CIRCULAR NO. 24/2015
F.No.279/Misc./140
/2015/ITJ Government of India Ministry of Finance Department of Revenue Central
Board of Direct Taxes
New Delhi, 31.
December, 2015 Subject: Recording of satisfaction note under section 158BD/153C
of the Act - reg.- The issue of recording of satisfaction for the purposes of
section 158BD/153C has been subject matter of litigation.
2. The Hon'ble
Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in
Civil Appeal No.3958 of 2014 dated 12.3.2014(available in NJRS at
2014-LL-0312-51) has laid down that for the purpose of Section 158BD of the
Act, recording of a satisfaction note is a prerequisite and the satisfaction
note must be prepared by the AO before he transmits the record to the other AO
who has jurisdiction over such other person u/s 158BD. The Hon'ble Court held
that the satisfaction note could be prepared at any of the following stages:
- at the time of or along with the initiation of proceedings against the searched person under section 1588C of the Act; or
- in the course of the assessment proceedings under section 158BC of the Act; or
- immediately after the assessment proceedings are completed under section I 588C of the Act of the searched person."
3. Several High
Courts have held that the provisions of section 153C of the Act are
substantially similar/pari-materia to the provisions of section 158BD of the
Act and therefore, the above guidelines of the Hon' blc SC, apply to
proceedings u/s 153C of the IT Act, for the purposes of assessment of income of
other than the searched person. This view has been accepted by CBDT.
4. The guidelines of
the Hon'ble Supreme Court as referred to in pars 2 above, with regard to
recording of satisfaction note, may be brought to the notice of all for strict
compliance. It is further clarified that even if the AO of the searched person
and the "other person" is one and the same, then also he is required
to record his satisfaction as has been held by the Courts.
5.
In view of the above, filing of appeals on the issue of recording of
satisfaction note should also be decided in the light of the above judgement.
Accordingly, the Board hereby directs that pending litigation with regard to
recording of satisfaction note under section 15813D /153C should be
withdrawn/not pressed if it does not meet the guidelines laid down by the Apex
Court.
(Ramanjit
Kaur Sethi)
DCIT OSD) (ITJ),
CBDT, New Delhi.
Copy
to:
1. The Chairperson, Members and officers of the CBDT of the rank of Under
Secretary and above.
2. All Pr. Chief Commissioners of Income-Tax & All
Directors General of Income-Tax with a request to bring to the attention of all
officers.
3. The Pr. Director General of Income-'fax, NADT, Nagpur.
4. The Pr. DG1T (Systems), ARA Centre, Jhandewalan Extension, New Delhi.
5. The
Pr. DGIT(Vigilance), New Delhi.
6. The ADG(PR, PP &OI,), Mayur Bhawan, New
Delhi for printing in the quarterly tax bulletin and for circulation as per
usual mailing list (100 copies).
7. The Comptroller and Auditor General of
India (40 Copies).
8. The ADG-4 (Systems) for uploading on ITD website.
9. Data
Base Cell for uploading on irsofficersonline.
10. Guard File.
(Ramanjit Kaur Sethi)
DCIT OSD) (ITJ),
CBDT, New Delhi.
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