AMARJIT SINGH,BATHINDA V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2 LUDHIANA, LUDHIANA

CO 7/CHANDI/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted an addition made by the Assessing Officer (AO) under Section 68 read with Section 115BBE of the Income Tax Act, 1961, amounting to Rs.9,65,71,414. The addition was based on a document titled 'BTD 2011' found during a search operation at the premises of a third party, Shri Kapil Romana, which allegedly contained entries related to the assessee, Shri Amarjit Singh. The Tribunal examined whether the AO correctly followed the procedural requirements under Sections 153A and 153C of the Income Tax Act in making the addition. The Tribunal concluded that the AO did not adhere to the mandatory procedure required under Section 153C, as the document was not found at the assessee's premises and no incriminating material directly linked to the assessee was discovered during the search.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36628 (ITAT-CHANDIGARH)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2019-2020
• Other Referred Cases: CIT, Bangalore Vs IBC Knowledge Park Pvt. Ltd., Shri Tarsem Singla Vs CIT- Central, Ganesh Builders Vs CIT, Manish Maheshwah v. Asst. CIT, CIT Vs Calcutta Knitwears, Misty Meadows Private Limited Vs Union of India, CBI Vs V.C.Shukla and others, Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II, CIT Vs Parveen Juneja, PCIT Vs Hassan Ali Khan, Shri Vasantlal & Co. Vs CIT, CIT Vs Ashwani Gupta, CIT Vs Pradeep Kumar Gupta
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROHIT SHARMA
• Assessee Lawyers: PANKAJ BHALLA
• Keywords: Unexplained cash credit; Document seized; Documents seized; Block assessment; Reason to believe; Opportunity of cross examination
• Section: 143(3); 250; 153; 132; 153A; 68; 22; 153C; 72; 158BC; 158BD; 158B(b); 20

Judgement Text

"आयकर अपील य अ\u000bधकरण,च\u0010डीगढ़ \u0014यायपीठ, च\u0010डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 774/CHD/2023 \u001bनधा\u001dरण वष\u001d / Assessment Year: 2019-20 The DCIT, Central Circle-2, Ludhiana. Vs Shri Amarjit Singh, 76, Green Avenue, Improvement Trust Colony, Opp. Rose Garden, Bathinda. \u0001थायी लेखा सं./PAN NO: AJNPS6631H अपीलाथ\u000f/Appellant \u0010\u0011यथ\u000f/Respondent & C.O. No. 07/CHD/2024 in आयकर अपील सं./ ITA No. 774/CHD/2023 \u001bनधा\u001dरण वष\u001d / Assessment Year: 2019-20 Shri Amarjit Singh, 76, Green Avenue, Improvement Trust Colony, Opp. Rose Garden, Bathinda. Vs The DCIT, Central Circle-2, Ludhiana. \u0001थायी लेखा सं./PAN NO: AJNPS6631H अपीलाथ\u000f/Appellant \u0010\u0011यथ\u000f/Respondent Assessee by : Shri Pankaj Bhalla, CA Revenue by : Shri Rohit Sharma, CIT DR Date of Hearing : 04.02.2025 Date of Pronouncement : 06.03.2025 HYBRID HEARING O R D E R PER RAJ PAL YADAV, VP The Revenue is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 2 short ‘the CIT (A)’] dated 25.09.2023 passed for assessment year 2019-20. 2. On receipt of notice in Revenue’s appeal, assessee has filed Cross Objection bearing No. 07/CHD/2024. 3. The assessee has raised 7 grounds in his Cross Objection, however, ld. Counsel for the assessee did not press Ground No. 3 and 6 at the time of hearing. Hence, both the grounds are rejected. Ground No. 7 is general ground which does not call for recording of any finding. 4. In Ground No. 1 of the Cross Objection, assessee has pleaded that ld. CIT(A) has rightly passed order under Section 250 of the Income Tax Act and deleted the addition of Rs.9,65,71,414/-. Similarly, in Ground No. 5, the assessee has pleaded that CIT(A) has rightly deleted addition made under Section 68 read with Section 115BBE amounting to the tune of Rs.9,65,71,414/-. In other words, both the grounds are in support of the CIT(A)’s finding. If we peruse sub-clause (4) of Section 253 of the Income Tax Act, it provides that the AO or the assessee, as ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 3 the case may be, on receipt of notice that an appeal against the order of the CIT(A) has been preferred under sub-section (1) or sub-section (2) by the other party, may notwithstanding that he may not be appealed against such order, or any part thereof, within 30 days of receipt of the notice, file a Memorandum of Cross Objection and in other words, a respondent could file a Cross Objection within 30 days on receipt of notice in an appeal. This clause further contemplates that this Cross Objection should be against any part of the order of the CIT(A). It means it is to be filed aggrieved with any part of the order. No Cross Objection is maintainable qua in support of the order. Hence, these grounds could have not been raised in the Cross Objection. Accordingly, Ground No. 1 and 5 are rejected. 5. Ground No. 2 and 4 are inter-connected with each other. In these grounds, assessee has challenged the very jurisdiction of the AO for passing an assessment order under Section 153A read with Section 143(3) of the Income Tax Act. ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 4 6. In brief, facts of the case are, a search & seizure operation was carried out upon the premises of the assessee on 26.02.2020. According to the AO, assessee belongs to Home Line Group of Cases, Mohali. A simultaneous search was conducted on the premises of one Shri Kapil Romana on whose premises a document heading “BTD 2011” was found and seized. According to the AO, this document exhibits an outstanding loan taken from one Shri “Happy Jee” at Rs.11,45,78,645/- is available. The AO was of the view that assessee must have advanced this loan to Shri Kapil Romana which is recorded in said ledger. Therefore, on the basis of this document, the AO confronted the assessee to explain the source of such loans advanced by him to Shri Kapil Romana. The assessee has submitted that this document was not in his handwriting. It was not found from his possession. It is in the handwriting of some other person, it was found from the possession of third person. He has no connection with any such transaction. We will be dealing with this issue on merit while taking up the appeal of the revenue but for ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 5 a limited purpose, its reference is being mentioned here because according to the assessee, the assessment has been framed under Section 153A and documents found during the search of a third person is being used by the ld. AO for making an addition on the basis of a document seized from third person, an assessment ought to have been passed under Section 153C of the Income Tax Act. In other words, AO ought to have followed the procedure contemplated in Section 153C of the Income Tax Act. The ld. Counsel for the assessee drew our attention towards Section 153C and thereafter submitted that since AO failed to adhere this procedure, hence his assessment order is not sustainable. In support of his contention, he relied upon the judgement of Hon'ble Karnataka High Court in the case of CIT, Bangalore Vs IBC Knowledge Park Pvt. Ltd. reported in (2016) 69 taxmann.com 108 (Kar), copy of this judgement has been placed in the Paper Book at page No. 72 to 91. 6.1 Similarly, he relied upon the judgement of ITAT Chandigarh in the case of Shri Tarsem Singla Vs CIT- ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 6 Central, in ITA No. 263/CHD/2012, copy is placed at page No. 92 to 108. He further relied upon the order of the ITAT in the case of Ganesh Builders Vs CIT passed in ITA No. 452/CHD/2022. Copy of this order is being placed at page No. 109 to 123. On the strength of these judgements, ld. Counsel for the assessee contended that assessment order is not sustainable in the present form. 6.2 The ld. CIT DR, on the other hand contended that since notice under Section 153A was served upon the assessee as the assessee was also covered under the search action, therefore, it was open for the AO to look into all the relevant material. 7. We have duly considered the rival contentions and have perused the record carefully. Section 153C has a direct bearing on the controversy. Therefore, we deem it appropriate to take note of the relevant part of this Section which read as under : Assessment of income of any other person. “153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 7 (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 assessment year or years referred to in sub-section (1) of section 153A :” 8. A bare perusal of this Section would reveal that if during the course of a search, any money, bullion, jewellery or books of account pertains to any person other than the searched person, then AO of the searched person would record his satisfaction exhibiting the fact that income pertaining to other assessee has escaped assessment. Thereafter, he would transmit that seized material alongwith his satisfaction note to the AO having territorial jurisdiction over such other person, the AO of the other person would also record his satisfaction and issue notice under Section 153C of the Income Tax Act. In the present case, the AO of Shri Kapil Romana has not ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 8 recorded any satisfaction that document ‘BTD-2011’ pertains to the assessee. It is a ledger account of Shri Kapil Romana. At the most, information contained in this document partially be pertaining to the assessee. But in both the courses, he has to first record his satisfaction that income pertaining to the assessee Shri Amarjit Singh has escaped assessment and therefore, he is transmitting these seized materials to the AO of the assessee but no such procedure has been followed. A similar situation has been dealt with by Hon'ble Karnataka High Court in the case of CIT Vs IBC Knowledge Park. The relevant observations contained in paragraph No. 49 to 51 are worth to be noted which read as under : “49. On a conjoint reading of the aforesaid provisions, it becomes clear that a search can take place only when a concerned officer has information and reason to believe that any person is in possession of any valuable assets, which has not been or would not be disclosed under the Act. In such a case, a search can take place. Following the search, if any books of account, other documents, any valuable assets is or are found in the possession or control of any person in the course of a search, then the books of account or other documents or valuable assets could be seized. Under Section 153A, the satisfaction regarding an inference of liability must be recorded. The Assessing Officer has to issue notice to the assessee i.e., the person searched for the purpose of assessment or reassessment of the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted. Section 153C as already noted, deals with assessment of income of any other person, when the Assessing Officer is satisfied that the books of account or documents or valuable assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to under sub-section(l) of Section 153A of the Act. In such a ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 9 case, the Assessing Officer has to issue notice to assess or reassess income of other person under Section 153A of the Act. Thus, the fact that search has been conducted would not justify issuance of notice under Section 153A. If it is only during a valid search when certain incriminating materials are detected, notice could be issued. 50. Chapter XIV-B which deals with special procedure for assessment of search cases deals with undisclosed income as a result of search, the computation thereof and such other provisions. Undisclosed income is defined in Clause (b) of Section 153B. Undisclosed income includes money, bullion or other valuable assets. It is only when the concerned officer has information about the same and has reason to believe that the said valuable assets has not been or would not be disclosed would give jurisdiction to the officer authorized to conduct a search operation. Therefore, the object and purpose of a search is to detect undisclosed income. As defined under Clause (b) of Section 158B of the Act, it is only when the undisclosed income is detected in a search operation that there would be assessment or reassessment, under the provisions of Chapter XIV-B of the Act, of the person who is presumed to be in possession of the undisclosed income. If during the course of search, any valuable assets belongs to or any books of account or document seized or requisitioned pertains to or any information contained therein relates to a person other than the persons searched, then the Assessing Officer, on recording satisfaction, can also assess and reassess the income of any other person. Thus, what emerges is that the sine qua non for the purpose of assessment or reassessment pursuant to a search operation is detection of undisclosed income. In fact, the initiation of search proceeding is also based on possession of information and reason to believe that a person is in possession of certain valuable assets, which has not been or would not be disclosed under the Act. The same is nothing but 'undisclosed income' as defined in Clause (b) of Section 158B(b) of the Act. This becomes even more clear on a comparison of section 132(l)(c) with Section 158B(b) of the Act. It is for the above reason that Sections 153A and 153C begin with a non-obstante clause in order to make these provisions exclusive of Sections 139, 147, 148, 149, 151 and 153 of the Act. If a search operation does not lead to detection of undisclosed income as defined in Chapter XIV-B of the Act, then no purpose would be served in reopening the assessment already completed. Also, if there is no detection of any undisclosed income, then there would be no need for pending assessment to abate. Thus, when particulars of income declared in the return is already available with the Assessing Officer, such income cannot form part of undisclosed income even if such return is filed beyond the time-limit, but before search, as long as they relate to any year covered in the block. Thus, a block assessment is justified only on the basis of evidence found during search and the materials or information relatable thereto. Section 153C is in pari materia with Section 158BD conferring jurisdiction over third parties to a search providing certain conditions before the Assessing Officer having jurisdiction over a third party can assume jurisdiction. Materials such as books of account, documents or valuable assets found during a search should belong to a third party which would lead to an inference of undisclosed income of such third party. Such an inference ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 10 should be recorded by the Assessing Officer having jurisdiction over the searched persons and communicated to the Assessing Officer having jurisdiction over such third party along with the seized documents and other incriminating materials on the basis of which the Assessing Officer having jurisdiction over such third party would issue notice under Section 153C. On receipt of the aforesaid material, the Assessing Officer having jurisdiction over such third party would proceed against the said third party. Thus, where no material belonging to a third party is found during a search, but only an inference of an undisclosed income is drawn during the course of enquiry, during search or during post-search enquiry, Section 153C* would have no application. Thus, the detection of incriminating material leading to an inference of undisclosed income is a sine qua non for invocation of Section f 53C of the Act. 51. Before considering the decisions cited at the Bar, it is necessary to refer to a decision of the Hon'ble Supreme Court in Manish Maheshwah v. Asst. CIT [2007] 289 ITR 341/158 Taxman 258. In that case, search was conducted on one of the directors of the assessee-company M/s. Indore Construction (Pvt.) Ltd. When the search was conducted in the premises of the director Sri. Manish Maheshwari and his wife several incriminating documents relating to the company were seized. While dealing with Section 158BD of the Act, the Hon'ble Supreme Court has observed as under: \"Condition precedent for invoking a block assessment is that a search has been conducted under Section 132, or documents or assets have been requisitioned under Section 132A. The said provision would apply in the case of any person in respect of whom search has been carried out under Section 132A or documents or assets have been requisitioned under Section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of Section 158BC in respect of any other person, the conditions precedents wherefor are : (i) Satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other ,than the person with respect to whom search was made under Section 132 of the Act; (ii) The books of account or other documents or assets seized or requisitioned had been handed over to the Assessing Officer having jurisdiction over such other person; and (iii) The Assessing Officer has proceeded under Section 158BC against such other person. The conditions precedent for invoking the provisions of Section 158BD, thus, are required to be satisfied before the provisions of the said chapter are applied in relation to any person other than the person whose premises had been searched or whose documents and other assets had been requisitioned under Section 132A of the Act.\" 8.1 The other orders relied upon by the assessee of ITAT Chandigarh Bench are on the same line. ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 11 9. It is further observed that Section 158BD is pari materia to Section 153C and judgement of Hon'ble Supreme Court in the case of CIT Vs Calcutta Knitwears reported in 362 ITR 673 also laid down the conditions when 158BD could be invoked. 10. At the time of hearing, ld. CIT DR has expressed his apprehension as to how income pertains to an assessee unearthed during the course of search carried upon third person is to be taken into consideration when assessment proceedings of the assessee under Section 153A are open. In other words, when search was carried out upon the assessee also, then how the material collected from the premises of third person is to be taken into consideration. In our opinion, if this situation emerges out, then AO has to pass order under Section 153A and thereafter in that very order, he can commence 153(C) proceedings too after following the complete procedure. Meaning thereby, after receiving satisfaction note from the AO of the searched person, he could discuss the ingredients of 153C and the material on merit thereafter. He cannot take into ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 12 consideration the material collected at the premises of third person without following mandatory procedure contemplated in Section 153C. Hence, the whole addition is not sustainable on this ground. In support of our above conclusion, we are fortified by the judgement of Hon'ble jurisdictional High Court rendered in the case of M/s Misty Meadows Private Limited Vs Union of India, Civil Writ Petition No. 5139 of 2024, copy of this decision has been placed on the record by the ld. Counsel for the assessee. The Revenue has challenged this decision in the Hon'ble Supreme Court and SLP has been dismissed. The Hon'ble Supreme Court has specifically observed that in view of the findings recorded in paragraph No. 33 of the Hon'ble High Court’s decision, no interference is called for. The brief facts of the case before Hon'ble High Court was that a search & seizure operation was carried out at the premises of M3M (India) Ltd. situated at Paras Twin Tower-B, 6 th Floor, Golf Course Road, Sector 54, Gurgaon. The Registered Office of the assessee was situated at Shop No. 4/36, DDA Market, Dakshin Puri Extension, New ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 13 Delhi. According to the Revenue, while preparing Panchnama drawn at the Paras Twin Tower, Gurgaon, name of the assessee company was also added, though no search was carried out at the premises of the assessee. The AO has issued notice under Section 153A and ultimately passed the assessment order. The assessee had challenged this assessment order by way of a Writ Petition bearing No. 5139 of 2024. The Hon'ble High Court has allowed the writ petition and held that no search was carried out at the premises of the assessee, therefore, no notice ought to have been issued under Section 153A. Hon'ble High Court took cognizance of Section 153C of the Income Tax Act and recorded that the procedure contemplated in 153C is a mandatory procedure. The Hon'ble Court has also made reference to the decision of Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. 454 ITR 212 and others. We find that on the principle of law, whether without following the mandatory procedure of Section 153C, the document ‘BTD 2011’ found at the premises of Shri Kapil Romana could be used ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 14 in an assessment proceeding of the assessee undertaken under Section 153A or not. We have held that this document cannot be used and for relying upon this document, the Revenue has to follow the mandatory procedure contemplated under Section 153C. 11. The kind of revenue involved in this appeal of the Department indicates that dispute will be carried on before the higher appellant authorities. Therefore, we deem it appropriate to adjudicate the issue on merits also. The Revenue has taken six grounds of appeal but its grievance revolves around the single issue namely, ld. CIT(A) has erred in deleting the addition of Rs.9,65,71,414/- which was added by the AO under Section 68 read with Section 115BBE of the Income Tax Act, 1961. The rest of the pleas taken by the Department are peripheral arguments in support of this central point. We have taken note of the fact while adjudicating the Cross Objections. It emerges out from the record that a search was carried out at the premises of the assessee on 26.02.2020. However, no incriminating material was found ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 15 at his premises but simultaneous search was conducted at the premises of one Shri Kapil Romana where according to the Revenue, a document with title ‘BTD 2011’ was found. This document is a ledger account of the assessee in the books of Shri Kapil Romana. It is for the period from 01.04.2019 to 02.11.2019. The heading of the ledger read ‘BTD 2011 Happy Ji INT A/c’. According to the AO, assessee is being known as ‘Happy Ji’ hence it is an interest account of ‘Happy Ji’ in the books of Shri Kapil Romana. The AO found opening balance in this account at Rs.15,67,08,109/-. The AO, thereafter, observed that this ledger account deals with transactions entered into between M/s ASE Builders Pvt. which is a concern of Shri Amarjit Singh i.e. assessee herein and HM Overseas. He found that this opening balance must be a closing balance for assessment year 2018-19. M/s HM Overseas in books of account of M/s ASC Builders Pvt. Ltd. which shows an opening balance of Rs.6,01,36,695/- as on 01.04.2019. Thus, AO harboured a belief that out of the total balance, assessee is maintaining account of Rs.6,01,36,695/-. He ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 16 debited this amount and treated the rest as unexplained amount of the assessee. Accordingly, ld. AO has made additions. 12. Dissatisfied with the above, assessee carried the matter in appeal before the CIT(A). Ld. First Appellate Authority has appreciated the issue in detail and recorded the finding from page No. 18 to 31 of the impugned order. The ld. First Appellate Authority has summarized its finding at page 31 which read as under : “(C) To summarize : (i) In view of the above discussion, it is held that the Assessing Officer has erred in interpreting the transactions mentioned on same seized document in two different ways which led him to conclude that the part transactions reflected in the seized ledger accounts is either accounted for or is not related to him and does not represent his income in any form and the other part (opening balance)is unexplained cash credit. In fact, in case if the part transactions are wrong, there is no reason to make unexplained cash credit. In fact, in case if the part transactions are wrong, there is no reason to make impugned addition of other part (i.e. the opening balance) which is unsubstantiated in absence of any corroborative evidence. Since part of the transaction has been accepted as not related to the assessee then the same logic should have been applied to other part (i.e. opening balance). (ii) The relied upon document is not a genuine document. Not only no addition has been made in case of assessee for AY 2020-21, ASC builders Pvt Ltd for all the relevant years but also no addition has been made in case of Jagjeet Chawla whose ledger the AO has strongly relied on to allege that the amount represents unexplained credit. Following the principles of consistency, addition cannot to be made in the case of the appellant for current year, Moreover, the AO has failed identify the entity BTD 2011. (iii) The AO has also failed to refer to any corroborative evidence apart from the unsubstantiated ledger found at the premises of third person. The said document was found at premises of third person, thus presumption of section 132(4A) and 292C cannot be used against the appellant. ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 17 In view of the above discussion, the addition of Rs. 9,65,71,414/- made in the hands of the assessee is liable to be deleted.” 13. The ld. CIT DR relied upon the order of AO and submitted that since assessee is known as ‘Happy Ji’ his ledger account was found during the search upon one Shri Kapil Romana, therefore, it is the duty of the assessee to explain the source of opening balance in the books of Shri Kapil Romana. 14. On the other hand ld. Counsel for the assessee has raised multiple contentions. In his first fold of arguments, he submitted that this document was found from the premises of a third person. Assessee has no control over writing this document. A third person could write anything, how assessee would be responsible to explain those entries. There is no other corroborative evidence possessed by the Revenue. He relied upon judgement of Hon'ble Supreme Court in the case of CBI Vs V.C.Shukla and others (1998) 3 SCC page 410. In this judgement, Hon'ble Supreme Court has considered whether contents of Diary impounded from third party could lead to prove charges against the accused under the ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 18 Prevention of Corruption Act, 1988. It is a famous case of ‘Jain Hawala’. In his second fold of contentions, he submitted that it is not ascertainable who has written this ledger. It is not discernible whether statement of Shri Kapil Romana was recorded under Section 132(4) of the Income Tax Act or not. It is also not on the record whether he was confronted with this ledger or not. Apart from above, he emphasized that the presumption of truth attached to discovery of an evidence and the statement recorded under Section 132(4) is confined to the person from whose possession such document was found and who has made the declaration. In a statement under Section 132(4), the document as well as the statement cannot bind a third person namely in the present case, the assessee. The presumption of evidence of this ledger could only be used against Shri Kapil Romana and not against the assessee. In support of his contention, he relied upon the judgement of Hon'ble Delhi High Court in the case of CIT Vs Parveen Juneja, IT Appeal No. 57 of 2017. He further relied upon decision of Hon'ble Bombay High Court in the ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 19 case of PCIT Vs Hassan Ali Khan 426 ITR 556. He also placed on record the copies of these decisions as well as some other orders of the ITAT on this point. He further contended that author of the ledger account is unknown. He was never put to cross-examination by the assessee. The assessee has made specific request for this purpose. He pointed out that in paragraph No. 4.11, the AO has observed that Shri Kapil Romana has accepted this ledger account in his statement ‘on oath’ but it is pertinent to note that he can accept ‘on oath’ qua himself and cannot bind the assessee. The ld. Counsel for the assessee has relied upon judgement of Hon'ble Supreme Court in the case of Shri Vasantlal & Co. Vs CIT 45 ITR 206. He also relied upon two decisions of Hon'ble Delhi High Court, namely; CIT Vs Ashwani Gupta 322 ITR 326 and CIT Vs Pradeep Kumar Gupta 303 ITR 95. 15. The ld. Counsel for the assessee further contended that document is to be read as a whole. He took us through the document which is being reproduced by the CIT(A) at page 20 of the impugned order. He ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 20 pointed out that after the first entry exhibiting opening balance, next entry is APEX HDFC Bank ‘Receipt’. The AO failed to establish any relationship of the assessee with this entry. Similarly, third entry is not related to the assessee. The assessee does not know any Malhotra Group etc. and as to why these entries of third person are being appearing in a ledger account alleged to be relating to the business of the assessee in Shri Kapil Romana’s books. He further contended that a reference was made by the AO regarding ASC Builders Pvt. Ltd. Assessment proceedings were initiated for assessment year 2020-21 but no action was taken by the AO. The CIT(A) has reproduced the assessment order on page No. 22 and 23. Similarly CIT(A) has reproduced assessment order of Shri Jagjeet Singh on page No. 25. The CIT(A) has observed that AO has made a mention of one Shri Jagjeet Singh Chawla but no addition was made in the name of Shri Jagjeet Singh Chawla. In other words, according to the ld. Counsel for the assessee, except the addition of alleged ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 21 opening balance, AO has not made any addition out of this paper. 16. We have duly considered the rival contentions and gone through the record carefully. We find that document was not found from the premises of the assessee. An addition under Section 153A could not be made in the income of the assessee unless incriminating material was found during the course of search carried out upon the premises of the assessee. We rely upon the judgement of Hon'ble Supreme Court in the case of Abhisar Buildwell Pvt. Ltd. 454 ITR 212. The conclusion of the Hon'ble Court in paragraph No. 12 read as under : \"12. If the submission on behalf of the Revenue that in case of search even where no incriminating material is found during the course of search, even in case of unabated/completed assessment, the AO can assess or reassess the income/total income taking into consideration the other .material is accepted, in that case, there will be two assessment orders, which shall not be permissible under the law. At the cost of repetition, it is observed that the assessment under Section 153 A of the Act is linked with the search and requisition under Sections 132 and 132A of the Act. The object of Section 153A is to bring under tax the undisclosed income which is found during the course of search or pursuant to search or requisition. Therefore, only in a case where the undisclosed income is found on the basis of incriminating material, the AO would assume the jurisdiction to assess or reassess the total income for the entire six years block assessment period even in case of completed/unabated assessment. As per the second proviso to Section 153A, only pending assessment/reassessment shall stand abated and the AO would assume the jurisdiction with respect to such abated ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 22 assessments. It does not provide that all completed' unabated assessments shall abate. \" 17. The authenticity of the document has not been proved by the AO because assumption of truth contemplated under Section 132(4) is confined qua the person who has confessed a document. In other words, this document was from the books of Shri Kapil Romana and if he admits these entries pertaining to him can be construed as true qua him and he can be bound for the liabilities, but not a third person. We rely upon the judgement of Hon'ble Supreme Court in the case of CBI Vs V.C.Shukla (supra). 17.1 The AO has not put Shri Kapil Romana for cross examination of the assessee and in the absence of opportunity of cross examination, any evidence collected from the back of the assessee or the statement cannot be used against the assessee. The Hon'ble Supreme Court has propounded this proposition in the judgement of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata-II 281 CTR 241, the other Hon'ble High ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 23 Courts namely; Hon'ble Delhi High Court in the case of Ashwani Gupta and Pradeep Kumar Gupta, Allahabad High Court in the case of Gargi Din Jwala Prasad Vs CIT are also unanimous in their opinion on this proposition that if cross-examination was not given to an assessee, statement recorded at the back of the assessee will not be used against the assessee in evidence. 18. It is pertinent to note that when an explanation or defence by an assessee based on number of facts established by evidence and circumstances required consideration, whether it is sound or not, must be determined not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts as a whole. Thus, this cumulative setting of all these folds of contentions raised by the assessee do indicate that evidence possessed by the Revenue is not worthy of credence and on this basis, no addition could be made in the hands of the assessee. We find that ld. First Appellate Authority has considered all these aspects elaborately in a well reasoned order wherein ITA No.774/CHD/2023 & C.O. 07/CHD/2024 A.Y.2019-20 24 ld. First Appellate Authority had taken into consideration various propositions propounded by the Hon'ble Supreme Court as well as Hon'ble High Courts. We do not find any error in the finding of the CIT(A) and we concur with it. Accordingly, the appeal of the Revenue is dismissed on merit also. 19. In the result, Cross Objections of the assessee are partly allowed. The ld. CIT(A) has rightly deleted the additions. The appeal of the Revenue is dismissed on merit. Order pronounced on 06.03.2025. Sd/- Sd/- (KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” आदेश क\u0002 \u0003ितिलिप अ\tेिषत/ Copy of the order forwarded to : 1. अपीलाथ\u000f/ The Appellant 2. \u0003\u0010यथ\u000f/ The Respondent 3. आयकर आयु\u0014/ CIT 4. िवभागीय \u0003ितिनिध, आयकर अपीलीय आिधकरण, च\u0018डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड\u001c फाईल/ Guard File आदेशानुसार/ By order सहायक पंजीकार/ Assistant Registrar "