Facts of the Case:
Clear Channel India Pvt. Ltd, the Assesee is engaged in the business of advertising. A search and seizure operation under Section 132 of the Income-tax Act (“Act”) was conducted on 3rd February, 2021 in the case of Mr. Samir Modi and Ms. Shivani Modi and on 6th February 2021 at the residence of Mr. Sandeep Arora. During the search on Mr. Sandeep Arora, certain material allegedly pertaining to the Assessee was seized. Based on such material, the Assessing Officer (AO) of the searched person recorded a satisfaction note on 27th June 2024. Subsequently, notice under Section 153C of the Act vide dated 30th March 2025 was issued to the Assessee for AY 2016-17. The Assessee filed a writ petition before the Bombay High Court challenging the validity of the notice primarily on two grounds:
- Delay in recording the satisfaction note.
- Absence of Document Identification Number (DIN) on the satisfaction note.
Contention of Assessee:
The Assessee contended that satisfaction note must be recorded immediately after completion of assessment of the searched person, as laid down by the Supreme Court in CIT v. Calcutta Knitwears (2014) 362 ITR 673 (SC). Further, CBDT Circular No.24/2015 dated 31st December 2015 clarifies that the ratio of Calcutta Knitwears (supra) applies to proceedings under Section 153C of the Act as well.
The Assessee contended that satisfaction note by the Assessing Officer of the searched person was recorded only on 27th June 2024, i.e., after a delay of approximately 15 months from the conclusion of the assessment of the searched person i.e., 31st March, 2023. Thus, there was a delay of approximately 15 months, which cannot be construed as “immediate”.
The Assessee relied on the Delhi High Court in CIT v Bharat Bhushan Jain (2015) 370 ITR 695 and the Gujarat High Court in Pr. CIT v Jitendra H. Modi HUF (2018) 403 ITR 110 to explain the meaning of the word “immediately”, wherein the delay of 9 to 15 months was not tolerated.
The satisfaction note provided to the assessee does not bear a DIN. Reliance was placed upon CBDT Circular No. 19/2019 dated 14th August 2019 and decisions of Bombay High Court in Ashok Commercial Enterprises v ACIT (2023) 459 ITR 100 and Sanjay Nathalal Shah v/s ACIT (2026) 182 taxmann.com 847.
Contention of Revenue:
The Revenue contended that Hon’ble Supreme Court in Calcutta Knitwears allows recording of satisfaction within a reasonable time. Therefore, the expression “immediately thereafter” should not be interpreted strictly.
The Revenue further contended that Courts should consider practical difficulties to analyse such large volume of seized data before importing any interpretation.
Ruling:
The Hon’ble Court observed that the Apex Court has consciously used the term “immediately”, which implies a sense of urgency and proximity in time and is often understood to be as soon as possible or without delay.
The AO must record satisfaction:
- At the time of initiating proceedings against searched person; or
- During assessment proceedings of searched person; or
- Immediately after completion of such assessment.
In the present case:
- Assessment of searched person completed by 31st March, 2023.
- Satisfaction note recorded 27th June, 2024.
Therefore, Delay of 15 months cannot be considered “immediate” and hence the proceeding u/s 153C of the Act were therefore barred by limitation.
Editor’s Note:-
Verify timeline of satisfaction note:-
Ensure the satisfaction note under Section 153C of the Act is recorded as per the timeline explained in the judgement.
Seek copy of satisfaction note:-
Always request the satisfaction note recorded by the AO of searched person and AO of other person and examine limitation of notice issued u/s 153C of the Act. If there is substantial delay between assessment of searched person and recording of satisfaction, limitation challenge can be taken.
Use writ jurisdiction strategically:-
To avoid multi-level litigation and pre-deposit of tax 10% (erstwhile 20%) before filing appeal.
Citation:- Clear Channel India Private Limited v/s Deputy Commissioner of Income Tax, Circle-1(1)(1), Mumbai & Ors. (WP No. 4990 of 2025)