Case Note & Summary
The petitioner, Nirma Limited, received funds from Siddhi Vinayak Cement Private Limited during Financial Years 2009-10 to 2011-12 by way of share application money, loans, and inter-corporate deposits. Using these funds, the petitioner purchased land parcels worth Rs.104,82,31,209/- and acquired all shares of Siddhi Vinayak Cement Private Limited in October 2011. A search was conducted on the Satyam Sangani Shaligram Group of Companies on 06.03.2018, during which incriminating documents related to transactions by Hanubhai Sanghani were found. Based on this, a notice under Section 153C of the Income Tax Act, 1961, was issued to the petitioner on 31.03.2022 for Assessment Years 2008-09 to 2018-19. Along with the notice, the satisfaction note recorded by respondent No.1 was supplied, but the satisfaction note recorded by respondent No.2 was not supplied. The petitioner filed returns of income in April 2022 and requested the satisfaction note via letters dated 04.05.2022, 19.05.2022, and 24.05.2022. The petitioner then filed a writ petition challenging the notice on the ground that non-supply of the satisfaction note violated principles of natural justice. The court considered the issue of whether the failure to supply the satisfaction note renders the notice invalid. The petitioner argued that the satisfaction note is a mandatory requirement and its non-supply vitiates the proceedings. The respondent argued that the satisfaction note was not required to be supplied. The court held that the satisfaction note is a foundational document and its non-supply violates natural justice, quashing the notice. The court allowed the petition and quashed the notice under Section 153C.
Headnote
A) Income Tax - Reassessment under Section 153C - Satisfaction Note - Non-Supply - The failure to supply the satisfaction note recorded by the Assessing Officer to the assessee violates principles of natural justice and renders the notice under Section 153C of the Income Tax Act, 1961, invalid. The court held that the satisfaction note is a foundational document and its non-supply prejudices the assessee's right to a fair hearing. (Paras 1-16) B) Income Tax - Natural Justice - Right to Fair Hearing - The assessee has a right to receive all documents relied upon by the revenue, including the satisfaction note, to effectively respond to the reassessment proceedings. The court held that non-supply of the satisfaction note amounts to a denial of natural justice. (Paras 1-16)
Issue of Consideration
Whether the failure to supply the satisfaction note recorded by the Assessing Officer under Section 153C of the Income Tax Act, 1961, to the assessee renders the notice invalid and violates principles of natural justice.
Final Decision
The court allowed the petition and quashed the notice under Section 153C of the Income Tax Act, 1961.
Law Points
- Section 153C of the Income Tax Act
- 1961
- satisfaction note
- natural justice
- reassessment
- search assessment
