Facts of the Case

Vinod Kumar Garg filed writ petitions before the Delhi High Court challenging notices issued by the Income Tax Department pursuant to search and seizure operations conducted on another person. The petitioner was treated as an “other person” for the purposes of post-search assessment proceedings and was subjected to proceedings by the Deputy Commissioner of Income Tax, Central Circle-28, Delhi.

The petitioner contended that no incriminating material pertaining to the relevant assessment years had been discovered during the search. Despite this, reassessment proceedings were initiated for multiple preceding years within the statutory block period.

The matter formed part of a large batch of connected writ petitions and appeals arising from the same search action involving numerous individuals and entities before the Delhi High Court. 

 Issues Involved

  1. Whether proceedings against a non-searched individual could be initiated without assessment-year-specific incriminating material discovered during search.
  2. Whether completed assessments for earlier years can be reopened in the absence of such material.
  3. What constitutes valid jurisdictional satisfaction for invoking proceedings against an “other person.”
  4. Whether the Central Circle authorities validly assumed jurisdiction over the petitioner.

 Petitioner’s Arguments

  • The petitioner contended that assumption of jurisdiction was unlawful as no material relating to the relevant assessment years had been found during the search.
  • It was argued that discovery of material pertaining to a particular period cannot justify reopening of all preceding years without a direct nexus.
  • The petitioner asserted that completed assessments can be disturbed only where seized material has a bearing on determination of total income for those specific years.
  • It was further contended that statutory requirements regarding recording of proper satisfaction had not been complied with.

 Respondent’s Arguments (Revenue)

  • The Revenue submitted that proceedings were validly initiated pursuant to lawful search operations and transfer of material relating to the petitioner.
  • It was contended that the Assessing Officer had recorded the requisite satisfaction for invoking jurisdiction.
  • The Department argued that once jurisdiction is properly assumed, assessment of multiple years within the statutory block period is permissible under the Act.
  • It was further submitted that the seized material had relevance to the petitioner’s income.

Court Order / Findings

  • Proceedings against a non-searched person must be founded on seized material belonging to or pertaining to that person.
  • Jurisdiction cannot be exercised merely because a search was conducted on another entity.
  • In respect of completed assessments, reassessment must be based on incriminating material having a bearing on determination of income for the relevant assessment year.
  • Material relating to one assessment year cannot justify reopening of all preceding years without a specific nexus.
  • Proper recording of satisfaction by the Assessing Officer is a foundational requirement for assumption of jurisdiction. 

Important Clarification

  • Proceedings against an “other person” following a search are not automatic.
  • Jurisdiction arises only when seized material specifically relates to that person and to the relevant assessment years.
  • Completed assessments cannot ordinarily be reopened in the absence of incriminating material.
  • The ruling reinforces strict adherence to statutory safeguards governing search-based assessments under the Income Tax Act.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1772275806_VINODKUMARGARGVsDY.COMMISSIONEROFINCOMETAXCENTRALCIRCLE28DELHI.pdf  

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