Shabnam Bharatinder Singh Vs DCIT (ITAT Delhi)
Invalid 153C Satisfaction Sinks Entire Assessment: Diary Must Have “Bearing on Total Income”
Search was conducted on Kuldeep Bishnoi Group, during which a diary belonging to Late Shri Sukumar Poria was seized. On the basis of certain notings in the diary, AO initiated proceedings u/s 153C against Assessee, alleging unaccounted cash receipts & made additions treating entries as undisclosed income. CIT(A) upheld the action.
ITAT quashed the entire proceedings. Tribunal held that mere recording that seized material “pertains to” the Assessee is not sufficient. For valid assumption of jurisdiction u/s 153C, AO must record clear satisfaction that the seized books / documents “have bearing on determination of total income” of the other person. In the present case, satisfaction note failed to record such mandatory satisfaction. Diary belonged to a third person, entries were not shown to impact Assessee’s income, and there was no nexus established year-wise.
Relying heavily on Delhi HC judgment in Saksham Commodities Ltd., Tribunal reiterated that section 153C does not permit mechanical or en-bloc reopening of all years merely because some material is found in search. Absent valid satisfaction, jurisdiction itself fails. Consequently, proceedings u/s 153C and all consequential assessments were quashed in toto, rendering other grounds academic.
FULL TEXT OF THE ORDER OF ITAT DELHI
