AI Drafter 
TaxTMI 
TaxTMI 
2019 (3) TMI 1196
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....ounds have been raised by the Revenue and by the assessee in their cross-objections, therefore, all the above appeals and the cross-objections are being considered together. 3. The facts of the case are that there was search and seizure operation in this group of cases on 10th February, 2012. During the course of search, statement of Shri Lalit Mahajan i.e., the assessee in appeal No.5590/Del/2015 was recorded, in which, he admitted of cash investment by him and other family members in respect of booking of space in Indirapuram Habitat Centre. The total payment in cash by various family members was `10 crores, details of which are given at page 2 of the assessment order, which is reproduced below for ready reference :- S.No. Name of Investor Area/Unit No. Amount paid in Cheque Amount paid in Cash 1 Smt. Rinku Mahajan 2000 sq.ft. 30,80,000 99,92,000 2 Sh. Nitin Mahajan 3500 sq.ft. 53,90,000 1,75,26,000 3. Smt. Shivali Mahajan 2000 sq.ft. 30,80,000 99,92,000 4. Sh. Jatin Mahajan 3500 sq.ft. 53,90,000 1,75,26,000 5. Smt. Anila Mahajan 4500 sq.ft. 69,30,000 2,24,82,000 6. Sh. Lalit Mahaja....
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....ing the course of search of the assessee's premises can be used against the assessee and not the material found in the case of some other assessee. That for utilizing the material found during the course of some other assessee, there is a specific provision i.e., Section 153C, which has not been invoked in this case and the assessment has been made u/s 153A. Under Section 153A, the Assessing Officer is supposed to make the assessment strictly on the basis of incriminating material found, if any, from the assessee's premises. He stated that the decision of Hon'ble Jurisdictional High Court in the case of CIT Vs. Kabul Chawla - [2016] 380 ITR 573 (Delhi) still holds good. 6. The learned counsel further stated that even on merits, the addition made by the Assessing Officer was deleted by the ITAT in the case of Shri Subhash Khattar vide ITA No.902/Del/2015, which is affirmed by the Hon'ble Jurisdictional High Court in ITA No.60/2015 dated 25th July, 2017. Similarly, addition made in the case of Asha Rani Lakhotia was also deleted by the ITAT, Delhi Benches in ITA No.424/Del/2015. He stated that the addition in the case of Subhash Khattar as well as Asha Rani Lakhotia was al....
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....#39;ble Jurisdictional High Court in the case of Smt. Dayawanti Vs. CIT - 2017] 390 ITR 496 (Delhi) relied upon by the learned DR is stayed by the Hon'ble Apex Court vide order dated 3rd October, 2017. 9. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and the rival submissions, we find that in these appeals, following two questions arise for our consideration :- (i) Whether any material found in the search of any other person than the assessee in appeal can be considered in the assessment under Section 153A of the assessee. (ii) Whether the addition can be made only on the basis of statement given by the assessee during the course of search. 10. Now, we consider the arguments of both the sides in the light of the facts of the case. The scope of assessment under Section 153A has been considered by the Hon'ble Jurisdictional High Court in the case of Kabul Chawla (supra). In the above mentioned case, Hon'ble Jurisdictional High Court has considered all earlier decisions of Hon'ble Delhi High Court and has also considered the decisions of other High Cour....
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....d any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs 2002-03, 2005-06 and 2006-07. On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." 11. In clause (iv) above, their Lordships held "Obviously an assessment has to be made under this Section only on the basis of seized material". In clause (v), the same is reiterated by holding "In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made". In clause (vii), it is stated "Completed assessments can be interfered with by the AO while mak....
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.... 153 of the Act. Obviously, the reference to the incriminating material in the above decisions of Hon'ble Jurisdictional High Court is in regard to incriminating material found as a result of search of the assessee's premises and not of any other assessee. The legislature has provided Section 153C by invoking the same the Revenue can utilize the incriminating material found in the case of search of any other person to the different assessee. Section 153C is reproduced below for ready reference :- "Assessment of income of any other person. 153C. [(1)] [Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, - (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer havin....
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.... 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the assessee during search operation. 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the....
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....rief facts as noted in paragraph 2.1 of the judgment, it is clear that during the course of search, loose sheets and noting on the telephone diaries were found and seized by the Revenue during the course of search. In paragraph 2.3 again, it is mentioned that the assessment was completed by the Assessing Officer based on the admission made by the assessee during the search and the record seized. Again, in paragraph 5, it is mentioned "we find that the case of the assessee was decided on the basis of his own sworn statements and admitted documents". Thus, in the case before the Hon'ble Madras High Court, the incriminating material was found and seized and statement was based on such incriminating material. Therefore, the above decision would not be applicable to answer the question whether addition can be made under Section 153A solely on the basis of statement. 20. The next decision relied upon by the learned DR is of Hon'ble Delhi High Court in the case of Bhagirath Aggarwal (supra). In this case, Hon'ble Jurisdictional High Court held as under :- "Held, dismissing the appeal, that it was the assessee who had admitted and surrendered a sum of Rs. 1.75 crores as....
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....judgment in the case of Dynamic Orthopedics P.Ltd. vs. CIT (2010) 321 ITR 300 (SC) to contend that the provisions of section 205 of the Companies Act stand incorporated into section 115J of the Act. He read some observations of the Hon'ble Apex Court in Dynamic Orthopaedics (SC)(supra) expressing disagreement with the ratio laid down in the case of Malayala Manorama (supra). We are in full agreement with the ld.DR to the extent that the Hon'ble Supreme Court did record its respectful dissent with Malayala Manorama (SC)(supra) to the effect that depreciation need not be computed as per Schedule XIV of the Companies Act in computing profits for the purpose of section 115J. However, what is significant to note is that the Hon'ble Supreme Court made these observations while directing the Registry to place the civil appeal before the Hon'ble Chief Justice of India for appropriate directions as the matter needs reconsideration by a larger bench. In other words, this is simply a referral order for consideration of the issue by a larger bench and not an enunciation of law by the Apex Court. The ld.AR placed on record a report pointing out that the above appeal referred to ....
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....r material discovered during the search and seizure operation would not empower the Assessing Officer to make the addition merely because any admission was made by the assessee during the search operation. Admittedly, in this case, during the course of search of assessee's premises, no incriminating material was found except the statement of one family member viz., Shri Lalit Mahajan. Solely on the basis of the statement of Shri Lalit Mahajan, the addition was in the case of all the family members, which cannot be done in view of the decision of Hon'ble Jurisdictional High Court in the case of Harjeev Aggarwal (supra) and Best Infrastructure (India) (P.) Ltd. (supra). 29. However, for the sake of completeness, we have also gone through the statement of Shri Lalit Mahajan which is reproduced by the Assessing Officer in the assessment order and, for ready reference, we reproduce the same herein below:- 4. Subsequently, search was conducted at the corporate office of Mahajan group of Okhla Industrial Area and on 11.02.2012 statement of head of the Mahajan family, Sh. Lalit Mahajan was recorded on oath. He admitted in his statement of making cash investment in the above....