RADHEY MINERALS LTD.,NAGPUR vs. ACIT-CENTRAL-CIRCLE-2(3), NAGPUR

214 ITA Nos. 426 & 427/N0g/2013 & ITA No. 1B4/Nag/2014 IN THE INCOMETAX APPELLATE TRIBLNAL NAGPUR BENCH NAGPUR BEFORE SHRL SHAMIM YAHYAACCOUNTANT MEMBER AND SHIRI RAMLAL NEGH JUDICIAL MEMBER SNo: LTA No Asstt Year 1 2 3 426Nag/2013 427/Nag/2013 184/Nag/2014 2007-08 2008-09 2009-10 Radhey Minerals Ltd. Nagpur. PAN AAACR6HUAM: Appellant Asstt. Commissioner of Tncome-tax; Cenlral Circle-2(3), Nagpur: Vs. Respondent: ' Appellant by Shri R.V.Loya Respondent by Shri A.R. Ninawe. # Date of Hearing 29-03-2017. Date of Pronouncement 30"h March, 2017, QRDER PER_SHAMMYAHYAAM : These appeals filed by assesee are direcled against the separate orders of leamed CIT(Appeals) dated 05-08-2013 and 29-11-2013 for respective assessment years Since the issues are conimon and connected, the appeals are being disposed by this common order: The were heard together and common grounds of appeal read as under That thhe order ol the Asstt Commissioner of Income Tax, (1) Central Circle 2(3), Nagpur is bad in law and wrong on facts and the learned CI.TA(A) has erred in confirining the same That the notice issued 1/s.153C and the proceedings thereafter is bad in Jaw. On the facts and circumstances of the case action Of both the authorities is unjustified. Q3m ITA Nos 426 & 427/N19/2013 & ITA No. 134/N0g/2014, (2) That tIne Assessing Officer erred jl] law and on facts in disallowing Rs.21,55,722/-/-_ Rs.36,87,787/- and Rs.44,19,031/- for 43 Ys. 2007-08_ 2008-09 and 2009-10 respectively from OLIt of financial expenses and the leained CIT(A) was unjustified in only partly allowing the expenditure. On lhe facts and eircumstances of the case; the expenditure is incurred for the purpose of business and therefurc allowable. (3) That the learned CIT(A) erred in Jaw and 01 facts in holding that the trading transaction, in which delivery is not enforced, constitutes speculative transaction_ On the facts and circuinstances of the cuse the trading transactions entered by the asscssee are outside the purview the detinition of speculative transaction 2l5 envisaged as per Section 43(5) of the Income Tax Act_ (4) That the learned CIT(A) erred i17 law and on Facts in holding that the financial expenses (partly) have been incutted for speculative transaction On the facts and circumstances of the case_ the fiinds available through LC transaction have been EL utilised for the working capital of the regular business of the assessec That the Assessing Ofticer erred in law and on facts in charging interest under section 234A- 234B and 234C and tie Qni leamned C.I.T.(A) has erred in confirmning the action of the Assessing Ofticer. 2 Since the facts are identical, we refer to the facts and figures of assessment year 2007-08. 3 In all these cases there wa; 4 search action carried out in the business premises of Gupta Industries Ltd. and at the residential premises aS Well as other premises belonging to Mukesh Gupta on 29-07-2009. During the course of searct , certain books of accounts and documents were seized. On the basis of these seized material, notice Ws 1S3C was issued On the assessee. [n the assessment order the AO has rejected the assessee $ plea against the lack of validity of the jurisdiction for issuing notice W/s 153C and had made additions mainly on account of financial expenses. ## 21S ITA Nos 426 & 427/N0g/2013 & ITA No 184/Nag/2014 the learned CIT( Appeals) has dealt with the 4, Upon assessee'$ appeal, assessee' $ challenge ofjurisdiction aS under is that the assessment order is bad in law and wrong {2. Ground No.] On facts. The AQ noted that in the assessment order that in the return filed 2.1 the notice us 153C is bad in law_ 4s 153C asgessee has taken a plea that without substantiating its claim; In the absence of any substantia] reason held to be not tenable; more $0 when the plea taken by the assessee was 132 ofthe Acl: there is search and Seizure action On the assessee uls submitted for lhe appellant that it a 2.2 In appeal proceedings was conducted in the business premises of search and seizure operation_was ShcMukesh Gupta on 29/07/2009 and other premises belonging to Shri TPhere was no seizure of cash and valuables belonging l0 Mukesh Gupta. As per the AO, during the course of search; several items of the assessee found and seized. books of accounts and incriminating documents were incriminating documents wcre [ound Throughout the post However, nO made repeated requests to the search proceedings, the assessee provide the copy of the statements recorded investigation wing & AO to However, neither was the request for inspection in case of the assessee: considered within and procurement of copy ol seized material favourably provided to the assessee: Also the 3 reasonable time nol was the same provided any evidence n rhe basis of which the order assessee was not and surmises of way passed by the AO. The order ig based on conjectures brought on record by the AO either during the the AO. No evidence was the claim made in the assessment proceedings or in his order to support Thus, that the order of AO is unjustified and liable to be order by him- set aside. In addition to the fact that &8 noted in the assessment ordets3he 2.3 raised no substantial reason for its objection to notice uls 153C; appellant 2 LLA; the fact that the AQ has noted that during the course of search several and and incriminating documents were found and item of books of accounts No. 8 to 16 of A2(25) seized and that the seized material vide Page tanthe assessee which is incriminating in natle; and further that EC belong ive of the assessee inspected the seized material the authorized representati etc , the appellant' S ground and tock photocopies of relevant documents is held to be without substance and is dismissed - 216 ITA Nos, 426 & 427/Nag/2013 & ITA No 184/Nog/2014 2 On merits leamned CIT( Appeals) partly sustained Ihe addition made by the S AO the above order of leamed CIT(Appeals} assessee is in appeals 6 Against from the grounds of appeal referred above; the asgessee before us. As emanating has raised the issue that learned CIT(Appeals} has erred in at the threshold holding that the notice issued Ws 153C is valid and perused the records. Leamned 7 We have heard both the counsel submitted that the satisfaction of the AO of the searched counsel of the assessee Ws 153C f the [.T. Act has not been recorded before persong a8 envisaged the assessee w/s 153C of the Act which vitiates initiating the proceedings against counse] referred impugned assessments: For this proposition, leamed the entire 24/2015 dated 31 st December; 2015 which has been to the CBDT Circular No Leamed counsel submitted that from the above said issued on this very subject: i8 clear that in absence of appropriate satisfaction CBDT Notification it raided even il he is the same AO a8 that of recorded by the AO of the party devoid of jurisdiction: Leamed counsel the assessment will be assessee, note a3 emanating from the that 4 perusal of lhe satisfaction submitted records of the searched party makes it very clear that the appropriate assessment therein: He asserted that no satisfaction of satisfaction has not been recorded incriminating andor belonging to the assessee is seized documents being Thug no valid notice Ws 153C i8 recorded by the AO of the searched person and assessment framed is bad in law and liable issued in the case of the assessee itted that this proposition is duly quashed. Learned counsel submi to be supported by following case laws 1S5 ITD OS01 (Delhi) DCIT vs: Satkar Roadlins Pvt Td (2015) (2015) 232 Taxman 0268 (AP) 8iT'vS Sheettys Pharmaceuticals & Biological Ltd. Omi ITA Nos; 426 & 427/Nag/2013 & ITA No, 184/Nog/2014, 3 Hon'ble Madhya Pradesh High Court order in ITA No. 4412011 in the case of MIs Mechmen vide order dated 10/07/2015 (2014) 385 ITR 0411 (AII) CIT vs_ Gopi Apartrent ITAT order in ITA NQ.1344Del/2012 in the case Of Mls DSL Properties (P) Ltd. vide order dated 22/03/2013 ITAT order In ITA NO.5480 to 5465/Del2012 in the case of VK Fiscal Services Pvt. Ltd, vide order dated27/11/2013 Hon'ble Bombay High Court in ITA No;1337 of 2013 in the case o1 Mis, Ingram Micro (India) Exports Pte. Ltd. vide order dated 29/04/2015 Hon'ble Delhi High Court in ITA No.422/2015in the case of Nikki Drugs & Chemicals Pvt Ltd. vide order dated 03/12/2015 ITTA NO.254 of 2014 Judgement per Hon'ble the Chiei Justice Shri Kalyan Jyoti Sengupta) #AT order in ITA Nos.4228/Del/2o 11 in the case of Ifs Shield Home Pvt Ltd vide order dated 24/02/2016 5 Oni Further more leamed counsel submitted that the addition has not been made on the basis of seized material. In this regard learned counsel submitted that the assessments in all these cases have been completed earlier: Hence in the of incriminating material found during the search; no addition is absence sustainable u/s 1S3C. Leamed counsel firrther submitted that no incriminating document was found during search: The documents in Page No. 8 to 16 of item 25 of Annexure A2 are sale invoices issued by the appellant company to Gupta Domestic Fuels (N) Ltd: and Gupta International Industries Ltd. on account of sale of Coal by the appellant to these companics Once the invoices are issued by the appellant and have been received by the buyers viz. Gupta Domestics Fuels (N) Ltd: and Gupta International Industries Ltd; the same belongs to the 21 ITA Nos, 426 & 427/Nog/2013 & ITA No 184 Nag/zOl4. 219 lf the seized document which forms the basis does not belong to the buyers. jurisdiction to issue notice Ws 153C and; therefore: the petitioner, there is no are null and void as held by Hon'ble Jurisdictional Bombay entire proceedings Arpil Land Pvt, Ltd: in LT. Appeal No; High Court in the case of CIT VS_ 83/2014 order dated 07-02-2017. The entries for the purchase by the aforesaid entities is duly found recorded in of accounts ol assessee. The entries for sale are also found recorded their books of assessee. Thus these documents cannot be called &8 in the books of accounts of issue of notice Ws 153C. incriminating documents for the purpose perusal of the assessment order; it will be revealed that addition Furthermore, on the basis of these documenls This itself establishes that the is not made on not incriminating in nature. For the proposition that dehorse documents are no addition is sustainable where assessments have already been seized material _ earlier; learned counsel relied upon the following further case laws completed Hon'ble Bombay High Court order_in ITA NQ941-of 201 in the case of Technical Education Society vid 95563/8;8 order dated 2 (2011) 51*0TR 0241 (Pune) Sinhgad Technical Education Society vs. ACIT ITAT order in ITA Nos 8628 8633//2010 in the case 3 of Mls, Dhananjay internationa] Lta, vide order dated 12/10/2015 4 ITAT order in ITA NQ 959/PN2010 in the case of Bharati Vidyapeeth Medical Foundation vide order dated 28/0412011 Hon'ble Bombay High Court order in ITANO.923 of 201 inohe ease 0i Bharati Vidyapeeth vide order dated 'O2n) 11/09/2014 6 ITAT order in ITA NO 917/PN/2O1O in the case %f Bharati Vi?yapeeth vide order dated 28/04/2011 Hon"ble Delhi High Court order in ITA NO. 171/2015 in the case of Ws Refam Management Services (F) LI ITA Nos 426 & 427/Nag/2o13 & ITA No, 184/N0g/2014, 220 vide order dated 05/11/2015 Hon'ble Delhi High Court order in ITA NO.164/2015 in the case of RRJ Securities Ltd, vide order dated 30/102015 ITAT order in ITA Nos;1541 & 1543/Mum/2015in the case Of Ms. Empire Mali Pvt: Ltd. vide order dated 12/10/201 5 ITAT order in ITISSJA Nos 84-86/K0l/2011 in the case of Trishul Hi-Tech industries vida order dated 24/09/20 ITAT order in ITA No.472/Coch/2013in the case ef Ma Roya Cartons P Ltd vide order dated 16/03/2011. 9 10_ 11. 9 Per contra learned DR. relied upon the orders of the authorities below. We find that at the outset we need to adjudicate the jurisdiction aspect 10. The first limb of argument in this regard is that there is no valid satisfaction in the case of the persons searched that incriminating material found may relate to the assessees in whose case action has been taken ufs 153C. At the outset in this case we may gainfully refcr to the satisfaction recorded in the case of persons in whose cases search and seizure activities were conducted. The satisfaction note found in the case of the searched persons, namely, Shri Mukesh Gupta Indl Coal India Ltd. were examined from the concerned assessment and Gupta records brought by the learned DR. Common satisfaction note in the case of Mukesh Gupta, Indl, Reads &s under 6 All the books and documents seized impounded during the course of Aopel as also material gathered on cnquirics and post search search survey 3 investigations and the various observationg made in the appraisal report carefully examined ad considered with reference to the have been 3 of accounts while framing the assessinents for all the regular books assessment years_ Common satisfaction note in the case Gupta Coal India Ltd reads &s under: AlL the books and documents seizedlimpounded during the course of search/survey as also material gathered 0n enquiries &nd post search investiz igations and the various observations made in the appraisal report ITA Nos_ 426 & 427/Nag/2013 & ITA No 184/N0g/2014. 221 have ben carefully examined and considered with reference to the regular books of accounts while framing the asscssments for all the assessment years. Regarding quantity of coal reccived from and supplied to various parlies information wa5 called Ws ]33(6) of' the IT. Act. The details were verified with reference t0 books of accounts of the assessee and lhere is no discrepancy. Regarding payment of salary in cash the information has been passed 0nl tO the respective A.O. having jurisdiction over the individual: The assessee has accounted for the entire expenditure in the books Regarding receipt of Rs.5 lakhs in the cash book of Chandrapur branch the amount is duly rellected in the cash book of Chandrapur Branch ' 11 There is no other satistaction note whatsoever in the concerned assessment files of the pcrsons in whose case search action has been conducted and based upon which notices have been issued U/s 153C l0 the assessee. 12 In this regard we can gainfully refer to the provisions of section 153(1) as under Notwithstanding anything contained in sectinu _]3E, section 14Z, section 148, seglun [42, sertitn_lS] an1d seclion 132, where the Assessing Officer is satisfied that any Ioney, bullion, jewellery or Othcr valuable article OT thing or books of account or documents seized or requisitioned belongs or belong to a person other than the perSor Teferred to in scctiq L33A then the books of account Of documents or assets seized Qf requisitioned shall be handed ovcr to the Assessing Officer having jurisdiction over such other person Z[and that Assessing Officer shall procecd against each such other person and issue notice and "SSe55 Or Teassess tlle income of the other person in accordance with the provisions of section LSJA, il, that Assessing Officer is satisfied that the books of accounr Or documents Or assels seized Or requisitioned have bearing on the determinalion of the total income &t such other person for the relevant assessment year or years referrcd to in sub-section (1) of geclion 1 53AI:] EL '[Provided that in case of such other person , the reference to the date of initiation of Ihe search under section 132 Or making of requisition under seclion_1324 in the second proviso to T[sub-section (V) 0l] scctiqn LSJA shall be construed a8 reference to thie date of recei ving the bopks of accotnt Or docunents Or assets seized Qr requisitioned by the Assessing Oflicer having jurisdiction ovcr such othcr person :] '[Provided further that thc Central . Covemment may by rules- made by it and puiblishcd in the Official Gazette; specify the class % classcs of cases in Tespect of such other person, in which the Assessing Officer shall nOt be required 10 issue notice Dzn {TA Nos, 426 & 427/Nag/2013 & ITA No_ 184/Nag/z014. reassessing the total incoie (of six #ssessment years immediately for asscssing Of year relevanl to the previous year in which search 15 preceding the a5sessmnent requisition is Inade exccpt in cases where any axsessment CHI conduicted QI reassessmenl has abated,] 13 From the above provisions, it is clear that where the AO of the persons searched is satisfied that any money, bullion, jewellery, books of accounts O olher documents etc. belong to & person other than a searched person, then such document OI &ssets etc, shall be handed over to the AO of the other person and the later AO shall proceed against such other person fo assess or reassess his income_ Thus it is manifest before handing over such documents to the AO of the other person 8 satisfaction has to be recorded by the AO of the searched billion or jewellery etc_,found from the person persons, that money, the 'other person'. Only when such satisfaction' i8 searched belong to recorded by the AO of the person searched and such documents or assets are handed aver to the AO of the 'other person' _ that the later seized, etc _ A0 acquires jurisdiction to make assessmnent or reassessment of the 'other It is, therefore, clear that lle AO of the 'other person' can acquire person.' jurisdiction to agsess or reassess income of the 'other person' only whcn the records satisfaction in his case (searched AQ of the persons searched bullion jewellcry, etc. to him. So, person) before handing over money, what emerges is thal the recording of satisfaction by the AO of the person precedent for the AO of Ihe other person' to acquire searched is a condition Unless such jurisdictional Fact is satisfied, there can be no jurisdiction. questiqh of making assessment or reassessment of the other person:' In the case of Anil Kumar & Ors. vs UOI & Ors. Reported in 155 Taxman 659 (SC)the Hon'ble Apex Court observed that A jurisdictiona] fact is & fact which mnust exist before 4 court, a tribunal or aM1 authority assumes particular matter. A jurisdictional fact is one on jurisdietion over a non-existence of which depends jurisdiction of a cour, 4 existencc Or 2222 F 2 '23 10 ITA Nos, 426 & 427/Nog/2013 & ITA No. 184/Nug/2014 an authorily It i5 the fact upon which an administrative tribunal Ol agency's power to act depends. If lhe jurisdictional fact does not exist; the authority Or ofticer camnot act If 81 Court Or authority colrl; wrongly assumes the existence of such fact; the order can be questioned by writ of certiorari. The underlying principle is that by erroneously 4 assuming existence of such jurisdictional fact, no authorily can confer upon itselt' jurisdiction which it otherwise does not pussess_ The existence of 'jurisdictional fact' is sine qua non for the exercise of power by a court of limited jurisdiction: As noted earlier sectiun 153C provides for taking recourse to assessment in of any other person, the conditions precedent wherefore are: (1) respect satisfaction mnLiSt be recorded by the AO that any undisclosed income belongs to any person; other than the person with respect to whom search Wa5 made under 5- 132; (ii) the books of account or other documents or assets seized or requisitioned had becn handcd over to the AO having jurisdiction over such other person; and (iii) the ^O has proceeded under 5. ISJC against Such other person The conditions precedent for invoking the provisions of 8_ 153C. thus, a17e required to be satisfied before the provisions of said section are applied in relation to any person other than whose premises had been searched Or whose documents &nd lhe person othcr assets had been requis isitioned under $. 132A.s That the recording of atisfaction by the AO having jurisdiction over the person searched is an RZLLA) 1 ntial and prerequisite condition for bestowing jurisdiction to the AO of other persons. Jwob8 14 Now in this regard the CBDT has also issued notification as under 224 11 ITA Nos. 426 & 427/Nag/2013 & ITA No; 184/N0g/2014, "CIRCULAR NO. 242015 F No.z7@/Misc,I140 {ZO15/1T J Government of India Ministry Of Finance Department Qf Revenue Central Board of Direci Taxes New Delhi, 31 st December; 2015 Subject Recording of satistaction note under section 15380/153C of the Act reg- The issve of satistaction far the purpcses of section 15380/153C has bben of recording subject matter cf litigation 2 The Hon'ble Supreme Court in tba case of Mls Calcutta Knitwears 1n}; it5 detailed judgment in Civil Appeal NO.3958 of 2014 dated 12.3.2014/available in NJRS at 2014-LL-0312-S1} has laid down lhat for Ihe purpose of Section 15880 of the Act, recording of & salisfaction nate is prerequisite and thesatisfaction note musi be prepated by the AO belorg ha transmits the record t0 the other AO who has jurisdiction Qver such ather person uls 15880 The Hon'ble Courl held Ihat "the satisfaclion ngte could be prepared at any Qf the foilowing stages: (a) at the time of Jr along with Iha initiation Qf proceedinge against the searched pareon under section 150BC Df the Ack Qr {b} in the Course of the assessment proceedings under section 1588C of Ihe Act; cr (c) mmedalely atter the as5eg8menf praceedings are completed under seclion 1S8BC Qf (he Act cf the searched person:' 3 Several High Courls have held that the pravisions #f section I63C of the Act are substantially Ihe provisions af secfion 158B0 of the Act and therefore the above similarfpari-materia t guidelines of the Hor'ble SC apply to proceedings U/s 163C Gf te IT Act, for the purposes %f assessment af income Df other Ihan Ihe searched person Thie view has been accepted by CBOT. 4_ The guidelines cl the Han'ble Supreme Caur a5 relerted tQ in para 2 above_ wilh regard may be brought to the nptice of all for strict compliance_ It Is td recording of satisiaction nate, further clarifed that aven if the AO &f the searched person ad the "cther person" ig one and Khe same then also he is required to recard his satisfaction as hag been held by the Courts &5_ In view Of the above, liling of appeals cn the issu8 of recording c[ satisfaction nole should also pe decided in the light of the above judgement Accordingly the Board hereby directs that pending litigation with regard ta recording af satistaction nole under section 15880 /153C should be wilhdrawninol pressed if it does nol mneet the guidelines laid dovn by the Apex Court. 15, From the above CBDT notification it is clear that even if the AO of the searched persons and the assessee are same still proper gatisfaction qua the documents etc. found relating to the assessee has to be recorded in the case of the searched persons From the perusal of the satisfaction note of the AO in the case of the searched persons as reproduced above it is evidenl that there is no such satisfaction that any bullion; jewellery, books of accounts, other documents etc. belonging to the assessce has been Found and the sane is being APPELL Wozn 12 ITA Nos. 426 & 427/Nag/2013 & ITA No. 184/N0g/2014. handed over to the AO ofthe assessce. Thus the absence of requisite satisfaction denudes the legality of jurisdiclion in this case. Hence it has t0 be held that since proper satisfaction a5 envisaged Ws 153C has not been recorded, the liable lo be quasled on account of lack of validity of assegsments are jurisdietion: In this regard the case laws referred above by the learned counsel of the assessee support this proposition. We may gainfully refer to some of them aS under CIT VS_ Shetty Pharmaceuticals Biological Ltd. 232 Taxman 0268. (Andhra Pradesh HC;) In this case it was held that section 153C and 153A mandates recording of satisfaclion of the Assessing Officer{s) is 4 pre - condition for invoking jurisdiction and il is not 4 mere formality because recording of satisfaction postulates application of mind consciously as the documents seized must be belonging to the any other pcrson other than the person referred to in Section 153-4 of the Act It is contended that the same Assessing Officer is involved in the matter: This facl does not dispense with above requirement. It is settled position of law lhat when a thing is t0 be done in one particular manner under law this has to be done in that mnanner alone and not other way (See Nazir Ahmed v King Emperor) We think the learned Tribunal has correctly followed the principle We do not find any element of law to be decidcd: Conclusion: Zwo50 Recording of gatisfaction of AO(s) is pre-condition for invoking jurisdiction and it is not a mere formality because recording of satisfaction postulates application of mind dconsciously as documents seized must be belonging to any other person other than person referred to in S, 153-A ii) Hon'ble High Court of Madhya Pradesh High Court decision in the case of CIT vg. Mechmen in ITA No 44/2011, ITA No. 45/2011 & others vide order dated 10-07-2015. In this case the relevant exposition from the Hon 'ble High Court is #S undet Even for the pupose of Section 153C, the Assessing Officer before handing ovcr the items to the Asscssing Officer having 225 PELz 13 ITA Nos. 426 & 427/N0g/z013 & ITA Na 184/N0g/2014. jurisdiction must be "satisfied" that the items belongs or belong to the person othcr that the person referred to in Scction 153A That satisfaction of the concerned Assessing Officer is & sine qua Mon The consequences flowing from the action to be taken o the basis oF such information handed over lo the Assessing Officer having jurisdiction, for the assessce, who is a person Other than the person referred to in Section [53A is drastic of assessment Or Te- assessment ofhis income falling within six assessment years The fact lhat incidentally the Assessing Officer is common at both the stages would not extricate him from recording satisfaction at the respective stages; In that the Assessing Officer is satisfied that the itens referred t0 in Section 1S3C belongs or belong to a person (other than the person referred to in Section 1534), being sine qua non, He cannot assume jurisdiction to transmit those items to another file which incidentally is pending before him concerning other pergon (person other than (he person referred to in Section 1534). Similarly, as there is no provision either express Or implied (in the Act) to with the requirement of satisfaction, if the dispense Assessing Officer happens to be the same; #S in this case, the arguments of thc Department Inust be negative. We conclude thai the condition precedent for resorting to action under Section 1S8BD delineated by the Supreme Court in the case pcL of Manish Maheshwari (supra) and in the recent case of Commissioner of Income-tax-III vS_ Calcutta Knitwears (suspra), would apply on all fours mandating satisfaction of the Assessing Qn Officer(s) dealing with the case at the respective stages referred to in Section 153C . iii) Hon ble Bombay High Court decision in the case of Director of Income Tax vs. MJs Ingram Micro (India) Exports Pte Ltd. in ITA No. [337 of2013 & Others vide order dated 29-04-2015. In this case it #a5 expounded that aS per provisions of section 153A and section 153C of the IT. Act; proceedings can only be initiated after the AO arise at the satisfaction that the seized material pertains to other persons, namely, persons other than searched It is only then the persons other than the persons. searched party can be proceeded against. 226 14 ITA Nos, 426 & 427/Nag/2013 & {TA No. 184/Nog/Z014 Ff there IS a satisfaction required and Lo be recorded a9 4 pre- condition and which is mandalory then in lhe absence thereof all Further steps stand vitiated. In a batch of 'appeals in ITA No: 60/2016 Olhers in the Principal CIT VS_ Satkar Roadlines Pvt. I.td. vide order dated January 124 2016, the Hon'ble Delhi High Court noted as under 11 is stated by Ms. Suruchi Aggerwal, Senior Counsel for the Revcnue, that in light of the Circular No. 24/2015 dated 31st December; 2015 issued by the Central Board of Direct Taxes on the subject ~Recording of satisfuction note under Section 1S8BD/1S3C ofthe Act" , these appcals are not pressed These appeals are, accordingly: dismissed as not pressed: iv) Q25i 16. From the above case laws and CBDT Citcular; it is evident that recording of requisite satislaction in the case of a searched party is a sine qua non for assuming jurisdiction for the issue of notice us 153C even if the AO of the searched person and the assessee uFe sane. It is abundantly clear from the satisfaction note recorded in the case of the gearched person that there is no requisite satisfaction granting the AO jurisdiction for issuing notice to the assessee Ws 153C of the I.T. Acl: The satisfaction note a8 emanated from files of searched persons; namely, M/s Mukesh Gupta and Gupta Industries Ltd. does not show at all that thal the AO in dheir case has recorded a satisfaction that any of the seized material is belonging to the assessee has been found, and is incriminating in nature which is to be handed over to the AQ of the assessee: In such circumstances, in our considered opinion, the assessee deserves to succeed on this account and the assessments are liable to be quashed on account of lack of validity of jurisdiction. Accordingly we set aside the orders of" leamed CIT(Appeals) on this aspect of jurisdiction and quash the assessments by holding that requisite satisfaction was not recorded before the issue of notice Ws '1S3C . 227 " 15 {T4 Nos_ 426 & 427/N0g/2013 & ITA No. 184/N0g/2014, 17, In this regard we further note that in siiilar situation when the finding was that requisite satisfaction was not there in lhe case of the searched person qua incriminating material relating to asscssee having been found, the Revenue had withdrawn this appeal before the Hon'ble Delhi High Court in the light of Circular No. 24/2015 as referred above, CIT vs Satkar Roadlines (supra)