Section 153C Quashed for Failure to Show Bearing on Total Income: ITAT Delhi

Deepak Sahu Vs DCIT (ITAT Delhi)

Section 153C Cannot Be Invoked For The Entire Block Through A Mechanical Satisfaction Note—Delhi ITAT Quashes Assessment

Summary: The Delhi Bench of the Income-tax Appellate Tribunal has quashed an assessment under section 153C after finding that the Assessing Officer of the non-searched person failed to record the mandatory satisfaction that the seized material had a bearing on the determination of the assessee’s total income for the relevant assessment year.

The Tribunal held that the mere receipt of seized documents or digital data from the Assessing Officer of the searched person does not automatically justify proceedings under section 153C for every year falling within the block period. The Assessing Officer must independently examine the material, identify the relevant assessment year and record its potential impact on the assessee’s total income.

Background of the search

A search under section 132 was conducted on the Sushen Mohan Group on 2 January 2020. During the search, documents, books, mobile phones and other digital material were seized, and statements of various persons were recorded.

The assessee, Deepak Sahu, was stated to be working as Manager-Finance and described as a key employee of the searched group.

The Assessing Officer of the searched person recorded a satisfaction note on 30 September 2021. Thereafter, the Assessing Officer having jurisdiction over the assessee recorded another satisfaction note on 9 April 2022 and issued notice under section 153C on the same day.