TaxTMI 
TaxTMI 
2026 (4) TMI 30
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....ain documents pertained to assessee and, accordingly, the material along with satisfaction note was handed over to the AO of the assessee. Upon receipt of such documents and the satisfaction note, the AO of the assessee recorded his satisfaction on 09.06.2021 and issued the notice u/s. 153C for the impugned assessment year. Thereafter statutory notices were issued from time to time asking the assessee to file necessary details and after considering the submissions filed by the assessee, order was passed u/s. 153C of the Act dated 18.03.2021 by making addition of Rs. 8,80,000/- being bogus commission expenses u/s. 69C of the Act and the total income was assessed at Rs. 54,10,940/-. 3. Against the said order, the assessee preferred an appeal before the Ld. CIT(A) who vide impugned order dated 28.06.2025 has dismissed the appeal of the assessee. 4. Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking following grounds of appeal: "1. That having regard to the facts and circumstances of the case, Ld. CTT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned assessment order u/s. 153C and that too withou....
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....ce it is not specified in clear terms what document and which are entries containing the name of the assessee and amount thereof, for each individual assessment year, the proceedings u/s. 153C of the Act initiated through a common satisfaction note are invalid. He placed reliance on the judgment of the Hon'ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma reported in 159 taxmann.com 179 (Kar). Ld. AR further submits that the SLP against the said order stood dismissed by the Supreme Court as reported in 165 taxman.com 846 (SC). He further placed reliance on the judgment of Hon'ble Jurisdictional High Court in the case of Shaksham Commodities Ltd. vs. ITO reported in 464 ITR 01 (Del.). 6. On the other hand, ld. CIT-DR vehemently supported the order of lower authorities and submits that satisfaction note can be recorded for multiple Assessment Years and for this reliance is placed on the judgments of Hon'ble Jurisdictional High Court in the case of Indian National Congress vs. DCIT reported in 463 ITR 431 (Del) and requested for the confirmation of the proceedings initiated u/s. 153C of the Act. 7. In rejoinder, the ld. AR submits that judgment of the Co-ordina....
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.... to be recorded under section 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." 7. It is pertinent to note that the Special Leave Petition (SLP) preferred by the revenue against this order had been dismissed by the Hon'ble Supreme Court which is reported in 165 taxmann.com 846 (SC) by observing as under:- "ORDER 1. Delay condoned. 2. Heard the learned Senior Counsel appearing for the appellants. 3. We are not inclined to interfere with the impugned judgment and order passed by the High Court of Karnataka at Bengaluru in Writ Appeal No. 831/2022 (T-IT) dated 22-01-2024/ Deputy Commissioner of Income-tax v. Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) . 4. The Special Leave Petition is dismissed. 5. Pending application(s), if any, shall stand disposed of. 8. The Learned DR before us vehemen....
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....he Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place. (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income" of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years "in which both the disclosed and the undisclosed income would be brought to tax". (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with t....
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....ely to have an impact on the total income of a particular AY forming part of the six AYs' immediately preceding the AY pertaining to the search year or for the "relevant assessment year". 51. Ultimately Section 153C is concerned with books, documents or articles seized in the course of a search and which are found to have the potential to impact or have a bearing on an assessment which may be undergoing or which may have been completed. The words "have a bearing on the determination of the total income of such other person" as appearing in Section 153C would necessarily have to be conferred pre-eminence. Therefore, and unless the AO is satisfied that the material gathered could potentially impact the determination of total income, it would be unjustified in mechanically reopening or assessing all over again all the ten AYs' that could possibly form part of the block of ten years. 53. Sinhgad Technical Education Society also constitutes a binding precedent in respect of the aforesaid proposition as would be evident from the Supreme Court noticing that the material disclosed pertained only to AY 2004-05 or thereafter and that consequently the Section 153C ac....
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....articular AY. 57. It becomes pertinent to note that both Sections 153A and 153C require the assessee upon being placed on notice to furnish ROIs' for the six AYs' or the "relevant assessment year". All that the two provisions mandate is that notwithstanding the submission of those ROIs', the AO would frame one assessment order in respect of each of the years which were made subject matter of the notice and which would deal with both disclosed and undisclosed income. This too reinforces our view that Section 153C would apply only to such AYs' where the jurisdictional AO is satisfied and has incriminating material for those AYs' and which may be concerned with disclosed and undisclosed income. 60. Before concluding, we also deem it imperative to briefly notice certain aspects which emerge from a reading of the Satisfaction Notes themselves. As is manifest from a reading of the Satisfaction Note drawn by the jurisdictional AO of the assessee in W.P. (C) 1459/2024, after noticing the material which was recovered during the search and related to FYs' 2009-10, 2010-11 and 2011-12 [corresponding AYs' thus being AYs' 2010-11, 2011-12 and 20....
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....ing in mind the AYs' which are likely to be impacted. It would thus be incorrect to either interpret or construe Section 153C as envisaging incriminating material pertaining to a particular AY having a cascading effect and which would warrant a mechanical and inevitable assessment or reassessment for the entire block of the "relevant assessment year". 64. In our considered view, abatement of the six AYs' or the "relevant assessment year" under Section 153C would follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs' that may form part of the block of ten AYs'. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a notice would inevitably be issued the moment a search is undertaken or documents requisitioned, whereas in the case of the latter, the proceedings would be liable to be commenced only upon the AO having formed the opinion that the material gathere....
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....ght to be abated or reopened in terms of the impugned notices. The respondents have erroneously proceeded on the assumption that the moment any material is recovered in the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs' years immediately preceding the assessment correlatable to the search year or the "relevant assessment year" as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed above." 10. Hence respectfully applying the construction that is favourable to the assessee by taking shield from the decision of the Hon'ble Supreme Court in the case of Vegetable Products reported in 88 ITR 192 (SC), we would like to follow the decision of the Hon'ble Jurisdictional High Court supra in the case of Saksham Commodities Ltd reported in 464 ITR 1 (Del) and the decision of the Hon'ble Karnataka High Court in the case of Sunil Kumar Sharma supra and hold that recording of consolidated satisfaction note for various assessment years by the Learned AO would become fatal to the very assumption of ....