Addition can’t be made based on search & seizure action taken against a third party without categorical finding that the search material pertains to the assessee

CASE LAW DETAILS

Decided by: ITAT, AGRA BENCH, AGRA (THIRD MEMBER), In The case of: Bhajan Das & Brothers v.ACIT, Appeal No. IT (85) A. No. 18/Agr/2005, Decided on: December 23, 2008

RELEVENT PARAGRAPH

9. I have gone through the records carefully and I am unable to find any reason for making addition in the hands of the assessee. The addition is based upon the search proceedings and seizure that took place in the case of Narendra Kumar Paraswani not in the hands of the firm. Even the statement that were recorded have not implicated the assessee in any manner. The assessee is a firm. If at all, there are any family partition, I do not consider why the firm is required to explain that. In other words, the addition made u/s 158BC in respect of this document cannot be supported in the eyes of law. If the department is able to lay any hands leading to involvement of assessee in earning undisclosed income, proceedings u/s 158BD could have been drawn. The Assessing Authority assessing the person search must give a categorical finding that the searched material pertains to the assessee. All this procedure having not been gone into an the paper seized rightly been considered as dumb documents, I agree with the finding of the Id. Judicial Member on this issue. I have also gone through the seized material which contains some scribbling of figures. These scribbling does not in any way lead to the transactions of the firm. It was written byone Shri Balraj Paraswani who can explain the nature and contents contained therein. How it is connected to the transactions of the firm is also not established. Therefore, in my view, having regard to all these facts, the addition cannot be made in respect of this material u/s 158BC of the Act. I do not agree with the views of the learned AM that the document contained any transaction in relation to the firm so as to justify the addition in the hands of the firm.

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