Jurisdictional Assessing Officer must record satisfaction before issuing notices under Section 153C; failure to comply with this requirement may render issued notices invalid.

ORDER :

(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)

1. Present petition has been filed challenging the notices dated 29.09.2020 under Section 153C of the INCOME TAX ACT (in short as ‘the Act’) as also the order dated 01.09.2021 disposing the objections filed by the assessee along with the show cause notices issued for Assessment Year (AY) 2016-17, AY 2017-18 and AY 2018-19 dated 01.09.2021. The only ground to challenge the notices under Section 153C of the Act issued to the assessee and the consequential action of the Revenue is that the jurisdictional Assessing Officer has not recorded any satisfaction prior to the issuance of the said notices.

2. The contention is that during the search and seizure operations conducted on 26.09.2018 at the premises of Star Alliance, which was engaged in the business of real estate, certain material was seized by the Assessing Officer of the said assessee which has resulted in issuance of notices dated 29.09.2020 to the assessee under Section 153C by the jurisdictional Assessing Officer. It is submitted that by communication dated 29.10.2020, the assessee has asked to supply the satisfaction note on which the assessee’s assessment has been reopened. The contention is that the copy of the satisfaction note received by the assessee on 20.02.2021 was the satisfaction note dated 15.10.2019 of the searched party and not of the jurisdictional Assessing Officer of the assessee.

3. It is further submitted that after receipt of the copy of statement and other relevant material from the Revenue on 05.03.2021, the assessee filed objections to Section 153C proceedings with their detailed submissions on 25.03.2021. By order dated 01.09.2021, the objections of the assessee were rejected and show cause notices were issued thereafter. Amongst various objections taken in the writ petition about the validity of the proceedings under Section 153C, the only ground pressed into service is that the satisfaction note was recorded by a different person than the person issuing the notice under Section 153C.

4. The reliance is placed on the decisions of Commissioner of Income-tax-III vs. Calcutta Knitwears , [2014]43 taxmann.com 446(SC) , Ashok Commercial Enterprises vs. Assistant Commissioner of Income Tax , [2023] 154 taxmann.com 144 (Bombay), Canyon Financial Services Ltd. vs. Income Tax Officer , [2017] 84 taxmann.com 71(Delhi), Super Malls (P.) Ltd. vs. Principal Commissioner of Income Tax, 8 New Delhi, [2020] 115 taxmann.com 105 (SC) as also CBDT Circulars dated 31.12.2015 and 14.08.2019, to substantiate the above submissions

5. The contention is that it was mandatory for the Assessing Officer before issuing notice under Section 153C to reach at the satisfaction that the books of accounts or the documents of assets seized or requisitioned of the searched party have bearing on the determination of income of another person. The requirement to supply the satisfaction note cannot be understated. The CBDT Circular dated 31.12.2015 made it mandatory for the Assessing Officer to record his satisfaction before issuing notice for the purpose of assessment of income of other than the searched person under Section 153C, even if he happens to be the Assessing Officer of the searched party. Placing the CBDT Circular dated 14.08.2019, it is submitted that any communication made by the Ass