TaxTMI 
TaxTMI 
2026 (5) TMI 225
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....ter alia includes unsecured cash loan and undisclosed cash. Based on the evidence gathered during the search, AO of the searched person as per section 153A of the Act recorded satisfaction note and forwarded the same to the AO of assessee. Further, a satisfaction note was recorded by the AO of the any other person i.e., the assessee as per the provisions of the section 153C of the Act. Assessment orders have been passed on 31/03/2024 against the Assessee for Assessment Year 2017-19, 2018-19, 2019-20 and 2020-21 under Section 153C of the Income Tax Act, 1961 ('Act' for short) by making certain additions. Aggrieved by the assessment orders dated 31/03/2024, Assessee preferred captioned Appeals before the Ld. CIT(A). The Ld. CIT(A) vide orders dated 23/12/2025, dismissed the Appeals of the Assessee. As against the orders of the Ld. CIT(A) dated 23/12/2025, Assessee preferred the captioned Appeals on the grounds mentioned above. Though the Assessee has 3. Though the Assessee has raised several grounds of Appeals, we have heard only on Ground No. 4 of the Assessee. The Ld. Assessee's Representative contended that initiation of assessment proceedings u/s 153C of the Act fo....
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....ntained therein, relates to, a person other than the person referred to in section 1534, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A 3. The issue of consolidated satisfaction note, was examined by the Hon'ble jurisdictional Delhi High Court in case of Indian National Congress v DCIT W.P.(C) 4264/2024 & CM Nos. 17433/2024 & 17435/2024 Dt 22.03.2024). In this case, the Hon'ble Delhi Court had considered the similar plea of the assessee....
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.... 06 pages. In the satisfaction note, the AO has duly recorded his satisfaction after mentioning that "during the course of the search and seizure action various incriminating evidences regarding giving unsecured cash loans and unaccounted/undisclosed cash amounting to Rs. 2,40,00,000/- has been found and seized from the premises of Sh. CS Jha. No satisfactory explanation could be provided by Sh CS Jha with regard to the undisclosed cash found from his premises." AO also noted that Sh. CS Jha himself had admitted in his statement that the cash was found from his residence and that no ledger or any account with regard to the seized cash was maintained by him. The relevant portion (Question No. 14, 15 and 16) of the statement was also quoted in the satisfaction note (para3). Then the AO also mentioned that the entire cash of Rs. 2,40,00,000/- pertains to a single AY i.e. AY 2020-21. Further, reference to other seized material from Annexure A1 to A6 and loose papers at Annexure A-3 (Page 14 to 22 and 22 & 24) was also given and the same was confronted to the assessee during the search action. The satisfaction note contains details of date wise loan transactions (para 4.1 and 5.1 and 5.....
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....al which pertains to the AYs' which are sought to be reopened. As mentioned in para 6 above, the requirements of the statute are duly met in the satisfaction note of the AO. 9. In view of the above, it is humbly prayed that the assessee's plea may kindly be rejected being devoid of merit. (Jitender Singh) CIT DR, A Bench ITAT, Delhi 5. Heard both the parties and perused the material available on record. We have gone through the satisfaction note placed at page no. 33 of the paper book. It is observed that a consolidated satisfaction note is recorded for assessment years 2017-18 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 respective Assessment Years. For the sake of ready reference, the subject satisfaction note is reproduced as under: 6. 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 of Sunil Kumar Sharma (supra) and also ....
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....om 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 which encapsulates the incriminating mate....
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....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 Assessing Officer. (vii) Completed a....
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....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 which is sought to be subjected to actio....
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....fter 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, the discovery of material likely to imp....
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....ertaken 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 have on the total income for the six AYs....
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....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 jurisdiction and consequential framing of assessment under section 153C of the Act for the assessment years 2015-16 and 2016-17 in the instant case. Accordingly, the assessments framed under section 153C of the Act for the assessment years 2015-16 and 2016-17 are hereby quashed. 11. Since the entire assessments are quashed, the other grounds raised by the assessee need not be gone into and they are left open". 7. It is relevant to mention that the Judgment of the Hon'ble Delhi High Court in the case of Shaksham Commodities Ltd. (supra) has been rendered subsequent to the Judgment in the case of Indian National Congress (supra) relied by the Revenue. Further, 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 matters on 16/06/2025, reported in [2025] 175 taxmann.com 849 (S.C). Thus, by respectfully following the aforesaid jud....