TMI Blog2022 (1) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Assessing officer having jurisdiction over Ramesh Maniar Group that any books of account or documents etc, seized during the course of search pertains or pertain to, or any information contained therein, relates to the assessee company and in absence of satisfaction so recorded, the books of account or documents seized during the course of search were not handed over to the Assessing Officer having jurisdiction over the assessee company. In absence of satisfaction so recorded and handing over of the seized material by the Assessing officer of the searched person, the Assessing officer could not by himself have invoked the provisions of section 153C of the Act. Therefore, the mere fact that proceedings have been initiated basis receipt of information from DCIT Central Circle -3 Jaipur and the incriminating documents/material found during the course of search from a third party, Ramesh Manihar Group, it cannot be said that the Assessing officer has to necessarily exercise jurisdiction under section 153C of the Act as the same is subject to satisfaction of various conditions as we have discussed supra and which have not been fulfilled in the instant case. We are therefore of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the same and held that since name of HMD is found in the excel sheets, it represent the assessee company through its director Shri Hari Mohan Dangayach (HMD) and the assessee company also made his transactions of lending unaccounted money through the said group and earned interest income thereon. We therefore find that there is a total disconnect and variance between the two statements and change of stand of Shri Ramesh Chand Maheshwari in his statement recorded u/s 132(4) and the statement subsequently recorded u/s 131 of the Act after a gap of almost 21 months and the Assessing officer in the instant case has effectively placed reliance on the subsequent statement recorded u/s 131 ignoring the earlier statement recorded u/s 132(4) of the Act. In the facts of the present case, where there is shifting stand of Shri Ramesh Chand Maheshwari in his two statements and there is heavy reliance placed by the Revenue on the latter statement recorded u/s 131, it is imperative that the assessee company be allowed an opportunity to seek a copy of the said statement and file its objections and secondly and equally important, be allowed an opportunity to cross examine Shri Ramesh Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of unaccounted interest earned by the assessee company. 3. In its Cross-objection No. 03/JP/2020, the assessee company has taken the following sole ground of appeal:- That on the facts and in the circumstances of the case, the Ld. CIT(A) is wrong, unjust and has erred in law in not adjudicating various legal contentions specifically reliance on judgment of Hon ble ITAT, Jaipur Bench in case of Navratan Kothari (ITA No. 425/JP/2017) on applicability of Sec. 153C of the I.T. Act, 1961 in case of the respondent. 4. The facts of the case are that the assessee company filed its original return of income on 12.09.2011 declaring total income of ₹ 10,65,040/- which was taken up for scrutiny and thereafter, the assessment was completed u/s 143(3) r/w section 153A of the Act vide order dated 26.03.2015 wherein the assessed income was determined at ₹ 17,76,790/-. Subsequently, search and seizure operations were carried out u/s 132 in case of Ramesh Manihar Group on 07.01.2016 wherein certain information/documents were seized and basis information received from the office of DCIT, Central Circle-3, Jaipur on 29.03.2018, the Assessing Officer recorded reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company as HMD . This short name is again verifiable with another pen drive namely from to group.xlsx , where full name of the assessee Hari Mohan Dangayach , is mentioned along with his promoter company name of Green Fire Exports, Dangayach Hotels P. Ltd, Kamlesh Dangayach, Serveall Land Developers P. Ltd, Emsaru Constructions P. Ltd., Green Star Constructions P. Ltd., Serve All Land Developers Pvt. Ltd. Further, PAN No. of the company was also written in the excel file. On further examination of these pen drives, it was also found that amount of transaction was mentioned after suppressing five zeros i.e. ₹ 4,40,00,000/- was mentioned as 440.00 in the form of different entries. In these pen drives, it was also mentioned, as for which period and on what rate of interest, the amount was advanced to the borrowers. 7. The Assessing Officer, thereafter, referred to the statement of Sh. Ramesh Chand Maheshwari recorded u/s 131 of the Act dated 08.11.2017 and reproduced certain questions and replies so submitted by him. The Assessing Officer further stated that after search operations, Ramesh Manihar Group and its associates have filed their application before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff the assessee company s grounds challenging the reopening the assessment u/s 147 of the Act stated that the Assessing Officer has rightly assumed jurisdiction u/s 147 of the Act for the reason that the information along with documents collected during search on Sh. Ramesh Manihar could easily result into Assessing officer forming a belief of escapement of income on the part of the assessee company. The ld. CIT(A) also dismissed the ground taken on behalf of the assessee company relating to issuance of notice U/s 148 without obtaining proper sanction u/s 151 stating that A/R of the assessee company has not been able to put forth any cogent reason or evidences leading up to the conclusion that the approval taken by the Assessing Officer u/s 151 of the Act was not proper. Therefore, grounds challenging reopening of the assessment u/s 147 and issuance of notice u/s 148 of the Act without seeking proper sanction were dismissed by the ld. CIT(A) and against the said findings, the assessee company is not in appeal before us. However, another ground of appeal taken by the assessee company relating to initiation of proceedings u/s 148 as against 153C was not adjudicated upon and against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to HMD being considered as Dhangyanch Hotels Pvt. Ltd . During the course of assessment proceedings, the appellant specifically asked the Assessing officer to point out which portion of the statement on the basis of which it is concluded as to involvement of the appellant in providing cash loan. The Assessing officer is completely silent on the same. If the Assessing officer wants to draw any adverse inference against any other person based on such statement, it was incumbent upon him to relate such statement to the appellant and also to provide an opportunity of cross examination of such person. 12. The ld. CIT(A) thereafter referred to the decision of Hon ble Supreme Court in case of Common Cause (A Registered Society) reported in 394 ITR 220 wherein the earlier decision of Hon ble Supreme Court in case of V. C. Shukla s case has been discussed at length and relying on the said decision, the ld. CIT(A) stated that though these judgments of the Hon ble Supreme Court were rendered in the context of criminal law, yet what the Hon ble Supreme Court held that merely on the basis of such uncorroborated entries kept by thirdparty investigation cannot be conducted and applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of ₹ 4.4 crores being considered as an amount advanced by way of cash loans and not recorded in the books of accounts and consequent addition towards interest which was presumed to have been earned was also directed to be deleted. Against the said findings of the ld CIT(A) deleting the additions, the Revenue is now in appeal before us. 14. In the aforesaid factual matrix of the matter, both the parties are in appeal before us against the findings and order of the ld CIT(A) and have raised respective grounds of appeal. We firstly refer to assessee company s ground of appeal in its cross-objection challenging the reopening of assessment and assumption of jurisdiction by the Assessing officer u/s 147 of the Act against section 153C of the Act and the contentions advanced by the respective parties in this regard. 15. It was submitted by the ld A/R that the entire re-assessment proceedings were based on the information received by the Assessing officer from DCIT, Central Circle, 3 during the course of search u/s 132 and Assessing Officer should have taken recourse to section 153C which overrides section 147, for carrying out impugned re-assessment proceedings in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Assessing officer can take recourse to section 153C for carrying out the reassessment proceedings as there are conditions specified in section 153C which needs to be fulfilled and only in such cases where the conditions so specified are fulfilled, the Assessing officer can take recourse to section 153C of the Act. It was submitted that in the instant case, the conditions specified in section 153C are not fulfilled as no satisfaction has been recorded by the Assessing officer of the searched person and no seized material has been handed over to the Assessing officer of the assessee company and hence, basis receipt of information/documentation and subsequent enquiries and investigation conducted during the course of search, the Assessing officer recorded the reasons for escapement of income and initiated the proceedings u/s 147 by issuance of notice u/s 148 of the Act. It was submitted that even though the ld CIT(A) has not disposed off the assessee s contentions and ground of appeal so taken in this regard, however, similar contentions were raised by the assessee during the reassessment proceedings while filing its objections to the reasons so recorded before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153C as amended by the Finance Act with effect from 01.06.2016 which read as under:- Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,- (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total in come of such other person for six assessment years immediately preceding the assessment year r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur and the incriminating documents/material found during the course of search from a third party, Ramesh Manihar Group, it cannot be said that the Assessing officer has to necessarily exercise jurisdiction under section 153C of the Act as the same is subject to satisfaction of various conditions as we have discussed supra and which have not been fulfilled in the instant case. We are therefore of the considered view that in the peculiar facts and circumstances of the present case, there is no infirmity in action of the Assessing officer in not initiating the proceedings u/s 153C of the Act. In the result, sole ground of appeal in assessee company s cross objection is dismissed. ITA No. 33/JP/2020 21. We now refer to Revenue s grounds of appeal challenging the deletion of additions made by the ld CIT(A) and the contentions advanced by the respective parties in this regard. 22. The ld PCIT/D/R took us through the findings of the Assessing officer and submitted that during the course of search as well as in post search proceedings, statements of Shri Ramesh Chand Maheshwari were recorded u/s 132(4) as well as under section 131 of the Act in which he has admitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir application before the Income Tax Settlement Commission and have surrendered the income so earned as commission on account of these un-recorded or unaccounted transactions and due taxes has also been paid. It was submitted that basis the said application filed and admission by the Ramesh Manihar Group, the Assessing officer has rightly stated that the assessee company also made transactions regarding lending its unaccounted money through said group and advanced the same out of books of accounts to earn interest income which was also not recorded in the books of accounts. It was accordingly submitted that the excel sheet notings extracted from the Jagat. XIs from the PEN drive in possession of Sh. Ramesh Chand Maheshwari thus stand corroborated by his statement recorded on oath u/s 132(4) of the Act and subsequent statement recorded u/s 131 of the Act as well as the application moved by his Group before the Settlement Commission. 24. Regarding assessee company request to provide cross examination of Sh. Ramesh Chand Maheshwari whose statements were recorded and relied upon by the Assessing officer, it was submitted that the Assessing Officer rightly stated that the right of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eassessment proceedings, the assessee company vide letter dated 25-10-2018 requested the A.O. to provide copy of the statements of Ramesh Manihar Others, and certified copy of alleged transactions allegedly pertaining to assessee company on which reliance was placed by A.O. and vide letter dated 05-12-2018 asked A.O. to provide opportunity to examine Shri Ramesh Manihar. The A.O. thereupon provided only a copy of statement of Ramesh Manihar dated 07-01-2016 recorded in course of proceedings U/s 132 but certified copy of document for alleged transactions allegedly pertaining to assessee company and copy of statement of Ramesh Manihar recorded on 8-11-2017 U/s 131 by DCIT, C.C 3, Jaipur was not supplied. The A.O. also did not allow cross examination of Ramesh Manihar by assessee company. 29. It was submitted by the ld A/R that the assessee company, while absolutely denying of giving any cash loan to any one, asked A.O. from details of alleged notings of cash loan given in notice U/s 148 that how from such details involvement of assessee company in providing loans in cash through RMG is proved. The identities of person allegedly receiving loan has also not been given. Thus when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantiate the alleged observation/inference drawn by the A.O. It is also submitted that on the basis of above said information, the addition of ₹ 4.40 Crore in case of Shri Hari Mohan Dangayach was also proposed by issue of notice U/s 148. In A.Y. 2012-13 from such details found from Ramesh Manihar for subsequent financial year, notice U/s 148 in the name of Hari Mohan Dangayach has also been issued. It is submitted that department itself is not sure that by whom alleged cash loans were advanced. 31. It was further submitted that no addition can be made without any corroborative evidence of material found in course of search from third party. In this connection, the assessee company places reliance on the decision of Amritsar Bench of the ITAT in case of I.T.O. vs. Balram Jakhar [2005] 98 TTJ (Amritsar) which was rendered on the basis of Hon ble Supreme Court decision in famous case of Jain Hawala diaries reported as CBI v. V.C. Shukla AIR 1998 SC 1406 wherein it was held as under:- Provisions of Section 34 of the Evidence Act, was considered for the purposes of the expression entries in books of account , books of account . In this case, which is also known as Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to be appreciated and a conclusion drawn therefrom. Therefore, the Assessing officer has sought to make addition in the hands of the assessee company admittedly upon the basis of the traces and imprints that are clearly at best circumstantial. The evidentiary value of the entire material relied upon by the Assessing officer is suspect and despite carrying out through investigation, the Assessing officer in the re-assessment proceedings has failed to uncover any damning evidence against the Appellant. It was further held that from the above submitted facts, it is evident that the said details given in reasons recorded give no indication even by which it could lead to the presumption that there is any connection of the assessee company with the said alleged notings on alleged lose papers allegedly found from Shri Ramesh Manihar not there is any indication or legal corroborative material that the said alleged notings pertain to assessee company. As submitted above, the statement of Shri Ramesh Manihar was neither recorded in assessee company s presence nor any opportunity to cross examination is allowed and as such the said statement does not have any evidentiary value to reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi), it was held that seized documents without corroborative evidence are to be considered Dumb Documents that cannot be relied upon and made basis of addition. Similar propositions have been laid down by the Hon'ble ITAT, Jaipur Bench in the case of DCIT v. Countrywide Buildstate (P) Ltd. v. [2013] 59 SOT 11 (Jaipur-Trib) and DCIT v. Rajat Agarwal [2012] 144 TTJ 753 (Jaipur Trib). Thus extracts of the excel Sheet and details from pen-drives are nothing but dumb documents, not admissible as evidence and on the basis of which, no addition can be made in the hands of assessee company. 34. It was further submitted that in assessee company s own case, a massive search and seizure action u/s 132 of the Act was carried out by the Income-tax department on 25-04-2012, where no such incriminating documents / information relating to alleged loans through Sh. Ramesh Manihar were found by the investigation / search team, as alleged in the reasons recorded for issuing a notice under section 148 of Income Tax Act to the assessee company. The facts and submissions are verifiable from the assessment order passed u/s 153A r.w.s. 143 (3) of the I. T. Act, 1961. 35. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m./2015 to 3097/Mum./2015 decided on 11.10.2017), the ITAT Mumbai held that addition made on the basis of a print out taken from the computer of a third party without there being no other corroborative evidence brought on record to prove the fact that the payment mentioned in the seized material was actually received by the assessee company, was not sustainable. Similarly, in another case of Aarti Colonizers Company, certain incriminating material in the form of data stored in electronic medium was found in search conducted on the partners of the assessee firm. On the basis of such electronic evidences, additions were made in the hands of the assessee firm. Such additions were subsequently deleted by the Raipur Bench of the Tribunal (ITA No. 178 to180/RPR/2014 dated 01.07.2019) and it was observed by the Tribunal that no material was found to show that the amount contained in the data was paid by the assessee firm at any point of time. Resultantly, in the absence of any corroborative evidences no addition can be made. 38. It was further submitted that Shri Ramesh Manihar in his statement recorded u/s 132 (4) in course of search in answer to Q. No. 12 stated that he acted as a br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Manihar stated that whatever was told by him in answer to question No. 15 and 17, he still stands by it. It is reiterated that in answer to such questions, recorded during search U/s 132 (4), Ramesh Manihar stated that whatever loan have been given by him in cash has been given on his personal account and that such money lending was done to small traders and was carried out by him from last 4 to 5 years. 40. It was further submitted that it can even be possibility that Ramesh Manihar engaged in the business of providing loans in cash to different persons on his personal account, in order to save himself and pre-empting any possibility of action from the Income Tax Department against him, he managed the record keeping in manner which can support his story. This even finds support from the fact that at the first instance when he was questioned by the Income Tax Department, u/s 132(4), he accepted to have provided loans in cash to different persons on his own account. Ld. A.O. made addition for the reason that Shri Ramesh Manihar accepted to have acted as a broker for receiving and providing loan in cash and as a result surrendered such amount of brokerage before the Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. 6. According to us, not allowing the assessee company to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity in as much as it amounted to violation of principles of natural justice because of which the assessee company was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee company disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee company. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee company. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1- 01-2018 (ITA No.(S) 368 to 372/JP/17) following the judgment of Hon'ble Supreme Court in case of Andman Timber Industries held that without giving opportunity of cross examination the assessment completed is a nullity. Therefore, the statement of witness cannot be sole basis of the assessment without given an opportunity of cross examination and consequently it is a serious flaw which renders the assessment order a nullity. In view of above facts and position of law, it was submitted that the Ld. CIT(A) was right in deleting the impugned addition of ₹ 4,40,00,000/- made by Ld. AO. Thus, it is requested to that order of ld. CIT(A) on this ground may kindly be upheld. 44. We have heard the rival contentions and purused the material available on record. The case of the Revenue is that the assessee company had advanced a sum of ₹ 4.4 crores by way of cash loans, through Ramesh Manihar Group to various persons, which is not recorded in its books of accounts and the same was brought to tax as unaccounted income u/s 69 of the Act. It was also held that the assessee company has advanced the said amount on various dates for different periods of time, accordingly, consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itial onus lies on the assessee company which it has failed to satisfy and reliance has been placed on the findings of the Assessing officer in this regard. 47. The ld A/R in his submissions has however stated that the addition has been made by the Assessing officer by way of undisclosed investment in form of cash loans invoking the provisions of Section 69 and therefore, the burden lies on the Assessing officer to prove that the investment by way of cash loans has infact taken place by the assessee company and the amount so invested belongs to the assessee company and the burden is on the Revenue to first prove the said allegations by leading positive evidence. In this regard, our reference was drawn to the provisions of Section 69 of the Act which reads as under: Where in the financial year immediately preceding the assessment year, the assessee company has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee company offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een satisfied or not and basis of his findings, we refer to the information and other material/documentation available with the Assessing officer prior to initiation of the reassessment proceedings as well as analysis/examination thereof during the course of reassessment proceedings and besides, other information/documentation relied upon by the Assessing officer during the course of reassessment proceedings to arrive at his findings and which forms the basis of subject addition of undisclosed investment in the impugned order. These include information received from DCIT Central Circle-3 Jaipur prior to recording of reasons and issuance of notice u/s 148, copy of extracts of excel sheets/data found in 18 pen drives during the course of search u/s 132 from the premises of Shri Ramesh Manihar and found relevant to the assessee company, copy of statement of Shri Ramesh Chand Maheshwari alias Shri Ramesh Manihar recorded during the course of search u/s 132(4) dated 7.01.2016, copy of statement of Shri Ramesh Chand Maheswari alias Shri Ramesh Manihar subsequently recorded u/s 131 dated 8.11.2017. 50. Firstly, we refer to the information so received by the Assessing officer from DCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the lender , Hari Mohan has been written; under the heading related data of the lender , Jagdish ji has been written; under the heading From and To Group.xlsx , name of following entities namely Green Fire Exports, Dangayach Hotels P. Ltd, Kamlesh Dangayach, Serveall Land Developers P. Ltd, Emsaru Constructions P. Ltd., Green Star Constructions P. Ltd., Serve All Land Developers Pvt. Ltd have been stated; thereafter, mobile number and two PAN numbers have been stated. We find that the said data and information so contained therein is unclear, vague, in abbreviated and codified form and points mainly to a person by name of HMD whose name found mention in both the tables and not the assessee company and therefore the said data per se on a standalone basis cannot constitute as tangible and cogent material/evidence in possession of the Assessing officer establishing the fact that it is the assessee company which has lent its money in cash through Ramesh Manihar Group unless the same is analysed and examined thoroughly and necessary linkage is established with the assessee company. 51. Now, let s look at as to how the Assessing officer has examined and analysed the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no satisfaction has been recorded by the Assessing officer of Ramesh Manihar Group that seized documents pertains to the assessee company or any information contained therein relates to the assessee company and the original seized pen drives found during the course of search have not been handed over to the Assessing officer by Assessing officer of the Ramesh Manihar Group. In fact, it has been an admitted position of the Revenue, as we have noted earlier, that no such satisfaction of the Assessing officer of the searched person was recorded and the pen drives seized during the search doesn t pertain to the assessee but Shri Ramesh Manihar who has also owned up the same and only information was disseminated to the jurisdictional Assessing officer. Therefore, what has been received by the jurisdictional Assessing officer in the instant case is only the information in form of extracts and print out of certain excel sheets containing the aforesaid data in various pen drives found during the course of search in case of Ramesh Manihar Group. Here, it is relevant to note that presumption available under section 132(4A) in terms of authencity and correctness of contents of such data/infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has changed hands apparently from the Investigation Wing to the Assessing officer of the searched person and then, finally to the Assessing officer who has placed reliance on the same and has passed the impugned order. It may be an apprehension on part of the assessee company that the data while shared/handed over to the Assessing officer might have been either modified, altered or tempered with, however, where such an apprehension has been raised by the assessee company and more so, it would also be interest of Revenue where there is heavy reliance placed by the Revenue on such data, such apprehension so raised by the assessee company needs to be appropriately addressed by leading positive evidence and recording of satisfaction by the Assessing officer which we find has not happened in the instant case. 55. Having said that, let s examine whether data so found in the pen drives and received by the Assessing officer stand corroborated by the Shri Ramesh Chand Maheshwari in his statement recorded under Section 132(4) at the time of search conducted on 27.01.2016. In reply to question no. 12, he has stated that through his two firms, namely Amarnath Associates and Amarnath Ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odalities of such cash financing and how the accounts thereof are maintained in computers and pen drives. Therefore, we are unable to understand as to how the Assessing officer has reached to a conclusion that basis such statement recorded u/s 132(4) that Shri Ramesh Chand Maheshwari and his partner Shri Manmohan Bagla were involved in cash loan transactions where the amounts were taken in cash from the lenders and the same was advanced to the borrowers in cash and have earned commission income on these transactions, and has recorded a consequential finding that since name of HMD is found in the excel sheets, it represent the assessee company through its director, Shri Hari Mohan Dangayach (HMD) and the assessee company has made the transactions of lending unaccounted money through the Ramesh Manihar group and earned interest income thereon. We therefore find that there is a clear disconnect between the findings of the AO and the statement of Ramesh Chand Maheshwari recorded on oath u/s 132(4) of the Act, and data so found in the pen drives which is claimed by the AO as relating to cash loan financing by the assessee company through Ramesh Manihar cannot thus be held to be corrob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer in the instant case has effectively placed reliance on the subsequent statement recorded u/s 131 ignoring the earlier statement recorded u/s 132(4) of the Act. 58. Without getting into the background and basis of such change in stand of Shri Ramesh Chand Maheshwari which is a matter for Revenue and appropriate authorities to ponder and examine, and is in any case beyond the scope of impugned matter under consideration, the question that arises for consideration is whether the Assessing officer can be held justified in placing reliance on such shifting stand of Shri Ramesh Chand Maheshwari in his own two statements which put a question mark on reliability of his statements and can it be said that the data so found in the pen drives relates to cash loan financing of various lenders stand corroborated by the statement of Shri Ramesh Chand Maheshwari recorded under Section 131 of the Act. The assessee company has also challenged the same stating that such statement was never confronted to it during the course of reassessment proceedings and even an opportunity of cross-examination of Shri Ramesh Chand Maheshwari so demanded was not provided by the Assessing officer. 59. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee company and routed through Ramesh Manihar Group for onward lending and without providing an opportunity of cross-examination. The assessee company is not privy to the application filed before the Settlement Commission and proceedings before the Settlement Commission and therefore, the findings of the Settlement Commission cannot be said to bind the assessee company and for that matter, the jurisdictional Assessing officer who has to record his own independent findings considering the facts and circumstances of the present case. We therefore agree with the findings of the ld CIT(A) that mere admission by one person before the Settlement Commission cannot bind the another person in absence of any nexus between the person admitting and the other person. 61. We find that similar view has been taken by the Coordinate Mumbai Benches in case of Anil Jaggi vs ACIT (supra). In that case, payment of on-money by assessee company, Anil Jaggi, was noticed in the course of search in the Hiranandani Group in respect of purchase of certain properties. The Coordinate Bench after appreciating the entirety of facts and circumstances held that the findings of the Assessing officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany for purchase of the property under consideration. We find that the information as emerges from the print out of the pen drive falls short of certain material facts, viz. date and mode of receipt of 'on money', who had paid the money, to whom the money was paid, date of agreement and who had prepared the details, as a result whereof the adverse inferences as regards payment of on money by the assessee company for purchase of the property under consideration remain uncorroborated. We further find that what was the source from where the information was received in the pen drive also remains a mystery till date. We find that Sh. Niranjan Hiranandani in the course of his cross-examination had clearly stated that neither he was aware of the person who had made the entry in the pen drive, nor had with him any evidence that the assessee company had paid any cash towards purchase of flat. We have deliberated on the fact that Sh. Niranjan Hiranandani in his statement recorded on oath in the course of the Search seizure proceedings had confirmed that the amounts aggregating to ₹ 475.60 crore recorded in the pen drive were the on-money received on sale of flats, which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained. We thus are unable to subscribe to the view of the lower authorities and set aside the order of the CIT (A) sustaining the addition of ₹ 2.23 crores in the hands of the assessee company. 62. We therefore find that the Assessing officer has merely relied upon extracts of certain uncorroborated excel sheets, found during the course of search in case of Ramesh Manihar Group. Such excel sheets do not point out to the fact of assessee company having given loans, in cash, to different persons through Ramesh Manihar Group. Nothing concrete is discernible from these excel sheets. The Assessing officer has failed to corroborate the excel sheets with independent evidences. Unless such corroborative evidences were brought on record, the present additions are not justified. Nowhere in the excel sheets found during the course of search in case of Ramesh Manihar Group and relied upon by the AO, it could be established that HMD as mentioned in those documents stand for the assessee company. No trail of documents or corroborative evidences could be established in this regard. The extracts of the excel sheets on which reliance had been placed were found from the computers of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the statement and not providing cross examination to find out any involvement of the person affected by such statement is a gross violation of principles of natural justice which renders such reliance a nullity and if such statement is discarded, there remain no evidence to hold that the appellant has given any such advance to the tune of ₹ 4.4 crores. Merely extracts of excel sheet do not provide any evidence of the allegation made by the AO against the assessee company. Thus, mere fact that there were certain entries found from record of third party is not sufficient to make addition on the ground that assessee company had made unexplained investments. The ld CIT(A) has rightly held that though cognizance may be taken in respect of entries by third-party in the assessment of other person so as to initiate inquiry for assessment, yet when there is no finding that such entries are in fact pertaining to such third person only which should be emanating from the entries itself or from the person who has recorded such entry, no cognizance can be taken so as to fasten tax liability on such third person. 63. In this regard, we find that under similar fact pattern, Coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hosted the ICC event for which she was supposed to receive cash payment. It is further relevant to observe, even Ms. Sandhya Ramchandra, from whose computer such print out was taken had stated before the Departmental Authorities that she was not aware of the fact mentioned in the said Annexure as it was for a period prior to her appointment in Matrix. In these circumstances, simply relying upon a untested / unverified document and without any other corroborative evidence to demonstrate that the assessee company has actually received cash payment of ₹ 2,50,000 for hosting an event in Sidney, the addition, in our view, is unsustainable. Therefore, we uphold the order of the learned Commissioner (Appeals) on this issue by dismissing the ground raised. 64. Similarly, in case of Aarti Colonizer Company (supra), the matter came up before the Coordinate Raipur Benches of the Tribunal where it was held that the addition has been made by the assessing officer on the basis of the screenshot of journal entry dt. 4-9- 2007 taken from the tally data in the pen drive found during the course of search and the printout of the details of land which has been reproduced by the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, this cannot be considered as evidence of investment. It is undisputed that neither during search nor during the assessment proceedings, any material was found to show that the amount contained in the journal entry was paid by the assessee company firm to anyone at any time. Therefore, only on the basis of journal entry, section 69 could not have been invoked. As regards the details of land given on page Nos. 2 and 3 of assessment order as table 1, it merely contains some details about different lands and it does not contain even a whisper about any investment or payment made by anyone. We observe that the inference has been drawn by the assessing officer only on the basis of the three figures mentioned at the end of the table, on page No. 3 of the assessment order. This, in our considered view, cannot be considered to be evidence of payment/investment. It is undisputed that during search or thereafter during the assessment proceedings, no material was found or brought on record evidencing that the three figures referred to above represent any actual investment/payment by the assessee company. As rightly contended by the learned Authorised Representative of the assessee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 311 and 337 of the paper book. These profit loss accounts have remained undisputed by the assessing officer. We are inclined to agree with the argument of learned Authorised Representative of the assessee company that when the source of revenue for the assessee company was not there, it cannot be perceived that the assessee company could have earned any undisclosed income and made any undisclosed investment. In CIT v. Smt. P.K. Noorjahan (supra), on behalf of the Revenue, it was argued that the word may in section 69 should be read as shall against which Hon ble Supreme Court observed that it was unable to agree. Hon ble Supreme Court thereafter held that the use of the word may clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income Tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee company as the income of the assessee company and the Income Tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee company is found to be satisfactory. The question whether the source of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in making addition of ₹ 7,32,98,821 on account of the lands described on page Nos. 2 and 3 of the assessment order. We, therefore, deem it proper to confirm the findings of learned Commissioner (Appeals) on this issue and hold that he was justified in deleting the addition. 8.2. Next the addition of ₹ 2,73,44,233 comprised in the total addition of ₹ 10,06,43,054, we observe that the addition has been made by the assessing officer on the basis of printout of tally data found in the pen drive seized from the residence of Shri Kishore Atlani. The printout contains details of 32.68 acres of land and the details have been reproduced as table 2 in the assessment order, on page Nos. 4 and 5. We observe that apart from this printout found during search, no other corroborative material in the form of cash book ledger etc. was found during search. A perusal of the details shows that the lands were purchased over a period of three years, from different persons. It is not the case of assessing officer that details of payment of individual lands were also found during search. What is to be noted is, apart from the chart found, no other corroborative evidence was found du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit become conclusive. 8.2.2 While considering the explanation of assessee company about the entries in the pen drive being fake, made by one Shri Ajay Atlani, it is noteworthy to consider that no enquiry whatsoever appears to have been conducted either from the said Shri Ajay Atlani or from Shri Kishore Atlani, from whose residence the pen drive was found. The assessee company explained the circumstances under which the entries were made in the tally data in the pen drive by Shri Ajay Atlani. All these facts and assertions have remained uncontroverted. The assessee company explained some of the contents of the tally data in pen drive to demonstrate that the entries found in pen drive are fake. Before us. during the course of hearing, learned Authorised Representative of the assessee company filed a summarised form of his explanation in the form of a chart. The explanation given to the assessing officer was to the effect that some of the entries in the pen drive do not match with the entries in regular books in the sense that in some cases, payments are mentioned to be made in cash in the pen drive while such payments are established to have been made through cheque in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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