Delhi ITAT Quashes Section 153C Assessments in SRB Promoters Case: Limitation Breach and Defective Satisfaction Notes Render Proceedings Void

Background and Overview

The Delhi Income Tax Appellate Tribunal recently delivered a significant ruling in the case of SRB Promoters Pvt Ltd Vs ACIT (ITAT Delhi), quashing assessment orders framed under Section 153C read with Section 143(3) of the Income Tax Act, 1961 for Assessment Years 2011-12 and 2012-13. Both appeals — ITA No. 726/Del/2026 and ITA No. 727/Del/2026 — arose from separate assessment orders dated 30.12.2018, both confirmed by the Commissioner of Income Tax (Appeals), Delhi-26 vide orders dated 26.11.2025 passed under Section 250 of the Act.

Since both appeals involved substantially common legal questions, the Tribunal disposed of them through a consolidated order. The outcome was decisive: the Assessing Officer had assumed jurisdiction under Section 153C in a legally unsustainable manner, and the resultant assessment orders could not survive scrutiny.

ITA No. 726/Del/2026 — Assessment Year 2011-12: The Limitation Issue

Factual Matrix

The assessee, SRB Promoters Pvt Ltd, was not the person against whom a search was conducted under Section 132 of the Income Tax Act, 1961. Rather, it was a third party — an "other person" — in whose case proceedings were initiated under Section 153C on the basis of documents and loose papers allegedly belonging to the assessee, which were seized from the person actually searched.

The Assessing Officer of the assessee recorded a satisfaction note under Section 153C on 23.03.2018, after receiving the seized material from the AO of the searched person on the same date. On that very day, notices under Section 153C were issued to the assessee for AYs 2010-11 to 2015-16. The AO calculated the six-year block by treating the year of the original search as the base year, rather than the year in which the material was handed over to him.

The Authorised Representative argued that for a person other than the searched person, the relevant "year of search" — for the purpose of computing the permissible six assessment years under Section 153C — must be the year in which the jurisdictional AO of the other person receives the seized material and records satisfaction, and not the year of the original search itself.

Since the satisfaction note in the present case was recorded on 23.03.2018, FY 2017-18 would constitute the relevant year. Accordingly, the six preceding assessment years would be AYs 2012-13 to 2017-18. AY 2011-12, which was the subject matter of ITA No. 726/Del/2026, fell entirely outside this permissible window and was therefore time-barred.

Reliance was placed on:

  • CIT vs. Jasjit Singh reported in [2023] 155 taxmann.com 155 (SC)
  • PCIT v. Ojjus Medicare Pvt. Ltd. reported in (2024) 161 taxmann.com 160 (Delhi High Court)

Tribunal's Analysis and Decision

The Tribunal carefully examined the legal position and agreed with the assessee's contention. It observed that in the present case, while the date of actual handover of seized material to the AO of the assessee was not explicitly discernible from the record, the satisfaction note was indisputably recorded on 23.03.2018. Accordingly, the Tribunal treated this date as the date of handover, placing the relevant previous year in FY 2017-18.

The ITAT referred extensively to the Delhi High Court's ruling in PCIT v. Ojjus Medicare Pvt. Ltd. (supra), which had authoritatively settled the following principles:

"As per legal fiction contained in first proviso to section 153C, date of receipt of seized books/material by the jurisdictional AO of the other person is the commencement date for determination of six assessment years/relevant assessment years."