Income Tax Appellate Tribunal - Delhi
Rajdeo Singh,Delhi vs Dcit, Central Circle-3, Delhi on 29 April, 2026
1
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F", NEWDELHI
BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
and
SHRI SUDHIR KUMAR, JUDICIAL MEMBER
ITA No.8205/DEL/2025
(Assessment Year: 2017-18)
Rajdeo Singh, vs. DCIT, Central Circle 3,
D-40, Lovely Apartments, New Delhi.
Mayur Vihar Phase 1,
Delhi - 110 091.
(PAN: AJPPS7845D)
ITANo.156/DEL/2026
(AssessmentYear:2017-18)
Shishir, vs. DCIT, Central Circle 3,
B-1/1, Vinay Khand, New Delhi.
Gomti Nagar,
Lucknow - 226 010 (Uttar Pradesh).
(PAN: AVJPS9637B)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Shri Pavan Ved, Advocate
Shri Mohit Gupta, CA
Shri Mirza Muhiuddin Baiq, ACA
Shri Nishant Garg, CA
REVENUE BY : Ms. Monika Singh, CIT DR
Date of Hearing : 09.04.2026
Date of Order : 29.04.2026
ORDER
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ITA No.8205/DEL/2025
ITA No.156/DEL/2026
PER S. RIFAUR RAHMAN, AM :
1. These appeals are filed by the assessees, Shishir and Rajdeo Singh, against the order of ld. Commissioner of Income-tax (Appeals), Delhi-23["Ld. CIT(A)", for short] dated 22.12.2025and 28.10.2025 for the Assessment Year 2018-19 respectively.
2. Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order. We take up the assessee's appeal being ITA No.8205/Del/2025 for AY 2017-18 in the case of Rajdeo Singh as lead case to adjudicate the issues under consideration.
3. The assessee, Rajdeo Singh, in ITA No.8205/Del/2025 for AY 2017-18 raised the following grounds of appeal :-
"1. That on the facts and in the circumstances of the case the order passed by the CIT(A) u/s 250 of the Act dated 28.10.2025 is bad in law, violative of principles of natural justice and unjust.
2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in confirming the assessment order passed by the Assessing Officer (AO) determining the total income of the appellant at Rs.24,02,250/- as against the declared income of Rs.10,92,090/- vide order u/s 153C of the Income Tax Act, 1961 dated 13.03.2024.
3. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the order passed u/s 153C of the Income-
tax Act, 1961, which is barred by limitation and thus, deserves to be quashed.
4. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on the facts in upholding the initiation of proceedings u/s 153C of the Act based on a defective, unspecific and vague satisfaction note which has 3 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 been drawn on the strength of an undated & unsigned one loose sheet of paper which document does not at all indicate that it has a bearing on the determination of income of the appellant and therefore, the notice issued u/s 153C of the Act on the basis of the vague Satisfaction Note which has no value in the eyes of law, the same is illegal and not valid under law.
5. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on the facts in upholding a high-pitched assessment framed u/s 153C of the Act by making erroneous, arbitrary and ad-hoc additions based on mere conjecture, suspicions and surmises. It is also worthwhile to mention here is that keeping in view such erroneous actions and to ensure fair, objective and rationality while framing scrutiny assessment orders, the CBDT has constituted LOCAL COMMITTEES TO DEAL HIGH-PITCHED SCRUTINY ASSESSMENTS VIDE INSTRUCTION [ENO.225/290/2015-ITA-II], DATED 9-11-2015.
6. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the ad-hoc and arbitrary additions made by the Ld. AO based on non-speaking, unsigned & undated dumb documents without any corroborative material, evidence on record and finding that such document has materialized into transactions giving rise to income of the appellant which had not been disclosed by the appellant as the said document has no relevance to the actual & real facts of the case.
7. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the ad-hoc and arbitrary additions made by the Ld. AO on the basis of alleged material which does not form part of the Satisfaction Note drawn by the AO of the Searched Person as well as the Jurisdictional AO which material has been relied upon by the Ld. AO while framing the impugned assessment order u/s 153C of the Act and thus, the order so framed is bad in law and needs to be quashed.
8. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding the ad-hoc and arbitrary additions made by the Assessing officer on the basis of generic/unconnected/unrelated WhatsApp chats which either have no financial implication and/or have never been materialized and have no evidentiary value.
9. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in upholding ad-hoc and arbitrary additions made by Assessing officer based on generic WhatsApp chats without providing the Certificate u/s 65B of the Information Technology Act, 2000 and without following the procedures laid down under the Indian Evidence Act 1972 read with the Information Technology Act, 2000.
4 ITA No.8205/DEL/2025 ITA No.156/DEL/202610. That on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and on facts in making an ad-hoc and arbitrary addition amounting to Rs.13,10,160/- on substantive basis in the hands of the appellant and on protective basis in the hands of Sh. Shishir as the Ld. AO was himself not sure in whose hands the addition has to be made as the said addition have been made totally on arbitrary & ad-hoc basis on the premises of some non-speaking undated & unsigned dumb documents supported by generic/unconnected WhatsApp chats which itself have no evidentiary value and that too without following the procedures laid down under the Indian Evidence Act, 1971 read with the Information Technology Act, 2000.
11. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in upholding the wrong invocation of Sec. 69A and Sec. 115BBE of the Act.
12. That on the facts and in the circumstances of the case, the statutory approval so granted u/s 153D of the act is merely mechanical, without application of mind, without considering and perusing the material on record and thus bad in law thereby making the assessment proceedings u/s 153C r.w.s. 153D void ab initio which fact is completely ignored by the Ld. CIT(A).
13. That the order so framed by the Ld. Assessing Officer as well as by the Ld. CIT(A) are bad in law & on facts [to the extent as elaborated above] and thus, needs to be quashed.
14. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law & on facts in upholding wrong initiation of penalty proceedings particularly based on an erroneous assessment order."
4. At the outset of the hearing, ld. AR for the assessee submitted that assessee has filed additional ground of appeal under Rule 11 of the Income Tax (Appellate Tribunal) Rules and it is purely legal issue and the same is reproduced below :-
"That on the facts and in the circumstances of the case, the notice u/s 153C of the Act dated 12.12.2022 for AY 2017-18 is barred by limitation due to inordinate delay as laid down by CBDT Circular No. 24/2015 dated 31.12.2015 and thus, notice u/s 153C is bad in law, void-ab-initio 5 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 being barred by limitation and accordingly, the entire assessment proceedings along with consequent demand deserves to be quashed."
5. Since the above ground of appeal is purely legal, do not require fresh facts to be investigated and go to the root of the matter, ld. AR of the assessee prayed that the same may be admitted in view of the judgement of NTPC Ltd. vs. CIT, (1998) 229 ITR 0383 (SC).
6. On the other hand, ld. DR for the Revenue has no objection of admitting the additional ground of appeal being purely legal issue.
7. In view of the reliance made by the ld. AR for the assessee on the judgment of Hon'ble Supreme Court in the case of NTPC Ltd. (supra) and issue being purely legal, we proceeded to admit the additional ground of appeal being a legal issue.
8. During the course of hearing, the Ld. AR of the assessee submitted the following written submissions before us as under:-
1. During the course of hearing held on 09.04.2026, the Ld. AR for the assessee placed the following common written submissions before us and also furnished a Compilation of Case Laws as under:
The issues as well as the facts involved in the captioned appeals are identical and therefore, joint common written submissions are being submitted herewith for ITA No. 8205/DEL/2025 and ITA No. 156/DEL/2026 as under:
A. BRIEF CASE DETAILS 6 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No.
1. That proceedings u/s 153C of the Act were initiated in case of the captioned assessees on the basis of the material found & seized (i.e., Pg. no. 28 of Annexure-A4) A4) during the course of search action conducted at the premises of one, Mr. Ramavtar Agarwal at S S-92, 92, Panchsheel Park, New Delhi covered under Dinesh Tyagi Group of Cases on 16.05.2018.
2. That the satisfaction was rec recorded orded by the AO of the person searched on 17.01.2022 wherein the aforesaid material was relied upon for initiation of proceedings u/s 153C of the Act in case of the captioned assessees. The copy of the satisfaction note is provided at Page No. 1 of Paper Paper-B Book and is also imaged hereunder along with the seized material relied upon in the Satisfaction Note:
SATISFACTION NOTE OF AO OF THE PERSON SEARCHED 7 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No. ALLEGED INCRIMINATING SEIZED MATERIAL FORMING PART OF SATISFACTION NOTE (Also imaged at Page No. 3 of the assessment order dated 13.03.2024) 8 ITA No.8205/DEL/2025 ITA No.156/DEL/2026
3. That the cases of both the assessees were centralized to DCIT, Central Circle-3, New Delhi vide order u/s 127 of the Act dated 22.12.2022.
4. That erroneous assessments in the present cases have been framed vide orders u/s 153C of the Act both dated 13.03.2024 as under: -
S. Assessee Returned Additions Made Assessed
NO. Name income Substantive Protective Total Income
1 Shishir Singh 18,63,830 26,18,200 3,56,33,300 3,82,51,500 4,01,15,330
2 Rajdeo Singh 10,92,090 1310160 0 1310160 24,02,250
5. That the assessee preferred appeal against the aforesaid erroneous assessment for framed u/s 153C of the Act before the Ld. CIT(A). The Ld. CIT(A) arbitrarily without considering the submissions of the appellants, vide order dated 28.10.2025 confirmed the addition of Rs. 13,10,160/- in the hands of Sh.
Rajdeo Singh and vide order dated 22.12.2025, confirmed the total addition of Rs. 3,82,51,500/- (including addition made in the hands of Sh. Rajdeo Singh) on substantive basis in the hands of Shishir.
6. That the captioned appeals for AY 2017-18 have been preferred against the aforesaid erroneous orders passed by the Ld. CIT(A) u/s 250 of the Act emanating from the erroneous assessments framed vide order u/s 153C of the Act both dated 13.03.2024 by the Ld. DCIT, CC-3, Delhi.
B. WRITTEN SUBMISSIONS (WS) The orders framed u/s 153C of the Act dated 13.03.2024 by the Ld. AO are barred by limitation, bad in law, illegal, unlawful and thus, deserves to be quashed in view of the following written submissions: -
I. The notice u/s 153C of the Act dated 12.12.2022 for AY 2017-18 is barred by limitation due to inordinate delay as laid down by CBDT Circular No. 24/2015 dated 31.12.2015 and thus, notice u/s 153C is bad in law, void-ab-initio being 9 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 barred by limitation and accordingly, the entire assessment proceedings along with consequent demand deserves to be quashed.
1) That the aforesaid issue of notice u/s 153C of the Act dated 12.12.2022 is time barred has been raised in both the captioned appeals vide Additional Ground No. I submitted vide separate request letters both dated 09.03.2026 duly submitted before the Hon'ble Bench and Ld. DR on 13.03.2026, the acknowledged copy of the said letter dated 09.03.2026 is enclosed at Page Nos. 39-42 of this WS.
2) That in the instant batch of appeals, the proceedings u/s 153C of the Act have been initiated on the basis of the alleged information gathered during the course of search conducted on 16.05.2018 at the residential premises of one Mr. Ram Avtar Agarwal at S-92, Panchsheel Enclave, New Delhi.
3) That the assessment in case of the person searched, i.e., Mr. Ram Avtar Agarwal was framed vide order u/s 153A of the Act dated 28.09.2021. The copy of the assessment order framed u/s 153A of the Act dated 28.09.2021 in case of Mr. Ram Avtar Agarwal for AY 2017-18 is provided at Page Nos. 3- 205 of Paper-Book.
4) That the notice u/s 153C of the Act in the instant cases of appellant have been issued on 12.12.2022, i.e., after one year & three months' time from the date of assessment framed u/s 153A of the Act in case of person searched. The copy of the notice u/s 153C of the Act dated 12.12.2022 is provided at Page No. 2 of Paper-Book.
5) That at this juncture, it is important to place reliance on the judgement delivered by the Hon'ble Supreme Court of India in the case of CIT vs. Calcutta Knitwears in Civil Appeal No. 3958 of 2014 wherein vide order dated 12.03.2014, the Hon'ble Supreme Court settled the law with regard to timeline for initiation of assessment u/s 153C of the Act at Para 44 as under:
"The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the 10 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person."
6) That Hon'ble Delhi High Court following the afore-stated timeline provided by the Hon'ble Supreme Court in the case of Calcutta Knitwears (supra), vide order dated 08.01.2015 held the following in the case of CIT v. Bharat Bhushan Jain [2015] 61 taxmann.com 89 (Delhi) [Copy of the judgement dated 08.01.2015 is enclosed at Page Nos. 1 to 4 of Compilation of Case Laws (CCL)]:
"6. Having regard to the intent of the Supreme Court in paragraph 44 of the Calcutta Knitwears (supra), where it was indicated that the Revenue has to be vigilant in issuing notice to the third party under section 158BD, immediately after the completion of assessment of the searched person, this court is of the opinion that a delay ranging between 10 months of one-and-half years cannot be considered contemporaneous to assessment proceedings. We are of the opinion that notices were not issued in conformity with the requirements of section 158BD, and were unduly delayed. The appeals of the Revenue, accordingly, fail and are dismissed.
7) That vide aforesaid judgement in case of Bharat Bhushan Jain (supra), the Hon'ble Delhi High Court following the principles laid down by the Hon'ble Supreme Court has delivered a landmark judgement whereby the Hon'ble Delhi High Court has specified the time limit beyond which, the issuance of notice u/s 158BD of the Act will be considered as time barred, the said timeline of delay has been specified as ranging between 10 months to one & a half year, meaning thereby that if any notice u/s 158BD of the Act is issued beyond 10 months' time from the date of assessment order framed in the case of person searched, the same will be considered as delayed and accordingly, the said notice will be time barred.
8) That in order to streamline the assessment procedure with regard to issuance of notice for framing assessment in case of person other than person searched, the CBDT issued Circular No. 24/2015 dated 31.12.2015 wherein it clarified that 11 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 Several High Courts have held that the provisions of section 153C of the Act are substantially similar/pari-materia to the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon'ble SC in case of Calcutta Knitwears (supra), apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. The copy of the CBDT Circular No. 24/2015 dated 31.12.2015 is provided at Page Nos.
206-207 of Paper-Book. Accordingly, the afore-stated principles laid down by the Hon'ble Supreme Court in the case of Calcutta Knitwears (supra) and by the Hon'ble Delhi High Court in the case of Bharat Bhushan Jain (supra) in terms of delay in issuance of notice u/s 158BD squarely applies to issuance of notice u/s 153C of the Act as well.
9) That at this juncture, it is worthwhile to place reliance on the recent judgement delivered by Hon'ble ITAT, Hyderabad in the case of Shri Farooqi Gulam Samdani vs. DCIT, Central Circle 1(3), Hyderabad in ITA No.814/Hyd/2025 for AY 2019-20 wherein vide order dated 24.12.2025 at Para 13 [Copy of the judgement dated 24.12.2025 is enclosed at Page Nos. 5 to 33 of CCL], the Hon'ble Tribunal held as under:
"Since the Hon'ble Supreme Court and majority of Hon'ble High Courts have taken a view that notice issued u/s.153C of the Act after a period of 10 months to 1 ½ year is barred by limitation and in our considered view by applying the above case laws in the present case, notice issued u/s.153C of the Act dated 16.12.2022 after a period of 22 months is not a valid notice and consequently the assessment order passed by the Assessing Officer u/s.153C of the Act dated 13.03.2024 is invalid, void ab initio and liable to be quashed. We order accordingly."
In view of the above well-stated law and facts of the case, in the instant appeals before your honors, since the notice u/s 153C of the Act in both the cases have been issued on 12.12.2022, i.e., after one year & three months' time [15 months' delay] from the date of assessment framed u/s 153A of the Act in case of person searched on 28.09.2021, the notices so issued u/s 153C of the Act are not a valid notice and accordingly, the assessment orders so framed u/s 153C of 12 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 the Act dated 13.03.2024 are liable to be quashed being void-ab-initio, invalid, bad in law and oblige.
II. Assessment u/s 153C of the Act has been initiated based on a vague, non-
speaking, non-specific and defective Satisfaction Note based on an undated & unsigned dumb document and thus, the very order u/s 153C of the Act dated 13.03.2024 of framed based on a defective satisfaction are liable to be quashed.
1) Drawing of Satisfaction note is a pre-requisite for initiating proceedings u/s 153C of the Act wherein the Ld. AO record his satisfaction based on some incriminating material which has been found during the course of search which material specifically & clearly indicate that there exists an undisclosed income for a particular assessment year which belongs to a person other the person searched.
2) In the instant appeal matter of the captioned assessees, identical satisfaction note has been drawn by the AO of the person searched and a single loose sheet (alleged seized material) has been relied upon for initiation of assessment proceedings u/s 153C of the Act in both the cases on the basis of alleged incriminating material unearthed during the course of search (as imaged above).
3) From the perusal of the aforesaid Satisfaction Note recorded by the Ld. AO and the alleged seized material relied upon, the following crucial facts are totally unascertainable:
i. That as to how it has been alleged that the assessee has undertaken any undisclosed transaction pertaining to AY 2017-18; ii. That what amount of income has remained undisclosed by the assessee in his respective hand;
iii. That what is the nature & the relevant amount of transaction which has remained undisclosed as just the description of the alleged sheet has only been mentioned in the Satisfaction Note without determining exactly which amount is the undisclosed income of the assessee specifically; iv. That how the alleged seized material pertains to the assessee 13 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 v. That as to how it is being alleged that the alleged seized material has a bearing on the determination of total income of the assessee for AY 2017-18.
4) All the afore-stated crucial aspects which are a pre-requisite for initiation of proceedings u/s 153C of the Act are totally missing from the alleged seized material and satisfaction note based on which impugned assessment proceedings u/s 153C of the Act have been initiated against the assessee making the impugned assessment orders bad in law and void-ab-initio as the ld.
AO failed to satisfy the mandatory pre-requisite for initiation of impugned assessment proceedings u/s 153C of the Act, i.e., to record a well-reasoned satisfaction note based on material unearthed during the course of search which clearly indicate that it has a bearing on the determination of total income of the person for a particular assessment year.
5) The Satisfaction Note cannot be vague and should contain specific information along with corroborative seized material for having satisfied that the person other than the person searched has not disclosed his income for a particular year in his return of income filed for that relevant assessment year to which such information pertains.
6) In the present cases, the premise for initiating the proceedings u/s 153C of the Act solely lies on a "piece of loose sheet" which is undated, unsigned and a random noting, in other words, a "dumb document" from which nothing can be clearly ascertained and therefore, such vague sheet cannot form a justified basis for making additions to income of the assessee and to initiate the very impugned assessment proceedings u/s 153C of the Act. [EMPHASIS SUPPLIED]
7) The predominant judicial view is that no arbitrary addition to the income can be made by the Assessing Officer based on the dumb documents, loose papers containing scribbling, rough/vague noting in the absence of any corroborative material, evidence on record and finding that such dumb documents had 14 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 materialized into transactions giving rise to income of the assessee which had not been disclosed in regular books of account by the appellant.
a) Hon'ble Jurisdictional Delhi High Court in the case of CIT v. Girish Chaudhary in ITA No. 22 of 2007 [Copy of the judgement dated 22.05.2007 is enclosed at Page Nos. 34 to 41 of CCL] following the judgment delivered by the Hon'ble Supreme Court in the case of CBI vs. VC Shukla & Others, vide order dated 22.05.2007 held that no addition can be made on the basis of a dumb document and accordingly, the order of the Tribunal deleting the entire addition in the absence of a relevant material was upheld.
b) Hon'ble Karnataka High Court in the case of DCIT v. Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) vide order dated 22.01.2024 [Copy of the judgement dated 22.01.2024 is enclosed at Page Nos. 68 to 93 of CCL] held as under:
"26. It is established in law by the Hon'ble Apex Court that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. Following the law declared by the Hon'ble Apex Court, we are of the view that the action taken by the respondent/Revenue against the Assessee based on the material contained in the diaries/loose sheets, are contrary to the law declared by the Hon'ble Apex Court. In that view of the matter, impugned notices issued under section 153C of the Act, based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal."
c) Hon'ble ITAT, Delhi in the case of Sunshine Infratech (P) Ltd. v. DCIT in ITA No. 3699/Del/2018 [Copy of the judgement dated 24.02.2025 is enclosed at Page Nos. 42 to 45 of CCL] and decided vide order dated 24.02.2025 as under:
"4. Learned Sr. DR vehemently argues in light of the assessment findings that the Assessing Officer herein had rightly made addition of Rs.20 Cr. in the assessee's hands in furtherance to the relevant incriminating material found/seized in the course of search action carried out on 09.10.2013. We note in this backdrop that the learned Assessing Officer's assessment dated 29.03.2016 has itself reproduced the corresponding contents of the seized material at 15 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 pages 3 onwards continuing upto page 10 wherein none of the parties in question appears to have put in the signature(s) so as to constitute valid agreement make them liable for the corresponding stipulates therein.
5. This being the clinching fact, we hereby quote CIT Vs. Girish Chaudhary (2008) 296 ITR 619 (Delhi) that no addition could be made based on such a dumb document wherein none of the parties have even not put in their respective signature. The impugned addition stands deleted in very terms therefore."
d) The Hon'ble ITAT, Mumbai in case of ITO Vs Kranti Impex Pvt. Ltd. in ITA No. 1229/Mum/2013 vide order dated 28/02/2018 [Copy of the judgement dated 28.02.2018 is enclosed at Page Nos. 46 to 67 of CCL] held that since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When dumb documents like the present loose sheets of papers are recovered and the Revenue wants to make use of it, the onus rests on the Revenue to collect cogent evidence to corroborate the noting therein. The Revenue has failed to corroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized papers reveal the unaccounted on- money receipts of the assessee. ........ Thus, the impugned addition was made by the AO on grossly inadequate material or rather no material at all and as such, deserves to be deleted. Hence, we are of the view that an assessment carried out in pursuance of search, no addition can be made simply on the basis of uncorroborated noting in loose papers found during search because the addition on account of alleged on-money receipts made simply on the basis of uncorroborated noting and scribbling on loose sheets of papers made by some unidentified person and having no evidentiary value, is unsustainable and bad-in-law."
16 ITA No.8205/DEL/2025 ITA No.156/DEL/2026In view of the aforementioned legal position, it is unambiguously clear that dumb documents (undated, unsigned random notings) cannot at all be relied upon for making addition while framing assessment under the relevant provisions of Income Tax Act, 1961 and thus, following the said settled position of law, the assumption of jurisdiction by recording satisfaction note based on a dumb document is not permissible under law and accordingly, the very assumption of jurisdiction is bad in law, illegal and void.
12) In addition to the above, it further most respectfully submitted that when the satisfaction note is absolutely devoid of any categorization/specification of the undisclosed income with reference to the documents relied/mentioned therein, the issuance of notice u/s 153C of the Income Tax Act, 1961 is legally unsustainable and bad in law as the same has been issued without satisfying the mandatory requirements for invoking provisions of section 153C of the Act, i.e., to record a valid satisfaction note on the basis of a legible self- explanatory material unearthed during the course of search indicating undisclosed income for a particular assessment year.
13) In this regard, reliance is placed on the landmark judgement delivered by the Hon'ble Jurisdictional High Court of Delhi in the case of Saksham Commodities Ltd. vs. Income Tax Officer [2024] 161 taxmann.com 485 (Delhi)/[2024] 464 ITR 1 (Delhi) vide order dated 09.04.2024 [Copy of the judgement dated 09.04.2024 is enclosed at Page Nos. 94 to 128 of CCL] wherein the Hon'ble Court has settled the law that assessment u/s 153C of the Act cannot be initiated in respect of Assessment Years for which no incriminating material had been gathered or obtained and satisfaction notes also failed to record any reasons as to how material discovered and pertaining to a particular Assessment Year was likely to "have a bearing on determination of total income" for the year which was sought to be reopened in terms of impugned notices u/s 153C of the Act and in such circumstances, proceedings initiated u/s 153C could not sustain and impugned notice was held to be quashed.
17 ITA No.8205/DEL/2025 ITA No.156/DEL/2026The relevant paras of the aforementioned judgement dated 09.04.2024 are reproduced herein below for ready reference: -
"67. On an overall consideration of the aforesaid, we come to the firm conclusion that the "incriminating material" which is spoken of would have to be identified with respect to the AY to which it relates or may be likely to impact before the initiation of proceedings under Section 153C of the Act. A material, document or asset recovered in the course of a search or on the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search or the "relevant assessment year" would not justify a sweeping or indiscriminate invocation of Section 153C.
68. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs' and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments."
14) From the perusal of the contents of the aforesaid judgement, it is unambiguously clear that the incriminating material based on which satisfaction has been recorded to initiate proceedings u/s 153C of the Act must itself indicate that it has a bearing on the determination of total income for a particular year in case of the person other than the person searched. In the instant cases, the incriminating material is single sheet of paper which is undated, unsigned and contains random noting which does not at all indicate that it has a bearing on the determination of total income of the assessee that 18 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 too for a particular year as the same do not have any date whatsoever. In the absence of the date, it is impossible for the Ld. AO to assume jurisdiction for any assessment year including the impugned assessment year, i.e., AY 2017-
18. Hence, the Ld. AO has assumed the jurisdiction to initiate proceedings u/s 153C of the Act without following the mandatory requirements contained under the law and thus, the very assessment order passed u/s 153C of the Act dated 13.03.2024 is legally unsustainable & void-ab-initio and accordingly, deserves to be quashed.
15) There are plethora of judgements taking the aforesaid view that provisions of Sec. 153C cannot be invoked in absence of an incriminating seized material which specifically & clearly indicates that it has a bearing on the determination of total income of the assessee for a relevant assessment year, few of such judgements are being relied upon as under: -
i) The Hon'ble Supreme Court in the case of CIT vs. Singhad Technical Education Society (2017) 397 ITR 344 (SC) [Copy of the judgement dated 29.08.2017 is enclosed at Page Nos. 129 to 144 of CCL] has held vide order dated 29.08.2017 that the alleged incriminating seized material must pertain to the relevant assessment year for which impugned notice u/s 153C has been issued otherwise the assessment proceedings so initiated are invalid by observing as under: -
"18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co- relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act."19 ITA No.8205/DEL/2025 ITA No.156/DEL/2026
ii) The Hon'ble ITAT, Delhi in the case of Rajiv Agarwal v. ACIT in ITA No. 2948/Del/2023 vide order dated 31.12.2024 [Copy of the judgement dated 31.12.2024 is enclosed at Page Nos. 145 to 163 of CCL] following the judgement of the Jurisdictional Delhi High Court in case of Canyon Financial Services Ltd. Vs. ITO [399 ITR 202] held as under:
"14......... When the satisfaction notes are compared with the notice u/s 142(1) of the Act along with the annexure having analysis of the seized material, it appears that at the time of assumption of jurisdiction by way of recording the satisfaction, the AO of the assessee before us had not applied his mind while issuing the notice on 17.06.2021 and it was only while issuing notice under sub section (1) of section 142 of the Act, the analysis of the documents was done. Thus, in regard to the appeals of the assessee, we find substance in the ground No.1 as raised before us. Thus, the Ld. CIT(A) has erred in law by not appreciating that the impugned assessment orders in both the years were based on illegal assumption of jurisdiction on the basis of satisfaction note which was recorded without application of mind and quite in a mechanical manner. The reasons do not demonstrate how the nature of seized material has bearing on the total income of the assessee and to which assessment year particularly. The satisfaction note does not reflect any rational connection with or relevant bearing on the alleged seized material and the alleged undisclosed income of the assessee for a particular year sought to be assessed. Thus, we are inclined to allow the ground No.1 in the appeals filed by the assessee and, consequently, allow the appeals of the assessee with consequential effects and the appeal of Department is dismissed."
iii) The Hon'ble Madras High Court in the case of Agni Vishnu Ventures (P.) Ltd.
v. DCIT [2023] 157 taxmann.com 242 (Madras) vide order dated 28.06.2023 [Copy of the judgement dated 28.06.2023 is enclosed at Page Nos. 164 to 187 of CCL] observed as under:
"82. It thus flows from the provision (Sec. 153C) that the receiving assessing officer must apply his mind to the materials received and ascertain precisely the specific year to which the incriminating material relates. It is only when this determination/ascertainment is complete that the flood gates of an assessment would open qua those particular years. The issuance of a notice cannot be an automated function unconnected to this exercise of analysis and ascertainment by an assessing officer.20 ITA No.8205/DEL/2025 ITA No.156/DEL/2026
..............
84. In other words, a Damocles sword appears over the head of an assessee with the issuance of every notice which is laid to rest only upon conclusion of the proceedings; The sword cannot be invoked lightly and except if the statutory condition is satisfied. That is to state, an officer has to analyse and compartmentalise the incriminating material year wise, to arrive at a categoric determination as to the year to which the incriminating material relates and issue notices only for those years."
iv) The Hon'ble Delhi High Court in the case of PCIT, Delhi-18 v. N.S. Software (Firm) [2018] 93 taxmann.com 21 (Delhi) vide order dated 18.04.2018 held as under:
"23.......... In the present case, the Ld. AO has not explained steps taken by him to determine that the seized material belonged to the Assessee Firm. The satisfaction note has been prepared in a standard mechanical format and it does not provide any details about the books of accounts which allegedly belong to the Assessee Firm..
......................
nevertheless at the stage of sending notice under Section 153C, the AO has to record a specific reason or reasons, why the material seized from the other person has a nexus to the assessee, to whom the notice under that provision is addressed. In this case, this never happened. Thus, for the previous years, the rule in CIT v Kabul Chawla [2016] 380 ITR 573/234 Taxman 300/61 taxmann.com 412 (Delhi), i.e., that in the absence of any incriminating materials, the previous years' assessments cannot be disturbed, applies.
24. In the present case, therefore, the failure of the AO to record a specific satisfaction as to how the recovered material belonged to the assessee in the note that preceded the notice issued under it, vitiates the assessments."
In view of the afore-stated facts and settled law, it is hereby prayed before your honor to kindly quash the assessment orders framed u/s 153C of the Act all dated 13.03.2024 in case of all the captioned assessees in the interest of natural 21 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 justice as the same has been passed on the basis of wrong assumption of jurisdiction by recording a defective satisfaction note without following the mandatory conditions & prerequisites laid down under the income tax law and oblige.
III. The assessment has been framed by placing reliance on some alleged material seized from third party not forming part of the impugned Satisfaction Note meaning thereby that the assessment so framed u/s 153C of the Act is out of jurisdiction.
1) In addition to the arguments stated above at I & II, it is further most respectfully submitted that the Ld. AO while framing assessment u/s 153C of the Act has travelled beyond its jurisdiction by placing reliance on the alleged material seized from third party which does not form part of the satisfaction recorded by the AO of the person searched which determines the scope of assessment to be framed u/s 153C of the Act in case of the assessees.
2) That the Ld. AO has initiated the impugned assessment proceedings u/s 153C of the Act by recording satisfaction based on the material found & seized (i.e., Pg. no. 28 of Annexure-A4) during the course of search action conducted at the premises of one, Mr. Ramavtar Agarwal at S-92, Panchsheel Park, New Delhi, however, the Ld. AO has also relied upon the WhatsApp chats contained in the Mobile Phone (i..e, I-Phone 7) which belonged to Mr. Dinesh Tyagi which mobile phone was seized during the course of independent search action conducted in the case of Mr. Dinesh Tyagi at his premises at 394, Sector 17, Faridabad, Haryana (refer Para 5.20 at Pg. No. 33 of the assessment order dated 13.03.2024) - Mobile Phone seized & annexurized as Annexure-A2 in the Independent Panchnama drawn in case of Sh. Dinesh Tyagi. The copy of the Panchnama drawn in the case of Mr. Dinesh Tyagi evidencing the seizure of his mobile phone has been provided at Page Nos. 208 - 216 of Paper-Book (Relevant Page No. 212).
22 ITA No.8205/DEL/2025 ITA No.156/DEL/20263) That said Mobile Phone (I-Phone 7) annexurized as Annexure-A2 seized from his premises at 394, Sector 17, Faridabad, Haryana, do not find any place in the Satisfaction Note recorded by the AO of the Person Searched and thus, the additions have been made by the Ld. AO by placing reliance on material which is out of the scope of assessment so framed u/s 153C of the Act in view of the Satisfaction recorded making the Satisfaction Note so drawn incomplete and defective and thus, liable to be quashed. In this regard, reliance is placed on the judgement delivered by the Hon'ble ITAT, Chennai in case of M/s.KP Construction vs. ACIT in ITA No.437/Chny/2021 wherein vide order dated 05.04.2024 [Copy of the judgement dated 05.04.2024 is enclosed at Page Nos. 188 to 197 of CCL], it was held as under:
"In the present case, on perusal of satisfaction note recorded by the AO of a searched person, we find that there is no reference to the seized materials considered by the AO to frame assessment and make additions for relevant A Y 2016-17 which is clearly evident from the seized materials referred to by the AO in Page No.4 of the order where he referred Annexure No. ANN/RB/ISPC/B&D/1O, but said material did not find mention by the AO in the satisfaction note. From the above, it is undisputedly clear that there is no live link between the satisfaction arrived at by the AO and incriminating material found during the course of search and thus, in our considered view, the satisfaction note recorded by the AO as required under provisions of Sec. 153C of the Act, is not in accordance with law and further, notice issued by the AO on the basis of said incorrect satisfaction is illegal ab initio and liable to be quashed."
4) Without prejudice to above, Sec. 153C of the Act mandates that in case the alleged chats found in the mobile phone during the course of search in case of Dinesh Tyagi are relied upon, in that case, independent satisfaction note has to be drawn in respect of documents found during the course of search in case of Dinesh Tyagi which has not been done in the instant cases and therefore, assessment has been framed by relying on such chats which does not form part of Satisfaction Note and accordingly, the same is liable to be quashed.
23 ITA No.8205/DEL/2025 ITA No.156/DEL/2026Accordingly, the Satisfaction Note so recorded is void-ab-initio and thus, following the principles of Sublato Fundamento Cadit Opus, the impugned assessment orders dated 13.03.2024 based on such non-est satisfaction note deserves to be quashed.
IV. The additions have been made by placing reliance on inadmissible electronic evidences and thus, the entire erroneous additions deserves to be deleted
a) The Ld. AO has made erroneous additions by placing reliance upon some generic/random/unconnected WhatsApp Chats which were never discussed/mentioned/indicated and/or formed part of the Satisfaction Note so drawn which fact is clearly apparent and discussed at Para III above to support the reliance placed on a piece of undated & unsigned dumb document.
b) In the instant case, the tax authorities have not followed the procedure laid down u/s 65B of the Indian Evidence Act, 1872 and the Digital Evidence Investigation Manual 2014 (hereinafter called as the "Manual") prescribed by the CBDT which is a mandatory pre-requisite for admissibility of electronic evidences such as WhatsApp chats and other electronic data seized.
c) It is a well settled law that for placing reliance on electronic evidences, the Ld. AO has to follow the Digital Evidence Investigation Manual 2014 as the said Manual has prescribed the due procedure to be followed for placing reliance on the digital material seized during the course of search. The relevant portion of such manual are reproduced below:
Page No. 65 of the Digital Evidence Investigation Manual 2014 Page No. 74 of the Digital Evidence Investigation Manual 2014 24 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No. The copies of Annexures Annexures-7, 7, 8 & 9 as referred in above Manual are enclosed herewith at Page Nos. 43 43-45 of this WS.
d) From the perusal of the contents of the aforesaid Manual, it can be seen that it is directed by the CBDT that the Digital Evidence Collection Form and Mobile Phone Evidence Collection Form should be enclosed in the order, however, no such form was enclosed with the assessment order which is a matter of record.
The CBDT has prescribed such forms for validation of the electronic evidence being relied upon by the department, without following such norms as prescribed ribed by the CBDT, the said electronic data cannot be relied which is a settled law as the said evidences remain unverified & unsubstantiated if the proper procedure as prescribed by such Manual is not followed.
25 ITA No.8205/DEL/2025 ITA No.156/DEL/2026e) It is also apparent from the said Manual that the Digital Forensic Report containing the details of containing details of hash value and the details of all mahazar drawn to open the digital evidence at various times to gather further evidences should be included as an annexure to the assessment order and if the chain of custody form is present, the same can be annexed to the assessment order. The Manual states that these documents establish the integrity of the digital data and therefore, conversely, if the said documents like Digital Forensic Report and Chain of Custody Form are not annexed with the assessment order then therefore, the integrity of the digital data so relied in the assessment order becomes questionable and thus, such digital data becomes an inadmissible evidence which cannot be relied upon for making additions. In the instant case of the assessees, no such Forms were annexed with the assessment order and thus, the said additions so made by placing reliance on inadmissible electronic data are liable to be deleted.
f) Further to the above, the Ld. AO has also not brought on record any Certificate u/s 65B of the Indian Evidence Act, 1872 to support his reliance on alleged WhatsApp chats, the Ld. AO only provided a copy of a so-called Extraction Report for placing reliance on the WhatsApp chats as a certificate u/s 65B of the Indian Evidence Act, 1872 along with Show Cause Notice (SCN) dated 06.03.2024. Against the aforesaid SCN dated 06.03.2024, the assessee submitted a detailed reply vide letter dated 07.03.2024 wherein it was duly submitted that the said Extraction Report was not a Certificate u/s 65B of the 26 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No. Indian Evidence Act, 1872 and its contents are totally wrong and not tenable under the eyes of law, copy of the said report is also imaged hereunder:
27 ITA No.8205/DEL/2025No. ITA No.156/DEL/2026 No. 28 ITA No.8205/DEL/2025 ITA No.156/DEL/2026
g) From the perusal of the above Extraction Report, it can be seen that nothing can be ascertained as to how such report validates the WhatsApp chats so relied upon by the Ld. AO, nothing is stated in the said Extraction Report as to how the Whatsapp Chat is an incriminating evidence against the assessee and from where such evidence was collected or seized and no-where, there is any certification of a forensic expert. Therefore, the Ld. AO failed to provide Certificate as prescribed u/s 65B of the Indian Evidence Act, 1872 and therefore, no addition can be made by relying upon the impugned generic WhatsApp chats of Mr. Dinesh Tyagi or any other electronic material so relied upon in view of the settled law & facts of the case.
h) In addition to above, it is also mentioned in the Manual that the hash values are generated of each digital evidence collected which authenticates such digital evidence and such hash values should be mentioned in the Panchnama against each digital material seized. However, in the instant case, it can be seen from the copy of Panchnama drawn in the case of Mr. Dinesh Tyagi enclosed at Page Nos. 208 - 216 of Paper-Book (Relevant Page No. 212) that neither hash value nor IMEI Number of the Mobile Phone is mentioned which is a clear violation of the procedure of collection & storage of electronic evidence as prescribed under the said Manual.
i) In view of the above, the additions so made by placing reliance on inadmissible electronic evidence (incl. WhatsApp Chats) are liable to be deleted and therefore, the entire additions so made in the instant cases of the appellant deserves to be deleted. In this regard, reliance is placed on the following judicial pronouncements:
Hon'ble ITAT, Delhi in the case of DCIT, Central Circle-13, Delhi vs. M/s Balar Marketing Pvt. Ltd. in ITA No. 3143 to 3148/Del/2023 vide order dated 18.03.2026 held as under:
"25. We thus come to a stage where it becomes relevant to again rely the provisions of the Manual issued by the Board to find out how the Board recognizes the due procedure to be adopted to ensure the admissibility of 29 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 digital evidences and we find that by virtue of para 6.8 of the Manual while giving directions as to how the forensic imaging of cloning of the devices have to be done the Manual directs that hash value should be recorded in the Panchnama and the assessee can be given the option of seeking a copy of imaged/cloned hard disk by paying the copying charges.
The Manual very categorically emphasis on the importance of hash value as evidence of genuineness and completeness of the collection and examination of the digital evidences.
26. However, when we examine the Panchnama, the copy of which was file at hearing, there is absolutely no whisper of the hash value of these digital devices and evidences in the Panchnama. There is no mention of IMEI numbers of the devices shown seized in the Panchnama. .............
30. Now, what is material is that the Manual very categorically lays down the importance of chain of custody and the Manual lays down procedure to be followed by authorities for reporting and analysis of digital evidences and as to how the AO has to deal with the digital evidences and its analyse in the assessment order and what is the importance of chain of custody of digital evidences. The relevant para 9.1 and 9.6 of the Manual ...................
38. More importantly, as we examined the assessment order, we find that none of the directions of the Manual have been followed by the AO except for making the extracts of digital images of Sambhav Software or statements annexed to the assessment order. The aforesaid directions of Board in para 9.1 and 9.6 of the Manual have been completely ignored by the AO. It appears that at time of initiation of search the process of collection of digital evidences was very much in accordance with the directions of Manual. The preparation of chain of custody document and taking E Certificate at time of making working copy, does show that authorities were conversant with the Manual or other instructions. They were aware that only evidence found in search is in the digital form so they with all caution initiated the process of collection of digital evidences form two phones in accordance with mandate of Manual and general principles of law, regulating collection of electronic evidence and to maintain its sanctity throughout, till it is ultimately relied in assessment and if needed at stage of judicial scrutiny. However, the attempt was either half hearted, if not to be presumed to be thwarted half way to prejudice of assessee. It is established that that tax authorities applied some provisions and instructions of the Manual, at time of search but, failed to maintain the records as per the instructions in Manual for Panchnama, mobile device collection form, certificate u/s 65B of the Evidence Act and most importantly the chain of custody form.
30 ITA No.8205/DEL/2025 ITA No.156/DEL/2026.............
40. Then it is also pertinent to mention that the incriminating evidences relied by the AO is not the primary evidence existing in the laptop or computer wherein the alleged Sambhav software was installed, but, are merely images of Sambhav software which allegedly Mr. Vimal Jain was sharing with counterparts for acknowledging the transactions. Similarly, on going through the Whatsapp chats as part of the annexure to the assessment order, the same do not contain any message which will narrate any transaction on its own, but, only mention some figures which are allegedly to be codes. When original Sambhav software could not be retrieved from any of the electronic devices the images in the phones of Mr. Vimal Jain were, no doubt, secondary evidences only and that all the more required that if they were to be relied the instructions given by the Board to ensure the authenticity of evidence become material directions to be followed. The evidences extracted from the phone howsoever relevant would become admissible only once necessary compliances required as per due course of law are made. The due course here certainly is the instructions in Manual. Even if it is claimed by ld. DR to be not binding the aforesaid discussion has firmly established that the assessment though being a quasi judicial exercise had to be on the basis of evidences whose veracity can be tested in subsequent proceedings, like appeal or judicial review. This gives us an opportunity to hold that even if the case of revenue is accepted that strict principles or rules of Evidence Act are not applicable or there is no necessity of certificate u/s 65B, still in order to give and add credibility to the conclusions drawn on the digital evidences the AO should ensure that there is substantive compliances of the Manual and not just by way of eye wash.
41. Thus we have no hesitation to hold that assessment has been framed on the basis of material, allegedly retrieved from digital devices, but which are not admissible under law so as to be relied for drawing conclusions, of fact in dispute, being proved on scales of probability even. The corresponding grounds by which assessee challenges the assessment order being framed on inadmissible electronic evidences thus deserves to be sustained."
The Hon'ble ITAT Delhi in the case of Designers Point (India) P. Ltd Vs ACIT in ITA No.2517/Del/2022 vide order dated 06/09/2023 has clearly observed that whatsapp chats has no evidentiary value in absence of other collaborative adverse material.
31 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 The Hon'ble ITAT Kolkata in the case of Atul Tantia v. DCIT in I.T.A. No. 492/Kol/2021 vide order dated 28/03/2023 clearly held that "In our considered view the addition cannot be sustained as it based on the SMS or WhatsApp messages without any corroborative evidences".
The Hon'ble ITAT Mumbai in the case of Monica Kumarpal Banda v. ACIT Central Circle - 2(1) in ITA 170/MUM/2023 vide order dated 07.08.2023 observed & held that "Instead of establishing the authenticity of the chats, department chose to rely on these chats in an isolated manner which are simply a dumb document in absence of any corroborative evidence or being co-related with statements of the persons mentioned (supra).
In revenue view of the above, we do not have any hesitation in holding that proceeded on a wrong premise while relying on assessee's whatsapp chat.........."
The Hon'ble Supreme Court in the case of Ambalal Sarabhai Enterprise vs Ks Infraspace LLP Limited vide CIVIL APPEAL NO(s). 9346 OF 2019 (arising out of SLP (Civil) No(s). 23194 of 2019) vide order dated 6 January, 2020 held that "the WhatsApp messages which are virtual verbal communications are matters of evidence with regard to their meaning and its contents to be proved during trial by evidence−in−chief and cross examination." The Hon'ble Chennai Tribunal in the case of DCIT, Cc-1(4), Chennai vs M/S. John Kumar Trust ITA No.3028/CHNY/2019 vide order dated 13.05.2022 also observed that "First of all, WhatsApp messages cannot be considered as a conclusive evidence to draw an adverse inference against the assessee, unless those WhatsApp messages are supported by corroborative evidences to indicate that those messages and contents represents undisclosed income of the assessee."
The Hon'ble VISAKHAPATNAM Tribunal in the case of ACIT vs M/S. Shri Manchukonda Shyam in ITA no. 87/Viz/2020 vide order dated 23.09.2020 held
- "Addition was made merely on the basis of whatsapp messages and the statement recorded from section 132(4) from Shri Lanka Anil Kumar which 32 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 was subsequently retracted. Therefore we are of the view that the addition made by the AO is unsustainable and the Ld.CIT(A) rightly deleted the addition. Accordingly, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed."
Hon'ble Supreme Court in the case of Anwar PV v. B.K. Basheer [2014] 10 SCC 473 and also in the case of Arjun Pandit Rao Khotkar v. Kailash Kushanrao Gorantyal [2020] 7 SCC 1.
The ratio laid down by these judgments is that when the mandatory requirement of section 65B of the Evidence Act has not been complied with in respect of any of the electronic records relied upon by the department, they being not admissible in evidence, the assessment orders being passed on the same, cannot be sustained in the eye of law.
The Hon'ble Punjab-Haryana High Court in the case of Rakesh Kumar Singlavs Union Of India vide order dated 14 January, 2021 held that "11. Learned counsel for the NCB has also placed reliance on Whatsapp messages by which the petitioner could be implicated. However, on the asking of this Court, whether a certificate under Section 65B of the Indian Evidence Act is available at the present moment to authenticate the said messages, the answer is in negative. The recent judgment rendered by the Supreme Court in the matter of Arjun Panditrao Khotkar Vs. Kailash Kushanrao Gorantyal and others (2020) 7 SCC 1 has held that a certificate Section 65B of the Indian Evidence Act is required when reliance is being placed upon electronic record. Therefore, the said message would be of no evidentiary value as on date."
The Hon'ble Madras High Court in the case of SKM Animal Feeds and Foods (India) (P.) Ltd. v. ACIT vide order dated 31.10.2023 held that "in view of the law laid down by this Court as well as the Hon'ble Apex Court and since the impugned order has been passed in violation of principles of natural justice and due to non-compliance of Section 65(B) of the Indian Evidence Act, this Court has no hesitation to hold that the impugned order is liable to be set aside".
33 ITA No.8205/DEL/2025 ITA No.156/DEL/2026In view of the afore-stated legal position and facts of the case, it is hereby prayed before your honor to kindly delete the entire additions so erroneously made by placing reliance on WhatsApp Chats without following the due procedure laid down under the Indian Evidence Act, 1872 and the Digital Evidence Investigation Manual 2014 and oblige.
V. The assessment proceedings u/s 153C of the Act has been initiated by recording satisfaction based on borrowed satisfaction from the Competent Authority which is not permissible under law and thus, the Satisfaction Note so drawn by the Jurisdictional Assessing Officer is defective and accordingly, the impugned assessment order based on such defective satisfaction note is liable to be quashed meaning thereby that the assessment so framed u/s 153C of the Act is out of jurisdiction
1) That in the instant cases, the satisfaction by the Jurisdictional Assessing Officer has been recorded on 05.12.2022 wherein he has mentioned that "the approval from the competent authority has been obtained in this case and Notices u/s 153C of the I. T. Act, 1961 has been issued for AY 2017-18". The copies of satisfaction note recorded by the JAO dated 05.12.2022 in both the cases are enclosed herewith at Page Nos. 46- 47 of this WS.
2) That as per the provisions of Sec. 153C of the Act, there is no requirement to take any approval from any superior authority for recording satisfaction for initiation of proceedings u/s 153C of the Act. The Ld. JAO has to independently record his satisfaction by applying his own independent mind that whether the proceedings u/s 153C of the Act are liable to be initiated in a case on the basis of a material unearthed during the course of search which has a bearing on the determination of total income of the person other than the person searched for a particular assessment year. In this regard, reliance is placed on the judgement delivered by the Hon'ble Jurisdictional High Court of Delhi in the case of PCIT-7, Delhi v. Naveen Kumar Gupta in ITA 401/2022 34 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 vide order dated 20.11.2024 at Para 59 [Copy of the judgement dated 20.11.2024 is enclosed at Page Nos. 198 to 253 of CCL], the Hon'ble Court has categorically observed that there is no requirement of taking approval for initiation of proceedings u/s 153C of the Act, the relevant contents of the said judgement are reproduced as under:
"Subject to obtaining the approval under Section 153D of the Act, if necessary, the AO is not required to seek any approval from the specified authority, as required under Section 148/151 of the Act for issuing a notice under Section 153C of the Act and can proceed to assess / reassess income for the concerned assessment years."
3) That in the instant case, the Ld. JAO has not applied his independent mind and has borrowed satisfaction from an unidentified superior authority for recording satisfaction for initiation of proceedings u/s 153C of the Act in the instant cases which is contrary to the procedure specified under the Income Tax Act, 1961 and accordingly, the satisfaction recorded by the Ld. JAO is also defective and thereby jurisdiction has been wrongly assumed by the Ld. JAO to initiate proceedings u/s 153C of the Act and thus, the assessment framed vide order u/s 153C of the Act dated 13.03.2024 deserves to be quashed.
4) The doctrine of "borrowed satisfaction" arises when an Assessing Officer initiates reassessment proceedings not based on their own independent assessment of the facts, but by mechanically adopting conclusions drawn by another authority or system. This concept finds its roots in administrative law principles that demand statutory powers must be exercised by the authority vested with them, not by proxy or delegation. When the Income Tax Act confers power on the Assessing Officer to form a reason to believe, it is that specific officer who must personally be satisfied about the escapement of income. They cannot simply borrow the satisfaction of the Investigation Wing.
5) In this regard, reliance is placed on the following landmark judicial pronouncements establishing the principle that the authority which has been 35 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 entrusted with jurisdiction to act under law should act independently without involving any other authority:
a) Hon'ble Supreme Court of India in the case of Anirudh Sinhji Karan Sinhji Jadeja Vs. State of Gujarat, (1995) 5 SCC 302 vide order dated 11.08.1995 [Copy of the judgement dated 11.08.1995 is enclosed at Page Nos. 254 to 260 of CCL] observed at Para 11 as under:
"If a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If the discretion is exercised under the direction or in compliance with some higher authority's instruction, then it will be a case of failure to exercise discretion altogether."
b) Hon'ble Delhi High Court in the case of CIT vs. SPL‟S SIDDHARTHA LTD.
in ITA No.836 of 2011 vide order dated 14.09.2011 [Copy of the judgement dated 14.09.2011 is enclosed at Page Nos. 261 to 268 of CCL] held as under:
"Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorised under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be "independent" and not "borrowed" or "dictated"
satisfaction. Law in this regard is now sell-settled."
c) Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax v. Meenakshi Overseas Pvt. Ltd. in ITA 692/2016 wherein vide order dated 26.05.2017 [Copy of the judgement dated 26.05.2017 is enclosed at Page Nos. 269 to 286 of CCL] held as under:
"36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis of the reasons to believe that income has escaped assessment. The conclusions of the AO are at best a reproduction of the 36 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 conclusion in the investigation report. Indeed, it is a 'borrowed satisfaction'.
The reasons fail to demonstrate the link between the tangible material and the formation of the reason to believe that income has escaped assessment.
37. For the aforementioned reasons, the Court is satisfied that in the facts and circumstances of the case, no error has been committed by the ITAT in the impugned order in concluding that the initiation of the proceedings under Section 147/148 of the Act to reopen the assessments for the AYs in question does not satisfy the requirement of law."
5) In view of the above settled law, the Ld. JAO has erred in law in recording satisfaction on the basis of borrowed satisfaction which does not satisfy the requirement of law as the Ld. JAO has to apply his independent mind to record satisfaction for initiation of proceedings u/s 153C of the Act and thus, the jurisdiction has been wrongly assumed for initiation of proceedings u/s 153C of the Act without independent application of mind based on borrowed satisfaction. Accordingly, the assessment order so framed u/s 153C of the Act is bad in law and therefore, deserves to be quashed.
VI. The assessment order u/s 153C of the Act dated 13.03.2024 is bad in law and deserves to be quashed as the same has been passed based on a mechanical approval u/s 153D of the Act In view of the facts detailed in the afore-stated submissions, it can be seen that the Ld. Addl. CIT, Central Range-1, Delhi has granted a mechanical approval without proper application of mind and thus, the order deserves to be quashed on this count as well. Reliance placed on the following judicial pronouncements: -
i) PCIT v. Shiv Kumar Nayyar (Delhi High Court) in ITA 285/2024 & CM APPL 28994/2024 [Copy of the judgement is enclosed at Page Nos. 287 to 294 of Compilation of Case Laws (CCL)],
ii) Asst. CIT v. Serajuddin and Co. [2023] 150 taxmann.com 146 (Orissa) [Copy of the judgement is enclosed at Page Nos. 295 to 304 of Compilation of Case 37 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 Laws (CCL)] - SLP of the Revenue also dismissed by the Hon'ble Supreme Court of India [Copy of the judgement is enclosed at Page Nos. 305 to 306 of Compilation of Case Laws (CCL)]
iii) PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] (Allahabad HC),
iv) PCIT Vs Anuj Bansal (Delhi High Court) in ITA 537/2023 It is also respectfully submitted that approval envisaged u/s 153D of the Act is not merely an administrative approval but there is a statutory duty on the higher authorities to apply its mind before granting the approval. This duty cannot be discharged mechanically by the officers as the inbuilt purpose to safeguard the interest of the citizens in that case cannot be fulfilled.
Accordingly, in view of the above settled legal position, the orders passed by the Ld. AO are illegal, non-est and void ab-initio since the approval u/s 153D of the Act has been granted in a mechanical manner without observing that jurisdiction has been wrongly assumed to initiate assessment proceedings u/s 153C of the Act in the present cases of the captioned assessees and that impugned proceedings u/s 153C of the Act are barred by limitation.
Without prejudice to above, though the case of the assessee is fully covered in its favour and the entire proceedings deserves to be quashed in view of submissions made at Para Nos. I to IV above, still even otherwise, the assessee has made numerous requests time & again for supply of copy of approval granted u/s 153D of the Act as well as the details of correspondence between the Ld. AO and Ld. Addl. CIT, however, despite of seven reminders w.e.f. 22.07.2024 to 17.03.2026, the said documents have still not been received and therefore, adverse inference may kindly be drawn against the department. The copy of the last reminders dated 17.03.2026 is also enclosed herewith at Page Nos. 48-49 of this WS.
38 ITA No.8205/DEL/2025 ITA No.156/DEL/2026C. PRAYER In view of the afore-stated detailed written submission and in the light of the settled position of law, it is hereby prayed before your honour to kindly grant requisite relief to the appellants by quashing the erroneous, time barred, void, illegal, invalid, without jurisdiction, and unlawful orders so framed u/s 153C of the Act both dated 13.03.2024 and oblige."
9. The Ld. AR for the assessee argued that the assessment orders so framed u/s 153C of the Act dated 13.03.2024 deserves to be quashed on not one but many counts. The Ld. AR for the assessee also furnished a Summary of Arguments wherein six arguments were made challenging the validity of the assessment order so framed, the said summary of argument is also reproduced hereunder:
On the basis of the arguments listed below, the very assessment orders so passed u/s 153C of the Act dated 13.03.2024 deserves to be quashed:
I. The notice u/s 153C of the Act dated 12.12.2022 for AY 2017-18 is barred by limitation due to inordinate delay as laid down by CBDT Circular No. 24/2015 dated 31.12.2015 and thus, notice u/s 153C is bad in law, void-ab-initio being barred by limitation and accordingly, the entire assessment proceedings along with consequent demand deserves to be quashed Matter covered by the following judicial precedents:
i. Hon'ble Supreme Court of India in the case of CIT vs. Calcutta Knitwears in Civil Appeal No. 3958 of 2014 wherein vide order dated 12.03.2014 ii. Hon'ble Delhi High Court in the case of CIT v. Bharat Bhushan Jain [2015] 61 taxmann.com 89 (Delhi) [Copy of the judgement dated 08.01.2015 is enclosed at Page Nos. 1 to 4 of Compilation of Case Laws (CCL)] 39 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 iii. Hon'ble ITAT, Hyderabad in the case of Shri Farooqi Gulam Samdani vs. DCIT, Central Circle 1(3), Hyderabad in ITA No.814/Hyd/2025 for AY 2019- 20 order dated 24.12.2025 at Para 13 [Copy of the judgement dated 24.12.2025 is enclosed at Page Nos. 5 to 33 of CCL] II. Assessment u/s 153C of the Act has been initiated based on a vague, non-
speaking, non-specific and defective Satisfaction Note based on an undated & unsigned dumb document and thus, the very order u/s 153C of the Act dated 13.03.2024 of framed based on a defective satisfaction are liable to be quashed Matter covered by the following judicial precedents w.r.t. reliance placed on dumb documents:
a) Hon'ble Jurisdictional Delhi High Court in the case of CIT v. Girish Chaudhary in ITA No. 22 of 2007 order dated 22.05.2007 [Copy of the judgement dated 22.05.2007 is enclosed at Page Nos. 34 to 41 of CCL]
b) Hon'ble Karnataka High Court in the case of DCIT v. Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) vide order dated 22.01.2024 [Copy of the judgement dated 22.01.2024 is enclosed at Page Nos. 68 to 93 of CCL]
c) Hon'ble ITAT, Delhi in the case of Sunshine Infratech (P) Ltd. v. DCIT in ITA No. 3699/Del/2018 [Copy of the judgement dated 24.02.2025 is enclosed at Page Nos. 42 to 45 of CCL]
d) Hon'ble ITAT, Mumbai in case of ITO Vs Kranti Impex Pvt. Ltd. in ITA No. 1229/Mum/2013 vide order dated 28/02/2018 [Copy of the judgement dated 28.02.2018 is enclosed at Page Nos. 46 to 67 of CCL] Matter covered by the following judicial precedents w.r.t. defective satisfaction note on account of non-specific year-wise alleged seized material:
i. Hon'ble Jurisdictional High Court of Delhi in the case of Saksham Commodities Ltd. vs. Income Tax Officer [2024] 161 taxmann.com 485 40 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 (Delhi)/[2024] 464 ITR 1 (Delhi) vide order dated 09.04.2024 [Copy of the judgement dated 09.04.2024 is enclosed at Page Nos. 94 to 128 of CCL] ii. Hon'ble Supreme Court in the case of CIT vs. Singhad Technical Education Society (2017) 397 ITR 344 (SC) [Copy of the judgement dated 29.08.2017 is enclosed at Page Nos. 129 to 144 of CCL] iii. Hon'ble ITAT, Delhi in the case of Rajiv Agarwal v. ACIT in ITA No. 2948/Del/2023 vide order dated 31.12.2024 [Copy of the judgement dated 31.12.2024 is enclosed at Page Nos. 145 to 163 of CCL] iv. The Hon'ble Madras High Court in the case of Agni Vishnu Ventures (P.) Ltd.
v. DCIT [2023] 157 taxmann.com 242 (Madras) vide order dated 28.06.2023 [Copy of the judgement dated 28.06.2023 is enclosed at Page Nos. 164 to 187 of CCL] v. The Hon'ble Delhi High Court in the case of PCIT, Delhi-18 v. N.S. Software (Firm) [2018] 93 taxmann.com 21 (Delhi) vide order dated 18.04.2018 III. The assessment has been framed by placing reliance on some alleged material seized from third party not forming part of the impugned Satisfaction Note meaning thereby that the assessment so framed u/s 153C of the Act is out of jurisdiction Matter covered by the following judicial precedents:
Hon'ble ITAT, Chennai in case of M/s.KP Construction vs. ACIT in ITA No.437/Chny/2021 order dated 05.04.2024 [Copy of the judgement dated 05.04.2024 is enclosed at Page Nos. 188 to 197 of CCL] IV. The additions have been made by placing reliance on inadmissible electronic evidences and thus, the entire erroneous additions deserves to be deleted 41 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 Matter covered by the following judicial precedents:
i. The Hon'ble ITAT, Delhi in the case of DCIT, Central Circle-13, Delhi vs. M/s Balar Marketing Pvt. Ltd. order dated 18.03.2026. ii. The Hon'ble ITAT Delhi in the case of Designers Point (India) P. Ltd Vs ACIT order dated 06/09/2023.
iii. The Hon'ble ITAT Kolkata in the case of Atul Tantia v. DCIT vide order dated 28/03/2023.
iv. The Hon'ble ITAT Mumbai in the case of Monica Kumarpal Banda v. ACIT Central Circle - 2(1) order dated 07.08.2023.
v. The Hon'ble Supreme Court in the case of Ambalal Sarabhai Enterprise vs Ks Infraspace LLP Limited vide CIVIL APPEAL NO(s). 9346 OF 2019 (arising out of SLP (Civil) No(s). 23194 of 2019) order dated 6 January, 2020. vi. The Hon'ble Chennai Tribunal in the case of DCIT, Cc-1(4), Chennai vs M/S. John Kumar Trust ITA No.3028/CHNY/2019 order dated 13.05.2022. vii. The Hon'ble VISAKHAPATNAM Tribunal in the case of ACIT vs M/S. Shri Manchukonda Shyam in ITA no. 87/Viz/2020 vide order dated 23.09.2020. viii. The Hon'ble Supreme Court in the case of Anwar PV v. B.K. Basheer [2014] 10 SCC 473 and also in the case of Arjun Pandit Rao Khotkar v. Kailash Kushanrao Gorantyal [2020] 7 SCC 1.
ix. The Hon'ble Punjab-Haryana High Court in the case of Rakesh Kumar Singlavs Union Of India vide order dated 14 January, 2021. x. The Hon'ble Madras High Court in the case of SKM Animal Feeds and Foods (India) (P.) Ltd. v. ACIT vide order dated 31.10.2023.
V. The assessment proceedings u/s 153C of the Act has been initiated by recording satisfaction based on borrowed satisfaction from the Competent Authority which is not permissible under law and thus, the Satisfaction Note so drawn by the Jurisdictional Assessing Officer is defective and accordingly, the impugned assessment order based on such defective satisfaction note is 42 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 liable to be quashed meaning thereby that the assessment so framed u/s 153C of the Act is out of jurisdiction Matter covered by the following judicial precedents:
i. Hon'ble Jurisdictional High Court of Delhi in the case of PCIT-7, Delhi v.
Naveen Kumar Gupta in ITA 401/2022 vide order dated 20.11.2024 at Para 59 [Copy of the judgement dated 20.11.2024 is enclosed at Page Nos. 198 to 253 of CCL] ii. Hon'ble Supreme Court of India in the case of Anirudh Sinhji Karan Sinhji Jadeja Vs. State of Gujarat, (1995) 5 SCC 302 vide order dated 11.08.1995 [Copy of the judgement dated 11.08.1995 is enclosed at Page Nos. 254 to 260 of CCL] iii. Hon'ble Delhi High Court in the case of CIT vs. SPL‟S SIDDHARTHA LTD.
in ITA No.836 of 2011 vide order dated 14.09.2011 [Copy of the judgement dated 14.09.2011 is enclosed at Pg Nos. 261 to 268 of CCL] iv. Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax v. Meenakshi Overseas Pvt. Ltd. in ITA 692/2016 wherein vide order dated 26.05.2017 [Copy of the judgement dated 26.05.2017 is enclosed at Page Nos. 269 to 286 of CCL] VI. The assessment order u/s 153C of the Act dated 13.03.2024 is bad in law and deserves to be quashed as the same has been passed based on a mechanical approval u/s 153D of the Act Matter covered by the following judicial precedents:
i) PCIT v. Shiv Kumar Nayyar (Delhi High Court) in ITA 285/2024 & CM APPL 28994/2024 [Copy of the judgement is enclosed at Page Nos. 287 to 294 of Compilation of Case Laws (CCL)], 43 ITA No.8205/DEL/2025 ITA No.156/DEL/2026
ii) Asst. CIT v. Serajuddin and Co. [2023] 150 taxmann.com 146 (Orissa) [Copy of the judgement is enclosed at Page Nos. 295 to 304 of Compilation of Case Laws (CCL)] - SLP of the Revenue also dismissed by the Hon'ble Supreme Court of India [Copy of the judgement is enclosed at Page Nos. 305 to 306 of Compilation of Case Laws (CCL)]
iii) PCIT v. Sapna Gupta [2022 SCC OnLine All 1294] (Allahabad HC),
iv) PCIT VsAnuj Bansal (Delhi High Court) in ITA 537/2023 PRAYER In view of the afore-stated detailed written submission and in the light of the settled position of law, it is hereby prayed before your honour to kindly grant requisite relief to the appellants by quashing the erroneous, time barred, void, illegal, invalid, without jurisdiction, and unlawful orders so framed u/s 153C of the Act both dated 13.03.2024 and oblige."
10. On the other hand, the ld. DR for the Revenue challenged the arguments and submissions of the ld. AR by contending as under:
i. That the inordinate delay in issuance of notice u/s 153C of the Act should be ignored on account of COVID-19 Pandemic. ii. That the Additional Ground raised by the assessee is not admissible in view of Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 as the said ground was never raised before the Ld. CIT(A). iii. That the argument of the assessee that satisfaction note has not been drawn independently by the Ld. Jurisdictional Assessing Officer, i.e., ITO Ward-60(1), Delhi (hereinafter called as "Ld. JAO") has 44 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 not been raised before the Ld. CIT(A) and thus, the said ground should not be admitted.
Further, for merits of the case, the Ld. DR placed reliance on the orders passed by the authorities below.
11. In the rejoinder, the ld. AR for the assessee against the afore-stated contentions of the ld. DR submitted as under:
i. a. Against the first contention, the Ld. AR argued that in the instant case, the inordinate delay in issuance of notices u/s 153C of the Act in both the cases is not even covered by the COVID-19 relaxations provided by the CBDT. The Ld. AR submitted that in the instant cases, the notices u/s 153C of the Act have been issued in both the cases of Sh. Shishir and Sh. Rajdeo Singh on 12.12.2022, i.e., after the delay of 15 months from the date of framing of assessment in the case of the person searched, namely, Mr. Ram Avtar Agarwal, on 28.09.2021 and the maximum period of relaxation which was allowed by the CBDT lapsed on 30.09.2021 in view of Press Release dated 25.06.2021 which stated at Para B.16 as under:
"Time Limit for passing assessment order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021."
b. Therefore, the inordinate delay committed in issuance of notices u/s 45 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 153C of the Act on 12.12.2022 is not covered even by the relaxation of limitation period provided by CBDT as aforesaid and thus, the notices u/s 153C of the Act so issued on 12.12.2022 after the delay of almost 15 months' time is barred by limitation in view of the binding judgment of the Hon'ble Jurisdictional High Court of Delhi in the case of CIT v. Bharat Bhushan Jain [2015] 61 taxmann.com 89 (Delhi) wherein it has been held that if any notice u/s 158BD (153C) of the Act is issued beyond 10 months' time from the date of assessment order framed in the case of person searched, the same will be considered as delayed and accordingly, the said notice will be time barred.
c. Furthermore, the Ld. AR of the assessee submitted that the assessment of the person searched, namely, Sh. Ram Avtar Agarwal was barred by limitation originally on 30.09.2020 in view of Second Proviso to Clause
(b) to Sec. 153B of the Act (as the date of search was 16.05.2018) and accordingly, the original limitation to frame the assessment in case of the person searched was 18 months from the end of the financial year in which the last of the authorization for search was executed, i.e., 30.09.2020. The said limitation was extended time and again by the CBDT through numerous Notifications and Press Releases, last extended vide Press Release dated 25th June, 2021 till 30.09.2021 and only on the strength of the said COVID extension, the case of the searched person was assessed on 28.09.2021 which otherwise would have been barred by limitation, therefore, the department has duly availed and exhausted the COVID Relaxation and therefore, not entitled to any further COVID Relaxations in case of issuance of notice u/s 153C of the Act without any statutory mandate and provision under law.
46 ITA No.8205/DEL/2025 ITA No.156/DEL/2026Thus, the Ld. AR of the assessees submitted that this contention of the Ld. DR is devoid of any merit and thus, deserves to be dismissed.
ii. Against the second contention of the Ld. DR, the Ld. AR argued that the law is well settled with regard to the admissibility of Additional Grounds which goes to the root of the matter in view of the judgement delivered by the Hon'ble Supreme Court of India in the case of NTPC v. CIT [1998] 97 Taxman 358 (SC) wherein vide order dated 04.12.1996 it was held that the appellate authorities have jurisdiction to examine any ground having a bearing on the tax liability of the assessee which goes to the roots of the matter in accordance with law and reason and the same cannot be overlooked. Thus, this contention of the Ld. DR is highly misplaced and against the settled law and accordingly, deserves to be dismissed.
iii. a. With regard to third contention, the Ld. AR argued that the assessee have duly challenged the very defective satisfaction notes drawn in the instant cases before the Ld. CIT(A) as well as before the Tribunal which is a matter of record vide specific Ground No. 4 in both the cases, the said ground is also reproduced hereunder:
"That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on the facts in upholding the initiation of proceedings u/s 153C of the Act based on a defective, unspecific and vague satisfaction note which has been drawn on the strength of an undated & unsigned one loose sheet of paper which document does not at all indicate that it has a bearing on the 47 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 determination of income of the appellant and therefore, the notice issued u/s 153C of the Act on the basis of the vague Satisfaction Note which has no value in the eyes of law, the same is illegal and not valid under law."
b. The Ld. AR submitted that vide Ground No. 4, the assessee have duly challenged the satisfaction note which inter alia includes the argument raised that the Ld. JAO has not drawn the Satisfaction Note independently due to the fact that he was himself not satisfied to initiate the assessment proceedings u/s 153C of the Act on the basis of the very alleged seized material which was an undated and unsigned loose sheet from which it could not be ascertained as to which assessment year, the said material pertains to and therefore, the Ld. JAO took the approval from higher authority to take a shelter and shoulder as the Ld. JAO himself was not satisfied that any proceeding can be initiated u/s 153C of the Act for a particular assessment year on the basis of an undated dumb document. Since the approval has been taken from the superior authority without the mandate of law, this itself makes the satisfaction note defective which ground has been duly taken by the assessee. Accordingly, the satisfaction note so drawn by the Ld. JAO on the basis of an undated dumb document by taking an approval from higher authority is bad in law and void-ab-initio making the entire assessment order so framed based on such defective satisfaction note, illegal, unlawful and void and thus, the assessment orders deserves to be quashed. Therefore, this contention of the Ld. DR is also misplaced and devoid of any merits.
48 ITA No.8205/DEL/2025 ITA No.156/DEL/202612. Considered the rival submissions and material placed on record. The Ld. AR for the assessee have submitted before us that the assessment orders so framed u/s 153C of the Act dated 13.03.2024 are liable to be quashed. The relevant arguments so made by the Ld. AR for the assessee are summarized hereunder:
a) The Ld. AR submitted that the notices issued u/s 153C of the Act are time barred as the same have been issued after a delay of 15 months. The Ld. AR submitted that in the instant appeals before us, the notices u/s 153C of the Act have been issued on 12.12.2022 whereas the assessment u/s 153A of the Act in case of the person searched, namely, Sh. Ram Avtar Agarwal was framed on 28.09.2021, therefore, following the ratio of the judgement delivered by the Hon'ble Jurisdictional High Court of Delhi in the case of CIT v. Bharat Bhushan Jain [2015] 61 taxmann.com 89 (Delhi) after considering the law laid down by the Hon'ble Supreme Court of India in the case of CIT vs. Calcutta Knitwears in Civil Appeal No. 3958 of 2014, there is an inordinate delay of 15 months in issuance of notices u/s 153C of the Act on 12.12.2022 and therefore, such notices are time barred. The observation and ratio of the judgement delivered by the Hon'ble Jurisdictional Delhi High Court in case of Bharat Bhushan Jain (supra) as relied is reproduced below:
"6. Having regard to the intent of the Supreme Court in paragraph 44 of the Calcutta Knitwears (supra), where it was indicated that the Revenue has to be vigilant in issuing notice to the third party under section 158BD, immediately after the completion of assessment of the searched person, this court is of 49 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 the opinion that a delay ranging between 10 months of one-and- half years cannot be considered contemporaneous to assessment proceedings. We are of the opinion that notices were not issued in conformity with the requirements of section 158BD, and were unduly delayed. The appeals of the Revenue, accordingly, fail and are dismissed."
b) The Ld. AR for the assessee further submitted that if the original limitation for framing of assessment u/s 153A of the Act in case of the person searched, namely, Sh. Ram Avtar Agarwal is considered as prescribed under Second Proviso to Clause (b) to Sec. 153B of the Act (as the date of search was 16.05.2018), i.e., 18 months from the end of the financial year in which the last of the authorization for search was executed, i.e., 30.09.2020 then the delay in issuance of notices u/s 153C of the Act in case of Sh. Rajdeo Singh and Sh. Shishir, would have been more than two years & two months' time, however, due to relaxations provided by the CBDT on account of COVID-19 Pandemic, that inordinate delay of more than two years & two months' time fallen down to 15 months after exhausting the benefit of COVID-19 Pandemic relaxations as last extended vide CBDT's Press Release dated 25th June, 2021 till 30.09.2021.
c) The Ld. AR for the assessee further placed reliance on the decision of the ITAT, Hyderabad in the case of Shri Farooqi Gulam Samdani vs. DCIT, Central Circle 1(3), Hyderabad in ITA No.814/Hyd/2025 for AY 2019-20 wherein vide order dated 24.12.2025, the ITAT had followed the principles laid down by the Hon'ble Jurisdictional High Court of Delhi in the case of Bharat Bhushan Jain (supra) and Hon'ble Supreme Court of India in the case of Calcutta Knitwears, held at Para 13 as under:
50 ITA No.8205/DEL/2025 ITA No.156/DEL/2026"Since the Hon'ble Supreme Court and majority of Hon'ble High Courts have taken a view that notice issued u/s.153C of the Act after a period of 10 months to 1 ½ year is barred by limitation and in our considered view by applying the above case laws in the present case, notice issued u/s.153C of the Act dated 16.12.2022 after a period of 22 months is not a valid notice and consequently the assessment order passed by the Assessing Officer u/s.153C of the Act dated 13.03.2024 is invalid, void ab initio and liable to be quashed. We order accordingly."
The Ld. AR for the assessee pointed out that in the case of Shri Farooqi Gulam Samdani, even the date of framing of assessment u/s 153C of the Act and issuance of notice u/s 153C of the Act are almost similar and identical and thus, the notices so issued u/s 153C of the Act dated 12.12.2022 in case of the assessees, are also unambiguously time barred. Accordingly, the Ld. AR for the assessee prayed that the notices so issued u/s 153C of the Act are not valid and accordingly, the assessment orders so framed u/s 153C of the Act dated 13.03.2024 are liable to be quashed being void-ab-initio, invalid, bad in law.
d) The Ld. AR for the assessee further submitted before us that the seized material relied upon while recording of Satisfaction by the Ld. AO of the person searched as well as the Ld. JAO for initiation of proceedings u/s 153C of the Act, the said material is again imaged hereunder:
51 ITA No.8205/DEL/2025No. ITA No.156/DEL/2026 No.
e) The Ld. AR further submitted that the above seized material and stressed upon the fact that when the said seized material so relied upon is "undated" and no other material is relied upon for recording of satisfaction which is a matter of record and is evident from the bare perusal of the 52 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No. Satisfaction Notes so drawn by the AO of the person searched (Page No. 1 of the Paper-Book) Book) and Ld. JAO (Page No. 46 of the Written Submissions) for comparison, the same aare re reproduced below for ready reference:
SATISFACTION NOTES in case of Sh. Shishir (ITA No. 156/DEL/2026) 53 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No. SATISFACTION NOTES in case of Sh. Rajdeo Singh (ITA No. 8205/DEL/2025) 54 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No. 55 ITA No.8205/DEL/2025 No. ITA No.156/DEL/2026 No. 56 ITA No.8205/DEL/2025 ITA No.156/DEL/2026
f) The Ld. AR for the assessee submitted that it is a settled law that in the absence of a seized material which specifically and clearly indicate that there exists an undisclosed income for a particular assessment year which belongs to a person other the person searched, no satisfaction for initiation of assessment proceedings u/s 153C of the Act can be drawn. To buttress the said contention, the Ld. AR of the assessee relied upon several judicial precedents including the judgment of the Hon'ble Jurisdictional High Court of Delhi in the case of Saksham Commodities Ltd. vs. Income Tax Officer [2024] 161 taxmann.com 485 (Delhi)/[2024] 464 ITR 1 (Delhi), the relevant contents of the said judgement in case of Saksham Commodities are reproduced hereunder:
"67. On an overall consideration of the aforesaid, we come to the firm conclusion that the "incriminating material" which is spoken of would have to be identified with respect to the AY to which it relates or may be likely to impact before the initiation of proceedings under Section 153C of the Act. A material, document or asset recovered in the course of a search or on the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search or the "relevant assessment year" would not justify a sweeping or indiscriminate invocation of Section 153C.
68. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs' and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers 57 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus resulting in the abatement of pending proceedings and reopening of concluded assessments."
g) The Ld. AR for the assessee submitted that in the instant appeals before us, the alleged incriminating material based on which satisfaction has been recorded to initiate proceedings u/s 153C of the Act does not indicate that it has a bearing on the determination of total income for a particular year in case of the person other than the person searched as the said alleged seized material is simply an undated and unsigned dumb document from the perusal of which, it cannot at all be inferred that it has a bearing on the determination of total income of the assessee that too for a particular year as the same do not have any date whatsoever. Therefore, in the absence of the date, it is impossible for the Ld. AO to assume jurisdiction for any assessment year including the impugned assessment year, i.e., AY 2017-18 and thus, the Ld. AO has assumed the jurisdiction to initiate proceedings u/s 153C of the Act without following the due process under the law and therefore, the very assessment orders so passed u/s 153C of the Act both dated 13.03.2024 are legally unsustainable and void-ab-initio and accordingly, deserves to be quashed on account of a defective satisfaction note.
h) The Ld. AR further added that the satisfaction note is defective and also suffers from another anomaly that the Ld. JAO has not recorded his satisfaction independently rather the Ld. JAO has taken approval from another superior authority for initiation of proceedings u/s 153C of the Act in case of the assessees, namely, Sh. Shishir and Sh. Rajdeo Singh as can 58 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 be clearly seen from the perusal of the Satisfaction Note so recorded by Ld. JAO dated 05.12.2022 at Para 7 (v) which states that "the approval from the competent authority has been obtained in this case and Notices u/s 153C of the I. T. Act, 1961 has been issued for AY 2017-18" and thus, the said satisfaction note so drawn by the Ld. JAO is illegal and has been drawn against the law as there is no requirement to take any approval from another authority for recording of Satisfaction u/s 153C of the Act as the Ld. JAO has to apply his own mind for initiation of proceedings u/s 153C of the Act and accordingly, notice u/s 153C of the Act cannot be issued based on a borrowed satisfaction. The Ld. AR to substantiate the aforesaid contention placed reliance on the following judicial precedents:
Hon'ble Jurisdictional High Court of Delhi in the case of PCIT- 7, Delhi v. Naveen Kumar Gupta in ITA 401/2022:
"Subject to obtaining the approval under Section 153D of the Act, if necessary, the AO is not required to seek any approval from the specified authority, as required under Section 148/151 of the Act for issuing a notice under Section 153C of the Act and can proceed to assess / reassess income for the concerned assessment years."
Hon'ble Supreme Court of India in the case of Anirudh Sinhji Karan Sinhji Jadeja Vs. State of Gujarat, (1995) 5 SCC 302:
"If a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If the discretion is exercised under the direction or in compliance with some higher authority's instruction, then it will be a case of failure to exercise discretion altogether."
Hon'ble Jurisdictional High Court of Delhi in the case of CIT vs. SPL‟S SIDDHARTHA LTD. in ITA No.836 of 2011:
59 ITA No.8205/DEL/2025 ITA No.156/DEL/2026"Thus, if authority is given expressly by affirmative words upon a defined condition, the expression of that condition excludes the doing of the Act authorised under other circumstances than those as defined. It is also established principle of law that if a particular authority has been designated to record his/her satisfaction on any particular issue, then it is that authority alone who should apply his/her independent mind to record his/her satisfaction and further mandatory condition is that the satisfaction recorded should be "independent" and not "borrowed" or "dictated" satisfaction. Law in this regard is now sell-settled."
i) The Ld. AR of the assessees have submitted that as per the provisions of Sec. 153C of the Act, only the Ld. AO has to record his satisfaction on his own independently, however, in the instant appeals before us, the satisfaction note has not been drawn independently which is contrary to the mandate of law as envisaged u/s 153C of the Act and thus, the satisfaction note so drawn by the Ld. JAO is defective on this count as well.
13. To contrary to the submissions of the Ld. AR, the Ld. DR submitted that as far as the delay in issuance of notice u/s 153C of the Act is concerned, the same may be ignored due to COVID-19 Pandemic, as regard the contention of Ld. AR with regard to the borrowed satisfaction and issuance of notice u/s 153C of the Act, the Ld. DR submitted that the said arguments were not raised before the Ld. CIT(A) and this Tribunal and thus, should not be adjudicated upon. Further, the Ld. DR placed reliance on the authorities below.
14. Having considered to the facts and the legal position involved in the matter coupled with the submissions made by both the parties, we are in complete agreement with the arguments so raised by the assessee and we find that the 60 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 contentions of the Ld. DR are devoid of any merit. The contention of the Ld. DR that the grounds which have not been raised before the Ld. CIT(A) cannot be raised before the Hon'ble Tribunal has no legs to stand in the eyes of law as the law with regard to the admission of additional grounds is no longer res integra rather well-settled by the Hon'ble Supreme Court of India in the case of NTPC v. CIT [1998] 97 Taxman 358 (SC)and the said settled position of law has been unanimously followed by various judicial forums consistently. We are vested with the power to adjudicate any issue which goes to the root of the matter and it is bound to decide the issues raised before us as per the law. In the instant case, the additional ground so raised by the assessee that the notice u/s 153C of the Act is time barred goes to the root of the matter and keeping in view the facts, the said additional ground deserves to be admitted. Hence, admitted for adjudication.
15. We are of the view that the instant appeal before us are squarely covered by the ratio of the judgement delivered by the Hon'ble Jurisdictional High Court of Delhi in the case of Bharat Bhushan Jain (supra) since, there is an inordinate delay of about 15 months in issuance of notices u/s 153C of the Act on 12.12.2022 from the date of framing of assessment in the case of the person searched, namely, Mr. Ram Avtar Agarwal on 28.09.2021 and the said delay is not covered by the relaxations provided in the limitation period keeping in view the COVID-19 Pandemic as rightly argued by the Ld. AR for the assessee as mentioned at Paras 11(a) to 11(c) above that if the original limitation for framing of assessment u/s 153A of the Act in case of the person searched, namely, Sh. Ram Avtar Agarwal is considered as prescribed under Second Proviso to Clause (b) to Sec. 153B of the Act (as the date of search was 16.05.2018), i.e., 18 months from the end of the financial year in which 61 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 the last of the authorization for search was executed, i.e., 30.09.2020 then the delay in issuance of notices u/s 153C of the Act in case of Sh. Rajdeo Singh and Sh. Shishir, would have been more than two years & two months' time, however, due to relaxations provided by the CBDT on account of COVID-19 Pandemic, that inordinate delay of more than two years & two months' time has fallen down to 15 months after exhausting the benefit of COVID-19 Pandemic relaxations as last extended vide CBDT's Press Release dated 25th June, 2021 till 30.09.2021. Therefore, even after considering and allowing the benefit of COVID-19 Pandemic to the Revenue as pleaded by the Ld. DR, there is an inordinate delay of about 15 months in issuance of notices u/s 153C of the Act dated 12.12.2022 from the date of framing of assessment in case of person searched, namely, Mr. Ram Avtar Agarwal on 28.09.2021 and thus, we find merit in the arguments and submissions of the assessee.
16. In view of the above, we are bound by the binding judgement of the Hon'ble Jurisdictional High Court of Delhi in the case of Bharat Bhushan Jain (supra) keeping in view the principles of judicial discipline and accordingly, following the view taken by the Hon'ble Jurisdictional High Court of Delhi in the case of Bharat Bhushan Jain (supra), since in the instant two appeals before us in case of Sh. Rajdeo Singh in ITA No. 8205/DEL/2025 and in case of Sh. Shishir in ITA No. 156/DEL/2026, the notices so issued u/s. 153C of the Act both dated 12.12.2022 after a delay of 15 months are barred by limitation and consequently, the assessment orders passed by the Assessing Officer u/s 153C of the Act both dated 13.03.2024 are invalid, void ab initio and accordingly, are hereby quashed being non-est in the eyes of law and therefore, the additional ground so raised by the assessees are allowed.
62 ITA No.8205/DEL/2025 ITA No.156/DEL/202617. Though we have already quashed the very assessment order by allowing the additional ground so raised by the assessee, it is further worthwhile to mention here that in the instant cases before us, the same are also not sustainable as the Ld. JAO has failed to record an independent valid satisfaction note for initiation of proceedings u/s 153C of the Act which is a mandatory requirement under the law and the said requirement has not been adhered to properly by the Ld. JAO as in the instant cases, it is clearly apparent from the perusal of the Satisfaction Note so placed before us that the Ld. JAO has recorded the satisfaction after borrowing satisfaction by taking an approval from higher authority. There is no requirement to take any approval from competent authority for recording of Satisfaction u/s 153C of the Act as the Ld. JAO has to apply his own mind for initiation of proceedings u/s 153C of the Act and accordingly, notice u/s 153C of the Act cannot be issued based on a borrowed satisfaction and therefore, the assessment orders so framed u/s 153C of the Act dated 13.03.2024 deserves to be quashed on this count of defective satisfaction note as well and accordingly, the Ground No. 4 of appeal raised by the assessee is allowed.
18. Further, satisfaction has been recorded to initiate proceedings u/s 153C of the Act on the basis of an undated & unsigned dumb document from the perusal of which, it cannot at all be inferred that as to whether it has a bearing on the determination of total income of the assessees for AY 2017-18 as the said document does not contain any date. Accordingly, in the absence of any date, it is unascertainable for the Ld. AO to assume jurisdiction for any assessment year including the impugned assessment year, i.e., AY 2017-18 and thus, the Ld. AO has assumed the jurisdiction to initiate proceedings u/s 153C of the Act on mechanical manner with identical satisfaction note in both the cases 63 ITA No.8205/DEL/2025 ITA No.156/DEL/2026 before us as reproduced at Para 11(e) above and therefore, the satisfaction so recorded and the consequent assessment so framed pursuant to the said defective satisfaction note so recorded u/s 153C of the Act are both legally unsustainable and void-ab-initio and accordingly, deserves to be quashed based on the decision of Saksham Commodities Ltd.(supra) and the ratio is reproduced hereunder:
"67. On an overall consideration of the aforesaid, we come to the firm conclusion that the "incriminating material" which is spoken of would have to be identified with respect to the AY to which it relates or may be likely to impact before the initiation of proceedings under Section 153C of the Act.......".
19. Since we have quashed the entire assessment orders dated 13.03.2024 u/s 153C of the Income Tax Act, 1961, in case of Shri Rajdeo Singh and the facts in the case of Shri Rajdeo Singh are exactly similar to the facts in Shishir, the findings are applicable mutatis mutandis in view of foregoing paras above, therefore, the other grounds of appeals so raised by the assessees are not being adjudicated and thus, are left open.
20. In the result, the appeals of both the assessees are allowed.
Order pronounced in the open court on this 29th day of April, 2026.
Sd/- sd/-
(SUDHIR KUMAR) (S. RIFAUR RAHMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 29.04.2026
TS
64
ITA No.8205/DEL/2025
ITA No.156/DEL/2026
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI