Sharpi Agarwal Vs DCIT (ITAT Delhi)
ITAT Quashes Section 153C Assessment Due to Defective Satisfaction Note; ITAT Holds Proper Satisfaction Mandatory for Section 153C Action, Quashes Assessments; Section 153C Proceedings Invalid as Satisfaction Note Lacked Mandatory Findings; ITAT Rejects Revenue Stand on Technical Defect, Quashes 153C Assessments for Improper Satisfaction.
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, decided a batch of appeals relating to Assessment Years 2017-18, 2018-19, and 2019-20 involving challenges to assessments initiated under Section 153C of the Income Tax Act. The assessees contested the validity of notices issued under Section 153C and argued that the statutory conditions for initiating proceedings had not been satisfied.
The principal issue before the Tribunal was whether the satisfaction note recorded by the Assessing Officer adequately established that the seized material had a bearing on the determination of the total income of the assessee, who was a person other than the searched party. The assessees argued that the satisfaction note did not explicitly state this requirement and relied on the Delhi High Court judgment in Saksham Commodities Ltd. vs. ITO (2024) 464 ITR 1 (Delhi) as well as a co-ordinate bench ruling in Mukesh Chandra Agarwal vs. DCIT.
The Revenue contended that the satisfaction note had been properly recorded based on incriminating material seized during a search conducted on 18.10.2019 and that the additions were made on merits for recovery of actual tax dues. It was argued that the proceedings should not be invalidated on technical grounds.
