Section 153C limitation and defective satisfaction note can invalidate jurisdiction where incriminating material lacks clear year-wise linkage.

Section 153C proceedings must be initiated within the applicable limitation period and on the basis of incriminating material that is clearly linked to a specific assessment year. Here, the notices were issued about 15 months after completion of the searched person's assessment, beyond the period recognised in binding precedent, and the COVID-19 relaxation did not cure the delay, so the notices were time barred and invalid. The satisfaction note was also defective because it relied on an undated, unsigned loose sheet, did not clearly identify the relevant year or its impact on total income, and reflected borrowed rather than independent satisfaction. The assessments were quashed.

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Issues: (i) whether the notices issued under section 153C were barred by limitation; (ii) whether the assumption of jurisdiction and the consequent assessment were vitiated by a defective satisfaction note based on an undated, unsigned loose sheet and by borrowed satisfaction.

Issue (i): whether the notices issued under section 153C were barred by limitation.

Analysis: The notices under section 153C were issued about 15 months after completion of the assessment in the case of the searched person. The delay exceeded the contemporaneous period recognised in the binding jurisdictional precedent relied upon by the parties, and the relaxation relating to the COVID-19 period did not extend to cure the delay in the present facts.

Conclusion: The notices were time barred and invalid.

Issue (ii): whether the assumption of jurisdiction and the consequent assessment were vitiated by a defective satisfaction note based on an undated, unsigned loose sheet and by borrowed satisfaction.

Analysis: The satisfaction note did not identify with certainty the year to which the material related, did not show how the material had a bearing on total income, and was founded on an undated, unsigned loose sheet described as a dumb document. The record also showed that the jurisdictional officer acted after taking approval from a superior authority, which did not amount to the independent satisfaction required for invocation of section 153C. The assessment therefore lacked the jurisdictional foundation required by law.

Conclusion: The satisfaction note was defective and the assessment was void.

Final Conclusion: The assessments for both assessees were quashed, and the remaining grounds were not adjudicated.

Ratio Decidendi: Proceedings under section 153C require timely initiation on the basis of incriminating material that is clearly referable to a specific assessment year and support an independent, reasoned satisfaction by the jurisdictional Assessing Officer; absence of either renders the assumption of jurisdiction invalid.

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