Sec. 153C Can Be Initiated Based on Incriminating Material Alone, Without Links Between Entities | HC

Case Details: Shiv Parkash Bansal v. DCIT - [2025] 172 taxmann.com 317 (Delhi)

Judiciary and Counsel Details

• Yashwant Varma & Harish Vaidyanathan Shankar, JJ.
• Ruchesh Sinha & Prakash Sinha, Advs. for the Petitioner.
• Vipul Agrawal, SSC for the Respondent.

Facts of the Case

A search and seizure operation under Section 132(1) was carried out in the case of certain persons. During the search, cash and jewellery, incriminating documents containing cash transactions pertaining to said person were found and seized.

The Assessing Officer (AO) came to the conclusion that the digital evidence obtained in the course of that search pertained or related to the assessee. Accordingly, AO proceeded to draw proceedings referable to section 153C for the assessment years 2015-16 to 2021-22.

The assessee contended that the action under section 153C must be premised upon some connection between the searched and non-searched entity. The matter was before the Delhi High Court.

High Court Held

The High Court held that Section 153C caters to a contingency where the search may lead to the unearthing of money, bullion, jewellery or other valuable articles or thing. The section 153C action is thus aimed at reopening an assessment made in respect of a person other than the one referred to in section 153A and such person being the non-searched entity. All assessments pending on the date of commencement of an action under that provision stand abated, and the AO becomes empowered to commence assessment afresh.

The trigger for section 153C is thus the discovery of documents or articles in the course of a search that pertain or belong to a third party and which may have a bearing on the determination of the total income of such other person for the six assessment year period or the relevant assessment years.

However, as Section 153C is read, it becomes apparent that the provision clearly neither envisages nor mandates the existence of a connection between persons and individuals who may fall within the ambit of Section 153A and those against whom action under Section 153C may be initiated.

The latter provision is solely concerned with the discovery of documents and articles belonging to or pertaining to a person other than the one subjected to search, which is likely to have an impact on the total income of such other person. Section 153C is thus premised on material or information alone as opposed to the discovery of a connection or link between the searched person and the non-searched entity.

Since the statute neither required nor obliged the Assessing Officer of other person to find or uncover a relationship or an association between searched and non-searched persons, the challenge to initiating action under section 153C against the assessee was misconceived.

List of Cases Reviewed

• Income Tax Officer v. Vikram Sujitkumar Bhatia (2024) 7 SCC 741 (Para 16) followed.
• S.R. Batliboi & Co. v. Department of Income Tax (Investigation) 2009 SCC OnLine Del 1628 (Para 10)
• Commissioner of Income Tax v. Arpit Land Pvt. Ltd 2017 SCC OnLine Bom 640 (Para 22), distinguished.

List of Cases Referred to

• S.R. Batliboi & Co. v. Department of Income Tax (Investigation) 2009 SCC OnLine Del 1628 (para 9)
• ITO v. Vikram Sujitkumar Bhatia (2024) 7 SCC 741 (para 16)
• CIT v. Arpit Land Pvt. Ltd 2017 SCC OnLine Bom 5640 (para 22).