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2020 (2) TMI 772 - ITAT DELHIReopening of assessment u/s 147 OR assessment u/s 153C - addition u/s 68 - addition based on statement of accommodation entry providers - HELD THAT:- It is important that the documents found during the course of search from 1/3 person or any other material should belong to the assessee (pertinent to the assessee after amendment) and the AO must be satisfied that such books of accounts et cetera have a bearing on the determination of the total income of such other person. If 1 of the condition fails, the provisions of section 153C cannot be applied. Therefore, the material available with the assessing officer would be a tangible material based on which the proceedings u/s 147 of the income tax act, if it stands the test of the provisions of that section, can be initiated. Thus, it is not necessary that if books of accounts of these assessee are found during the course of search on third person, necessarily the case of the assessee must be completed by invoking the provisions of section 153C of the act. Merely because regular books, of other persons are found with searched persons assumption of jurisdiction by AO of Other persons may be justified but since these are generally the regular books of account on the basis of which returns are prepared, there cannot be any undisclosed income arising from them. In view of expression, "books of account/documents/assets seized have a bearing on the determination of total income" appearing in section 153C(1), proceedings u/s. 153C will not be valid. In view of this, we are of the opinion that assessing officer did not have any jurisdiction to invoke the provisions of section 153C of the income tax act and therefore it has not been rightly invoked by him. Thus, action of AO for reopening of the assessment u/s 147 of the act is upheld. Validity of reopening of assessment - reopening has been challenged as proceedings u/s 147 is solely on the basis of the unverified, on rectified, unsubstantiated and unconfirmed statement of Mr Malu - HELD THAT:- AO merely on the basis of the statement of the entry operators, who did not name the share deposit as 1 of the companies operated by them, the inspector report saying that share deposit and did not exist by inquiring at the incorrect address and failure to give cross-examination of those entry operators, which are the only statement against the assessee, the addition made by the learned assessing officer cannot be sustained. Honourable Supreme Court in M/S ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE,KOLKATA-II [2015 (10) TMI 442 - SUPREME COURT] has held that when except the statement of the 3rd party is the only evidence available with the revenue authorities, addition cannot be made on that solitary evidence without granting the cross-examination of such 3rd party to the assessee when asked for. In the present case the assessee asked for cross-examination before the assessing officer and as well as before the learned CIT – A, the assessee did not give the cross-examination of those accommodation entry providers. Further, the copies of the statement given by the assessing officer during the course of remand proceedings, none of the statement of the entry provider implicated the company, which deposited the share capital with the assessee. Addition made by the learned assessing officer and sustained by the learned CIT – A cannot be upheld. We direct the learned AO to delete the addition.
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