2026 (3) TMI 66 - AT - Income Tax

Jurisdictional satisfaction under 153C requires year-wise linkage of seized material; aggregated notes invalidate reopening and assessments.

Jurisdictional satisfaction for reopening must state that material seized from a searched person is likely to affect determination of income for each ... Initiation of assessment proceedings u/s 153C by recording consolidated satisfaction note - Validity of a consolidated satisfaction note recorded for multiple assessment years for initiating proceedings u/s 153C and its effect on assessments framed for the years under consideration - HELD THAT:- The Tribunal examined the satisfaction note which was recorded as a consolidated note for assessment years 2014-15 to 2020-21 and found that it did not identify year-wise additions nor bifurcate amounts relevant to particular assessment years. In an identical situation, the Co-ordinate Bench of the Tribunal in the case of SRS Panchratan Diamonds Pvt. Ltd. [2025 (12) TMI 1420 - ITAT DELHI] considered the Judgments of Sunil Kumar Sharma [2024 (2) TMI 116 - KARNATAKA HIGH COURT] and also Shaksham Commodities [2024 (4) TMI 461 - DELHI HIGH COURT] decided the issue in favour of the Assessee holding that the consolidated satisfaction note is invalid, wherein Tribunal has also distinguished the Judgment of the Hon’ble Jurisdictional High Court in case of Indian National Congress [2024 (3) TMI 1126 - DELHI HIGH COURT] [Paras 7, 8, 10, 11] As against the Judgment of the Hon’ble Jurisdictional High Court in the case of Shaksham Commodities Ltd. (supra), the Revenue filed SLP before the Hon'ble Supreme Court, which has been dismissed along with other connected matters [2025 (6) TMI 1333 - SC ORDER] Thus, consolidate satisfaction note recorded by the AO for various assessment years to assume the jurisdiction is invalid. Final Conclusion: Assessee appeal allowed - AO's consolidated satisfaction note, lacking year-wise linkage of incriminating material, was invalid. Issues: Whether a consolidated satisfaction note recorded for multiple assessment years, without year-wise identification of incriminating material, validly permits initiation of proceedings under Section 153C of the Income-tax Act, 1961 and consequent framing of assessments for the years under challenge.Analysis: The statutory scheme requires that action under Section 153C proceed upon satisfaction that material received from a searched person is likely to have a bearing on the determination of total income of the other person for the specific assessment year(s) sought to be reopened. A satisfaction note that aggregates multiple years without identifying year-wise incriminating material fails to evidence the requisite formation of opinion that the seized material is likely to impact a particular assessment year. Where the satisfaction note does not identify amounts or material by assessment year, the foundational requirement for assuming jurisdiction under Section 153C is not met. The consequence of an invalid satisfaction note is that abatement and re-opening under Section 153C cannot be sustained and the resultant assessment orders lack jurisdictional basis.Conclusion: The consolidated satisfaction note recorded for multiple assessment years without year-wise identification of incriminating material is invalid and fatal to the assumption of jurisdiction under Section 153C of the Income-tax Act, 1961; assessments framed on that basis are quashed.