TMI Blog2024 (4) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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, 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. 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.Though the name of the assessee was not found noted in any of the relevant seized loose sheets and the names of OPS Ramesh or Ramesh were found noted only in some of the seized loose sheets, AO held that the entries in the said seized loose sheets reflected the transactions of the assessee only by giving the reasoning that the assessee was able to earn money on account of his official position as PWD Minister and distributed the same through M/s SRS Mining for political gain on account of the control exercised by the PWD department over sand quarry mining activity in the State of Tamil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement. In the absence of any attempt to discredit the said statement with cogent evidences in the assessment order, the said statement could not be disregarded in appreciating the evidences on record while adjudicating the issue under consideration. The said fact favors the case of the assessee. Material has been seized from a third-party and the presumption of Sec.132(4A) r.w.s. 292C would arise qua the searched person or qua the person who was found in the possession or control of such documents. Such a presumption was not applicable to a person other than the searched persons as held by Hon ble Bombay High Court in the case of ACIT vs. Latha Mangeshkar [ 1973 (6) TMI 13 - BOMBAY HIGH COURT] There is a statutory presumption with regard to books of accounts, documents, money, bullion, jewellery or other valuable article or thing found in possession or control in the course of the search that the same belong to such person. It is quite clear that the presumption of Sec. 132(4A) would arise only against the person making the said statement and in whose possession such incrimination material or books of accounts have been found. This presumption would not arise against third parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y corroborative evidence, without appreciating that the entries found in the seized materials were in the form maintained systematically on daily basis mentioning the dates and amounts and the author of seized material Shri Srinivasulu admitted the nature of payments by explaining the reference of code names. 2.3 The Ld.CIT(A) erred in observing that there was no corroborative evidence in respect of such seized materials with regard to the receipt of incidental charges by the assessee from M/s. SRS Mining. The primary evidence found during the course of search were notebooks maintained by Shri. K.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e instructions of partners of M/s. SRS Mining and the partners of the firm should also have been examined to prove the veracity of the entries. It is to state that the partners also agreed with the statement of Shri. Srinivasulu in the sworn statement recorded u/s. 132(4). 2.10 The Ld.CIT(A) erred in placing reliance on various case laws with regard to evidentiary value of seized materials. These case laws mainly dealt with loose sheets seized, where as in this case seized record is the day-to-day record 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ANN/KGAR/MPKSSR/LS/S-1, it was noted that amount of Rs. 217 Crores was mentioned about the receipt of cash from the assessee, the then PWD Minister and the details of its distribution to various constituencies during the Tamilnadu State Assembly Elections in 2016. 4.2 During the course of above search, residential premises of Shri T. Shanmugasundaram (an employee of M/s SRS Mining) was also searched wherein some incriminating material was found which was marked as ANN/VK/TS/LS-S1. The same contained the details of receipt and distribution of cash as mentioned in the seized material vide Annexure ANN/KGAR/MPKSSR/LS/S-1. Similarly, the seized material vide Annexure ANN/KGAR/MPKSSR/B D/S-1 to 3 11 seized from Bazullah Road, T. Nagar and Annexure ANN/MPK/NS/B D/S-3, 17, 19 20 as seized from Yogambal Street contained details of unaccounted cash receipt by assessee from SRS Mining. 4.3 Since the said material had bearing on determination of total income of the assessee, a satisfaction was arrived u/s 153C and notice u/s 153C was issued on 03-12-2019 calling for return of income for AY 2016-17. In response, the assessee filed return of income on 11-12-2019 declaring income of Rs. 2.98 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the expenditure entries in the Matrix Note books match exactly with the cash book of Nagarathinam and Oswal notebooks maintained by K. Srinivasulu. Thus, there was not just one but 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 S. Nagarathinam and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations in the matrix notebooks. The payments of incidental expenses are also noted down. From the entries in the matrix notebooks, Shri S. Nagarathinam once again prepared and maintained a fair copy in the form of parallel cash book of M/s SRS Mining. The cash book contains 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 was 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 notebooks 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 notebooks contained only the details of payments made to influential people date-wise. The entries found in these books matched with that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sent by him though Jail Authorities. To reconfirm the various issues, a summons u/s 131 was issued to Shri K. Srinivasulu as well as to Shri Shanmugasundaram and statement was recorded from them on 30-03-2021 and 21-03-2021 respectively. Both of them retracted their statement as given by them during the course of search. Both of them denied the writings made in the seized loose sheets and submitted that their signature was obtained under pressure. 4.13 Since Shri Shanmugasundaram retracted from his statement and refused to recognize the writings of the seized loose sheets, an independent expert forensic examination was done and the services of independent professional forensic expert was requisitioned. On the basis of all these facts, Ld. AO concluded that the retraction by Shri Shanmugasundaram was nothing but an after-thought and therefore, it was required to be rejected. 4.14 Similarly, the retraction of Shri K. Srinivasulu was also rejected on the observation that it would not be fair to believe that a person who was remanded to a prison could submit a letter voluntarily and without coercion. Further, the retraction was after lapse of 103 days without any convincing reply for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een written and maintained by me. From Page No-65 to 70 contains the details of various receipts and expenses pertains to PWD Minister Sri O. Paneerselvam (Period 2011 to 2016]. Page Nos. 65 to 70 contains total amount of Rs. 217,00,00,000/- received from the PWD Minister Sri O. Paneerselvam 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. 65 to 70 contains the details of various receipts and expenses pertaining to assessee. These pages contain an amount of Rs. 217 Crores as received from the assessee which was distributed to various constituencies. Similar statement was recorded from Shri T. Shanmugasundaram on 08-12-2016. He was working as an accountant in M/s SRS Mining. The Ld. AO thus formed an opinion that the amount of Rs. 217 Corers was spent by way of unexplained expenditure for political gain to various constituencies over Tamilnadu by the assessee. To support this conclusion, some cross verification was made with one Shri R. Sharath Kumar on 10-04-2017 and 09-05-2017 who had received a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 10-03-2023. Appellate Proceedings 5.1 In first legal ground, the assessee challenged the legal validity of satisfaction note recorded by Ld. AO for initiating proceedings u/s 153C. The assessee contended that the satisfaction was based on reasons to suspect rather than on reasons to believe . The satisfaction was merely on the basis of statement of an employee of M/s SRS mining though the partners of M/s SRS Mining did not depose against the assessee. The assessee also contended that the delay of one year in communication of the reasons for issue of notice u/s 153C was bad-in-law. It was submitted that the satisfaction note was on the basis of suspicion, surmise and false conjectures and there was no mention in the statement of Shri K. Srinivasulu that the assessee had received sum of money from M/s SRS mining or its partners directly or indirectly. Shri K. Srinivasulu merely identified the entries in the seized records carrying initial OPS and nowhere stated that he was aware of parting of money to the assessee and the assessee was beneficiary of alleged payments. 5.2 The Ld. CIT(A) perused the satisfaction note of AO and rejected this ground as raised by the assessee. The sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of distribution of the said amount to various constituencies during the Assembly elections for the State of Tamilnadu in the year 2016. The seized material also contained details of unaccounted cash receipts by assessee from M/s. SRS Mining. On the basis of the said observations, the AO arrived at the satisfaction that the aforesaid material pertains to or relates to the assessee and the same had bearing on determination of total income of the assessee for the relevant assessment years. Therefore, the contention that the satisfaction note was based on reasons to suspect and not on reasons to believe , was not correct. The satisfaction required to be drawn by the AO for the purpose of assuming jurisdiction u/s. 153C would be in the nature of prima-facie satisfaction only and there is no requirement for such satisfaction to be based on conclusive establishment of the fact that the seized material had a bearing on the determination of total income of the assessee. As long as the inference drawn by the AO flows from the contents of the seized material on a prima-facie basis, it could not be held that the same was founded on mere suspicion or surmise or conjecture. This proposition wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substituted Sections 147 to 149 and 151. The contention of the assessee was that no explicit provision was made by the Finance Act 2021 to enable the completion of the search assessment pending as on 01.04.2021 u/s 153A and 153C. The assessee also contended that the AO had no legal jurisdiction to complete the pending assessments as on 01.04.2021 u/s 153A / 153C in respect of searches initiated prior to 01.04.2021 in the absence of such an explicit provision. Accordingly, the assessee contended that the assessments thus completed by Ld. AO were legally unsustainable. The Ld. CIT(A) rejected the same on the ground that while making changes in procedure for search assessments in respect of searches initiated on or after 01.04.2021 by bring them under the scope of the newly substituted sections 147 to 149 and 151, simultaneous amendments have also been made in Section 153A and 153C to make it unambiguously clear that the said provisions would continue to be applicable for search assessments in respect of searches initiated on or before 31.03.2021. The amendments to the said effect were made in sub-section (1) of sec 153A and by way of insertion of sub section (3) in section 153C. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written submissions made by the assessee, in this regard, have been extracted in the impugned order at paras 37 to 39. 5.6 On the issue of undisclosed receipts as allegedly received by the assessee from M/s SRS Mining, Ld. CIT(A) noted that this addition was based on the entries found in the note books seized from the office premises of M/s SRS Mining during the course of search conducted in their cases 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. The Ld. CIT(A), upon perusal of the relevant entries in the seized material, concurred that 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 name as OPS Ramesh . The Ld. AO relied on the statement of Shri. K. Srinivasulu u/s 132(4) dated 10.12.2016 to conclude that the said name of OPS Ramesh , in the seized material, refers to the assessee. The Ld. AO stated in the assessment order that Shri K. Srinivasulu explained in his statement that the name OPS Ramesh in the seized material was used to denote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in search of the 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 47 and 48 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 ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said seized material as used against the assessee did not contain complete information to facilitate drawing of such an inference. The information available merely contained the date, amount of payment and the abbreviated name of the recipient. There was absolutely no mention in the seized material regarding the nature of the said transactions of cash payments, the purpose of such payments and the precise identity of the recipient. In the absence of such essential and critical information, it could not be inferred that the payments were made to a person, whose name does not even find a place in the seized material arid that the said amounts represent the income of the said person. It could also not be inferred with a reasonable degree of certainty that the payments were made to such a person based on an abbreviated name appearing in the seized material. An entry made in a diary or notebook by a third person with scant details cannot be used to fasten tax liability on the person whose name does not appear at all or only an abbreviated name appears in the seized material, in the absence of any corroborative evidence to attribute the entries to such a person. Such seized material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the seized material. There was no reference to any such statement of the partners in the assessment order. Therefore, the statement of Shri K. Srinivasulu could barely be considered as corroborative evidence against the assessee with regard to the entries in the seized material. This was further fortified by the fact that the said statement was retracted vide letters dated 21-03-2017 and 23-03-2017 addressed to DDIT (Inv.) which was submitted by Shri K. Srinivasulu through the Jail Superintendent when he was lodged in the Jail. In the retraction letters, it was claimed that the earlier statement was given under coercion and duress and in a state of mental shock, depression and physical exhaustion at the relevant point of time due to continuance of search action continuously for more than 3 days without a break and he not being allowed to sleep or to take rest. He further stated that he was not allowed to read the typed statement and his signature was 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 tort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee denied having any transaction with the groups and therefore, he could not be expected to discharge a reverse burden as per legal principles laid down by Hon ble Supreme Court in the case of K.P. Varghese vs. ITO (131 ITR 597) holding that onus of establishing that the conditions of taxability are fulfilled would be on revenue and throwing this burden on the assessee would be to cast an almost impossible burden upon him to establish the negative. Therefore, Ld. AO was not correct in stating that the assessee failed to furnish any evidence to that he did not have any financial transactions with M/s SRS Mining or its associates. The burden was on revenue to establish that the assessee was in receipt of payments as noted in the seized material. This burden was not discharged by revenue in the present case. Further, as per settled legal precedents, no addition could be made unless there is corroborative evidence to validate the entries found in the material seized from a third-party. 5.13 The Ld. CIT(A), in para. 62, referred to the decision of Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (AIR SC 410) holding that every transaction as recorded in the regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Shri. T. Shanmugasundaram recorded u/s 132(4) dated 09.12.2016 with regard to the contents of the said seized material. The Ld. CIT(A) tabulated the contents of the loose sheets as under: - Seized material reference Page No. Contents of the seized loose sheets ANN/KGAR/MPKSSR/LS/S-I 65-68 Constituency wise details of amounts distributed in respect of 14 districts aggregating to Rs. 217.65 Crores ANN/K GAR/MPKSSR/LS/S 69 District wise summary details of amount distributed to various constituencies in respect of 14 districts aggregating to Rs. 217.65 Crores ANN/KGAR/MPKSSR/LS/S-1 70 This page contains random scribblings which shows that there are receipts amounting to Rs. 217.00 crores as against total expenditure of Rs. 217.65 towards distribution to various constituencies. This page also contains item-wise breakup of total receipts of Rs. 217 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tributed to 18 constituencies. However, it was pertinent to observe that neither the name of the assessee not the names OPS Ramesh and Ramesh were found noted in page Nos.65 to 69 of seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-I and page Nos.67 to 71 of seized loose sheets vide ANN/VK/TS/LS/S-1 which contain the district wise details and constituency wise distribution of amounts aggregating to Rs. 217.65 Crores. The details of various seized loose sheets referred to by Ld. AO in the assessment order in respect of the issue under consideration and the seized loose sheets out of the same where the name OPS Ramesh or Ramesh' was found noted was as follows: - Seized material reference Page Nos. Premises from which material was seized Page Nos containing the name OPS Ramesh or Ramesh ANN/KGAR/MPKSSR/LS/S-I 65-70 Business Premises of SRS Mining 70 ANN/VK/TS/LS/S-1 3, 7, 78 81 Residence of Shri T. Shanmugasundaram 3,7,78 81 ANN/VK/TS/LS/S-1 67-71 -do None ANN/VK/TS/LS/S-1 77 -do None ANN/VK/TS/LS/S-2 98-113 -do None Though the name of the assessee was not found noted in any of the relevant seized loose sheets and the names of OPS Ramesh or Ramesh were found noted in some of the seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 217 Crores as received from the PWD Minister Shri. O.Pannerselvam 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 name of Ramesh was found noted only in page No.70 of the said seized material (as shown in the table in the preceding page), which contains scribblings with regard to the receipts of Rs. 217 Crores. It could be noted that the remaining pages from page No. 65 to 69 do not contain either the name of the assessee or the names such as OPS Ramesh or Ramesh . Further, it is seen on careful perusal of the scribbling found on page No.70 that the name Ramesh was noted against receipts totaling to Rs. 74 Crores only (41+30+3) out of the total receipts of Rs. 217 Crores found noted therein. In the light of the said crucial facts emanating from the seized material, the statement of Shri K. Srinivasulu that the said loose sheets pertain to the receipt of Rs. 217 Crores from the assessee and the distribution of the same to various constituencies lacks any credibility and remains unsubstantiated. The said deponent did not at all explained as to ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anmugasundaram and the reference made to an independent professional forensic expert for the purpose of establishing that the said retraction is factually incorrect, would have no relevance to the issue under consideration. The statement of Shri T. Shanmugasundaram, therefore, would not lend any assistance to the revenue to draw any adverse inference against the assessee by treating the same as corroborative evidence. 6.6 It was further noted that Ld. AO issued summons to Shri. S. Ramesh, the then PA to the assessee and recorded his statement u/s 131 on 24.03.2021. The fact that Ramesh as found noted at page No.70 of the seized material ANN/KGAR/MPKSSR/LS/S-1 containing the details of receipts totaling to Rs. 217 Crores, was confronted to him. However, Shri Ramesh completely denied having any knowledge of or nexus with the transactions noted in the seized material and stated that he did not know as to why his name had been scribbled in the seized material. He also stated that he had no relation with concerned parties and that he does not know the persons who had written and maintained the seized loose sheets. However, Ld. AO did not make any mention in the assessment order regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns which have been enumerated in paras 80 and 81 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 record to prove that on-money was paid except the loose sheets found in the premise of third-party and admission made by the third-party. Also, Hon ble Supreme Court in the case of Common Cause vs. UOI (supra) held as under: - We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable 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 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pear at all in the seized loose sheets. It could also not be inferred with a reasonable degree of certainty that the amounts shown as a received from a person whose name was noted in the bland manner as Ramesh without any more details regarding his specific identity represent the amount paid by the assessee. An entry made in a diary or notebook by a third-person with scant details cannot be used to fasten tax liability on the person, in the absence of any corroborative evidence to attribute the entries to such a person. Such seized material was liable to be treated as a dumb document, which would not have any evidentiary value in respect of the entries found therein, unless corroborative evidence is available which can provide necessary reliable basis for deciphering the details of the identity of the person who made the relevant transaction. 6.10 In the light of above stated facts, Ld. CIT(A) 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. The statement lacked credibility and remain unsubstantiated. The statement was silent as to how the entire amount of Rs. 217 Crores was stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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. 6.12 The Ld. CIT(A), in para 95, referred to the decision of Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (AIR SC 410) holding 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. Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t / incidental charges paid to several persons including the assessee. During the course of above search, residential premises of Shri T. Shanmugasundaram (an employee of M/s SRS Mining) was also searched wherein some incriminating material was found which also contained the details of receipt and distribution of cash on behalf of the assessee. Since the aforesaid material had bearing on determination of total income of the assessee, a satisfaction was arrived u/s 153C and proceedings u/s 153C were initiated against the assessee which culminated into impugned assessment on 28-09-2021 for AY 2016-17. Similar assessment was framed for AY 2017-18. On the basis of seized material coupled with sworn statements recorded u/s 132(4) from employees of M/s SRS Mining, Ld. AO alleged that the assessee received unaccounted income from the group. Another allegation in AY 2017-18 was that the group received certain amounts from the assessee for distribution to various constituencies during State Election in the year 2016. The material was seized from different places and the contents of the same matched with each other and accordingly, Ld. AO formed an opinion that the assessee was one of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 expenditure incurred. Apart from expenditure, there were lot of payments to various persons as directed by Shri Srinivasulu. The Ld. AO noted that these books were being maintained meticulously and provide detailed accounts of cash receipts and payments. The daily statement of sand yards was compared with the Matrix notebook maintained by Shri S. Nagarathinam and it was found that the amount sent to head office from each sand yards tally exactly with the receipts shown in the matrix notebooks against the respective yard. Not only this, Shri S. Nagarathinam maintained another set of books in his own handwritings which were called as cash books. These were prepared from entries in the matrix notebooks and contained exactly all the entries in the Matrix notebooks but without denominations. There was a consolidation statement, at final page of the month giving total receipts and expenses for that particular month. 10. The firm maintained small Oswal notebooks also which was another set of cash books being maintained by Shri K Srinivasulu in his own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with specific reference to the seized records. 13. Upon further appeal, Ld. CIT(A), upon perusal of satisfaction note as recorded by Ld. AO, rejected legal grounds of the assessee assailing assumption of jurisdiction u/s 153C on the ground that Ld. AO duly examined the material seized and noted that the said seized material contained notings regarding receipt of Rs. 217 Crores from the assessee by M/s SRS Mining and distribution thereof to various constituencies. The seized material also contained details of unaccounted cash receipts by assessee from M/s. SRS Mining. On the basis of the said observations, Ld. AO formed an opinion that the aforesaid material had bearing on determination of total income of the assessee for the relevant assessment years. Therefore, the contention that the satisfaction note was based on reasons to suspect and not on reasons to believe was not correct. The satisfaction required to be drawn by the AO for the purpose of assuming jurisdiction u/s. 153C would be in the nature of prima-facie satisfaction only and there is no requirement for such satisfaction to be based on conclusive establishment of the fact that the seized material had a bearing on the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... popularly used in the press and media to refer to the assessee. However, drawing such a presumption without having any independent corroborative evidence that the acronym OPS used in the seized material refers only to the assessee and not to any other person whose name may have the same acronym, could not be sustained. In the absence of any other corroborative evidence supporting the inference drawn by AO, it could be said that the conclusion of Ld. AO was mere conjecture which could not be accepted to fasten huge tax liability on the assessee on account of such inference. 15. Proceeding further, it could also be seen that the impugned additions have been made in the 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 inferen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the person whose name appears therein, in the absence of corroborative evidence. If a third-party 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. 16. So far as the statement of Shri K. Srinivasulu is concerned, as rightly held by Ld. CIT(A), the same 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name Shri P. Ramamohan Rao. That assessee sought cross-examination of Shri K. Srinivasulu during the course of assessment proceedings. However, Shri K. Srinivasulu became non-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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the addition made in the hands of the said person who was the Chief Minister of the State of Karnataka during 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, would not sustainable in the absence of any evidence to corroborate the notings in the seized material. The said decision, in our opinion, is squarely applicable to the facts of the present case and favors the case of the assessee. 19. Considering all these facts, the apt conclusion would be that the seized material was in the nature of dumb document which did not contain complete and unambiguous information to arrive at such a conclusion that the assessee was in receipt of the payments found noted therein against the name OPS Ramesh . There was no corroborative evidence to support and supplement the details in the seized material to conclusively establish that the name OPS Ramesh 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buted to 18 constituencies. However, neither the name of the assessee nor the abbreviation viz. OPS Ramesh and Ramesh were found noted on page Nos. 65 to 69 of seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-I and page Nos.67 to 71 of seized loose sheets vide ANN/VK/TS/LS/S-1 which contain the district wise details and constituency wise distribution of amounts aggregating to Rs. 217.65 Crores. Though the name of the assessee was not found noted in any of the relevant seized loose sheets and the names of OPS Ramesh or Ramesh were found noted only in some of the seized loose sheets, Ld. AO held that the entries in the said seized loose sheets reflected the transactions of the assessee only by giving the reasoning that the assessee was able to earn money on account of his official position as PWD Minister and distributed the same through M/s SRS Mining for political gain on account of the control exercised by the PWD department over sand quarry mining activity in the State of Tamilnadu and in view of the fact that M/s SRS Mining controlled the entire sand mining activities in the state. The reasoning given by the AO only tantamount to a wild allegations and a sweeping statement which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of receipt of money and its distribution found in page Nos. 65 to 70 have been attributed by him to the assessee when there was absolutely no mention of assessee s name in the said loose sheets and the name Ramesh was found noted against receipts to the extent of Rs. 74 Crores only out of the total receipts of Rs. 217 Crores. Therefore, as rightly concluded by Ld. CIT(A), the statement of Shri. K. Srinivasulu was to be held to be opposed to the facts which was 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. 22. The Ld. AO also relied on the statement of Shri. T. Shanmugasundaram (accountant of M/s SRS Mining). The same was carefully considered by Ld. CIT(A). Upon perusal of answers given by him, it was noted that Shri. T. Shanmugasundaram did not make any reference to the name of the assessee in his answers. In fact, Shri T. Shanmugasundaram did not speak anything about the source of the amount of Rs. 217.65 Crores which was distributed to various constituencies. It was, therefore, clear that AO could not have drawn any suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson other than the searched persons as held by Hon ble Bombay High Court in the case of ACIT vs. Latha Mangeshkar (97 ITR 696) and various other decisions including the decision of Hon ble Gujarat High Court in the case of PCIT vs. Gaurangbhai Pramodchandra Upadhyay (TCA No.98 of 2020) as well as the decision of Pune Tribunal in Vinit Ranawat vs ACIT (88 Taxmann.com 428). The Ld. CIT-DR has referred to the case law of Hon ble High Court of Madras in the case of Thiru A.J. Ramesh Kumar vs. DCIT (139 Taxmann.com 190) in support of proposition that statement made u/s 132(4) would have a strong evidentiary value and binding on person who makes it. We have gone through the same. The Hon ble Court, after considering the provisions of Sed.132(4) and 132(4A) held that it is manifest that the statement recorded on oath carries a significant evidentiary value, which may be used by the assessing officer during the course of assessment proceedings as corroborative evidence along with documentary evidence material unearthed during the course of search and seizure action. Further, there is a statutory presumption with regard to books of accounts, documents, money, bullion, jewellery or other va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litigation, the appeal papers got misplaced. The counsel of the assessee was informed who proceeded to obtain copies of appeal papers and the cross-objections were filed with a delay accordingly. The assessee submit that the delay was due to prolonged litigation and it was not willful or due to any negligence on the part of the assessee. Though Ld. CIT-DR has opposed condonation of delay, the bench considers the reasons of delay to be reasonable and accordingly, proceed with the adjudication of cross-objection. 27.2 Ground Nos. 1 to 5 of assessee s cross-objections is in support of impugned order on merits. Since we have dismissed the appeals of the revenue, thee grounds have become infructuous. The remaining grounds read as under: - 6. The CIT(A) erred in holding that the AO had recorded valid satisfaction for issuance of notice u/s 153C of the Act. 7. The CIT(A) ought to have quashed the assessment as the AO has failed to prove that a valid satisfaction note was recorded prior to issuance of notice u/s 153C of the Act. 8. The AO having failed to provide the satisfaction note till date despite the specific request of the respondent during the assessment proceedings. The CIT(A) ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized material noted that the said material contained details of unaccounted cash receipts of the assessee from M/s SRS mining during previous years relevant to AYs 2015-16 to 2017-18. The Ld. AO thus recorded the satisfaction that the relevant seized material pertained to and contained information relating to the assessee which had a bearing on determination total income for AYs 2015-16 to 2017-18. In para 13, Ld. CIT(A) has extracted the satisfaction note of Ld. AO. On the basis of all these facts, unless anything contrary is shown to us, we are unable to accept the argument of Ld. AR. From the orders of lower authorities, it would appear that satisfaction note existed at the first place, unless anything to the contrary is placed on record. The assessee is making an assertion and therefore, it would be the onus on assessee to controvert these findings. In the absence any such evidence, the arguments raised by Ld. AR could not be accepted at this stage of proceedings. 29. It could also be seen that Ld. CIT(A), upon perusal of satisfaction note as recorded by Ld. AO, rejected legal grounds of the assessee assailing assumption of jurisdiction u/s 153C on the ground that Ld. AO duly e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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