TMI Blog2024 (4) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A). We endorse the view of Ld. CIT(A), in this regard. Addition of alleged receipts from assessee to SRS Mining and distribution thereof to various constituencies - As observed that the impugned addition has been made based on the entries found in the loose sheets seized from the office premises of M/s SRS Mining coupled with statement of Shri K. Srinivasulu u/s 132(4) (from whose possession the material was seized) with regard to the contents of the said seized material, entries found in the loose sheets seized from the residential premises of accountant of M/s. SRS Mining and the statement of Shri. T. Shanmugasundaram u/s 132(4) dated 09.12.2016 with regard to the contents of the said seized material. Name of the assessee did not appear in any of the relevant loose sheets taken into consideration by the AO while drawing such an inference. It was also noted that the acronym HM appears as scribbling at the top of the loose sheets only whereas the said acronym HM was not found noted in any of the remaining loose sheets as referred to by Ld. AO. Though the name of the assessee was not found noted in any of the relevant seized loose sheets and the acronym HM was found noted o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uire any interference on our part. Appeals of the revenue as well as the cross-objections of the assessee, for all the three years, stands dismissed. - Cross Objection No.51/Chny/2023 (In ITA No.604/Chny/2023) And Cross Objection No.52/Chny/2023 (In ITA No.605/Chny/2023) And Cross Objection No.53/Chny/2023 (In ITA No.606/Chny/2023) Hon ble Shri V. Durga Rao, JM And Hon ble Shri Manoj Kumar Aggarwal, AM For the Revenue : Shri V. Nandakumar (CIT)- Ld. DR For the Assessee : Shri J. Purushotaman (CA)-Ld. AR ORDER PER BENCH 1.1 Aforesaid appeals by Revenue for Assessment Years (AY) 2015- 16, 2016-17 2017-18 arise out of a common order of learned Commissioner of Income Tax (Appeals)-19, Chennai [CIT(A)] dated 14- 03-2023 in the matter of separate assessments framed by Ld. Assessing Officer [AO] u/s. 153C of the Act on 28-09-2021. It is admitted position that facts as well as issues are quite identical in all the years. For the purpose of adjudication, facts from case records of AY 2015-16 have been culled out in this order. The assessee has preferred cross-objections against revenue s appeals. 1.2. The Registry has noted delay of 165 days in the cross objections, the condonation of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee from M/s.SRS Mining. The primary evidence Found during the course of search were notebooks maintained by Sri. Srinivasulu during the ordinary course of business carried on by the firm M/s.SRS mining and the statement recorded from Shri. K. Srinivasulu in which he explained the nature of entries is corroborative evidence. Further, the Matrix note books and cash books maintained by Shri. Nagarathinam contain details of payments made to influential persons, which matched with Oswal Note books maintained by K. Srinivasulu. Three different sets of documents seized from two Premises belonging to M/s.SRS Mining corroborated the entries in one another. 2.4. The Ld.CIT erred in observing that there was no acknowledgement in the seized material by the assessee of receiving the said payments by way of appending his signature/initial against the said payments. As far as question of not writing the name In full but in abbreviated form and not recording acknowledgement for the payments made, the Ld. CIT(A) ought to have appreciated that maintaining clear, unambiguous and formal records of transaction of such nature would not be done for obvious reasons. 2.5. The ld.CIT(A) failed to appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of receipts and payments. 2.11 The Ld CIT(A) erred in observing that the statement of Shri. Srinivasulu lost its evidentiary value on his retraction, without appreciating that the retraction of statement by both Shri. Srinivasulu holds no value as they have done so by citing absurd and unfounded reasons like they were subjected to harassment and mental pressure by IT Authorities. They have not brought any evidence to show that they were harassed during search operation through any means. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. 1.4 The grounds taken by the assessee in its cross-objection read as under: - 1. The order of the Commissioner of Income Tax (Appeals) - 19, Chennai dated 14-03- 2023 in ITA No. 420 /CIT-A(l 9)/21-22 in so far as the legal issue on the assumption of jurisdiction u/s 153C of the Act for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the assumption of jurisdiction u/s 153C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by department u/s 132 in the case of M/s SRS Mining, Shri J. Sekar Reddy, Shri M. Premkumar and Shri K. Srinivasulu at T. Nagar on 08-12-2016. During search proceedings books and documents, Matrix notebook, cash book and other incriminating material was found and seized as per Annexure in ANN/KGAR/MPKSSR/LS/S-1. Another search was carried out at the resident of Shri T. Shanmugasundaram (an employee of SRS Mining) at Kodambakkam wherein certain incriminating material was found and seized as per Annexure in ANN/VK/TS/LS-S1 S2. 4.2 Based on the said material, a satisfaction was arrived that the information contained in the seized document related to the assessee and the same had bearing on determination of total income of the assessee. Therefore, a notice u/s 153C was issued on 06-11-2019 calling for return of income. In response, the assessee filed return of income on 06-11-2019 declaring income of Rs. 2.66 Lacs which was the same as filed u/s 139(1). Subsequently notices u/s 143(2) and 142(1) were issued from time to time calling for requisite details from the assessee. 4.3 The Ld. AO proceeded to finalize the assessment after going through the seized material, sworn statements reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut three levels of corroboration available for the seized material and therefore, these entries would represent actual state of affairs of various financial and business transactions. The said material was not isolated loose sheets and the entries were not random, isolated or irregular in nature. They were systematic records of daily events maintained over a prolonged period of time on regular basis. These were actual books of accounts of the assessee. To bolster its claim, some entries were checked by Ld. AO on sample basis and the same were found to be correct. Therefore, it was concluded by Ld. AO that the seized material was actual books of accounts of M/s SRS Mining which were being maintained by Shri S. Nagarathinam and Shri K. Srinivasulu. 4.6 From Yogambal Street, Matrix brand spiral books as maintained by Shri S. Nagarathinam, in-charge of the premise, written in his own handwriting, was found. The matrix notebooks gave detailed account of cash received during each day from sand yard owners at Chennai and also the amounts paid to various influential persons during the day. 4.7 In this regard, a sworn statement was recorded from Shri S. Nagarathinam who confirmed that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepared and maintained a fair copy in the form of parallel cash book of M/s SRS Mining. The cash book contained exactly all the entries in the Matrix notebooks but without denominations. This further adds to the genuineness and veracity of the seized materials. In addition, in the cash books, there is a consolidation statement, at final page of the month giving total receipts and expenses for that particular month. Even the partner of the firm Shri J. Sekar agreed in sworn statement dated 07-08-2017 that entries of cash books matched with that of the matrix notebooks. 4.9 Three small Oswal note books were seized from Bazullah Road T. Nagar, the details whereof have been tabulated in Para 7.10 of the assessment order. This was another set of cash books of M/s SRS Mining as maintained by Shri K Srinivasulu in his own handwriting. Shri K. Srinivasulu was trusted aide of Shri J. Sekar These note books contained only the details of payments made to influential people date-wise. The entries found in these books matched with that of the Matrix notebooks and cash books maintained by Shri S. Nagarathinam. Thus, there were three different evidences, corroborating with each other, for the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the retractions were held to be invalid by Ld. AO and it was held that the statement made u/s 132(4) was valid evidence since the same was recorded on the basis of factual and specific with reference to the seized records. Reliance upon such evidence was proper and cogent in all respect. 4.14 The assessee assailed the allegations of Ld. AO and denied having any connection with any of the person. He further submitted that his name was not mentioned in the loose sheets and there was no corroborative evidence. Further section 153C would have no application where no material belonging to the assessee is found and an inference of undisclosed income is drawn during the course of enquiry. 4.15 However, Ld. AO continued with the opinion that M/s SRS Mining was making regular and periodic payment to the assessee and added the impugned amount to the income of the assessee as unexplained income as under: - 7.26 In view of the detailed arguments mentioned in the above para, it is clear that SRS mining was making regular and periodic payments to the assessee. Further the assessee during the scrutiny proceedings has merely denied receiving them though voluminous seized materials / document sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 155,80,00,000/- received from Shri Vaithilingam, Housing Minister of that period and the amounts were duly distributed to various constituencies. Similarly, Page Nos.43 to 53 contains the details of total amount of Rs. 71,44,50,500/- has been received from Shri Vaithilingam, Housing Minister of that period and the amounts were duly distributed to various constituencies. He thus confirmed that these were Tamilnadu Legislative Election-2016 related receipts and expenses which were written and maintained by him. The page nos. 34 to 53 contains the details of various receipts and expenses pertaining to assessee. The Pages 34 to 44 contains an amount of Rs. 155.80 Crores as received from the assessee which was distributed to various constituencies. The Pages 43 to 53 contains an amount of Rs. 71.44 Crores as received from the assessee which was distributed to various constituencies. Similar statement was recorded from Shri T. Shanmugasundaram on 09-12-2016. He was working as an accountant in M/s SRS Mining. The Ld. AO thus formed an opinion that this amount was spent by way of unexplained expenditure for political gain to various constituencies over Tamilnadu by the assessee. 4.18 The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal validity of proceedings u/s 153C on the ground that statement recorded u/s 132(4) could not be regarded as an evidence and the material seized at thirdparty premises had no relevance for initiation of proceedings u/s 153C. Reliance was placed on the decision of Hon ble Gujarat High Court in the case of Vijaybhai N Chandrani vs ACIT (231 CTR 474) as well as the decision of Jodhpur Tribunal in Chitra Devi vs. CIT (77 TTJ 430). The Ld. CIT(A) rejected the reliance on the decision of Jodhpur Tribunal since in the present case, Ld. AO had relied on material seized during the course of search in the case of M/s SRS Mining and no statement recorded u/s 132(4) was relied upon for the said purpose. The decision of Hon ble Gujarat High Court was held to be inapplicable in view of amendment made by Finance Act, 2015 to Sec.153C wherein the words belongs to was substituted by the words pertains to and relates to . Considering the same, this legal ground as urged by the assessee was dismissed. 5.2 The assessee raised another legal ground for AY 2017-18 on the ground that the assessment ought to have been completed for this year u/s 143(3) instead of making an assessment u/s 153C. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of RRJ Securities Ltd (supra) has not been challenged by the revenue in the Hon'ble Supreme Court and held that the amendment made to Section 153C(1) of the Act by the Finance Act, 2017 has stated for the first time that the period of re-assessment would be six assessment years preceding the year of search for both the searched person and the other person. The Hon'ble High Court also held that the said amendment would be prospective. There are no contrary decisions of other High Courts on this issue. In the case of present assessee, the AO of the searched person and the AO of the assessee were one and the same. Therefore, the date of initiation of search as referred to in the second proviso to section 153A(1) is required to be construed as the date of recording of satisfaction by the AO of the other person, by following the above mentioned decisions of the Hon'ble Delhi High Court. It was noticed from the records that the satisfaction note was recorded by the AO of the assessee on 05-11-2019. Hence, the six assessment years have to be reckoned as the assessment years immediately preceding the AY 2020-21 relevant to the previous year in which the satisfaction has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the name of the assessee did not appear in any of the entries so considered by Ld. AO to be pertaining to the assessee. All the entries so considered by AO merely contain the abbreviations HM or HM(M) or different extensions of the same. The Ld. AO relied on the statement of Shri. K. Srinivasulu u/s 132(4) dated 10.12.2016 to conclude that the said abbreviation HM refers to the assessee. The Ld. AO stated in the assessment order that Shri K. Srinivasulu explained in his statement that the name HM in the seized material was used to refer to the Housing Minister and since the assessee was Housing Minister during the relevant period, Ld. AO drew inference that the payments noted in the seized material with the name HM or HM(M) represent the payments made to the assessee. However, there was no mention anywhere in the statement of Shri K. Srinivasulu that the assessee was the actual recipient of the payments shown against the said abbreviated name. The main issue that would arise for determination is that whether such entries found against the abbreviation of the assessee s official position in the material seized from a third-party could be used to draw adverse inference against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence, we have apprehension whether it would be safe to even initiate investigation. In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of account but on random papers at any given point of time. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have co-relations with the random entries. In case we do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unilaterally makes entries in a diary/note book showing payments to a person to suit his convenience, the payments could not be inferred to have been made to the said person unless there is corroborative evidence to establish the actual making of payments to the said person. There was no reference to such corroborative evidence in the assessment order. 5.7 The Ld. CIT(A) also concurred that the statement of Shri K. Srinivasulu u/s 132(4) would not serve as corroborative evidence in respect of entries in the seized material. That person gave a general statement that the entries represent incidental expenses paid to various persons. When there were numerous pages and entries in the seized material, such a general statement would not inspire confidence for drawing any conclusion in respect of specific entries appearing therein allegedly with the abbreviated name of the assessee to conclude that the entries represent payment made to the assessee only. There was nothing in the statement even to remotely suggest that the entries appearing with the abbreviated name actually represent payment made to the assessee. The statement merely stated that the entries were maintained on the instruc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. Since the witness turned hostile, it was concluded that cross-examination would not serve any useful purpose. That assessee preferred Writ Petition before Hon ble High Court of Madras praying for issue of directions to the AO to permit the assessee to cross-examine the witness being relied upon by Ld. AO. The writ petition was dismissed vide order dated 27.12.2018. The Hon ble Court held that there was no infirmity in the order of AO in refusing the request for cross-examination since the witness turned hostile. The Hon ble Court further observed that if AO was to rely on the statement of Shri K. Srinivasulu which is in favor of the revenue, the AO has to let in other reliable evidence to corroborate the same. Similarly, the Hon ble Court in the case of M/s SRS mining Vs UOI (141 Taxmann.com 272), at para 9, observed that the statement of Shri K Srinivasulu could not be relied upon as he turned hostile by giving specific retraction statement and there was no need to accord permission to cross-examine him in view of the said reason. Considering these observations, it was to be held that the statement of Shri K. Srinivasulu could not be used against the assessee unless some other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the relevant period, based on the entries of cash payments found recorded with the initials BSY'' in the material seized during the course of search conducted in the case of a third-party is not sustainable in the absence of any evidence to corroborate the notings in the seized material. The said decision was squarely applicable to the facts of the present case. 5.13 It was finally held by Ld. CIT(A) that seized material was in the nature of dumb document which did not contain complete and unambiguous information to arrive at any conclusion based solely on the said material that the assessee was in receipt of the payments found noted therein against the abbreviated name HM . There was no corroborative evidence to support and supplement the details in the seized material to conclusively establish that the name HM found in the seized material refers to the assessee only. There was no corroborative evidence to prove that the payments noted in the seized material have actually materialized and transfer of money has actually taken place between the concerned parties. In view of all these reasons, it was to be held that Ld. AO had not discharged the onus to prove that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 46 constituencies to which amounts ranging from Rs. 25 lakhs to Rs. 1 crore were distributed ANN/VK/TS/LS/S-2 98-113 Acknowledgements given by candidates of some of constituencies regarding receipt of money. 6.2 The Ld. CIT(A) noted that the conclusion of Ld. AO was based on entries made in above loose sheets. The AO inferred that the amount of Rs. 227.24 Crores found noted as receipts at page No.42 of the seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-I (Rs.155.80 Crores) and page No.53 of the same seized material (Rs.71.44 Crores) represents the amount received by M/s. SRS Mining from the assessee. Further, AO inferred that the expenditure by way of various constituencies as noted found noted on page nos. 34 to 42 and at page nos. 44 to 53 of seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-1 represents expenditure out of the said receipts of Rs. 227.24 Crores. However, upon perusal of the contents of the aforesaid seized material, it could be noted that the name of the assessee did not appear in any of the relevant loose sheets taken into consideration by the AO while drawing such an inference. It was noticed that the name HM appears as scribbling at the top of the loose sheets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 08-12-2016, Shri K. Srinivasulu himself accepted that he did not know the exact name of the person who handed over monies to him, in respect of the amount stated to have been received from the assessee. The statement of Shri K. Srinivasulu undermines the veracity of his claim that the relevant amounts were received from the assessee. Therefore, the said statement was opposed to the facts evident from the seized material and the same could not be considered to be reliable for drawing any adverse inference against the assessee, in the absence of any other independent corroborative evidence. 6.4 The Ld. AO also relied on the statement of Shri T. Shanmugasundaram (accountant of M/s SRS Mining) recorded u/s 132(4) on 09-12-2016 for the purpose of drawing the inference that the assessee paid Rs. 227.24 Crores to M/s. SRS Mining for the purpose of distribution to various constituencies. The AO referred to the relevant parts of his statement at paras 8.9 of the assessment order and reproduced the answers given by the said person to Q.No.12 of the said statement. Upon perusal of the same, it was evident that Shri. T. Shanmugasundaram had merely confirmed that the loose sheet vide ANN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he premises of a third patty allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from the premises of assessee nor was it in handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. The ratio of the said decision was squarely applicable to the case of the assessee since Ld. AO had not referred to any cogent material to corroborate the entries made in the material seized from a third-party which are purportedly the transactions made by the said third-party with the assessee. The Ld. CIT(A) also referred to the decision of Jabalpur Bench of Tribunal in the case of ACIT vs Satyapal Wassan [TS-5104-ITAT-2007 (Jabalpur)-O] and also various other decisions which have been enumerated in paras 78 and 79 of the impugned order. Further, Mumbai Tribunal in the case of Riveria Properties Pvt. Ltd. Vs ITO (ITA No.250/Mum/2013) held that AO was required to bring further evidence on record to show that the money was actually exchanged between the parties in case where there was no other evidence on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d material as used against the assessee did not contain complete information to facilitate drawing of such an inference. The information available in the relevant seized material i.e., page nos. 42 and 53 of seized material ANN/KGAR/MPKSSR/LS/S-1 merely contained bland notings regarding the receipts of Rs. 227.24 Crores for meeting the expenditure by way of distribution of amounts to various constituencies. It was noted that the name HM was found scribbled at the top of the said two loose sheets and the said acronym was not even found noted against the bland entries of receipts appearing in the loose sheets. The break-up of the amounts received along with the corresponding date of receipts was not available in the said loose sheets. There was absolutely no mention in the seized loose sheet regarding the precise identity of the persons from whom the said amounts were received and the dates of receiving the same. In the absence of such essential and critical information, it could not be inferred that the amounts were received from the assessee whose name does not even appear at all in the seized loose sheets. An entry made in a diary or notebook by a third person with scant details c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained by force. He stated that he never paid any money to various persons as recorded in the typed assessment. He also stated that he signed the statement to end the prolonged ordeal of intimidation, harassment and mental torture. The said retraction was rejected without valid reasons. 6.9 It was further noted by Ld. CIT(A) that similar additions were made in the case of another assessee by the name Shri P. Ramamohan Rao. That assessee sought cross-examination during the course of assessment proceedings. However, Shri K. Srinivasulu became non38 cooperative and hostile during the course of preliminary examination of the said person before Ld. AO on 19-12-2018. Since the witness turned hostile, it was concluded that cross-examination would not serve any useful purpose. That assessee preferred Writ Petition before Hon ble High Court of Madras praying for issue of directions to the AO to permit the assessee to cross-examine the witness being relied upon by Ld. AO. The writ petition was dismissed vide order dated 27.12.2018. The Hon ble Court held that there was no infirmity in the order of AO in refusing the request for cross-examination since the witness turned hostile. The Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussion hereinabove, it is held that the addition of Rs. 227,24,50,500/- made in the assessment order for AY 2017-18 towards undisclosed income represented by unaccounted payments made to M/s SRS mining for the purpose of distribution to various constituencies is not sustainable on facts. Hence, the AO is directed to delete the said addition of Rs. 227,24,50,500/-. The relevant grounds of appeal are allowed in so far as they relate to the issue mentioned above. Aggrieved as aforesaid, the revenue is in further appeal before us. Our findings and Adjudication 7. From the detailed facts and discussions as enumerated by us in the preceding paragraphs, it emerges that the impugned additions have been made by Ld. AO in the hands of the assessee pursuant to the search and seizure action by the department u/s 132 in group cases of M/s SRS mining and its partners on 08-12-2016. During the course of search action, certain incriminating material was found from the premises of M/s SRS Mining. The said material allegedly contained details of cash payment / incidental charges paid to several persons including the assessee. During the course of above search, residential premises of Shri T. Sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es would represent actual state of affairs of various financial and business transactions. The said material was not isolated loose sheets and the entries were not random, isolated or irregular in nature. They were systematic records of daily events maintained over a prolonged period of time on regular basis. These were actual books of accounts of the assessee. To bolster its claim, some entries were checked by Ld. AO on sample basis and the same were found to be correct. Therefore, it was concluded by Ld. AO that the seized material was actual books of accounts of M/s SRS Mining which were being maintained by S. Nagarathinam and K. Srinivasulu. 9. From Yogambal Street, Matrix brand spiral books as maintained by Shri S. Nagarathinam, in-charge of the premise, written in his own handwriting, was found. The matrix notebooks gave detailed account of cash received during each day from sand yard owners at Chennai and also the amounts paid to various influential persons during the day. A sworn statement was also recorded from Shri S. Nagarathinam who confirmed that the said books belonged to him and maintained by him. It contained the details of receipt from 4 sand mining sites and the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Pertinently, Shri K. Srinivasulu retracted from earlier statements vide his letters dated 21-03-2017 and 23-03-2017 which was sent by him through Jail Authorities. Another witness i.e., Shri Shanmugasundaram also retracted from his statement. The Ld. AO held that the retraction was without valid reasons. The Ld. AO continued with the allegations and held that even if the statements were retracted by both of them, the same would have evidentiary value in terms of various judicial decisions. The same would still be valid evidence since the same was recorded on the basis of factual and with specific reference to the seized records. 13. Upon further appeal, Ld. CIT(A), rejected various legal grounds of the assessee assailing assumption of jurisdiction u/s 153C. The Ld. AO formed an opinion that the aforesaid seized material had bearing on determination of total income of the assessee for the relevant assessment year. Therefore, jurisdiction u/s 153C was valid. The findings of Ld. CIT(A) have already been enumerated by us in preceding paras 5.1 and 5.2. In our considered opinion, these legal issues are perfectly been addressed by Ld. CIT(A) and the same do not warrant any interference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the assessee merely on the basis of vague entries found in the material seized from a third-party premise. The said material was seized from the premises of a third-party during the course of search conducted in the case of the said third-party. The said material was neither seized from the premises of the assessee nor was the same found to be in the handwriting of the assessee. Therefore, such material, unless backed by corroborative evidence, would not constitute adequate evidence to draw any adverse inference against the assessee as held by Hon'ble Delhi High Court in the case of CIT Vs Sant Lal [2020] 118 Taxmann.com 432 (Del). The Hon ble Court, in similar situation, held no addition could be made merely on the basis of such entries. The ratio of the said decision was squarely applicable to the case of the assessee as the Ld. AO has not referred to any cogent material to corroborate the entries made in the material seized from a third-party which are purportedly the transactions made by the said third-party with the assessee. The other decisions including the decision of Jabalpur Bench of Tribunal in the case of ACIT vs. Satyapal Wassan [TS-5104-ITAT-2007 (Jabalp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. When there were numerous pages and entries in the seized material, such a general statement would not inspire confidence for drawing any conclusion in respect of specific entries appearing therein allegedly with the abbreviated name of the assessee to conclude that the entries represent payment made to the assessee only. There was nothing in the statement even to remotely suggest that the entries appearing with the abbreviated name actually represent payment made to the assessee. The statement merely stated that the entries were maintained on the instructions of the partners of M/s SRS mining. It was very clear that Shri K. Srinivasulu had no first-hand knowledge of the payments noted in the seized material and had merely noted whatever was told to him by the partners. In such a situation, the statement would serve a very limited purpose of ascertaining the identity of the person who made the entries and nothing more. Since the entries were made on the instructions of the partners, it is the partners who were required to explain the exact identity of the recipients, the nature of payments, the purpose of payments and the identity of the person who made the payments etc. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The Hon ble Court further observed that if AO was to rely on the statement of Shri K. Srinivasulu which is in favor of the revenue, the AO has to let in other reliable evidence to corroborate the same. Similarly, the Hon ble Court in the case of M/s SRS mining Vs UOI (141 Taxmann.com 272), at para 9, observed that the statement of Shri K Srinivasulu could not be relied upon as he turned hostile by giving specific retraction statement and there was no need to accord permission to cross-examine him in view of the said reason. Considering these observations, it was to be held that the statement of Shri K. Srinivasulu could not be used against the assessee unless some other evidence to corroborate the same was made available on record. In the present case, AO did not rely on any other corroborative evidences except for relying on the statement of Shri K. Srinivasulu since in the sworn statements of three other partners recorded on 08-12-2016, no questions were posed to them at all regarding the seized material allegedly containing the details of incidental charges paid to various persons. It was thus evident that no other corroborative evidence was available in record in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There was no corroborative evidence to support and supplement the details in the seized material to conclusively establish that the name HM found in the seized material refers to the assessee only. There was no corroborative evidence to prove that the payments noted in the seized material have actually materialized and transfer of money had actually taken place between the concerned parties. In view of all these reasons, the addition of alleged receipts by the assessee from M/s SRS Mining has rightly been deleted by Ld. CIT(A). We endorse the view of Ld. CIT(A), in this regard. 20. So far as the addition of alleged receipts from assessee to SRS Mining and distribution thereof to various constituencies is concerned, it could be observed that the impugned addition has been made based on the entries found in the loose sheets seized from the office premises of M/s SRS Mining coupled with statement of Shri K. Srinivasulu u/s 132(4) (from whose possession the material was seized) with regard to the contents of the said seized material, entries found in the loose sheets seized from the residential premises of Shri T. Shanmugasundaram (accountant of M/s. SRS Mining) and the statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was made available on record. In the present case, AO relied on reply of Shri K. Srinivasulu to Q.No.12 wherein he stated that page Nos.34 to 58 of the seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-1 contain details of total amount of Rs. 227.24 Crores as received from the Housing Minister Shri Vaithilingam and that the said amount was distributed to various constituencies. However, the name of the assessee was not found noted anywhere in the relevant pages of the seized material and the abbreviated name of HM was found scribbled at the top of page nos. 42 and 53 of the said seized material which contains bland notings with regard to the receipts of Rs. 227.24 Crores. It could be noted that the remaining pages in the seized material do not contain either the name of the assessee or the abbreviated name such as HM . In the light of all these crucial facts, the statement of Shri K. Srinivasulu lacks any credibility and the same remains unsubstantiated. The said deponent did not at all explained as to how the details of receipt of money and its distribution found in page Nos. 42 to 53 have been attributed by him to the assessee when there was absolutely no mention of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial evidence. The Hon ble Court referred to the decision of Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) as well as another decision in Common Cause vs. UOI (supra) while arriving at such a conclusion. The Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) held that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon ble Supreme Court is that independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case. 25. Considering all these facts, we are of the considered opinion that the adjudication of Ld. CIT(A), on legal grounds as well as on merits, would not require any interference on our part. We endorse the findings of Ld. CIT(A). In the result, the appeals of the revenue as well as the cross-objections of the assessee, for all the three years, stands dismissed. Conclusion 26. The appeals of the revenue as well as the cross-objections of the assessee stands dismissed. Order pronounced on 3rd April, 2024 - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
