Delhi High Court – Orders
Surender Pal Gupta vs Assistant Commissioner Of Income Tax … on 20 January, 2025
Author: Vibhu Bakhru
Bench: Tushar Rao Gedela, Vibhu Bakhru
$~54 to 56
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 645/2025
SURENDER PAL GUPTA .....Petitioner
Through: Mr. N.P. Sahni and Mr. Abhinav Jain,
Advocates
versus
ASSISTANT COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE 28 DELHI & ORS .....Respondents
Through: Mr. Gaurav Gupta, SSC with Mr.
Shivendra Singh and Mr. Yojit
Pareek, JSCs
(55)
+ W.P.(C) 647/2025
SURENDER PAL GUPTA .....Petitioner
Through: Mr. N.P. Sahni and Mr. Abhinav Jain,
Advocates
versus
ASSISTANT COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE 28 DELHI & ORS .....Respondents
Through: Mr. Gaurav Gupta, SSC with Mr.
Shivendra Singh and Mr. Yojit
Pareek, JSCs
(56)
+ W.P.(C) 648/2025 & CM APPL. 3092/2025
SURENDER PAL GUPTA .....Petitioner
Through: Mr. N.P. Sahni and Mr. Abhinav Jain,
This is a digitally signed order.
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Advocates
versus
ASSISTANT COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE 28 DELHI & ORS .....Respondents
Through: Mr. Gaurav Gupta, SSC with Mr.
Shivendra Singh and Mr. Yojit
Pareek, JSCs
CORAM:
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
ORDER
% 20.01.2025
CM APPL. 3082/2025, CM APPL. 3083/2025, CM APPL. 3087/2025,
CM APPL. 3088/2025, CM APPL. 3090/2025 & CM APPL. 3091/2025
1. Exemptions allowed, subject to all just exceptions.
2. The applications stand disposed of.
W.P.(C) 645/2025 & CM APPL. 3084/2025 (Stay)
W.P.(C) 647/2025 & CM APPL. 3089/2025 (Stay)
W.P.(C) 648/2025 & CM APPL. 3092/2025 (Stay)
3. The petitioner has filed the present petitions impugning the
proceedings initiated under Section 153C of the Income Tax Act, 1961
(hereafter the Act) by issuance of notices dated 30.06.2023 for the
assessment years (AY) 2018-19, 2019-20 and 2020-21. The said notices are
premised on satisfaction notes dated 23.06.2022 and 30.06.2023 recorded by
the Assessing Officer (AO) of the searched entities (Alankit Group of
Cases).
4. The satisfaction notes indicate that a search was conducted in the
Alankit Group of Cases on 18.10.2019 under Section 132 of the Act.
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Thereafter, the assessments in respect of the Alankit Group of Cases were
centralized within the jurisdiction of the Deputy Commissioner of Income
Tax, Central Circle 28, New Delhi. The notes also record that during the
course of search, ledgers pertaining to the petitioner were obtained from the
laptop of one Sh. Sunil Kumar Gupta and the same were seized. An analysis
of the ledgers indicates that there were unaccounted cash transactions. The
satisfaction notes set out a tabular statement indicating the alleged
unaccounted cash transactions. The same is reproduced below:-
Particulars FY Sum of Sum of
Unaccounted Cash Unaccounted Cash
payments made to received from Sh.
Sh. Alokk Agarwal Alokk Agarwal
SURENDER PAL JI 2013-14 1,34,85,400 1,25,39,550
Surenderpal 2009-10 9,57,50,000 56,00,000
2011-12 14,09,800
2014-15 3,88,32,520 1,17,24,000
2015-16 13,69,17,400 77,77,000
SURENDRA PAL 2010-11 1,08,00,000
2016-17 5,51,14,000
5. It is material to note that the satisfaction notes set out the identical
tabular statements (as is set out above) indicating the alleged unaccounted
cash transactions.
6. It is apparent from the above that there is no allegation regarding any
incriminating material pertaining to AYs 2018-19, 2019-20 and 2020-21.
Undisputedly, if no incriminating material is found pertaining to previous
years, the assessment in respect of the assessment years relevant to the said
previous years cannot be reopened under Section 153C of the Act. This issue
is covered by the decision of this court in Saksham Commodities Limited
vs. Income Tax Officer, Ward 22(1), Delhi & Anr.: 2024 SCC OnLine Del
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2551. The relevant extract of the said decision is set out below:-
“63. On an overall consideration of the structure of Sections 153A
and 153C, we thus find that a reopening or abatement would be
triggered only upon the discovery of material which is likely to
“have a bearing on the determination of the total income” and would
have to be examined bearing in mind the AYs’ which are likely to be
impacted. It would thus be incorrect to either interpret or construe
Section 153C as envisaging incriminating material pertaining to a
particular AY having a cascading effect and which would warrant a
mechanical and inevitable assessment or reassessment for the entire
block of the “relevant assessment year”.
64. In our considered view, abatement of the six AYs’ or the
“relevant assessment year” under Section 153C would follow the
formation of opinion and satisfaction being reached that the material
received is likely to impact the computation of income for a
particular AY or AYs’ that may form part of the block of ten AYs.
Abatement would be triggered by the formation of that opinion
rather than the other way around. This, in light of the discernibly
distinguishable statutory regime underlying Sections 153A and 153C
as explained above. While in the case of the former, a notice would
inevitably be issued the moment a search is undertaken or documents
requisitioned, whereas in the case of the latter, the proceedings
would be liable to be commenced only upon the AO having formed
the opinion that the material gathered is likely to inculpate the
assessee. While in the case of a Section 153A assessment, the issue
of whether additions are liable to be made based upon the material
recovered is an aspect which would merit consideration in 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
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preceding the AY pertaining to the year of search and the “relevant
assessment vear”. 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 the issuance
of notice as well as abatement would have to necessarily be preceded
by the satisfaction spoken of above being reached by the
jurisdictional AO of the non-searched entity.
66. Therefore, and in our opinion, abatement of the six AYs’ or the
“relevant assessment year” would follow the formation of that
opinion and satisfaction in that respect being reached.
67. On an overall consideration of the aforesaid, we come to the firm
conclusion that the “incriminating material” which is spoken of
would have to be identified with respect to the AY to which it relates
or may be likely to impact before the initiation of proceedings under
Section 153C of the Act. A material, document or asset recovered in
the course of a search or on the basis of a requisition made would
justify abatement of only those pending assessments or reopening of
such concluded assessments to which alone it relates or is likely to
have a bearing on the estimation of income. The mere existence of a
power to assess or reassess the six AYs’ immediately preceding the
AY corresponding to the year of search or the “relevant assessment
year” would not justify a sweeping or indiscriminate invocation of
Section 153C.
68. The jurisdictional AO would have to firstly be satisfied that the
material received is likely to have a bearing on or impact the total
income of years or years which may form part of the block of six or
ten AYs’ and thereafter proceed to place the assessee on notice under
Section 153C. The power to undertake such an assessment would
stand confined to those years to which the material may relate or is
likely to influence. Absent any material that may either cast a doubt
on the estimation of total income for a particular year or years, the
AO would not be justified in invoking its powers conferred by
Section 153C. It would only be consequent to such satisfaction being
reached that a notice would be liable to be issued and thus resulting
in the abatement of pending proceedings and reopening of concluded
assessments.”
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7. In view of the above, we are inclined to allow the present petitions.
However, the learned counsel appearing for the Revenue seeks time to
ascertain whether there is any other satisfaction note prepared by the AO
which would indicate that any incriminating material was found during the
course of search proceedings conducted under Section 153C of the Act.
8. At his request, list for further proceedings on 11.02.2025.
9. In the meanwhile, the Revenue is also at liberty to file a counter
affidavit, if necessary. Rejoinder thereto, if any, be filed before the next date
of hearing.
10. In the meanwhile, the proceedings pursuant to the impugned notices
are stayed.
VIBHU BAKHRU, ACJ
TUSHAR RAO GEDELA, J
JANUARY 20, 2025
Aj/Yrj
This is a digitally signed order.
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