The main legal point established in the judgment is that the requirement of 'satisfaction' is a pre-condition for invoking jurisdiction under Section 153C of the Income Tax Act, and it must be in writing and consciously reflect the application of mind.

1. All the three appeals have been filed by the Department against consolidated order dated 29.11.2013 passed by the Income Tax Appellate Tribunal, Agra in ITA Nos. 200, 305 and 306/Agra/2013 for the assessment year 2002-03 and 2006-07.

2. The brief facts of the case are that all the assessees belong to M/s. Shanker Gutka Group, where a search and seizure operation was carried out on 30/31 January 2008. During the course of search, some cash was found and seized. No search warrant was issued in the name of the assessees, but the proceedings under Section 153C were initiated and assessees were asked to file the returns. Later, the A.O. passed the assessment order on account of house property and long term capital gain under Section153C read with Section 153A /143(3) of the Income Tax Act. The CIT(A) has confirmed the additions, but the Tribunal has deleted the said additions. Being, aggrieved the Department has filed the present appeals.

3. With this background, Shri Shambhu Chopra, the learned counsel for the Department submits that the core issue is that the Tribunal himself has interpreted the provision of Section 153C of the Income Tax Act but the same only provides the procedure to be followed.

4. For the purpose, the learned counsel submits that in the case of CIT v. Classic Enterprises : [2013] 358 ITR 465 (Alld.), it was observed that:

"... Section 153C of the Income Tax Act, 1961, prescribed the procedure to be adopted for initiating proceedings under section 153A against a person who has not be searched, in a situation where the Assessing Officer having the jurisdiction over the other person is different from the Assessing Officer having jurisdiction over the person in respect of whom the search has been conducted. The Assessing Officer has to be satisfied that undisclosed income found during search operations belongs to the third person before notice can be issued under section 153C. Mere use or mention of the word "satisfaction" in the order or note will not meet the requirement of the concept of satisfaction as used in section 158BD. The satisfaction has to be in writing and can be gathered from the assessment order, if it is so mentioned or recorded, or from any other order, note or record maintained by the Assessing Officer of the person searched. The Assessing Officer is satisfied when he makes up his mind or reached a clear conclusion when he take a prima facie view that the material available establishes "undisclosed income" of a third party. The Assessing Officer must reach a clear conclusion that good ground exists for the Assessing Officer of the third person to initiate proceedings as material before him shows or would establish "undisclosed income" of a third person. At this stage, as the proceedings are at the very initial stage, the "satisfaction" is neither required to be firm or conclusive..."

5. On an enquiry by the Bench, the learned counsel for the Department accepted that in the instant cases, no satisfaction was recorded. He read out para 7 of the Tribunal's order, where it was mentioned that the A.O. did not make any addition against the assessee on the basis of any adverse material. No material is produced to prove that the A.O. was satisfied that any money, bullion, jewellery or other valuable articles or things or books of accounts, or documents seized or requisitioned belong to or belonging to a person other than person referred to in Section 153A of the IT Act.

6. The learned DR also admits that no satisfaction note has been recorded in these cases before initiating the proceeding under Section 153C of the Income Tax Act as mentioned by the Tribunal in para 7 of the order.

7. However, he made a request that the Tribunal's order may kindly be set aside.

8. On the other hand, Shri Rahul Agrawal, the learned counsel for the assessee relied on impugned order passed by the Tribunal.

9. Learned counsel further submits that satisfaction is the mandatory requirement. For the purpose he relied on th