Section 153C satisfaction note defect invalidated third-party assessment where later amendment could not be applied retrospectively.

Section 153C requires a valid satisfaction note meeting the statutory requirements applicable to the relevant period. The Tribunal applied strict construction and held that a satisfaction note stating only that seized material "relates to" the assessee could not support the assessment for the years in question because that expression was introduced only later by the Finance Act, 2015. The Revenue's attempt to rely on the amended wording was rejected as inapplicable to the relevant assessment years. The common orders of the first appellate authority were upheld and the Revenue's appeals failed.

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Issues: (i) Whether the assessment made under section 153C of the Income-tax Act, 1961 was valid in the absence of a proper satisfaction note; (ii) whether the Revenue could rely on the expression indicating that the seized material "relates to" the assessee for the relevant assessment years.

Issue (i): Whether the assessment made under section 153C of the Income-tax Act, 1961 was valid in the absence of a proper satisfaction note.

Analysis: The seized material was examined in the context of the search conducted on 11.03.2010. The satisfaction recorded by the Assessing Officer stated only that the material "relates to" the assessee. That expression was inserted in section 153C by the Finance Act, 2015 with effect from 01.06.2015 and was not available for the relevant period. The Tribunal applied a strict construction of the provision and also followed its earlier common order on the same search and similar third-party proceedings.

Conclusion: The assessment under section 153C was rightly quashed for want of a valid satisfaction note.

Issue (ii): Whether the Revenue could rely on the expression indicating that the seized material "relates to" the assessee for the relevant assessment years.

Analysis: The Revenue's challenge proceeded on the basis that the Assessing Officer of the searched person and the other person was the same, and that the seized material belonged to the assessee. However, the Tribunal held that the statutory expression relied upon by the Revenue was not applicable to the relevant period and therefore could not cure the defect in the satisfaction note.

Conclusion: The Revenue's reliance on the later statutory expression was rejected.

Final Conclusion: The common orders of the first appellate authority were upheld and all the Revenue's appeals failed.

Ratio Decidendi: A satisfaction note under section 153C must satisfy the statutory requirements applicable for the relevant period, and a later amendment cannot be used to validate an otherwise defective invocation of the provision.

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