TMI Blog2022 (7) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... to. Since the seized material is neither the regular books of account nor kept in the regular course of business of the assessee. They were not sufficient enough to fasten the liability on the present assessee, against whom they were sought to be used. The seized document collected by the department did not raise a reasonable ground to believe that there is a valid payment to the present assessee so as to award contract to the KNNL and the payment is relating to for awarding the contract of UBP. The seized material itself would not furnished evidences of the truth of their contents and that was not corroborated by any further evidence so as to hold that the assessee has actually received the said payment - we are of the opinion that the order of the earlier Bench in the cases of Shri D.S.Suresh Vs. ACIT [ 2021 (4) TMI 1 - ITAT BANGALORE] and Shri D.V.Sadananda Gowda [ 2021 (4) TMI 55 - ITAT BANGALORE] are squarely applicable to the present facts of the case and accordingly in view of the above discussion, we confirm the deletion of the addition made by the CIT(A). Hence, the grounds raised by the Revenue are dismissed. - ITA No. 14/Bang/2019 & CO No. 45/Bang/2019 - - - Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, to amend or delete any of the grounds that may be urged at the time of hearing of appeal. 3. Assessee raised the following grounds in the Cross Objection: -] 1. The orders of the authorities below in so far as they are against the Cross-objector/respondent are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The order of re-assessment is bad in law and void-ab-initio for want of requisite jurisdiction especially, the mandatory requirements to assume jurisdiction u/s 148 of the Act did not exist and have not been complied with and consequently, the re-assessment requires to be cancelled. 3. Without prejudice to the above, the impugned order passed by the learned A.O. without following the procedure laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts reported in 259 ITR 19 [SC] is bad in law and therefore, the impugned order passed deserves to be annulled. 4. Without prejudice to the above, the impugned order passed by the learned A.O. in gross violation of the principles of natural justice in as much as the learned A.O. has not furnished the copies of the materials relied upon fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sections 143(2) of the Act, dated 11.08.2015 and along with the aforesaid notices, separate notices under Section 142(1) of the Act, also dated 11.08.2015 were issued calling for certain information contained in the annexure to the aforesaid notices. The cases were fixed for hearing on 20.08.2015. In response to the aforesaid notices issued, the assessee s Authorised Representative Mr. P G Ananthnaryanan appeared before the A.O. on 20.08.2015 and furnished the details called for vide letter dated 20.08.2015. It. is submitted that certain further documents were called for in course of the hearing on 20.08.2015 and the same were duly furnished under the cover of the letter dated 24.08.2015 filed on 25.08.2015. However, in the impugned orders passed, the A.O. has stated in the tabular chart on Page [3] of the assessment orders that there was no compliance by the assessee to the aforesaid notice dated 11.08.2015, which finding is patently erroneous. Thereafter, the assessee received the letter of the A.O. dated 24.02.2016 in which, the extract of the reasons recorded for re-opening the assessment were furnished as an Annexure. It is submitted that upon receipt of the reasons recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the request of the assessee for the copies of the seized materials and statement recorded were not acceded to by the learned A.O. and the assessee was not given the copies of these seized materials and statements before the completion of the assessment proceedings. Instead, the assessee received a letter of the learned A.O. dt.22.03.2016 on 26.02.2016 stating that all copies of the materials were already given to the assessee. It was further stated by the learned A.O. that the reply filed by the assessee vide letter dated 14.03.2016 did not address the issue raised in the pre-assessment notice dated 08.03.2016. Hence, a final opportunity to file submissions was afforded to the assessee within the next 5 days. Upon receipt of the aforesaid letter of the learned A.O., dated 22.03.2016, the assessee submitted vide letter dated 28.03.2016 filed on 29.03.2016 that he was not given the copies of the seized materials and that the letter dated 14.03.2016 was addressed by him only on the aspect of reopening of the assessment. The assessee once again prayed for the copies of the documents to be furnished and requested the learned A.O. to take note of the fact that the so-called pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessment was framed without giving the assessee copy of the seized material and statements relied upon. The learned CIT(A) directed AO to furnish copies of the seized material and statement relied upon by him and the AO was also directed to furnish the relevant seized material and statements a per letter dated 04.04.2018. Thereafter the AO has also allowed the assessee to cross examine Shri Sunil Sahasrabhudhe and Shri Naveen R. Shetty and reported that a copy of the statements recorded at the time of cross examination were also given to the assessee. Later the assessee filed statements as on 03.07.2018 as under: - 2. Without prejudice to the above, it is submitted that even the perusal of the seized materials relied upon by the learned A.O. read together with the sworn statements of Sri Sunil Sahasrabudhe, Vice President, RNS Infrastructure Limited and Sri Naveen R. Shetty, Managing Director of RNS Infrastructure Limited that was furnished in course of appellate proceedings, by the learned A.0. vide letter dated 04/04/2018, does not support the case of the Department that there were any cash payments made to the appellant as alleged in the assessment order. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of search by being shown the seized materials that has now been furnished by the learned A.0. under the cover of the letter dated 04/04/2018 (Answer to Q.No.5 6). Further, the aforesaid witness has categorically affirmed that he has never made any statement before the Income-tax Department that cash payments were made to the appellant in connection with the business of RNS Infrastructure Limited (Answer to Q.No.7). He has also categorically maintained that the statement dated 16/02/2012 was taken by force and that he has immediately brought to the notice of the department these facts and that his statement on16/02/2012 was completely disowned (Answer to Q.No.1, 2 3). 3.3 Upon conclusion of the cross examination, Sri Sunil Sahasrabudhi was re-examined and nothing has been elicited from him in course of his re-examination by the learned A. 0. to discredit his statements made in course of the cross-examination. In fact, Sri Sunil Sahasrabudhi has stated in Course of his re-examination that the seized documents relied upon by the department are not part of the books of accounts of M/s. RNS Infrastructure Limited. Thus, there is no material on record to support the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntact contrary to the materials on records. Accordingly, the addition made for all the years under appeal deserves to be deleted. It is prayed accordingly . 8. Further the CIT(A) gone through the entire statement of Shri Sunil Sahasrabudhe recorded on 16.02.2012 at the time of search which are reproduced as follows: - Q.01 Please identify yourself? Ans. I am Sunil D. Sahasrabudhe s/o, Dattatreya, aged 51 years, residing at Flat No. C. 1005, RNS Shanti Nivas, Behind RNS Motors Showroom, Yeshwanthpur, Tumkur Road, Bangalore 560022. I am associated with the RNS group since 22 years. I am' Vice President (Finance) RNS Infrastructure Ltd., since the last 5 years. Q.02 Please confirm that you have been administered oath and have been made aware of the consequences of giving false statement(s} on oath? Ans, I confirm that I have been administered oath and have been made aware of the consequences of giving false statement(s) on oath. Q.03 From the records and documents available in the premise it is noted that receipt payments are available where project wise receipt and payment are mentioned as on a particular date. I am showing you one such document. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch over phone. Q.10 Who made the phone call and when? A. I cannot recall the each and every person who had informed me about the above payment. Q.11 Cash you recall some of the names? A. our accountant and some time project manager informed the same. Q.12 Please give the name of your accountant and project manager who informed you of the payments made. A: I cannot remember the name of the accountants since it is 12 years old project and lot of staff has changed in between. However, sometime Mr. Suresh Shetty use to inform me over phone. Q.13 Why was the information was given to you by these persons? A. To know the branch income and expenditure he used to inform me. Q.14 Please explain the noting Rene - CM A. The information received from the branch was noted. Q.15 What was the information related to this notings ? A. The amounts paid on the instruction of a particular person. Rane is shown under this head. 0.16 . What does the noting initial 5,00,000 means? A. Initial means date of release of payment is not known and 5,00,000 means rules 5 lakhs. Q.17 What does the noting 20-1-200050,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce the vouchers pertaining to these payments. A. All the vouchers are not immediately traceable since the data pertaining to last 12 years. Q.28 Please produce the most recent voucher dated 1-2-2012 pertaining to the payment of Rs.50,00,000. A. Details of the vouchers are not yet received from the branch for above payment. Q.29 Please produce the voucher dated 8-7-2010; 18-4-2010 and 8- 10-2009 pertaining to Naveen Mumbai, cash Mumbai and Sanjeev shetty respectively. A. There are number of vouchers for the above three payments and hence, I have to verify and submit the same which may take some time. Q.30 Were you have asked to produce the said vouchers and you have failed to produce the same? Do you have anything to say about that? A. Presently I do not have the vouchers. Q.31 Since you have failed to produce the vouchers it is to be inferred that you were unable to produce the same and there is no voucher existing corresponding to the stated payment. Please aware of this as the last opportunity to produce the voucher or else it is to be assumed that there is non compliance to the directions to the authorized officers of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d my statement recorded u/s.132(4) on 16.02.2012, since it was taken by force. The same has been mentioned in this letter. Q4. I am showing you the two pages extracts of certain data retrieved from TRNSMAIN, TRNSBKP,TRANSOLD Data, TRNSX, files found in 40 GB, 500 GB and 80 GB hard disk of the server system at office of M/s. RNSIL at 7th Floor, Naveen Complex, MG Road, Bangalore , which has been furnished to me by the learned ACIT, under the cover of the letter dated 04.04.2018. Kindly state if you have given any statement on the basis of this material in course of your deposition before the income tax department? Ans. I have not seen this material before and I am seeing it for the first time. This is not a part of our books of accounts. I have not been examined with reference to this material in course of my earlier depositions. q6. Is it accurate to state that you have not made any statement with reference to this material earlier? Ans. Yes, I have not been examined with reference to this material earlier. I have not made any statement on the same. Q7. Have you in course of any of your statements before income-tax department ever stated that certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned office. Q2. Do you have the original document for verification of the same? Ans. No, I do not have that currently, But, I can produce it in front of you, if required. Q3. What is being booked under the head Sundry-expenses in the books of accounts of Mis. RNS Infrastructure Ltd. ? Ans. We do not have the head Sundry-expenses in the books of accounts of Mis. RNS Infrastructure Ltd. Q4. How were the books of accounts of M/s. RNS Infrastructure Ltd. maintained in the relevant A.Y.? Ans. The books of accounts of Mis. RNS Infrastructure Ltd. were maintained using a software called BTW package in the computer systems of the company. Q5. Were there any major expenses, of over Rs.1,00,000/- of M/s. RNS Infrastructure Ltd. which were made by cash, in the relevant A. Y.? Ans. No. Q6. I am showing you the records of two pages extract of certain data received from TRNSMAIN, TRNSBKP, TRANSOLD Data, TRNSX, files found in 40 GB,500 GB and 80 GB hard disk of the server system at the office of Mis. RNSIL at 7th Floor, Naveen Complex, MG Road, Bangalore , which as per our records has been retrieved from the office computer systems of M/s. RNS Infrastructure Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch itself I have informed the IT official who was recording my statement, whereupon he had called Mr. Sunil Shasrabuddhe who also confirmed the same in my presence. At this point, the recording of my statement was stopped and I was issued summons u/s. 131to appear on the next day. Q2. I am showing you certain data retrieved from TRNSMAIN, TRNsBKP, TRANsOLDData, TRNSX, files found in 40 GB, 500 GB and 80 GB hard disk of the server system at the office of M/s. RNSIL at 7th Floor, Naveen Complex, MG Road, Bangalore which has been furnished to me by the learned ACIT, under the cover of the letter dated 04.04.2018. Kindly state if you have given any statement on the basis of this material in course of your deposition before the income tax department? Ans. I have been shown many documents and I don't remember particularly whether this document was shown to me. However, I can add that all this data is fabricated and it does not relate to the accounts of M/s. RNS Infrastructure Ltd., I have stated this previously in my recorded statements which can be referred to and I stand by the statements made earlier. Q3. Have you in course of any of your statements before Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 7th Floor, Naveen Complex, MG Road, Bangalore , which as per our records has been retrieved from the office computer systems of M/s. RNS Infrastructure Ltd., during the course of search. Can you explain the contents of the same? Ans. These documents are not a part of our books of accounts, hence I cannot explain the contents, Also I want to state that these documents seems fabricated to me. Q5. Were you the chairman of M/s. RNS Infrastructure Ltd., in the relevant A. Y. ? Ans. No. Dr. R.N.Shetty was the chairman of Mis, RNSInfrastructure Ltd., in the relevant A. Y. Q6. Is Dr. R.N.Shetty related to you? IF yes, how? Ans Dr. R.N.Shetty is my father. Q7. The name 'Naveen R.5hetty , appears on the documents I have shown to you. Can you explain why your name is appearing in these extracts? Ans. As I have stated earlier, these are fabricated data which are implanted in our systems which have no relevance to our books of accounts. Therefore, question of explaining my name does not arise. Q8. Is an individual named 'Mr. Prashant Shetty' related to you, If yes, how? Ans, I do have a relative by name of Mr. Prashant Shetty, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments has also been questioned by the Managing Director of M/s. RNS Infrastructure Limited, in whose, premises the same has been found and serious doubts arise about whether such a document can be considered as reliable at least so far as the appellant, a third party, is concerned, considering the consistent stand taken by the Managing Director of M/s. RNS Infrastructure Limited in course of his search and seizure operations. At any rate, the appellant being a third party in whose case the addition has been made, based on documents found in course of the search- of the third party, does not suffer from the burden of the presumptions under Section 132(4) read with section 292C of the Act. It is well settled position of. law that this burden does not extend to the documents found in third party premises and cannot operate against the appellant herein 15. Accordingly, considering the various case law cited by the parties he deleted the addition by further observing as under: - 4.4.18 Considering the facts discussed supra, it is seen that the AO ha just relied on an extract said to have been a deleted digital file, retrieved from the Computer, using the forensic tools, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was held by the Hon'ble Supreme Court in the case of CBI Vs. V.C. Shukla 3 SCC 410 that file containing loose sheets or papers are not books and hence entry therein are not admissible u/s. 34 of the Evidence Act, 1872. In the present case, the seized material having certain entries are found, regarding amount which was presumed thus are illegal payments to the persons mentioned therein. These entries are unsubstantiated. On that basis 0ne cannot reach to the conclusion that figures mentioned therein are the undisclosed payments in these assessment years under consideration to the present assessee. In our opinion, the documents relied on by the Assessing Officer for making addition in these assessment years was dumb document and lead nowhere since these diary jottings are not supported by any corroborative material or evidence to show that the information made by lower authorities is correct. Further unsigned document in the form of diary jottings cannot be relied upon for making or sustaining the addition. In the present case, more so, the Managing Director of RNSIL made a categoric statement in his letter that no payments were made to the assessee in the F.Y. 2008-09 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T.Act. Any electronic record can only be considered as a piece of evidence which shall be as per section 65-B of the Indian Evidence Act and on complying the conditions enumerated u/s 65B(4) of the Indian Evidence Act. The above said principle has been settled by the Hon ble Supreme Court in the case of (Anver P.V. v. P.K.Basheer and Ors. reported in (2014) 10 SCC 473. The diary noting, the statement of VP (Finance), RNSIL has not pointed out any payment to the assessee. The statement recorded on 16.02.2012 (date of search) was retracted by the VP (Finance) RNSIL on 07.03.2012 itself. The CIT(A) during the course of appellate proceedings had directed the A.O. to grant an opportunity of cross examination of VP (Finance) RNSIL and inspect the incriminating material. The VP (Finance) RNSIL during the course of cross examination had outrightly denied making any payment by him or RNSIL to the assessee. It was further submitted by him that the statement recorded on 16.02.2012 was under duress and he had taken up the matter with the DDIT (Investigation) Bangalore in his letter dated 07.03.2012. This fact is also admitted by the JCIT in her covering letter to the CIT(A) dated 25.10.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not specify date on which it was paid or who has paid. It is not possible to any person to say conclusively that it is relating to these assessment years being the absence of date of payment. Further it is only diary jottings not supported by corroborated material or any independent evidence. In other words, there should be a material on record to show that there is an undisclosed income on the basis of material on hand with the Assessing Officer and guess work is not possible. The Assessing Officer shall have the basis for assuming that there was a payment by RNSIL to the assessee which was not disclosed to the Department. The unsubstantiated diary jottings cannot be considered as a conclusive evidence to make any evidence towards undisclosed escaped income. It was held by the Hon'ble Supreme Court in the case of CBI Vs. V.C. Shukla 3 SCC 410 that file containing loose sheets or papers are not books and hence entry therein are not admissible u/s. 34 of the Evidence Act, 1872. In the present case, the seized material having certain entries are found, regarding amount which was presumed thus are illegal payments to the persons mentioned therein. These entries are unsu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 7th Floor, 14 MG Road and at Murudeshwar Bhawan, 604-B, Gokul Road, Hubli marked as 22/A/RNSIL/2, dt.16.02.2012. This seized material shows certain sundry payments grouped under GE SUN 01 and GE SUN 03 and the sundry payments were made by cash. In these sundry payments, certain entries mentioned the name of the assessee and the corresponding payment to him. From this, the A.O. came to conclusion that the assessee being a Chief Minister, and Chairperson of the Karnataka Neeravari Nigam Ltd (KNNL) that had awarded the Upper Bhadra Project (UBP) contract to Murudeshwar Power Corporation Ltd. in 2008-09 to the tune of Rs.1033 Crores and KNNL is the subsidiary of RNSIL, in which case search was took placed and that payment was out of the book payment in connection with awarding of tender of UBP to KNNL by assessee being a Chief Minister of Karnataka and Chairperson of KNNL and made addition on this count to the tune of Rs.2,11,13,832/-. However, on examining the witness and crossexamination of parties, who denied such payment to the assessee, on that basis, the CIT(A) deleted the addition. The entire case of the department is based on the un-corroborated entries found in the computer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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