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 v. Calcutta Knitwears, 362 ITR 673 (SC), 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.
