The CBDT has circular in which CBDT has explained the law relating to recording of satisfaction note by the Assessing Officer.
Copy of circular is appended below:-
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
Department of Revenue
Central Board of Direct Taxes
New Delhi, 31st December, 2015
Subject: Recording of satisfaction
note under section 158BD/153C of the Act
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:
(a) at the time of or along with the
initiation of proceedings against the searched person under section 158BC of
the Act; or (b) in the course of the assessment proceedings under section 158BC
of the Act; or (c) immediately after the assessment proceedings are completed under
section 158BC 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’ble 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 para 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
158BD /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
CIRCULAR
NO. 24/2015