Assessment under section 153C was made upon the Assessee based on two documents found during the course of search action upon a third party. It was observed that the first document did not belong to assessee; further, there was no date or period stated in the said document to which the alleged transaction stated therein pertained. The other document was merely a ledger of a party recorded in the books of Assessee.

Held that jurisdiction under section 153C can be invoked only when the AO of the search party was satisfied that there was asset or document found during the course of search belonged to another assessee; and the Assessee of such other Assessee is satisfied that such asset/document found was incriminating in nature. Since the first document did not ‘belong’ to Assessee; section 153C cannot be invoked based on such a document. Similarly, the other document was merely a copy of a ledger account already recorded in books of Assessee; hence it cannot be considered to be incriminating in nature. Such a document having no bearing on determination of income cannot be used for assuming jurisdiction under section 153C. Further, as the said ledger pertained to preceding year provision under section 153C cannot be resorted for year under consideration; reliance was placed on the decision of Hon’ble Supreme  Court in the case of CIT v. Sinhgad Technical Education Society(2017) 397 ITR 344 (SC) where it was held that it is a jurisdictional requirement for invoking section 153C of the Act that the incriminating material should pertain to that particular year in which it is sought to be invoked.

Considering the above, Hon’ble ITAT held that proceedings which were based on documents which neither belonged to Assessee nor were incriminating in nature-were not sufficient to involve provision of section 153C; hence considered invalid.  (AY. 2007-08 to 2010-11)