RAMESHBHAI HARILAL PATEL,PUNE V. ACIT CENTRAL CIRCLE 1(1), PUNE, PUNE

ITSSA 7/PUN/2025

AI Insights

The case involves appeals by Rameshbhai Harlilal Patel against the orders of the CIT(A) for the assessment years 2017-18 and 2018-19, which confirmed additions made by the Assessing Officer based on documents seized during a search operation. The primary legal issue was the validity of the assessment proceedings initiated under section 153C of the Income Tax Act, 1961, which were based on a combined satisfaction note covering multiple assessment years. The Tribunal found that the use of a consolidated satisfaction note was not in compliance with the legal requirements, leading to the quashing of the assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775886 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 18-02-2025
• Other Referred Cases: National Thermal Power Co. Ltd. v. CIT, Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr, CIT vs. Sunil Kumar Sharma, DCIT vs. Sunil Kumar Sharma, Shri Rajendra Rameshlal Gugale vs. PCIT, M/s. Aashrya Developers (P.) Ltd. vs. ACIT, Indian National Congress vs. DCIT, CIT vs. Naga Hills Tea Co. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWALI
• Assessee Lawyers: SUHAS BORA
• Keywords: Unexplained investment; Document seized; Peak credit; Documents seized; Principle of natural justice; Search and seizure; Loose papers; Validity of assessment
• Section: 143(3); 132; 153A; 131; 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS ASTHA CHANDRA, JUDICIAL MEMBER IT(SS)A Nos.6 & 7/PUN/2025 Assessment years : 2017-18 & 2018-19 Rameshbhai Harlilal Patel 330/331, Market Yard, Gultekdi, Pune – 411037 Vs. ACIT, Central Circle 1(1), Pune PAN : ADVPP2158G (Appellant) (Respondent) Assessee by : Shri Suhas Bora and Ms Sampada Ingale Department by : Shri Rajesh Gawali, Addl.CIT Date of hearing : 13-08-2025 Date of pronouncement : 12-09-2025 O R D E R PER R.K. PANDA, VP: The above 2 appeals filed by the assessee are directed against the common order dated 20.12.2024 of the Ld. CIT(A), Pune - 11 relating to assessment years 2017-18 & 2018-19 respectively. Since identical grounds have been raised by the assessee in both the appeals, therefore, for the sake of convenience, both the appeals were heard together and are being disposed of by this common order. IT(SS)A No.6/PUN/2025 (A.Y. 2017-18) 2. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 31.10.2017 declaring total income of Rs.3,02,08,060/-. A Printed from counselvise.com 2 IT(SS)A Nos.6 & 7/PUN/2025 search and seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was carried out in the case of Ashok Bhosale & Others group of cases on 01.08.2017. During the search operation residential premises of Shri Sachin Madanlal Nahar, Flat No.7, Awiskar Apartment, Sr. No.568/19, Bibwewadi, Kondhwa Road, Pune was also covered. Shri Sachin Nahar is engaged in the business of commission and financial broker between the borrower and lenders wherein, he provides a platform for lenders having surplus funds, to invest the same with the borrowers, who are in the need of funds. During the search operation at the residential premise of Shri Sachin Nahar, various incriminating documents were found and seized indicating that besides the accounted business carried out through banking channels, Shri Nahar was involved in unaccounted business through cash transactions as well, which were not recorded in the books of accounts. Various incriminating documents were seized showing that many lenders gave cash loans through Shri Nahar to various borrowers and interest was earned on such cash loans. These documents contained information that the assessee gave cash loans to various persons through Shri Sachin Nahar which was not recorded in the regular books of accounts. 3. As during the search operation on Shri Sachin Nahar, certain documents containing transactions regarding cash loans given by the assessee were found on 01.08.2017, a statement of the assessee was recorded u/s. 131 of the Act on 03.08.2017. During the said statement the assessee accepted that he has given cash loans to certain parties through Shri Sachin Nahar. He was also confronted with Printed from counselvise.com 3 IT(SS)A Nos.6 & 7/PUN/2025 the various documents seized from the residence of Shri Sachin Nahar and the assessee accepted these entries and disclosed an additional income of Rs.2,90,00,000/- for assessment year 2017-18. 4. Based on the findings of the search and documents seized from the residence of Shri Sachin Nahar the Assessing Officer issued notice u/s 153C of the Act on 29.03.2021, in response to which the assessee filed his return of income on 28.04.2021 by declaring total income of Rs.3,02,08,060/-. 5. During the course of assessment proceedings the Assessing Officer provided the copies of satisfaction note, relevant seized documents, relevant portion of the statement of Shri Sachin Nahar as well as the statement of the assessee recorded on 03.08.2017. The Assessing Officer analyzed the seized documents according to which the assessee has given an amount of Rs.4,63,00,000/- to Shri Sachin Nahar. He, therefore, confronted the assessee to explain the source of the amount lent of Rs.4,63,00,000/- and whether the interest earned thereon of Rs.49,22,070/- is reflected in the return of income filed. The assessee in his submission flatly denied to have given the amount of Rs.4,63,00,000/- through Shri Sachin Nahar during the financial year 2016-17. It was submitted that in the course of statement recorded u/s 131 of the Act on 03.08.2013 a sum of Rs.2,90,00,000/- was offered to tax for assessment year 2017-18 in addition to regular income on account of advances made through Shri Sachin Nahar and interest thereon. The assessee while filing the regular return of income u/s 139(1) of the Act has offered the said amount of Printed from counselvise.com 4 IT(SS)A Nos.6 & 7/PUN/2025 Rs.2,90,00,000/- as additional income and has also paid due taxes thereon along with interest. The assessee also requested for cross-examination of Shri Sachin Nahar which was accepted by the Assessing Officer and cross-examination was granted. The assessee submitted that he has only given an amount of Rs.2,90,00,000/- through Shri Sachin Nahar which consists of portion of interest received on these advances and re-invested of Rs.22,00,000/- during assessment year 2017-18 and not Rs.4,63,00,000/- as alleged in the notice. Further the assessee has not received any interest of Rs.49,22,070/- as stated in the notice but based on seized material provided it was worked out to Rs.22,40,780/- which has been re-invested for giving advances and therefore, there is no question of separately treating interest as income in addition to advances. Relying on various decisions it was argued that in absence of corroborative evidence or independent enquiry to justify that a sum of Rs.4.63 crores has been advanced by the assessee through Shri Sachin Nahar, there is no justification for making addition of Rs.1,73,00,000/- (i.e. Rs.4,63,00,000 – Rs.2,90,00,000) on account of amounts lent and Rs.49,22,070/- on account of interest earned. 6. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee and made addition of Rs.1,73,00,000/- to the total income of the assessee on account of amount lent by the assessee through Shri Sachin Nahar and Rs.49,22,070/- towards interest earned thereon by recording as under: Printed from counselvise.com 5 IT(SS)A Nos.6 & 7/PUN/2025 “5.8 The submissions made by assessee have duly been considered very carefully. The assessee in his submission in para 4(a) has mentioned that copy of annexure C referred to answer to question no. 75 of statement of Shri Sachin Nahar dated 01/08/2017 is not provided to assessee. In this regard, this is to state that Annexure C contains details of other assessees also. However, transactions pertaining to assessee finding mention in annexure C have already been communicated through means of seized documents itself. Assessee has already been communicated that necessary documents pertaining to assessee have been given to assessee. This office is in possession of volume of seized documents which may have direct or indirect reference to the facts of the assessee and it is not possible to provide each and every document to the assessee. However, all relevant documents found necessary have been provided to the assessee. Further, in sub-para (ii) it is pointed out that in response to question no. 82 relating to bundle no.11 Sachin Nahar had stated that most of the entries mentioned in this bundle are duly reflected in bundle no. 9. In this regard, it is to mention that there is no doubt that certain entries in bundle 11 are reflected in bundle 9 but not all entries from bundle 11 are reflected in bundle 9. 5.8.1 Regarding explanation in para 4(b) and the possibility of same code being used for other persons referred by assessee if any, assessee has not given any such exact details indicating names of such persons and amount given to them or presented any kind of evidence in his support. Regarding claim of the assessee that the details of borrowers are not provided to him, it is to mention that shri Sachin Nahar has repeatedly stated that the transaction of lending is finalized with due consultation and knowledge of lenders with borrowers especially with regard to rate of interest and period of loan and borrowers are very much known to lenders at the time of lending itself. With regard to explanations in para 4(c) and 4(d) it is to mention that bundle number 9 is an important register in the nature of ledger account and contains most of the transactions of money lent. In view of these facts discussed, claim of the assessee that answers in the statement recorded on 1st August 2017 and 17th November 2017 of Mr Sachin Nahar are ambiguous and contradictory and do not have evidentiary value is not correct. 5.8.2 Regarding copy of statement recorded of Sachin Nahar in cross examination conducted on 20.12.2021 the copy has been provided on 24.12.2021 on receipt of application on the same day. The submissions made in para 5 to 7 are based on cross examination of Sachin Nahar on 20.12.2021. Regarding amount received back on respective due dates and conclusion of the assessee that subsequent advances given could be given out of original advances received back, it is to state that Shri Sachin Nahar has submitted the amount of total loans of Rs.4.53 or after considering all such effects and transactions. Assessee in his support has not given any evidence in this regard and with regard to same code for other persons referred from his own records and is merely depending on facts, figures, notings and statements of Shri Sachin Nahar only. Assessee has submitted that, at the end of the cross-examination Shri Sachin Nahar was asked that based on his answers in cross examination one can conclude that figure of Rs.4.83 cr. worked out is erroneous to which he said he cannot comment on this. In this regard, assessee has put the question asking can we conclude that the said computation of Rs.4,63,00,000/- is erroneous and amount disclosed in the course Printed from counselvise.com 6 IT(SS)A Nos.6 & 7/PUN/2025 of statement recorded u/s 131 of the Act of Rs.2,90,00,000/- is final?\" To this answer, Shri Sachin Nahar has answered I cannot comment on this.\" The conclusion drawn by the assessee only saying amount of Rs. 4.63 cr is erroneous is not with proper reference to the context, Shri Sachin Nahar was not the party to the disclosure of amount of Rs.290,00,000/- in the course of statement recorded u/s 131 of the Act and has answered accordingly. Hence, inference drawn by assessee in this regard is misplaced. 5.8.3 Regarding his submission in para 6 with respect to details of borrowers and enquiries with borrowers it is to mention that, as already discussed, borrowers are known to lenders and to the assessee. They are therefore witnesses of the assessee and onus was on the assessee to prove otherwise. Further, it is claimed by the assessee that this office has simply relied on his statement and paper seized from him to mention the said figures of Rs. 4.63 crores without independent enquiry. In this regard, statement of assessee was recorded u/s 131 of the Act on 03/08/2017. The facts and figures of notings in seized material made by Shri Sachin Nahar has been accepted by the assessee. In his statement he has stated that the entire record was maintained by Shri Sachin Nahar and he trusted him. So there is no reason as to why amount of Rs. 4.63 crores as stated by Shri Sachin Nahar is not now acceptable, especially considering no evidence of whatsoever nature has been presented in his support in this respect. The amount of advances given by assessee and working of peak balances as per annexure I, wherein amount of peak advance worked out to Rs. 2.90 crore inclusive of interest of Rs. 22,00,000/- by him is not acceptable for detailed discussion made above and also fact that working made are on the basis of certain presumptions without concrete evidence. The inference drawn in para 8.4 of the submission by the assessee that in the case of Shri Ramesh Patel only entries in the bundle no. 9 are live and relevant and are to be taxed on account of advances made through Mr. Sachin Nahar and accordingly referred register no. 9 as final and important register in the satisfaction note dated 05/03/2021 is misplaced and out of context. It is reiterated that, it is not denied that most of the entries in bundle no. 11 are repeated in bundle no. 9 but not all entries of bundle 11 are reflected in bundle 9. Repeated entries are considered only once, Similarly, the entries in bundle 6.8 & 10 not reflected in bundle 9 are considered accordingly. 5.8.4 In para 9.1, the submission made by assessee that in statement recorded during cross examination on 20/12/2021 Shri Sachin Nahar had disowned the figure of Rs. 4.63 crore stated by him in the annexure to the statements recorded on 17/11/2017 in case of Mr. Ramesh Patel by stating that he cannot comment on authenticity of said figure is also misplaced and out of context. At the cost of repetition it is reiterated that, in this regard, assessee has put the question asking \"can we conclude that the said computation of Rs.463,00,000/- is erroneous and amount disclosed in the course of statement recorded u/s 131 of the Act of Rs. 2.90,00,000/- is final?\" To this answer, Shri Sachin Nahar has answered \"I cannot comment on this.\" The conclusion drawn by the assessee that he has disowned the figure of Rs. 4.63 crore is not with proper reference to the context. Shri Sachin Nahar was not the party to the disclosure of amount of Rs.2,90,00,000/- in the course of statement recorded u/s 131 of the Act and has Printed from counselvise.com 7 IT(SS)A Nos.6 & 7/PUN/2025 answered accordingly. Hence, inference drawn by assessee in this regard is misplaced and rejected. Therefore, statement of Shri Sachin Nahar is neither contradictory nor ambiguous and do have evidentiary value and reliance placed by assessee on the decisions in the case of Dhirajlal Girdharilal Vs. CIT 26 ITR 736 is misplaced. 06 In view of the detailed discussion herein above, it is concluded that assessee agrees with the fact that the assessee has lent the money through Shri Sachin Nahar during the year under consideration. This implies that assessee agrees with the seized documents on which the assessee himself offered the amount of Rs. 2,90,00,000/- in A.Y. 2017-18. Therefore, the balance amount of Rs.1,73,00,000/- (4,63,00,000-2,90,00,000) is also correct which has also been derived from the seized documents. Therefore, the amount of Rs.1,73,00,000/- (4,63,00,000-2,90,00,000) is hereby added to the total income of the assessee on account of unexplained investment u/s 69 of the IT Act, as the assessee has already disclosed the amount of Rs.2,90,00,000/- in his return of income filed. The total income to the tune of Rs.1,73,00,000/- is taxed u/s 69 r.w.s. 115BBE of the Act. Penalty proceedings u/s 271AAC are initiated separately.” 7. Before the Ld. CIT(A) the assessee challenged both the additions but without any success. 8. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds: On facts and in law 1. The assessment order is bad in law and void ab initio. a. The assessment order passed under section 143(3) read with section 153C of the Income Tax Act, 1961 is bad in law and void ab initio. b. The approval granted by Additional CIT U/Sec. 153D of the Act does not contain Document Identification Number (DIN) which is in contravention to CBDT Circular No.19/2019 dated 14.08.2019 thereby rendering the assessment order legally unsustainable. c. The approval granted under section 153D by the Addl. CIT was mechanical and without due application of mind, thereby vitiating the assessment proceedings. 2. Erroneous addition of ₹ 1,53,00,000/- in respect of loans advanced by the appellant Printed from counselvise.com 8 IT(SS)A Nos.6 & 7/PUN/2025 a. The Ld. AO and the Ld. CIT(A) erred in confirming the addition of ₹1,53,00,000/- without appreciating that certain amounts considered in the computation of ₹4,63,00,000/- were due and payable before the end of the financial year. The seized material and the cross-examination of Mr. Sachin Nahar indicate that these amounts should have been received on the respective due dates and re-advanced, leading to double counting in the computation of ₹4,63,00,000/-. b. The statements made by Mr. Sachin Nahar during the cross- examination on 20.12.2021 ambiguous and lack evidentiary value. The addition made on this basis is unjustified. c. The appellant has already accepted ₹2,90,00,000/- as undisclosed income. The further addition of ₹1,53,00,000/- is excessive and arbitrary. d. The Ld. AO deprived the appellant of the right to examine material witnesses by neither summoning certain borrowers nor providing their addresses despite the appellant's request. This denial of natural justice invalidates the addition made by the Ld. AO. 3. Addition of interest income without proper justification a. The Ld. AO as well as the Ld. CIT(A) erred in confirming the addition with respect to the interest received on the advances without furnishing any working or supporting documents to substantiate the computation of interest. b. The appellant had clearly explained that the interest amount was readvanced during the year under consideration, resulting in double addition once as principal and again as interest income. This has led to an unjustified enhancement of taxable income. 4. Improper direction by the Ld. CIT(A) to the AO regarding interest computation a. The Ld. CIT(A) has erred in directing the AO to verify the quantum of interest, as such a direction effectively amounts to setting aside the assessment order to the file of the AO, which is beyond the powers of the CIT(A) as per section 251 of the Act. 5. The appellant craves leave to add, alter, modify, or withdraw any grounds of appeal at the time of hearing. 9. The assessee has also raised the following additional ground: “The assessment order passed by the Ld. AO is bad in law and void ab initio as consolidated satisfaction has been recorded u/s 153C of the Act for different assessment years by the Ld. AO which vitiates the entire assessment proceedings as the same is not in accordance with the law.” Printed from counselvise.com 9 IT(SS)A Nos.6 & 7/PUN/2025 10. Identical additional ground has been raised in appeal for assessment year 2018-19 also. 11. The Learned Counsel for the assessee submitted that the above additional ground raised by the assessee is purely legal in nature which go to the root of the matter and all necessary facts are already available on record. Referring to the decision of Hon’ble Supreme Court in the case of the National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (1991) 187 ITR 688 (SC) he submitted that the additional ground raised by the assessee should be admitted. 12. The Ld. DR on the other hand strongly objected to the admission of the additional ground raised by the assessee. 13. After hearing both the sides and considering the fact that the additional ground raised by the assessee is purely legal in nature and all the material facts are already available on record and no new facts are required to be investigated, therefore, in view of the decision of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (supra) and in the case of Jute Corporation Of India Ltd vs Commissioner Of Income Tax And Anr (supra), the additional ground raised by the assessee is admitted for adjudication. Printed from counselvise.com 10 IT(SS)A Nos.6 & 7/PUN/2025 14. The Ld. Counsel for the assessee referring to pages 64 to 67 of the paper book drew the attention of the Bench to the proforma for recording satisfaction u/s 153C and submitted that at column No.8 the Assessing Officer has mentioned the assessment years involved as assessment years 2012-13 to 2018-19. Referring to pages 68 and 69 of the paper book he drew the attention of the Bench to the satisfaction recorded by the Assessing Officer which states as assessment years 2012-13 to 2018-19. Thus, it is a combined satisfaction issued for assessment years 2012-13 to 2018-19. 15. Referring to the following decisions the Ld. Counsel for the assessee submitted that the assessment order is bad in law if consolidated satisfaction note is recorded u/s 153C of the Act for all assessment years: i) CIT vs. Sunil Kumar Sharma (2024) 165 taxmann.com 846 (SC) ii) DCIT vs. Sunil Kumar Sharma (2024) 469 ITR 197 (Karnataka) iii) Shri Rajendra Rameshlal Gugale vs. PCIT vide ITA Nos.1676/PUN/2024 order dated 30.12.2024 for assessment year 2017-18 iv) M/s. Aashrya Developers (P.) Ltd. vs. ACIT vide ITA Nos.3461 to 3464/Del/2023 order dated 31.12.2024 for assessment years 2011-12, 2012-13, 2013-14 & 2015-16 16. So far as the merit of the case is concerned, he submitted that the Assessing Officer has computed advances of Rs.4,63,00,000/- based on selective seized material / extracts of the statement of Shri Sachin Nahar. However, since a part of those amounts were due and payable / received and re-advanced during the year causing double counting, therefore, the computation made by the Assessing Officer is erroneous. He submitted that the assessee had already offered an amount of Printed from counselvise.com 11 IT(SS)A Nos.6 & 7/PUN/2025 Rs.2,90,00,000/- in the return of income filed u/s 139(1) on the basis of the statement recorded u/s 131 of the Act after search took place in the case of Shri Sachin Nahar. He submitted that the statements relied on by the Assessing Officer were ambiguous and selectively furnished and despite the request by the assessee full statements were never given to him. 17. Referring to the statement of the assessee recorded on 03.08.2017 after the search at the residence of Shri Sachin Nahar on 01.08.2017, he submitted that the assessee in his answer to question Nos.18, 20, 23, 24 and 26 has offered an amount of Rs.2,90,00,000/- as undisclosed income over and above the regular income for the financial year 2016-17. 18. Referring to page 55 of the paper book, he drew the attention of the Bench to the tabulation giving working of the details of Rs.2,90,00,000/- as per Bundle No.9. 19. Referring to page 56 of the paper book he drew the attention of the Bench to the reply given by Shri Sachin Nahar wherein he has categorically mentioned that there is also a possibility of same code being used for the respective person as well as the persons to whom he had referred. Printed from counselvise.com 12 IT(SS)A Nos.6 & 7/PUN/2025 20. Referring to page 58 of the paper book he drew the attention of the Bench to the same and submitted that Shri Sachin Nahar has categorically reiterated the same fact with his own handwriting. 21. Referring to pages 60 and 61 of the paper book he drew the attention of the Bench to the reply given by Shri Sachin Nahar wherein he again reiterated about the same code being used for the respective person as well as the persons to whom he had referred. Referring to the various answers given by the assessee to the questions put to him as well as replies given by Shri Sachin Nahar during the course of cross-examination he submitted that the disclosure of Rs.2,90,00,000/- made by the assessee on account of advances and interest is legally correct and based on notings at Bundle No.9. Therefore, in absence of any corroborative evidence in support of the contention of the Assessing Officer while making addition of Rs.1,73,00,000/- on account of amounts lent and Rs.49,22,070/- towards interest, the same should have been deleted by the Ld. CIT(A). He accordingly submitted that the addition made by the Assessing Officer and sustained by the Ld. CIT(A) should be deleted. 22. The Ld. DR on the other hand strongly relied on the order of the Ld. CIT(A). He submitted that the Assessing Officer has worked out an amount of Rs.4,63,00,000/- as the amount lent by the assessee through Shri Sachin Nahar on which he has earned interest of Rs.49,22,070/-. Since the assessee has declared Printed from counselvise.com 13 IT(SS)A Nos.6 & 7/PUN/2025 only an amount of Rs.2,90,00,000/- as undisclosed income over and above the regular income for the assessment year 2017-18, the Assessing Officer made addition of Rs.1,73,00,000/- on account of the amount lent and Rs.49,22,070/- on account of interest. Since the addition made by the Assessing Officer is based on the seized documents and since the Ld. CIT(A) after thoroughly appreciating the facts sustained the same, therefore, the same should be upheld. 23. So far as the additional ground is concerned, the Ld. DR relied on the decision of Hon’ble Delhi High Court in the case of Indian National Congress vs. DCIT (2024) 463 ITR 431 (Del) and submitted that the Hon’ble High Court in the said decision has held that satisfaction note merely forms foundation for initiation of action which would enable to evaluate whether an opinion has been validly formed and as long as it rests on incriminating material, which pertains to assessment years in question, same would qualify requirement of section 153C. 24. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. Before deciding the issue on merit, we would first like to decide the additional ground raised by the assessee challenging the validity of assessment on account of combined satisfaction note. The satisfaction note by the Assessing Officer of Shri Sachin Nahar, copy of which is placed at pages 64 to 67 of the paper book reads as under: Printed from counselvise.com 14 IT(SS)A Nos.6 & 7/PUN/2025 Printed from counselvise.com 15 IT(SS)A Nos.6 & 7/PUN/2025 Printed from counselvise.com 16 IT(SS)A Nos.6 & 7/PUN/2025 25. Similarly, the satisfaction note by the Assessing Officer of the assessee, copy of which is placed at pages 68 to 69 of the paper book reads as under: Printed from counselvise.com 17 IT(SS)A Nos.6 & 7/PUN/2025 Printed from counselvise.com 18 IT(SS)A Nos.6 & 7/PUN/2025 Printed from counselvise.com 19 IT(SS)A Nos.6 & 7/PUN/2025 26. Thus a perusal of the satisfaction note recorded by the Assessing Officer of the searched person as well as the Assessing Officer of the assessee shows that a combined satisfaction note has been prepared for assessment years 2012-13 to 2018-19. Under these circumstances we have to see as to whether the assessment proceedings are validly initiated u/s 153C on account of combined satisfaction. 27. We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of Chitra Narendra Parmar vs. ACIT & group of cases vide ITA Nos.1262 & 1269/PUN/2024 & ors, order dated 14.07.2025 for assessment years 2016-17 and 2017-18, where the Tribunal, following the decision of the Hon’ble Karnataka High Court in the case of DCIT v. Sunil Kumar Sharma reported in 159 taxmann.com 179 (Kar.) and distinguishing the decision of the Hon’ble Delhi High Court in the case of Indian National Congress vs. DCIT (2024) 463 ITR 431 (Del), has quashed the assessment proceedings passed u/s 153C of the Act on account of combined satisfaction. The relevant observations of the Tribunal read as under: “56. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) and the paper book filed on behalf of both sides. We have also considered the various decisions cited before us by both sides. We find the Assessing Officer in the instant case, on the basis of information obtained that certain documents / loose papers pertaining to or information contained in papers / documents related to the assessee Smt. Chitra Narendra Parmar were found during the course of search on 26.09.2017, issued notice u/s 153C of the Act on the basis of satisfaction note dated 11.11.2020 and 21.04.2021. We find the Assessing Officer completed the assessment making addition of Rs.25 lakh as on-money paid for purchase of flat No.B-1004 for assessment year 2016-17 and Rs.20 lakh for assessment year 2017-18. We find the Ld. CIT(A) upheld the action of the Assessing Officer in making the addition, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that 153C proceedings are Printed from counselvise.com 20 IT(SS)A Nos.6 & 7/PUN/2025 not valid on account of (a) combined satisfaction note issued for different assessment years; (b) mechanical approval u/s 153D; (c) the jurisdiction does not lie with the Assessing Officer to issue notice u/s 153C in view of the admission of the settlement application filed by Dhamale group of cases by the Settlement Commission and (d) non handing over of the seized material by the Assessing Officer of the searched party, who was waiting for jurisdiction to be transferred to him in the case of the assessee. Even on merit also, his submission is that the addition is not required since the Assessing Officer has held the cheque payments as on-money paid in cash and there are additions of the same amount which amounts to double addition. 57. A perusal of the first satisfaction note issued by the Assessing Officer dated 11.11.2020, copy of which is placed at pages 62 to 65 of the paper book shows that the Assessing Officer at para 4 has recorded as under: “Satisfaction of the Assessing Officer of the person referred to in section 153A that the seized material referred to in Sr. No.5 pertains to the person referred to in Serial No.4. 1. A search and seizure u/s 132 of Income-tax Act, 1961 was conducted on 26/09/2017 and subsequent dates in the case of Yuvraj Dhamale Group, engaged in real estate business. 2. The search and seizure action u/s 132 of act was also conducted in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt Ltd at residential premise of Shri Pravin Gawali at 35/10, Shivajirao Kadam nagar, Ambegaon pathar, near Raje chowk, Pune. During the search proceedings, several incriminating materials and documents were seized. 3.A print out of excel sheet containing recording of on money receipts from customer of project Rajgruhi Residency project developed by M/s Wellbuild merchants pvt ltd has been seized as per Bundle no 55. As per entry on page no 11 of said sheet, Smt Chitra Narendra Parmar has booked the flat no 1004 (B building) in the project for which she has made cash payment of Rs.10,00,000/-. 4. In view of above discussion, I am satisfied that entries on page no 11 of Bundle no 55 relates to person as mentioned in Sr no 4 above i.e. Smt. Chitra Narendra Parmar. Hence, in view of the provisions of section 153C of the I. T. Act, 1961, it is necessary to initiate proceedings u/s 153C of Act for A Ys 2012-13 to 2018- 19 in case of such other person namely Smt Chitra Narendra Parmar. Sd/- (Swapnil Sharadrao Patil) Date: 11/11/2020 Deputy Commissioner of Income Tax, Place : Pune Central Circle 2(3), Pune” Printed from counselvise.com 21 IT(SS)A Nos.6 & 7/PUN/2025 58. Similarly, the second satisfaction dated 21.04.2021 reads as under: “Satisfaction note for initiating proceedings u/s 153C of the IT Act, 1961 in case of Smt. Chitra Narendra Parmar A. The search and seizure action u/s 132 of act was conducted in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt Ltd at the residence premise of Shri Pravin Gawali (one of Director in the company M/s Wellbuild Merchants Pvt Ltd) at 35/10, Shivajirao Kadam Nagar, Ambegaon Pathar Near Raje Chowk, Pune. During the search proceedings, several incriminating materials and documents were seized. While examining the documents and seized material at the time of finalizing the assessment in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt Ltd, it was noted that the certain documents/lose papers pertain to or the information contained in papers/documents pertains to Assessee i.e. Smt. Chitra Narendra Parmar. B. A satisfaction note was drawn by the AO during the proceedings u/s 153A in case of Shri Yuvraj Sitaram Dhamale and M/s Wellbuild Merchants Pvt. Ltd that documents/papers/materials pertain to or information contained therein relates to Smt. Chitra Narendra Parmar. The details of seized documents are as below: (i) An Excel Sheet has been seized as per Bundle no 55 from the residence premise of Shri Pravin Gawali, mainly containing the details of flat holder, flat area, cheque and cash amount paid for booking of flat in the project Rajgruhi Residency (proejct developed by company M/s Wellbuild Merchants Pvt Ltd). As per entry on page no 11 of said Excel Sheet, Smt. Chitra Narendra Parmar has booked flat in ‘B' building in the project ‘Rajgruhi Residency’ for which he has made cash payment of Rs. 10,00,000/-. C. On examination of the seized material and the facts of the case, I am satisfied that entries on page page no 11 of Bundle no 55 seized from residence premise of Shri Pravin Gawali at 35/10, Shivajirao Kadam Nagar, Ambegaon Pathar Near Raje Chowk, Pune relates to Assessee and it has a bearing on determination of total income in case of Assessee for six assessment years immediately preceding the AY 2018-19 and for AY 2018-19. Hence, in view of the provision of section 153C of the Income Tax Act, 1961, it is necessary to initiate proceedings u/s 153C rws 153A of the Income Tax Act, 1961 for A.Yrs 2012-13 to A.Y. 2018-19. (emphasis supplied by us) Sd/- (Swapnil Sharadrao Patil) Date: 21/04/2021 Deputy Commissioner of Income Tax, Printed from counselvise.com 22 IT(SS)A Nos.6 & 7/PUN/2025 Place : Pune Central Circle 2(3), Pune” 59. Thus, it is seen that the Assessing Officer has passed a combined satisfaction note for various assessment years. We find the Hon’ble Karnataka High Court in the case of DCIT v. Sunil Kumar Sharma (supra) has held that satisfaction note is required to be recorded u/s 153C of the IT Act, 1961 for each assessment year and hence, a consolidated satisfaction note recorded for different assessment years would vitiate the entire assessment proceedings. The relevant observations of Hon’ble High Court read as under: “53. Further, satisfaction note is required to be recorded under section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant/ Revenue.” 60. We find when the Revenue challenged the above order of the Hon’ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma (supra), the Hon’ble Supreme Court in SLP (Civil) Diary No.21526 of 2024 vide order dated 20th August, 2024 dismissed the SLP filed by the Revenue. 61. We find following the above decision, the Co-ordinate Bench of the Tribunal in the case of Shri Rajendra Rameshlal Gugale vs. PCIT vide ITA No.1676/PUN/2024 for assessment year 2017-18, order dated 30.12.2024 has quashed the assessment proceedings by observing as under: “8.7. Since in the instant case a consolidated satisfaction note has been prepared for assessment years 2012-2013 to 2018-2019, therefore, the consolidation satisfaction note being not in accordance with law, therefore, the entire assessment proceedings is liable to be quashed. We hold accordingly and quash the assessment.” 62. So far as the decision of the Hon’ble Delhi High Court in the case of Indian National Congress vs. DCIT (supra) relied on by Ld. DR is concerned, we find no doubt there is a favourable decision in favour of the Revenue on the issue of combined satisfaction. However, it has been held in various decisions that when there are two views possible on an issue and there is no decision of the jurisdictional High Court on that issue, then the view which is favourable to the assessee has to be adopted. Even the Ld. DR in his written submissions has cited the decision of the Hon'ble Supreme Court in the case of CIT vs. Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC) where the Hon'ble Supreme Court at page 240 has observed as under: “If a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well-accepted view of law.” Printed from counselvise.com 23 IT(SS)A Nos.6 & 7/PUN/2025 63. Further, the Hon'ble Supreme Court recently in the case of M/s. A.P. Electrical Equipment Corporation vs. The Tahsildar & Ors. (supra) has held that if two decisions of this Court appear inconsistent with each other, the High Courts are not to follow one and overlook the other, but should try to reconcile and follow that decision whose facts appear more in accord with those of the case at hand. Following the above principle and considering the fact that the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue in the case of DCIT vs. Sunil Kumar Sharma (supra), therefore, we follow the decision of the Hon’ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma (supra) and hold that the satisfaction note is required to be recorded u/s 153C for each assessment year and a consolidated satisfaction note recorded for different assessment years would vitiate the entire assessment proceedings. Since in the instant case a consolidated satisfaction note has been prepared for assessment years 2012-13 to 2018-19, therefore, such consolidated satisfaction note being not in accordance with law, the entire assessment proceedings are liable to be quashed. We hold and direct accordingly.” 28. Since in the instant case also the Assessing Officer has passed a combined satisfaction note for assessment years 2012-13 to 2018-19, therefore, respectfully following the decision of the Co-ordinate Bench of the Tribunal in the case of Chitra Narendra Parmar vs. ACIT (supra) (to which both of us are parties), we hold that the assessment proceedings initiated u/s 153C of the Act on account of combined satisfaction are not valid in law and accordingly the same are quashed. Since the assessee succeeds on this legal ground, the grounds challenging the addition on merit are not being adjudicated being academic in nature. The appeal of the assessee is accordingly allowed. IT(SS)A No.7/PUN/2025 (A.Y. 2018-19) 29. After hearing both the sides we find the grounds raised by the assessee in the above appeal are identical to the grounds raised by the assessee in appeal for Printed from counselvise.com 24 IT(SS)A Nos.6 & 7/PUN/2025 assessment year 2017-18. We have already decided the issue in the preceding paragraphs and allowed the additional ground raised by the assessee quashing the assessment framed u/s 153C on account of combined satisfaction and allowed the appeal of the assessee. Following similar reasonings, the additional ground raised by the assessee in appeal for assessment year 2018-19 is also allowed on the issue of combined satisfaction. The appeal of the assessee is accordingly allowed. 30. In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on 12th September, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 12th September, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘B’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune Printed from counselvise.com 25 IT(SS)A Nos.6 & 7/PUN/2025 S.No. Details Date Initials Designation 1 Draft dictated on 09.09.2025 Sr. PS/PS 2 Draft placed before author 11.09.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "