What if the same officer holds charge of both the searched person and you?
Then one satisfaction note is enough, provided it records clearly that the seized documents belong to the other person and not to the searched person. There is nothing to transmit, so no second note is needed.
Decided by the Supreme Court (Ashok Bhushan and M.R. Shah, JJ (judgment delivered by Shah J)) on 2020-03-05, reported as [2020] 423 ITR 281 (SC); [2020] 115 taxmann.com 105 (SC); [2020] 273 Taxman 556 (SC); [2020] 4 SCC 581; Civil Appeal Nos. 2006 to 2013 of 2020. It bears on section 132, section 153C of the Income Tax Act 1961, in Search, Survey & Block Assessment matters.
It closes an argument that was frequently run — that two notes are always needed. What survives is the content requirement: the note must say the documents belong to the other person, and many do not.
Binding on every court and authority in India.
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A search under s.132(1), authorised by the Director of Income-tax (Investigation), Chandigarh, was carried out on 8/9 April 2010 at the premises of the Tejwant Singh and Ved Prakash Bharti group at Karnal, Panipat and Delhi, and a survey under s.133A was carried out at Super Malls' own premises. Pen drives were seized from a vehicle parked in front of the residence of Ved Prakash Bharti, a director of Super Malls; printouts taken from them recorded cash receipts on the sale of shops and offices at Super Mall, Karnal. The same officer happened to hold charge both of the searched persons and of Super Malls. He recorded a satisfaction note dated 22 February 2013 and issued notice under s.153C, and additions were made for AY 2008-09. The Commissioner (Appeals) dismissed the assessee's appeal; the Tribunal allowed it, holding the satisfaction note invalid, without going into the merits; the Delhi High Court restored the note and remanded the appeals to the Tribunal for a fresh hearing on merits. The assessee appealed to the Supreme Court.
The appeals were dismissed and the Delhi High Court's order affirmed. Where the Assessing Officer of the searched person and of the other person is the same, it is enough that he notes in the satisfaction note that the documents seized from the searched person belonged to the other person; once the note says so, the requirement of s.153C is fulfilled and a single note prepared by him suffices, since there is no question of his transmitting the seized documents to himself (para 6.1). On the facts the note dated 22 February 2013 said exactly that, so the mandatory requirements were complied with (para 6.2). The Court decided only the validity of the satisfaction note: the merits of the additions were left to the Tribunal, which was directed to dispose of the appeals afresh in accordance with law (para 7).
The Court took the conditions precedent in s.153C, as explained in CIT v. Calcutta Knitwears and Pepsi Foods, to be mandatory, and then separated two eventualities (para 6.1). Where the two Assessing Officers are different, the officer of the searched person must record satisfaction that the seized document belongs to the other person and must transmit the material along with his note; that requirement is mandatory, though his further duty to make a note in the searched person's file is administrative, and a failure to make it does not vitiate the proceedings. Where the same officer holds both charges, the second requirement falls away because he cannot transmit documents to himself, so one satisfaction note is enough — provided he is conscious and satisfied that the seized documents belonged to the other person, the note being recorded qua that other person. Reading the note in this case, the Court found it recorded the seizure from the searched person's residence and the officer's satisfaction that the documents belonged to the assessee and not to the searched person, and agreed with the High Court that s.153C had been complied with (para 6.2).
In case, where the Assessing Officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other person.
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Handle my notice → Ask a CA on WhatsAppThen one satisfaction note is enough, provided it records clearly that the seized documents belong to the other person and not to the searched person. There is nothing to transmit, so no second note is needed. This was decided by the Supreme Court (Ashok Bhushan and M.R. Shah, JJ (judgment delivered by Shah J)) and bears on section 132, section 153C of the Income Tax Act 1961. It is reported as [2020] 423 ITR 281 (SC); [2020] 115 taxmann.com 105 (SC); [2020] 273 Taxman 556 (SC); [2020] 4 SCC 581; Civil Appeal Nos. 2006 to 2013 of 2020. It closes an argument that was frequently run — that two notes are always needed. What survives is the content requirement: the note must say the documents belong to the other person, and many do not. If it applies to you, the first step is this: Check whether the same officer held both charges before arguing that a second note was required.
A search under s.132(1), authorised by the Director of Income-tax (Investigation), Chandigarh, was carried out on 8/9 April 2010 at the premises of the Tejwant Singh and Ved Prakash Bharti group at Karnal, Panipat and Delhi, and a survey under s.133A was carried out at Super Malls' own premises. Pen drives were seized from a vehicle parked in front of the residence of Ved Prakash Bharti, a director of Super Malls; printouts taken from them recorded cash receipts on the sale of shops and offices at Super Mall, Karnal. The same officer happened to hold charge both of the searched persons and of Super Malls. He recorded a satisfaction note dated 22 February 2013 and issued notice under s.153C, and additions were made for AY 2008-09. The Commissioner (Appeals) dismissed the assessee's appeal; the Tribunal allowed it, holding the satisfaction note invalid, without going into the merits; the Delhi High Court restored the note and remanded the appeals to the Tribunal for a fresh hearing on merits. The assessee appealed to the Supreme Court. The matter was decided on 2020-03-05 by the Supreme Court (Ashok Bhushan and M.R. Shah, JJ (judgment delivered by Shah J)). On those facts the Supreme Court held as follows. The appeals were dismissed and the Delhi High Court's order affirmed. Where the Assessing Officer of the searched person and of the other person is the same, it is enough that he notes in the satisfaction note that the documents seized from the searched person belonged to the other person; once the note says so, the requirement of s.153C is fulfilled and a single note prepared by him suffices, since there is no question of his transmitting the seized documents to himself (para 6.1). On the facts the note dated 22 February 2013 said exactly that, so the mandatory requirements were complied with (para 6.2). The Court decided only the validity of the satisfaction note: the merits of the additions were left to the Tribunal, which was directed to dispose of the appeals afresh in accordance with law (para 7).
The Court took the conditions precedent in s.153C, as explained in CIT v. Calcutta Knitwears and Pepsi Foods, to be mandatory, and then separated two eventualities (para 6.1). Where the two Assessing Officers are different, the officer of the searched person must record satisfaction that the seized document belongs to the other person and must transmit the material along with his note; that requirement is mandatory, though his further duty to make a note in the searched person's file is administrative, and a failure to make it does not vitiate the proceedings. Where the same officer holds both charges, the second requirement falls away because he cannot transmit documents to himself, so one satisfaction note is enough — provided he is conscious and satisfied that the seized documents belonged to the other person, the note being recorded qua that other person. Reading the note in this case, the Court found it recorded the seizure from the searched person's residence and the officer's satisfaction that the documents belonged to the assessee and not to the searched person, and agreed with the High Court that s.153C had been complied with (para 6.2). In the words reproduced by the source cited on this page: "In case, where the Assessing Officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other person." The decision followed or applied Affirms Pr. CIT v. Super Malls (P.) Ltd. [2016] 76 taxmann.com 267/[2017] 393 ITR 557 (Delhi)(HC).
It was decided by the Supreme Court on 2020-03-05 and is reported as [2020] 423 ITR 281 (SC); [2020] 115 taxmann.com 105 (SC); [2020] 273 Taxman 556 (SC); [2020] 4 SCC 581; Civil Appeal Nos. 2006 to 2013 of 2020. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 132, section 153C, 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeals were dismissed and the Delhi High Court's order affirmed. Where the Assessing Officer of the searched person and of the other person is the same, it is enough that he notes in the satisfaction note that the documents seized from the searched person belonged to the other person; once the note says so, the requirement of s.153C is fulfilled and a single note prepared by him suffices, since there is no question of his transmitting the seized documents to himself (para 6.1). On the facts the note dated 22 February 2013 said exactly that, so the mandatory requirements were complied with (para 6.2). The Court decided only the validity of the satisfaction note: the merits of the additions were left to the Tribunal, which was directed to dispose of the appeals afresh in accordance with law (para 7). It arises in Search, Survey & Block Assessment matters, on section 132, section 153C of the Income Tax Act 1961, and was decided by Ashok Bhushan and M.R. Shah, JJ (judgment delivered by Shah 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 the note for the crucial finding: that the documents belong to you and not to the searched person. If that finding is missing or merely assumed, that is the point to take.
Still good law. Applied by the Madras High Court in LKS Gold House (P.) Ltd. v. DCIT [2024] 161 taxmann.com 604 (Madras), decided 18 January 2024, which held that where the Assessing Officer of the searched person and of the other person are the same, a single satisfaction note recorded in the capacity of the searched person's Assessing Officer is sufficient (para 108). The same decision limits its reach: it holds that the ruling cannot be read to mean that limitation for preparing the satisfaction note or completing the assessment of the other person must coincide with the period for assessing the searched person (para 105). 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.
The decision settles one point only — that a single satisfaction note suffices where the same officer assesses both the searched person and the other person. It says nothing about the merits of the additions, which went back to the Tribunal for a fresh hearing. It is also not authority on limitation: the Madras High Court in LKS Gold House (P.) Ltd. v. DCIT [2024] 161 taxmann.com 604 declined to read it as fixing the limitation for assessing the other person by reference to the searched person's assessment. 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.
The appeals were dismissed and the Delhi High Court's order affirmed. Where the Assessing Officer of the searched person and of the other person is the same, it is enough that he notes in the satisfaction note that the documents seized from the searched person belonged to the other person; once the note says so, the requirement of s.153C is fulfilled and a single note prepared by him suffices, since there is no question of his transmitting the seized documents to himself (para 6.1). On the facts the note dated 22 February 2013 said exactly that, so the mandatory requirements were complied with (para 6.2). The Court decided only the validity of the satisfaction note: the merits of the additions were left to the Tribunal, which was directed to dispose of the appeals afresh in accordance with law (para 7).
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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?