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xxv. Further, the A.O has also heavily relied upon the statement of Sri Ankur Agarwal, an employee of BSL, recorded in course of search at his premises under extreme pressure and undue stress allegedly stating that the Assessees herein had obtained bogus LTCG by pre-arranged trading in shares of certain non-descript listed companies. The said statement was however, later on retracted by the maker of the statement i.e. Sri Ankur Agarwal on 20.12.2016 before the Ld. A.O. Such retracted statement cannot be held as evidence/reliable material so as to fasten exorbitant liability on the Assessees herein. It is earnestly submitted that the said statement was made by an Page | 23 employee of BSL, who is a third person insofar as the Assessees are concerned. The said statement was admittedly not in the nature of an ‗admission' or ‗confession' made by the Assessees herein u/s 132(4) but an adverse statement or allegation made against the Assessees by a third person. Their Lordship in the case of L.K. Advani Vs. Central Bureau of Investigation on 1st April, 1997 (1997 IIIAD Delhi 53, 1997 CriLJ 2559, 1997 (4) Crimes 1, 66 (1997) DLT 618, 1997 (41) DRJ 274, (1997) 116 PLR 1, 1997 RLR 292) held at para 89 that ―I am tempted here to cite a few lines from Murphy on Evidence, page 180 ―At common law, an admission made by one party is evidence against the maker of the statement, but not against any other person implicated by it.‖ .‖ Thus, an ‗admission' made by a person u/s 132(4) can only be used as evidence against the person who makes it. However, insofar as adverse statements of third persons/ parties are concerned, as clearly held by the Hon'ble Apex Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise (2015) 281 CTR 241 (SC) (supra) and host of other decisions of the Hon'ble High Courts cited earlier, such statements can only be relied upon by the Department in drawing adverse inference against the assessee after allowing the assessee an opportunity of cross-examining the said person.

iii. It is well settled by a plethora of judgments that addition cannot be made in the hands of an assessee on the basis of entries in books of third parties in the absence of any corroborative evidence. Attention in this regard is craved to the judgment of the Hon'ble Supreme Court in Central Bureau of Investigation Vs. V.C. Shukla & Ors (1998) AIR 1406 (SC) (pages 353-374 of PB-5), wherein certain diaries, small note book and various loose papers were found and seized from the premises of Mr. S.K. Jain of New Delhi. In those diaries/loose papers, the names of V.C. Shukla and L.K. Advani were found recorded. The CBI charge-sheeted those persons, namely, Shri Shukla and Shri Advani under the Prevention of Corruption Act, 1988. Under the given facts, the Hon'ble Apex Court held that the entries in those diaries/loose papers could not be used against Shri Advani or Shri Shukla but could only be used against Shri Jain and may be proved as admission by him. This in other words means that the addition cannot be made in the hands of the assessee on the basis of entries in the books of account of third parties in absence of any corroborative evidence. The relevant excerpts of the S.C. Judgment in this regard, are as follows:

―As per s. 132(4A), where any book of account or document is found in the possession and control of any person in the course of search, it is presumed that they belong to such persons. Thus, clearly, the presumption is in respect of the person from whom they were found. The use of the words "to such person" in the said section mean the person from whom the books of account of documents were found. Clause (ii) of s. 132(4A) provides that the contents of such books of account or documents are true. In our opinion, this presumption can also be applied only against the person from whose possession the books of account or the documents were found. Therefore, so far as the case of Mr. Niranjan J. Shah is concerned, the Revenue authorities may presume that the books of account or documents found from his possession are correct. However, while utilising those documents in the case of any other person (i.e. the person other than Mr. Niranjan J. Shah), there cannot be any presumption about the correctness of such books or documents. The Hon'ble apex Court has considered this matter in the case of CBI vs. V.C. Shukla (supra). In that case, certain diaries, small note book and various loose papers were found and seized from the premises of Mr. S.K. Jain of New Delhi. In those diaries/loose papers, the names of V.C. Shukla and L.K. Advani were found recorded. The CBI charge-sheeted those persons, namely, Shri Shukla and Shri Advani under the Prevention of Corruption Act, 1988. The Hon'ble apex Court held that the entries in those diaries/loose papers cannot be used against Shri Advani or Shri Shukla but can be used against Shri Jain and may be proved as admission by him. The learned Departmental Representative had contended that the above decision of Hon'ble apex Court was not applicable to income-tax proceedings because the above decision was based upon the interpretation of s. 34 of the Evidence Act, 1872. He contended that Evidence Act is not applicable to income-tax proceedings. However, Page | 37 we are unable to accept the above contention of the learned Departmental Representative in view of the decision of Hon'ble apex Court in the case of Chuharmal vs. CIT (1988) 70 CTR (SC) 88 :