IMPORTANT POINT
The incriminating materials must relate to the relevant assessment years.

JUDGMENT

A.K. Sikri, J.

Leave granted.

2. All these four appeals are filed by the Commissioner of Income Tax-III, Pune (hereinafter referred to as the `Revenue), wherein the respondent is also the same (hereinafter referred to as the `assessee'). Even the issue that arises for consideration is identical in all these appeals. Reason for filing four appeals is that the dispute pertains to four Assessment Years, i.e. 2000-01, 2001-02, 2002-03 and 2003-04. In fact, for this very reason the High Court has decided the issue by common judgment dated March 25, 2015, the correctness whereof is challenged by the Revenue in these appeals. Thus, we propose to club all these appeals and proceed to decide by a singular judgment.

3. The issue pertains to the validity of the proceedings which were initiated by the Assessing Officer (for short, `AO') under Section 153C of the Income Tax Act, 1961 (hereinafter referred to as the `Act'). It may be mentioned here itself that the assessee is an educational institution registered under the Bombay Public Trusts Act, 1950 and the Societies Registration Act, 1860. It also got itself registered under Section 12AA of the Act since the Assessment Year 1994-95. Because of the said registration under Section 12AA of the Act, Sections 11 and 12 of the Act apply to the assessee as per which income earned by the assessee from property held for charitable or religious purposes (Section 11) and income from contributions are exempt from taxation under certain circumstances.

4. It so happened that a search and seizure operation was carried out under Section 132 of the Act on one Mr. M.N. Navale, President of the assessee Society, and his wife on July 20, 2005 from where certain documents were seized. On the basis of these documents, which according to the Revenue contained notings of cash entries pertaining to capitation fees received by various institutions run by the assessee, a notice under Section 153C of the Act was issued on April 18, 2007. It is that notice which is quashed by the Income Tax Appellate Tribunal (ITAT) and the order of the ITAT has been upheld by the High Court by the impugned judgment.

5. With the glimpse of the issue involved and the background in which the same has arisen, we now proceed to state the facts in little detail so as to get the clarity of the matter.

6. As mentioned above, a search was conducted on Mr. M.N. Navale and his wife on July 20, 2005. It is not in dispute that he is one of the trustees of the assessee Society. This search was conducted under Section 132 of the Act. As per the Revenue, certain incriminating documents were recovered which showed that the assessee was taking capitation fee from the students. These documents also allegedly reveal that the activities of the trust were not genuine and were not being carried out in accordance with the trust deed. For these reasons, the assessee was treated as an Association of Person (AOP). Having regard to the complexity involved in the accounts and the changes to be effected on account of the change in the status of the assessee to that of AOP, a special audit under Section 142(2A) of the Act was conducted. On the basis of special audit report, taxable incomes for the Assessment Years 1999-2000 to 2006-07 had been worked out.

7. Since the documents were recovered from Mr. Navale and sought to be used against the assessee, for undertaking this exercise it is imperative that a Satisfaction Note is recorded by the AO of the person searched for use of those documents against the third person (assessee herein), which is a pre-condition for initiation of proceeding under Section 153C of the Act. This Satisfaction Note was recorded on April 18, 2007. In this Note, after discussing the documents which were recovered and seized in the search carried out on Mr. Navale, the AO recorded his satisfaction to the effect that the assessee tr