Section 153C Assessment Quashed by ITAT Pune: Consolidated Satisfaction Note for Multiple Assessment Years Renders Proceedings Void Ab Initio
Background and Case Overview
The Income Tax Appellate Tribunal, Pune, in the matter of Ramdas Chabaji Dhankude Vs ACIT, delivered a significant ruling concerning the jurisdictional validity of assessment proceedings initiated under Section 153C of the Income Tax Act, 1961. The matter arose from two appeals — ITA No.823/PUN/2024 (relating to Assessment Year 2016-17, directed against the CIT(A) order dated 20.03.2024) and ITA No.824/PUN/2024 (relating to Assessment Year 2018-19, directed against the CIT(A) order dated 16.03.2024). Since the grounds raised across both appeals were materially identical, they were heard together and disposed of by way of a common order.
The core question before the Tribunal was both legally precise and practically significant: can a single consolidated satisfaction note covering multiple assessment years serve as a valid jurisdictional foundation for proceedings under Section 153C, or does the law mandate a separate, year-specific satisfaction note for each assessment year?
Facts of the Case
The assessee, an individual, had originally filed his return of income on 14.01.2017 declaring a total income of Rs. 7,05,770/-, comprising share income from a partnership firm and income from other sources.
A search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted on 19.12.2017 at the residential premises of Mr. Baburao Dattareya Chandere located at 1053, Gokhale Cross Road, Matruda Building, Shivajinagar, Pune. During this search, certain incriminating material purportedly belonging to the assessee was seized.
Initiation of Section 153C Proceedings
Following the search, proceedings under Section 153C were set in motion:
- The Assessing Officer of the searched person recorded a satisfaction note on 09.12.2019, covering Assessment Years 2012-13 to 2017-18 — a single consolidated note for all six years.
- The Assessing Officer of the assessee recorded a separate satisfaction note on 16.10.2020, also covering Assessment Years 2012-13 to 2018-19 collectively.
- A notice under
Section 153Cdated 19.10.2020 was issued and served on the assessee for Assessment Year 2016-17. - In response, the assessee filed a return of income on 11.11.2020 declaring total income of Rs. 9,79,410/-, reflecting share income from the firm and income from other sources.
The assessee had also formally requested the Assessing Officer to furnish details of the searched person, a certified copy of the satisfaction note, and specifics of the documents described as incriminating. The Assessing Officer subsequently issued statutory notices under Section 143(2) and Section 142(1) along with a detailed questionnaire.
Assessing Officer's Findings
Upon examination of the submissions, the Assessing Officer noted that the assessee had disclosed short-term capital gain of Rs. 2,73,638/- on sale of a flat at Pride Platinum. Since the return reflecting this gain was filed only after issuance of notice under Section 153C, the Assessing Officer treated this as a concealment-linked disclosure and initiated penalty proceedings under Section 271(1)(c), while otherwise accepting the returned income.
Proceedings Before CIT(A)
Before the Ld. CIT(A), Pune-12, the assessee raised multiple challenges:
- Validity of the
Section 153Cnotice and assessment on jurisdictional grounds - Alleged mechanical approval under
Section 153Dwithout application of mind - Absence of Document Identification Number (DIN) on the approval granted by the Additional CIT under
Section 153D, argued to be in contravention of CBDT Circular No. 19/2019 dated 14.08.2019 - No incriminating material found specifically relatable to the relevant year
- Challenge to the initiation of penalty proceedings under
Section 271(1)(c)
The CIT(A) was not persuaded by any of these contentions and dismissed the appeal, upholding the assessment. The assessee thereupon approached the Tribunal.