Bharat Kumar Bansal Vs ACIT (ITAT Hyderabad)
One Satisfaction Can’t Fit Seven Years: ITAT Hyderabad Quashes Section 153C Proceedings for Consolidated Satisfaction Note
The ITAT Hyderabad allowed the assessee’s appeals for AYs 2013–14 to 2019–20, holding that the initiation of proceedings under section 153C was invalid in law as it was based on a single consolidated satisfaction note covering multiple assessment years.
A search under section 132 was conducted on a third party on 22.11.2018, during which an agreement of sale dated 28.08.2018 was seized. Relying on this document, the Assessing Officer recorded a single satisfaction note dated 12.10.2022, stating that the seized material belonged to the assessee and had a bearing on his income for seven assessment years (AY 2013–14 to AY 2019–20). Based on this, notices under section 153C were issued and assessments were completed.
The Tribunal found that the seized document could, at best, relate only to AY 2019–20, and there was no material whatsoever linking it to the earlier years. More importantly, it held that law mandates recording of a separate satisfaction note for each assessment year before assuming jurisdiction under section 153C. Recording a common or omnibus satisfaction note for multiple years strikes at the very root of jurisdiction.
Relying on the binding decision of the Karnataka High Court in DCIT v. Sunil Kumar Sharma (469 ITR 197)—affirmed by the Supreme Court on dismissal of the Revenue’s SLP—the Tribunal held that a consolidated satisfaction note vitiates the entire proceedings. Since the jurisdiction itself was invalid, all notices issued under section 153C and the consequential assessment orders were quashed.
As the appeals were allowed on this purely legal ground, the Tribunal refrained from adjudicating the other issues on merits, leaving them open. Accordingly, all seven appeals were allowed in full
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
