VEENA GUPTA,DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 26, DELHI , DELHI

PDF · subscribers
ITA 6705/DEL/2025Status: DisposedITAT Delhi10 July 2026AY 2018-199 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the satisfaction note recorded by the Assessing Officer did not explicitly state whether the seized material had a bearing on the determination of the assessee's total income. Relying on a High Court judgment, the Tribunal quashed the assessment proceedings.

What were the facts?

The assessee filed appeals against assessment orders passed under Section 153C of the Income Tax Act. The primary contention was the invalidity of the Section 153C proceedings due to a flawed satisfaction note recorded by the Assessing Officer.

What were the issues?

The key issue was whether the satisfaction recorded by the Assessing Officer for initiating proceedings under Section 153C was valid and in compliance with the law. The admissibility of electronic data and the validity of approvals under Section 153D were also raised.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153D,Section 68,Section 69C,Section 271AAC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, ‘B’: NEW DELHI

Before: MS MADHUMITA ROY & SHRI KRIWANT SAHAY

For Appellant: Ms. Anankya Kapoor, Advocate
Hearing: 01.07.2026Pronounced: 10.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘B’: NEW DELHI BEFORE MS MADHUMITA ROY, JUDICIAL MEMBER AND SHRI KRIWANT SAHAY, ACCOUNTANT MEMBER

ITA No.6704 & 6705 /Del/2025 [Assessment Year: 2017-18 to 2018-19] Veena Gupta vs DCIT Central Circle – 26 BT-36, Shalimar Bagh, Delhi Delhi Appellant Respondent Appellant by Sh. Sumit Lalchandani, Advocate Ms. Anankya Kapoor, Advocate Sh. Shivam Yadav, Advocate Respondent by Sh. Om Prakash, CIT DR Date of Hearing 01.07.2026 Date of Pronouncement 10.07.2026 ORDER PER KRINWANT SAHAY A.M. These appeals are filed by the assessee against the assessment order passed u/s.143(3)/153C of the Act dated 18.08.2025 passed by the Ld. CIT(A)-25, New Delhi for the A.Y. 2017-18. 2. Since common issues are involved in both these appeals they were heard together and are disposed of by this common order for the sake of convenience.

3.

The assessee has raised following common grounds of appeal :-

1.

That the notice issued and the assessment order passed under Section 153C of the Income Tax Act, 1961 ('the Act') by the Assessing Officer ('AO') are fundamentally flawed, being without jurisdiction, barred by limitation, and passed in violation of the statutory framework governing such proceedings, thereby rendering them legally unsustainable. 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. 3. That on the facts and in the circumstances of the case, the AO has erred in failing to record the requisite satisfaction as mandated under law, thereby rendering the impugned proceedings invalid, bad in law, and without jurisdiction. 4. That the approval granted under Section 153D of the Act for passing the assessment order under Section 153C is invalid, as it has been granted in a mechanical manner. without independent application of mind, rendering the assessment order bad in law. 5. That on the facts and in law, the approval under section 153D stands vitiated due to non-application of mind, as both the proposal and the approval are mere carbon copies across years and group entities, issued in the fag end, in breach of the statutory mandare. 5. That the approval under Section 153D of the Act is bad in law as both the proposal and the approval under Section 153D were invalid being issued without a Document Identification Number (DIN) in violation of CBDT Circular No. 19/2019 daned 14.08.2019. On the facts and in law, the AO/CIT(A) failed to appreciate that, in the absence of incriminating material found during the search, the interference with a completed assessment and additions under Section 153C of the Act are unsustainable and without jurisdiction. 8. On the facts and in law, excel sheets Page | 2

and tally data retrieved from electronic devices are Inadmissible as evidence due to non-compliance with Section 65B of the Indian Evidence Act, 1872 and the CBDT Manual, rendering the additions made by the AO liable to be deleted. 9. On the facts and circumstances of the case and in law, the AO has erred in relying upon the retracted statements and material seized from the residential premises of Mr. Sunil Kumar Gupta without providing an opportunity to cross-examine despite specific request. 10. On the facts and circumstances of the case and in law, the AO erred in passing the assessment order under Section 153C of the Act without generating, allotting, quoting. and communicating a valid DIN, in contravention of Circular No. 19 of 2019 dated 14.08.2019, rendering the entire proceedings and assessment order invalid. 11. That the CIT(A) erred in upholding the validity of the notice and assessment under Section 153C and in sustaining the additions, without independent application of mind and without properly considering the detailed submissions filed, rendering the order arbitrary and legally unsustainable. 12. On the facts and circumstances of the case, the CIT(A) failed to appreciate the fact that the additions/disallowances made by the AO are beyond the scope of the satisfaction note. 13. On the facts and circumstances of the case and in law, the AO erred in making illegal additions and completing the assessment at income of Rs. 35,61,910/-. 14. On the facts and circumstances of the case, AO has wrongly made addition of Rs. 15,00,000/- under Section 68 of the Act and CIT(A) has erred in upholding the same. 15. On the facts and circumstances of the case, AO has wrongly made addition of Rs. 45,000/- under Section 69C of the Act and CIT(A) has erred in upholding the same.

16.

On the facts and circumstances of the case, AO has wrongly made addition of Rs.1,04,548/- under Section 69C of the Act and CIT(A) has erred in upholding the same. 17. On the facts and circumstances of the case and in law, the AO erred in charging interest and initiating penalty proceedings under Section 271 AAC of the Act.”

4.

At the very outset the Ld. Counsel for the assessee submitted before the Bench that the assessee is not willing to press grounds of appeal taken on the issue of approval granted u/s.153D of the Act ( i.e. ground No. 4, 5 and 6) so they are dismissed as not pressed.

5.

During proceedings before us the Ld. Counsel for the assessee vehemently pressed the jurisdiction issue or legal issue pertaining to assessment of jurisdiction u/s.153C of the IT Act by the AO. In fact the appeal on ground No. 2 and 3 are on this issue only as per brief synopsis filed by the Ld. Counsel for the assessee and his arguments made during the proceedings before us. His arguments are summarised as under :-

“THE ASSESSMENT PROCEEDINGS ARE ILLEGAL, BAD IN LAW AND LIABLE TO BE QUASHED AS THE SATISFACTION NOTE RECORDED IS NOT IN ACCORDANCE WITH LAW. 1. In the present case, the very assumption of jurisdiction under Section 153C of the Act is vitiated at its inception, inasmuch as the satisfaction recorded by both the Assessing Officer of the searched person as well as the Assessing Officer having jurisdiction over the assessee is ex facie mechanical, non-speaking, and in complete disregard of the mandatory requirements enshrined under Section 153C(1) of the Act. The action of the Assessing Officer is thus Page | 4

rendered unsustainable in law. The illegality committed is summarised as under:  Absence of any incriminating material found during the course of search pertaining to the assessee;  Absence of any material having any bearing on the determination of the total income of the assessee;  Illegality arising from recording of a consolidated satisfaction note, without independent application of mind as required under law.  non-application of mind by the assessing officer of the assessee at the time of recording satisfaction note for the purpose of issuing notice under section 153C”

6.

In support of this issue the ld. Counsel for the assessee filed brief orders passed by the coordinate Bench of ITAT, Delhi in following the cases :-

“7. This issue also stands directly covered by the judgements rendered by ITAT arising from common impugned search: a. Sakshi Agarwal v. DCIT, Central Circle-28, ITA Nos. 4216 to 4223/DEL/2025; b. Alka Agarwal v. DCIT, Central Circle-28, ITA Nos. 4264 to 4269, 4271, 4272/DEL/2025; c. Pratishtha Images Private Limited v. DCIT, Central Circle- 28, ITA Nos. 4297 to 4304/DEL/2025; d. Alankit Forex India Limited v. DCIT, Central Circle-28, ITA Nos. 4208 to 4215/DEL/2025; e. Alankit Finsec Limited v. DCIT, Central Circle-28, ITA Nos. 4273 to 4280/DEL/2025; f. Saroj Gupta v. DCIT, CC-27, ITA Nos. 6262, 6264 & 6265/Del/2025;

g. DCIT v. M/s. Nutshell Vyapaar Pvt. Ltd., ITA Nos. 5471- 73/Del/2025 & Co Nos. 61-63/Del/2025; h. DCIT, Central Circle-28 v. M/s RameshwarDayal Educational Trust, ITA Nos. 6357 to 6359 & 6361/Del/2025 and CO Nos. 39 to 42/Del/2026 i. Hari Om Prakash Gupta HUF v. DCIT, Central Circle-28, ITA Nos. 6459 to 6463/Del/2025; j. Sharpi Agarwal; ITA Nos. 5975-77/Del/2025.”

7.

The Ld. DR relied on the order of the lower authorities and vehemently defended their findings.

8.

We have considered the findings given by the AO in the assessment order and the Ld. CIT(A) in the appellate order and we have also seen the satisfaction note prepared by the AO in this case and we find that in the satisfaction note nowhere it is explicitly clear as to whether the referred seized material bearing on the determination of total income of such other person. The Ld. DR could not rebut the charges put forward by the Ld. Counsel for the assessee. There is nothing as such mentioned either in the satisfaction note or in the assessment order. The coordinate Bench of the Tribunal in list of cases mentioned above relying on judgment of the Honble Supreme Court in the case of Saksham Commodities Ltd. Vs. ITO [2024] 161 taxmnna.com 485 in an identical situation quashed in assessment in following manner :-

“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.”

8.

In view of the above we find merits in the ground No.2 and 3 of assessee’s appeals. Accordingly, the respective assessment order are hereby quashed.

9.

Since we have allowed ground No.2 and 3 of above captioned appeals and other grounds require no further adjudication.

10.

In the result, the appeals filed by the assessee in ITA No.6704/Del/2025 for A.Y. 2017-18 and in ITA No.6705/Del/2025 for A.Y. 2018-19 are partly allowed.

Order pronounced in the open court on 10.07.2026.

Sd/- Sd/- [MADHUMITA ROY] [KRINWANT SAHAY] JUDICIAL MEMBER ACCOUNTANTMEMBER Dated: 10.07.2026 NEHA , Sr.P.S.* Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

More judgments on Section 153C

All 9,619 judgments and leading authorities on Section 153C →

Recent GST High Court judgments

Search GST case law →