an order under Section 148A(d) of the Act is less than seven days, such remaining period shall be extended to seven days and accordingly the period of limitation for issuance of notice u/s. 148 shall be deemed to have been extended. 5. Interestingly, sub section (2) to Section 149 of the Act provides that the limitation prescribed under sub section (1) of Section 149 of the Act for issuance of notice shall be subject to the provisions of Section 151 of the Act. The use of word 'shall' in sub section (2) of Section 149 of the Act makes it clear that the limitation prescribed u/s. 149 of the Act for issuance of notice u/s. 148 of the Act is subject to the timeline prescribed u's. 151 of the Act. In other words, the limitation prescribed u/s. 149(1) of the Act would not override the timeline prescribed for grant of app....
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....ant assessment year and without benefit of further extension in terms with third, fourth or fifth proviso under sub section (1) of Section 149 of the Act. 8. Therefore, keeping in view the provision contained under sub section (2) of Section 149 of the Act, which makes the limitation provided u/s. 149(1) of the Act subject to the timeline provided u/s. 151 of the Act, the limitation provided u/s. 149(1) of the Act including the provisos cannot get imported for the purpose of extending the limitation u/s. 151(i) of the Act prior to the amendment of section 151 of the Act by Finance Act, 2023. That being the case, the timeline for sanction by specified authority fixed u/s. 151 of the Act has to be scrupulously followed. 9. At this stage, it is to be noted that the Hon'ble Jurisdictional High Court in the decisions referred to by my learned brother Accountant Member in his order has specifically held that the proviso inserted to Section 151 of the Act by Finance Act, 2023, effective from 01.04.2023 will not apply prior to its effective date. Pertinently the line of argument taken by the Department in the case of Albert Joseph Rozario v. ITO (supra) was not for th....
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....sanction has also been denied. Even in the affidavit in reply, the Department is refusing to give the sanction which makes us wonder what is the national secret involved in that, that Assessee is being refused what he is rightfully entitled to receive from the Department. In the affidavit in reply, the stand taken by the Revenue is it will be made available during the re- assessment proceeding. 3. The impugned order and the impugned notice both dated 7th April 2022 state that the Authority that has accorded the sanction is the PCIT, Mumbai 5. The matter pertains to Assessment Year ("AY") 2018-19 and since the impugned order as well as the notice are issued on 7th April 2022, both have been issued beyond a period of three years. Therefore, the sanctioning authority has to be the PCCIT as provided under Section 151 (ii) of the Act. The proviso to Section 151 has been inserted only with effect from 1" April 2023 and, therefore, shall not be applicable to the matter at hand. 4. In this circumstances, as held by this Court in Siemens Financial Services Private Limited v. Deputy Commissioner of Income Tax & Ors., the sanction is invalid and consequently, the impugned or....
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....w might have been taken. In any case of the matter, the point of time from which the proviso to Section 151 of the Act would be applicable was considered by the Hon'ble Jurisdictional High Court in at least four judgments. Three of these judgments have already been referred to in the decision of my learned brother Accountant Member. Even in case of Agnello Oswin Dias v. ACIT [2014] 161 taxmann.com 16 (Bombay), the Hon'ble Jurisdictional High Court, while reiterating the view that after expiry of three years from the end of the relevant assessment year, the specified authority in terms of Section 151(ii) of the Act is PCCIT, has held that the proviso to Section 151 of the Act having been inserted w.e.f. 01.04.2023 shall not be applicable prior to 01.04.2023. Meaning thereby, the proviso will not have retrospective effect. These decisions of the Hon'ble Jurisdictional High Court, being directly on the issue, constitute binding precedents. 12. In any case of the matter, Sections 149 and 151 of the Act have been enacted for different purposes and operate in different situations. While Section 149 of the Act, prescribes limitation for issuance of notice u/s. 148 and....
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....sment order came to be passed which has been confirmed by the Ld. CIT(A). 12. It is observed that while recording the satisfaction the AO has neither bifurcated the amounts nor year-wise additions pertaining to the assessee were identified, based on the said consolidated satisfaction, the assessment has been framed for the year under consideration. 13. In an identical situation, the Co-ordinate Bench of the Tribunal in the case of SRS Panchratan Diamonds Pvt. Ltd. Vs. DCIT in ITA Nos. 218 and 219/del/2023 (dated 14/11/2025], considered the Judgments of Hon'ble Karnataka High Court in the case of Sunil Kumar Sharma reported in (2024) 159 taxmann.com 179 (Karnataka) and also the Judgment of Hon'ble Delhi high court in the case of Shaksham Commodities Vs. ITO reported in [2024] 161 taxmann.com 485 (Delhi) [dated 09/04/2024], decided the issue in favour of the Assessee therein. Wherein it is held that the consolidated satisfaction note is invalid, and the Co-ordinate Bench of the Tribunal has also distinguished the Judgment of the Hon'ble Jurisdictional High Court in case of Indian National Congress vs. DCIT reported in 463 ITR 431 (Del). The relevant observations of Co-ordinate ....
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....ovision only requires the AO to be satisfied that the material collated and handed over is likely to have an impact on the total income for the relevant AY or AYs'. While an assessment would necessarily have to be made in respect of each of the relevant AY or AYs', we find ourselves unable to read Section 153A or 153C as mandating separate Satisfaction Notes being drawn for each assessment year. Our conclusion in this respect stands fortified from the language of Section 153A(1)(a) which contemplates a notice being issued calling upon the person to furnish a return of income for each of the six AYs' or the relevant AY or AYs'. This too appears to suggest that while the notice could be composite and based on a common satisfaction note which encapsulates the incriminating material pertaining to the AYs' in question, it is only returns which must and mandatorily be filed separately. 25. Regard must be had to the indubitable fact that the Satisfaction Note merely forms the foundation for initiation of action and which would enable us to evaluate whether an opinion has been validly formed. As long as it rests on incriminating material which pertains to the A....
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.... to be made under this section only on the basis of the seized material." (v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess" in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess" to the completed assessment proceedings. (vi) In so far as the pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer. (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." ....
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....ase where the material gathered in the search is contemplated to have an adverse impact on the declarations and disclosures made by an assessee pertaining only to AYs' 2016-17 and 2017-18. What we seek to emphasise is that pending assessments for those two years could validly form subject matter of action under Section 153C and pending assessments in that respect would surely abate. However, that by itself would not be sufficient to either reopen or issue notices in respect of AYs' prior to or those falling after those two AYs' and which may otherwise fall within the maximum block period of ten years merely because the statute empowers the AO to do so. Unless the material gathered and recovered is found to have relevancy to the AY which is sought to be subjected to action under Section 153C, it would be legally impermissible for the respondents to invoke those provisions. Consequently, the AO would be bound to ascertain and identify the year to which the material recovered relates. The years which could be then subjected to action under Section 153C would have to necessarily be those in respect of which the assessment is likely to be influenced or impacted by the materi....
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....rial pertaining to FY 2009-10 [and thus relating to AY 2010-11], the AO proceeded to seek approval for initiating action under Section 153C in respect of AYs' 2010-11 up to 2020-21. 61. A reading of the aforesaid Satisfaction Notes would establish that jurisdictional AOs' appear to have proceeded on the premise that the moment incriminating material is unearthed in respect of a particular AY, they would have the jurisdiction and authority to invoke Section 153C in respect of all the assessment years which could otherwise form part of the "relevant assessment year" as defined in Section 153A. In our considered opinion, the aforesaid understanding of Section 153C is clearly erroneous and unsustainable. As explained hereinabove, the discovery of material likely to implicate the assessee and impact the assessment of total income for a particular AY is not intended to set off a chain reaction or have a waterfall effect on all AYs' which could form part of the "relevant assessment year". This, more so since none of the Satisfaction Notes record any reasons of how that material is likely to materially influence the computation of income for those AYs'. 62....
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.... the course of the assessment proceedings, under Section 153C, the AO would have to be prima facie satisfied that the documents, data or asset recovered is likely to "have a bearing on the determination of the total income". It is only once an opinion in that regard is formed that the AO would be legally justified in issuing a notice under that provision and which in turn would culminate in the abatement of pending assessments or reassessments as the case may be. 65. We would thus recognize the flow of events contemplated under Section 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may have on the total income for the six AYs' immediately preceding the AY pertaining to the year of search and the "relevant assessment year". It is only once the AO of the non-searched entity is satisfied that the material coming into its possession is likely to "have a bearing on the determination of the total income" that a notice under Section 153C would be issued. Abatement would thus be a necessary corollary of that notice. However, both....