Deepak Purshottam Shah (HUF) Vs ACIT (ITAT Mumbai)
Seized Papers Related to AY 2011-12; ₹14.80 Crore Addition for AY 2009-10 Quashed by Mumbai ITAT
Summary: A satisfaction note under section 153C cannot support proceedings for an assessment year merely because that year appears in a list of years covered by the note. The seized material must have a connection with the particular year sought to be assessed. Applying this principle, the Mumbai ITAT quashed the AY 2009-10 assessment of Deepak Purshottam Shah (HUF). The documents identified in the satisfaction note related to FY 2010-11, corresponding to AY 2011-12, and the note disclosed no seized material bearing on AY 2009-10.
The result was that an assessment carrying an addition of ₹14.80 crore, described as profit from a land sale to Tata Housing Development Co. Ltd., was quashed for want of jurisdiction. The Tribunal did not decide whether the alleged profit had in fact been earned.
Search and the ₹14.80 Crore Addition
A search under section 132 was conducted in the Swastik Group on 31 July 2014. The assessee HUF was stated to be a partner in various concerns of that group. For AY 2009-10, it had filed a return on 21 December 2010 declaring income of ₹85,36,940. Following the search, proceedings under section 153C were initiated and an assessment making additions was completed.
That assessment had already travelled to the Tribunal once. By an order dated 28 November 2018 in ITA No. 7011/Mum/2017 and connected appeals, the matter was restored for fresh adjudication. In the resulting assessment order dated 30 December 2019, passed under section 143(3) read with sections 254 and 153C, the AO added ₹14,80,00,000 as alleged profit arising from the sale of land to Tata Housing Development Co. Ltd. The CIT(A) upheld the assessment, and the HUF again approached the Tribunal.
The assessee challenged both the jurisdiction to proceed under section 153C and the addition on merits. Its central jurisdictional argument was straightforward: the seized documents cited to initiate the proceedings did not relate to AY 2009-10.
What Did the Satisfaction Note Identify?
The Tribunal examined the satisfaction note dated 2 February 2015. It was a common note covering AYs 2009-10 to 2014-15 and referred particularly to pages 206 and 208 of Bundle No. 13, seized from the premises of Swastik Spaces Pvt. Ltd. These pages concerned transactions relating to the land sale to Tata Housing Development Co. Ltd. The note also referred to a statement of Shri Deepak P. Shah recorded under section 132(4).
The decisive feature was the year identified by the material itself. As the Tribunal recorded, the statement and tabulation reproduced in the satisfaction note identified additional income in the assessee’s case with FY 2010-11. That financial year corresponds to AY 2011-12, whereas the assessment before the Tribunal was for AY 2009-10. The note did not identify any seized document or material having a bearing on determination of the assessee’s income for AY 2009-10.
The Same Note Had Been Examined Earlier
The Tribunal also considered an earlier coordinate bench decision in the same assessee’s case for AYs 2012-13 and 2013-14—ITA Nos. 5591 and 5593/Mum/2024, order dated 1 September 2025. That bench had examined the same satisfaction note and the same pages 206 and 208 of Bundle No. 13. It found that the documents related to FY 2010-11/AY 2011-12 and could not support section 153C proceedings for AYs 2012-13 and 2013-14.
The present bench held that this factual finding applied equally to AY 2009-10. Material already identified as relating to AY 2011-12 could not, without a demonstrated connection, become incriminating material for an earlier year simply because the satisfaction note covered six years.
Year-Specific Nexus Was the Jurisdictional Issue
In reaching its conclusion, the Tribunal relied on CIT v. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) for the need to correlate seized material with the assessment year for which section 153C jurisdiction is assumed. It also referred to PCIT v. Abhisar Buildwell (P.) Ltd. (2023) 454 ITR 212 (SC) and DCIT v. U.K. Paints (Overseas) Ltd. (2023) 454 ITR 441 (SC) concerning additions to completed assessments in the absence of incriminating search material.
The Tribunal noted that AY 2009-10 was a completed or unabated assessment. It further referred to Ashok Commercial Enterprises v. ACIT (2023) 459 ITR 100 (Bom.) for examining section 153C jurisdiction by what the satisfaction note itself records, rather than by a later attempt to supplement it.
Finding no seized material in that note relatable to AY 2009-10, the ITAT held that the assumption of jurisdiction under section 153C could not be sustained and quashed the assessment order dated 30 December 2019.
Author’s Comments
The strength of this decision lies in its examination of the actual satisfaction note, not merely the fact that a search took place or that several assessment years were mentioned. The note identified particular pages and a particular transaction, but its own account placed the alleged income in FY 2010-11. For AY 2009-10, the required link was missing.
The assessee had also challenged the use of a common satisfaction note for six years, the absence of a DIN, and the ₹14.80 crore addition on merits. The Tribunal expressly left those issues undecided because the assessment had already been quashed on the absence of year-specific incriminating material. This order therefore supports that jurisdictional proposition; it does not decide that a consolidated satisfaction note is invariably invalid or that the land transaction generated no taxable profit.
Cases Discussed/Relied Upon
- Deepak Purshottam Shah (HUF) — ITA Nos. 5591 & 5593/Mum/2024 (ITAT Mumbai); AYs 2012-13 & 2013-14; Order dated 01/09/2025 — Followed. The Coordinate Bench had examined the very same satisfaction note dated 02/02/2015 and held that pages 206 and 208 of Bundle No. 13 pertained to FY 2010-11 corresponding to AY 2011-12. The Tribunal held that this factual finding squarely applied to AY 2009-10 and that the same material could not constitute incriminating material for that year.
- CIT Vs Sinhgad Technical Education Society (Supreme Court); (2017) 397 ITR 344 (SC) — Relied upon and followed. The Tribunal applied the principle that seized material relied upon for assumption of jurisdiction under section 153C must have a document-wise correlation with the assessment year sought to be assessed and that such correlation constitutes a jurisdictional fact.
- PCIT Vs Abhisar Buildwell (P.) Ltd. (Supreme Court); (2023) 454 ITR 212 (SC) — Relied upon and followed. The Tribunal referred to the Supreme Court ruling that, in respect of completed/unabated assessments, no addition can be made in search assessment proceedings in the absence of incriminating material found during the course of search.
- DCIT Vs U.K. Paints (Overseas) Ltd. (Supreme Court); (2023) 454 ITR 441 (SC) — Relied upon and followed. The Tribunal noted that the principle concerning absence of incriminating material in completed assessments had been reiterated in the specific context of section 153C, where assessments were held unsustainable when no incriminating material was found during search either from the assessee or from a third party.
- Ashok Commercial Enterprises Vs ACIT (Bombay High Court); (2023) 459 ITR 100 (Bom.) — Relied upon and followed. The Tribunal applied the jurisdictional High Court ruling that existence of incriminating material for assumption of jurisdiction under section 153C has to be tested from the satisfaction note itself and that the Revenue cannot subsequently augment, supplement or improve upon the satisfaction recorded.
- Saksham Commodities Ltd. Vs ITO (Delhi High Court); (2024) 464 ITR 1 (Del.) — Relied upon. The Tribunal referred to the ruling that section 153C proceedings cannot be sustained for assessment years in respect of which no incriminating material has been gathered and where the satisfaction note does not show how the discovered material has a bearing upon determination of total income of the concerned assessment year.
- NTPC Ltd. Vs CIT (Supreme Court); (1998) 229 ITR 383 (SC) — Applied. The Tribunal relied on this decision while admitting the additional jurisdictional grounds, holding that a legal ground arising from facts already available on record can be raised before the Tribunal without requiring fresh investigation of facts.
- Shri Rajendra Rameshlal Gugale Vs Pr. CIT (ITAT Pune); ITA No. 1676/PUN/2024; Order dated 30/12/2024 — Cited by the assessee. It was relied upon in the additional grounds in support of the challenge to the common/consolidated satisfaction note. The Tribunal did not separately adjudicate that issue because the assessment was quashed for absence of seized material relatable to AY 2009-10.
- DCIT Vs Sunil Kumar Sharma — Cited by the assessee. The source records the citation as “168 Taxman.com 77 (2024)” in the additional grounds. It was cited in support of the challenge to the common/consolidated satisfaction note; that issue was ultimately treated as academic and was not separately adjudicated by the Tribunal.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Present appeal is filed by the assessee against the order dated 15/09/2025 passed by the Ld. Commissioner of Income Tax (Appeals), Pune–11 [“Ld. CIT(A)”] u/s. 250 of the Income-tax Act, 1961 (“the Act”) for A.Y. 2009-10.
2. The assessee has raised the following grounds of appeal:
“1.0 On the facts and in the circumstances of the case, and in law, the order of the Ld. CIT(A) is bad in law on various grounds, and in equity and the same should be annulled or set aside.
2.0 On the facts and in the circumstances of the case and in law, the order of the CIT(A) erred in confirming the assessment order passed u/s.143(3) r.w.s.254 r.w.s.153C of the Income-tax Act, 1961 without appreciating the fact that the assessment was completed without valid jurisdiction in absence of ‘Satisfaction Note’ recorded by the Assessing Officer of the searched person which is pre-requisite to assessment u/s.153C of the Act and same must be prepared by Assessing Officer of the searched person before the handover of the records to the assessee’s Assessing Officer who has jurisdiction over assessee.
3. On the facts and in circumstances of the case and in law, the order of the CIT(A) erred in confirming the assessment order passed u/s.143(3) r.w.s.254 r.w.s.153C of the Income-tax Act, 1961 without appreciating the fact that the assessment was completed without valid jurisdiction as no specific satisfaction note was recorded for A.Y.2009-10 by the Ld. AO.
4. On the facts and in the circumstances of the case and in law, the order of the CIT(A) erred in confirming the assessment order passed u/s.143(3) r.w.s.254 r.w.s.153C of the Income-tax Act, 1961 without appreciating that the satisfaction was recorded for six assessment years without quantifying the escapement of income for each assessment year as mandated by the Income-tax Act, 1961.
5.0 On the facts and in the circumstances of the case and in law, the order of the CIT(A) erred in confirming the assessment order passed u/s.143(3) r.w.s.254 r.w.s.153C of the Income-tax Act, 1961 without appreciating the fact that the assessment made by the Ld. AO u/s.153C of the Act was beyond jurisdiction as no incriminating material was found during the course of search action u/s.132 of the Act in case of Swastik Group with respect to the addition made by the Ld. AO in hands of the assessee.
6.0 On the facts and in the circumstances of the case and in law, the order of the CIT(A) erred in confirming the assessment order passed u/s.143(3) r.w.s.254 r.w.s.153C of the Income-tax Act, 1961 without appreciating that the assessment order was passed without mentioning the Document Identification Number (DIN) which makes the order invalid as per CBDT Circular No.19/2019 dated 14.08.2019.
7.0 On the facts and in the circumstances of the case and in law, the order of the learned Commissioner of Income-tax confirming the assessment order passed u/s.143(3) r.w.s.254 r.w.s.153C of the Income-tax Act, 1961, solely citing non-prosecution, without independent examination of facts, seized material or computation, thereby rendering the order per incuriam and violative of natural justice.
8.0 On the facts and in the circumstances of the case and in law, the order of the CIT(A) erred in confirming the addition made by the Assessing Officer amounting to Rs.14,80,00,000/- as undisclosed income in form of profit in respect of sale of land to Tata Housing Development Co. Limited disregarding the fact of the case and merely based on the search proceeding and Investigation Wing report.
9.0 On the facts and in the circumstances of the case and in law, the order of the CIT(A) erred in confirming the addition made by the Assessing Officer amounting to Rs.14,80,00,000/- as income of the appellant without there being any incriminating material or either corresponding cash or unexplained assets to show that the appellant had ever indeed received such income and hence the same should be deleted.
10.0 The appellant craves to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another.”
2.1. The assessee has further filed the following additional grounds of appeal dated 12/07/2026:
“1. Under the fact and circumstances of the case and in law order passed by the Assessing Officer in absence of assumption of valid jurisdiction on various counts and so also in the absence separate satisfaction notes the order being bad in law, the same be declared null and void.
2. In the instant case hearing was held on 16.06.2026 where it was pointed out to the honourable bench that the order passed by the Assessing Officer on the basis of common consolidate satisfaction note as against individual separate satisfaction for each year being bad in law the order passed therefore being bad in law the same should be annulled.
3. Since the grounds of appeal on legal ground were all being asked to raise additional ground. In view of the same we are submitting an additional ground as above and request your honour to admit the same and deal with it.
4. Since this ground being Legal ground where all the facts were available on record the same may please be admitted and deliberated. In this regards reliance is placed on the judgement of Supreme Court in case of NTPC Limited reported in 229 ITR 383.
5. Under the fact and circumstances of the case and in law order passed by the Assessing Officer in absence of assumption of valid jurisdiction on various counts being bad in law, the same should be annulled.
6. Under the facts and circumstances of the case and in law order passed by the Assessing Officer on the basis of Common consolidated Satisfaction note as against individual separate satisfaction note issued for the year under consideration being bad in law the same should be annulled.
7. We are also relying on the following judgements which were already quoted by my AR and the printouts were handed over in the last hearing, the copies are once again enclosed herewith:
Shri Rajendra Rameshlal Gugale Vs. Pr. CIT
ITA No.1676/PUN/2024, Pune ITAT Order dated 30.12.2024
Supreme Court of India
DCIT Vs. Sunil Kumar Sharma – 168 Taxman.com 77 (2024)
The Thrust Of the Judgements is as under:
Consolidated Notes Vitiate Proceedings: The court held that the Assessing Officer must record a separate, year-specific satisfaction note for each individual assessment year. Merging them into one overarching note is a fatal procedural flaw that invalidates the entire assessment process.”
2.2. The additional grounds challenge the very assumption of jurisdiction u/s.153C and arise from the satisfaction note and material already forming part of the assessment record. No fresh investigation of facts is necessary for their adjudication. The Hon’ble Supreme Court in NTPC Ltd. v. CIT, (1998) 229 ITR 383 (SC) has held that a legal ground arising from facts already available on record can be raised before the Tribunal. We accordingly admit the additional grounds and proceed to adjudicate the jurisdictional issue along with Grounds Nos.2 to 5 of the original grounds.
3. Brief facts of the case are as under:-
A search action u/s.132 was carried out in the case of Swastik Group on 31/07/2014. The assessee is stated to be a partner in various concerns of the said group. The assessee filed its return of income for A.Y.2009-10 on 21/12/2010 declaring total income of Rs.85,36,940/-. Pursuant to the search, proceedings u/s.153C were initiated and assessment was originally completed making various additions. In the first round of appellate proceedings, the matter travelled before this Tribunal in ITA No.7011/Mum/2017 and connected appeals and, vide order dated 28/11/2018, the matter was restored for fresh adjudication.
3.1. Pursuant thereto, the Ld.AO passed the assessment order dated 30/12/2019 u/s.143(3) r.w.s.254 r.w.s.153C of the Act, whereby an addition of Rs.14,80,00,000/- was made as alleged profit arising from sale of land to Tata Housing Development Co. Ltd.
Aggrieved by the order of the Ld.AO the assessee preferred appeal before Ld.CIT(A).
4. The Ld.CIT(A), after considering the submissions of the assesse upheld the assessment.
Aggrieved by the order of the Ld.CIT(A) the assessee is in appeal before us.
5. Before us, the Ld.AR submitted that the very assumption of jurisdiction u/s.153C for the year under consideration is bad in law as no incriminating material pertaining to A.Y.2009-10 was found during the course of search. Referring to the satisfaction note dated 02/02/2015, the Ld. AR submitted that the only seized documents referred therein are pages 206 and 208 of Bundle No.13 concerning sale of land to Tata Housing Development Co. Ltd.; however, the transactions and the statement relied upon therein pertain to F.Y.2010-11 and therefore have no nexus whatsoever with A.Y.2009-10.
5.1. He further submitted that the very same satisfaction note has already been considered by the Coordinate Bench in assessee’s own case for A.Ys.2012-13 and 2013-14 in ITA Nos.5591 & 5593/Mum/2024, order dated 01/09/2025, wherein it has been categorically held that the documents at pages 206 and 208 of Bundle No.13 pertain to F.Y.2010-11 corresponding to A.Y.2011-12. Reliance was also placed on the following decisions:-
- CIT v. Sinhgad Technical Education Society, reported in (2017) 397 ITR 344 (SC);
- PCIT v. Abhisar Buildwell (P.) Ltd., reported in (2023) 454 ITR 212 (SC);
- DCIT v. U.K. Paints (Overseas) Ltd., reported in (2023) 454 ITR 441 (SC);
- Ashok Commercial Enterprises v. ACIT, reported in (2023) 459 ITR 100 (Bom.); and
- Saksham Commodities Ltd. v. ITO, reported in (2024) 464 ITR 1 (Del.).
5.2. The Ld. DR, on the contrary, relied upon the orders passed by the authorities below and submitted that there was sufficient material for initiation of proceedings u/s.153C.
We have perused the submissions advanced by both sides in light of the record placed before us.
6. The short issue that arises for our consideration is whether the satisfaction recorded u/s.153C discloses any incriminating material having nexus with the assessment year under consideration, i.e., A.Y.2009-10. We have carefully perused the satisfaction note dated 02/02/2015. The said satisfaction note has been recorded commonly for A.Ys.2009-10 to 2014-15 and refers to documents seized from the premises of M/s. Swastik Spaces Pvt. Ltd., particularly pages 206 and 208 of Bundle No.13, recording transactions relating to sale of land to Tata Housing Development Co. Ltd. The satisfaction note also refers to the statement of Shri Deepak P. Shah recorded u/s.132(4). Significantly, the statement and the tabulation reproduced in the satisfaction note itself identify the additional income in the case of the assessee with Financial Year 2010-11. Thus, the satisfaction note does not identify any seized document or material pertaining to or having any bearing upon determination of the total income of the assessee for A.Y.2009-10. satisfaction note.
6.1. He submitted that, the very same satisfaction note dated 02/02/2015 has been examined by the Coordinate Bench in assessee’s own case in ITA Nos.5591 & 5593/Mum/2024 for A.Ys.2012-13 and 2013-14, order dated 01/09/2025. The Coordinate Bench specifically noticed that the satisfaction note covered A.Ys.2009-10 to 2014-15; that the documents referred therein were pages 206 and 208 of Bundle No.13 relating to the land transaction with Tata Housing Development Co. Ltd.; and that the said documents pertained to F.Y.2010-11 corresponding to A.Y.2011-12. The Coordinate Bench therefore held that the documents forming the basis of the satisfaction could not sustain proceedings for A.Ys.2012-13 and 2013-14. He referred to following observations from the order passed by this Tribunal in assessee’s own case for assessment year 2012-13 and 2013-14(supra) that read as under:
“(i) The Satisfaction Note has been recorded as a combined note covering AY’s 2009-10 to 2014-15, rather than recording separate Satisfaction Notes for each of the six assessment years in the case of the assessee.
(ii) The AO’s satisfaction note refers only to documents in Bundle No.13, specifically pages 206 and 208, which relate to a land sale transaction with Tata Housing Development Co. Ltd.
(iii) The documents in question pertain to FY 2010-11, corresponding to AY 2011-12. Therefore, the proposed addition under the said Satisfaction Note relates to AY 2011-12 and not to the years under consideration, i.e., AY 2012-13 and AY 2013-14.”
6.2. The Coordinate Bench thereafter recorded that no satisfaction connected the seized documents with the assessment years then under consideration and held the proceedings to be invalid. The aforesaid factual finding squarely applies to the year before us. Once it has already been found in assessee’s own case that pages 206 and 208 of Bundle No.13 pertain to F.Y.2010-11/A.Y.2011-12, the same material cannot constitute incriminating material for A.Y.2009-10.
6.3. This legal position is also supported by the decision of Hon’ble Supreme Court in case of CIT v. Sinhgad Technical Education Society, (supra), wherein Hon’ble Court approved the proposition that the seized material relied for assumption of jurisdiction u/s.153C must have a document-wise correlation with the assessment year sought to be assessed and that such correlation constitutes a jurisdictional fact.
6.4. Further, it is noted that in PCIT v. Abhisar Buildwell (P.) Ltd. (supra), Hon’ble Supreme Court held that, in respect of completed/unabated assessments, no addition can be made in search assessment proceedings in the absence of incriminating material found during the course of search. The same principle in the specific context of assessments u/s.153C stands reiterated in DCIT v. U.K. Paints (Overseas) Ltd. (supra), wherein assessments u/s.153C were held unsustainable where no incriminating material was found during search either from the assessee or from a third party.
6.5. We also find support from the decision of the Hon’ble Bombay High Court in case of Ashok Commercial Enterprises v. ACIT, (supra), wherein it was held that, existence of incriminating material for assumption of jurisdiction u/s.153C has to be tested from the satisfaction note itself and the Revenue cannot subsequently augment, supplement or improve upon the satisfaction so recorded. The Coordinate Bench in assessee’s own case relied on the said decision while considering this very satisfaction note. Similarly, the Hon’ble Delhi High Court in Saksham Commodities Ltd. v. ITO, reported in (2024) 464 ITR 1 held that proceedings u/s.153C cannot be sustained for assessment years in respect of which no incriminating material has been gathered and the satisfaction note does not show how the material discovered has a bearing upon determination of total income of the concerned assessment year.
6.6. Applying the above principles to the facts before us, we find that the satisfaction note contains no reference to any seized material relatable to A.Y.2009-10. The only documents referred therein, namely pages 206 and 208 of Bundle No.13, have already been held by the Coordinate Bench in assessee’s own case to pertain to F.Y.2010-11 corresponding to A.Y.2011-12. The year under consideration was also a completed/unabated assessment and, in the absence of any incriminating material pertaining to this year, the concluded assessment could not have been disturbed in proceedings u/s.153C.
6.7. In view of the foregoing discussion, respectfully following the decision of the Coordinate Bench in assessee’s own case in ITA Nos.5591 & 5593/Mum/2024 and the ratio laid down by the Hon’ble Supreme Court in Sinhgad Technical Education Society (supra), Abhisar Buildwell (P.) Ltd. (supra) and U.K. Paints (Overseas) Ltd. (supra), read with the decision of the Hon’ble Jurisdictional High Court in Ashok Commercial Enterprises (supra), we hold that assumption of jurisdiction u/s.153C for A.Y.2009-10 cannot be sustained. Accordingly, the assessment order dated 30/12/2019 passed u/s.143(3) r.w.s.254 r.w.s.153C of the Act is hereby quashed.
Accordingly, Grounds Nos. 5 raised by the assessee stands allowed.
7. We further note that the assessee has challenged the recording of a common/consolidated satisfaction note for six assessment years vide application for admission of additional grounds dated 12/07/2026. However, we do not consider it necessary to adjudicate this issue as we quashed the assessment order passed under section 153C r.w.153A any seized material relatable to A.Y.2009-10 raised by the assessee in Ground No 5. All other grounds raised by the assessee is also treated as academic that do not require any adjudication at this stage.
8. Since the assessment itself stands quashed on the jurisdictional issue, the grounds challenging the addition of Rs.14,80,00,000/- on merits, the ground relating to DIN and all other consequential grounds are rendered academic and therefore do not require separate adjudication. Ground No.1 being general in nature requires no adjudication and Ground No.10 is consequential.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 25-09-2026.
