Uploading Information On Insight Portal Not A Substitute For Handing Over Material To AO For Non-Searched Entity U/S 153C Of IT Act: Delhi HC

The provision stipulates that where the Assessing Officer of the person searched is satisfied that records of undisclosed assets relate to another person, the AO may handover the materials to the Assessing Officer of that other person.

The Assessing Officer of that other person is empowered to proceed against such other person for evading tax on such undisclosed income.

A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela observed,

“Uploading of information by the investigation wing of the Income Tax department would not be a substitute for recording of a satisfaction note by the AO of a searched person and handing over the assets, books of accounts or other material to the AO of the person other than the searched person for the purpose of initiation of proceedings under Section 153C of the Act.”

The bench was hearing a petition filed by builders ATS Township, challenging the initiation of reassessment proceedings on the ground of being barred by limitation.

Counsel for the Revenue contended that the date of placing the material on the insight portal ought to be considered the date of search for the purposes of computing limitation under Section 153C of the Act.

The Court however opined that the Revenue's argument is contrary to its decision in Dinesh Jindal v. Assistant Commissioner of Income Tax, Central Circle 20, Delhi & Others (2024).

It was held therein that in case of a search after 31.03.2021, post enactment of Finance Act 2021, there would be no actual handover of material to the jurisdictional Assessing Officer and therefore it would not be permissible to revert to Section 153A of the Act for the purposes of computing the period of limitation from the date of the search.

The High Court said “prima facie, this reasoning would also hold good in case of assuming the date of placing information on insight portal as the date of search for the purposes of the proviso to Section 153C of the Act.”

Court said in the case at hand there is no reference of any asset representing income escaping assessment. Thus, reopening the assessments for a period of ten years as contemplated under Section 153A of the Act may not be applicable.

The plea was accordingly allowed.

Appearance: Mr. Ved Jain, Mr. Nishcay Kantoor, Ms. Soniya Dodeja and Mr. Divyansh Dubey, Advocates for Petitioner; Mr. Indruj Singh Rai, SSC, Mr. Rahul Singh, JSC and Mr. Anmol Jagga, Advocate for Respondent

Case title: ATS Township Pvt Ltd v. Assistant Commissioner Of Income Tax Circle 1(1) Delhi & Ors

Case no.: W.P.(C) 13790/2024