Sh. Ram Ready Mix Concrete Pvt. Ltd. Vs DCIT (ITAT Delhi)
Invalid Section 153C Satisfaction Note Renders Search Assessments Void: ITAT Delhi Quashes Assessments of Ready-Mix & Cement Firms
The Delhi Bench of the ITAT allowed seven appeals filed by Shri Ram Ready Mix Concrete Pvt. Ltd. and Kamdhenu Cement, quashing assessments framed under section 153C read with section 143(3) for AYs 2018-19 to 2022-23. The Tribunal held that the very foundation of the proceedings—the satisfaction note recorded by the Assessing Officer of the searched person—was legally defective and failed to meet the mandatory requirements of section 153C.
The Tribunal noted that the satisfaction note, though detailing the search conducted in the case of an alleged entry operator group, did not record any clear finding that the seized material “belonged to”, “pertained to” or “related to” the assessees, as required under section 153C(1)(a) and (b). Mere narration of alleged bogus transactions and a general belief that the assessees’ transactions required verification was held to be insufficient to assume jurisdiction under section 153C.
The Revenue argued that an explicit recording of such satisfaction was not mandatory and that the material indicated suspicious transactions justifying proceedings against the assessees. However, the Tribunal rejected this contention, holding that section 153C being a jurisdiction-conferring provision must be strictly construed. Relying on binding precedents including Dilip Kumar & Co. (SC), RRJ Securities Ltd. (Delhi HC), PCIT v. Jasjit Singh and PCIT v. Ojjus Medicare Pvt. Ltd., the Tribunal emphasized that absence of a valid satisfaction goes to the root of jurisdiction.
Accordingly, the ITAT concluded that all impugned assessments were non est in law, having been initiated on the basis of an invalid satisfaction note, and quashed the assessments in entirety without examining the merits of additions. All seven appeals of the assessees were allowed
FULL TEXT OF THE ORDER OF ITAT DELHI
