2019 (3) TMI 1196 - AT - Income Tax

Assessment u/s 153A - addition based on excel sheet found during the course of search and also the statement of assessee during the course of search - addition in the case of various family members as unexplained investment in the acquisition of space in Indirapuram Habitat Centre - Whether any material found in the search of any other person than the assessee in appeal can be considered in the assessment under Section 153A of the assessee? - Whether the addition can be made only on the basis of statement given by the assessee during the course of search? - HELD THAT - When during the course of search of an assessee any books, document or money, bullion, jewellery etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person. Value of the statement recorded during the course of search - HELD THAT - We, respectfully following the decision of Harjeev Aggarwal 2016 (3) TMI 329 - DELHI HIGH COURT and Best Infrastructure (India) (P.) Ltd. 2017 (8) TMI 250 - DELHI HIGH COURT hold that the statement recorded during the course of search on standalone basis without reference to any other material discovered during the search and seizure operation would not empower the Assessing Officer to make the addition merely because any admission was made by the assessee during the search operation. Admittedly, in this case, during the course of search of assessee s premises, no incriminating material was found except the statement of one family member. Solely on the basis of the statement of one family member, the addition was in the case of all the family members, which cannot be done. The addition for unexplained investment can be made only in the year when the investment is made and not in any other year. In view of the above, even as per the statement of Shri Lalit Mahajan, no addition can be made in this year. In view of the above, we do not find any justification to interfere with the order of the learned CIT(A). The same is upheld. - Decided in favour of assessee.

Summary

Issues Involved:
1. Consideration of material found in the search of another person in the assessment under Section 153A of the assessee.
2. Addition based solely on the statement given by the assessee during the course of search.

Issue-wise Detailed Analysis:

1. Consideration of Material Found in the Search of Another Person:

The primary issue was whether material found in the search of a third party (Aerens Group) could be used in the assessment under Section 153A of the assessee. The tribunal referred to the jurisdictional High Court's decision in Kabul Chawla, which stated that an assessment under Section 153A should be based strictly on incriminating material found during the search of the assessee’s premises. The tribunal noted that the legislature provided Section 153C for utilizing incriminating material found in the search of another person. Since Section 153C was not invoked in this case, the tribunal held that the material found in the search of Aerens Group could not be used against the assessee.

2. Addition Based Solely on the Statement Given by the Assessee:

The second issue was whether an addition could be made solely on the basis of the statement given by the assessee during the search. The tribunal referred to the jurisdictional High Court's decisions in Harjeev Aggarwal and Best Infrastructure (India) (P.) Ltd., which held that statements recorded during the search do not by themselves constitute incriminating material. The tribunal emphasized that such statements, without reference to any other material discovered during the search, would not empower the Assessing Officer to make an addition. Since no incriminating material was found during the search of the assessee’s premises, the tribunal concluded that the addition based solely on the statement of Shri Lalit Mahajan was not justified.

Additional Considerations:

The tribunal also reviewed the statement of Shri Lalit Mahajan, noting that he admitted to cash payments made during the financial years 2006-07 to 2008-09. However, the tribunal clarified that any addition for unexplained investment could only be made in the year when the investment was actually made, not in the assessment year 2006-07. Consequently, the tribunal found no justification for the addition in the year under consideration.

Conclusion:

The tribunal upheld the order of the CIT(A) and dismissed the appeals of the Revenue while allowing the cross-objections of the assessees. The decision was pronounced in the open court on 19.03.2019.