A consolidated satisfaction note without year-wise identification of incriminating material under Section 153C of the Income-tax Act invalidates the assumption of jurisdiction, relying on Sunil Kumar Sharma and Saksham Commodities Ltd.

Headnote:(A) Income-tax Act, 1961 - Sections 153A and 153C - Search and seizure - Assessment of undisclosed income - Satisfaction note - A consolidated satisfaction note recorded for multiple assessment years without year-wise bifurcation of incriminating material is invalid and vitiates the assumption of jurisdiction under Section 153C. (Paras 5-7)

(B) Income-tax Act, 1961 - Section 153C - Assessment - Jurisdiction - The provision requires the Assessing Officer to be satisfied that seized material is likely to have a bearing on the determination of total income for a specific assessment year; a mechanical or en-bloc exercise of power for all years without such satisfaction is impermissible. (Paras 6-8)

Facts of the case:
The four appeals were filed by different assessees against orders of the Commissioner of Income Tax (Appeals) for Assessment Years 2017-18 and 2019-20. The Assessing Officer recorded consolidated satisfaction notes under Section 153C of the Act for multiple years (e.g., 2014-15 to 2020-21) without bifurcating amounts or identifying year-wise additions pertaining to each assessee. Based on these consolidated notes, assessment orders were passed and confirmed by the CIT(A).

Findings of Court:
The Tribunal held that a consolidated satisfaction note recorded for more than one Assessment Year without identifying year-wise additions is invalid. It relied on the decisions of the Hon’ble Karnataka High Court in Sunil Kumar Sharma and the Hon’ble Delhi High Court in Saksham Commodities Ltd, which held that satisfaction must be recorded for each Assessment Year individually. The Tribunal distinguished the earlier Delhi High Court judgment in Indian National Congress and noted that the SLP against Saksham Commodities Ltd was dismissed by the Supreme Court. Consequently, the assessment orders under Section 153C were quashed.

Issues: The main issue was whether recording a consolidated satisfaction note for various assessment years under Section 153C of the Act is fatal to the assumption of jurisdiction.

Ratio Decidendi: The court ruled that a consolidated satisfaction note fails to meet the statutory requirement of a year-wise assessment of incriminating material, rendering the proceedings invalid. The principle that a construction favorable to the assessee must be applied was also invoked. Result : Appeals allowed and assessment orders quashed.

Table of Content
1. this paragraph introduces the appeals and sets the stage for the legal analysis. (Para 1)
2. the primary legal argument concerns the failure to record required satisfaction under section 153c, with parties citing conflicting precedents. (Para 2 , 3)
3. the tribunal examines the consolidated satisfaction notes recorded for multiple assessment years and questions their validity. (Para 4 , 5)
4. the tribunal holds that a consolidated satisfaction note for multiple assessment years is invalid, following the precedent in saksham commodities ltd. and sunil kumar sharma, thereby quashing the assessments under section 153c. (Para 6 , 7)
5. the tribunal allows the appeals and quashes the assessment orders, making other grounds academic. (Para 8 , 9)

ORDER

PER YOGESH KUMAR, U.S. JM:

All the four captioned Appeals are filed by the different Assessees against the orders of Ld. Commissioner of Income Tax (Appeals) (‘Ld. CIT(A)’ for short)-25, NewDelhi dated 29/07/2025 and 31/07/2025 for Assessment Year 2019-20 and 31/07/2025pertaining to the Assessment Year 2017-18 respectively.

2. The Ld. Counsel for the assessee canvassing on Ground No. 3 of the Appeal submitted that A.O. 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. The Ld. Counsel has relied on plethora of judicial precedents in support of his contention.

3. Per contra, the Ld. Departmental Representative relied on the Judgment in the case of Indian National Congress vs DCIT reported in 463 ITR 431 (Del) dated 22-03-2024 and submitted that the Ground No. 3 of the Assessees’ Appeal deserves to be dismissed. Further relying on the orders of the Lower Authorities sought for dismissal of the Appeals filed by the Assessees.

4.We have heard both the parties and perused the material available on record. In the case of Ankit Agarwal, the satisfaction has been recorded for AY 2014-15 to 2020-21on10/05/2022, in the case of Alok Agarwal the satisfaction has been recorded for AY 2010-11 to 2020-21 on 10/05/2022 and in the case of Jagmohan Kejriwal, the satisfaction has been recorded on 20/06/2022 for AY 2010-11 to 2020-21. Pursuant above consolidated satisfaction notes, the assessment proceedings have been initiated and therespective assessment orders came to be passed which have been confirmed by the Ld. CIT(A), which are under challenged before us.

5. Heard both the parties and perused the material available on record. We have gone through the satisfaction notes issuedu/s 153C of the Act dated 10/05/2022, 20/06/2022 respectively mentioned above placed on record by the Assessees in the paper book. It is observed that a consolidated satisfaction note was recorded for more than one Assessment Year, wherein neither the AO has bifurcated the amounts nor year-wise additions pertaining to the assessee were identified, based on the said consolidated satisfaction, the assessment has been framed for the year under consideration.

6.In an identical situation, the Co-ordinate Bench of the Tribunal in the case of SRS Panchratan Diamonds Pvt. Ltd. In ITA Nos. 218/Del/2023 and 219/Del/2023 vide order dated 14/11/2025, relied on the Judgments of Hon’ble Karnataka High Court in the case of Deputy Commissioner of Income-tax Vs.Sunil KumarSharma [2024] 159 Taxmann. Com 179 (Karnataka) and also the Judgment of Hon’ble Delhi high Court in the case of Saksham Commodities Ltd vs ITO reported in 464 ITR 1 (Del) dated 09-04-2024 and decided the issue in favour of the Assessee holding that the consolidated satisfaction note is invalid, wherein the Co-ordinate Bench of the Tribunal has also distinguished the Judgment of the Hon’ble Jurisdictional High Court in the case of Indian National Congress (supra). The relevant observations of Co-ordinate Bench in the case of SRS Panchratan Diamonds Pvt. Ltd. (supra) are reproduced as under:

“6. From the above, it could be seen that the Learned AO of the

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2026 Supreme(Online)(ITAT) 13453

INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)ALOK AGARWAL & SONS HUF CIVIL LINES DELHI – AppellantVersusDEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-28 JHANDEWLAN EXTN. NEW DELHI – RespondentITA 4949/DEL/2025[2017-2018]

A consolidated satisfaction note without year-wise identification of incriminating material under Section 153C of the Income-tax Act invalidates the assumption of jurisdiction, relying on Sunil Kumar Sharma and Saksham Commodities Ltd.

INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
ALOK AGARWAL & SONS HUF CIVIL LINES DELHI – Appellant
Versus
DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-28 JHANDEWLAN EXTN. NEW DELHI – Respondent
ITA 4949/DEL/2025[2017-2018]