Virat Alloys Private Limited Vs ACIT (Gujarat High Court)
The Gujarat High Court considered a batch of writ petitions challenging a notice issued under Section 153C of the Income-tax Act, 1961 for the assessment year 2015–16, along with all consequential proceedings. The petitioner-company had filed its revised return declaring nil income. A search under Section 132 of the Act was conducted on 25 June 2018 in the case of M/s World Window Group. The petitioner asserted that it had not undertaken any business or transactions with the said group during the relevant financial years. Despite this, a notice under Section 153C dated 24 June 2022 was issued to the petitioner, to which it responded.
The principal challenge raised was that the mandatory “satisfaction note,” required for invoking proceedings under Section 153C, was neither properly recorded nor communicated within a reasonable time. The petitioner relied on the decision of the Supreme Court in CIT v. Calcutta Knitwears and CBDT Circular No. 24 of 2015, which clarify that recording of a satisfaction note is a sine qua non for proceedings against a person other than the searched person and that such note must be prepared at specific stages.
The Revenue contended that satisfaction notes were recorded by the Assessing Officer of the searched person and thereafter by the jurisdictional Assessing Officer of the petitioner. However, it was fairly admitted that the satisfaction note of the petitioner’s Assessing Officer did not bear any date. It was also undisputed that the satisfaction note was supplied to the petitioner only on 30 May 2024, nearly two years after issuance of the impugned notice, and no explanation was offered for this delay.
