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2018 (4) TMI 788 - AT - Income TaxValidity of initiating proceedings u/s 153A - Validity of Search Action - reliability of seized material - Held that:- The impugned seized material AIBSG/01 and AIBSG/02 were found in the premises of the BSG and not in the premises of the assessee. AO himself has held that the seized material AIBSG/01 and AIBSG/02 did not belong to the assessee but rather belongs to BSG. Having held that the said seized material belonged to BSG, AO at a later date issued the requisite notice and completed the assessment in his case making substantial additions, largely relying on the same seized material - Unless the material belongs to the assessee, the same cannot be used or held against the assessee in proceedings under Section 153A or 153C of the Act. Thus the additions made by the Assessing Officer based on seized material AIBSG/01 is unsustainable for this reason. As the seized material AIBSG/01 as per the panchanama contained 72 total pages and 72 written pages whereas the copies supplied to the assessee contained 90 written pages - reply of Revenue is that all the seized material are properly numbered, serialized, are genuine and that the objection put forth by the assessee is hyper technical in nature. If the copies of the seized documents supplied are in excess of the actual documents seized, as seemed to be suggested by the assessee, the assessee could easily point out the documents that don’t belong to it. This has not been done. It could be merely a case of wrong mention of numbers in the Panchanama. As long as the assessee has not pointed out any document as not being genuine, this objection is technical and has no bearing on the substantive issues raised in the appeal. We, therefore, dismiss the objections raised in this regard. Statements recorded based on the seized material AIBSG/01 and AIBSG/02 from BSG, AKG and KMG - mere reliance on a statement recorded during search action, that too of third persons, for making additions in the case of the assessee is not appropriate - Where the assessee has claimed that the statement was not based on any documents. It is also settled principle that when documents / statements are used against the assessee, copies of the same have to be provided and opportunities afforded to the assessee to explain the statements made. Mere reliance on a statement recorded in the wee hours of the day in the course of search action without any further efforts to bring in corroborative evidence and afford opportunities to the assessee and to the deponents also to explain or rebut or correct the statements is inappropriate. On an appraisal of the record before us, in our view, the Assessing Officer has faultered in not following the rule of law and the procedures prescribed in this regard Disallowances made on the basis of statements of persons not being made available for cross-examination cannot be used against the assessee and hence such disallowances are not sustainable. Even otherwise, we have already held in the pre-paragraphs of this order (supra) that seized material found in the premises of third person cannot be used against the assessee without any corroborative evidence that the seized material belongs to the assessee. Therefore these additions fail on this count as well
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