Section 153C jurisdiction requires year-specific satisfaction; consolidated satisfaction notes invalid, assessments and penalties quashed for assessment years.

Action under Section 153C requires a jurisdictional assessing officer to record year-specific satisfaction identifying which assessment year(s) received material relates to and explaining how that material is likely to affect determination of income for those years; a consolidated satisfaction note lacking year-wise identification or reasons is invalid. Applying this principle, the consolidated satisfaction recorded here did not specify incriminating material year-wise or reason how it would impact particular years, so the assumption of jurisdiction under Section 153C was vitiated, the assessments framed thereunder were quashed, and the consequential penalty dependent on those assessments was also quashed.

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Issues: Whether recording a consolidated satisfaction note for multiple assessment years to invoke Section 153C of the Income-tax Act, 1961 is valid, and whether assessments and consequential penalty framed under that satisfaction note are liable to be quashed.

Analysis: The Tribunal examined the satisfaction note placed on record and relevant precedents. The issue-focused legal framework includes the requirement that action under Section 153C arises only after the jurisdictional Assessing Officer forms an opinion that the material received is likely to have a bearing on the determination of total income for specific assessment year(s). The Tribunal analysed authorities distinguishing consolidated satisfaction notes from year-wise satisfaction, including decisions of the Hon'ble Delhi High Court in Saksham Commodities Ltd. and the Hon'ble Karnataka High Court and Supreme Court in Sunil Kumar Sharma, which emphasise that the AO must identify the specific assessment year(s) to which the incriminating material relates and record reasons showing how the material is likely to impact those year(s). Applying those principles to the facts, the Tribunal found the AO's satisfaction note to be consolidated across years without year-wise identification or bifurcation of incriminating material and without reasons demonstrating how the material would affect particular assessment years. On that basis the Tribunal concluded that the AO failed to form the requisite year-specific satisfaction necessary to validly assume jurisdiction under Section 153C, rendering the assessments initiated thereunder vitiated. The Tribunal further held that quashing the assessment orders consequentially required quashing the penalty imposed under the penal provision that depended on the quashed assessment.

Conclusion: The consolidated satisfaction note recorded to invoke Section 153C of the Income-tax Act, 1961 is invalid for want of year-wise identification and reasoning; therefore, the assessments framed under Section 153C for the years under challenge are quashed and the related penalty is also quashed. The appeals are allowed in favour of the assessee.

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