Year-wise satisfaction for section 153C proceedings is mandatory; a composite note without material linkage invalidates the assessments.

ITAT Bangalore held that proceedings under section 153C require year-wise satisfaction recorded separately for each assessment year on the basis of seized material attributable to that year. A consolidated satisfaction note covering assessment years 2015-16 to 2020-21, where the search yielded only one agreement and no other incriminating material linking distinct years, was insufficient. The Tribunal applied the binding jurisdictional view that a composite satisfaction note for multiple years vitiates the proceedings and distinguished the Revenue's contrary reliance because there was no year-specific seized material covering all years. The notices and consequential assessments under section 153C were therefore unsustainable.

---

---

Issues: Whether a consolidated satisfaction note recorded for multiple assessment years, without year-wise satisfaction based on seized incriminating material, could sustain notices and assessments under section 153C.

Analysis: The Tribunal found that the search yielded only one agreement and no other incriminating material linking distinct assessment years, while the satisfaction recorded by the Assessing Officer was common for all years from 2015-16 to 2020-21. It held that proceedings under section 153C require satisfaction to be recorded separately for each assessment year with reference to the seized material relevant to that year. The Tribunal relied on the binding jurisdictional view that a consolidated satisfaction note for different assessment years vitiates the proceedings, and distinguished the contrary view cited by the Revenue on the facts because the present case did not involve year-wise seized material covering all years.

Conclusion: The notices issued under section 153C and the consequential assessments were unsustainable, and the assessee succeeded on the legal ground.

Ratio Decidendi: For initiation of proceedings under section 153C, satisfaction must be recorded separately for each assessment year on the basis of seized material attributable to that year; a composite satisfaction note without such year-wise linkage invalidates the proceedings.

---