IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI)

BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 3390/Del/2023 (A.Y. 2018-19) ITA No. 3391/Del/2023 (A.Y. 2019-20) ITA No. 3392/Del/2023 (A.Y. 2020-21)

Deepak Narang Vs. DCIT A-2/66, Top Floor, Paschim Central Circle-29, 318, Income Vihar, West Delhi Tax Building, E-2, ARA Centre, PAN: AAFPN6476N Jhandewalan Extension, Delhi Appellant Respondent ITA No. 3947/Del/2023 (A.Y. 2020-21)

DCIT Vs. Deepak Narang Central Circle-29, 318, A-2/66,Top Floor, Paschim Income Tax Building, E-2, Vihar, ARA Centre, Jhandewalan West Delhi, Extension, Delhi Delhi PAN: AAFPN6476N Appellant Respondent Assessee by Shri Amit Goel, CA and Sh. Pranav Yadav, Adv Revenue by Ms. Sita Shrivastava, CIT(DR)

Date of Hearing 21/05/2025 Date of Pronouncement 30/06/2025 ORDER PER YOGESH KUMAR, U.S. JM:

The captioned Appeals for Assessment Years 2018-19, 2019-20 and

2020-21 are filed by the Assessee challenging the order of the Commissioner of Income Tax (Appeals)-30, (‘Ld. CIT(A)’ for short) dated 18/10/2023. The Department of Revenue has also filed the Cross Appeal for Assessment Year 2020-21 challenging the order of the Ld.

CIT(A) dated 18/10/2023.

2. The Ld. Counsel for the Assessee vehemently submitted that the additions made in all the three Assessment Years are based on the document seized during the search action conducted u/s 132(1) of the Income Tax Act, 1961 ('Act' for short) on M/s Era Infra Engineering Ltd. along with search action of Manoj Kumar Singh. Based on the incriminating material seized during the course of search conducted on the third person/other than the Assessee herein, the assessment proceedings u/s 153A of the Act has been initiated against the Assessee and the assessment has been framed in all the three Assessment Years u/s 153A of the Act. The Ld. Assessee's Representative submitted that when the incriminating materials found and seized during the course of search of other person, the assessment has to be framed u/s 153C of the Act on the Assessee and not u/s 153A of the Act. The Ld. Counsel relying on the plethora of judicial precedents, submitted that the entire assessment proceedings for the years under consideration are liable to be set aside. Thus, sought for allowing the Appeal.

3. The Ld. Department's Representative by relying on the orders of the Lower Authorities submitted that, the additions have been rightly made on its merit on all the three Assessment Years and above contention of the Assessee's Representative is devoid of merit. Therefore, sought for dismissal of the captioned Appeals of the Assessee.

4. We have heard both the parties and perused the material available on record. The issues involved in the Appeals of the Assessee as well as Revenue are tabulated as under:-

5. It can be seen from the assessment order in all the above three Assessment Years, the impugned additions have been made by the A.O. based on the incriminating material found during the search of a third party, however, the assessment has been framed against the Assessee u/s 153A of the Act.

6. The Jurisdictional High Court in the case of PCIT (Central)-3 Versus Anand Kumar Jain (HUF) and ors, reported in 2021 (3) TMI 8 held that, material/statement found/recorded during the course of search in the case of third party cannot be used in the assessment made u/s 153A in the case of Assesse and that the Assessing Officer was required to follow the mandatory/procedure u/s 153C of the Act. The relevant portion of the Judgment are as under:-

“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 stat