Validity of satisfaction note for assessments based on a WhatsApp chat found deficient, rendering the assessment void ab initio

The article examines challenge to initiation of assessments following seizure-derived proceedings where the satisfaction note relied solely on a WhatsApp chat to support addition under unexplained investment. The legal reasoning emphasises that a satisfaction note confined to a single information source without corroborative evidence fails to constitute valid satisfaction for triggering search/seizure-linked assessments, and consequently such assessment orders are void ab initio. The operative point is that electronic messages require corroboration before they can sustain initiation and completion of assessments predicated on seizure-derived material.

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Issues: Whether the assessment proceedings under section 153C of the Income-tax Act, 1961 initiated on the basis of the satisfaction note dated 05.01.2023 (recorded for AYs 2015-16 to 2021-22) were valid, and whether the consequent assessment completed under section 143(3) is sustainable.

Analysis: The satisfaction note recorded on 05.01.2023 was examined and found to revolve around a single piece of information. The note recorded a categorical conclusion applying initiation of proceedings under section 153C for multiple assessment years despite the material referring to the relevant year only. The legal framework requires a validly recorded and reasoned satisfaction to confer jurisdiction under section 153C. Where the satisfaction is not demonstrably specific and reasoned for the years proposed to be covered, the jurisdictional prerequisite for consequential assessment is absent. The assessment order shows completion under section 143(3) consequent to proceedings said to be initiated under section 153C; given the invalid satisfaction, the jurisdictional foundation for that assessment is defective.

Conclusion: Held that the satisfaction note dated 05.01.2023 is not a valid satisfaction in law, the consequential assessment is void ab-initio, and the appeal is allowed in favour of the assessee.

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