Milestone Developers, Surat V. ACIT, Central Circle-3, Surat

ITSSA 18/SRT/2022

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0107 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-11-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-11-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 29-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Validity of assessment; Accommodation entries; Documents seized; Set aside
• Section: 131; 132; 139; 143(3); 142(1); 153A; 143(1); 69B; 143(2); 207; 13; 153; 158BD; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./IT(SS)A No.18/SRT/2022 Assessment Year: (2012-13) (Physical Hearing) M/s. Milestone Developers, T. P. No.80, Survey No.11, O. P. 11, F. P. 11, Sultanabad, Bhimpore, Surat - 395007 Vs. The ACIT, Central Circle-3, Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AASFM5005D (Appellant) (Respondent) आयकर अपील सं./IT(SS)A No.37/SRT/2022 Assessment Year: (2012-13) The ACIT, Central Circle-3, Surat. Vs. M/s. Milestone Developers, T. P. No.80, Survey No.11, O. P. 11, F. P. 11, Sultanabad, Bhimpore, Surat - 395007 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AASFM5005D (Appellant) (Respondent) Assessee by Shri Rasesh Shah, CA Respondent by Shri Ashok B. Koli & Shri Ritesh Mishra, CIT(DR) Date of Hearing 06/11/2023 Date of Pronouncement 07/11/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned two cross appeals filed by the Assessee and Revenue, pertaining to same Assessment Year (AY) 2012-13, are directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], which in turn arise out of an assessment order passed by the Assessing Officer under section 143(3) r.w.s. 153C of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Page | 2 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers 2. Grounds of appeal raised by the assessee in IT(SS)A No. 18/SRT/2022, are as follows: “VALIDITY OF ASSESSMENT The Commissioner of Income Tax (Appeals) erred in confirming the validity of assessment u/s 153C of the Act, when the necessary conditions for initiating the assessment u/s 153C of the Act were not satisfied. 2. Under the facts and circumstances of the case, the initiation of the case is without jurisdiction and is not permissible either in law or on facts and hence required to be quashed. (II) ADDITION AS UNEXPLAINED INVESTMENT U/S.69B OF THE ACT. 1. The Commissioner of Income Tax (Appeals) erred in sustaining the addition amounting to Rs.3,23,07,825/- on account of unexplained investments u/s 69B of the Act. 2. The appellant states that the CIT(A), went with extraneous considerations while presuming and sustaining the investment in land by the appellant on the basis of rough notings and other materials, although the on-money paid was denied by part of the sellers and hence, the addition made is required to be deleted. 3. Under the facts and circumstances of the case, CIT(A) erred in confirming the addition amounting to Rs. 3,23,07,825/- on account of unexplained investment u/s.69B of the Act and is required to be deleted. (III) MISCELLANEQUS;- 1. The appellant craves leave to add, alter or vary any of the grounds of appeal.” 3. Grounds of appeal raised by the Revenue in IT(SS)A No. 37/SRT/2022, are as follows: “(1) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in restricting the addition of Rs. 10,02,96,000/- made by the Assessing Officer on account of unexplained investment u/s. 69B of the Act to Rs.3,23,07,825/-, ignoring the incriminating documents found and impounded/seized during the course of survey/search proceedings and the detailed finding given by the Assessing Officer in the assessment order on the basis of such important documents. (2) In addition to ground No.(l), on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in ignoring the fact that there were clinching evidences to show that the rate of sale of a portion of the property was Rs. 17,000/- Sq. Yard, which was also accepted by the assessee as also by the Ld.CIT(A) whereas there were no determinative evidences to substantiate the contention of the assessee that the remaining part of the land was sold at a lower rate of Rs.5,000/- Sq. Yard, and on the contrary, all circumstantial Page | 3 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers evidences including commercial prudence support the Assessing Officer's action. (3) In addition to ground No.(l) & (2), on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in ignoring the fact that there were clinching evidences to show that the rate of sale of a portion of the property was Rs. 17,000/- Sq. Yard and there cannot be such a huge variation in the sale prices of properties within a span of one year period especially when portion of the same property was sold at higher price and was sold by the same co-owners to the assessee. (4) In addition to ground No.(1), (2) and (3), on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in restricting the additions by relying upon the submission of the assessee that a partnership firm was formed between the sellers and the purchasers and subsequently it was dissolved(for which the assessee has produced a copy of the Partnership Deed and Dissoluttion Deed) and hence the property was sold at a lower rate, ignoring the fact no such documents were found or seized during the course of search proceedings whereas the additions were made by the AO on the basis of clinching evidences found and seized during the course of survey. (5) In addition to ground No.(1), (2), (3) & (4), on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in restricting the additions without considering the fact the Assessing Officer has made the addition on the basis of comparative details of sale rates available in the form of incriminating documents in respect of the same portion of the property, which is a usual practice adopted in valuation of the properties in the commercial and general practices. (6) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.7,45,41,150/- made by the Assessing Officer by observing that that there was no incriminating material supporting the addition, without appreciating the fact the draft Satakhat was found from the possession of Shri Vasudev Goplani, Advocate and father of one of the partners of the firm and also ignoring the detailed findings given by the Assessing Officer in the assessment order. (7) In addition to ground No.(6), on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in glossing over the fact that he has accepted the purchase price of portion of the same property during the year under consideration @ Rs. 17,000/- per Sq. Yard and in not applying the same rate for the other portion of the land sold by the original owners to the assessee and ignoring the surrounding facts and general commercial prudence applicable for determination of value of property in question, purchased by the assessee. (8) It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. Page | 4 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers (9) The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 4. Since these cross appeals filed by the Revenue and Assessee are pertaining to same assessee and common issues are involved, therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 5. The relevant material facts, as culled out from the material on record, are as follows. The assessee before is a partnership firm, filed its return of income u/s 139 of the Income Tax Act, for the assessment year (A.Y.) 2012-13 on 17.09.2012, declaring total income at Rs. Nil. The assessee`s return was processed u/s 143(1) of the Act on dated 17.02.2013. Thereafter, a search action u/s 132 of the Income-tax Act, 1961 was carried out on dated 05.03.2013 in the case of Diamond Group of Surat. One of the sub-groups covered during the course of this search-action was Milestone Sub Group. The Milestone Developer is one of the cases of Milestone sub- group, which was connected with the group of search cases. Consequent to the search-action, notices u/s 153C of the Income Tax Act were issued to the assessee for various assessment years on dated 14.02.2014. In response to the notice u/s 153C of the Act, the assessee-firm has filed return of income for the A.Y. 2012-13 on 18.03.2014, declaring total income at Rs. Nil. The Notice u/s 143(2) of the Act was issued on 24.03.2014, which was served upon to the assessee. The Notice u/s 142(1) of the Act, along with questionnaire was issued on 03.09.2014 which was duly served on the assessee. In response to notices u/s 143(2) and 142(1) of the I.T. Act issued, the assessee, attended from time to time and filed the details called for. The details filed by the assessee have been verified by the assessing officer. During the year under consideration, the assessee has derived income from the business of building construction and development related Page | 5 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers activity and offered it`s income under the head Income from Business and Profession. 6. During the course of Assessment proceedings, it was observed by the assessing officer that assessee has purchased the land admeasuring 17424.74 sq. yards bearing R.S. No. 11 at Sultanabad, Surat in two parts from two different set of sellers. The details of said transaction are as below: The assessing officer observed that during the course of search proceedings, evidences revealing payment of on money to the tune of Rs.17,48,37,150/-, as a part of the above sale transaction were found and seized. The copies of the said evidences have been provided to the assessee. In view of the same, a show cause notice was issued to the Page | 6 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers assessee on 05-02-2015, bringing forth the facts emerging from the evidences seized and other material on record. The said show cause notice issued by the assessing officer to the assessee is reproduced by the Assessing Officer, on page no.4 to 7 of the assessment order. 7. In response to above show cause notice, the assessee submitted its reply before the assessing officer, which is considered by the Assessing Officer on page no.7 to 53 of assessment order. The Assessing Officer has also asked the assessee to submit further details during the assessment proceedings and in response, the assessee submitted required details before the Assessing Officer. The Assessing Officer after considering the submissions of the assessee observed that all the sellers of the land have admitted of the involvement of the on money in the sale of their land bearing R.S.No.11 at Sultanabad. The seized/impounded evidences admitted to be true in their statements on oath abundantly provide evidence of the fact that the land bearing R.S.No.11 has been purchased by the assessee i.e. Milestone Developers at an amount far over and above that stated in the registered sale deed. The evidences found and seized and the enquiries conducted during the course of post search enquiries, clearly show that the land was sold @ Rs.l7,000/- per Sq.Yard. All the workings found during the course of the search proceedings clearly indicate the rate to be @ Rs.l7,000/sq. yd. The papers and pages found during the search wer actually small handwritten chits containing notings of various figures. After a careful consideration of the facts and evidences on. record claims of both the sellers and also the purchasers the detailed discussion on them in the foregoing, the sale price of the 9000 square yards of land bearing S.No.11 at. Sultanabad is taken at Rs.17,000 per square yard. The assessing officer noted that in the face of the glaring and admitted evidences of the receipt and so the payment of on money in the purchase of 9000 sq. yds of land bearing S.No.11 at Sultanabad, failure of the assessee Page | 7 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers to put forward any evidences to the contrary and also its refusal to cross examine the sellers (witnesses) who have vouched for receiving the said amounts and abject failure on the part of the assessee to put forth any tenable argument to justify its stand, the Assessee's claims of not having paid the on money in the impugned deal was rejected by the assessing officer. The rate as is emanating from the said evidences is @ 17,000 per sq. yd as against the rate of Rs 5856 per square yard as per registered sale deed. The same is considered for computing the total investment in the hands of the firm for the purpose of acquiring this land. The same works out to Rs.15,30,00,000/- and the on-money component paid in cash but not disclosed works out to Rs. 10,02,96,000/-.The source of the same is not reflected in the books of the assessee nor is it explained by it. Therefore, this was accordingly treated as unaccounted investment in the hands of the firm and subjected to tax u/s 69B of the I.T. Act. 8. In respect of land at R.S. No.11, Sultanabad Purchased from contractor’s family, the Assessing Officer observed that the land has been acquired by the assessee group from Contractor family. Shri Kanaiyalal L. Contractor along with his family members was originally holding a total of 17425.94 Sq. Yard land at R.S. No.11, Sultanabad, Dumas, Surat. Out of this, a piece of land admeasuring 9000 Sq. Yard was sold in two parts to Shri Vasudev Goplani and members of Ruchandani family in the years 2006 and 2009. Remaining portion of land of 8425.94 Sq. Yard was retained by Contractor family. Finally, this portion of land was sold by Contractor family to M/s Milestone developer in year 2011. During the course of survey at the office premises of Shri Vasudev Goplani, a copy of draft Satakhat entered into between M/s Milestone Developers and Shri Sidharth Satish Shah as purchasers and Shri Kanaiyalalbhai L. Contractor, Shri Hemant Kumar L. Contractor and Smt. Dahiben L. Contractor as Page | 8 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers Sellers for sale land at S.No.11, Sultanaband, Dumas Surat, admeasuring 8425.94 Sq. Yard, for a consideration of Rs.13,500/- per Sq. Yard totaling to Rs.11,37,37,000/- was found and the same has been impounded as Annexure BF-1 at Page No.84 from the office premises of Shri Vasudev Goplani. However, on verification of the registered Sale Deed No.SRT/1/ATV/12133/2011 of above, it is noticed that registry of land has done at the value of Rs.6,87,00,000/-. Thus, apparently there is an involvement of on money of Rs.4,50,37,000/- in this transaction. But, in their statement on oath, both purchaser and seller have denied the transaction as per satakhat and stated that the deal was finalized as per the registered deed. However, AO noted that there is a plethora of evidences which clearly indicate that substantial amount of on money has been paid in the transaction under consideration. But before going to the same one has to take note of the critical fact that rate of purchase of land by the Ruchandani and Goplani family in 2009. On the basis of the loose papers seized from the residence of Shri Haresh Ruchandani (pages-50, 70 and its reverse side of the Annexure-1) it has been established that the, rate at which land has been acquired is Rs 9000 per square yard. In fact it is not the case of the assessee at all. That being the case the claim that it has sold at Rs 8424.74 per sq. yard when it itself has sold it at 9000 per sq. yard two years before, is not acceptable. 9. During the assessment proceedings, Assessing Officer issued show cause notice and in response to the show cause notice, the assessee submitted its reply. After considering the reply of the assessee, the Assessing Officer concluded the issue in para no.7.5 on page no.69 of the assessment order stating that both the properties are adjoined, close relationship between the sellers, same period of transfer of properties, same purchaser and a single project named ‘Acquatica’ coming up on the combined piece of land indicate that ‘on money’ is paid in the said land Page | 9 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers transaction. The draft satakhat impounded, from Assessee's advocate provides very strong circumstantial evidence to actual rate and also the quantum of ‘on money’ involved. The where-abouts of the signed satakhat that was not found during search at the premises are in the exclusive domain, of the either parties. Under such circumstances the assessing officer observed that the only reliable evidence and basis is the rate at which the adjacent land has been sold, more so when it is sold almost at the same time. Accordingly, the rate adopted for computing the true purchase price in the case of part-1 of the land is also adopted for this part of the land. The rate as is emanating from the said evidences is @ Rs.17,000 per sq. yard as against the rate of 8424.74 per sq. yd as per registered deed. The same is considered for computing the total investment in the hands of the firm for the purpose of acquiring this land. The same works out to Rs.14,32,41,150/- and the ‘on-money’ component paid in cash but not disclosed works out to Rs.7,45,41,150/-. The source of the same is not reflected in the books of the assessee nor is it explained by it. The said amount was accordingly treated by AO as unaccounted investment in the hands of the firm u/s 69B of the I.T. Act. 10. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has partly deleted the addition made by the Assessing Officer on merit. However, on technical ground, raised by the assessee, during the appellate proceedings, challenging the satisfaction recorded under section 153C of the Act, the findings of the ld. CIT(A) are as follows: “5.1 I have carefully considered the Assessment order and submission filed by the appellant. The brief facts of the case are that a search action was carried out in Diamond Group on 05.03.2013. As part of the said search, the residential premises of Ruchandani Family and Goplani Family were covered. The appellant firm had purchased land at Sultanabad from the said two families. A pocket diary seized as Annexure-BS-1 containing pages from 1 to-14 showed certain cash payments made by the appellant firm to the sellers towards the purchase of Sultanabad land. Further, Annexure-A1 page 49 to 70, 71 to 85 Page | 10 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers and138 to 144 showed the purchase deeds for having purchased the Sultanabad land and the partnership deed entered into by the appellant firm with the members of the Ruchandani Family. These documents were matching with the information found on Annexure- BS-1, which showed the cash payments received by the Ruchandani Family relating to Sultanabad land. 5.2 The AO prepared the satisfaction note on the basis of above seized material dated 30.01.2014 and on the basis of the said note issued the notice u/s. 153C of the Act. The Assessing officer of the appellant on the basis of satisfaction note of the assessing officer of the searched person, initiated the proceedings u/s 153C of the Act on 14.02.2014. 5.3 The appellant argued that addition made vide order u/s 153C can only be on the basis of the incriminating seized material. It is evident that the addition made in the assessment order u/s 153C was certainly on the basis of the seized material specified in the earlier paragraph. 5.4 In view of the above referred facts, it is quite clear that the incriminating material found in the search premises of Ruchandani and Goplani Families (Sellers of Sultanabad land to the appellant) belonged to the appellant firm and on the basis of the same, notice u/s. 153C of the Act was issued by the AO after duly recording the satisfaction. The said satisfaction note was also made available to the appellant and additions were made purely on the basis of incriminating material found during the course of search. In such situations, the Assessing Officer is right in issuing notice u/s. 153C of the Act. The notice issued by the AO u/s.153C of the Act is found to be in order. Thus, ground no. 1 of appeal challenging the jurisdiction is dismissed.” 11. Aggrieved by the order of the ld. CIT(A), the assessee as well as revenue both are in appeal before us. 12. Shri Rasesh Shah, Learned Counsel for the assessee, begins by pointing out that technical ground raised by the assessee, challenging the satisfaction note issued by assessing officer and initiation of proceedings under section 153C of the Act, goes to the root of the matter, hence it should not be adjudicated first. The ld Counsel pointed out that additions made by the assessing officer were not based on the materials indicated in the “satisfaction note”, therefore the assessment framed by the assessing officer u/s 153C of the Act does not survive, and therefore it should be quashed. For this, ld Counsel relied on the various decisions of the Delhi Tribunal in case of Heavan Suppliers Pvt. Ltd. vs. ACIT [ITA No. 365/Del/2018] and Mumbai Tribunal in the case of DCIT vs. Shri Khimji Page | 11 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers Karamshi Patel [ITA No. 3039, 3117 & 4038/Mum/2019], wherein it was held that when the additions are not based on the materials indicated in the satisfaction note, the assessment made u/s 153C does not survive. 13. The ld Counsel further stated that even otherwise, the materials on the basis of which the addition was made by AO, in respect of the property mentioned in the satisfaction note, do not belong to the assessee, or pertain to the assessee, or relate to the assessee and therefore, the action u/s 153C of the Act is bad in law. The ld Counsel pointed out that it is a case of unabated assessment and therefore, the assessment made u/s 153C of the Act, does not survive in absence of incriminating material mentioned in the “satisfaction note”. The materials on the basis of which the addition was made were not referred in the ‘satisfaction note’ and therefore, it is a case of recording of no satisfaction. 14. The ld Counsel also stated that learned CIT(Appeals) relied on the Annexure “BS-1” that was seized from the residence of Shri Kanaiyalal Ruchandani for sustaining the validity of assessment made u/s 153C of the Act. However, the Annexure “BS-1” contains dumb documents. Further it was not referred in the “satisfaction note” and even the addition was not based on these papers, after considering the assessee’s explanation. The “satisfaction note” was recorded qua search action in the case of Shri Pitambar Ruchandani and Smt. Monica Ruchandani. Both the additions were made on the basis of materials recovered in course of the search action in case of persons, other than, Shri Pitambar Ruchandani and Smt. Monica Ruchandani. Therefore, “satisfaction note” is itself is defective one and based on such “satisfaction note”, no addition should be made in the hands of assessee. 15. The ld Counsel also stated that assessee`s case, is a case of unabated assessment and therefore, the assessment made u/s 153C of the Act, does Page | 12 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers not survive in absence of incriminating material mentioned in the “satisfaction note”. The materials on the basis of which the addition was made were not referred in the “satisfaction note” and therefore, it is a case of recording of no satisfaction. The ld Counsel also relied on number of decisions of the Hon’ble Supreme Court and various High Courts, that when no incriminating materials are found in the course of search, the assessment made u/s 153C of the Act cannot survive. In the case of the assessee, the materials indicated by the Assessing Officer for making the addition, were dumb documents and are not incriminating materials. Further, they are loose papers and therefore it does not constitute evidence even against the assessee. 16. The Ld. Counsel also argued that not only “satisfaction note’ is defective, the notice issued u/s 153C of the Act by the assessing officer, is also defective, which is reproduced below: Page | 13 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers The Ld. Counsel pointed out that in notice under section 153C of the Act, the assessing officer referred the name of Shri Pitambar Ruchandani and Smt. Monica Ruchandani only, however, assessing officer made both the additions in the assessment order on the basis of materials recovered in course of the search action in case of other persons. (other than, Shri Pitambar Ruchandani and Smt. Monica Ruchandani). Based on the above facts ld Counsel contended that assessment framed by the assessing officer under section 153C r.w.s. 143(3) may be quashed. 17. On the other hand, ld. DR for the Revenue argued that just because, by mistake, the assessing officer mentioned the name of Shri Pitambar Ruchandani and Smt. Monica Ruchandani, in the “satisfaction note”, does not vitiate the assessment proceedings. The assessing officer has enough power to make additions in the hands of assessee, on the basis of other material, which were not mentioned in the “satisfaction note”. No doubt, the seized material, which is mentioned in the “satisfaction note” are not part of the assessment order but adequate references were made by the assessing officer in respect of Shri Pitambar Ruchandani and Smt. Monica Ruchandani in the assessment order. The ld DR further pointed out that assessing officer made the addition based on the incrementing material found during the search, hence addition made by the assessing officer may be sustained. To support of his contention, the ld. CIT(DR) for the Revenue relied on the following decisions: (i) DCIT vs. Shivram Consultants India (P.) Ltd. (2023) 147 taxmann.com 457 (Del Trib.) (ii) Super Malls (P.) Ltd. vs. PCIT, (2020) 115 taxmann.com 105 (SC) (iii) Rajesh Sunderdas Vaswani vs ACIT, (2016) 76 taxmann.com 311 (Guj.) Page | 14 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers (iv) Kamleshbhai Dharamshibhai Patel vs CIT, (2013) 31 taxmann.com 50 (Guj.) 18. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We find that one key issue arises for our apt adjudication in the instant lis, which is, whether the “satisfaction note” of the assessing officer is defective and addition should not be made without incriminating material particularly when the material mentioned in the “satisfaction note” was not the base for making addition in the hands of assessee. Therefore, at this juncture, it is appropriate to go through the “satisfaction note” under section 153C of the Act, which is placed at page no.180 of assessee`s paper book. The such satisfaction record by the Assessing Officer under section 153C of the Act is reproduced below: “SATISFACTION NOTE FOR ISSUING NOTICE U/S 153C OF I.T. ACT, 1961 A search action u/s 132 of the I.T. Act, 1961 was carried out on 05.03.2013 in the case of Diamond Group of Surat and residence of Shri Pitamber B. Ruchandani and Monica A. Ruchandani i.e. 60, Narmad Nagar, Athwaline, Surat was also covered in the said action. Some documents were seized from his residential premises, which are inventoried as annexure-A1 (Page no.-1 to 147). On perusal of these seized papers it is noticed that Page no.49 to 70, 71 to 85 and 138 to 144 are belongs to the assessee firm M/s. Milestone Developers and the details of which are as under: Sr. No. Page No. of Annexure-A1 Nature of transaction 1 49 to 70 Photocopy of registry dtd: 05.06.2011 2 71 to 85 Photocopy of registry dtd: 05.06.2011 3 138 to 144 Photocopy Partnership deed dtd: 21.09.2010 It is clear from the above discussion that the said seized loose paper’s file i.e. (Page No.49 to 70, 71 to 85 and 138 to 144) belongs to the assessee’s firm i.e. M/s Milestone Developers. In view of above fact I am satisfied that all the requisite condition of section 153C of the Act are fulfilled, therefore it is a fit case for issuing notice u/s 153C Page | 15 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers r.w.s. 153A of the I.T. Act. Therefore notice u/s 153C of the I.T. Act is issued to the assessee.” 19. Having gone through the above “satisfaction note”, we noticed that the nature of transaction mentioned in the ‘satisfaction note’ in annexure A-1 vide page no.49 to 70-Photocopy of registry dated 05.06.2011 and annexure A-1 vide page no.71 to 85- photocopy of registry dated 05.06.2011, no addition was made by the Assessing Officer, based on the these incriminating materials noted in the above “satisfaction note”, therefore satisfaction recorded by the Assessing Officer is not in accordance with the provisions of section 153C of the Act. Therefore, we note that when the additions are not based on the materials indicated in the satisfaction note, the assessment made u/s 153C of the Act does not survive, for that reliance can be placed on decision of the Coordinate Bench of Delhi Tribunal in case of Heavan Suppliers Pvt. Ltd. vs. ACIT [ITA No. 365/Del/2018], order dated 04.05.2022.and the Coordinate Bench of Mumbai Tribunal in the case of DCIT vs. Shri Khimji Karamshi Patel [ITA No. 3039, 3117 & 4038/Mum/2019],order dated 15.02.2023, wherein it was held that when the additions are not based on the materials indicated in the satisfaction note, the assessment made u/s 153C does not survive. (i) The findings of Coordinate Bench of Delhi Tribunal in case of Heavan Suppliers Pvt. Ltd (supra) is reproduced below: “4. Heard. On behalf of the assessee it was submitted by the Ld. Sr. Counsel that the ground no. 2 is the only ground to which he restricts these arguments as the same goes to the Jurisdictional issue. It was submitted that even the Ld. CIT(A) had appreciated the submission on behalf of the assessee that the judgment of Hon’ble Supreme Court of India in Commissioner of Income Tax- iii, Pune vs. Singhad Technical Education Society, 397 ITR 344 settles the issue that in order to justify assumption of jurisdiction u/s 153C of the Act. The documents seized must be incriminating and must relate to each of the assessment years whose assessments are sought to be reopened. The Ld. CIT(A) without distinguishing still upheld the findings of Ld. AO while in the light of satisfaction note dated 29.01.2016, there was no incriminating material for the relevant financial year 2013-14. On the other hand, ld. DR defended the Page | 16 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers findings of ld. Tax Authorities below submitting that satisfaction note was only indicative and based upon it the detail inquiry was done in the reassessment. 5. Appreciating the matter on record and the contentions raised it can be observed that the original return of income was filed by the assessee on 30.03.2015 and the time limit to issue notice u/s 143(2) was up to 30.09.2015. However, on the basis of satisfaction note recorded on 29.01.2016 notice u/s 153C was issued in pursuance of which return was filed on 25.02.2016. The satisfaction note is on record at page 1 of the paper book which makes it apparent that admittedly the alleged incriminating evidence related to the assessee pertains to financial years 2008-09 and 2009-10. However, there was no reference to them in the assessment orders. The assessment proceedings were on extraneous facts and evidences then the one referred in the satisfaction note and which were basis for issuing notice u/s 153C of the Act. 5.1 It can be also observed that the ld. First Appellate Authority although took note of judgment of Hon’ble Supreme Court of India in the case of Singhad Technical Education Society (Supra) but failed to follow the ratio. Hon’ble Supreme Court of India in the case of CIT vs. Singhad Technical Education Society (supra) has held that incriminating material in regard to the assessee has to pertain to the assessment years in question. Hon’ble Delhi High Court in the case of CIT vs. Kabul Chawala (2015) 61 taxmann.com 412 has held that if no incriminating material was found during the course of search in respect of the issue, no addition in respect of that issue can be made to the assessment u/s 153A and 153C of the Act. Thus, the bench is of considered opinion that Ld. Tax Authorities below were not justified in making assessment, not based upon incriminating material mentioned in the satisfaction note and thus acted beyond jurisdiction and scope of Section 153C / 143(3) of the Act. That being so, the assessment order deserves to be quashed and the remaining grounds as raised in appeal need not be examined further. Consequently, the appeal of the assessee is allowed, the impugned orders are set aside.” (ii) The findings of Coordinate Bench of Mumbai Tribunal in the case of Shri Khimji Karamshi Patel (supra), are reproduced below: “20.The ld. Counsel of the assessee vehemently argued that the Assessing Officer has wrongly acquired the jurisdiction u/s. 153C of the Act and additions are made devoid of any incriminating material found in the course of search of third party. He drew our attention to the first proviso to section 153C which reads as under:- “Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person” Page | 17 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers 21.He, accordingly, emphasized on the first proviso to section 153C of the Act to submit that A.Y. 2014-15 is an unabated year as the date of initiation of search begins from the date of handing over of the seized incriminating material to the Assessing Officer having jurisdiction over the assessee. In this case, the satisfaction note is recorded on 18.03.2016 and due date of issuing notice u/s. 143(2) for A.Y. 2014-15 was 30.09.2015 thereby making A.Y. 2014- 15 as unabated year. Hence, none of the additions and disallowances ought to have been made by the Assessing Officer devoid of any incriminating material, which is absent in this case for the year under consideration. 22.The ld. DR for the revenue relied on the order of the lower authorities. 23.We have heard the rival submissions of the parties and have gone through the assessment order and appellate order along with the material placed on record. The core issue involved here is the validity of additions in light of the satisfaction note recorded before issuing the notice u/s. 153C of the Act for A.Y. 2014-15 and the additions made in the assessment order having any basis to incriminating material, if any. It would be relevant to reproduce here the satisfaction note recorded on 18.03.2016 by the Assessing Officer prior to issue of notice u/s. 153C of the Act for A.Y. 2014-15 dated 22.03.2016: “A Search action was carried out u/s 132 of the Income Tax Act, 1961 on 09.10.2014 at the offices of Lotus/Kamdhenu / Green Valley group & their Associates and at the residences of their Directors As a part of the search a Survey was conducted at the office premises of M/s Nishrin Trading and Investment Pvt. Ltd. Situated at Sir Navroji Bldg, Shankar Sneth Lane, Grant Road West, Mumbai 400 007 on 09.10.2014 which was later converted into search and seizure action u/s 132(1) on 10.10.2014. During the course of search action certain loan books were also found and seized which were marked as Sr no 1 to 13 of Annexure A to Panchanama at 11.10.2014 Page 8 and 9 of the loan book Sr no 8 seized reflects loan transactions of by M/s Trishul Developers (prop Khimji Karamshi Patel) of Rs 2,52,28,964 /-and Rs 1.21,42,032/- with M/s Divine Tradecom Pvt Ltd and M/s Rowland Trexim Pvt Ltd. During the course of search in the said group it was found that the entities with whom the loans transactions are entered, namely M/s Divine Tradecom Pvt Ltd and M/s Rowland Trexim Pvt Ltd are Paper companies giving accommodation entries. The operator of the said companies, namely Shri Pradeep Poddar has given a statement u/s 131 that both the companies are shell companies and used for proving accommodation entries. The above document Identified at Loan book no 8 of Annexure A to panchanama dt 11-10-2014 found and seized and the information contained therein pertains to M/s Trishul Developer prop Shri Khimj Karamshi Patel) and the same has a bearing on the determination of its total Income, In view of the above I am satisfied that the above seized document and the information contained therein found and seized at the premises of the assesse belong to M/s Trishul Developer (Prop Khimji K Patel) which is a person other than the person referred u/s 153A and has a bearing on determination of its total Income. Hence the above assessee M/s Trishul Developer (Prop Khimji k Patel becomes liable to be governed by section 153C. Since, the aforesaid Assessee Page | 18 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers becomes liable to be governed u/s 153 of the income tax Act, 1961, notice u/s 153C is issued in this case for A. Ys. 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15.” 24. On perusal of the satisfaction note placed at page no. 1 of Common Paper Book filed before us, it is noted that it refers to certain loan books of the proprietorship concern of the assessee namely M/s. Trishul Developers were found and seized which reflects loan transactions of Rs. 2,52,28,964/- and Rs. 1,21,42,032/- with M/s. Divine Tradecom Pvt. Ltd. and M/s. Rowland Trexim Pvt. Ltd. respectively. It is clarified that these transactions with the parties are duly recorded in the books of accounts of the assessee. The satisfaction note nowhere points out as to what incriminating material was found or discovered in the course of search carried out in the case of Kamdhenu group. Even the additions and disallowances, which are made by the Assessing Officer, are not in connection to the issue referred to in satisfaction note. Moreover, satisfaction note is prepared for all the years together from A.Ys. 2009-10 to 2014-15 without pointing out any assessment year specific incriminating material for the year under consideration. It is observed that as per first proviso to section 153C of the Act, A.Y. 2014-15 is an unabated year and have attained finality as the due date of issuing notice u/s. 143(2) for the said year was 30.09.2015 whereas the satisfaction note is recorded on 18.03.2016 and notice u/s. 153C of the Act is issued on 22.03.2016. Further, it is noted that the addition of Rs. 2,00,00,000/- being unsecured loans from M/s. Everlink Investment Advisory Pvt. Ltd. and Rs. 63,00,000/- being unsecured loans from M/s. Konarch Commerce Pvt. Ltd. has no relevance to any incriminating material found in the course of search in Kamdhenu Group on 09.10.2014. In fact, the said additions of Rs. 3,00,00,000/- u/s. 68 and the consequential interest of Rs. 11,78,742/- are based on some statements of third parties viz. Shri Anand Sharma and Shri Pravin Agarwal recorded not in the course of search in Kamdhenu Group on 09.10.2014 as referred in the satisfaction note. Thus, it is clear that the information relied upon by the Assessing Officer does not have any bearing to the search conducted and cannot be considered as incriminating material found during the search. Even the disallowance of Rs. 30,80,593/- made u/s. 36(1)(iii) for not utilising the interest bearing funds wholly and exclusively for business purposes is not connected to any incriminating material found during the search. 25.In this regard, we find that the said issue is squarely covered by the decision of the Hon‟ble Apex Court in the case of Sinhgad Technical Education Society Ltd. (2017) 84 Taxman.com 290 (SC), wherein it is held that there has to be incriminating material pertaining to the assessment year in question in order to make any addition or disallowance in an assessment made u/s. 153C of the Act. In light of the above background of facts and settled judicial precedent, we are of the considered view that no additions or disallowances can be made devoid of any incriminating material found during the search on a third person. Accordingly, the Cross objection filed by the assessee is allowed. 26.Since the Cross Objection filed by the assessee in CO 46/Mum/2021 is allowed on the jurisdiction issue itself, appeal of the revenue in ITA no. 4038/Mum/2019 on merits of the case need not require any adjudication and is accordingly dismissed.” Page | 19 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers 20. We note that the materials on the basis of which the addition was made in respect of the property mentioned in the ‘satisfaction note”, do not belong to the assessee, or pertain to the assessee, or relate to the assessee and therefore, the action u/s 153C of the Act and the assessment made u/s 153C of the Act, are bad in law. We note that ld Counsel for the assessee relied on number of decisions of the Honourable Supreme Court and various High Courts, that when no incriminating materials are found in the course of search, the assessment made u/s 153C cannot survive. In the case of the assessee, the materials indicated by the Assessing Officer for making the addition, were dumb documents and are not incriminating materials. Further, they are loose papers and therefore it does not constitute evidence even against the persons from whom they were recovered. We note that assessee`s is a case of unabated assessment and therefore, the assessment made u/s 153C of the Act does not survive in absence of incriminating material mentioned in the satisfaction note. The materials on the basis of which the addition was made were not referred in the satisfaction note and therefore, it is a case of recording of no satisfaction. We note that learned CIT(Appeals) relied on the Annexure “BS-1” that was seized from the residence of Shri Kanaiyalal Ruchandani for sustaining the validity of assessment made u/s 153C of the Act. However, the Annexure “BS-1” contains dumb documents. Further it was not referred in the satisfaction note and even the addition was not based on these papers, after considering the assessee’s explanation. The satisfaction note was recorded qua search action in the case of Shri Pitambar Ruchandani and Smt. Monica Ruchandani. Both the additions were made on the basis of materials recovered in course of the search action in case of persons other than Shri Pitambar Ruchandani and Smt. Monica Ruchandani, hence, assessment framed by the assessing officer under section 153C of the Act, liable to be quashed. Page | 20 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers 21. The section 153C of the Act, as stood at the time of the search and recording of the satisfaction, is reproduced as under: “(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A :]” 22. We note that in assessee`s case, the search was conducted on 05.03.2013 and the ‘satisfaction note’ u/s 153C was recorded on 14.02.2014. The provision of section 153C was amended w.e.f. 01.10.2014, requiring assessing officer of the other person to record satisfaction to the effect that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A of the Act. This amendment amendment is not applicable in assessee’s case, as the said amendment came into being w.e.f. 01.10.2014, whereas search was conducted in the assessee`s case on 05.03.2013. Thereafter, the provision was amended w.e.f. 01.06.2015 by Finance Act, 2015 and it was amended that even when the materials seized or requisioned pertains to or relates to assessee, the action u/s. 153C can be taken. This amendment made with effect from 01.06.2015 was held to be retrospective by Honourable Supreme Court in the case of ITO vs Vikram Bhatia (Civil Appeal No. 911 of 2022)(SC), the said judgment of Hon`ble Supreme court is not on the “satisfaction note” hence does not apply to the assessee under consideration. 23. We note that the assessing officer did not make the addition on the basis of the papers mentioned in the ‘satisfaction note’ but on basis Page | 21 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers of other papers recovered in the course of the search in the case of the other sellers and statements recorded u/s 132(4) and 131 of the other sellers that were not referred in the “satisfaction note”. The “Satisfaction Note” was recorded u/s 153C of the Act in the case of the assessee, qua the search conducted in the case of Shri Pitambar Ruchandani and Smt. Monica Ruchandani. As stated earlier, that the papers referred in the “Satisfaction Note” are the Registered Sale Deed, the Registered Rectification Deed in regard to the purchase of property at Bhimpore and the Partnership Deed. It is submitted by Ld. Counsel that the addition was not made on the basis of these papers but, on the basis of other papers i.e. Page No 70 (reverse side) and Page No 51 of Annexure “A-11”seized from the residential premises of Shri Haresh Ruchandani and Page No 49 of Annexure“A-8” seized from the residential premises of Shri Radhakrishna Ruchandani. The consideration mentioned in the Registered Sale Deed and mentioned in the “Satisfaction Note” was apparently accounted for and therefore, the addition was not based on the loose papers mentioned in the “Satisfaction Note”. In the show cause notice issued by the Assessing Officer on 05.02.2015, the Assessing Officer referred to the Page Nos.3, 5, 7, 9, 11 and 13 of the Diary “BS-1”, recovered from the residential premises of Shri Kanaiyalal Ruchandani. The Assessing Officer only mentioned the date and the amount reflected in the said papers, in the show cause notice. The addition was not made on the basis of these papers of the Diary “BS-1”, as can be observed from the finding part of the assessment order, although these papers were referred in the show cause notice, as reproduced at Page No 4 and 5 of the assessment order. In any case, these papers of “BS-1” were not referred in the ‘Satisfaction Note’ and the ‘Satisfaction Note’ was not recorded qua Shri Kanaiyalal Ruchandani.The assessing officer of the search party is required to handover the materials to the assessing officer of the third person i.e. Page | 22 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers assessee after recording satisfaction. As the materials that were made the basis in the form of papers recovered in the case of Radhakrishna Ruchandani, Haresh Ruchandani and other cases were not referred in the ‘satisfaction note’. 24. We note that “Satisfaction Note” was not recorded year-wise. In the satisfaction note recorded u/s 153C on 14.02.2014, the assessment years 2007-08 to 2012-13 were mentioned combindly, although the partnership firm came into existence only with effect from 21.09.2010. Even the notice u/s 153C of the Act was issued consolidated from A.Y. 2007-08 to A.Y. 2012-13. All these things prove that the assessing officer did not apply his mind and therefore, the ‘satisfaction note’ recorded by the assessing officer suffers from infirmity and doesn’t survive in the eyes of the law. It has been held by Supreme Court in the case of CIT vs. Calcutta Knitwears [362 ITR 673 (SC)] that “for the purpose of section 158BD a satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the records to the other Assessing Officer who has jurisdiction over such other person.”. Hence, we note that no valid satisfaction note was prepared by the assessing officer. Therefore, it can be concluded that no satisfaction was recorded in the eye of law, for this the reliance is placed on the judgment of the Gujarat High Court in the case of PCIT vs M/s. Munisuvrat Corporation (R/Tax Appeal No. 187 of 2019) dated 23.07.2019, and aggrieved by the same the revenue filed an SLP against the said order which was dismissed by the Honourable Supreme Court [115 taxmann.com 265 (SC)]. 25. In the satisfaction note, the partnership deed, sale deed and amended sale deed were referred. These papers cannot be said to be incriminating. The land purchased by the assessee as per the registered sale deed is reflected in the audited accounts. In the audited financial statements, the land purchased of Rs.12,95,76,310/- is reflected which includes the part of Page | 23 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers the land purchased from the Ruchandani Family, the Goplani Family and from the Contractor Family. Even the assessing officer didn’t make the addition on the basis of these papers. The provision of section 153C can be invoked only when incriminating materials are found in the course of the search at the premises of the third party, for this, ld Counsel relied on the following judgments: (i) CIT Vs. Sinhgad Technical Education Society [84 taxmann.com 290 (SC)] “As per the provisions of section 153C, incriminating material which was seized had to pertain to the assessment years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four assessment years. Since this requirement under section 153C is essential for assessment under that provision, it becomes a jurisdictional fact.” (ii) ARN Infrastructure India Ltd. Vs. ACIT [81 taxmann.com 260 (Del. HC) As regards the other document seized, and mentioned in the satisfaction note viz., the extract of the ledger account maintained by the petitioner concerning the payments of commission made by it to RGEPL, even if it is held to 'belong' to the petitioner, it could hardly be said to be an 'incriminating' document. This was a document relevant only for the assessment year 2010-11. It could not have been used for re-opening the assessments of the earlier years i.e. assessment years 2007-08 to 2009-10, 2011-12 and 2012-13. (iii) CIT vs. IBC Knowledge Park Pvt. Ltd. [69 taxmann.com 108 (Kar. HC)] It was held that that the Tribunal was not correct in holding that the assessment under section 153C was valid despite there being no satisfaction recorded to the effect that the documents found during the search were incriminating in nature and prima facie represented undisclosed income. (iv) PCIT vs. Smt. Lakshmi Singh [78 taxmann.com 207 (Kar HC) It was held that power under section 153C could not be invoked when no incriminating evidence was discovered in respect of assessee during search under section 132. Page | 24 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers (v) PCIT vs. Allied Perfumers (P). Ltd. [124 taxmann.com 358 (Del. HC)] It was held that assessee contented that no addition could be made to its income in absence of any incriminating material found against it during course of search. It was noted that Tribunal had given a clear finding of fact that there was no reference to any incriminating material related to assessee found during search which could justify action of Revenue. Merely because a satisfaction note was recorded, same could not lead to reach conclusion that notice under section 153C was justified. (vi) PCIT v. Index Securities (P). Ltd. [86 taxmann.com 84 (Del. HC)] The document could not be said to be incriminating and so it was held that essential requirement for assumption of jurisdiction under section 153C was not met and therefore, issuance of notice was unjustified. (vii) CIT v. RRJ Securities Ltd. [62 taxmann.com 391] It is not disputed that the said hard disk also did not contain any incriminating material as the data on the hard disc only supported the return filed by the assessee. This apart, as the hard disc did not belong to the assessee, proceedings under section 153C could not be initiated on the basis of the said disk. 26. On perusal of section 153C of the Act, it is clear that the assessing officer of the “other person” shall proceed with such “other person” in accordance with the provisions of Section 153A of the Act. So at least, when the assessment is not pending, the notice u/s 153C cannot be issued unless assessing officer is satisfied that the materials referred in the “satisfaction note” are incriminating in nature. Here the materials referred in the satisfaction note are not incriminating in nature and assessment for A.Y. 2012-13 was not pending when satisfaction note was recorded. Thus, notice u/s 153C cannot be issued for A.Y. 2012-13. In this case the return of income was filed u/s 139 on 17.09.2012 which was processed u/s. 143(1) on 17.02.2013. The time period for issuing notice u/s 143(2) was already expired on 30.09.2013 when notice u/s 153C was issued on 30.01.2014. So, no addition can be made without incriminating materials recovered in the case of Pitamber Ruchandani. Therefore, the assessment is Page | 25 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers not otherwise valid in view of the recent decision of Hon`ble Supreme Court in the case of PCIT vs. Abhisar Buildwell P. Ltd. [149 taxmann.com 399 (SC)]. In context of section 153C, it was held by the Honourable Supreme Court in the case of DCIT vs. U.K. Paints (Overeas) Ltd. [Civil Appeal No 6634 of 2021] that when no incriminatiog material is found during the search, either from the assessee or from the third party, the assessment u/s 153C of the Act cannot survive. In case of the assessee in course of the search action, in case of a third party viz. Shri Pitambar Ruchandani and Monica Ruchandani, no incriminating material was found as can be seen from the perusal of the “Sactisfaction Note” visa a vis addition made, based on the material found in case of others third parties. The assessment proceedings u/s 153C of the Act, is therefore invalid on the ground that no incriminating material was found in the case of the third parties viz. Pitambar Ruchandani and Monica Ruchandani. 27. Learned DR for the Revenue relied on the decision of Honourable Gujarat High Court in the case of Kamleshbhai Dharamshibhai Patel vs. CIT [31 taxmann.com 50]. This decision is not applicable to the facts of the case of the assessee, as the issue before the Honourable Gujarat High Court was that whether the documents found in the course of search belong to the other person, or pertain to, or relate to the other person. There was no stand of the petitioner in that case that the materials found were not incriminating. The Revenue also relied on the decision of the Honourable Gujarat High Court in the case of Rajesh Sunderdas Vaswani vs. ACIT [76 taxmann.com 311]. This case is also not applicable to the facts of the assessee’s case, as in that case, the Honourable High Court held that there was a prima facie material to suggest that incriminating documents, seized during the course of search, belonged to the petitioner. Besides, the decisions relied on by ld DR in the case of DCIT vs. Shivram Consultants India (P.) Ltd. (2023) 147 taxmann.com 457 (Del Trib.) and in the case of Page | 26 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers Super Malls (P.) Ltd. vs. PCIT, (2020) 115 taxmann.com 105 (SC) are distinguishable on facts and do not apply to the assessee under consideration. In case of the assessee, no incriminating documents were referred in the “satisfaction note”. Even otherwise, the documents which were the basis of addition were dumb documents. Further it is submitted that assessee is challenging not only the notice u/s 153C, but also the assessment made u/s 153C of the Act. We note that ld Counsel for the assessee, has relied on number of case law including the decision of the Honourable Supreme Court in case of CIT vs. Sinhgad Technical Education Society [84 taxmann.com 290] and DCIT vs. U.K. Paints (Overseas) Ltd. [Civil Appeal No 6634 of 2021], wherein it was held that the seized documents should contain incriminating material, either belonging to the assessee, or pertaining to the assessee, or relating to the assessee. This should be judged on the basis of the “satisfaction note”, in case where the assessment is framed under section 153C of the Act. Even if, it is assumed that the “satisfaction note” can be supplemented, the materials on the basis of which the addition for purchase of the property referred in the “satisfaction note”, do belong to the assessee, or pertain to the assessee, or relate to the assessee. We note that since the “satisfaction note” was recorded qua search action in the case of Shri Pitambar Ruchandani and Smt. Monica Ruchandani, however, the assessing officer made both the additions on the basis of materials recovered in course of the search action in case of persons (other than Shri Pitambar Ruchandani and Smt. Monica Ruchandani). Considering these facts and circumstances, we quash the assessment framed by the assessing officer under section 153C r.w.s. 143(3) of the Act, dated 23.03.2015. 28. As the assessment under section 153C r.w.s. 143(3) of the Act, dated 23.03.2015, itself is quashed, all other issues on merits of the additions, in Page | 27 IT(SS)A Nos. 37 &18/SRT/2022/AY.2012-13 M/s. Milestone Developers the impugned assessment proceedings, are rendered academic and infructuous, therefore, we do not adjudicate them. 29. In the result, appeal filed by the Assessee [in IT(SS)A No. 18/SRT/2022) is allowed in above terms, whereas the appeal filed by the Revenue (in IT(SS)A No.37/SRT/2022) is dismissed. Registry is directed to place one copy of this order in all appeals folder / case files. Order is pronounced on 07/11/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 07/11/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat