ITAT Surat Quashes Section 153C Assessments Over Delayed Satisfaction Note

Sarang Devshibhai Kapuriya Vs ACIT (ITAT Surat)

Summary: The Surat Bench of the Income Tax Appellate Tribunal considered four appeals filed by Sarang Devshibhai Kapuriya for Assessment Years 2015-16 to 2018-19 against assessments framed under section 153C read with section 144 of the Income-tax Act, 1961. The appeals were delayed by 131 days. The Tribunal, relying on section 253(5) and the Supreme Court decision in Collector, Land Acquisition Vs Mst. Katiji and others, found sufficient cause, condoned the delay and admitted the appeals.

On merits, the assessee challenged the assumption of jurisdiction under section 153C. A search under section 132 was conducted in the case of the searched person, Shri Praveen Jivrajbhai Tarpara, on 23.01.2018, and the assessments of the searched person under section 153A were completed on 07.06.2021. The satisfaction note for initiating proceedings against the assessee under section 153C was, however, recorded only on 23.11.2022, approximately 17 months after completion of the searched person’s assessments. The assessee relied upon CIT Vs Calcutta Knitwears and CBDT Circular No.24/2015, which prescribe the stages at which satisfaction may be recorded. Reliance was also placed on the Gujarat High Court decision in Parag Rameshbhai Gathani Vs ITO, where a substantially delayed satisfaction note had resulted in quashing of section 153C proceedings.