S. 153C Proceedings Unsustainable Due to Lack of Inadequate Satisfaction Recording of Income: ITAT [Read Order]
The ITAT reiterates the mandatory requirement of proper satisfaction linking seized material with taxable income.
![S. 153C Proceedings Unsustainable Due to Lack of Inadequate Satisfaction Recording of Income: ITAT [Read Order]](https://images.taxscan.in/h-upload/2026/04/06/2132244-income-recorsjpg.webp "S. 153C Proceedings Unsustainable Due to Lack of Inadequate Satisfaction Recording of Income: ITAT [Read Order]")
The Income Tax Appellate Tribunal (ITAT) DelhiBench has set aside various assessment orders framed under Section 153C of theIncome tax Act 1961 held that “without proper satisfaction regarding the nexus of seized material and income of the assessee,”assessment orders framed under 153C cannot stand. A search action in the case of Alankit Group was conducted on 18.10.2019,...
The Income Tax Appellate Tribunal (ITAT) DelhiBench has set aside various assessment orders framed under Section 153C of theIncome tax Act 1961 held that “without proper satisfaction regarding the nexus of seized material and income of the assessee,”assessment orders framed under 153C cannot stand.
A search action in the case of Alankit Group was conducted on 18.10.2019, during which certain materials were allegedly seized in regard to the assessee’s case. Accordingly, assessment under 153C for A.Y. 2013-14 to 2020-21 was initiated by the AO against the assessee. A satisfaction note regarding the same has been recorded by the jurisdictional AO on 24.12.2021.
The assessee Atoll Vyapaar Pvt. Ltd claimed that the note of satisfaction did not indicate in what manner the seized material had a bearing on its income, thus not meeting the mandatory legal requirement.
However, the Revenue department on the other hand claimed that the use of the term bearing in the note of satisfaction was not mandatory for the initiation of proceedings under Section 153C of the Act.
The Tribunal negated the claim of the Revenue and relied on the Delhi High Court judgment in Saksham Commodities Ltd. vs. ITO (2024) which mandates that there should be a clear nexus between the seized material and the determination of income which should have been reflected in the note of satisfaction.
Further, It has been held by the Tribunal that “since there is no satisfaction note recorded by the Assessing Officer regarding whether the seized incriminating material has any ‘bearing’ on determination of the total income of the assessee, all assessment framed under 153C read with 143(3) are quashed.”
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