The satisfaction note says the officer is satisfied and nothing else. Is that enough to found a s.153C notice?
On s.153C as it stood before 1 June 2015. No. Anything found during a search is presumed by law to belong to the person searched. Before the Assessing Officer of the searched person can say a document belongs to somebody else, he must rebut that presumption on cogent material, and the satisfaction note itself must show the reasons. A note that only recites the word 'satisfied' fails the first step, and everything built on it goes. Read the decision only against that older wording: with effect from 1 June 2015 s.153C was widened to cover books or documents that 'pertain to' the other person or contain information 'relating to' him, and in ITO v. Vikram Sujitkumar Bhatia (SC, 2023) the Supreme Court held the amended provision applies even where the search was conducted before that date. The 'belongs to' analysis in this case is therefore not the current test.
Decided by the High Court (Badar Durrez Ahmed J and Siddharth Mridul J) on 2014-08-07, reported as W.P.(C) 415/2014, 568/2014, 570/2014, 571/2014, 575/2014 and 576/2014 (Delhi High Court). It bears on section 153C, section 153A, section 132, section 292C, section 158BD of the Income Tax Act 1961, in Search, Survey & Block Assessment matters.
The satisfaction note is the jurisdictional foundation of every s.153C assessment, and in practice it is usually a short cyclostyled paragraph. This is the decision that says what such a note must contain, and it is the one to put in front of the officer when you first ask for a copy of the note.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A search under s.132 was carried out on the Jaipuria Group on 27 March 2012. Among the material seized were a summary of Pepsi Foods claims as at 29 November 2011, VAT impact details for April to June 2010, discount details, concentrate stock summaries and PFL support documentation. The Revenue's case was that the Jaipuria Group had inflated raw material cost to depress its profits, Pepsi Foods being the sole supplier of concentrate to the group at allegedly inflated rates. On 2 August 2013 the Assistant Commissioner of Income Tax, Central Circle-12, New Delhi recorded a satisfaction note and issued notices under s.153C to Pepsi Foods for assessment years 2006-07 to 2011-12. Six writ petitions were filed challenging those notices. The assessee's case was that the note nowhere showed how the statutory presumptions in s.132(4A)(i) and s.292C(1)(i) had been rebutted. The Revenue's case was that because the documents concerned transactions with Pepsi Foods they belonged to Pepsi Foods, and that a s.153C notice is only the opening step in an enquiry so no rigorous satisfaction is called for at that stage.
All six petitions were allowed and the s.153C notices were quashed, with no order as to costs. Two steps must be taken before a s.153C notice can issue: the Assessing Officer of the searched person must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person, and only then can the document be handed over to the Assessing Officer of that other person. The very first of those steps had not been fulfilled, so the notices could not stand.
The Court began from the statutory presumptions. Section 132(4A)(i) and s.292C(1)(i) provide that a document found in the possession or control of a person in the course of a search may be presumed to belong to that person, so the normal presumption is that a document found with the searched person is his. It is for the Assessing Officer to rebut that presumption and reach a satisfaction that the document in fact belongs to somebody else, and there must be cogent material before he does so; surmise and conjecture cannot take the place of satisfaction (para 6). The Court declined to import into s.153C the tentative, prima facie standard of satisfaction that applies under s.158BD, because s.158BD concerns a provisional view about undisclosed income whereas s.153C requires a conclusion about who a document belongs to, reached against a statutory presumption to the contrary; to that extent it disagreed with the Allahabad High Court's approach in Classic Enterprises (para 7). SSP Aviation was read as supporting, not displacing, the requirement that the officer be satisfied the documents belong to the other person (para 8). Turning to the note actually recorded, the Court found that apart from asserting that the documents belonged to the petitioner and that it was a fit case for a notice, there was nothing to indicate how the presumptions had been rebutted; mere use of the word 'satisfaction' or the words 'I am satisfied' does not meet the requirement, and the note must itself display the reasons or basis for the conclusion (para 11). Because the first step had not been fulfilled, the notices were quashed (para 12).
There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction".
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Handle my notice → Ask a CA on WhatsAppOn s.153C as it stood before 1 June 2015. No. Anything found during a search is presumed by law to belong to the person searched. Before the Assessing Officer of the searched person can say a document belongs to somebody else, he must rebut that presumption on cogent material, and the satisfaction note itself must show the reasons. A note that only recites the word 'satisfied' fails the first step, and everything built on it goes. Read the decision only against that older wording: with effect from 1 June 2015 s.153C was widened to cover books or documents that 'pertain to' the other person or contain information 'relating to' him, and in ITO v. Vikram Sujitkumar Bhatia (SC, 2023) the Supreme Court held the amended provision applies even where the search was conducted before that date. The 'belongs to' analysis in this case is therefore not the current test. This was decided by the High Court (Badar Durrez Ahmed J and Siddharth Mridul J) and bears on section 153C, section 153A, section 132, section 292C, section 158BD of the Income Tax Act 1961. It is reported as W.P.(C) 415/2014, 568/2014, 570/2014, 571/2014, 575/2014 and 576/2014 (Delhi High Court). The satisfaction note is the jurisdictional foundation of every s.153C assessment, and in practice it is usually a short cyclostyled paragraph. This is the decision that says what such a note must contain, and it is the one to put in front of the officer when you first ask for a copy of the note. If it applies to you, the first step is this: Ask for the satisfaction note in writing at the very first opportunity, before filing the return called for by the notice. Ask for the note of the searched person's Assessing Officer, not just the note in your client's file.
A search under s.132 was carried out on the Jaipuria Group on 27 March 2012. Among the material seized were a summary of Pepsi Foods claims as at 29 November 2011, VAT impact details for April to June 2010, discount details, concentrate stock summaries and PFL support documentation. The Revenue's case was that the Jaipuria Group had inflated raw material cost to depress its profits, Pepsi Foods being the sole supplier of concentrate to the group at allegedly inflated rates. On 2 August 2013 the Assistant Commissioner of Income Tax, Central Circle-12, New Delhi recorded a satisfaction note and issued notices under s.153C to Pepsi Foods for assessment years 2006-07 to 2011-12. Six writ petitions were filed challenging those notices. The assessee's case was that the note nowhere showed how the statutory presumptions in s.132(4A)(i) and s.292C(1)(i) had been rebutted. The Revenue's case was that because the documents concerned transactions with Pepsi Foods they belonged to Pepsi Foods, and that a s.153C notice is only the opening step in an enquiry so no rigorous satisfaction is called for at that stage. The matter was decided on 2014-08-07 by the High Court (Badar Durrez Ahmed J and Siddharth Mridul J). On those facts the High Court held as follows. All six petitions were allowed and the s.153C notices were quashed, with no order as to costs. Two steps must be taken before a s.153C notice can issue: the Assessing Officer of the searched person must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person, and only then can the document be handed over to the Assessing Officer of that other person. The very first of those steps had not been fulfilled, so the notices could not stand.
The Court began from the statutory presumptions. Section 132(4A)(i) and s.292C(1)(i) provide that a document found in the possession or control of a person in the course of a search may be presumed to belong to that person, so the normal presumption is that a document found with the searched person is his. It is for the Assessing Officer to rebut that presumption and reach a satisfaction that the document in fact belongs to somebody else, and there must be cogent material before he does so; surmise and conjecture cannot take the place of satisfaction (para 6). The Court declined to import into s.153C the tentative, prima facie standard of satisfaction that applies under s.158BD, because s.158BD concerns a provisional view about undisclosed income whereas s.153C requires a conclusion about who a document belongs to, reached against a statutory presumption to the contrary; to that extent it disagreed with the Allahabad High Court's approach in Classic Enterprises (para 7). SSP Aviation was read as supporting, not displacing, the requirement that the officer be satisfied the documents belong to the other person (para 8). Turning to the note actually recorded, the Court found that apart from asserting that the documents belonged to the petitioner and that it was a fit case for a notice, there was nothing to indicate how the presumptions had been rebutted; mere use of the word 'satisfaction' or the words 'I am satisfied' does not meet the requirement, and the note must itself display the reasons or basis for the conclusion (para 11). Because the first step had not been fulfilled, the notices were quashed (para 12). In the words reproduced by the source cited on this page: "There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction"." The decision followed or applied SSP Aviation Ltd. v. Deputy Commissioner of Income Tax (Delhi High Court) — relied on; CIT v. Classic Enterprises (Allahabad High Court) — disagreed with, on the footing that it applied the s.158BD standard of satisfaction to s.153C; Kamleshbhai Dharamshibhai Patel v. CIT (Gujarat High Court) — distinguished on facts.
It was decided by the High Court on 2014-08-07 and is reported as W.P.(C) 415/2014, 568/2014, 570/2014, 571/2014, 575/2014 and 576/2014 (Delhi High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 153C, section 153A, section 132, section 292C, section 158BD, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. All six petitions were allowed and the s.153C notices were quashed, with no order as to costs. Two steps must be taken before a s.153C notice can issue: the Assessing Officer of the searched person must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person, and only then can the document be handed over to the Assessing Officer of that other person. The very first of those steps had not been fulfilled, so the notices could not stand. It arises in Search, Survey & Block Assessment matters, on section 153C, section 153A, section 132, section 292C, section 158BD of the Income Tax Act 1961, and was decided by Badar Durrez Ahmed J and Siddharth Mridul J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Read it against s.132(4A)(i) and s.292C(1)(i) — but only for pre-1 June 2015 proceedings, and only where the document is one that could plausibly belong to either person, such as a sale deed or correspondence of which each side holds a copy. Per Ganpati Fincap para 41(vi) and (vii), approved in Super Malls (SC, 2020), a note that records the document belongs to your client is otherwise enough; the Assessing Officer need not add that it does not belong to the searched person, and an objection built on that omission alone will fail. Where the document is unambiguously your client's, put your weight elsewhere: whether a satisfaction note exists at all and whether it preceded initiation, and whether the material has any bearing on the determination of total income for each year for which a notice has issued. Check whether the note identifies the documents at all, and whether it gives any reason. A note that asserts the documents belong to your client and then recites 'I am satisfied that it is a fit case for issue of notice under section 153C', with no reasons, is the form the Court struck down here. Take the point as a jurisdictional objection, on the record, at the assessment stage. Do not save it for appeal.
Superseded by amendment. Not overruled. Confined by the Delhi High Court in Ganpati Fincap Services Pvt. Ltd. v. CIT (25 May 2017) at para 41(vi) and (vii) to documents that could belong to more than one person; those propositions were cited and approved by the Supreme Court in Super Malls Pvt. Ltd. v. PCIT (5 March 2020), which is in the library. Its 'belongs to' analysis is superseded for s.153C proceedings initiated on or after 1 June 2015 by the amended provision, which per ITO v. Vikram Sujitkumar Bhatia (SC, 2023) applies even to searches conducted before that date, the operative date being when the material reaches the Assessing Officer of the other person. Date scope: by the closing limb of s.153A(1) that section reaches only a search initiated, or a requisition made, after 31 May 2003 and on or before 31 March 2021, and s.153C is excluded by its own sub-section (3) from any search initiated on or after 1 April 2021, so this entry is authority for a search within that window and says nothing about a later one — a search initiated between 1 April 2021 and 31 August 2024 is governed instead, by force of s.152(3), by ss.147 to 151 as they stood immediately before the Finance (No. 2) Act 2024, and a search initiated on or after 1 September 2024 by the substituted Chapter XIV-B. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Do not confuse this case with Deputy Commissioner of Income Tax v. Pepsi Foods Ltd. (now Pepsico India Holdings Pvt. Ltd.), the Supreme Court decision on the third proviso to s.254(2A), which is already in the library and has nothing to do with s.153C. This is a Delhi High Court writ decision of 7 August 2014. The judgment also refers to a separate Delhi High Court decision, Pepsico India Holdings Pvt. Ltd. v. ACIT, on the same statutory expression; that is a third, different case. This decision construes s.153C as it stood before 1 June 2015. For proceedings initiated on or after that date the amended words 'pertains to' and 'relates to' apply, including to searches conducted before 2015 — see ITO v. Vikram Sujitkumar Bhatia (SC, 2023), which is already in the library. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
All six petitions were allowed and the s.153C notices were quashed, with no order as to costs. Two steps must be taken before a s.153C notice can issue: the Assessing Officer of the searched person must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person, and only then can the document be handed over to the Assessing Officer of that other person. The very first of those steps had not been fulfilled, so the notices could not stand.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
When must the satisfaction note be recorded before proceedings are taken against a third party?
The seized documents say nothing about the years being assessed. Can s.153C still be used for them?
The search party carted away all our books. Does the way a search was conducted make it illegal?
The search was before June 2015 but the notice came later. Which version of s.153C applies?