Gujarat High Court Quashes 153C Notices Issued After 22-Month Delay in Recording Satisfaction

The petitioner challenged notices issued under Section 153C for AY 2017-18. A search under Section 132 was conducted in the case of a third party, Suresh R. Thakkar. During the search, WhatsApp chats and related material were found, indicating alleged “on-money” payments in a land transaction involving members of the Gathani family. The searched person’s statement under Section 131 confirmed discussions regarding cash and cheque consideration for sale of land.

Assessment of the searched person was completed in August 2021. However, the Assessing Officer recorded the satisfaction note only after 22 months and transmitted the material to the AO of the petitioner. The AO recorded his satisfaction on 14.07.2023, and the Section 153C notice was issued on 09.02.2024.

Core Issue: Whether a satisfaction note recorded 22 months after the assessment of the searched person satisfies the statutory requirement that satisfaction under Section 153C must be recorded “immediately” after such assessment.

HC Held: The High Court held that the delay of 22 months in recording satisfaction was wholly inconsistent with the mandate in Calcutta Knitwears and CBDT Circular No. 24/2015, which requires the satisfaction to be recorded at one of three stages, including immediately after completion of assessment of the searched person.

Since the satisfaction was not recorded at the permissible stages and the delay defeated the very purpose of prompt and efficient search assessments, the notices under Section 153C were held unsustainable.

Therefore, both writ petitions were allowed, and the S. 153C notices were quashed.

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