TMI Blog2024 (4) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered to be incriminating material for the purpose of Section 153A of the Act to make addition in hands of assessee as a searched person, as the two AYs before us are of concluded assessments. The corollary to aforesaid being that to consider the said seized document of transactions of appellant reflected in manual cash book in the hands of appellant, provisions of Section 153C should have been invoked at the first instance. Thus the change of head of the addition by Ld. CIT(A), has resulted in vitiating the exercise of jurisdiction u/s 153A of the Act and 153C of the Act. Additions u/s 69C against Cash Expenditure - Disclosure were made by appellant in IDS - Even otherwise, if Ld. CIT(A) has given benefit to the appellant of having cash in hand subsequent to the disclosure in IDS, then the source of impugned expenditures incurred by Mr Vasudevan, on behalf of the appellant should also be accepted. Restricting the benefit to opening balance in AY 2015- 16 has no basis except being based on presumption. Thus, there was no justification with CIT(A) to hold that the said expenditure by Mr. Vasudevan, were the benefit or perquisites given by the company to its director which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to search, the assessment proceedings under section 153A of the Act, were initiated for both the AYs, which were completed vide order(s) dated 17/03/2021 after making addition(s) of Rs. 28,20,658/- and Rs. 9,25,074/- respectively under section 69C of the Act on the basis of a manual cash book, alleged to be containing cash expenses from unexplained sources found from the premises of Lion Manpower. 4. On further appeal, the Ld. CIT(A), however, allowed partial relief to the appellant and modified the order of the assessing officer by partially sustaining the additions u/s 2(24)(iv) of the Act, by considering the same as the benefit or perquisite obtained by the director from the company. 5. The assessee is in appeal raising the following grounds for AY 2015-16 which are similar in both the AY, except the amounts involved:- 1. Under the facts and circumstances of the case, the Ld. CIT(A) has grossly erred on facts as well as in law in not annulling the assessment order passed by the Ld. AO u/s 153A r.w.s. 143(3) which is ex-facie illegal, arbitrary and without jurisdiction being against the principles of natural justice and against the provisions of IT Act, 1961. 2. Under the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f panchnamas of both the appellant and Company are enclosed at page 120-129 of paper Book II. The case of Ld. AR is that the Ld. AO did not refer any document found during the course of search upon the appellant. The seized material, i.e., cash book was annexed at Annexure A-12 and A-13, which was found from the aforementioned premises of Lion Manpower and formed part of its Panchnama. Therefore, during the course of search upon the appellant, no incriminating material was found. Thus Ld. AR contends, under the circumstances, no addition can be made in the case of the appellant, and Ld. AR heavily relied Hon ble Supreme Court judgment in PCIT Vs Abhisar Buildwell Pvt. Ltd.; 454 ITR 212(SC). 8. It comes up that as the appellant raised this issue before Ld. CIT(A) however, the Ld. CIT(A) decided the same against the appellant by holding as under: 6.2. I have carefully considered the contentions raised by the appellant. Regarding the contention that the seized documents on the basis of which addition have been made in the case of the assessee were found from the premises of M/s Lion Manpower Solutions Pvt. Ltd and such seized documents from a third party cannot be used in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further reliance is placed on the decision Delhi High Court in the case of PCIT, (Central) - 3 Vs. Anand Kumar Jain (HUF) [ITA 23, 26-31/2021] dated 12.02.2021 for the proposition that even if a search was conducted upon the premises of the assessee, if the AO was relying upon the incriminating material found from the search of third party, then the same can not be used for assessment u/s 153A and AO should have resorted to section 153C of the Act. We consider it pertinent to reproduce the part of judgment relied by Ld. AR, herein below; 8. Next, we find that, the assessment has been framed under section153A, consequent to the search action. The scope and ambit of section 153Ai s well defined. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly relied the judgement of the Hon ble Supreme Court in the case of CIT vs. Ajit Kumar (2018) 93 taxmann.com 294(SC) as the adverse material found at the time of search and seizure proceedings at the premises of the company had material information available with regard to the transactions of the assessee also. It was submitted that the company does not have a separate existence and a mind of its own. With regard to certain transactions of Mr. Vasudevan which was submitted in the form of explanation from the assessee, it was submitted that the same were not through any banking channel and were rightly disbelieved by the ld.CIT(A). It was also submitted that this amount was not accounted in the cash book of the assessee. The ld. DR has relied MDLR Resorts Ltd. vs. CIT, (2014) 361 ITR 407 (Del) to submit that infirmities in Panchnama are not material to question the search. 15. After taking into consideration of material before us and the submissions, it comes up that Assessing officer has relied on manual cash book of Company for the period 07-10-2014 to 22-04-2015, which was found and seized from premises of Company only. Admittedly the manual cash book of Company was maintained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,20,658 16,57,222 2016-17 9,25,074 8,54,575 20. Ld. CIT(A) has held that: i) Since the source of expenses is cash of the company traceable to the seized cash book itself in the form of; i) funds introduced by the appellant and ii) withdrawals from the bank account of the company, such expenditure cannot be treated as unexplained expenditure u/s 69C of the Act. ii) However, the said expenses were personal expenses of the appellant which were incurred by the company. Therefore, since the personal expenses of the appellant were met by the company, the said amount is chargeable as income of the appellant as per the provisions of section 2(24)(iv) of the Act. iii) The CIT(A) gave the benefit of opening cash balance in the aforesaid cash book to the extent of Rs. 12,33,835/- as relatable to income of Rs. 50 lacs disclosed by the assessee in Income Declaration Scheme, 2016 (IDS)for AY 2014-15, and rejected the balance to be attributable to the same on the ground that the cash book was meticulously maintained by Mr. Vasudevan and if the income of Rs. 50 lacs in the form of cash was given to Mr. Vasudevan, it should have accounted as receipt in the said cash book and therefore, the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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