Rakesh Trisal Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, allowed the assessee’s appeals for Assessment Years (AYs) 2016-17 and 2019-20 after holding that the assumption of jurisdiction under Section 153C of the Income-tax Act, 1961 was invalid because it was based on a consolidated satisfaction note covering multiple assessment years. The appeals arose from assessment orders passed under Sections 153C read with 143(3), whereby certain additions had been made. The Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee’s appeals, following which the assessee approached the Tribunal. Although several grounds were raised, the Tribunal confined its consideration to Ground No. 2, which challenged the legality of initiation of proceedings under Section 153C. The assessee contended that the Assessing Officer (AO) had recorded a single consolidated satisfaction note for Assessment Years 2014-15 to 2020-21 instead of recording separate satisfaction for each assessment year, rendering the proceedings contrary to law and judicial precedents. The Revenue argued that a consolidated satisfaction note was legally permissible and relied upon the Delhi High Court’s decision in Indian National Congress v. DCIT to support the validity of the proceedings.
The Tribunal examined the satisfaction note dated 15 March 2022 and found that it covered Assessment Years 2014-15 to 2020-21 without identifying year-wise incriminating material or specifying the additions attributable to each assessment year. It observed that the assessments under challenge had been framed solely on the basis of this consolidated satisfaction note. The Tribunal noted that an identical issue had been considered by a coordinate bench in SRS Panchratan Diamonds Pvt. Ltd., which had relied upon the Karnataka High Court’s judgment in DCIT v. Sunil Kumar Sharma and the Delhi High Court’s decision in Shaksham Commodities Ltd. v. ITO to hold that recording a consolidated satisfaction note for multiple assessment years vitiates the assumption of jurisdiction under Section 153C. It further noted that the Special Leave Petition (SLP) against the Karnataka High Court’s judgment in Sunil Kumar Sharma had been dismissed by the Supreme Court.
