AO Cannot Issue Consolidated Satisfaction Note for Multiple Assessment Years: ITAT Allows Appeal noting Exceeded Jurisdiction [Read Order]

The Income Tax Appellate Tribunal (ITAT), New Delhi Bench, allowed an appeal wherein the recorded satisfaction note showed invalid jurisdiction of the Assessing Officer (AO).

The facts of the case are that search under Section 132 of the Income Tax Act, 1961 was conducted on 16.04.2019 in the case of Nitish Garg. During the assessment proceedings, cash amounting to 22,00,000/- belonged to his father, Praveen Garg, the appellant-assessee herein.

The AO of this search recorded his satisfaction on 29.09.2021 and handed over the seized material to the AO of the appellant. After the assessment proceedings against the assessee concluded, an order was passed making an addition of INR 5,31,890/- on the income of the assessee.

After the assessee’s appeal was dismissed by the Commissioner of Income Tax (Appeals) [ CIT(A) ], he preferred the present appeal before the ITAT. One of the grounds taken by the assessee was that the initiation of assessment proceedings under Section 153C of the Income Tax Act, 1961 by recording consolidated satisfaction note for all Assessment Years (2014-15 to 2020-2021) is bad in law and liable to be quashed.

The department’s representative submitted that the satisfaction note can be recorded for multiple Assessment Years, and cannot be found at fault with. Both parties placed heavy reliance on case laws.

The tribunal referenced an identical issue in SRS Panchratan Diamonds Private Limited v. Deputy Commissioner of Income Tax (2013) and Shaksham Commodities Ltd v. ITO (2024) to hold that the consolidated satisfaction note is invalid. ITAT held that the consolidated satisfaction note recorded by the AO for various assessment years to assume the jurisdiction is invalid.

Accordingly, the bench of Renu Jauhri (Accountant Member) and Yogesh Kumar U.S. (Judicial Member) allowed the appeal on this ground and quashed the assessment order.

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