TMI Blog2024 (2) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the Tally account found in the laptop as well as loose paper were held to be having no evidentiary value being dump documents and retraction of the statement by filing the affidavit and non-consideration of the same by the AO or examination of the said affidavit to ascertain the correct facts is a serious laps on the part of the AO while making addition. Also to bring into the effect of penalty provision us 271D or 271E, it has to be established with independent evidence and not merely corroborative evidence (i.e. book entries) that Assessee has actually committed the default contemplated in section 269SS or 269T i.e. it has taken loan in cash or it has repaid the loan in cash exceeding Rs. 20,000. The explanation below 269SS defines the Loans or deposits MEANS Loans or deposits of money. The use of word Means by legislature in the Explanation below Section 269SS or 269T is with a purpose and it is to restrict the meaning to only Loan of Money . The use of Word Means indicates that definition is hard and fast and no other meaning can be assigned to the expression that is put down in definition [P.Kasilingham vs. PSG College of Technology [ 1995 (3) TMI 466 - SUPREME ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961. 2) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the penalty was imposed on the basis of dumb documents despite the fact that the data on the said documents was duly corroborated as per the findings in the penalty order. ITA No. 795/Ind/2019 for A.Y. 2011-12 in the matter of Penalty u/s 271D: 1) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty of Rs. 2,55,00,000/- levied by the JCIT (Central), Indore, u/s 271D on account of violating the provisions of section 269SS of the Income-tax Act, 1961. 2) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the penalty was imposed on the basis of dumb documents despite the fact that the data on the said documents was duly corroborated as per the findings in the penalty order. ITA No. 796/Ind/2019 for A.Y. 2012-13 in the matter of Penalty u/s 271D: 1) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty of Rs. 1,30,00,000/- levied by the JCIT (Central), Indore, u/s 271D on account of violating the provisions of section 269SS o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the provisions of section 269T of the Incometax Act, 1961. 2) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the penalty was imposed on the basis of dumb documents despite the fact that the data on the said documents was duly corroborated as per the findings in the penalty order. ITA No. 801/Ind/2019 for A.Y. 2010-11 in the matter of Penalty u/s 271E: 1) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty of Rs. 2,55,10,000/- levied by the JCIT (Central), Indore, u/s 271E on account of violating the provisions of section 269T of the Incometax Act, 1961. 2) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in holding that the penalty was imposed on the basis of dumb documents despite the fact that the data on the said documents was duly corroborated as per the findings in the penalty order. ITA No. 802/Ind/2019 for A.Y. 2011-12 in the matter of Penalty u/s 271E: 1) On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty of Rs. 1,35,00,000/- levied by the JCIT (Central), Indore, u/s 271E on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ience and clarity. 3. The background facts leading to present appeals are such that the assessee is a company. A search u/s 132 of the Act was conducted in case of one PATH Group including assessee on 27.08.2014. Pursuant to search, the assessments of assessee were completed u/s 153A/143(3) for AY 2009- 10 to 2015-16. During search, the authorities seized a laptop from premise of assessee and took Tally data from laptop in the name of XYZ 0809-2. The search-team also seized loose papers marked as LPS-1 to 8 from the premise of one Shri G.C. Patidar, an employee of assessee. The statements of Shri G.C. Patidar were also recorded u/s 132(4) wherein he stated that unsecured loans were taken from various people which were out of books. During assessments proceedings, the assessing authority observed that the assessee has taken loans in cash and also made repayments in cash. Considering such act of assessee as a default committed in violation of section 269SS 269T of the Act, the assessing authority referred matter to Joint Commissioner of Income-tax (Central), Indore [ JCIT ] for taking action 271D 271E. Accordingly, the JCIT show-caused assessee in response to which the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed revenue s appeals and thus upheld the orders of first appellate authority. Furthermore, in the present appeals also, the first appellate authority i.e. CIT(A) has deleted the penalties imposed by JCIT on the basis of very same material. Since the present appeals being contested by revenue do not have any new material or fact, the impugned orders of CIT(A) deleting the penalties are in order and must be upheld having regard to the order passed by ITAT in IT(SS)A No. 32 33/Ind/2021 (supra) . 5. The fourth document considered by JCIT is Page 21-24 of LPS-1 seized from office of M/s Agroh Infrastructure Developers Pvt. Ltd. This document is a basis for penalties to the extent of Rs. 3,66,25,000/- u/s 271D and Rs. 1,15,00,000/- u/s 271E in AY 2009-10 only (For the sake of clarity, these penalties are already included in overall penalties of Rs. 8,98,85,000/- u/s 271D and Rs. 1,64,00,000/- u/s 271E imposed by JCIT) in respect of cash loans taken/cash repayments alleged to have been made by assessee from/to M/s Agroh Infrastructure Developers Pvt. Ltd. The JCIT has discussed this issue at length in Para 6 / Page 19-23 of penalty-order. In this regard, Ld. AR submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60,000/- are cash loan received by the assessee out of book for A.Y.2009-10 on which the AO has computed the interest expenses of Rs.82,03,684/-. Similarly for A.Y.2010-11 the AO taken loan of Rs.54,65,000/- and interest expenses of Rs.58,55,122/-. The details of these amounts have been given by the AO in para 11 as under: Name of Transaction Period Amount received Amount paid Loan availed by PATH FY 08-09 5,32,60,000 49,00,000 FY 09-10 54,65,000 2,55,10,000 Interest Expenses paid by PATH FY 08-09 82,03,684 FY 09-10 58,55,122 Cash transaction of PATH with directors Relatives FY 08-09 2,85,25,021 5,52,49,940 FY 09-10 1,46,61,842 5,37,00,603 7.2 All these figures as given by the AO are based on the assumption of the AO that the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est except the statement of Shri G.C. Patidar who has mentioned interest rate only and not the payment of interest during the year under consideration. We further note that the AO in para 13.3.5 rejected the contention of the assessee by considering the signature on the loose sheet on cutting and correction as signature of Shri Puneet Agrawal as under : 13.3.5 The contention of assessee is incorrect, important evidence seized from premise of Shri G.C Patidar is serial of 19 of page no.14 of LPS-1 seized from residence of Patidar it consist of signature of Shri Puneet Agrawal clearly meaning that he has approved the transactions. 7.3 This observation of the AO is contrary to the statement of Shri G.C. Patidar recorded u/s 132(4) of the Act and question no.31 and answer to the same are reproduced as page no.93 of the assessment year as under: 7.4 Thus, it is clear that Shri G.C. Patidar has stated in the statement that the signature on the loose sheet may be of Mr. NayazAhmmad from the office. Therefore, the observation of the AO is contrary to the record itself and the addition made by the AO on account of alleged payment of interest on the cash loans is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the office of the company was used by one of its employee Mr. Nilesh Tawrech who was taking tally accounting training under Shri G.C. Patidar, who used to provide him hypothetical entries for learning purpose for that reason and for learning purpose name of the company was taken as 'XYZ'. The appellant has claimed not having any knowledge of company 'XYZ' which has also been stated by appellant during the course of assessment proceedings. The appellant after the search proceedings enquired from his staff member regarding the impugned printouts. Mr G.C. Patidar, who worked as an accountant usually comes to office and worked for others and uses the printer installed at the premises of the appellant, informed that he has opened this account on tally to train his junior Mr. Nilesh Tawrech and most of the figures are imaginary and few of the figures were copied from the data of appellant. The appellant in support has filed affidavit of Shri G.C. Patidar regarding the same. 4.2.3 After considering the entire factual matrix and evidence/material on record inter alia written submissions filed, I reach to conclusion that impugned additions have been made on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sheer presumption and assumption basis. Further, the AO did not even bother to carry out independent enquiries from the person whose names are mentioned on LPS-1 LPS 8 which Was seized from the premises of G C Patidar. The trainee junior Nilesh Tawarech has untimely passed away. Therefore, it is impossible for the appellant to bring Shri Nilesh Tawarech in person for examination on oath. It is pertinent to mention that no incriminating material was found during search having sole direct nexus with any of the impuged cash loan transaction. Furthermore, neither the AO call any of the person whose names were mentioned on loose paper for examination nor any person whose name were mentioned on loose paper turned out to AO and has admitted that any such transaction has taken place. Therefore, in absence of any cogent evidence having direct nexus with the impugned transactions, the said impugned papers and tally data account cannot be used against the appellant. The AO has also alleged that some of the data is accounted and some of the data is unaccounted in books of accounts, however, has failed to explain that the unaccounted data. Also, the data found from the premises of Shri G.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flected. Even on second table at page 99, the name of PATH is not reflected therefore to attribute these transactions to PATH is fallacious. The said loose sheet was subject to varying interpretation in the year AY 2008-09 and is a nonspeaking/ dumb document. The director of Agroh cannot give any satisfactory reply during the statement recorded at the time of search however during the course of their assessment admitted that they have given loan to PATH. The statement of the Director wherein they admitted giving loan to PATH has not been provided nor the opportunity to cross examination was made available. It is important to mention that the buy-back of shares is duly accounted in audited books of account of appellant and the impugned loose papers were not found from premises of the appellant. Therefore, the AO is not justified in presuming buyback of shares as cash loan and interest on a loan was equally hypothetical. The statement given which has to be used against the assesse has to be confronted and opportunity to cross examine has to be provided, which squarely apply in relation to loose paper seized from the premises of Agroh where the statement was taken behind the bac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The data in the form of loose sheet gathered from the premises of GC Patidar which is a print out of excel sheet cannot be relied upon in the absence of any corresponding entry being made of the loan given by the counter party in his books. It is the stand of the AO that some of the Modi family member has given loan to PATH by cheque, therefore the entries in the loose sheet / tally data can be assumed to be true. The proof of actual transaction taken place cannot be substituted from the presumption howsoever strong it may be it cannot take the place of an evidence. It is onus on the AO to prove that actual transaction of cash i.e. movement of cash actually taken place with the help of documentary evidence. The assessment order does not discuss any such attempt by the department to conclusively establish that the transaction whereby debtor creditor relationship has been created between the two parties. None of the parties from whom the loans are allegedly taken by Assessee Company in cash were examined for the truth of the happening of such transactions. If the alleged cash loans are taken by the assessee company is taken to be true on the fact of it, then there arises a correspond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l such vital gaps by bringing positive evidence on record and prove the allegation about alleged cash loans by the assessee, which he utterly failed to do so. CBI vs VC Shukla 3 SCC 410 The Hon'ble Supreme Court has held that loose sheets of paper cannot be termed as 'book' within the meaning of s. 34 of Evidence Act. It has also been held therein by the Hon'ble Supreme Court that even correct and authentic entries in books of account cannot, without independent evidence of their trustworthiness, fix a liability upon a person. The Hon'ble Supreme Court also observed that even assuming that the entries in loose sheets are admissible under s. 9 of the Evidence Act to support an inference about correctness of the entries still those entries would not be sufficient without supportive independent evidence. Rakesh Goyal Vs. ACIT (2004) 87 TTJ (Del) 151 - The findings of Hon'ble Tribunal was as under:- 20.1 After perusing the findings of the CIT(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly the finding of the CIT(A) has not been controverted by the learned Departmental Representati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So, unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person, on such document by itself cannot prove the contents of the document. These are the findings of fact recorded by both the authorities i.e. CIT(A) and the Tribunal. 15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration . Jayantilal Patel Vs. ACIT Ors (1998) 233 ITR 588 (Raj) - Held that - During search at the residence of Dr.Tomar, the Department official found a slip containing some figures. This piece of paper claimed to have been recovered at the time of search contains figures under two columns. In one column, the total of these figures comes to Rs. 17,25,000 from 31st May, 1989, to 8th Dec., 1989, and in the other column, the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts as they are simply the rough papers to be thrown in the waste paper basket. In this connection, the assessee relies upon the court decisions. CIT Vs. Chandra Chemouse P. Ltd. (2008) 298 ITR 98 (Raj.): it is held that - (i) Additions can be made only when evidence is available as a result of search or a requisition of books of accounts or documents and other material. However additions cannot be made on the basis of inferences. (ii) No facts were available to AO after search and inference of AO did not fall within the scope of Section 158BB. (iii) Deletion of additions made by Tribunal of assumed undeclared payments made for purchase of property was on basis of facts. Ashwani Kumar V. ITO (1991) 39 ITD 183 (Del) and Daya Chand V. CIT (2001) 250 ITR 327 (Del) and S.P. Goel V. DCIT (2002) 82 ITD 85 (Mum.): Nine out of 19 slips found were without any name or amount and therefore were dumb documents and no adverse inference could be drawn. Common Cause (A Registered Society) Vs. Union of India - 30 ITJ 197 (SC): In this case, the Hon'ble Court held that without any independent evidence or corroborative material, no addition is permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged payments were made do not find a mention in full. They have been shown in abbreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to. 19. With respect to evidentiary value of regular account book, this Court has laid down inV.C. Shukla, thus; 37. In Beni v. Bisan Dayal it was observed that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on page 117 to 119 of A/1 represent 'on money' payments by the assessee) . (iv) Atual Kumar Jain Vs. DCIT (2000) 64 TTJ (Del.Trib) 786- Held that additions based on chit of paper, surmises, conjectures etc could not be sustained in the absence of any corroborative evidence supporting it. [Similarly in present case, neither either parties have admitted payment/receipt of 'on money' nor any corroborative evidence was seized to support the findings of the AO]. SK Gupta Vs. DCIT (1999) 63 TTJ (Del.Trib) 532 - Held that that additions made on the basis of torn papers and loose sheets cannot be sustained as same do not indicate that any transaction ever took place and does not contain any information in relation to the nature and party to the transaction in question. (vi) Jagdamba Rice Mills Vs. ACIT (2000) 67 TTJ (Chd) 838 Held that No addition can be made on dump documents . (vii) In the latest decision of the Hon'ble M.P. High Court, Indore Bench in the case of the PCIT-1 v/s Shri Pukhraj Soni (2019) 34 ITJ 489 (MP) has held as under; On the basis of search re-assessment additions were made - Appeal allowed by CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO is not justified in presuming certain facts without having anything to corroborate. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of UmacharanSaha Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC). 4.2.9 Despite the request of the Appellant, during the course of Assessment proceeding and also during the course of Penalty proceedings, the department despite having several weapons in its armory, like giving of summon, survey, search and seizure, reassessment, revision etc could not establish as to whether the alleged person from whom it is alleged that the appellant has taken huge loan in cash are really existing person or imaginary person. Nothing has been brought on record to suggest any enquiry has been conducted about the alleged lenders. No statement were recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial to conclusively show that huge amount revealed from seized document were actually transferred from one side to another, addition under section 69C were not sustainable. Hon'ble Supreme Court in the case of Pr. CIT Vs. Vinita Chaurasia [2018] 98 Taxman.com 468 (SC) arising out of Order of HC in CIT Vs.VinitaChaurasia [2017] 82 Taxmann.com 153 dismissed the departmental SLP and affirm the very principle again that when a addition was made to the assessee income by invoking 153C on the basis of document seized in the course of search carried out in the case of L and later L retracted his statement that said document belong to Assessee and moreover there were various internal inconsistencies and contradictions in document in question, impugned addition was to be set aside. In the case of CIT Vs. World wide Township Project Ltd (2014) 106 DTR Del 139 it was held that - A plain reading of the aforesaid Section indicates that (the import of the above provision is limited) it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the Section is clearly restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 132(4A) is available in the statute of income tax, yet the ingredient of default has to be established by the Department. In the case of Ushakant N Patel vs CIT (2006) 6 ITJ 312 (Gujrat HC) it has been held that un-disclosed investment under Sec.69, the question was whether even if presumption under 132(4A) is established, yet prerequisite of sec. 69 has to be complied with. It was held that even if the presumption available u/s. 132(4A) can be raised against assessee, the ingredient by way of prerequisite condition of 69 of the Act has to be satisfied and cannot be presumed to have been established on the basis of 132(4A) of the Act. Section 69 opens with the word where any financial year immediately preceding the Assessment year, the Assessee has made investment ... Therefore it was incumbent upon the authority to establish that such investment had been made in a financial year immediately preceding the assessment year in question. In the case in hand, despite presumption, the ingredient of default i.e. actually taking or repaying loan or interest payment or giving loan to directors in cash is to be established by the Authority, with necessary enquires conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 19 to 20 as under : 19. In the case at hand Mohd. Rashid was summoned and his statement was recorded. A request was made by the assessee to crossexamine him. The same was not allowed. On a perusal of the assessment order it is perceivable that the Assessing Officer has heavily relied upon the statement of Mohd. Rashid. The Assessing Officer has expressed the opinion that there could not have been any transaction between M/s. Rashid and Co., as it was a small firm and not assessed to income-tax. 20. In the obtaining factual matrix the seminal question is whether the said statement of Mohd Rashid could have been utilised against the assessee without calling him for cross-examination. It is of immense significance that Mohd. Rashid has filed an affidavit in variance of his original statement. That apart, the Assessing Officer has ignored the affidavit and ascribed reasons how the transaction with the said Mohd. Rashid was not worth giving credence. The genuineness of bills produced by the assessee has not been accepted exclusively on the basis that the said Mohd. Rashid was a small businessman and was not assessed to income-tax. The aforesaid circumstances eloquently spea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the judgment KishanChadnChellaram reported in 125 ITR 713 at page 720 which is also followed in the judgments cited by the petitioner in the case of Deputy Commissioner of Income Tax vs. M/s.Roger Enterprises (P) Ltd., reported in 2012 SCC Online ITAT 11821 and in the case of Brij Bhushan Singal vs. Assistant Commissioner of Income Tax reported in 2018 SCC Online ITAT 2891 , held as follows :- ''It is true that the proceedings under the Income Tax Act law are not governed by the strict rules of evidence and therefore, it may be said that even without calling the Manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the Income Tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for the opportunity to cross examine the Manager of the bank with reference to the statement made by him. ....'' 23.The counsel for the petitioners also placed the recent judgment of the Supreme Court in the case of ICDS Ltd., reported in 2020 10 SCC 529, wherein, the Apex Court has remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that estimate; and that in case he proposes to use against the Assessee the result of any private inquiries made by him, he must communicate to the Assessee the substance of the information so proposed to be utilized to such an extent as to put the Assessee in possession of full particulars of the case he is expected to meet and that he should further give him an ample opportunity to meet it. The Income Tax Officer is not bound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessment even by private enquiry. But if he desires to use the material so collected, the Assessee must be informed of the material and must be given an adequate opportunity to explain it and controvert the contents of it. (emphasis supplied) [See Dhakeshwari Cotton Mills Ltd. v. Commissioner of Income Tax, (1954) 26 ITR 775 (SC); C. Vasantial and Co. v. Commissioner of Income Tax, Bombay City, (1962) 45 ITR 206 (SC) and KishinchandChellaram v. Commissioner of Income Tax, Bombay City (1980) 125 ITR 713 (SC): (1980) 19 CTR 360: (1980) 4 Taxman 29]. In view of this legal position, in our considered view the orders of the CIT(A) and the Tribunal are in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them . 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the crossexamination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a this issue of addition made on account of unaccounted/unexplained payment of interest on the alleged cash loans. 8. Now, we would like to extract the operative part of order passed by ITAT in IT(SS)A No. 32 to 34/Ind/2021 (supra) as under: Ground No. 3 of Revenue s appeal for AY 2009-10 (Rs. 14,83,394): 20. This ground relates to the addition of unaccounted interest payment on cash-loans. 21. The facts qua this addition are such that during the course of search conducted on one M/s Agroh Infrastructure Developers Pvt. Ltd (AIDPL), the authorities seized a loose paper marked as LPS-1-Page No. 21 / 23 , which contained details of certain financial transactions. The document contained two tables, the upper-table contained the name of assessee and the transactions which were corroborated by the books of assessee. But the lowertable neither contained the name of assesssee nor the transactions mentioned therein were corroborated by assessee s books. However, the Ld. AO attributed the transactions mentioned in the lower-table to the assessee for the reason that the transactions mentioned in the upper-table were corroborated to assessee and hence the docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking/ dumb document. The director of Agroh cannot give any satisfactory reply during the statement recorded at the time of search however during the course of their assessment admitted that they have given loan to PATH. The statement of the Director wherein they admitted giving loan to PATH has not been provided nor the opportunity to cross examination was made available. It is important to mention that the buy back of shares is duly accounted in audited books of account of appellant and the impugned loose papers were not found from premises of the appellant. Therefore, the AO is not justified in presuming buyback of shares as cash loan and interest on a loan was equally hypothetical. The statement given which has to be used against the assesse has to be confronted and opportunity to cross examine has to be provided, which squarely apply in relation to loose paper seized from the premises of Agroh where the statement was taken behind the back . 4.2.11 Last but not the least, the loose papers relating to alleged loan and interest were found and seized from premises of Agroh Group of Indore located at Aqua Point, Umaria, Mhow as page no 19-23 of LPS-1. As far as legality ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other u/s153C. This reasoning is faulty. The assessment u/s153C could have been made after completion of the assessment u/s153A. The Act has provided separate provisions for making assessment in case of material found in the course of the search from the premises of the assessee as well as the material found in the course of search at the premises of the third party. The AO is required to follow the procedure laid down in the Act for making the assessment and he cannot devise his own procedure for shortcut methods . In our considered opinion, when the case of the assessee is covered u/s153A and if reliance is placed on the incriminating material found during the course of search of third party, then sec153C would be applicable and have to be adhered to. Thus, in the instant case, the AO was required to first complete the proceedings u/s153A in hand, which were initiated by way of notice dt.30-6-14 and thereafter, he was at liberty to take action u/s153C for bringing the material found from the premise of Shri Ashok Choudhary to tax in the hands of the assessee . 5.7. In Shivani Mahajan (Del-Trib) dt.19-3-19 ITA No.5585/Del- Trib/2015, identical que was raised be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition made by the AO in violation of the procedure provided in the Act is bad in law and void ab initio and cannot be sustained. Accordingly, the addition of Rs.3.3 crores, made protectively on the basis of the documents found from the premises of the third party, by the AO and upheld by the ld CIT(A) on substantive basis, is deleted. The ground No.6.2 is accordingly allowed. Further Hon ble Kolkata Tribunal in the case Krishna Kumar Singhania (2018) 168 ITD 271 (Kol-Trib) dt.6-12-17, where in Para 10 it was held as under: 10. We find that it is not in dispute that there were no documents that were seized from the premises of the assessee except loose sheets vide seized document reference KKS/1 comprising of 8 pages, for which satisfactory Explanation has been given by the assessee and no addition was made by the ld AO on this seized document. The seized document used by the ld AO for making the addition in sec153A assessment is CG/1 to 11 and CG/HD/1 which were seized only from the office premises of Cygnus group of companies in which assessee is a director. In this regard, it would be pertinent to note that as per sec292C, there is a presumption that the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions of both sides and perused the orders of lower authorities. On a careful consideration, we agree with the observations made by Ld. CIT(A) that the impugned seized document which is the basis of making addition in the hands of assessee, was in fact seized from the premise of AIDPL and not from assessee, hence no presumption u/s 292C can be drawn against assessee; (ii) no addition can be made on the assessee u/s 153A on the basis of document found during search conducted upon someone else, particularly because the AY 2009-10 under consideration is a non-abated assessment-year; and (iii) the Ld. AO has not provided any opportunity of cross-examination of AIDPL to the assesssee before relying upon the document found in possession of AIDPL. Thus, keeping in view these serious infirmities, the Ld. AO is not justified in using the impugned document against assessee for drawing adverse inferences and making any addition. Being so, we are in agreement with the Ld. CIT(A) that the addition of Rs. 14,83,394/- is not sustainable. We, therefore, approve the action of Ld. CIT(A). This ground is, thus, dismissed . 9. We find that both sides are ad idem to the point that the material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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