2025 (10) TMI 1168 - SCH - Income Tax

Notices under s.153C based on loose sheets and diaries invalid; consolidated satisfaction note vitiates assessments across years

The Deputy Commissioner of Income Tax Circle 1 (4) & Anr. Versus Sunil Kumar Sharma

The SC dismissed the SLP, upholding the HC's finding that notices issued under s.153C based on loose sheets and diaries lacked legal validity and could ... Validity of proceedings u/s 153C - whether the assessee should be treated as a “Searched Person” or “Other Person”? - Whether ‘Loose Sheets’ and ‘Diary’ have any evidentiary value? As decided by HC [2024 (2) TMI 116 - KARNATAKA HIGH COURT] we are of the view that the action taken by the respondent / Revenue against the Assessee based on the material contained in the diaries/loose sheets, are contrary to the law declared by the Hon'ble Apex Court. In that view of the matter, impugned notices issued u/s 153C based on the loose sheets/diaries are contrary to law, which require to be set aside in these writ appeals, as the same are void and illegal. As satisfaction note is required to be recorded u/s 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue. HELD THAT:- We are not inclined to interfere with the impugned order in exercise of our jurisdiction under Article 136 of the Constitution of India. Special Leave Petition is, accordingly, dismissed and the accompanying interlocutory application(s), if any, stands disposed of 'Delay condoned.' The Court, exercising jurisdiction under Article 136 of the Constitution of India, stated it was 'not inclined to interfere with the impugned order' and therefore held that 'The Special Leave Petition is, accordingly, dismissed' with any accompanying interlocutory application(s) disposed of. The order reflects a refusal to grant discretionary relief under Article 136, affirming the impugned judgment/order below by decline to exercise extraordinary appellate jurisdiction. No substantive assessment of the merits is recorded beyond the determination that interference is unwarranted; procedural irregularity (delay) was regularized by condonation. The disposition is summary in nature and confines relief to dismissal, leaving the impugned order operative and concluding ancillary interlocutory proceedings.