Narender Nath Vs DCIT (ITAT Delhi)
The ITAT Delhi allowed the assessee’s appeal for Assessment Year 2021-22 and quashed the assessment framed under Sections 153C read with 143(3) of the Income Tax Act. The appeal arose against the order of the CIT(A)-23, Delhi dated 28.07.2025.
The primary issue before the Tribunal was whether the satisfaction recorded by the Assessing Officer under Section 153C was legally valid for initiating proceedings against the assessee, who was a third party to the search proceedings.
A search operation had been conducted on 23.03.2021 in the case of M/s KK Spun Group. Subsequently, the Assessing Officer of the searched party recorded satisfaction dated 25.02.2023 for initiating proceedings against the present assessee under Section 153C. According to the Revenue, the seized documents found during the search “belonged to” the assessee and therefore justified initiation of proceedings.
The assessee challenged the validity of the satisfaction note and argued that the statutory conditions prescribed under Section 153C had not been properly fulfilled.
The Tribunal examined Section 153C(1)(a) and observed that the provision distinguishes between assets such as money, bullion, or jewellery “belonging to” a third person and documents that merely “pertain to” or “relate to” such person. The Tribunal noted that the Assessing Officer had incorrectly recorded satisfaction by stating that the seized documents “belonged to” the assessee, instead of recording that the documents pertained or related to the assessee as required under law for documentary material.
