Satisfaction Note Must Clearly Show Bearing of Seized Material on Income: ITAT Quashes S. 153C Assessment Holding Proper Satisfaction is Mandatory [Read Order]
ITAT Delhi quashed assessment proceedings under Section 153C holding that the satisfaction note failed to clearly show how the seized material had bearing on determination of the assessee’s income.
![Satisfaction Note Must Clearly Show Bearing of Seized Material on Income: ITAT Quashes S. 153C Assessment Holding Proper Satisfaction is Mandatory [Read Order]](https://images.taxscan.in/h-upload/2026/05/11/2136457-site-img11-11jpg.webp "Satisfaction Note Must Clearly Show Bearing of Seized Material on Income: ITAT Quashes S. 153C Assessment Holding Proper Satisfaction is Mandatory [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, quashed assessment proceedings initiated under Section 153C after finding that the satisfaction note did not clearly show what bearing the seized material had on determining the assessees’ income. During a search and seizure action conducted on Alankit Group, certain material allegedly relating to the assessees, Sharpi Agarwal...
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, quashed assessment proceedings initiated under Section 153C after finding that the satisfaction note did not clearly show what bearing the seized material had on determining the assessees’ income.
During a search and seizure action conducted on Alankit Group, certain material allegedly relating to the assessees, Sharpi Agarwal and Shivli Agarwal, was found. The Assessing Officer thereafter recorded a satisfaction note and initiated proceedings under Section 153C against the assessees, pursuant to which additions were made.
The additions were upheld by the Commissioner of Income Tax (Appeals) [ CIT(A) ].
Before the Tribunal, the assessees contended that the satisfaction note recorded by the Assessing Officer nowhere clearly stated whether the seized material had any bearing on determination of their total income. They placed reliance on the Delhi High Court decision in Saksham Commodities Ltd. v. ITO (2024) and the Tribunal’s decision in Mukesh Chandra Agarwal v. DCIT (2025).
However, the Revenue submitted that the satisfaction note had been properly recorded on the basis of incriminating material found during the search proceedings. It was further contended that the proceedings could not be quashed merely on technical grounds.
The Tribunal, comprising Yogesh Kumar U.S. (Judicial Member) and Krinwant Sahay (Accountant Member), observed that the satisfaction note did not clearly state whether the seized material had any bearing on determination of the assessees’ total income.
Referring to the decision in Saksham Commodities Ltd., the Tribunal held that recording satisfaction under Section 153C is not a mere mechanical exercise and the defect in the satisfaction note went to the root of the assessment proceedings.
Accordingly, the Tribunal quashed the assessment orders passed under Section 153C.
The appeals of the assessees were allowed.
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