2024 (5) TMI 1689 - HC - Income Tax

Year-specific incriminating material is essential for Section 153C jurisdiction; unsupported notices were quashed.

Section 153C of the Income-tax Act can be invoked only when the jurisdictional Assessing Officer is satisfied that seized or requisitioned material has a ... Validity of assessment u/s 153C - Assessment year-wise nexus of incriminating material u/s 153C - Jurisdictional satisfaction for initiation of proceedings under Section 153C - Validity of notices issued under Section 153C for the assessment years in question when the satisfaction note identified incriminating material only for different assessment years - HELD THAT: - The Court held that initiation of proceedings under Section 153C must be founded on material having a bearing on the determination of total income for the specific assessment year sought to be reopened. Since the satisfaction note of the jurisdictional Assessing Officer referred to incriminating material only for AYs 2010-11 and 2020-21, no basis existed for invoking Section 153C for AYs 2014-15 to 2019-20. Applying the principle stated in Saksham Commodities Limited [2024 (4) TMI 461 - DELHI HIGH COURT] the Court held that the power under Section 153C cannot be exercised in a sweeping manner across the entire block of years without year-specific incriminating material and the requisite satisfaction. [Paras 2, 3, 4] The notices issued u/s 153C for the impugned assessment years, and all consequential proceedings, were quashed. Final Conclusion: The writ petitions were allowed. The Court quashed the impugned notices under Section 153C and all consequential proceedings, holding that in the absence of assessment year-specific incriminating material and corresponding jurisdictional satisfaction, such notices could not be sustained. Issues: Whether notices issued under Section 153C of the Income-tax Act, 1961 for the concerned assessment years were valid when the satisfaction note related only to incriminating material concerning other assessment years and no material was found for the years covered by the notices.Analysis: Section 153C permits issuance of notice and resulting abatement only when the jurisdictional Assessing Officer is first satisfied that the seized or requisitioned material is likely to have a bearing on the determination of total income for the particular assessment year or years sought to be reopened or assessed. The material must be identified with the assessment year to which it relates or is likely to impact. A sweeping invocation of the provision for multiple years is not justified merely because the statute permits assessment of a block period. Where the satisfaction note itself shows that the incriminating material pertains to different years and there is no material for the assessment years covered by the impugned notices, jurisdiction under Section 153C is not established.Conclusion: The notices under Section 153C and the consequential proceedings were invalid and were quashed in favour of the assessee.Final Conclusion: The writ petitions succeeded and the impugned reassessment machinery under Section 153C could not be sustained for the assessment years for which no incriminating material was shown.Ratio Decidendi: Jurisdiction under Section 153C arises only when the seized or requisitioned material is first found, on the jurisdictional Assessing Officer's satisfaction, to have a bearing on the determination of total income for the specific assessment year or years sought to be proceeded against.