M/s. South Coast Spices Exports Pvt. Ltd vs. PRINCIPAL COMMISSIONER OF INCOME TAX

The brief facts necessary for the disposal of the writ appeal are as follows: The appellant had impugned Exts.P1 to P6 notices issued to it under Section 153 of the Income Tax Act [hereinafter referred to as the “IT Act”] for the assessment years 2015-16 to 2020-21, Exts.P7 to P11 assessment orders dated 28.03.2023 for the assessment years 2015-16 to 2019-20 and Exts.P12 and P13 assessment orders dated 29.3.2023 for the assessment years 2020-21 and 2021-22, whereby, the appellant's total income and loss had been assessed for the said years. It was the case of the appellant before the writ court that the proceedings initiated under Section 153C of the IT Act, for the W.A.No.2002/2023 aforementioned assessment years, required it to file returns of income for the said years under circumstances where there was no valid material on the basis of which the Assessing Officer could have recorded the satisfaction note, which was a pre-requisite for issuing the notice under Section 153C of the IT Act. The submission of the learned counsel for the appellant was essentially that the satisfaction note recorded by the Assessing Officer did not contain a Document Identification Number [DI Number], and therefore, the entire proceedings initiated by the Assessing Officer against the appellant was illegal as without jurisdiction. The appellant relied on the judgment of the Bombay High Court dated 21.07.2023 in Ashok Commercial Enterprises v. Assistant Commissioner of Income Tax Central Circle - [W.P.(C).No.2595 of 2021 and connected cases] in support of its submissions.

The learned Single Judge, who considered the writ petition, found that in the course of a search under Section 132 of the IT Act at the business premises as well as residential premises of a Civil Contractor – Sri.K.N.Madhusoodhanan Nair, certain incriminating documents, showing the unaccounted income of the said person and his business concerns, as also the diversion of business funds for the W.A.No.2002/2023 purposes of evasion of taxation were noticed. During the course of the search proceedings, certain documents were also seized from the residence of the Accountant of a sister concern of Sri.K.N.Madhusoodhanan Nair, wherein, details of cash payments to the appellant company were also detected. It was after recording his satisfaction in relation to the said material obtained during the search of another person's premises that the Assessing Authority issued notices under Section 153C of the IT Act to the appellant herein. While the appellant had demanded the satisfaction note from the Assessing Authority and the same was sent to it by the Assessing Officer under cover of a letter which indicated the DI Number applicable to the satisfaction note, it was the submission of the learned counsel for the appellant that the Assessing Authority ought to have mentioned the DI Number on the satisfaction note itself and not merely in the covering letter accompanying the note. She relied on the Circular dated 14.08.2019 of the Income Tax Department to substantiate her contention regarding the erroneous assumption of jurisdiction by the Assessing Authority.

The learned Single Judge, however, found that when the satisfaction note had been provided to the appellant and the covering letter [Ext.P18] bore the DI Number applicable to the satisfaction

We have heard Smt.Preetha S. Nair, the learned counsel for the appellant as also Sri.Jose Joseph, the learned Standing Counsel for the Income Tax Department.

Before us, it is the submission of Smt.Preetha S. Nair, the learned counsel for the appellant that it was not enough that the Assessing Authority mentioned the DI Number of the satisfaction note in the covering letter but the DI Number had to be endorsed on the satisfaction note itself. She relies on the same judgment of the Bombay High Court to substantiate her contentions before us.