ITAT Delhi Quashes Search Assessment Over Defective Consolidated Satisfaction Note

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed a search assessment against Sunwhite Realty Private Limited over a defective satisfaction note recorded for multiple assessment years.

A bench of Judicial Member Anubhav Sharma and Accountant Member M. Balaganesh allowed the company's appeal against the assessment for the assessment year 2016–17.

The assessment arose from a search conducted in the Ashish Begwani group cases. Sunwhite Realty challenged the Assessing Officer's jurisdiction. It argued that the proceedings had been initiated on the basis of a consolidated satisfaction note covering several assessment years. The company also contended that the note did not identify the seized material pertaining to it. Nor did it specify the assessment year to which those entries related.

The tribunal noted that the same satisfaction note had already been examined by a coordinate bench in Vinay Home Pvt. Ltd. That case also arose from the Ashish Begwani group search. The coordinate bench had held that the satisfaction note was not recorded in accordance with law. It had also held that the assumption of jurisdiction was vitiated.

After examining the record, the tribunal found that the satisfaction note reproduced in the assessment order did not identify which seized entries pertained to Sunwhite Realty. It also did not specify the assessment year to which those entries related. Instead, a common satisfaction note had been recorded for Assessment Years 2011-12 to 2017-18.

The tribunal followed the decision in Vinay Home Pvt. Ltd. That decision, in turn, had relied on the Karnataka High Court's ruling in DCIT v. Sunil Kumar Sharma. The tribunal also noted that the Supreme Court had dismissed the Revenue's challenge to that judgment. Applying the same reasoning, it concluded that the jurisdiction assumed by the Assessing Officer was invalid

Holding that the facts of Sunwhite Realty's case were identical to those in Vinay Home Pvt. Ltd., the tribunal allowed the appeal. It also quashed the assessment.

For Appellant: Advocate Sandeep Goel,

For Respondent: Shrikant Namdeo, CIT-DR