In Pr. CIT v. Sheetal International Pvt. Ltd, a division bench of the Delhi High Court held that assessment under section 153C of the Income Tax Act cannot be quashed merely on ground that AO of the searched who was also that of the Assessee, did not record a separate satisfaction note.
A bench of Justice S Muralidhar and Prathibha M Singh was hearing an appeal against the order of the ITAT wherein the Tribunal quashed the Assessment order.
The bench relied on the Courts’ recent decision in Ganpati Fincap Services Pvt Ltd. v. Commissioner of Income Tax in which the Court made an observation that “Where the AO of the searched person and the other person is the same, such a satisfaction note qua the other person has to be recorded by the AO of the searched person prior to the initiation of the proceedings against the other person. This is a sine die non for triggering the proceedings against the other person under Section 153C of the Act. There do not have to be two separate satisfaction notes prepared by the AO of the searched person even where he is also the AO of the other person. In such event, the AO need make only one satisfaction note. That satisfaction note is qua the other person. Further, it is sufficient that such satisfaction note is placed in the file of the other person by the AO in his capacity as the AO of such other person.”
In that view of the decision, the bench quashed the impugned order of the ITAT and held that the proceedings under Section 153C of the Act cannot be nullified only for the reason that the AO of the searched who was also that of the Assessee, did not record a separate satisfaction note cannot be sustained in law.
Read the Full Text of the Judgment Below
