Tribunal upholds CIT(A) order, dismisses Revenue's appeals, allows assessees' cross-objections. Decision issued on 19.03.2019.

Deputy Commissioner of Income Tax, New Delhi Versus Smt. Shivali Mahajan, Smt. Rinku Mahajan, Shri Jatin Mahajan, Shri Nitin Mahajan, Smt. Anila Mahajan, Shri Lalit Mahajan And (Vice-Versa)

Deputy Commissioner of Income Tax, New Delhi Versus Smt. Shivali Mahajan, Smt. Rinku Mahajan, Shri Jatin Mahajan, Shri Nitin Mahajan, Smt. Anila Mahajan, ... 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.