TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 238
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....ppeal is hereby condoned. 4. Brief facts of the case are that, a search under Section 132 of the Income Tax Act, 1961 ('Act' for short) was conducted in the case of Nitish Garg on 16/04/2019 and during the course of search proceedings, certain cash was found and seized from Nitish Garg. During the course of assessment proceedings in the case of Nitish Garg, it was submitted that out of cash amounting to Rs. 42,00,000/- found and seized on 16/04/2019, cash amounting to 22,00,000/- was belongs to his father Sh. Parveen Garg the Assessee herein. The A.O. of the search person has recorded his satisfaction on 29/09/2021 and handed over the seized material to the A.O. of the other person i.e. Assessee. Further, assessment proceedings have been initiated against the Assessee and an assessment order came to be passed u/s 153C r.w. Section 143(3) of the Act by making an addition of Rs. 5,31,890/- by computing the income of the Assessee at Rs. 12,14,440/- against the returned income of Rs. 6,82,550/-. Aggrieved by the assessment order dated 29/03/2023, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 10/07/2025 dismissed the Appeal of the Assesse....
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....eld that a consolidated satisfaction note without specific, year-wise incriminating material is fatal to jurisdiction and decided the issue in favour of the Assessee. Further, also contended that the SLP filed by the Revenue against the Judgment of Hon'ble High Court of Delhi in the case of Shaksham Commodities Ltd. Vs. ITO (supra) has been dismissed, thus contended that the ratio laid down in the case of Shaksham Commodities Ltd. Vs. ITO (supra) is having binding precedent. 8. Heard both the parties and perused the material available on record. We have gone through the satisfaction note u/s 153C of the Act dated 03/11/2021 placed on record by the Assessee. It is observed that a consolidated satisfaction note is recorded for assessment years 2014-15 to 2020-21, wherein neither the AO has bifurcated the amounts nor year-wise additions pertaining to the assessee were identified, based on the said consolidated satisfaction, the assessment has been framed for the year under consideration. In an identical situation, the Co-ordinate Bench of the Tribunal in the case of SRS Panchratan Diamonds Pvt. Ltd. (supra), considered the Judgments of Hon'ble Karnataka High Court in the case o....
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....unil 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 vehemently relied on the decision of the Hon'ble Jurisdictional High Court in the case of Indian National Congress vs DCIT reported in 463 ITR 431 (Del) dated 22-03-2024 wherein it was held as under:- 24. The provision only requires the AO to be satisfied that the material collated and handed over is likely to have an impact on the total income for the relevant AY or AYs'. While an assessment would necessarily have to be made in respect of each of the relevant AY or AYs', we find ourselves unable to read Section 153A or 153C as mandating separate Satisfaction Notes being drawn for each assessment year. Our conclusion in this respect stands fortified from the language of Section 153A(1)(a) which contemplates a notice being issued calling upon the person to furnish a return of income for each of the six AYs' or the relevant AY or AYs'. This too appears to suggest that while the notice could be composite and based on a common satisfaction note wh....
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....rought 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 the Assessing Officer which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material." (v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess" in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess" to the completed assessment proceedings. (vi) In so far as the pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assess....
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....s 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 action initiated for AYs' 2000-01 to 2003-04 would not sustain. It was this position in law as enunciated in that decision which came to be reiterated by our Court in Index Securities. 55. Take for instance a case where the material gathered in the search is contemplated to have an adverse impact on the declarations and disclosures made by an assessee pertaining only to AYs' 2016-17 and 2017-18. What we seek to emphasise is that pending assessments for those two years could validly form subject matter of action under Section 153C and pending assessments in that respect would surely abate. However, that by itself would not be sufficient to either reopen or issue notices in respect of AYs' prior to or those falling after those two AYs' and which may otherwise fall within the maximum block period of ten years merely because the statute empowers the AO to do so. Unless the material gathered and recovered is found to have relevancy to the AY ....
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.... 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 2012-13], it has proceeded to observe that the assessments which were liable to abate or be reopened would be AYs' 2010-11 to 2020-21. A similar note appears in W.P. (C)1117/2024. Here again, after referring to the material pertaining to FY 2009-10 [and thus relating to AY 2010-11], the AO proceeded to seek approval for initiating action under Section 153C in respect of AYs' 2010-11 up to 2020-21. 61. A reading of the aforesaid Satisfaction Notes would establish that jurisdictional AOs' appear to have proceeded on the premise that the moment incriminating material is unearthed in respect of a particular AY, they would have the jurisdiction and authority to invoke Section 153C in respect of all the assessment years which could otherwise form part of the "relevant assessment year" as defined in Section 153A. In our considered opinion, the aforesaid understanding of Section 153C is clearly erroneous and unsustainable. As explained hereinabove, ....
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....ly 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 gathered is likely to inculpate the assessee. While in the case of a Section 153A assessment, the issue of whether additions are liable to be made based upon the material recovered is an aspect which would merit consideration in the course of the assessment proceedings, under Section 153C, the AO would have to be prima facie satisfied that the documents, data or asset recovered is likely to "have a bearing on the determination of the total income". It is only once an opinion in that regard is formed that the AO would be legally justified in issuing a notice under that provision and which in turn would culminate in the abatement of pending assessments or reassessments as the case may be. 65. We would thus recognize the flow of events contemplated under Section 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may h....