TMI Blog2019 (3) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... roceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person. Value of the statement recorded during the course of search - HELD THAT:- We, respectfully following the decision of Harjeev Aggarwal [2016 (3) TMI 329 - DELHI HIGH COURT] and Best Infrastructure (India) (P.) Ltd. [2017 (8) TMI 250 - DELHI HIGH COURT] hold that the statement recorded during the course of search on standalone basis without reference to any other 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. Solely on the basis of the statement of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Mahajan 4500 sq.ft. 69,30,000 2,24,82,000 Total 3,08,00,000 10,00,00,000 4. However, during the course of assessment proceedings, the assessee filed letter dated 11th March, 2014 in which he denied to have made any investment in cash in Indirapuram Habitat Centre. The Assessing Officer recorded his statement u/s 131 in which also he reiterated the same i.e., denied making any cash investment in Indirapuram Habitat Centre. The Assessing Officer also note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting 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 also made on the basis of same excel sheet found during the course of search at Aerens Group for alleged payment for acquisition of space at Indirapuram Habitat Centre. 7. Learned DR, on the other hand, stated that during the course of search of Aerens Group who is the builder and developer of Indirapuram Habitat Centre, it was found that in the booking of space in the said complex, huge cash payment was being received by them. An excel sheet was found from the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Courts and Tribunals and summarized the legal position in paragraph 37 and at the conclusion of the case in paragraph 38, which are reproduced below:- Summary of the legal position. 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:- i. Once a search takes place under Section 132 of the Act, notice under Section 153A(1) will have to be mandatorily issued to the person se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 making the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search . 12. Similar view was expressed by their Lordships in the case of CIT Vs. RRJ Securities Ltd. [2016] 380 ITR 612 (Delhi). 13. In the case of Principal CIT, Delhi-2 Vs. Best Infrastructure (India) (P.) Ltd. [2017] 397 ITR 82 (Delhi), their Lordships of Jurisdictional High Court reiterated the similar view in paragraph 33 of the order, which reads as under :- 33. At this stage, it requires to be noticed that the decision of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding 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 having jurisdiction over such other person] [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person [for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 17. Thus, Hon'ble Jurisdictional High Court has held The words evidence found as a result of search would not take within its sweep statements recorded duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 ₹ 1.75 crores as his undisclosed income. It was incumbent upon him to show that he had made a mistake in making that admission and that the admission was incorrect. He had access to all the documents which had been seized inasmuch as copies had been supplied to him. However, he did not produce anything to establish that the admission was incorrect in any way. Thus, the assessee could not resile from his statements made on November 10, 11, 2005, and November 21, 2005. The statements recorded under section 132(4) were clearly relevant and admissible and they could be used as evidence. In fact, once there was a clear adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies 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 a larger bench in Dynamic Orthopaedics is still pending before the Hon'ble Supreme Court. The position, which therefore, emerges is that the decision in the case of Malayala Manorama (SC)(supra) cannot be construed as overruled. It still holds the field as a binding precedent. 23. The identical situation is here. The decision of Hon'ble Delhi High Court in the case of Harjeev Aggarwal (supra) is referred to for consideration by the Larger Bench. Therefore, following the above decision of ITAT, we hold that merely by reference to Larger Bench, it cannot be construed that decision in the case of Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rastructure (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 stated projects of AEZ group. The relevant extracts of his statement are reproduced here below in respect of project at Indirapuram Habitat Centre :- Que.6 Please give details of consideration paid for booking of 20,000 sq.ft space in Indirapuram Habitant Centre as stated by you. Please also state when these spaces were booked. Ans. The details in respect of booking of spaces in Indirapuram Habitant Centre is as under: S.No. Name of Investor Area/Unit No. Amount paid in cheque Amount paid in cash 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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