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Judgment
The captioned appeals are filed by the above-mentioned Assessees/Appellants, wherein Assessees have challenged the orders of Ld. Commissioner of Income Tax (Appeals)-25, New Delhi (‘Ld. CIT(A)’ for short), dated 29/07/2025 in ITA No. 5972/Del/2025, 5973/Del/2025 and 5974/Del/2025 and orders dated 31/07/2025 in ITA Nos. 5975/Del/2025, 5976/Del/2025and 5977/Del/2025 respectively pertaining to the Assessment Years 2017-18, 2018-19 and 2019-20.
As the identical issues are involved in the captioned Appeals, the Appeals are heard together and decided in this common order. For the sake of convenience ITA No. 5975/Del/2025 has taken as lead matter.
The Assessee raised Identical grounds of appeal in all the Appeals and the Ld. Counsel for the Assessee has argued on the Ground No. 2 of the Appeals which reads as under: -
“2.The notice issued under Section 153C of the Act and the consequent assessment proceedings are illegal, void ab initio, and without jurisdiction, as the statutory preconditions for invoking Section 153C of the Act were not satisfied, rendering the proceedings bad in law and liable to be quashed.”
The Ld. Assessee's Representative contended that in the satisfaction recorded by the A.O., nowhere it is mentioned and explicitly made clear as to whether relevant seized material had a ‘bearing on the determination of the total income of such other person’.The ld. Counsel further relied on the land mark Judgment of the Hon’ble Jurisdictional High Court in the case of Saksham Commodities Ltd. vs. ITO (2024) 464 ITR 1 (Delhi) (HC) and also the order of the Co-ordinate Bench of the Tribunal in the case of Sh. Mukesh Chandra Agarwal Vs. DCIT in ITA No. 1786/Del/2025, order dated 08/12/2025 and sought for allowing Ground No. 2 in all the Appeals.
Per contra, the Ld. Departmental Representative vehemently submitted that the satisfaction note has been properly recorded in the light of incriminating material found and seized during the search conducted on 18.10.2019, which led the A.O. of the searched party to satisfy himself that the same belonged or pertaining or related to the Assessee as the case may be and the satisfaction Note finally culminating in the impugned assessment. Further contended thatthe additions have been made on merits with an intention to recover the actual tax dues from the Assessees, therefore, the technical grounds cannot be entertained by the Tribunal, thus, sought for dismissal of Ground No. 2 in all the Appeals.
We have heard both the parties and perused the material available on record. In order to decide the issue in hand, it is relevant to examine the satisfaction recorded by the A.O. As the identical satisfactions have been recorded the satisfaction recorded in the case of Sharpi Agarwal produced at page No. 93 of the paper book in ITA No. 5975/Del/2025 is reproduced as under:-
As could be seen from the above satisfaction note, nowhere it is explicitly clear as to whether the reserved seized material a ‘bearing on the determination of total income of such other person.’ The Co-ordinate Bench of the Tribunal in the case of Sh. Mukesh Chander Agarwal (supra) on relying on the Hon'ble Supreme Court of India Judgment in the case of Saksham Commodity (supra), in an identical situation quashed the assessment order in following manners: -
“2.It emerges during the course of hearing that there arises the first and foremost legal issue of validity of the impugned section 153C proceedings/assessments framed on 31st March, 2023 itself between the parties; for want of a valid satisfaction recorded by the learned lower authorities. There is hardly any dispute that the learned Assessing Officer of the assessee (who happens to be a person other than the searched party) had set into the motion section 153C proceedings herein reading as under:
“Reasons for satisfaction for issuing notice u/s 153C of the Income Tax Act, 1961 in the case of Sh. Mukesh Chandra Agrawal (PAN: ABWPA8709M)
A search and seizure operation was carried out in the Alankit Group of cases on 18.10.2019 subsequently the said group was centralized to the jurisdiction of the undersigned. Accordingly, during the course of assessment proceedings u/s 153A of Alankit Group, material/ documents related to your case have been found.
1.Annexure A-1, MCAR, page 1 to 17:- found and seized at 173, Sita Ram Apartments, IP Extension, Delhi wherein copy of Sale deed dated 26.08.2015 in favour of Shri Mukesh Chandra Agrawal found Residential Plot Sale deed made in Agra, Uttar Pradesh, Plot no. 21, Area 166.47 Sq. Mtr. Located in Swapn Lok Kaloni Kakua, Agra by Vishal Infra Pvt Ltd for Sale to Shri Mukesh Chandra Agrawal, Total Value of Property Rs.6,00,000/-.
2.Annexure A-1, MCAR, page 30 to 46:- found and seized at 173, Sita Ram Apartments ,IP Extension, Delhi wherein copy of Sale deed dated 30.05.2019 of Residential flat in favour of Shri Mukesh Chand Agrawal found copy of Sale Deed in case of Residential Plot Area 138.28 Sq. Mtr Flat no.173, Sitaram Apartment, I P Extention Delhi-92 in favour of Shri Mukesh Chand Agarwal and Smt Neeta Agarwal, by Shri Ajay Tiwari, F14/118, Krishna Nagar, Delhi51.Total Value of Property Rs.1,80,00,000/-.
3.Annexure A-1, MCAR, page 51 to 65:- found and seized at 173, Sita Ram Apartments, IP Extension, Delhi wherein copy of Sale deed dated 21.04.2014 of Residential Plot in favour of Shri Mukesh Chand Agrawal found copy of Residential Plot Sale deed made in Mathura, Uttar Pradesh, Plot Area 166.44 Sq. Mtr. Located in Mauja Bakal pur, Mathura by Agrawal Developers for Sale of Plot 44, Agrawal developers, MaujaBakalpur, Mathura Total Value of Property Rs. 16,00,000/-.
The assessment proceedings are required to be taken u/s 153C of the Income Tax Act, 1961 as the warrant issued in the names of Sh. Alok Agarwal, Sh. Ankit Agarwal, M/s Alankit Ltd. And M/s Alankit Assignment.”
3.That being the case, learned CIT(DR) strongly supports the above satisfaction note inter alia that the same had been properly recorded in light of the relevant incriminating material found/seized during the course of search dated 18.10.2019 which led the Assessing Officer of the said searched party to satisfy himself that the same belonged or pertained or related to the assessee; as the case may be, leading to the Assessing Officer’s satisfaction note finally culminating in the impugned assessment framed in its hands.
4.Faced with this situation, the tribunal invited the Revenue’s attention to the clinching fact that the learned Assessing Officer’s above extracted satisfaction note has nowhere made it explicitly clear as to whether the relevant seized material had a “bearing on the determination of the total income of such other person”. Learned CIT(DR) seeks to buttress the point herein that such a satisfaction note has to be read in totality than after adopting a hyper technical approach.
5.We find no reason to accept the Revenue’s stand. We make it clear that there is no quarrel between the parties about the learned Assessing Officer of the assessee/third person not having clarified as to whether the relevant seized material had any “bearing………………….” as stipulated in section 153C(1) of the Act. Hon’ble jurisdictional high court’s recent landmark decision in Saksham Commodities Ltd. Vs. ITO (2024) 464 ITR 1 (Delhi)(HC) has settled the law in the assessee’s favour and against the department that such recording of section 153C satisfaction is not a mere mechanical exercise. We thus draw strong support therefrom to conclude that the learned assessing authority in the assessee’s cases had erred in law and on facts in recording an improper satisfaction before initiating section 153C proceedings which vitiates the assessment itself in above terms. Ordered accordingly.
All other remaining pleadings between the parties stand rendered academic. “
In view of the above, we find merits in the Ground No. 2 of the Assessees’ Appeals, accordingly the respective Assessment Orders are hereby quashed. Since, we have allowed the Ground No. 2 of captioned Appeals and quashed the Assessment Orders, other grounds of Appeal require no adjudication.
In the result, Appeals of the Assessee in ITA No. 5972/Del/2025, 5973/Del/2025 and 5974/Del/2025, ITA Nos. 5975/Del/2025, 5976/Del/2025 and 5977/Del/2025 are allowed.