Absence of Dated Satisfaction Note and Delay in Communication Lead to Quashing of Section 153C Notice
In a significant ruling, the Gujarat High Court has quashed a notice issued under Section 153C of the Income Tax Act, 1961, against Virat Alloys Private Limited for the Assessment Year 2015-16. The bench, comprising Justices A.S. Supehia and Pranav Trivedi, observed that the satisfaction note recorded by the Assessing Officer lacked a date and was communicated to the petitioner after an unreasonable delay of over two years.
The case stemmed from a search conducted on June 25, 2018, on M/s World Window Group, which purportedly linked to Virat Alloys. However, Virat Alloys contended that it had no business transactions with the group during the relevant financial years. A crucial aspect of the court's decision was the reliance on the Supreme Court’s guidelines from the 2014 Calcutta Knitwears case, which mandates that a satisfaction note is essential before transmitting records to another Assessing Officer.
Despite the respondent's claim that the satisfaction note was recorded on June 23, 2022, the court noted its absence of a date and the delayed communication to Virat Alloys on May 30, 2024. The court highlighted that the delay and lack of proper documentation violated guidelines from the Supreme Court and the Central Board of Direct Taxes (CBDT) Circular No. 24/2015.
This ruling underscores the importance of adherence to procedural norms and timely communication in tax proceedings, emphasizing the judiciary's role in upholding taxpayer rights.
Bottom Line:
Income Tax Act, 1961 - Notice under Section 153C quashed due to the absence of a dated satisfaction note and its communication beyond a reasonable period.
Statutory provision(s): Income Tax Act, 1961 Sections 153C, 132.
