Garnet Veneer And Decors Limited Vs DCIT (ITAT Delhi)
Delhi ITAT Quashes Section 153C Assessment: Belated Recording of Satisfaction Note Vitiates Jurisdiction
The Delhi ITAT considered the validity of proceedings under Section 153C arising from a search conducted on 18.10.2019 in the Alankit Group cases. The assessee was a non-searched person, against whom jurisdiction under Section 153C was assumed pursuant to satisfaction notes recorded by the concerned AOs.
The assessment proceedings in the case of the searched person, Alok Kumar Agarwal, had already concluded on 24.05.2022. However, the AO of the searched person recorded the satisfaction note only on 24.06.2022, i.e. after completion of the searched person’s assessment. The satisfaction note by the AO of the assessee/non-searched person was recorded still later, on 07.02.2023.
The assessee contended that such delay in recording the satisfaction required for assuming jurisdiction under Section 153C was fatal. Reliance was placed on the Delhi High Court decision in CIT v. Bharat Bhushan Jain, which in turn followed the Supreme Court ruling in CIT v. Calcutta Knitwears, 362 ITR 673 (SC).
The ITAT accepted the jurisdictional objection and held that the delay in recording satisfaction was of such a nature as to vitiate the assumption of jurisdiction itself and consequently the assessment order. The Tribunal therefore allowed the assessee’s appeal and quashed the assessment.
Key takeaway: For proceedings against a non-searched person under Section 153C, recording of the requisite satisfaction is a jurisdictional requirement and must be done within the legally permissible time. A belated satisfaction note cannot sustain Section 153C jurisdiction, and the resultant assessment is liable to be quashed.
Cases Discussed:
- CIT Vs. Bharat Bhushan Jain (Delhi High Court), ITA No. 648/2009 order dated 08.01.2015
- CIT Vs. Calcuta Knitwears, Ludhiana (Supreme Court), 362 ITR 673 (SC)
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal preferred by the assessee against the order dated 24.07.2025 of Ld. Commissioner of Income Tax (Appeals)-25, New Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in DIN & Order No: ITBA/APL/M/250/2025-26/1078851588(1) arising out of the assessment order dated 13.03.2024 u/s 153C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by DCIT, Central Circle-28, New Delhi, for AY: 2019-20.
2. At the time of hearing, it was pointed out that there is a delay of 42 days in filing of the appeal before this Tribunal and in regard to which ld. Counsel has brought on record an application in condonation of delay and considering the reasons cited therein and as the delay is not of substantial period the same is condoned and the appeal is admitted for hearing.
3. Then, ld. Counsel has drawn our attention to notice u/s 153C of the Act dated 14.03.2023 available at page No. 221 of the paper book by which ld. AO has assumed jurisdiction. Further, copy of assessment has been placed on record in the case of search person Alok Kumar Agarwal for AY: 2010-11 which shows that jurisdiction u/s 153A of the Act was concluded on 24.05.2022. At page no. 103 copy of satisfaction note dated 24.06.2022 for AY; 2014-15 to AY; 2020-21 recorded by the AO on searched person has been provided at page No 104 copy of satisfaction note dated 07.02.203 recorded for initiating proceedings u/s 153C recorded by AO of the assesse has been provided. Admittedly, the case of assesse u/s 153C is an outcome of a search carried on 18.10.2019 in Alankit Group of Cases. These aforesaid facts at one hand reflect that in regard to search conducted on 18.10.2019 the satisfaction note in case of assesse was recorded on 24.06.2022 by the AO on search person and this dates falls beyond 01.04.2026, therefore, provisions of Section 153(3) of the Act come in application and assessment could not have been conducted u/s 153C but may have been u/s 147 of the Act. At the same time, when assessment in case of search person was completed on 24.05.2022 subsequently, on 24.06.2022 satisfaction note by the AO of search person was recorded and the satisfaction note of the AO of the assesse have non searched person was recorded on 07.02.2023. In regard to this delay in assumption of jurisdiction reliance is placed by the ld. Counsel on the decision of Hon’ble Delhi High Court in CIT Vs. Bharat Bhushan Jain vide ITA No. 648/2009 order dated 08.01.2015 wherein relying that decision of Hon’ble Supreme Court in CIT Vs. Calcuta Knitwears, Ludhiana reported in 362 ITR 673 (SC) such delay has been found to be of the nature vitiating the assumption of jurisdiction and passing of assessment order. As a consequence of the aforesaid ground No. 2 is sustained. The appeal is allowed and the impugned assessment order is quashed.
Order pronounced in the open court on 14.08.2026
