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TMI Blog2024 (6) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... erson 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on sworn affidavit of Smt. Yashodha in which she stated that she had made wrong entry as 38.5 lakh per acre instead of 8.5 lakh per acre by mistake. In the excel sheet, it has been clearly mentioned that agreed cost as Rs. 7,42,28,000/-, Guide line value as 1,73,52,000/-. This guide line value amount is also mentioned as DD against the agreed cost and balance amount shown as Rs. 5,58,76,000/-. Hence, the claim of typographical error in the sworn affidavit is not backed by any evidence and it is clearly an afterthought. 2.3 The Ld.CIT(A) failed to appreciate that the materials seized during the course of search presumed to be belonged to the assessee and its contents are true as per the provisions of Sec.132(4A) and 292C of the Act. The payment of on-money was also confirmed by the author of seized materials in her sworn statement. 2.4 The Ld.CIT(A) erred in observing that there was no corroborative evidence to substantiate that the on-money transaction mentioned in the excel sheet was happened, without appreciating that the statement recorded u/s. 132(4) from the person who had made entries in the excel sheet corroborates those entries found in the excel sheet. 1.3 The grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR submitted that in the absence of any corroborative evidences, no addition could have been made. It has been submitted that impugned addition is based on material found during the course of search on another assessee. Therefore, assessment could not have been made u/s. 153A. At the most, the assessment could have been made 153C which require recording of satisfaction before issuance of such notice. In the absence of such a satisfaction, no assessment could have been framed u/s. 153C. Reference has been made to the decision of Hon'ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell (P) Ltd. (2023) 454 ITR 212 (SC) as well as decision of the Bengaluru Bench of the Tribunal in the case of ACIT Vs. P.Shyamaraju Co. India Pvt. Ltd in ITA Nos.978 to 984/Bang/2014 dated 25-04- 2022. Reliance has also been placed on the decision of Hon'ble Supreme Court in the case of CIT Vs. P.V. Kalyanasundaram ( CA No.4262 of 2007 dated 14-09-2007). Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 2.1 During the course of search action u/s 132 in group cases of M/s. Velammal Group Institutions, the office premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 568.76 Lacs was taken to be the undisclosed income of the assessee and the assessment was finalized. Appellate Proceedings 3.1 During appellate proceedings, the assessee assailed impugned addition by way of elaborate written submissions which have been extracted in the impugned order. The assessee also assailed assumption of jurisdiction on legal grounds. 3.2 The assessee pointed out that during the course of assessment proceedings, it had submitted sworn affidavit of Smt. Yeshoda Rajan on 25-09-2021 wherein she admitted to have made certain typographical error while feeding the data. The Ld. CIT(A) observed that Ld. AO relied upon two evidences to support the impugned addition. The first one was the Excel sheet as maintained by the Accountant in the system and the second one was the sworn statement of accountant as recorded during the course of search. The statement of the accountant recorded u/s 132(4) was adverse to the assessee. To rebut the contention of the accountant, the assessee produced sworn affidavit of the accountant before Ld. AO. Even though the sworn affidavit was available before Ld. AO, he did not render any findings on the sworn affidavit. Further, the sworn st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned addition had no corroborative evidence. The lower authorities did not made any attempt to collect further cogent and corroborative evidence to prove the existence of transaction which has resulted into payment of on-money as alleged. The excel sheet relied upon by Ld. AO did not have basic details i.e., date of payment of excess consideration, the details of parties to whom the consideration was made and it also had no acknowledgement or signature in support of excess consideration. Therefore, this document, at best, could be considered as secondary evidence rather than primary evidence to sustain the addition. To support the same, corroborative evidence would be essential. No such attempt was made by Ld. AO to collect any corroborative evidence. Since the aforesaid document would require corroborative evidences and the same, on standalone basis, would have no evidentiary value and therefore, this ground was also allowed 3.5 The assessee also raised another legal issue that since no incriminating material was found from the possession of the assessee, framing of assessment u/s 153A was bad in law. The Ld. CIT(A) noted that warrant of authorization was issued in respect of al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Apex Court in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (149 Taxmann.com 399) would squarely apply to the facts of the case. In this decision it has been held by Hon ble Court that 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. 5. 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 assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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