TaxTMI 
TaxTMI 
2021 (3) TMI 221
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.... 9,41,660/-, Rs. 13,00,890/- and Rs. 7,52,800/- for A.Y. 2009-10 to A.Y. 2012-13, A.Y. 2014-15 and A.Y. 2015-16 respectively. Later on, statutory notices were issued and A.O. completed the assessments by making additions/disallowances of Rs. 9,09,000/-, Rs. 4,99,500/-, Rs. 8,53,500/-, Rs. 13,44,000/-, Rs. 1500/- and Rs. 1,77,000/- for A.Y. 2009-10 to A.Y. 2012-13. A.Y. 2014-15 and A.Y. 2015-16 respectively on account of unaccounted commission income earned by the assessee. 3.1. The Ld. CIT(A) noted the background of the facts of the case which lead to the above additions. A search and seizure action under section 132 of the I.T. Act was conducted in the Yadav Singh, Rajesh Manocha and Meenu Group. During the course of search action at the residence of Smt. Kusum Lata wife of Shri Yadav Singh evidences in the form of slips were found which established that Shri Yadav Singh has indulged in the practice of awarding contract with the help of his other colleagues for which an unaccounted and illegal commission of 5% was paid to Shri Yadav Singh and his colleagues which includes the assessee also. This fact was categorically admitted by Shri Ramendra Kumar Singh, an employee of the No....
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....e a mention of the name of the assessee in the Accounts Department. The assessee was also searched on the same day on 27.11.2014, which was also closed on the same day and thereafter summons were issued to the assessee under section 131(1) of the I.T. Act,1961 and statement of the assessee was recorded under section 131(1A) of the I.T. Act, 1961. The additions appears to have been made on the basis of the statement recorded under section 131(1A) of the I.T. Act, 1961, without corroborating evidence on record. Nothing was recovered during the course of search in the case of assessee. None of the papers found from other persons were connected with the case of the assessee. The assessee is not connected with Shri Yadav Singh or Shri Ramendra Kumar Singh in any manner. Copy of the Panchanama would show that nothing is recovered from the premises of the assessee at the time of search. The statement of assessee was never recorded under section 132(4) of the I.T. Act, 1961. The statement of assessee was recorded much later on after conclusion of the search on 03.02.2014 to 05.12.2014 in different sittings and assessee was required to write down in his handwriting a pre-written statement p....
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....014, wherein he accepted that Shri Yadov Singh and Shri Pradeep Sharma the appellant along with himself were involved in the receipt of illegal commission payment on the award of contract works. A detailed statement of Shri Ramendra is produced by the AO in the assessment order. Further, in the post search proceedings statement of the appellant was recorded on oath u/s 131 (1A) of the Act, wherein it was categorically accepted by him that he is in receipt of illegal commission against contract awarded to the various contractors during his posting from 2003 onwards till the date of recording of statement. It is also categorically admitted by the appellant that quantum of such commission varies from Rs. 1,000 to Rs. 2,000 per bond. The detailed statement of the appellant is reproduced by the AO from page no. 20 to 29 of the assessment order. The AO estimated the illicit commission of the appellant @ 1500 per bond which cannot be faulted within absence of any other material on the contrary Therefore, AO has correctly estimated the commission income of the appellant during this relevant assessment years which is as follows : Even as A. Y. Contracts 100 to 2000 per bond lence a....
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....merely made an estimated additions without referring to any seized material in all the assessment years. The statement of Shri Ramendra Kumar Singh was not confronted to assessee or allowed any cross examination on behalf of assessee. If the A.O. wanted to use the third party statement or material against the assessee, the A.O. shall have to follow the procedure provided under section 153C of the I.T. Act, 1961. However, the A.O. framed the assessments under section 153A of the I.T. Act, 1961, therefore, such statements or material recovered in the case of Smt. Kusum Lata or Shri Ramendra Kumar Singh cannot be read in evidence against the assessee. No addition could be made against the assessee under section 153A because no incriminating material is found or seized during the course of search. Therefore, the case of the assessee would be covered by Judgment of Hon'ble Delhi High Court in the case of CIT vs., Kabul Chawla 380 ITR 573. He has referred to reply of the assessee Dated 23.12.2016 which was filed before the CIT, Central Circle, Noida explaining under what circumstances statement of assessee was recorded under coercion and duress. The assessee denied to have made any volun....
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....itted that she has made efforts to locate the files of all connected matters, but, are not able to get the details, therefore, no application for clubbing/consolidation have been made by the Ld. D.R. Since these are early hearing appeals, both the parties argued the appeals finally. The Ld. D.R, therefore, submitted that there is no merit in the appeals of assessee, therefore, same may be dismissed. 6. We have considered the rival submissions and perused the material on record. Learned Counsel for the Assessee relied upon the Judgment of Hon'ble Delhi High Court in the case of PCIT [Central]-3 vs., Anand Kumar Jain (HUF) & Others vide Order Dated 12.02.2021 (supra), in which the Hon'ble Delhi High Court in paras 6 to 11 held as under : "6. We have considered the contentions of Mr. Sharma, however, we feel that the instant appeals do not raise any question of law, much less substantial question of law for our consideration. The relevant portion of the impugned order reads as under:- "5. (...) We find that the Ld. Counsel for the assessee has drawn our attention towards the relevant portion of the judgment / decision of the Hon'ble Supreme Court of India, Hon....
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.... carried out under Section 153A of the Act. That statement alone cannot justify the additions made by the AO. Even if we accept the argument of the Revenue that the failure to cross-examine the witness did not prejudice the assessee, yet, we discern from the record that apart from the statement of Mr. Jindal, Revenue has failed to produce any corroborative material to justify the additions. On the contrary we also note that during the course of the search, in the statement made by the assessee, he denied having known Mr. Jindal. Since there was insufficient material to support the additions, the ITAT deleted the same. This finding of fact, based on evidence calls for no interference, as we cannot re-appreciate evidence while exercising jurisdiction under section 260A of the Act. 8. Next, we find that, the assessment has been framed under section 153A, consequent to the search action. The scope and ambit of section 153A is well defined. This court, in CIT v. Kabul Chawla, concerning the scope of assessment under Section 153A, has laid out and summarized the legal position after taking into account the earlier decisions of this court as well as the decisions of other High Co....
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....ny admission was made by the Assessee during search operation. 25. (...) However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for ....
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....nt recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act. (...)" 10. Now, coming to the aspect viz the invocation of section 153A on the basis of the statement recorded in search action against a third person. We may note that the AO has used this statement on oath recorded in the course of search conducted in the case of a third party (i.e., search of Pradeep Kumar Jindal) for making the additions in the hands of the assessee. As per the mandate of Section 153C, if this statement was to be construed as an incriminating material belonging to or pertaining to a person other than person searched (as referred to in Section 153A), then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act by handing over the same to the AO who has jurisdiction over such person. Here, the assessment has been framed under section 153A on the basis of alleged incriminating material (being the statement recorded under 132(4) of the Act). As noted above, the Assessee had no opportunity to cross- examine the said witness, but that apart, the mandatory procedure under section 1....
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....he incriminating material was found during the course of search from the possession of the assessee. It may also be noted that Annexures A1 and A2 as referred to in the impugned assessment orders even do not disclose any name of the assessee or any material as to how the assessee is connected with the seized material. Since the documents itself do not indicate any involvement of the assessee for getting any commission etc., therefore, such recovery of the Annexures A1 and A2 would not implicate the assessee for earning of any commission at any point of time. Thus, the evidences which remained with the Revenue was the statement of Shri Ramendra Kumar Singh recorded under section 132(4) of the I.T. Act, 1961. This statement of Shri Ramendra Kumar Singh is not corroborated with any evidence or material on record. Thus, his statement alone is not sufficient to fasten any liability upon the assessee so as to compute undisclosed income in the form of getting commission by the assessee. The assessee claimed that statement of Shri Ramendra Kumar Singh was not confronted to assessee and no right of cross-examination have been allowed to assessee. The Ld. D.R, however, submitted that while r....
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....ng by filing a letter and affidavit to the Income Tax Authorities as well as President of Noida Authority, but, the delay in retracting the statement is of no significance because there were no corroborative material found during the course of search at the residence of Smt. Kusum Lata or Shri Ramendra Kumar Singh or at the residence of the assessee. Thus, in the absence of any corroborative evidence, statement of Shri Ramendra Kumar Singh or assessee cannot be the basis for estimating the additions of commission against the assessee in all the assessment years under appeal. It is well settled Law that if no incriminating material was found during the course of search, such type of additions cannot be made against the assessee. We rely upon the Judgment of Hon'ble Delhi High Court in the case of CIT vs., Kabul Chawla (supra). Further the statement of Shri Ramendra Kumar Singh and Annexures A1 and A2 found in their case being a third party cannot be referred to or relied upon in the case of the assessee unless the procedure provided under section 153C of the I.T. Act, 1961 have been adopted by the authorities below. Thus, the issue is entirely covered by Judgment of Hon'ble Delhi Hi....