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2022 (2) TMI 173 - AT - Income TaxSearch & seizure and survey operation - Reliance on seized material or any incriminating material used by the Revenue - Addition of unaccounted proceeds out of waste cotton sales u/s.69A - HELD THAT:- Addition of unaccounted sale of waste cotton is estimated only on the basis of statement of Cotton Clerk Shri B. Anandha Rajan on 29.06.2017 and Shri S. Thirumalai Kumar, AGM (Admin) on 30.06.2017. We have gone through the statement reproduced by the AO in his order and noted that there is no reference to any seized material or any incriminating material used by the Revenue. Also gone through the orders of the lower authorities including case records and noticed that there is no reference to any seized materials on the basis of which unaccounted sales of cotton waste is estimated. We are conscious of the fact that the CBDT has issued instruction time and again as to how confession of additional income during the course of search & seizure and survey operation is to be added. There is no incriminating material for making any estimation of unaccounted sale of waste cotton despite search was conducted. Even no substantial assets or cash was found from the assessee to support the claim of the Revenue. It seems that the total unaccounted cash found during the course of search was only ₹ 26,36,572/-, out of which ₹ 20 lakhs belong to Shri Sadiq and it has been accepted by the Settlement Commission. The balance amount ₹ 6,36,572/- remains after the order of CIT(A). This cash cannot be equated with the quantum of addition made by the AO and confirmed by the CIT(A) at ₹ 42 lakhs in each of these six assessment years. Hence, we have no hesitation in stating that the addition made by the AO and confirmed by CIT(A) is just mere on suspicion, conjectures and surmises without any evidence. Assumption of jurisdiction for making addition u/s.69A - We noted that the amount determined by the AO as unaccounted sale of cotton waste is without any basis, without any corroborative documentary evidence or any evidence found from the premises of the assessee during search & seizure operation. In the given facts, we are of the view that once there is no money, bullion, jewellery or other valuable article is found from the procession of the assessee during the course of search or there is no evidence seized or found or corroborated with the alleged unaccounted sale of cotton waste, no addition can be made by invoking provisions of section 69A of the Act. Hence, on this legal issue also, addition is to be deleted. Addition of amount as already been declared as income in the application filed before the Hon’ble Settlement Commission in the hands of M/s. Seyadu Beedi Company, in which firm the managing director of the appellant is a partner - HELD THAT:- As the assessee as well as the ld. Senior DR fairly agreed that the matter can be restored back to the file of the AO for verification and adjudication, whether this cash is declared by the assessee before Settlement Commission as income in the hands of M/s. Seyadu Beedi Company and in case, this is accepted by Settlement Commission, the same can be deleted. This issue of the assessee’s appeal is set aside and allowed for statistical purpose.
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