Section 153C Assessments Quashed by ITAT Delhi: How a Defective Satisfaction Note Invalidated Forty Assessments in the Alankit Group Cases
Overview of the Dispute
The Income Tax Appellate Tribunal, Delhi Bench, delivered a significant ruling on 28 November 2025, disposing of a consolidated batch of forty appeals filed by five assessees — Sakshi Agarwal, Alka Agarwal, Pratishtha Images Private Limited, Alankit Forex India Limited, and Alankit Finsec Limited — covering assessment years 2013-14 through 2020-21. The central question before the Tribunal was whether the assessments framed under Section 153C read with Section 143(3) of the Income Tax Act, 1961 were jurisdictionally valid in the absence of a legally adequate satisfaction note.
The search and seizure operation that triggered these proceedings was conducted on 18.10.2019 in the case of the Alankit Group. Following centralisation of the group cases, the Assessing Officer proceeded to initiate action under Section 153C against each of the five assessees, who were persons other than the searched person. What made these proceedings legally vulnerable — and ultimately fatal — was the manner in which the satisfaction note was recorded.
The Lead Case: Alankit Forex India Limited
The Satisfaction Note in Question
The Tribunal examined the satisfaction note dated 24.12.2021 recorded by the Assessing Officer in the lead appeal ITA No. 4208/Del/2025 concerning Alankit Forex India Limited. The satisfaction note read:
"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. It is a company owned and controlled by Shri Alok Kumar Agarwal. During the post search analysis, it came to light that it has been used to provide accommodation entries to various beneficiaries in lieu of cash received from them. It was earlier known as Alankit Life Care Limited. From various ledgers of bank accounts of this company obtained from 'Anarkali Complex' in Tally found in folder named DATA 24 in the laptop of Sh. Sunil Kumar Gupta found and seized from the residence of Sh. Sunil Kumar Gupta, at 3584/4, Narang Colony, Gali No. 4 Tri Nagar Delhi, it is seen that cash deposits and withdrawals have been made. It is to be examined and verified the source and utilisation of these cash deposits and withdrawals.
The said satisfaction note prepared by the AO of the person searched has been kept on record. I have also examined the above documents and the contents noted/written therein. After examination of these documents, I am also satisfied that these documents belong to the assessee. In view of the same, I am further satisfied that it is fit case for initiating proceedings u/s 153C of the Income Tax Act, 1961 for the A.Ys. 2010-11 to 2020-21."
The Jurisdictional Defect Identified
The Tribunal identified a critical omission in this satisfaction note. While the Assessing Officer recorded satisfaction that the seized material belonged to the assessee, he entirely failed to record satisfaction — which is an independent and essential jurisdictional requirement — that the seized material had a bearing on the determination of the total income of the assessee for the years under consideration.
Under Section 153C of the Income Tax Act, 1961, two distinct limbs of satisfaction are mandated before proceedings can be validly initiated:
First Limb: The Assessing Officer must be satisfied that the seized material — whether money, bullion, jewellery, books of account, documents, or other valuable articles — belongs to or pertains to a person other than the searched person, or that information contained therein relates to such other person.
Second Limb: The Assessing Officer having jurisdiction over such other person must independently be satisfied that the seized material has a bearing on the determination of the total income of that other person for the six assessment years immediately preceding the assessment year relevant to the year of search, and for the relevant assessment year or years referred to in
Section 153A(1).
The statutory language of Section 153C is unambiguous in this regard: