Third-party seized material cannot sustain an addition in section 153A proceedings where section 153C is the proper route.

An addition for unexplained money based on material seized from a third party could not be sustained in proceedings under section 153A where the seized material was recovered from M/s Gentle Entertainment Pvt. Ltd. and not from the assessee's premises. The governing principle applied was that incriminating material belonging to or relating to another person must be addressed through section 153C rather than by sustaining the addition only under section 153A. On that basis, the addition was deleted.

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Issues: Whether an addition towards unexplained money could be sustained in proceedings under section 153A of the Income-tax Act, 1961 when the material relied upon was seized from a third party's and not from the assessee's premises, and whether such addition was required to be dealt with under section 153C.

Analysis: The impugned sum was traced to seized material recovered from the premises of M/s Gentle Entertainment Pvt. Ltd. and not from the assessee's premises. On these facts, the basis of the addition was third-party seized material. The jurisdictional principle applied was that where incriminating material belongs to or pertains to another person, the proper course is proceedings under section 153C rather than sustaining the addition only under section 153A.

Conclusion: The addition was not sustainable under section 153A and was deleted; the issue was decided in favour of the assessee.

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