Proceedings u/s 153C of Income Tax Act cannot be Initiated in Absence of Incriminating Material: Delhi HC [Read Order]
The Court found no connection between the seized material and the petitioner’s income for the relevant assessment years
![Proceedings u/s 153C of Income Tax Act cannot be Initiated in Absence of Incriminating Material: Delhi HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/05/Proceedings-Income-Tax-Act-Initiated-Absence-of-Incriminating-Material-Delhi-HC-taxscan.jpg "Proceedings u/s 153C of Income Tax Act cannot be Initiated in Absence of Incriminating Material: Delhi HC [Read Order]")
The Delhi High Court, ruled that proceedings under Section 153C of the Income Tax Act,1961,could not be initiated in the absence of incriminating material. R.C. Jewellers Pvt.Ltd.,petitioner-assessee,challenged the notices on the grounds that no incriminating material was found during the search or requisition under Sections 132 or 132A of the Income Tax Act, and that the notices were...
The Delhi High Court, ruled that proceedings under Section 153C of the Income Tax Act,1961,could not be initiated in the absence of incriminating material.
R.C. Jewellers Pvt.Ltd.,petitioner-assessee,challenged the notices on the grounds that no incriminating material was found during the search or requisition under Sections 132 or 132A of the Income Tax Act, and that the notices were issued beyond the limitation period.
The case began on 27.10.2017, when officials from the Air Intelligence Unit ( AIU ) at Rajkot Airport intercepted two individuals from courier agencies who had arrived to collect parcels. On questioning, they admitted the parcels contained gold and jewellery but failed to provide ownership documents. Three parcels were opened, revealing thirty-one smaller packages. Two parcels had bills, but the rest were investigated further.
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Notices under Section 131 were issued and statements recorded. The matter was later converted into a search under Section 132. During the search, officials seized parcel no. J-9, containing 49 grams of fine gold worth ₹1,32,288/-, which had been sent by the petitioner-assessee to a recipient in Rajkot for job work.
Based on this, the Assessing Officer(AO) recorded a satisfaction note on 26.12.2019 and initiated proceedings under Section 153C, stating that the seized gold belonged to the assessee.
The assessee admitted to sending the parcel with 49 grams of gold to Rajesh Kumar Mohan Lal for job work, and this was recorded in its books. The petitioner argued that the seized parcel could not be considered incriminating material to reopen past assessments.
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The seized parcel had no impact on the assessee’s income for the earlier years (2012-13 to 2017-18). Also, the AO did not find any link between the seized material and those years.
The satisfaction note dated 03.09.2019 did not show any connection between the seized gold and the petitioner’s income for those years. Without incriminating material, proceedings under Section 153C could not be started.
This was supported by the Delhi High Court and Supreme Court decisions in Saksham Commodities Ltd., CIT-III, Pune v. Sinhgad Technical Education Society, and DCIT v. M/s U.K. Paints (Overseas) Ltd..
The division bench of Justice Vibhu Bakhru and Justice Tejas Karia set aside the impugned notices, order, and all related proceedings, and disposed of the pending applications, allowing the petition.
To Read the full text of the Order CLICK HERE
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