Section 153C Assessments Quashed for Defective Satisfaction: ITAT Delhi

Sakshi Agarwal Vs DCIT (ITAT Delhi)

Summary: ITAT Delhi allowed a batch of forty appeals involving five assessees—Sakshi Agarwal, Alka Agarwal, Pratishtha Images Private Limited, Alankit Forex India Limited and Alankit Finsec Limited—covering eight assessment years each from AY 2013-14 to AY 2020-21. The central jurisdictional issue concerned the validity of assessments framed under section 153C read with section 143(3), pursuant to a search and seizure operation carried out in the Alankit Group on 18.10.2019. In the lead appeal concerning Alankit Forex India Limited, the Assessing Officer had recorded a consolidated satisfaction dated 24.12.2021 stating that material/documents relating to the assessee had been found and that the documents belonged to the assessee, following which proceedings under section 153C were initiated for AYs 2010-11 to 2020-21. The Revenue contended that it was not mandatory for the satisfaction note expressly to use the word “bearing” where the relationship between the seized material and escaped income had otherwise been established, and relied upon, inter alia, Shiv Parkash Bansal, Indian National Congress v. DCIT and Super Malls Private Limited.

The Tribunal, however, found that the satisfaction note did not make clear whether the seized material had any “bearing on the determination of total income” of the other person, which was a jurisdictional requirement under section 153C. The Tribunal relied particularly upon the Delhi High Court ruling in Saksham Commodities Ltd. v. Income Tax Officer, whose approach, as noted by the Tribunal, stood upheld by the Supreme Court in [2025] 175 taxmann.com 849 (SC). It therefore held that the Assessing Officer had failed to record a proper section 153C satisfaction before setting the proceedings in motion. The satisfaction and consequential assessment in the lead appeal were quashed, and all remaining pleadings were rendered academic. Since both sides agreed that identical satisfaction notes had been recorded in the remaining thirty-nine appeals, those assessments were also quashed. Consequently, all forty appeals of the five assessees were allowed.