21-Month Delay in Recording Satisfaction Note Not ‘Immediate’: Bombay HC Quashes S. 153C Notices

The Bombay High Court has quashed reassessment proceedings initiated against Nippon Life India Asset Management Limited, holding that a delay of nearly 21 months in recording the mandatory satisfaction note under Section 153C of the Income Tax Act, 1961, is fatal and renders the proceedings time-barred. The bench of Justice B. P. Colabawalla and Justice Firdosh P. Pooniwalla has ruled that the CBDT Circular No. 24/2015 dated 31st December 2015 explicitly states that the ratio of the Hon’ble Supreme Court in Calcutta Knitwears (supra) applies to proceedings under Section 153C of the Income Tax Act. Therefore, the Assessing Officer of the searched persons was required to record satisfaction, at the latest, “immediately” after the completion of the assessment of the searched persons. In this regard, we find support in the decision of the Delhi High Court in Bharat Bhushan Jain (supra), where a delay of 10 months was held to be fatal. Similarly, the Gujarat High Court in Jitendra H. Modi HUF (supra) held that a period of 9 months could not be termed as “immediate”. The petitions challenged notices issued under Section 153C dated August 30, 2024, along with subsequent notices under Section 143(2) and orders rejecting objections. The core issue before the Court was whether the satisfaction note, a jurisdictional prerequisite for invoking Section 153C, had been recorded within the time frame mandated by law. The case arose from a search and seizure operation conducted in February 2021 in the case of certain third parties. The assessments of the searched persons were completed in September 2022. However, the Assessing Officer recorded the satisfaction note only on July 3, 2024—approximately 21 months after completion of the assessments—and thereafter issued notices to the petitioner. The petitioner argued that such a delay violated the law laid down by the Supreme Court in CIT v. Calcutta Knitwears, which mandates that the satisfaction note must be recorded “immediately” after completion of assessment proceedings of the searched person. Reliance was also placed on CBDT Circular No. 24/2015, which clarifies that this principle applies equally to proceedings under Section 153C. Accepting these submissions, the High Court emphasized that the term “immediately” cannot be equated with “within a reasonable time.” The Court observed that the Supreme Court had consciously used the expression “immediately,” implying prompt action without undue delay. A delay of 21 months, the Court held, clearly fails this test. The Court further noted that various High Courts have consistently held even shorter delays—ranging from 9 to 15 months—to be impermissible. In the present case, the delay was substantially longer, making the proceedings unsustainable. Rejecting the Revenue’s argument that the Assessing Officer of the petitioner had acted promptly after receiving the satisfaction note, the Court clarified that the relevant point for computing delay is the period between completion of assessment of the searched person and recording of satisfaction by that Assessing Officer—not subsequent actions by other officers. Additionally, the Court took note of inconsistencies in the Revenue’s affidavits, where an incorrect identification of the “searched person” was initially made and later corrected. While accepting the explanation as a bona fide error, the Court cautioned authorities to exercise due care in making statements on oath. Concluding that the delay in recording the satisfaction note was inordinate and contrary to settled legal principles, the Court held that the entire proceedings were barred by limitation. Consequently, all impugned notices under Section 153C, along with consequential proceedings, were quashed. Case Details Case Title: Nippon Life India Asset Management Limited Versus DCIT Citation: JURISHOUR-851-HC-2026(BOM) Case No.: Writ Petition No.4516 Of 2025 Date: 07/04/2026 Counsel For Petitioner: Niraj Seth, Gunjan Kakad, Balasaheb S. Yewale, Rupali Vasaikar Counsel For Respondent: N. C. Ranganayakulu Click Here To Read Order Read More: Arrest Memo Lacks Place Of Arrest, Arrest By DGGI Declared Illegal: Allahabad HC

21-Month Delay in Recording Satisfaction Note Not ‘Immediate’: Bombay HC Quashes S. 153C Notices

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