TaxTMI 
TaxTMI 
2025 (11) TMI 719
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....s allegedly found to be the beneficiary of accommodation entries and additions were made which were deleted by the ld. CIT(A) for which the Revenue is in appeal raising the following grounds:- "1. The Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 95,43,719/- made on account of the alleged cash commission from facilitation of accommodation entries by holding that no incriminating material was seized nor any statement on oath was recorded in the premises of the assessee during search whereas substantial incriminating material was seized and statements were recorded simultaneously from the premises of the closely connected persons committing the same offence as the assessee did. 2. The Ld. CIT(A) erred in law and on facts in deleting the Addition of Rs. 1,06,440/- made on account of cash commission earned from cash transportation activity by holding that no incriminating material was seized nor any statement on oath was recorded in the premises of the assessee during search whereas substantial incriminating material was seized and statements were recorded simultaneously from the premises of the closely connected persons committing the same offe....
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....f hearing of the appeal." 3. The ld. DR has heavily relied the order of the AO submitting that the statements recorded were rightly relied by the ld. AO. It was submitted that the assertion of the ld. CIT(A) that there was no incriminating evidence is not sustainable. 4. After going through the material on record, we find that in paras 4 to 4.1.10 and in para 4.1.20, the ld. CIT(A) has made the relevant observations which are reproduced below:- "4. I have considered the material on record including written submission of the AR of the appellant filed in course of appellate proceedings. I have also perused the assessment order u/s 153A/143(3) of the Income Tax Act, 1961 of the Act. 4.1.1 In Additional Ground No. 1 admitted above, the appellant has contended that the A.O. erred in law as well as in facts by making aggregate addition on account of alleged cash commission earned from supposed cash transportation activity, alleged commission earned for facilitating accommodation entries and on account of alleged unexplained investments in the assessment orders passed u/s 153A of the IT Act, 1961 though no incriminating document was found during the course of searc....
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....rocedure of law has not been followed by the Ld.AO and therefore the additions cannot be legally sustained. For using any material found from the premises of third party (Sh. Sukanta Roy) during the course of search in assessment proceedings of the appellant, the Ld.AO of the third party was required to record satisfaction as the material belong to the appellant in terms of section 153C of the Act and then was required to proceed as per the provisions of the section 153C of the Act. In the instant case the addition in dispute has been made in the assessment completed u/s 153A of the Act and not u/s 153C of the Act. The Act has provided separate provisions for making assessment in case of material found in the course of the search from the premises of the assessee as well as the material found in the course of search at the premises of the third party. The Assessing officer is required to follow the procedure laid down in the Act for making the assessment and he cannot devise his own procedure for shortcut methods. When the case of the assessee is covered under the provision of section 153 of the Act and if reliance is placed on the incriminating material found during the course of ....
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....seized from the premises of Sh. Nishant Chhajer and Sh. Sukanta Roy. No incriminating material relied upon by the Assessing Officer was seized from the premises of the appellant. 4.1.9 It is held that statement on oath of Sh. Ashish Begwani recorded u/s 132(4) on 22.10.2016 was recorded during search in the case of Sh. Ashish Begwani and not during the course of search in the case of the appellant. Similarly, seized material found from the premises of Sh. Nishant Chhajer and Sh. Sukanta Roy was not seized during the course of search in the case of the appellant. 4.1.10 From perusal of the assessment order, it is evident that neither any incriminating material unearthed during course of search in the case of the appellant nor any adverse statement on oath recorded with regard to above addition. The appellant had filed return of income on 29.03.2013 i.e. before the date of search. The time limit for issue of notice u/s 143(2) had expired on 30.09.2013 while the search was conducted on 22.10.2016. Various courts have held that no addition could be made in the hands of the appellant since no incriminating material was unearthed during course of search and the assessme....
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....ment does not constitute incriminating material found during the course of search. It is evidence collected during post search investigation and even that too in the case of Sh. Ashish Begwani. Hence, no addition can be made on basis of this statement in view of decision of Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla [2016] 380 ITR 573 (Delhi). 4.2.6 Respectfully following the above decisions of jurisdictional Delhi High Court and ITAT Delhi, it is held that if no incriminating material is found during search of an assessee and incriminating material is found in search conducted in the case of a third party, then the only legal recourse available to the department was to proceed in terms of Section 153C of the Act. Return of income was filed by the appellant on 29.03.2013 and last date for issue of notice u/s 143(2) of Income Tax Act expired on 30.09.2013, the assessment stood completed on the date of search. Since statement on oath of Sh. Ashish Begwani recorded u/s 132(4) on 22.10.2016 as well as seized material found from the premises of Sh. Sukanta Roy were not seized during course of search in the case of the appellant, it is held that the Assessing Of....
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....573(Delhi) (ii) Hon'ble Delhi High Court in the case of PCIT (Central) -3 Versus Anand Kumar Jain (HUF) decided on 12.02.2021, ITA 23,26 to 31/2021 (iii) Mr. Trilok Chand Chaudhary v. ACIT, Central Circle-26, New Delhi, ITA No. 5870/Del/2017, Dated: 20 Aug 2019 (ITAT Delhi) (Annexure-16) (iv) DCIT v. Shivali Mahajan and others, ITA No. 5585/Del/2015, Dated: 19 Mar 2019 (ITAT Delhi). (Annexure 17) - [Group search was conducted] (v) DCIT v. Vikas Jain, ITA No. 4075/Del/2014, Dated: 19 Mar 2019. (ITAT Delhi). (Annexure 18) (vi) Pavitra Realcon (P) Ltd. v. ACIT [2017], ITA No. 3185/Del/2015, Dated: 4 Oct 2017 (ITAT Delhi). (vii) CIT v. Pinaki Misra [2017], ITA No. 119/2004 and ITA No. 423/2004, Dated: 3 Mar 2017 (Delhi High Court) (Annexure 19) 4.4.3 I have considered facts of the case as well as written submissions of the appellant. From perusal of the assessment order, it is observed that addition of Rs. 10,05,00,000/- has been made on the basis of Statement of Jatin Madani recorded u/s 131 on 09.06.2017 as well as statement of Vikas Kumar Aggarwal recorded u/s 131 on 18.05.2017 in Kolkata. The issue that arises for consi....
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....clusion of his search. ............ ........... 4.4.12 In view of above facts, it is held that statements on oath of Sh. Jatin Madani recorded on 09.06.2017 and Sh. Vikas Kumar Agarwal recorded on 18.05.2017 were recorded during post search investigation and does not constitute incriminating material found during the course of search. Hon'ble Delhi High Court in the case of PCIT Vs Subhash Khattar (ITA No. 60/2017) dated 25.07.2017 held that in the absence of incriminating material in a completed assessment, seized material found in some other search could not be utilized for making addition. In view of above judicial decisions, particularly Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla [2016] 380 ITR 573, it is held that it was not open for the Assessing Officer to assume jurisdiction under section 153A of Income Tax Act de hors any incriminating material. Accordingly, addition of Rs. 10,05,00,000/- is hereby deleted and additional Ground Nos. 1 & 2 of the appeal are hereby allowed with respect to addition of Rs. 10,05,00,000/" 5. On going through all relevant findings of the ld. CIT(A) in regard to the grounds which have been raised....