2024 (6) TMI 899 - ITAT CHENNAI

Assessment u/s 153A v/s 153C - Legality of assessment framed u/s 153A based on materials found during the search of a third party - HELD THAT - As decided in ABHISAR BUILDWELL P. LTD. 2023 (4) TMI 1056 - SUPREME COURT already concluded assessment could not be disturbed in search proceedings u/s 153A and the additions have necessarily to be based on incriminating material found during the course of search. Proceeding further, the facts of the case would establish that impugned addition has been made on the basis of incriminating material found during the course of search on a third party as well as statement recorded therein. In such a case, the proceedings have to be initiated u/s 153C and not u/s 153A which has not been done by Ld. AO. To initiate proceedings u/s 153C, it is mandatory requirement of law that satisfaction should have been recorded by Ld. AO of the searched person as well as the AO of the other person before proceedings u/s 153C. The recording of satisfaction is sine qua non to assume jurisdiction u/s 153C. Without recording of this satisfaction, no addition could have been made in the hands of the assessee. In the present case, no such satisfaction has been shown to us and in fact, the assessment has been framed u/s 153A which could not be sustained in law considering the mandatory provisions of Sec.153C. Additions on the basis of statement recorded in a separate search action in the case of a third person are not permissible in Section 153A proceedings. The Hon'ble High Court observed that the statement of third person cannot be construed as an incriminating material belonging to or pertaining to the person other than the person searched. See Anand Kumar Jain HUF 2021 (3) TMI 8 - DELHI HIGH COURT Therefore, considering the aforesaid settled position of law, the assessment would be bad-in-law and therefore, the impugned addition could not be sustained on this score only - Decided in favour of assessee. Addition of Undisclosed Income - CIT(A) has rendered pertinent factual findings on merits and clinched the issue in the right perspective. The statement as relied upon by Ld. AO stood retracted and Ld. AO completely ignored the retraction. The affidavits filed by the assessee from vendors who sold the properties have also been completely ignored by AO. No corroborative evidences have been brought on record to strengthen the allegation of payment of on-money. The seized document is merely an excel sheet which did not have basic details or any acknowledgements. The same has rightly been held to be a dumb document and it could, at best, be considered as secondary evidence rather than primary evidence to sustain the addition. To support the addition arising out of this document, corroborative evidence would be essential. We concur with these findings of Ld. CIT(A). In the result, the appeal of the revenue stand dismissed.