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TMI Blog2025 (4) TMI 1443X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 132 of the Act was also carried out at the residential and business premises of the assessee and his group companies. During the course of search no incrementing material was found/seized from the possession of assessee or any of the group concerns as is evident from the assessment order. During the course of search, one pen drive was found and seized from the premises of M/s Jitendra Enterprises which contains the trial balance of the assessee and other group companies. As per the trial balance of proprietary firm of assessee, he had taken unsecured loan of Rs. 30,00,000/- from M/s Destiny Gems and Jewellers Pvt. Ltd. The AO based on the statements recorded of employees and directors of SRS group during the course of post search investigation its case, hold that the company M/s Destiny Gems and Jewellers is a shell company and made an addition of Rs. 30,00,000/- towards unsecured loan in the hands of assessee in the assessment completed under section 153A of the Act. 3. Against such order, the assessee preferred the appeal before the Ld. CIT(A) wherein it was also claimed by the assessee that no incriminating material was found from the possession of the assessee, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e independent enquiry under section 133(6)/131 of the Act. 7. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the above addition despite that the same has been made merely by relying on the statements recorded at the back of the assessee, without giving assessee an opportunity to cross examine the same. 8. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the above addition despite that the same has been made on the basis of material collected at the back of the assessee without giving assessee an opportunity to rebut the same. 9. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the above additions despite the fact that the same have been made by the AO by indulging in surmises without bringing on any direct evidence against the assessee, only on the basis of presumption and assumption. 10. The appellant craves leave to add, amend or alter any of the grounds of appeal." 5. The grounds of appeal No.1 to 4 are legal grounds taken on the issue that additions have been made in the order pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the assessment completed u/s 153A. Ld. AR further submitted that though search was carried out simultaneously but none of the persons whose statements are relied upon were having any direct relationship as employee of assessee or director in any of the group company of the assessee and thus they are foreign entity with respect to the assessee company. 8. Statements of third persons used for framing the assessment were recorded during the course of search action on SRS group. The assessee does not have any interest in the SRS group. Therefore, no addition could be made on the basis of such statement in the order passed u/s 153A of the Act. 9. The ld. AR further submitted that the loan of Rs. 30.00 taken from M/s Destiny Gems & Jewllers Pvt. Ltd. is duly appearing in the regular books of account and based on which final accounts were prepared and return was filed. Assessee had filed Balance Sheet before the AO wherein loan was appearing and the same has not been doubted by the AO as is evident from the notice issued by the Id. AO u/s 142(1) of the Act. Thus, the same cannot be treated as incriminating material. Ld. AR argued that if additions have to be made by the AO on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining Trial balance of the assessee. In the said trial balance, an entry of unsecured loan of Rs. 30.00 lacs taken from M/s Destiny Gems & Jewellers Pvt. Ltd. is appearing. The trail balance is prepared from the regular books of accounts and in the Balance Sheet, this loan of Rs. 30,00 lacs taken from M/s Destiny Gems & Jewellers Pvt. Ltd. is duly appearing. Therefore, this document could not be hold as incriminating material. It is further seen that besides pen drive, the AO has relied upon the statements of various directors of the loaner company wherein they accepted that the said company is paper/ shell company and concluded that the loan taken from the said company is bogus. It is admitted position that search was simultaneously carried out in the case of assessee as well as in the case of SRS group of cases, however, both the entities are independent and separate entities. The AO cannot allowed to assume jurisdiction to assess the assessee u/s 153A on the statements of third parties in whose cases, search was also carried out and such persons were not related to the assessee. At the best, the AO should have proceeded to assess the income of the assessee for such statements u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt will take effect from 1st June, 2015. 13. It is thus clear that any material/ statements pertaining / relating to a person other than the person searched, was first to be handed over by the AO of the searched person after recording his satisfaction, to the AO of other person to whom such material/ statements belonged, who after recording his satisfaction, has to proceed against such other person by issuing a notice u/s 153C of the Act and then to assess / re- assess income of such other person for such material/ statements. 14. The Hon'ble Jurisdictional High Court in the case of PCIT (Central)-3 vs. Anand Kumar Jain (HUF) and others reported in 2021(3) TMI 8 vide order dt. 12.2.2021 in ITA No. 23, 26-31/2021 has held as under: "Even if a search was conducted upon the premises of the assessee, if the AO was relying upon the incriminating material found from the search of third party, then the same cannot be used for assessment u/s 153A and AO should have restored to section 153C of the Act. 15. The Co-ordinate Bench of ITAT in the case of Trilok Chand Chaudhary, New Delhi vs ACIT, Central Circle- 26, New Delhi on 20 August, 2019 under identical circumstances has held as und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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