TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 703
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.... 2017-18 in ITA No. 663/Chny/2023 are reproduced as under: "1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2 The Ld.CIT(A) erred in deleting the addition of Rs. 3,18,39,413/- made towards undisclosed cash transaction from undisclosed sources made on the basis of entries pertaining to the assessee firm based on the excel sheets found in the electronic devices seized during the course of search in the case of Christy group of companies. 2.1 The Ld.CIT(A) erred in observing that the there were no corroborative evidences to substantiate the entries in the seized materials. It is to be noted that the assessee itself demonstrated during the appellate proceedings that the entries mentioned in the excel sheet as bank transactions were exactly matching with the bank statements. Relying on the assessee's contention, the Ld.CIT(A) directed to quantify the cash receipts and payments, without adding two zeros. In contrary to his stand, the CIT(A) erred in holding that* there were no corroborative evidences to substantiate the entries in the excel sheet. 2.2 The Ld.CIT(A) failed to appreciate that matching of bank ent....
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....earch in the case of M/s. Christy group of cases, certain loose sheets and electronic devices were found and seized from the residential premises of Shri. P. Karthikeyan, an employee of M/s. Christy Fried Gram Industry. The said electronic device contains three excel sheets with notings of transactions between the assessee and M/s Christy group of concerns for the assessment years 2017-18 to 2019-20. The Assessing Officer of the searched person and the Assessing Officer of the assessee are one and the same and therefore, based on seized material, the Assessing Officer recorded satisfaction u/s. 153C of the Act for assessment years 2017-18 & 2018-19, in respect of material pertains to the appellant on 07.01.2021 for the purpose of assuming jurisdiction u/s. 153C of the Act. As per satisfaction note recorded by the Assessing Officer of the searched person u/s. 153C of the Act, on the basis of electronic device seized at the residence of Shri. P. Karthikeyan vide Annexure ANN/GV/PK/ED/S, the Assessing Officer recorded his satisfaction that the relevant seized material containing details of cash transactions for the appellant has a bearing on the determination of total income of the ap....
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....sis of cash transactions recorded in excel sheets, worked out total cash given/received from the appellant for three assessment years and made additions u/s. 69A of the Act as unexplained money. The Assessing Officer, while computing total amount of cash transactions has appended two zeros into cash transactions appearing in seized material, i.e. excel sheet for two assessment years and worked out unaccounted cash transactions for three assessment years and made additions u/s. 69A of the Act. The relevant findings of the Assessing Officer are as under: "4. Cash transactions with M/s. Christy Friedgram Industry group: References are made to the following xi sheets found in the electronic devices maintained by Shri. P. Karthikeyan and the inferences thereon: (a) xl sheet 'appufood.xls' subsheet 'running' contains cash given/taken from M/s. Appu Food products from 21.03.2018 to 13.05.2018. The total cash given to and received from Appu Food Products comes to Rs. 33,00,00,000/- for AY:2018-19 and the given to and received from Appu Food Products comes to Rs. 72,00,00,000/for AY:2019-20. (b) xl sheet titled 'Annex-3-Appu-CFI-Running account' contains t....
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....ed in the previous paragraph, the cash transactions found in xl sheet 'appufood.xls' subsheet *running' contains cash given/taken from M/s. Appu Food products from 21.03.2018 to 13.05.2018. The total cash given to and received from Appu Food Products comes to Rs. 33,00,00,000/- for AY:2018-19 and the given to and received from Appu Food Products comes to Rs. 72,00,00,000/- for AY:2019-20. 7.1 The cash transactions found in xi sheet titled 'Annex-3- Appu-CFI-Running account' contains transaction for the period 22.03.2017 to 23.06.2017. It contained both cash and account transfer transactions with M/s.Appu Direct Pvt Ltd & M/s .Meenambika Foods (group concerns of Appu Foods). As per this sheet, the total cash given to M/s. Appu Foods comes to Rs. 38,50,770/- and the total cash received from M/s. Appu Foods comes to Rs. 97,00,000/- for AY:2018-19. 7.2 The cash transactions found in xi sheet titled 'Appu revised formar.xls 'subsheet 'cash redc & paid' contains transfers & receipts with M/s. Appu Direct Pvt Ltd for the period 03.01.2017 to O 1 .03.2017. In this sheet there are certain entries are marked as "Appu". The cash given to Appu comes to....
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....ourt in the case of CBI vs V.C. Shukla [1998] 3 SCC 410 and in Common Cause (A Registered Society) vs Union of India and argued that, additions made by the Assessing Officer u/s. 69A of the Act, on the basis of loose sheets found in the possession of third party without confronting those loose sheets to the appellant is not sustainable. The appellant had also furnished details with regard to the alleged cash transactions recorded in excel sheets and submitted that, all transactions recorded in cash are pertains to cash sales which was recorded in books of accounts of the assessee and thus, same cannot be considered as unaccounted transactions outside the books of accounts. The assessee had also objected for appending two zeros to the value recorded in excel sheets in respect of cash transactions and argued that, there is no basis for the Assessing Officer or supporting evidence to allege such cash transactions are taken place and the same can be considered as unexplained money u/s. 69A of the Act. 6. The ld. CIT(A), after considering relevant submissions of the assessee and also taken note of certain judicial precedents, deleted additions made u/s. 69A of the Act by holding that, ....
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....further submitted that, the ld. CIT(A) failed to appreciate that matching of bank entries with the entries of excel sheet clearly proved beyond doubt that seized excel sheets have evidentiary value and transactions narrated therein had actually happened regardless of bank or cash transactions. The ld. DR further submitted that, the ld. CIT(A) erred in observing that the excel sheets found during the course of search were not in the hand writing of the assessee and nature of transactions were not mentioned, without appreciating that the material seized from third party is in the form of excel sheets, clearly referring name of assessee as "Appu" and further the assessee is also in the similar line of business carried out by Christy group. The ld. DR further submitted that, the ld. CIT(A) failed to appreciate fact that during the course of search in the case of Christy group, it was noticed that the appellant group was maintaining two set of accounts "tally 1 and tally 2" and also in the practice of replacing the invoices not checked by any Government authorities in the accounted tally. The ld. DR further submitted that, the ld. CIT(A) failed to appreciate that the Assessing Officer b....
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....on of the assessee. In case the documents were found in the possession of third party, the presumption that said documents belongs to the assessee and contents recorded therein are true and correct does not apply. In this case, the documents were found in the possession of the third party and further said documents does not show any transactions of the assessee except stating that cash given/received from Appu. The assessee has explained said transactions and proved that the bank transactions recorded in excel sheets are matched with regular books of accounts of the assessee. Further, few cash transactions are pertains to cash sales made to the assessee. The remaining entries are not identifiable to any account or transactions whether it pertains to payment for purchases, receipt of loan, repayment of loan etc. In absence of any corroborative evidences, to support the transactions recorded in excel sheet, it cannot be presumed that said transactions are cash transactions made outside the books of accounts. 9. The Ld. Counsel for the assessee, further submitted that the Assessing Officer has appended two zeros to value recorded in excel sheets on the basis of statement of one Shri.....
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....ness premises of the appellant. It is therefore evident that, no documentary or other evidences to corroborate the entries of cash receipts and payments in the excel sheets were found to support the findings of the AO that said transactions are unaccounted transactions and are outside the books of accounts of the assessee. We further noted that, the AO neither during the assessment proceedings has made any reference to statements recorded u/s. 132(4) of the Act during the course of search in Christy group of cases or in the case of the assessee with reference to excel sheets found during the course of search to verify the contents recorded therein. Neither the person from whom said documents was found was examined nor the appellant or its partners was confronted with those evidences to verify the contents therein. From the above, it is clear that the AO has made additions towards cash transactions u/s. 69A of the Act, without there being any corroborative evidence to strengthen the entries recorded in excel sheet found during the course of search on third party. Therefore, we are of the considered view that no additions can be made u/s. 69A of the Act, on the basis of evidences fou....
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....idered as transactions of the assessee. In this connection, it is necessary to refer to the decision of Hon'ble Supreme Court in the case of State of Kerala vs KT Shadulli and Nalla Kandy Yusuf 1977 UPTC 363, where it has been observed that, it is quite possible that the author of the seized documents may have mentioned certain transactions in their books of accounts either to embarrass the assessee or due to animus or business rivalry or such other reasons which could only be established when the department examines such author of the document. In our considered view, the AO without examining the author of the document with reference to contents of said documents and also without confronting those documents to the assessee and its partners, simply reached to the conclusion that transactions recorded in excel sheets are undisclosed income of the assessee. It is also pertinent to observe that seized material relied upon by the AO to draw adverse inference against the assessee towards cash payments and receipts did not contain complete information with regard to date, amount of cash payment/receipt and the name of recipient and payer. There is absolutely no reference in the seized ma....
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....is necessary to refer to the decision of Hon'ble Gujarat High Court in the case of PCIT vs Gaurangbhai Promodchandra Upadhyay in Tax Appeal No. 98, 100, 103 & 104 of 2020, where it has been clearly held that since the documents were not found or recovered from the possession of the assessee, no presumption u/s. 132(4A)/292C of the Act could be drawn against the assessee in such circumstances. The Hon'ble Court of Patna in the case of Dharmaraj Prasad Bibhuti vs ITAT, Patna [2019] 109 Taxman.com 388, held that presumption u/s. 292C of the Act can be drawn only on such person whose possession or control any books of accounts, other documents, money, bullion, jewellery or other valuable articles or thing are found during the search. Further, in order to impart life and evidentiary value to the alleged excel sheets there must be statement recorded pertaining to those transactions from the person who is having control over the electronic devices and also from the searched person and these statements should be confronted to the appellant firm for getting sanctity that these transactions had actually being taken place. However, no such exercise has been carried out by the AO before making....
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....ions made u/s. 69A of the Act. Therefore, in our considered view the ground of appeal taken by the revenue fails. As regards ground no. 2.5 with regard to appending two zeros to value recorded in alleged excel sheets, the AO has added two zeros to values recorded to excel sheets for assessment year 2018-19 & 2019-20 only. For assessment year 2017-18, the AO has taken value recorded in alleged excel sheets without appending two zeros. The AO has added two zeros to value on the basis of statement of Shri. HariHara Krishnan, AGM, Finance of Christy group of concern, where in a statement recorded u/s. 132(4) of the Act, during the course of search on 06.07.2018 he had admitted that, an entry "to cash boss thru RRM-400000" refers to cash to boss and entry denotes the unaccounted cash of Rs. 4,00,00,000/. Based on the admission of Shri Harihara Krishnan, the AO appended two zeros to value and arrived at aggregated cash payments/receipts as per excel sheets and made additions u/s. 69A of the Act. First of all, the AO has not assigned any valid reasons to add two zeros to value recorded in excel sheets. Further, Shri. Harihara Krishnan, AGM Finance of Christy group is nothing to do with th....
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....os to cash entries alone is totally incorrect. Since, the payment through bank noted in seized excel sheets are matching with the corresponding entries found in the bank statement without need to append two zeros, it is considered that the payments through cash found noted in the same excel sheet cannot be construed by adding two zeros to the said amounts. If the payments through cash alone are considered by adding two zeros and the payment through bank are considered in the manner in which they appear in the excel sheets, the totals of the payments column and the receipts column will be grossly different from the total mentioned in the excel sheet. It is therefore clearly evident that, all the amounts mentioned in the excel sheets, regardless of whether they are cash transactions or bank transactions are the actual amounts without suppression of two zeros at the end. Therefore, we are of the considered view that the AO is erred in appending two zeros to the cash transactions appearing in the seized excel sheets and same is untenable. 14. In so far as ground no. 2.5 of revenue appeal with regard to undisclosed cash transactions, we find that when there are undisclosed cash receipt....