Initiation of assessment proceedings under Section 153C of the Income Tax Act requires a separate, year-specific satisfaction note recording the nexus between seized materials and the assessee’s income for that particular year; a consolidated satisfaction note for multiple years without year-wise analysis is invalid and vitiates the entire proceeding.

O R D E R

PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER :

1. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)-24, New Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 30.08.2022 for Assessment Year 2015-16.

2. At the outset, ld. AR of the assessee raised legal issue relating to assumption of jurisdiction under section 153C of the Income-tax Act, 1961 (for short ‘the Act’) by raising ground nos.1 & 2 which read as under :-

“1. On the facts and circumstances of the case, the order passed by the Ld. AO and impugned order passed by the CIT (A) is bad both in the eye of law and on facts.

2. In absence of providing of satisfaction note, if any, recorded by the regular AO of the appellant (ITO, Ward-1, Hisar) initiation of proceedings u/s 153C, in the facts and circumstances of the case, are not valid and, therefore, the assessment basing on such invalid proceedings deserved to be cancelled and CIT (Appeals) has erred in upholding the validity of the proceedings u/s 153C.”

3. Ld. AR of the assessee brought to our notice the relevant facts relating to the aforesaid grounds, the satisfaction note dated 23.9.2020 recorded by the Deputy Commissioner of Income, Central Circle-7, New Delhi i.e. AO of the searched person, namely, M/s Jindal Bullion Ltd. is placed at page 3 of Paper Book and satisfaction note dated 23.10.2020 recorded by the Income Tax Officer, JAO, Ward-1, Hisar i.e. AO of the assessee is placed at pages 82-83 of JPB. He further submitted that qua issuance of notice u/s 153C of the Act is in contravention of CBDT circular issued by the CBDT No. 24/2015 dated 31.12.2015, placed at pages 86-87 of JPB and submitted the chronological sequence of dates as under:

4. He further submitted that notice issued u/s 153C of the Act is in contravention of provisions of section 132(4) of the Act and section 292C of the Act and the binding circular No. 24/2015 dated 31.12.2015 issued by the Central Board of Taxes (“CBDT”) which provides that in case of a person other than the searched person recording of satisfaction is a per-requisite and satisfaction note has to be prepared at the time of initiation of proceedings against searched person or in the course of assessment proceedings of the searched person or immediately after completion of assessment of searched person. He submitted that the impugned notice u/s 153C of the Act is issued much after the time limit for completion of assessment u/s 153A/153C of the Act as stated in clause (a) and (b) of section 153B of the Act i.e. twenty-one months from the end of the financial year in which the search was conducted.

5. He further submitted that the satisfaction to initiate proceedings u/s 153C of the Act is recorded at a gap of about 9 months in September. 2020 on 23.9.2020 which is in contravention to the circular issued by CBDT Circular No.24/2015