SRS Panchratan Diamonds Pvt. Ltd. Vs DCIT (ITAT Delhi)
153C Proceedings Quashed – Consolidated Satisfaction Note is Invalid; Tribunal Follows Delhi HC Saksham Commodities & Karnataka HC Sunil Kumar Sharma
Tribunal first condoned 61 days’ delay & admitted both appeals. Core challenge was the validity of jurisdiction u/s 153C, where the AO recorded one consolidated satisfaction note for seven assessment years together (AYs 2011–12 to 2017–18), instead of preparing independent satisfaction notes for each year, & without showing how seized JBL-group digital data had any incriminating nexus with the assessee.
Tribunal referred to:
- Karnataka HC in Sunil Kumar Sharma (159 taxmann.com 179)-consolidated note is invalid; SLP dismissed by Supreme Court (165 taxmann.com 846).
- Delhi HC Full Bench in Saksham Commodities (464 ITR 1)-AO must show AY-wise nexus between seized material & income; 153C cannot be invoked in a mechanical, cascading manner.
Rejecting Revenue’s reliance on Indian National Congress (463 ITR 431), Tribunal-following the rule of adopting the view favourable to the assessee (Vegetable Products, 88 ITR 192)-held that consolidated satisfaction is fatal to jurisdiction.
Accordingly, Tribunal quashed the 153C assessments for both years. All other grounds, including additions based on alleged cash transactions, were left open as academic.
Result: Appeals allowed; 153C assessments annulled in full.
