Facts of the Case

The case formed part of a batch of writ petitions before the Delhi High Court challenging notices issued under Section 153C of the Income Tax Act, 1961 to several assessees, including Vikas Wahi.

The petitioners contended that the impugned notices sought to reopen multiple assessment years despite no incriminating material pertaining to those specific years having been discovered during the course of search conducted on another entity. The proceedings were initiated on the basis of satisfaction notes recorded by the Assessing Officers of the searched person and the “other person.”

The Court noted that in certain cases, including those involving Vikas Wahi, the material relied upon did not demonstrate any nexus with the assessment years sought to be reopened. A tabulated chart in the judgment recorded the dates of satisfaction notes and issuance of notices across various assessment years for different petitioners.

Issues Involved

  1. Whether jurisdiction under Section 153C can be invoked against a non-searched person without incriminating material relating to the specific assessment year.
  2. Whether reopening of multiple years is permissible merely because some material was found during search.
  3. Whether absence of a valid satisfaction note or lack of nexus with seized material vitiates proceedings.
  4. Distinction between proceedings under Sections 153A (searched person) and 153C (other person).

Petitioner’s Arguments

The petitioners argued that Section 153C applies only when material seized during search belongs to or pertains to the non-searched person and has a bearing on determination of income for the relevant assessment year.

It was contended that discovery of material relating to a particular year cannot justify reopening of all preceding years within the statutory block period. In the case of completed assessments, reassessment is permissible only on the basis of year-specific incriminating material.

The petitioners also submitted that in several instances satisfaction notes were either not supplied or did not demonstrate any connection between the seized material and the assessment years sought to be reopened. 

Respondent’s Arguments

The Revenue contended that once material relating to a non-searched person is found during search, proceedings under Section 153C can be initiated for all assessment years falling within the statutory block.

It was argued that the statutory framework Clarifies that the Assessing Officer is empowered to reassess total income for multiple years and that existence of incriminating material suffices to trigger jurisdiction.

Court Order / Findings

  • Section 153C proceedings against a non-searched person require existence of incriminating material discovered during search that pertains to that person.
  • Such material must have a bearing on determination of income for the specific assessment year sought to be reopened.
  • Discovery of material relating to one year does not justify reopening of all other years.
  • For completed assessments, additions can be made only on the basis of year-specific incriminating material.
  • Absence of a valid satisfaction note or failure to establish nexus between seized material and the relevant assessment year vitiates jurisdiction.
  • Proceedings under Section 153C involve an additional jurisdictional threshold compared to Section 153A and must be strictly construed.

Important Clarification

The judgment reinforces that Section 153C is not a blanket provision enabling reassessment of multiple years of a non-searched person merely because a search occurred elsewhere. Jurisdiction depends on the existence of relevant incriminating material and a valid satisfaction note establishing nexus with undisclosed income for the specific assessment year.

This ruling significantly strengthens safeguards against arbitrary search-based assessments of third parties and clarifies the limited scope of reassessment under Section 153C.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772256257_VIKASWAHIVsDEPUTYCOMMISSIONEROFINCOMETAXCENTRALCIRCLE26DLEHIANDORS..pdf 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.