RATNA SAGAR PVT LTD,DELHI vs. DCIT,CENTRAL CIRCLE-4, DELHI

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ITA 169/DEL/2025Status: DisposedITAT Delhi21 November 2025AY 2018-198 pages
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What did the Tribunal hold?

The Tribunal held that the recording of a satisfaction note by the AO of the searched person is a prerequisite for initiating proceedings under Section 153C. In the absence of such a note, the assessment is bad in law and without jurisdiction.

What were the facts?

The assessee filed appeals against assessment orders passed under Section 153C for AY 2018-19 and 2019-20. A key issue was the absence of a satisfaction note recorded by the AO of the searched person.

What were the issues?

Whether the assessment proceedings under Section 153C are valid without a satisfaction note from the AO of the searched person, and whether electronic evidence like WhatsApp chats can be used without proper certification.

Which sections of the Income-tax Act were involved?

Section 153C,Section 153D,Section 69A,Section 132(4),Section 65B

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI M BALAGANESH

For Appellant: Shri Raj Kumar Gupta, CA &, Shri J.P. Sharma, CA
For Respondent: Ms. Nimisha Singh, CIT DR
Hearing: 17.09.2025

सुनवाईक�तारीख/ Date of hearing: 17.09.2025 21.11.2025 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER C.N. PRASAD, J.M.

These two appeals are filed by the Assessee against different orders of the Ld. CIT(Appeals), Delhi-23 dated 20.12.2024 for the assessment years 2018-19 and 2019-20. Assessee has raised the & 170/DEL/2025 RATNA SAGAR (P) LTD. following common grounds of appeal for the assessment years 2018- 19 & 2019-20 except for the figures:

1. “That under the facts and circumstances, SAT Note being fatally defective including single consolidate SAT Note for A.Y.14-15 to A.Y.20-21, makes the impugned proceedings U/s.l53C illegal and unsustainable in law.

2. That under the facts and circumstances, the approval of Addl. CIT U/ S.153D is not as per law, hence the asstt. order is not sustainable.

3.

That under the facts and circumstances, in the absence of mandatory certificate U/s 65B of the Indian Evidence Act, 1872 and further in the absence of providing the same before using the material allegedly taken out from electronic devices, the whatsapp chat taken from the mobile of Sh. Niraj Kr. cannot be used for impugned asstt. proceedings.

4.

That under the facts and circumstances, in the absence of providing the relevant material used for asstt. adversely which also includes appraisal report and statements of various persons recorded U/s132(4) etc. etc., no such material can be used for taking any adverse view in impugned asstt. proceedings.

5. That under the facts and circumstances, the adverse inference taken from 02 Pgs. of whatsapp chat of Sh. Niraj Kr. and consequential addition of Rs.6,34,500/- U/s.69A is illegal and unsustainable in law as well as on merits.

6. That under the facts and circumstances, Sec.69A is not applicable for addition of Rs.6,34,500/-.”

2.

Ld. Counsel for the assessee, at the outset, submits that no satisfaction note recorded by the Assessing Officer in the case of the searched person and therefore the AO lacks jurisdiction to complete the assessment in the case of the assessee who is the other person wherein assessment was completed u/s 153C of the Act. Ld. Counsel for the assessee invited our attention to page 4 of the Paper Book & 170/DEL/2025 RATNA SAGAR (P) LTD. which is the order u/s 7 of RTI Act passed by the Assessing Officer in response to query raised by the assessee seeking copy of satisfaction note recorded in the case of the person searched, the AO stated in reply that copy of satisfaction note recorded by AO of searched person is not available with his office. Therefore, Ld. Counsel for the assessee submits that in the absence of satisfaction note recorded in the case of the searched person the AO has no jurisdiction to complete the assessment in the case of the assessee u/s 153C of the Act and reliance was placed on the decision of the Hon’ble Karnataka High Court in the case of Pr. CIT vs. Smt. G. Laxmi Aruna (2023) (150 taxmann.com 107). Ld. Counsel further submitted that the SLP filed by the Revenue against this judgment of the Hon’ble Karnataka High Court was also dismissed by the Hon’ble Supreme Court in PCIT vs. G.

Laxmi Aruna (2024) (159 taxmann.com 183) (SC).

3. Ld. Counsel for the assessee also made the following submissions:

& 170/DEL/2025 RATNA SAGAR (P) LTD. & 170/DEL/2025 RATNA SAGAR (P) LTD. & 170/DEL/2025 RATNA SAGAR (P) LTD. 4. On the other hand, the Ld. DR strongly placed reliance on the orders of the authorities below. Ld. DR also placed reliance on the decision of the Hon’ble Delhi High Court in the case of Indian Youth Congress (463 ITR 431).

5.

Heard rival submissions, perused the orders of the authorities below. In this case on perusal of the RTI reply dated 28.01.2025 furnished by the Assessing Officer, we observed that the AO is unable to provide a copy of satisfaction note recorded by the AO of searched person. In the case of PCIT vs. G. Laxmi Aruna the Hon’ble Karnataka High Court affirming the decision of the Tribunal held that recording of satisfaction note by the AO of searched person is pre- requisite and the same must be prepared by the AO before he transmits records to other AO who has jurisdiction over such other person u/s 153C and since in the case of the assessee before the Hon’ble Karnataka High Court, satisfaction note was not recorded by the AO of searched person it was held that the Tribunal had rightly quashed assessment on account of lack of jurisdiction. The SLP filed by the Revenue against this decision in the case of the PCIT vs. G.

Laxmi Aruna by the Revenue was dismissed by the Hon’ble Supreme Court in the case of PCIT vs. G. Laxmi Aruna (supra). The ratio of the above decisions squarely applies to the facts of the assessee’s case.

& 170/DEL/2025 RATNA SAGAR (P) LTD. Thus, respectfully following the above decision of the Karnataka High Court in the case of PCIT vs. G. Laxmi Aruna and the decision of the Hon’ble Supreme Court in the case of PCIT vs. G. Laxmi Aruna (supra), we hold that the assessment made u/s 153C in the case of assessee for the AY 2018-19 is bad in law and without jurisdiction since the satisfaction note was not recorded by the Assessing Officer of searched person. Accordingly, we quash the assessment order passed u/s 153C of the Act for the AY 2018-19. Since we have quashed the assessment on lack of jurisdiction of the AO the other technical grounds raised by the assessee are left open.

6.

Coming to the appeal for the AY 2019-20, the grounds taken by the assessee are identical to the grounds raised by the assessee for the AY 2018-19 and the decision taken therein shall apply mutantis mutandis to the appeal for the AY 2019-20. We order accordingly.

7.

In the result, appeals of the Assessee are partly allowed as indicated above.

Order pronounced in the open court on 21.11.2025

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