The preparation of satisfaction notes as required u/s 153C of the Act is consolidated for all the assessment years which is bad and also which includes name of other persons other than assessee which makes the satisfaction note arbitrary.
- Single Satisfaction Note for Multiple Assessment Years:
- The AO issued a single satisfaction note for the assessment years 2015-16 and 2016-17, which is contrary to the requirement of separate satisfaction notes for each assessment year. The assessee relies on the following judicial precedents
- The Karnataka High Court in DCIT Vs Sunil Kumar Sharma has held that a single satisfaction note for multiple years is invalid.
- The AO failed to issue separate satisfaction notes for each assessment year under Section 153C, and did not confront the appellant with the seized material. It was held that failure to record specific satisfaction renders proceedings under Section 153C invalid.
- The satisfaction note recorded by the Assessing Officer (AO) lacks specificity and does not establish a clear link between the seized documents and the appellant. Without a valid satisfaction note, the issuance of notice under Section 153C is legally unsustainable. The satisfaction note prepared by the AO is generic and does not demonstrate due application of mind.
Key Judicial precedents
Rajendra Ramesh Lal Gugale, Pune v. PCIT (Decided on 30.12.2024) ITAT Pune , A separate satisfaction note is required for each assessment year.
Para No. 8.9 & 9 of the Order: – 8.9. Once the assessment framed u/sec.153C r.w.s.143(3) dated 26.12.2021 is held to be void being not in accordance with law on account of a combined satisfaction note for assessment years 2012-2013 to 2018-2019 instead of separate satisfaction note.
9. In the result, appeal of the assessee is allowed.
DCIT v. Sunil Kumar Sharma (22.01.2024) In the High Court of Karnatka – A consolidated satisfaction note for different assessment years renders the proceedings invalid.
Para No. 53 of the order: – Further, satisfaction note is required to be recorded under Section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue.
SLP dismissed by Supreme Court on 20.08.2024 – Validating the above High Court ruling. In the case of CIT Vs Sunil Kumar Sharma Dt. 22.01.2024
PepsiCo India Holdings Pvt. Ltd. v. ACIT (Delhi HC, 14.08.2014) – Satisfaction note not in accordance with law; notice u/s 153C quashed.
Para No 14 of the order: – Unless and until it is established that the documents do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that “where the Assessing Officer is satisfied that any money, bullion, jewelry or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A ….” In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned.
Para No. 17 of the Order: – In view of the foregoing discussion, we do not find that the ingredients of Section 153C of the said Act have been satisfied in this case. Consequently, the notices dated 02.08.2013 issued under Section 153C of the said Act are quashed. Accordingly, all proceedings pursuant thereto stand quashed.
On the basis of judicial precedents when satisfaction note is bad and is not in accordance with law and is consolidated for many years and it is prepared for several persons and is generic and doesn’t demonstrate due application of mind, without valid satisfaction note, the issue of notice u/s 153C is legally not sustainable in the eyes of law.
Hence it is prayed to make the assessment null and void and the same is not in accordance with law.
Sandeep Kumar Jain Advocate
Mobile No. 9810772312
Mail – Skjain1147@gmail.com
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