The requirement of incriminating material for making additions under Section 153A and the necessity of following the mandatory procedure under section 153C when invoking section 153A based on incriminating material belonging to a person other than the one searched.

JUDGMENT

Sanjeev Narula, J. - The present appeals under Section 260A of the Income Tax Act [hereinafter referred to as the 'Act'] are directed against the common order dated 30th July, 2019 [hereinafter referred to as the 'impugned order'] passed by the Income Tax Appellate Tribunal [hereinafter referred to as the 'ITAT'] in ITA 5947/Del./2018, ITA No. 4723/Del./2018, ITA No. 5954/Del./2018, ITA No. 5950/Del./2018, ITA No. 5948/Del./2018, ITA No. 5947/Del./2018 and ITA No. 5955/Del./2018.

2. Briefly, the facts of the case are that the Assessee purchased shares of an unlisted private company in 2010. This unlisted company then merged with another unlisted company, M/s Focus Industrial Resources Ltd. and shares of this merged entity were allotted to the Assessee. Subsequently, the merged entity allotted further bonus shares to the Assessee and thereafter it was listed on the Bombay Stock Exchange. Assessee sold these shares on the stock exchange in 2014 and earned a huge profit which was claimed as exempt income on account of being long term capital gain.

3. A search was conducted u/s. 132 on 18th November, 2015 at the premises of the Assessee {being Anand Kumar Jain (HUF), its coparceners and relatives} as well as at the premises of one Pradeep Kumar Jindal. During the search, statement of Pradeep Kumar Jindal was recorded on oath u/s. 132(4) on the same date, wherein he admitted to providing accommodation entries to Anand Kumar Jain (HUF) and his family members through their Chartered Accountant. The assessing officer framed the assessment order detailing the modus operandi as to how the cash is provided to accommodation entry operator in lieu of allotment of shares of a private company. Thereafter when the matter was carried up in appeal before the CIT(A), the findings of AO were affirmed. However, in further appeal before the ITAT, the said findings were set aside vide the impugned order.

4. The Revenue is aggrieved with the aforesaid impugned order and has filed the present appeal under Section 260A of the Act, proposing the following questions of law:

a. Whether the ITAT is justified in deleting the additions made on account of bogus long term capital gain on the ground that the evidences found during search at the premises of entry provider cannot be the basis for making additions in assessment completed u/S. 153A in the case of beneficiary ignoring the vital fact that there was a common search u/s 132 conducted on the same day in both the cases of the entry provider and the beneficiary?

b. Whether ITAT was justified in holding that mere failure of cross examination of entry operator is fatal when copy of statement was provided to the Assessee and Assessee failed to discharge the onus of providing the genuineness of LTCG especially in view of the apex court decision in the case of State of UP vs. Sudhir Kumar Singh, (2020) AIR SC 5215?

5. Mr. Ajit Sharma, Sr. Standing Counsel submits that the ITAT has erred by holding that the Assessee's premises were not searched, and therefore notice under Section 153A could not have been issued. He submits that ITAT ignored that the assessment order itself reveals that a common search was conducted at various places on 18th November, 2015, including at the premises of the entry provider and the Assessee and thus assessment u/s 153A has been rightly carried out. He further argues that ITAT erred in setting aside the assessment order on the ground that no right of crossexamining Pradeep Jindal was afforded to the Assessee. He argues that there is no statutory right to cross-examine a person whose statement is relied upon by AO, so long as the Assessee is provided with the statement and given an opportunity to rebut the statement of the witness. The Assessee has been provided with a copy of the statement of Pradeep Kumar Jindal and the ITAT has wrongly noted to the contrary. Furthermore, the Assessee has failed to bring in any evidence to dispute the factual position emerging therefrom and has