Kiran Agarwal Vs DCIT (ITAT Delhi)
Mechanical Satisfaction Note Invalid: ITAT Quashes 153C Assessment in Alankit Group Case
The Delhi ITAT quashed the assessment framed under section 153C against Kiran Agarwal for AY 2019-20, holding that the satisfaction note recorded by the Assessing Officer was a mere formality and completely lacked any meaningful application of mind.
The proceedings arose from a search conducted on the Alankit Group on 18.10.2019. Based on certain ledgers allegedly found during the search, the Revenue initiated proceedings under section 153C against the assessee. The assessee challenged the very assumption of jurisdiction, contending that the satisfaction note failed to identify any incriminating material having a bearing on her income.
The Tribunal examined both the satisfaction note recorded by the Assessing Officer of the searched person and the satisfaction note recorded by the Assessing Officer of the assessee. It found that while the documents referred to certain ledger entries, the satisfaction note of the non-searched person merely reproduced generic language about the search and vaguely stated that some material had a bearing on the assessee’s income. There was no discussion of the nature of the documents, no analysis of the transactions, no explanation of how the material related to the assessee, and no indication as to how income had allegedly escaped assessment for any of the years covered by the notice.
The Tribunal observed that the satisfaction note was completely devoid of any sign of independent examination or application of mind. It relied on the Delhi High Court judgment in Saksham Commodities Ltd. (2024) 464 ITR 1, which held that a consolidated and mechanical satisfaction note, without demonstrating how the seized material has a bearing on the assessee’s income, is legally unsustainable.
Following the High Court’s ruling, the Tribunal held that the jurisdictional requirement of a valid satisfaction under section 153C had not been met. Since the very foundation of the proceedings was defective, the assessment could not survive.
FULL TEXT OF THE ORDER OF ITAT DELHI
