Smt. Geetanjali Bhayana v. DCIT (ITA Nos. 2227, 2228 & 2252/Del/2025)
In a significant ruling, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) in Smt. Geetanjali Bhayana v. DCIT (ITA Nos. 2227, 2228 & 2252/Del/2025) has quashed assessments framed under Section 153C of the Income-tax Act, 1961, holding that such proceedings are invalid when initiated after 01.04.2021, even if the original search on third party took place prior to that date.
This decision reinforces the post–Finance Act 2021 legal position and provides critical clarity on jurisdiction, satisfaction notes, and the applicability of Section 153C.
Facts of the Case
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The assessee filed regular returns for AYs 2018-19 to 2020-21.
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A search under Section 132 was conducted on 23.07.2019 in the case of a third party.
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The Assessing Officer (AO) of the assessee recorded a satisfaction note on 03.12.2021 and issued notices under Section 153C on 06.12.2021.
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The CIT(A) upheld the assessment.
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The assessee challenged jurisdiction before ITAT.
Core Legal Issues
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Whether Section 153C can be invoked when the satisfaction note is recorded after 01.04.2021?
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What is the “date of initiation of search” for an ‘other person’ under Section 153C?
Tribunal’s Findings
1. Date of Search for ‘Other Person’ is the Satisfaction Date
The ITAT relied on the first proviso to Section 153C(1) and the Delhi High Court ruling in PCIT v. Ojjus Medicare Pvt. Ltd. to hold that for a person other than the searched person, the “date of initiation of search” is the date on which seized material is received and satisfaction is recorded by the AO having jurisdiction over such person.
In this case, that date was 03.12.2021.
2. Section 153C Not Applicable to Searches Initiated On or After 01.04.2021
Section 153C(3), inserted by the Finance Act, 2021, categorically provides:
“Nothing contained in this section shall apply in relation to a search initiated on or after the 1st day of April, 2021.”
Since the satisfaction date (treated as the search date for the assessee) fell after 01.04.2021, the Tribunal held that Section 153C had become inapplicable.
The ITAT followed the Madras High Court ruling in Harigovind v. ACIT, which held that:
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There cannot be two different “dates of initiation of search”
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The proviso to Section 153C applies for all purposes, not merely abatement
3. Proceedings Were Without Jurisdiction
As Section 153C was no longer applicable:
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The AO lacked jurisdiction
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The correct route, if any, was Section 148 under the reassessment regime
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Entire proceedings were held void ab initio