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2024 (3) TMI 1455 - AT - Income TaxValidity of order of assessment passed u/s. 153C - condition precedent to invoke the provisions of section 153C - mandation of recording satisfaction - HELD THAT - The sufficiency of the seized material to make an addition to be tested at the time of framing the assessment and it is not at the time of recording satisfaction u/s 153C of the Act. From the satisfaction note prepared by the ld. AO of the assessee it emerges that the present AO of the assessee is satisfied that seized documents containing the details of certain transaction and these documents prima facie suggests that there was unaccounted transaction between the assessee and the M/s. Coffee Day Global Ltd. and belongs to the assessee being other person. Therefore AO was satisfied that it is specifically belong to the assessee being the other person. Therefore it cannot be said that the mandatory requirement of section 153C of the Act have not been complied with. Being so at the stage of recording satisfaction we make it clear that there is no conclusive proof is required that there existed undisclosed income in the hands of assessee. On the other hand there is prima facie satisfaction at the end of ld. AO of the present assessee is to be reached that to suggest that there is undisclosed income in the hands of present assessee. Hence we do not find any merit in this ground of the appeals of the assessee Addition u/s 69 - AO has relied upon loose sheets unsigned entries in note books to hold that the assessee has advanced loan in cash - Whether addition made u/s 69 as unexplained money towards alleged advance made by assessee in cash to M/s. Shivan Co. is without any valid seized material? - HELD THAT - The loose sheets scribbled note books cannot be treated as incriminating material unless they are corroborated with cogent evidences. The loose sheets note pads etc. relied upon by the assessing officer are not speaking ones. They are dumb documents. They cannot be relied upon to frame the assessment orders. The observation of AO would mean that the AO has acknowledged that the seized material are dumb documents. He relied on the decision of the Hon ble Supreme Court in Common Cause (A Registered Society) v. UOI 2017 (1) TMI 1164 - SUPREME COURT for the proposition that unsigned loose slips cannot be acted upon so as to sustain addition. Unexplained loan transactions - The entries in loose sheets of papers are not in the form of Books of Accounts and has held that such entries in loose papers/sheets are irrelevant and not admissible u/s 34 of Indian Evidence Act and that only where the entries are in the Books of Accounts regularly kept depending on the nature of the occupation that those are admissible. Being so the addition of Rs. 12.75 crores in the assessment year 2014-15 as amount advanced by assessee to M/s. Coffee Day Global Ltd. Group as unaccounted cash loan is not based on any positive materials hence the addition is deleted in the AY 2014-15. Since the principal alleged unaccounted advance is deleted in AY 2014-15 there cannot be earning of any interest on it in subsequent assessment years 2015-16 to 2018-19. Accordingly addition made in these AYs towards earning of alleged unaccounted interest income on alleged cash advance is also deleted. Accordingly we delete the addition made in all these assessment years towards cash loans as well as interest thereon based on the uncorroborated loose slips. This ground of appeals of the assessee is allowed. Unsubstantiated loose sheets and jottings without providing cross-examination of party s concerned - As we have already held that the addition is based on the loose slips found during the course of search action at the residence of Shri K.M. Deekshith and the statement recorded from K.M. Deekshith and late Shri V.G. Siddartha which is having no evidentiary value under Indian Evidence Act and accordingly we have already deleted the addition. Hence this ground is infructuous. Even otherwise third party statement cannot be relied upon without any corroborative material supporting the same and it cannot be bind the assessee and it is only binding on the person who has made the statement. Further Mr. K.M. Deekshith is not a borrower himself and he is supporting the alleged transaction between assessee and M/s. Shivan Co. without having any corroborative materials to suggest the occurrence of the same. Had he been the actual borrower with supporting evidence in the form of loan document promissory notes it could have been the case of the department that assessee has lent cash advance to M/s. Shivan Co. or M/s. Coffee Day Global Ltd. Group. Without any cogent material it cannot be presumed that the alleged transaction took place and there is no fruitful purpose would be served by giving opportunity of cross examination of Mr. K.M. Deekshith. Therefore there is no adverse inference could be drawn on the basis of assessee not availing the opportunity of cross examination of Mr. K.M. Deekshith. Levy of penalty u/s 271AAB - In this assessment year assessing officer made an amount of Rs. 3 crores as unaccounted income of the assessee on the basis of loose slips found during the course of search action in the case of M/s. Coffee Day Global Ltd. Group. However AO noted in the assessment order that during the course of search action in the case of assessee and also survey at the office premises of the assessee documents pertaining to the assessee s financing business were impounded. On being confronted with the same the assessee in his statement u/s 132(4) of the Act recorded on 29.1.2016 admitted an undisclosed income of Rs. 1 crore for the assessment year under consideration. This triggered the imposing of penalty u/s 271AAB of the Act. In our opinion the addition made by AO and sustained by ld. CIT(A) has already been deleted by us in quantum appeal for the assessment year under consideration. Being so the penalty levied in this assessment year u/s 271AAB of the Act cannot stand on its own legs as the quantum addition was already deleted on the reason that the addition is based on uncorroborated loose slips and there was no cogent evidence to make an addition.
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