Delayed Satisfaction Note Invalidates Section 153C Proceedings: Gujarat HC Quashes Notice

The petitioner, Virat Alloys Private Limited, challenged the notice dated 24.06.2022 issued under Section 153C for AY 2015-16 pursuant to a search conducted on 25.06.2018 in the case of M/s World Window Group.

While the Assessing Officer of the searched person recorded a satisfaction note on 06.05.2022, the satisfaction note of the petitioner’s jurisdictional Assessing Officer was undated and was furnished to the petitioner only on 30.05.2024, after an unexplained delay of over two years.

Issue Before Court: Whether a notice under Section 153C is valid when the jurisdictional Assessing Officer’s satisfaction note is undated and communicated to the assessee after an inordinate delay.

HC Held: The Gujarat High Court held that recording of a satisfaction note is a sine qua non for initiating proceedings under Section 153C and must strictly comply with the principles laid down by the Supreme Court in CIT v. Calcutta Knitwears and CBDT Circular No. 24 of 2015.

The Court noted that the satisfaction note of the petitioner’s Assessing Officer did not bear any date and was supplied to the petitioner after more than two years, with no explanation for the delay. The Court held that the mandatory jurisdictional requirement was not satisfied. Thus, the impugned notice issued under Section 153C and alllater proceedings were quashed and set aside. All connected petitions were allowed.

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