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.

The Tribunal noted that the Revenue’s challenge to that decision had subsequently been dismissed by the Supreme Court. Following the binding jurisdictional precedent, the Tribunal held that the satisfaction note dated 23.11.2022, recorded approximately 17 months after completion of the searched person’s assessment, was contrary to the prescribed procedure for assumption of jurisdiction under section 153C. The assessment orders passed under section 153C read with section 144 were accordingly quashed. The remaining grounds became academic and were not adjudicated. All four appeals were allowed.

Cases Discussed

• Collector, Land Acquisition Vs Mst. Katiji and others — 1987 AIR 1353, 1987 2 SCC 387.
• CIT Vs Calcutta Knitwears — (2014) 43 taxmann.com 446 (SC).
• Parag Rameshbhai Gathani Vs Income Tax Officer — (2025) 180 taxmann.com 662 (Gujarat).
• PCIT Vs Jitendra H Modi Huf — [2018] 92 taxmann.com 510 / 403 ITR 110 (Gujarat).
• Bhupinder Singh Kapur Vs ITO — [2025] 175 taxmann.com 689 (Punjab & Haryana).

FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, SURAT

1. The captioned four (4) appeals are filed by assessee challenging four (4) separate orders of first-appeals, all dated 17.09.2025 and passed by learned Commissioner of Income-tax (Appeals)-4, Surat [“Ld. CIT(A)”], which in turn arise out of respective four (4) assessment-orders, all dated 30.12.2022 and passed by learned ACIT, Central Circle-1, Surat [“Ld. AO”] u/s 153C r.w.s. 144 of the Income-tax Act, 1961 [“the Act”] for Assessment-Years [“AYs”] 2015-16 to 2018-19 on the grounds as mentioned in Form No. 36 (Appeal Memos).

2. We have heard the learned Representatives of both sides and perused the case record including the papers/paper-book filed by parties.

3. The registry has informed that the present appeals are delayed by 131 days and therefore time-barred. The assessee has filed identical applications/affidavits for condonation of delays in all cases; one of the same is scanned and re-produced for an immediate reference:

Before the Honorable Income Tax Appellate Tribunal, Surat – Bench “DB”
In the case of Sarang Devshibhai Kapuriya

Assessee’s IT(SS)A No.: 89/SRT/2026 for A.Y. 2015-16
Assessee’s IT(SS)A No.: 90/SRT/2026 for A.Y. 2016-17
Assessee’s IT(SS)A No.: 91/SRT/2026 for A.Y. 2017-18
Assessee’s IT(SS)A No.: 92/SRT/2026 for A.Y. 2018-19

Date of hearing: 19.08.2026

SYNOPSIS

1. The cases of the assessee were taken up for hearing on 19.08.2026. During the hearing, the AR of the assessee argued on legal grounds regarding the validity of assumption of jurisdiction u/s 153C.

Synopsis of legal arguments:

2. At the outset, it is submitted that there was a delay of 131 days in filing the present appeal before this Hon’ble Tribunal. It is submitted that the said delay was neither deliberate nor intentional, but occurred on account of bona fide reasons beyond the control of the assessee, including reliance placed on professional consultants. The assessee places reliance on the decision of the Hon”ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. [1987] 167 ITR 471 (SC). It is, therefore, submitted that the delay in filing the present appeal be condoned in the interest of substantial justice.

3. It is further submitted that a search action u/s 132 of the Act was carried out on 23.01.2018 at the residential premises of Shri Pravin Jivrajbhai Tarpara, the “searched person”. During the course of the said search, it was alleged that certain documents/loose papers pertaining to the assessee were found and seized, forming part of Annexures BS-2, BS-3 and BS-6 to the Panchnama dated 23.01.2018.

4. It is submitted that the Hon”ble Supreme Court in CIT v. Calcutta Knitwears [2014] 43 taxmann.com 446/362 ITR 673 (SC), while interpreting the pari materia provisions of section 158BD, has categorically held that a satisfaction note is sine qua non for assumption of jurisdiction over “any other person” and can be recorded only at one of three permissible stages:

(i) along with the initiation of proceedings against the searched person u/s 153A;

(ii) along with the assessment proceedings of the searched person; or

(iii) immediately after completion of the assessment u/s 153A of the searched person.

CBT Circular No. 24/2015 dated 31.12.2015 clarifies that the said three-stage requirement laid down in Calcutta Knitwears applies with equal force to proceedings u/s 153C.

5. In the present case, the Assessing Officer of the searched person had the opportunity to record satisfaction at stage (i) or stage (ii), but did not do so. Even at stage (iii), the satisfaction note came to be recorded only on 23.11.2022, i.e., after a delay of approximately 58 months (nearly 4 years and 10 months) from the date of search. No explanation whatsoever for this inordinate delay is forthcoming either from the satisfaction note itself or from the assessment records.

6. The issue is squarely covered by the decision of Hon’ble Jurisdictional Gujarat High Court in the case of Parag Rameshbhai Gathani v. Income Tax Officer, Ward-2, International Taxation & Anr. [2025] 180 taxmann.com 662 (Gujarat) wherein, on facts materially identical to the present case, where the satisfaction note was recorded nearly four years after search and almost two years after completion of the searched person’s assessment, it was held that—

“…there was no restricting factor on the Assessing Officer to record the satisfaction earlier…” 

and that the delay ran contrary to the decision in Calcutta Knitwears (supra) as well as Circular No. 24/2015, resulting in the notice u/s 153C being quashed and set aside.

7. It is further submitted that the assessment of the searched person, Shri Pravin Jivrajbhai Tarpara, u/s 153A was concluded on 07.06.2021, during the peak of the COVID-19 pandemic. Reckoned from this date, the satisfaction note dated 23.11.2022 was recorded after a further delay of approximately 17 months. Since the searched person’s own assessment was completed during the pandemic, no COVID-19 explanation is available to the Revenue for this delay. This position is squarely covered by Parag Rameshbhai Gathani (supra), where an identical COVID-19 explanation was rejected as an afterthought on the same facts.

8. It is further submitted that both the assessment order passed u/s 144 r.w.s. 153C by the Assessing Officer and the appellate order passed by the Ld. CIT(A) are ex-parte orders. The jurisdictional defect arising from the delayed satisfaction note goes to the very root of the assumption of jurisdiction, rendering the entire proceedings u/s 153C void ab initio, and being a pure legal/jurisdictional issue, is liable to be adjudicated even at this stage.

9. Your Honours may consider the above synopsis while addressing the legal grounds in the appeal and the AR of the assessee humbly requests to quash the assessment proceedings u/s. 153C for all years.

Thanking you,

Yours Truly,
(Authorized Signatory)

4. The averments made by assessee in above affidavit, which are self-explanatory and which do not require repetition, were discussed. The Ld. DR for revenue left the issue of condonation of delays to the discretion and wisdom of bench. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a “sufficient cause” for delay in filing present appeals. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a “sufficient cause” for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the facts of case, the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeals and proceed with hearing.

5. Briefly stated the facts are such that a search and seizure u/s 132 was conducted by income-tax authorities upon “Shri Praveen Jivrajbhai Tarpara” [Here-in-after referred to as the “Searched Person”] on 23.01.2018. During the course of such proceedings, certain incriminating documents pertaining to assessee/appellant were found and seized. Based thereon, satisfaction note dated 23.11.2022 was prepared and consequent action was taken u/s 153C against assessee, which culminated into passing of the aforesaid assessment-orders dated 30.12.2022 u/s 153C r.w.s. 144 in the case of assessee. The Ld. AO made certain additions in the assessment-orders so passed. Aggrieved thereby, the assessee carried matters in first-appeals before Ld. CIT(A) but did not get any success. Still aggrieved, the assessee has come in present appeals before us.

6. Ld. AR for assessee made a very specific and straightforward submission that the search action u/s 132 in the case of Searched Person was carried out as early as on 23.01.2018 and in pursuance thereof, the assessments of Searched Person were also completed by authorities u/s 153A long back on 07.06.2021 (during Covid-19 period). Thereafter the satisfaction note, based on the incriminating material found in the search conducted upon Searched Person, against assessee in terms of section 153C was prepared as late as on 23.11.2022 after a lapse of approximately 17 months from the completion of assessments in the case of Searched Person. Therefore, the preparation of satisfaction note as late as on 23.11.2022 and thereby framing assessments upon assessee is contrary to the principles laid down by the Hon’ble Supreme Court in CIT Vs. Calcutta Knitwears (2014) 43 taxmann.com 446 (SC), as accepted and directed to be followed by the CBDT vide Circular No. 24/2015 dated 31.12.2015.

7. Ld. AR submitted that an identical situation is already decided by Hon’ble Jurisdictional High Court in the case of Parag Rameshbhai Gathani Vs. Income-tax Officer (2025) 180 taxmann.com 662 (Gujrat) wherein the Hon’ble High Court has quashed the assessments framed by AO taking into consideration the earlier judgements of Hon’ble Supreme Court in CIT Vs. Calcutta Knitwears (2014) 43 taxmann.com 446 (SC) and CBDT Circular No. 24/2015. The relevant paras of decision of Hon’ble Gujrat High Court, are re-produced below for an immediate reference:

“A.S. SUPEHIA, J.- These writ petitions raise identical issues and, therefore, with the consent of the parties, the same are decided by a common judgement and order.

2. The issue involved in these petitions pertains to the challenge to the issuance of a notice under Section 153C of the Income Tax Act, 1961 (“the Act” for short) by the respondent authority upon the petitioner for the Assessment Year 2017-18.

3. The facts, as narrated in Special Civil Application No.3736 of 2025, are as follows:

4. The petitioner, by way of the present petition under Article 226 of the Constitution of India, seeks to challenge the impugned notice dated 09.02.2024 issued by the respondent authority under Section 153C of the Act for the Assessment Year 2017-18. Respondent No.1 issued the impugned notice dated 09.02.2024 under Section 153C of the Act, for the Assessment Year 2017-18, calling upon the petitioner to furnish a return of income. Pursuant to the issuance of the aforesaid notice, the respondent authority supplied copies of the “satisfaction note” recorded on 14.07.2023 by the Assessing Officer of the petitioner, and another “satisfaction note” recorded on 06.06.2023 by the Assessing Officer of the “searched person”, for the purpose of invoking jurisdiction under Section 153C of the Act. A perusal of the satisfaction notes reveals that jurisdiction under Section 153C of the Act has been invoked primarily on the ground that the petitioner allegedly made an “on-money” payment for the purchase of a property.

5. The satisfaction notes indicate:

(a) A search action under Section 132 of the Act was carried out on 15.10.2019 in the case of a land broker and financier group of assessees, during which the residential premises of one Suresh Ranchhodbhai Thakkar (a third party) were also covered;

(b) Certain incriminating material, including WhatsApp chat images, was found and seized during the course of the said search;

(c) Upon examining some of these images, it was found that the financial transactions mentioned therein were carried out between Dharmesh Gathani, Parag Gathani, Rushisinh Thakor, and Randhirsinh Thakor;

(d) During the post-search inquiry, the statement of Suresh R. Thakkar, was recorded on 20.12.2019 under Section 131 of the Act, wherein he confirmed the chat and communication with Rushisinh Thakor regarding a land deal facilitated by Suresh Bharwad. He further stated that the land was sold by Rushisinh Thakor to Paresh Gathani, and the consideration was paid in both cash and cheque;

(e) During the course of assessment proceedings under Section 153C in the case of Rushisinh Thakor and Randhirsinh Thakor, concluded in March 2023, a registered sale deed of land bearing Survey No.135, Okaf, was produced. On perusal of the said deed, it was found that the land had been purchased in the name of Bharti Dharmesh Gathani, wife of Dharmesh Gathani, vide sale deed dated 24.07.2020, for a registered consideration of Rs. 3,80,00,000/-;

6. The petitioner, vide letter dated 06.03.2025, raised objections against the initiation of proceedings under Section 153C of the Act for the year under consideration.

7. Learned Senior Advocate Mr.Tushar Himani, has submitted that the satisfaction note for initiating proceedings under Section 153C of the Act was recorded nearly four years by the Assessing Officer after the search and almost two years after the assessment of the searched person had been completed. This reflects an inordinate delay in the initiation of proceedings under Section 153C of the Act, and hence the impugned Notice is required to be quashed.

8. In support of his submissions, he has placed reliance on the judgment of the Supreme Court in the case of CIT v. Calcutta Knitwears [2014] 43 taxmann.com 446/223 Taxman 115/362 ITR 673, and the subsequent Circular No.24/2015 issued by the respondent-department in view of the decision of the Supreme Court in the case of Calcutta Knitwears (supra), and has submitted that the case of the petitioner would be squarely covered in view of the circular and the decision of the Supreme Court. Further, reliance is also placed by learned Senior Advocate Mr. Himani on the decision of this Court in the case of Pr. CIT v. Jitendra H. Modi (HUF) [2018] 92 taxmann.com 510 /403 ITR 110 (Gujarat).

9. In response, the learned Senior Standing Counsel Mr. Patel for respondent No.2 submitted that the issuance of the impugned notice under Section 153C of the Act is strictly in consonance with the provisions of the Act. It was contended that, subsequent to the Finance Act, 2015, the jurisdictional requirement mandates that the Assessing Officer of a person other than the searched person must be satisfied that the documents seized “pertain to or relate to” such other person. It is contended that in the present case, the WhatsApp chats discovered on the phone of the searched person, Shri Suresh R. Thakkar, coupled with his sworn statement and the subsequently registered sale deed, clearly establish that the seized documents “relate to” the petitioner. Hence, even applying the ratio of CIT v. Jasjit Singh [2023] 155 taxmann.com 155/295 Taxman 612/458 ITR 437 (SC) the impugned notice for A.Y. 2017-18 would fall within the extended limitation period of ten assessment years under Sections 153C and 153A of the Act.

10. Learned Senior Standing Counsel Mr. Patel, while referring to the Circular No.24/2015 dated 31.12.2015, has clarified that though the interpretation adopted by the Supreme Court in case of Calcutta Knitware (supra) with respect to Section 158BD, equally applies to Section 153C of the Act, however the decision of the Supreme Court will not apply to the facts of this case. It was pointed out that in the present case, the assessment proceedings of the searched person, Shri Suresh R. Thakkar, were completed in August 2021, during the post-Delta phase of the COVID-19 pandemic and during that period, most Government offices, including those of the Income Tax Department, were functioning with significantly reduced staff strength, often below 50% capacity. It is submitted that before normalcy could be restored, the third wave was triggered by the Omicron variant commenced in December 2021 and continued until February 2022, with normal operations resuming only around May 2023, and hence, in light of these constraints, the Assessing Officer of the searched person drew the satisfaction note on 06.06.2023 and transferred the seized material to the Assessing Officer of the “other person” on 02.02.2024. The Assessing Officer of the petitioner, upon receipt of such material, recorded his satisfaction on 14.07.2023 and accordingly issued the impugned notice.

11. It was further submitted that during the intervening period, the Department underwent a substantial administrative transformation with the introduction of the Faceless Assessment Scheme, 2020, notified vide CBDT Notification No.60/2020 dated 13.08.2020, and subsequent notifications. Under the said scheme, effective from 13.08.2020, all assessment-related functions except those pertaining to search and seizure under Sections 153A and 153C and certain categories of reassessments were centralized and assigned to faceless units. This large-scale structural reform necessitated extensive redistribution of jurisdiction among traditional Assessing Officers and the newly created Faceless Assessment Units. It is contended that albeit, the present case falls outside the purview of the Faceless Scheme, the Department’s functioning during this transitional phase was significantly affected by the concurrent operational demands of implementing the new system.

12. Learned Senior Standing Counsel Mr. Patel, in support of his submissions, has placed reliance on the decision of the Punjab and Haryana High Court in the case of Bhupinder Singh Kapur v. ITO [2025] 175 taxmann.com 689 (Punjab & Haryana), and has submitted that the High Court of Punjab and Haryana has validated the action of the department, though the satisfaction note was recorded almost after a period of 9 months. It is submitted that against the aforesaid decision, Bhupinder Singh Kapur v. ITO [2025] 175 taxmann.com 690 (SC)/ SLP (Civil) No.1352/2025 was also preferred before the Supreme Court, which was dismissed by order dated 24th January, 2025.

13. We have heard the learned advocates appearing for the respective parties at length. The established dates and events from the pleadings are as under :

14. Thus, it is apparent from the dates and events mentioned hereinabove that the search action was carried out in the case of Suresh R. Thakkar, i.e., the searched person, on 15th October, 2019, and the assessment was framed in August 2021. The satisfaction note was recorded on 6th June, 2023 by the Assessing Officer of the searched person, which was forwarded to the Assessing Officer of the petitioner, who in turn recorded the satisfaction note on 17th October, 2023, and thereafter the notice under Section 153C of the Act was issued on 6th November, 2023. Thus, the proceedings under Section 153C of the Act have been initiated almost four years after the search and almost two years after framing of assessment of the searched person, i.e., Suresh R. Thakkar.

15. Keeping in mind the aforenoted established facts, we may, at the outset, refer to the decision of the Supreme Court in the case of Calcutta Knitwears (supra). The Supreme Court in the said case, while examining the provisions of Section 158BC of the Act (now Section 153A of the Act), has held as under:

“44. In the result, we hold that for the purpose of Section 158BD of the Act, a satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the records to the other Assessing Officer who has jurisdiction over such other person. The satisfaction note could be prepared at either of the following stages: (a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act, (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the act of the searched person.”

16. In view of the aforesaid decision of the Supreme Court, the respondent-department issued Circular No.24/2015 in light of the provisions of Section 153C of the Act clarifying the recording of the satisfaction note at three stages. The said Circular is incorporated as under :

“CIRCULAR NO.24 of 2015 [F.NO.279/MISC./140/2015/ITJ]

Section 153C, READ WITH SECTION 158BD OF THE INCOME TAX ACT, 1961 – SEARCH AND SEIZURE -ASSESSMENT OF INCOME IN CASE OF OTHER PERSON -RECORDING OF SATISFACTION NOTE UNDER SECTION 158BD/153C OF THE SAID ACT CIRCULAR NO.24/2015 [F.NO.279/MISC./140/2015/ITJ], DATED 31-12-2015

The issue of recording of satisfaction for the purposes of section 158BDI153C has been subject matter of litigation.

2. The Hon’ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No.3958 of2014 dated 12.3.2014(available in NJRS at 2014-LL-0312-51) has laid down that for the purpose of Section 158BD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person uls 158BD. The Hon’ble Court held that “the satisfaction note could be prepared at any of the following stages:

(a) at the time of or along with the initiation of proceedings against the searched person under section 158BC of the Act; or

(b) in the course of the assessment proceedings under section 158BC of the Act; or

(c) immediately after the assessment proceedings are completed under section 158BC of the Act of the searched person. “

3. Several High Courts have held that the provisions of section 153C of the Act are substantially similar/pari-materia to the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon’ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT.

4. The guidelines of the Hon’ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the “other person” is one and the same, then also he is required to record his satisfaction as has been held by the Courts.

5. In view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgement. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction note under section 158BD 1153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the apex court.”

17. Thus, as per the Circular of the respondent Department, the judgment of the Supreme Court in the case of Calcutta Knitwears (supra) and the recording of the satisfaction note in three stages apply to the proceedings under Section 153C of the Act.

18. Though, the Assessing Officer had an opportunity to record the satisfaction note at two stages i.e. stage (a) and (b) as specified in the Circular, the same is not done. The next state which was available was stage (c) on immediate completion of proceedings of the searched person in August 2021, however, the satisfaction note was recorded on 6th June, 2023, after a period of 22 months. The satisfaction note was drawn by the Assessing Officer of the petitioner on 17th October, 2023. The satisfaction note of 17th October, 2023 of the petitioner (paragraph No.2.7) mentions that during the course of the assessment proceedings under Section 153C of the Act in the case of Shri Rushisinh Thakor and Shri Randhirsinh Thakor, concluded in March 2023, the transactions pertain to the sale, i.e., purchase of land by one Smt. Bharti Dharmesh Gathani, w/o. Dharmesh Gathani, vide sale deed dated 24th July, 2020, for a registered value of Rs.3,80,00,000/-. Thus, the Assessing Officer of the searched person prepared the satisfaction note on 6th June, 2023, after completion of the assessment in August 2021, i.e., almost after a period of 22 months. We may, at this stage, refer to the decision of the Coordinate Bench of this Court in the case of Jitendra H. Modi (supra), wherein this Court, by placing reliance on the decision of the Supreme Court in the case of Calcutta Knitwears (supra), has held that satisfaction recorded after 09 months could not be said to be immediate action and hence, the Coordinate Bench of this Court set aside the notices issued under Section 158BD of the Act. In the instant case, there has been a delay of 22 months in recording the satisfaction, which runs contrary to the decision in Calcutta Knitwears (supra) as well as provision ‘(c)’ of Circular No.24/2015 dated 31.12.2015, which uses the expression “immediately after the assessment procedure is completed”.

19. Twin reasons are assigned by the respondents in the affidavit in reply for delay in recording the satisfaction note, (a) COVID-19 pandemic; and, (b) adoption of Faceless Scheme. So far the reason of COVID-19 is concerned, the same runs contrary to the action of the respondents, since the assessment of the searched person was itself done during the pandemic, and in the affidavit-in-reply, the respondent has mentioned that the Omicron variant commenced in December 2021 and continued until February 2022. Thus, even after February, 2022, the satisfaction note has been recorded on 17.10.2023. The second reason of workload due to Faceless Scheme is also a lame excuse, since indubitably the exercise under sections 153A and 153C of the Act falls outside the purview of the said scheme. Hence, both the reasons assigned appear to be an afterthought, hence the same are rejected.

20. The reliance placed by the learned advocate Mr. Patel on the decision of Bhupinder Singh Kapur (supra) will not come to the rescue of the respondents, since in the present case, there is 22 months delay in recording the satisfaction. There was no restricting factor on the Assessing Officer to record the satisfaction earlier. The expression “immediate” though is impossible to quantify in period, however, the same cannot be extended to such an extent which defeats the purpose of cost effective, efficient and expeditious completion of search assessments. The intention of using such term is to reduce and avoid long drawn proceedings and to bring certainty to the assessment.

21. Thus, both the writ petitions succeed. The impugned notices issued under Section 153C of the Act for the respective assessment years are hereby quashed and set aside. RULE is made absolute. There shall be no order as to costs.”

[emphasis supplied]

8. Ld. AR accordingly submitted that the present cases of assessee are directly covered by above decision of Hon’ble High Court and therefore respectfully following the same, the assessments made by Ld. AO in present cases deserve to be quashed.

9. Replying to above, Ld. DR for revenue dutifully supported the orders of lower-authorities.

10. We have carefully considered the rival submissions and perused the material available on record. The undisputed facts of the case are that (i) the search u/s 132 in the case of the Searched Person was conducted on 23.01.2018 and the assessment proceedings in the case of the Searched Person were completed u/s 153A on 07.06.2021, and (ii) the satisfaction note for taking action u/s 153C in the case of assessee was recorded on 23.11.2022, i.e. after a lapse of about 17 months from the date of completion of assessment in the case of Searched Person. We agree that in an identical situation, where a delay of approx. 22 months after completion of assessments of Searched Person was involved, the Hon’ble Jurisdictional High Court in Parag Rameshbhai Gathani (supra) has quashed the assessments. The Revenue’s SLP challenging the decision of Hon’ble High Court has been recently dismissed by Hon’ble Supreme Court through Judgement & Order dated 27.07.2026 – Refer (2026) 188 taxmann.com 1030 (SC). Respectfully following the binding decision of Hon’ble Jurisdictional High Court as affirmed by Hon’ble Supreme Court, we hold that the satisfaction note dated 23.11.2022, having been recorded after an inordinate delay of approximately 17 months from completion of assessment of the Searched Person, is contrary to the procedure prescribed in law for assumption of jurisdiction u/s 153C. Being so, we quash the assessment-orders passed by the Ld. AO u/s 153C r.w.s. 144.

11. Since we have quashed the assessment-orders, other grounds raised by assessee in Form No. 36 (Appeal Memo) are rendered academic and require no adjudication at this stage.

12. In result, these appeals are allowed.

Order pronounced in open court on 24/08/2026