AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 1455
X X X X Extracts X X X X
X X X X Extracts X X X X
....t change in figures, which reads as under: 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The order of assessment passed u/s. 153C of the Act is bad in law and void-ab-initio in as much the conditions precedent to invoke the provisions of sec. 153C of the Act viz., the discovery of any assets / documents in course of search conducted in the case of any person that belongs to the appellant and is relevant for computing the income of the appellant for the year under appeal is totally absent and consequently the impugned assessment order passed deserves to be cancelled. 3. Without prejudice to the above, the order of assessment passed u/s. 153C of the Act is bad in law and void-ab-initio in as much as the conditions precedent to invoke the provisions of sec. 153C of the Act viz., the satisfaction that the material seized has a bearing on the assessment of income for the year under appeal has not been established by the learned A.O. and consequently, there is no valid satisfaction reached for taking up proceedings u/s. 153....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which under the facts and in the circumstances of the appellant's case and the same deserves to be cancelled. 6. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 3. Ground No. 1 is general in nature, which do not require any adjudication. 4. First, we will take up the common ground Nos. 2 & 3 in ITA Nos. 1061, 1062, 1063 & 1065/Bang/2023 with regard to the fact that the condition precedent to invoke the provisions of section 153C of the Act is not satisfied. 5. In ITA Nos. 1061, 1062, 1063 & 1065/Bang/2023 except in ITA No. 1066/Bang/2023 for the assessment 2018-19, there was legal ground questioning the assessment order framed u/s 153C of the Act as much as the condition precedent to invoke the provisions of section 153C of the Act has not been satisfied. 6. Facts of the issue are that the assessee, Shri Prakash Bhajandas Talreja is an individual and has been carrying on the business of money lending....
X X X X Extracts X X X X
X X X X Extracts X X X X
....OTE: In respect of AY 2018-19, being the year of search notice u/s 153C was not issued and order was passed u/s 143(3) r.w.s 153D of the Act. 6.1 Against this assessee went in appeal before ld. CIT(A), challenging the assessment order both on validity of framing assessment u/s 153C of the Act and addition made towards unexplained investment u/s 69 of the Act. The ld. CIT(A) has confirmed the order of the ld. AO. Now the contention of the assessee is that the ld. AO has recorded the satisfaction on the basis of following documents: Sl. No. Description of the Seized document Annexure/Sl.No./Pg.No.etc. 1. Pink folder marked as Annexure A/KMD/01 containing loose sheets serially numbered from 1 to 83 found and seized from the Residence of Shri K.M. Deekshith at No. 19, PMR Residency, Vysya Bank Layout, 34th Main, 4th Cross, JP Nagar, Bangalore Annexure : A/KMD/01 Page No. 38 and 43 2. Brown folder marked as Annexure A/CCDGLT8/1 containing loose sheets serially numbered from 1 to 134 found and seized from the office of M/s. Coffee Day Global Ltd. At No. 23/2, Coffee Day Square, Vittal Mallya Road, Bangalore Annexure : A/CCDGLT8/1 Page No. 108, 109, 129, 131 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment order have no link between each other. Hence, the assessment orders to be quashed. 7. On the other hand, ld. D.R. has submitted that the ld. AO has considered the various seized documents along with statements recorded u/s 132(4) of the Act from K.M. Deekshith as well as V.G. Siddartha of M/s. Coffee Day Global Ltd. for recording the satisfaction and the same has been considered for framing assessment u/s 153C of the Act and the same to be upheld. 7.1 The ld. D.R. submitted that a search action u/s. 132 of the Act was conducted on 21st September 2017 by the strength of warrant issued in the case of M/s. Coffee Day Global Limited, to search the office premises of M/s. Coffee Day Global Limited, No. 23/2, Coffee Day Square, Vital Mallya Road, Bengaluru-56000l and to search the residential premises of Shri. K. M. Deekshith, at No. 19, PMR Residency, Vysya Bank Layout, 34th Main, 4th Cross, J.P. Nagar, Bengaluru. The residence of the assessee Shri. Prakash Bhajandas Talreja at Flat No. 31, Embassy Court, High Grounds, Crescent Road, Sampangi Ram Nagar, Bengaluru-560001 was also covered during the search proceedings in connection with the Group case of M/s. Coffee Day Global....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f notice u/s 153C of the Act is illegal as the satisfaction recorded by the ld. AO is not in compliance with that judgement as there was no satisfaction recorded by the ld. AO with regard to specific assessment year or incriminating evidence specific. It was held that the satisfaction should indicate the assessment year and corresponding incriminating evidence related to the assessment years. It was submitted that a general satisfaction, will not meet the requirement of law to initiate the proceedings u/s 153C of the Act. The ld. AO needs to correlate between the seized material and the satisfaction recorded where the seized materials were not in the name of assessee, no action could have been undertaken in case of assessee u/s 153C of the Act and the entries in the seized materials should show that there was a loan transaction between the parties. Further, the contention of the ld. A.R. is that the admission of Late V.G. Siddartha or K.M. Deekshith who are being the third parties which were recorded u/s 132(4) of the Act cannot be used against the assessee as it cannot be conclusive evidence against the assessee unless there is corroborative evidence on record, because the maker o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....value of the property, because the value declared in the sale deed is the market value of the property, fixed by the state government authorities for determining stamp duty purpose. Further, there is no evidence with the A.O. to show that there is a under valuation of property and provisions of section 50C of the Act is invoked while completing the assessment. The A.O. merely acted upon the statement given by the third party which was totally denied by the assessee. It is a settled position of law that unless statement is tested under cross examination, the same cannot be considered as evidence against the assessee. The A.O. used the admission of partners of purchaser firm made u/s 132(4) of the Act in their case against the assessee, but failed to note that admission of other parties cannot be considered as conclusive evidence against the assessee, unless there is a corroborative evidence on record, because the maker of statement can bind himself, but how he bind others from his statement without there being any further evidence on record." 12. In the present case on hand, except loose sheet found in the premises of M/s. M.V.V. Builders and admission made by the third par....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s on money exchanged between the parties. In the absence of proper enquiry and sufficient evidences, we find no reason to confirm the addition made by the A.O. Therefore, we reverse the CIT(A) order and direct the Assessing Officer to delete the addition." 14. The assessee relied upon the decision of ITAT Hyderabad 'A' Bench, in the case of K.V. Lakshmi Savitri Devi Vs. ACIT (2012) 148 TTJ 157. The coordinate bench of this Tribunal, under similar circumstances held as under: "Admittedly there was no search action in the case of the assessee. It is a loose slip containing certain entries recording the payment which was found at the premises of CRK. It does not contain either date of payment or name of the person who has made the payment. According to the Department, CRK denotes C. Radha Krishna Kumar and KRK denotes K. Rajani Kumari. However, no name of the assessee was found in the louse sheet. The property was purchased from P w/c CRK for a disclosed consideration of Ps. 65 lakhs by the assessee. The property has been registered and the sale deed was executed for a consideration of Ps. 65 lakhs on 21st Aug., 2006 which consideration has been accepted by the State....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he payment of consideration at Rs. 165 lakhs. The Department herein i required to establish the nexus of the seized material to the assessee. As stated earlier there is no date and name of the assessee. The allegation of the Department is that the seized material denotes the payment made by the assessee to the purchaser for purchase of the property. However, no such narration or name of the assessee was found in the seized material. The Department is not able to unearth any document or material or any corroborative material to show that the assessee herein actually paid Ps. 165 lakhs for purchase of the property. The Department has not brought on record the date on which the payment was made and the source from which ii is paid and/or any details of bank account from where the cash was withdrawn. Without any of these details, the Department has taken a view that the assessee has paid Ps. 165 lakhs for purchase of the property. The Department cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong cannot take place of material in support of the finding from the AO. The AO should act in a judicial manner, proceed with judicial spirit and c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....us of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place of proof. We also agree with the Tribunal that the assessing officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden." 16. The Hon'ble Supreme Court, in the case of CIT Vs. P.V. Kalyana Sundaram (2007) 294 ITR 49, under similar circumstances held in favour of the assessee. The Hon'ble Supreme Court, while deciding the issue in favour of the assessee held as under: "We have heard learned counsel for the parties and have gone through the record. It is true that the Division Bench of the High Court has borrowed extensively from the orders of the Tribunal and the Commissioner and passed them off as if they were themselves the author(s). We feel that quoting from an order of some authority particularly a specialized one cannot per se be faulted as this procedure can often help in making for brevity and precision, but we agree with Mr. Vahanvati ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mb documents without any corroborative evidence finding that the alleged documents have materialized into transaction cannot be deemed to be income of the assessee. 8.4 In our opinion, similar issue came for consideration before Hon'ble Supreme Court in the case of Supermalls Pvt. Ltd. Vs. PCIT (423 ITR 281), wherein held as follows: "Before issuing notice under Section 153C Assessing Officer of the searched person must be "satisfied" that, inter alia, any document seized or requisitioned "belongs to" a person other than the searched person. That thereafter, AO may transmit the records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessment under Section 158BD and the other provisions of Chapter XIV-B shall apply. (para 6) It cannot be disputed that the aforesaid requirements are held to be mandatorily complied with. There can be two eventualities. It may so happen that the Assessing Offic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. (para 6.1) From the aforesaid satisfaction note, it emerges that the Assessing Officer is satisfied that the documents containing the details of the cash receipts on sale of shop/offices belonged to the other person - assessee. He is also satisfied that the documents/pen drive are seized from the searched person. He is also satisfied that the documents so seized from the residence of the searched person belonged to the assessee-other person. Therefore, the Assessing Officer was satisfied and it is specifically mentioned that the documents so seized belonged to the assessee - the other person. Therefore, it cannot be said that the mandatory requirements of Section 153C, in the facts and circumstances of the case, have not been complied with. The satisfaction note by the Assessing Officer clearly states that the documents so seized belonged to the other person - the assessee and not the searched person. Thus, the High Court is justified in observing that the requirement of Section 153C has been fulfilled. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....other person. Therefore, the ld. AO was satisfied that it is specifically belong to the assessee being the other person. Therefore, it cannot be said that the mandatory requirement of section 153C of the Act have not been complied with. Being so, at the stage of recording satisfaction, we make it clear that there is no conclusive proof is required that there existed undisclosed income in the hands of assessee. On the other hand, there is prima facie satisfaction at the end of ld. AO of the present assessee is to be reached that to suggest that there is undisclosed income in the hands of present assessee. Hence, we do not find any merit in this ground of the appeals of the assessee and the same is dismissed in all these appeals. 9. Next common grounds in Ground No. 4, 4.1, 4.3 & 4.4 in all these appeals in ITA Nos. 1061, 1062, 1063 & 1065/Bang/2023 except in ITA No. 1066/Bang/2023 with regard to alleged addition made u/s 69 of the Act as unexplained money towards alleged advance made by assessee in cash to M/s. Shivan & Co. is without any valid seized material. 9.1 The ld. A.R. for the assessee submitted that the AO has relied upon loose sheets, unsigned entries in note books ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e facts stated in a document is in issue, mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the fact or contents of the document. me truth or otherwise of the fact or contents so stated would have to be proved by admissible evidence i.e., by the evidence of those persons who can vouch safe for the truth of the facts in issue. " 9.2 Further, he submitted that the Hon'ble Supreme Court in the case of Mohd. Yusuf & Anr. v. D. & Anr- AIR 1968 Bom. 112 has observed that the evidence of the contents contained in document is hearsay evidence unless the writer thereof is examined before the Court. The Hon'ble Court, therefore, held that the attempt to prove the contents of the document by proving the signatures of the handwriting of the author thereof is to set at nought, the well-recognised rule that hearsay evidence cannot be admitted. 9.3 He submitted that the Tribunal in ACIT v. Layers Exports P. Ltd [20171 53 ITR (Trib) 416 (Mumbai) held as under: - "33. In entirety of the matter, we are of the view that an addition in assessments carried out pursuant to search action u/s 132 of the Act has to be related to co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnot form the basis for assessing the undisclosed income of the assessee. Admittedly, the said loose papers are not in the form of pro-notes or duly executed documents or books of account or certificates or money receipt which can prove conclusively the factum of any undisclosed income earned by the assessee or any unaccounted investments or made by him Additions be made simply on the basis of rough scribbling made by some unidentified person on few loose sheets of papers. " 9.4 In view of the aforesaid, the ld. A.R. submitted that since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When dumb documents like the present loose sheets of papers are recovered and the AO wants to make use of it, the onus rests on the AO to collect cogent evidence to corroborate the noting therein. The AO has failed to corroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized papers reveal the un....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case can be termed as "dumb" even as per the narrow definition adopted by the AO. The assessee strongly objected with the finding of the AO that assessee has advanced any unaccounted money to Late Shri V G Siddhartha or M/s. Coffee Day Global Limited. 9.8 He submitted that the notings in the loose sheets, note pads have been prejudicially and erroneously interpreted by the AO. The loose sheets do not evidence any concluded transactions. The inferences drawn by the AO is based on surmises and conjectures. The inferences are outcome of a prejudicial or speculative reading of the material not supported by any independent, cogent and reliable evidences. The AO sought to rely on undated, unsigned dumb loose sheets which are not reliable material at all held in the decision quoted above. 9.9 He submitted that the presumption under section 292C is with reference to books of accounts, other documents, money, bullion, jewellery or another valuable article or thing. The loose sheets, scribbled note-pads do not qualify as books of accounts and other documents. That being the case, the presumption contained in section 292C of the Act cannot be applied by the AO merely because the loose ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... search under section 132. Moreover, it is a search induced assessment. Section 132(4A) also contains similar presumption. Section, 132(4A) should be read harmoniously with reference to sub-section (1) of section 132. The books of account or other documents referred to in section 132(4A) are those referred to in section 132(1)(iii) read with section 132(1)(a)/(b). The assessee has established that the authorising officer could not have formed a reasonable belief that eventualities stated in section 132(1)(a)/(b) exist. Therefore, section 132(4A) cannot come into play. Consequently, section 292C does not apply. 9.13 Without prejudice to the above, he submitted that assessment u/s 153C have been made in the case of the assessee relying upon the very same material. Under such circumstances, the presumption under section 292C gets automatically rebutted. Section 153C(1) stat.es that where the Assessing Officer of the searched person is satisfied that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....criminating material. In fact, the assertion of the AO is contrary to his own reliance upon material belonging to a period other than the period for which assessment is made. By relying upon material belonging to some other assessee, which have no mention of date of advance, the AO has impliedly acknowledged that there is no material seized leave alone incriminating material. The findings of AO are not supported by any corroborative seized materials and the AO has made assessment in an arbitrary and capricious manner. 9.15 He submitted that the AO while rebutting the contentions of the assessee that assessment cannot be made under sec 153C in the absence of incriminating material has stated that material evidence found, have been discussed at length in the various paragraphs relating to advance made by assessee. He submitted that the discussion which the AO refers to in the above-mentioned counter is also general in nature. He has only made bald assertions that the assessment has been made based on incriminating material found during the course of search. It is not enough to state that the material seized is incriminating. It should be demonstrated that it is so. It can be demon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ized material, the computation cannot be correlated to the data in such seized material. Therefore, there is an element of estimation in all cases. 9.17 He submitted that the AO has stated in the assessment order that it is brought on record here, that various incriminating evidences to prove that advance money being in all years subject to assessment that have been seized and also discussed in detail as a part of this order. For the purpose of quantification, it is necessary to look for those material which give maximum possible detail with respect to quantum of advance money being made and that "It is again reiterated that the only purpose of considering certain evidences for the purpose of quantification is to deliver most reasonable possible estimation and the one close to reality." In the assessment order, the assessing officer has stated that "The estimation is both scientific and reasonably accurate. Had the truth been brought forward by the assessee, it would have been more accurate to the decimal values. 9.18 Further, he submitted that the AO is merely trying to justify his estimation of unaccounted cash advances. He has conceded that he has not found "directly incri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erial is not incriminating. On the one hand, the AO states that incriminating material is available for each assessment year and on the other hand, he hastens to add that "it was necessary to look for those material which give maximum possible detail respect to quantum of cash advance being made". He submitted that the assessment should be made for each of the years separately. The AO has completely missed the fundamental concept pertaining to assessment. 9.19 He submitted that the seized material has not been analysed by the AO financial year-wise. He has made a consolidated analysis and has considered the same for all years. As a result, there is discord between the discussion made in respect of seized material and the table wherein the alleged unaccounted cash generated has been tabulated year- wise. He submitted that the analysis of the seized material should be made year-wise considering the true spirit of the provisions pertaining to search and seizure. If a consolidated analysis is made for all the 5 years involved, it would be end-up being a subjective analysis rather than an objective analysis. An objective an analysis alone would help in determining whether the seized ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tements cannot be relied upon. The assessee relies on the following decisions: * The Hon'ble Supreme Court in Andaman Timber Industries v. CCE 2015 (10) TMI 442 - SUPREME COURT / 2015 (324) E.L.T. 641 (SC) * Kirloskar Investments & Finance Ltd. v. Assistant Commissioner of Income tax [19981 67 ITD 504 (BANG.) 9.23 Therefore, mere furnishing the copy of statements recorded is not sufficient. The assessee against whom the statements are to be used should be provided an opportunity to cross-examine the person who has given statement. Reliance is placed on the Hon'ble Delhi High Court in Principal Commissioner of Income-tax, Delhi-2 v. Best Infrastructure (India) (P.) Ltd' [2017] 84 taxmann.com 287 (Delhi) / [2017] 397 ITR 82 (Delhi). 9.24 The Hon'ble Tribunal in M/S Fateh Chand Charitable Trust CIT (Exemptions) Lucknow 2016 (4) TMI 1119 - ITAT Lucknow / (20161 49 ITR Trib) 276 held that it is settled position of law that any evidence collected at the back of the assessee cannot be used adversely unless and until it is confronted to the assessee and the assessee is allowed to cross-examine the witness, if any. It was similarly held in M/S Obulapu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce not giving cross examination of living person whose statement is relied upon by the AO, the such assessment orders framed by AO is bad in law and to be quashed as held by Supreme Court judgement in case of Andaman Timber Industries v Commissioner of Central Excise, 281 CTR 241 (SC) wherein held that opportunity of cross examination not given leads to nullity and such assessment orders to be quashed. Further bench of tribunal in case of ACIT vs Vireet Investments (P) Ltd 165 ITD 27 (Delhi - Trib.) (SB) wherein it was held that two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted, which is in line with the supreme court judgement in the case of CIT vs Vegetable Products, 88 ITR (SC). This is a well-accepted construction recognised by various courts. 9.28 He submitted that the Assessee neither had the occasion to look into those statements nor an opportunity to cross-examine those persons. In short, "no one shall be condemned unheard". The principles of natural justice are a jural postulate and has been enshrined in the maxin 'Audi alteram partem'. It is the second long arm of natural justice, whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the assessee else it cannot be used and no adverse inference can be drawn on such material. 9.30 He placed reliance on the judgement of the Hon'ble Supreme Court in the case of C. Vasantlal and Company v. CIT 1962 (2) TMI 7 - SUPREME COURT / [1962] 45 ITR 206 (SC} held as under: - "The Income-tax Office* is not bound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessment even by private enquiry. But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it The statements made by Achaldas and Poonamchand before the Income-tax Officer were material on which the income-tax authorities could act provided that the material was disclosed and the assessees had opportunity to render their explanation in that behalf." 9.31 By not furnishing the copy of statements Mr. Deekshith referred to in Assessment orders, it is implied that the assessing officer has not relied upon any other statement. Even in the assessment orders, assessing officer has made reference only to these two statements. Therefore, though the assessing of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....what is stated in the seized material. This is without prejudice to the contention that the statements recorded during the course of search are rebuttable. 9.34 He submitted that the observation of the AO that the contents of the statements are corroborated by material found and seized during search is not true. How can loose sheets / notepads which themselves do not qualify as reliable material corroborate any other material. In the submissions made by the assessee vide letter dated 11.11.2019, it is nowhere acknowledged the correctness of the statement of Mr. Deekshith. These submissions do not imply even remotely that the assessee is acknowledging that statements made by Mr. R M Deekshith are true. 9.35. He submitted that certain statements have been obtained by the authorised officer after the completion of search. These statements cannot be relied upon as they are invalid as submitted earlier. The reliability of the statements obtained from Mr. K M Deekshith have been mentioned at various places in these submissions. The AO has relied on the statement of Mr. K M Deekshith in the assessment order to the effect where in spite of the assessee denying the contents of the not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dice to the above, he submitted that no additions can be made solely based on the statements of third parties. Reliance is placed on following decisions: * The Hon'ble Delhi High Court in Commissioner of Income-tax v. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi) held as under: "21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession Of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such Examination only w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ai - Trib.) / [2017] 57 ITR(T) 1 (Mumbai - Trib.) held as under: - "We however are unable to persuade ourselves to subscribe to the view that such information arrived at on the basis of the stand-alone statement of the aforesaid person, viz. Sh. Mukesh Chokshi (supra), falling short of any corroborative evidence would however justify drawing of adverse inferences as regards the genuineness of the share transactions in the hands of the assessee. We though are also not oblivious of the settled position of law, as per which a very heavy onus is cast upon the assessee to substantiate the LTCG on sale of shares, as projected by her in the return of income for the year under consideration. Thus, to be brief and explicit, though the reopening of the case of the assessee in the backdrop of the aforesaid factual matrix cannot be faulted with, however such stand-alone information, i.e., the statement of Sh, Mukesh Chokshi (supra), cannot be allowed to form the sole basis for dislodging the claim of the assessee in respect of the LTCG reflected by her in the return of income for the year under consideration. We would not hesitate to observe that the lower authorities which have rushe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....can be relied and the addition sustainable. However, we do not subscribe to this view of the AO. In order to establish that the assessee had paid amount outside the books of accounts for effecting money lending transactions substantial evidence has to be placed on record which is absent in this case. It would be unjust if an addition is made on the assessee based on a statement made by third party without further making inquiries and collecting evidence. Therefore, we hereby request to delete the additions made by the Ld. AO in the concerned AY's. This entire question is based on facts and therefore, no interference is necessary." 9.43. He submitted that based on the above analysis, the AO has made assessments in the case of the above-mentioned assessee under section 153C of the Act. The AO stated that the payments evidenced by the seized material are not verifiable and on the other hand, he makes addition on the ground that the seized material evidencing payments are adequate to make additions in the hands of the assessee. The very fact that the AO has made these assessments would show that the assessing officer has no incriminating material to prove that any funds....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which very material he has denied on the ground that the funds have never been advanced, would show that the material cannot be transcended to qualify as incriminating material so as to form conclusive proof for making assessment under Section 153C. It can, at the most, arouse a suspicion which cannot be substituted for legal evidence. 9.46 The AO has held that the Loans & Advances contained in the seized material are not verifiable. It means that there is no incriminating material to support his analysis which he has used to make allegations regarding advance of funds for the personal benefit of assessee. Therefore, when there is no evidence to prove these allegations, the only fall out would be that no unaccounted cash was ever there in the first place. But the assessing officer has not accepted the contention that the alleged advancing of money could never be possible considering there is no physical existence of the same. By applying the theory of elimination, the only possibility is that advancing of such money never took place. 9.47 At the cost of repetition, he submitted that the AO erred in relying upon materials maintained by others even though the assessee had not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sweeping statements and general talk. He has simply responded to the specific questions asked in relation to the work being undertaken by him as assigned to him by his higher ups. Also, the statements recorded from him were done when he was holding a certain position in the company during the course of search proceedings. Therefore: his statement is being considered as that of a person who is part and parcel of the organization and not that of a third party. If there was anything that the assessee wanted to bring on record, the assessee would have done the needful for the same. Also, it is not clear as to why the assessee's request for cross- examination of Mr. K M Deekshith alone was denied. 9.52 He submitted that the above observations of the AO are not legally tenable. The right to cross-examine is not dependent upon the assessee's relationship with the third party. The right to cross- examine is dependent upon the fact that the statement of a party is used to the prejudice of the assessee. Therefore, mere fact that the statement sought to be relied upon by the assessing officer is that of a third party would not deprive the assessee of his right to cross-examine. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... A/CCDGL/T8 and also confronted the same to Mr. K M Deekshith. The reply of Mr. K M Deekshith is reproduced at page 6 of the assessment order. These two pages cannot be treated as evidence. It is not known to which period these two sheets belong to, neither are any dates mentioned in these sheets. It contains only names of certain persons with some figures. The initials PBT cannot be presumed to be the assessee. These are dumb sheets which have no relevance and its authenticity is not be taken on face value. Such loose sheets and scribblings cannot be the primary evidence to base the assessment upon. These sheets also cannot be relied upon to hold that the assessee has advanced cash loan to M/s Coffee Day Global Limited. In the assessment order, the AO has extracted page 6 of A/CCDGL/T8 and observed as under: "The above exhibit is an image of seized material A/CCDGL/T8, Page No. 6 which has information tabulated about the "Various scribblings and numbers and names of different people for year 2017". 9.56 In reading the above, it can easily be inferred that the initials PBT cannot be construed as the assessee and it's not in good faith to presume it to be the name of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce that seized material which the AO has sought to rely upon to compute the unaccounted cash loan transactions is not supported by cogent evidence. 9.60. Without prejudice to the contention that the replies given to various queries are not tenable in law as they are not supported by any material evidence, it is submitted that the inferences drawn by the AO do not directly emerge from the statement of Mr. K M Deekshith. The only base for the analysis of the loose sheets, note books containing obscure notings and the scribblings in the statement of Mr. K M Deekshith. The inferences reflect more of the zeal of the AO to tax rather than an objective analysis. The seized material does not contain any reliable evidence. 9.61 He submitted that in the assessment order, the AO relied upon reply to query from the statement under section 132(4) of Mr. KM Deekshith recorded on 27.11.2017 which is as under: - "In the sworn statement u/s 132(4) of the Income-tax Act, 1961 recorded from Mr. K M Deekshith during the course of search operation u/s 132 dt: 27.11.2017 he was asked about his role and responsibilities in M/s Coffee Day Global Limited. From the above statement of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... evidence and, in such instance, a third party's statement should not be the -base for the assessment considering the fact that the assessee has not been permitted to cross-examine him with regard to his statement. A perusal of cross examination Mr. K M Deekshith would show that there is nothing in the said statement which would establish no payment has been made in cash at all. It is submitted that these findings are perverse. Mr. K M Deekshith did not state where the cash was collected from the assessee nor did he give any further details regarding the alleged transaction. There is no evidence found to demonstrate that such huge sum of cash was being held by the assessee. Mere fact that the seized material contains initials of PBT does not mean that the entries therein have been made at the behest of the assessee. The AO cannot blow hot and cold. 9.67 He submitted that as far as the documents referred to in various seized material, the assessee has already stated that he has nothing to do with them and they cannot be relied on to make any allegations against him. Further, he submitted that there are lot of loose ends and contradictions in the theory advanced by the AO to s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l and as such, deserves to be deleted. Hence, the assessment carried out in pursuance of search, no addition can be made simply on the basis of uncorroborated noting in loose papers found during search because the. addition on account of alleged payments made simply on the basis of uncorroborated noting and scribbling on loose sheets of papers made by some unidentified person and having no evidentiary value, is unsustainable and bad-in-law. 9.71 The Tribunal in the case of Sri Y. Siddaiah Naidu, Tirupathi vs. Asst. Commissioner of Income-Tax 2015 {2} TMI 403 - ITAT HYDERABAD held that it is very much clear that from such notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular transaction. In these circumstances, no addition can be made on the basis of such document. 9.72 He submitted that in the case of CIT v. M/S Khosla Ice & General Mills 2013 (1) TMI 451 - Punjab & Haryana High Court, the Hon'ble Court held that assessee rightly contended that the impugned document was a non-speaking document in as much as it does not contain any intelligible narration in support of the inference drawn by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ged payment made simply on the basis of uncorroborated noting and scribbling on loose sheets made by some person have no evidentiary value and is unsustainable and bad in law. 9.76 The Hon'ble Supreme Court in Common Cause (A Registered Society) v. UOI [2017] 394 ITR 220 (SC) observed with regard to evidentiary value that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the cours....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... or documents or assets, seized or requisitioned, shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person arid issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A. Therefore, if the material seized belongs to or pertains to or relates to a person other than the searched person, only then section 153C comes into play. Hence, it is axiomatic to state that if the material seized belongs to or pertains to or relates to some other person, it does belong to or pertain to or relate Lo the searched person. Under such circumstances, one cannot invoke the presumption under section 292C that the material seized belongs to the searched person as the assessing officer by his own action of making assessment under section 153C in the case of trustees relying upon the very same seized material. 9.78 He submitted that the Delhi Tribunal in Vijay Kumar Aggarwal v. ACIT 2017 (5) TMI 1354 held that it is clear that the presumption of facts u/s 292C of the Act is rot a mandatory or compulsory presumption but a discretionary presumpt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wanted to avail the opportunity of cross- examination. That apart, the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price-list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above, (para 7) If the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice, (para 8)" 9.81 He submitted that the Delhi Tribunal in the case of Veena Gupta v. ACIT in ITA No. 5662/Del/2018 dated 27.11.2018 relying on the above judgment of Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded. 9.82 He su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....30,000 from out of the sum of Rs. 61,000 for income-tax and excess profits tax and business profits tax purposes, representing the value of the high denomination notes which were encashed." 9.83 Further, he submitted that the Hon'ble Supreme Court in the case of CIT v. Odeon Builders (P.) Ltd., 418 ITR 315 (SC) head-note is as follows: "Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to assessee, thus, denying opportunity of cross examination to assessee, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by assessee was a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... witness adverse to the assessee is an indispensable right and the opportunity of such cross- examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re- examination, if necessary. 9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. Again, it is the comparative instance that alone can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result, we decline to answer the question." 9.86. He submitted that as held by the Hon'ble Calcutta High Court in the above judgment, in the present case, Mr. Nagaraj cannot be considered as a reliable witness. More so, when the assessee was not given any opportunity to cro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e judicial conclusions. The AO is required to act fairly as a reasonable person, not arbitrarily and capriciously. The assessment u/s153C of the Act should have been supported by adequate material and it should stand on its own leg. This notebook or loose sheets found during the course of search is only circumstantial evidence and not full proof evidence to sustain the addition. No addition can be made in the absence of any corroborative material. If it is circumstantial evidence in the form of loose sheets and notebook, it is not sufficient to come to the conclusion that there is conclusive evidence to hold that assessee has advanced any cash loan. The notes in the diary/loose sheets are required to be supported by corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search cannot be sustained. The evidence on record is not sufficient to uphold the stand of AO that assessee has advanced unaccounted cash loans in the guise of carrying on money lending activities. 9.90. He submitted that the contention....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... v. ITO, 126 ITD 356 (Del) wherein it was held as follows: - "It was a matter of record that the assessee had not been allowed the cross-examination of the party whose statement had been used against it in making the assessment. The addition was, thus, in violation of principles of natural justice. Not allowing cross examination is a defect which is procedural in nature. It is only a procedural requirement to be complied with before making the assessment under the Act. Not following the procedural provisions like allowing cross examination will not make an assessment null and void. At most it can be an irregularity liable to be cured and in such a case, the assessment can be set aside to be redone. An addition made does not cease to be an addition merely by reason of want of cross-examination. It will be a proceeding liable to be challenged and corrected. [Para 13] The order of the Assessing Officer though was vitiated by an illegality which supervened, not at the initial stage of the proceedings but during the course of it and, therefore, assessment could neither be annulled, nor the addition could be deleted because of that illegality or irregularity. The matter was requ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....]" 9.92. He submitted that there are various loose sheets, scribblings and jottings having no signature or authorization from the assessee's side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, it does not show any recovery of the undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets. 9.93. Further he relied on the Supreme Court judgment in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) wherein it was held that opportunity of cross- examination not given leads to nullity and assessment order to be quashed. It is also pertinent to mention herein the decision of Special Bench of the Tribunal in ACIT v. HYPERLINK"https://indiankanoon.org/doc/105761717/"Vireet HYPERLINK "https://indiankanoon.org/doc/105761717/" Investments (P) Ltd. 165 ITD 27 (Delhi - Trib.) (SB) wherein it was held that when two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted, which is in line with the Supreme Court jud....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (ix) CIT vs Atam Valves Pvt Ltd 184 Taxman 6 (P&H) 9.95. Thus, he submitted that placing reliance on the seized material is not proper and all the additions on the basis of the above should be deleted in all the assessment years since, i) no opportunity to cross-examine the persons whose statements have been relied upon is afforded; ii) some of the statements have been recorded under section 131 by the authorized officer subsequent to completion of search; iii) there is no documentary evidence either to support the statements of Mr. K M Deekshith or of the parents of the students; and iv) the seized material is in the form of various loose sheets, scribblings, and jottings having no signature or authorization from the assessee's side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, search action not resulted in recovery of any undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets. 10. The ld. D.R. submitted that the incriminating material was found f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tisfaction note is to other officer and the assessee doesn't have any right to question on that. The whole annexure has to construed as satisfaction for initiating proceedings and the whole annexure is mentioned in the satisfaction note. So, the assessee's contention that the same pages are not reproduced in Assessment Order as mentioned in the satisfaction note is not valid ground. Th Assessment Order reproduced page 107 of seized material and which is seized material and it contains the assessee's initial 10.3 The ld. D.R. submitted that the Assessing Officer in his assessment order has reproduced relevant portion of seized documents which contains loose sheets from the Annexure A/KMD/01 (At the residence of K.M. Deekshith) and he has reproduced particularly Pg. No. 65,68,70 and 107. The contention of the assessee is that the reproduced document does not contain the Assessee's initial (PBT). The page 107 do contain the Assessee's initial (PBT) but it was not mentioned in the satisfaction note. So, on this basis, he is challenging the whole proceedings as void-ab-initio. 10.4 He submitted that the satisfaction note and assessment order are two different d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ous dates. Q.No. 38: I am showing you answer of Q No. 5,6 & 7 of the statement recorded u/s 131 of IT Act from Shri. Sendhil R on 21.09.2017 in the case of Shri. V.G. Siddhartha, M/S Coffee Day enterprises Ltd. and M/S Coffee day global. The copy o statement is attached as Annexure-I. The gist of the statement is as follows- Mr. Sendhil R has stated followings- l. You had directed him to handover cash of Rs. 15,00,000/- and to Mr. Arun on 05.09.2017. 2. You had directed him to handed over cash of Rs. 4 lakhs each (total 12 lakhs in three instances to Mrs. Mamtha, Ajila residing at Sanjay Nagar. 3. You directed him to hand over cash 2-4 lakhs regularly to Mrs. Mamta Anjila since last year. 4. He has stated that he used to handover 10-50 lakhs to Mr. Prakash Talreja and Mr. Chamanlal 2 to 3 times a month at your direction. Please confirm the same. Ans: Yes, I confirm that I had directed Mr. Sendhil R to carry out all the abovementioned transactions. 10.9 Statement u/s 132(4) at Office premises of Coffee Day Enterprises Ltd. Q.No. 3 During the course of search proceedings at your residence and also in office ce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....zed folder CCDGLT8/1. Please go through the page number 110 and 111. Please explain the transactions. Ans. These pages show the loans taken by way of cash and cheques from parties where the codes denotes as M-Mahesh Ramchand, P-Prakash Talreja and C-Chairman Lal. The amounts mentioned are the repayment schedules which are to be paid in cash and cheques. As explained above in answer to Q.No.5, these three parties have also given cash loans to us. Q.No.21. I am showing you seized folder CCDGL8/l. Please go through the pag number 108 and 109. Please explain the transactions. Ans. This is ledger extract of Talreja's adcount in Sivan and Co. This ledger contains only cheque entries and no cash components. Q.No.22. I am showing you seized folder CCDGL8/l. Please go through the number 107. Please explain the transactions by way of notings on this paper. Ans. This page contains the entries which show the loans taken by Sivan and Co by way of cheques and cash through Prakash Talreja. Q.No.24. With respect to above promissory notes, do you issue promissory notes to persons who advance loans in cash? If yes please produce them. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... He is one of the financiers to Sivan & Co. and 'VGS' is 'Mr V G Siddhartha', Proprietor of Sivan & Co. In the Financial year (FY) 2013-14, Mr. Prakash B Talreja has lent Rs. 12.75,00.000/- in cash to M/S Sivan & Co. at the rate of interest of 2% per month. For the borrowed amount of Rs. 12.75 crore: he used to take Rs. 3 crore per annum, as interest for three Financial Years (FYs)i.e. FY 2014-15, FY 201516 and FY 2016-17. In the FY 2017-18. Mr. Prakash B Talreja has been paid approximately 10,00,000/- in cash as interest for the outstanding principle amount ofRs.12 75 00 000/- borrowed from him. Page No. 39, contain the details of the payments made to various person i.e. Mr. Ramchand, one of the financier, has been paid Rs. 3.25 lakhs. Out of this Rs. l.25 was paid in cash and the rest Rs. 2 lakhs is paid in cheques as interest on the principle borrowed of Rs. 6 crore. In the same way, Mr. Chaman Lal has also been paid Rs. 2.50 lakhs as interest on the loan borrowed of Rs. 3 crore. Page No. 21 contains the calculation of interest on the loan of Rs. 10 crore borrowed from Mr. Avinash Amarlal by Sivan & Co. In this calculation, on the principal amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ress is Flat No. 31, Embassy Court, High Grounds, Crescent Road, Sampangi Rama Nagar, Bangalore- 5660001. Shri Prakash Bhajandas Talreja: 10.11 Statement recorded u/s 131 at Office of DDIT, Uunit-3(3), Bangalore: Q.N0.6 I am showing you the statement of Shri. K.M.Deekshith recorded on 27.11.201 flu/s 131 of the Income Tax Act. 1961 wherein reply to Q.No.5 he has stated that he has stated that you have given a loan of Rs. 12,75,000,00/- in the F. Y .2013-14 to M/S Shivan and co. Which is a proprietorship concern of Shri. V.G. Siddhartha in cash a t the rate of interest of 2 % per month and also the interest is paid in cash every month. Please comment and confirm the same. Ans. I have gone through the reply to Q.No.5 of the said statement of Shri. K.M. Deekshit recorded on 27.1 1.2017. I would like to state that I have not lent any amount by cash to M/S Shivan and Co. Whatever amount advanced to M/S Shivan and co. is only by way of cheques/RTGS and accounted in the books of Shri Madhusudan S. Patel my brother in law for whom I am holding the power of Attorney. I would also like to state and confirm that I have not received any amount of interest by way of cash....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Grouip. Further, he also stated that these cash receipts are not accounted in any of the books of accounts. The person who is in-charge and handling the cash transaction is done by K M Deekshith, so his statements becomes paramount importance. The contention of the assessee that there is no incriminating material found during the search of his premises cannot be the reason to nullify the statement of other persons and seized materials containing assessee's name. The statement of Sendhil R has to be taken in account as corroborative evidence. Mr. Sendhil has clearly acknowledged that he is handing over cash to the assessee communicates Srinivas on behalf of the assessee. He submitted that there are 3 statements which clearly points out that the assessee was engaged in making cash transactions. 10.14 Regarding not providing Cross-Examination opportunity of late Shri V.G. Siddartha, ld. D.R. submitted that the cross-examination of V.G. Siddhartha was not possible due to the fact, that he was deceased. So, it is not possible for cross-examining him. 10.15 The cross-examination of KM Deekshith was not allowed by the Assessing Officer because Mr. K. M. Deekshith has giv....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... facts of this case. 10.19 According to ld. D.R., in this case, the loose sheets & the statement of Sendhil R have to be considered as corroborative evidence with the statement of K M Deekshith and V G Siddhartha. The loose sheets show that there were transactions with the assessee and V G Siddhartha. The statements of two persons stands confirmed and sustained with the corroborative evidence, makes it conclusive. This case is not an identical one were made on a standalone basis as claimed by the assessee. The addition is to be upheld. 11. We have heard the rival submissions and perused the materials available on record. A search and seizure operation u/s 132 of the Act was conducted at M/s. Coffee Day Global Ltd. on 21.9.2017 at the premises No. 23/2, Coffee Day Square, V.M. Square, Bengaluru 1 and to search residential premises of M.D. at No. 19, PMR Residency, V.B. Layout, 34th Main, 4th Cross, JP Nagar, Bengaluru. Residence of assessee Shri Prakash Bhajandas Talreja at Flag No. 31, Embassy Court, High Grounds, Crescent Road, S.R. Nagar, Bengaluru 560 001 was also covered during the search proceedings in connection with the Group case of M/s. Coffee Day Global Ltd., M/s. C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ees, whether they are in hundreds, thousands or lakhs or crores. * No signature of the person who prepared it or there was no authentication of these documents. The contention of the ld. A.R. is that these documents are not speaking documents and on that basis addition cannot be made in the assessment orders. 11.3 We have carefully pursued the above documents. As seen from the above documents, these documents marked as 65, 68, 70 & 107 by Shri K.M. Deekshith found at the residence of Shri K.M. Deekshith does not have name of the present assessee. Further, in the loose slip marked as document No. 107 scanned at earlier page at the top of it, it is mentioned as "PBT" and the same was interpreted by the ld. AO that Prakash Bhajandas Talreja. But no amount or date has been mentioned in front of his name. In the same seized material, some other names have been mentioned as below. For clarity, we will reproduce it as follows: July, 17 PBT VINAY H. GOKLANCY (HUF) - 1.75 GOKLANCY ENTERPRISES - 1.75 AASHISH COMBINES - 2.80 BATHIJA BROTHERS - 2.75 SAPNA R. BHATIA - 2.05 F.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 1.oo crore in cash also to the vendor; that no presumption of such payment of Rs. 1.00 crore in cash can be drawn on the basis of an entry found in a diary/loose sheet in the premises of C.Radha Krishna Kumar which is not in the respondent's handwriting and which did not contain the name of the respondent or any date of payment or the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place of proof. We also agree with the Tribunal that the assessing Officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden." 11.8 No undisclosed Income can be computed by invoking the presumption U/s 132(4A) when the documents are seized from the premises of a third party. This was held in the case of [2005] 147 Taxman 59 (Visakhapatnam) (Mag.) In the ITAT VISAKHAPATNAM BENCH Smt. Bommana Swarna Rekha v. Assistant Commissio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e lower authorities. 11.13 As per section 153C of the Act, the assessment proceedings should be initiated for six years. However, in this case, assessment was reopened for the 4 assessment years 2014-15 to 2017-18 on the basis of loose slips found in the house of Shri K.M. Deekshith alleging that this was belonged to or relating to or pertaining to the present assessee. It is noted that the ld. AO has recorded the satisfaction for opening the assessment u/s 153C of the Act by placing reliance on the following seized materials: Annexure/Sl.No./Pg. No. etc. Annexure: A/KMD/01 Page Nos. 38 and 43 Annexure: A/CCDGLT8/1 Page Nos. 108, 109, 129, 131 11.14 However, for framing the assessment he relied on the following seized materials: Note: It is to be noted that there is no mention of "PBT" in this slip. Note: It is to be noted that there is no mention of "PBT" in this slip. Note: It is to be noted that there is no mention of "PBT" in this slip. Note: The word "PBT" is mentioned at the top of this slip without any narration. 11.15 These are not the seized material referred in page No. A/KMD/-01 pages 38 & 43 A/CCD/GL/T8....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see even presuming that late Shri V.G. Siddartha has borrowed money from the present assessee. In our opinion, this seized material having no concrete details of the transaction between the assessee and the borrower and also maintained by K.M. Deekshith at his own sweet will and based on such inchoate non-speaking documents, no liability can be fastened on a third party like present assessee before us since ld. AO had failed to corroborate such non-speaking document with any other document found during the course of search. Hence, it is not possible to come to conclusion that such a huge amount of advance in crores has been lent by present assessee to M/s. Coffee Day Global Ltd. Group or M/s. Shivan & Co. or late Shri V.G. Siddartha without any proper documents like loan agreement, promissory notes, cheque or security papers or any other documents. The person who has carried out search u/s 132 of the Act have not found any corroborative materials to support the contention of the department that assessee has lent such huge amount without slip of paper signed by the borrower and how he can recover such huge amount of loan without any security collected for repayment of such loan. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y be invoked against such/searched person and not against another person like person before us. The above said proposition is based and relatable to the Evidence Act which casts data of a person in whose possession, a thing or article was found to discharge the burden that it does not belong to him. 11.19 In the present case, no corroborative evidence was brought on record to confirm that the entries in seized material marked as A/KMD/01 pages 65, 68,70, 108 were actually reflects the loan transaction in the form of cash payment between the assessee and M/s. Coffee Day Global Ltd. Group or late Shri V.G. Siddartha or M/s. Shivan & Co. In that material, there was no entry regarding the payment of cash loan between these parties. Even the reply given by Shri K.M. Deekshith does not suggest the amount of loan lent, in the form of cheque and cash, date of loan, rate of interest, repayment mode, offering of security details and also there was no circumstantial evidence to suggest all these things. The department is relying on only the third-party statement recorded from the oath to suggest these transactions. In our opinion, the addition made by the ld. AO only on the basis of conjec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Officer of the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or reassess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is -after such satisfaction is arrived at - that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that was not a document that 'belonged' to the Assessee. Admittedly, this was a statement made by Mr. Taneja during the course of the search and survey proceedings. While it contained information that 'related' to the Assessee, by no stretch of imagination could it be said to a document that 'belonged' to the Assessee. Therefore, the jurisdictional requirement of Section 153C of the Act, as it stood at the relevant time, was not met in the present case. * For the aforementioned reasons, this Court concludes that the ITAT committed no legal error in holding that the AO had wrongly assumed jurisdiction under Section 153C qua the Assessee. The ITAT, rightly, therefore, set aside the order of the CIT (A), which had held the contrary." 11.21 Moreover, in the decision of the Hon'ble Supreme Court in the case of CIT Vs. Singhad Technical Education Society reported in [2017] 84 taxmann.com 290 (SC) it was categorically held that the incriminating material should belong to the assessee and for the assessment year under consideration in the following manner: "15. At the outset, it needs to be highlighted that the assessment order passed by ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. * We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 13.10.2023 asked to provide an opportunity to cross examine Mr. K.M. Deekshith and thereafter summons u/s 131 of the Act was issued to both the parties K.M. Deekshith as well as present assessee vide summons dated 18.10.2023. Shri K.M. Deekshith appeared for cross examination before DCIT Central Circle-1(3) on the scheduled day. On the other hand, the assessee on 19.10.2023 has filed a letter stating as follows: This is to state that my above client has received a summon with regard to attend cross examination of Sri KM Deekshith. I beg to state that at the stage of assessment itself I've asked for cross examination of Sri V G Siddhartha and Sri K M Deekshith which was not provided by concerned Assessing Officer. Now you've issued a summon to provide an opportunity to cross examine Sri K M Deekshith. It is to be noted that the primary party was Late Sri VG Siddhartha who is no more. Now the cross examination is impossible to perform and what is done cannot be undone as of now as Sri V G Siddhartha is no more. Hence in this case, it is total violation of principles of natural justice which has resulted in miscarriage of justice. In view of the above fact,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y on the order of Vizag Bench in the case of P. Koteswara Rao Vs. DCIT in ITA Nos. 251 & 252/Vizag/2012 and also the decision of ITAT Delhi Bench in the case of Vijayshree Food Products Pvt. Ltd. in ITA No. 587/Del/2019. Admittedly, during the assessment proceedings, the assessee had requested the ld. AO to provide an opportunity of cross examination of the parties involved therein, however, ld. AO have not provided an opportunity for cross examination to the assessee. However, the ld. CIT(A) has given an opportunity of cross examination to the assessee to cross examine K.M. Deekshith who was no privy to the transaction between the assessee and M/s. Coffee Day Global Ltd. Group or late Shri V.G. Siddartha even if there was cash loan transaction between these parties. In our humble opinion, the findings of the ld. CIT(A) was contrary to the settled principles of law. It is needless to mention herein that it is a primary law that nobody can be condemned without giving opportunity of examination and cross examination of evidence. At the cost of repetition, we may again state that for the purpose of making addition u/s 153C of the Act, it is essential that the incriminating material sh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Shri Anil Kumar to meet the petty cash or miscellaneous expenses from M/s Navaratna Estates during registration of properties. A search u/s 132 was conducted in the case of Shri Lanka Anil Kumar as well as the assessee and the survey u/s 133A was conducted in the case of M/s Navaratna Estates. No evidence was found by the department either in the premises of the assessee or in the premises of M/s Navaratna Estates, having given loan to Sri Anil Kumar to the extent of Rs. 1,05,00,000/-. In the search proceedings in the residence of Shri Anil Kumar also, no evidence with regard to unaccounted investment or expenditure representing the loan supposed to be taken from the assessee was found. Merely on the basis of the statement given by Shri Lanka Anil Kumar, which was subsequently retracted, the AO made the addition on the presumption that the assessee had advanced the sums to Shri Lanka Anil Kumar without bringing any evidence on record. The AO has neither given opportunity to the assessee to cross examine the third party nor disproved the explanation given by the assessee. As found from the order of the AO Sri Lanka Anil Kumar is an employee of M/s Navaratna Estates and drawing the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. * K. V. Lakshmi Savitri Devi Vs ACT 148 ITJ 517 (Hyd). * K. V. Lakshmi Savjtri Devi Vs ACIT ITTA 563 of 2017 (AP)(HC) * iii) Jawahar Bhai Atmaram Hathiwala Vs ITO 128 ITJ 36 (Ahd) * iv) DCIT Vs B. Vijaya Kumar ITA No. 930 & 931 of 2009 (Hyd). * v) CIT Vs R. Nalini Devi ITTA 232 of 2013 (A. P) * CIT Vs P. V Kalyana Sundaran (2007) 294 ITR 49 * i. Venkata Rama Sai Developers Vs DCIT ITA 453/Vizag/2012. * P. Venkateshwar Rao Vs DCIT ITA 25/825/Vizag/2012. The ratio laid down is that solely on the basis evidences such as notings in loose sheets found with third parties and the statement of third parties, additions cannot be made without corroborative evidences and independent enquiries. Applying the above ratio to the facts of the case, it is held that the addition made is not warranted, the same is deleted." 6.1. No evidence was found by the department to establish that assessee has given loans to Shri Lanka Anil Kumar during the course of search and no evidence was found regarding utilization of purported advances by Shri Lanka Anil Kumar. Shri Anil Kumar also subsequently retracted from the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Dismissed the petition Supreme Court clarified that the evidence that had surfaced was not credible and cogent. The Attorney General contended that documents which have been filed by the Birla as well as Sahara Group are not in the form of Account books maintained in the regular course of business. They are random sheets and loose papers and their correctness and authenticity even for the purpose of income mentioned therein have been found to be unreliable having no evidentiary value, by the concerned authorities of Income Tax. Analysing the veracity of the evidences procured from the companies, the Supreme Court, relied upon the ratio laid in V.C. Shukla case and observed that the entries in loose sheets of papers are not in the form of "Books of Accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible u/s 34 of Indian Evidence Act, and that only where the entries are in the Books of Accounts regularly kept depending on the nature of the occupation, that those are admissible. Being so, the addition of Rs. 12.75 crores in the assessment year 2014-15 as amount advanced by assessee to M/s. Coffee Day Global Ltd. Group as unaccounted cash loan ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The addition solely on the basis of entries in the loose slips which has been considered as lending of money by assessee and this being a serious allegation the same deserves serious verification before reaching any conclusion. The entire assessment is based on suspicion, surmises and conjectures. The noting in the loose sheets remain uncorroborated which being is not a speaking document and no supporting evidence in the form of loan document, promissory note, etc or other evidence found during course of search which cannot be basis for addition. That no quasi- judicial order can be based on suspicion or assumption. The following judgements are supporting the assessee case: * Dhirajpal Girdhari Lal vs CIT (1954) 26 ITR 775 (SC) * Dhakeshwari Cotton Mills Ltd vs CIT (1954) 26 ITR 775 (SC) * Lalchand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288 (SC) * Umacharan Shaw & Bros. vs CIT (1959) 37 ITR 271 (SC) * Bansal Strips (P) Ltd vs ACIT (2006), 99 ITD 177 Delhi * CBI vs V C Shukla (1998) 3 SCC 410 * Common Cause (A registered society) and others vs Union of India in Writ Petition (Civil) No. 505 of 2015 (SC) [2017] 394 ITR 22....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Day Global reflecting the investment of this loan amount in any form of asset or any expenditure or investment. There was no evidence found with assessee or M/s Coffee Day Global Limited in form of promissory notes/signed post-dated cheque or loan document. When it is unsecured loan, it is a trade practice to collect post-dated cheques or promissory notes. In the present case the assessee categorically stated in every stage of examination whatever money is lent is by banking channel and duly accounted. The AO cannot draw inference on basis of suspicion, conjecture and surmise. Suspicion, however strong cannot take place of material in support of addition. The AO should act in judicial manner, proceed with judicial spirit and come to a judicial conclusion. He should act fair as a reasonable person and not arbitrarily and capaciously and not with intention to reach his budget target. Hence, the order framed by the AO is having no leg to stand which shall be squashed. 12.4 He submitted that unless the burden of proving that the materials and cash belong to the assessee is discharged those materials can neither be seized u/s 132 nor relied upon to make assessment order u/s 153A. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed from Shri. Prakash Talreja. Subsequently, during the course of post search proceedings, again the statement of Mr. K.M Deekshith was recorded on oath u/s 131, In the said statement, Mr. K.M Deekshith once again confirmed that cash loan of Rs. 12.75 Crores was received from Shri- Prakash Talreja during the FY 2013-14. Further, he also confirmed that interest payments of Rs. 3 crores in cash were made to Mr. Prakash Talreja during the FYs 2014-15 to 2016-17 and Rs. 10 lakhs in the F.Y 2017-18. It is also pertinent to note that the statement of Shri. K.M Deekshith and the evidence collected were also confronted with Shri. Prakash B Talreja during the course of post search proceedings on oath and his statement u/s 131 of the Act were recorded. Shri. Prakash B Talreja has denied any such transactions. During the course of assessment proceedings, these issues were again put-forth before the assessee and a show-cause notice was issued, before passing the assessment order. The assessee obviously denied any such transactions". The A.O analysed the submissions made by the assessee and passed the assessment order making additions towards unaccounted income in the relevant AYs under conside....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(4) of the Act and also under Section 131 of the Act, that he was handling these cash transactions on the instructions of Sri. V G Siddhartha who is the promoter of M/s. Coffee Day Group. It is known fact that such transactions of unaccounted cash are maintained in rough note books, scribblings, codes etc. As such, not only evidences of receipts and payments in cash were found/seized but the same are further corroborated by the statements of Sri. KM Deekshith and Sri. V G Siddhartha, recorded on oath. The claim of assessee that initial PBT cannot be presumed to be him, is misconceived, as there is no presumption in this case but there is a confirmation made by the other 2 party involved in the transactions viz. Mr. K M -Deekshith and Sri. V G Siddhartha. The assessment order is not passed in a mechanical manner but after due verification and corroboration of evidences. 13.4 He submitted that the claim of the assessee that the statements recorded post search have no evidentiary value is also misplaced. It is not a case that some depositions have been taken in the form of letter or any other communication. In the instant case, during the course of post search enquiries, summons u/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... found, such chits/loose sheets may be regarded as 'documents' within the meaning of section 158B(b). The loose sheets seized during the search sometimes contain valuable information and those loose sheets are to be regarded as 'documents'. [Pora 15] Section 132 is a code in itself. The section, considered as a whole, shows that it has its own procedure for the search, seizure, determination of the point in dispute, quantum to be retained and also the quantum of the tax and interest on the undisclosed income. The object of introduction of section 132 is to prevent the evasion of tax, i.e. to unearth the hidden or undisclosed income or property, and bring it to assessment. It is not merely an information of undisclosed income but also to seize money, bullion etc. representing the undisclosed income and to retain them for the purposes of realization of taxes, penalties etc. [Para 16] Sub-section (4A) of section 132 enables an assessing authority to raise a rebuttal presumption that books of account, money, bullion, documents etc. belonged to such person; the contents of such books of account and other documents are true and that the signatures and ev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....statement is inconsistent, is also not substantiated with any evidences. No concrete material have been put forth by the assessee to disbelieve the statements K M Deekshith. 13.12 He submitted that the claim of the assessee that he has not been provided the statement recorded on oath of Sri. K M Deekshith and his cross examination was also not allowed is found to be incorrect. His claim of violation of principles of natural justice are also not found substantiated. 13.13 He submitted that during the course of appellate proceedings reference was made to para 9 of the assessment order wherein the submission of the assessee dated 11.11.2019 is reproduced, requesting for cross examination of Mr. K.M Deekshith. The assessee has requested for cross examination of Mr, K. M. Deekshith. as the AO had proposed to make additions in the case of the assessee based on the statement given by Mr. K.M Deekshith. during the search proceedings and post search proceedings. The Assessee also stated that the AO passed the assessment order without accepting his request for cross examination and therefore, a specific ground i.e. ground of appeal No. 6 was raised for the relevant assessment years on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee had specifically asked for cross examination only of Mr. K M Deekshith since the AO vide show cause notice dated 04.11.2019 had proposed to tax unaccounted income of Rs. 12.75 crores based on the statement of Sri K M Deekshith, in whose residence the loose sheets were found. Though Late Sri V G Siddhartha confirmed the statement deposed u/s 132(4) by Sri K M Deekshith, the assessee in his submission dated II. 11.2019, had specifically requested for cross examination only of Mr. K M Deekshith and not of Late Sri V G Siddhartha, since sheets were seized from the residence of Mr. K M Deekshith. Further the assessee as on 11.11.2019, was well aware of the fact that only cross examination of Mr K.M. Deekshith is possible as Late Sri V G Siddhartha died on 29 July 2019. 13.18 Therefore, he submitted that the contention raised by the assessee in his letter dated 19.10.2023 is deceptive and cannot be accepted. The Assessee by making misleading claims is trying to obfuscate the facts in order to support his case. However, the very fact that the assessee has chosen not to cross examine Mr. K.M. Deekshith only strengthens the hands of the Revenue. Assessee on the issue of cross e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he said transactions have been found to be correct^ Accordingly, the authenticity of the seized material is established and the assessee's claim that the addition is based on presumption is unsustainable. The assessee further stated that there was a search proceeding at his residential premises and office premises on 27.1.2016 at which point of time also, no incriminating documents were found in his possession. This claim of the assessee at best explains or reiterates the argument of the assessee that there are no intimating seized materials. This claim does not in any manner explain or diminish the value of the seized material found in the premise of Mr K M Deekshith. Assessee also stated that the initials PBT as mentioned cannot be construed as his initials. The fact that the initials PBT indicate Shri. Prakash Bhajandas Taireja has been categorically stated by Mr K M Deekshith and Late Shri VG Siddhartha in their statements recorded under section 132(4) and the same have not been retracted. In fact. Late Shri VG Siddhartha has accepted the said amounts as unaccounted income in the RO1 filed under section 153A. The condition of the assessee to cross examine the relied upon person....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ative material supporting the same and it cannot be bind the assessee and it is only binding on the person who has made the statement. 14.1 Further, Mr. K.M. Deekshith is not a borrower himself and he is supporting the alleged transaction between assessee and M/s. Shivan & Co. without having any corroborative materials to suggest the occurrence of the same. Had he been the actual borrower with supporting evidence in the form of loan document, promissory notes, it could have been the case of the department that assessee has lent cash advance to M/s. Shivan & Co. or M/s. Coffee Day Global Ltd. Group. Without any cogent material, it cannot be presumed that the alleged transaction took place and there is no fruitful purpose would be served by giving opportunity of cross examination of Mr. K.M. Deekshith. Therefore, there is no adverse inference could be drawn on the basis of assessee not availing the opportunity of cross examination of Mr. K.M. Deekshith. This ground of appeal of the assessee is allowed. ITA No. 1066/Bang/2023: 15. The ground Nos. 2 to 2.4 in this appeal are akin to ground Nos. 4 to 4.4 in ITA Nos. 1061, 1062, 1063 & 1065/Bang/2023. Accordingly, these grounds ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....levy of penalty. Against this assessee went in appeal before ld. CIT(A). 20. The ld. CIT(A) observed that the relevant part of the statement recorded during search has duly been reproduced by the AO in the assessment order. The addition is based on the admission under oath of the assessee as made at the time of search. There is nothing to show that statement made during search was under any undue pressure, threat or coercion. Verification at the end of the statement proves that the said statement was given voluntarily in a sound state of mind without any threat, coercion or undue influence. In the case of Smt. Dayawanti v CIT [201 7J390 ITR 496 (Delhi) the High Court held that the statements recorded during search operations could be relied upon to make addition to assessee's income. In the case of Hotel Kiran v ACIT [2002] 82 ITD 4S3 (Pune) the ITAT held that when statement under section 132(4) was voluntarily made and there was no coercion or threat whatsoever and contents of statement were clear and unambiguous, same would be binding on assessee even if it was subsequently retracted. In the case of ACIT Central Circle-2(3), Kolkata Vs. Vishal Agarwal reported in [2018] 10....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 20.04.2016 is found pertinent. As per Page 5 and Page 6 of his statement, "Page No. 29 indicates the derails of various deposits held by one of my customer who approached me for financing and the deal did not go through. The other- notings in small slips represent amounts due to syndicate partner M/s. Chimmanlal HUF and the adjustment with his parties, they do not pertain to me. Further, the notings in Kannada represent some expenses incurred for household purposes and the adjustment of my driver's personal advance. Further, the amount mentioned in the slips may kindly be treated as part of my declaration us 132(4) of the IT. Act, 1961 to the extent of Rs. 20,50,000 for A. Y.2016-1? (Rs. 18,50,000 and Rs. 2,00,000 cash on 30.08.2015). 10.5. It is apparent from the assessee's statement dated 20.04.2016 that there is material evidence of undisclosed income at least to the extent of Rs. 20,50,000. Therefore, the assessee submissions during penalty proceedings that his offer of additional income is without any adverse finding or seized document is a false statement. It is in this context, the assessee's admission of undisclosed income of Rs. 1,00,00,000 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e so had the search not been conducted]." 21.1 In view of the above, the ld. A.R. submitted that undisclosed income for the purposes of section 271MB of the Act must be represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132 of the Act. In the assessee's case no reference has been drawn to any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132 representing undisclosed income of Rs. 1,00,00,000/-. He submitted that in fact, in Para 10.4 and 10.5 of the penalty order, the learned A.O. himself stated as under: "10.4 It is submitted in the connection the appellant's statement dated 20/04/2016 is found pertinent and at page 5 and 6 is reproduced as under :- "Page No. 29 indicates the details of various deposits held by one of my customer, who approached me for financing and the deal did not go through. The other notings in small slips represent amount due to s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....00,000/- offered by the assessee to purchase peace with the Department was in the nature of undisclosed income to warrant the levy of penalty u/s 271AAB of the Act. 21.5 In view of the above, he submitted that the penalty of Rs. 10,00,000/- imposed u/s 271AAB of the Act being 10% of Rs. 1,00,00,000/- requires to be deleted. In light of the above, he prayed that the appeal of the assessee may be allowed for the advancement of substantial cause of justice. 22. The ld. D.R. submitted that on perusal of penalty order, the ld. CIT(A) observed that on being confronted during search process only, the assessee has come forward for disclosure of income of Rs. 1,00,00,000/-. The penalty provisions are incorporated in the legislation as a deterrent effect on the errant assessees. Merely because, the assessee came clear during the search proceedings does not entitle the assessee to claim immunity from levy of penalty. Also, mere taxation of undisclosed income without levy of penalty places the assessee at par with honest tax payers. In view of the above, the ld. CIT(A) held that the action of the ld. AO levying penalty of Rs. 10,00,000/- being 10% of the undisclosed income cannot be held....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... action u/s.153C is proposed NAME : Shri. Prakash Talreja. PAN : ABKPT1011B ADDRESS: No.31, Embassy Court, High Ground, Cresent Road, Bangalore-560001. 5. Specific details of the seized material on the basis of which action u/s.153C is proposed: (i) Nature of the seized material (money/bullion/jewellery/other valuable article or thing/books of account/documents) Documents. (ii) Description of the seized document : As per Annexure enclosed. [iii] Address of premise/place from where such material was seized 1) Residence of Shri. K.M. Deekshith at: No.19. PMR Residency, Vysya Bank Layout, 34= Main, 4º Cross. J.P. Nagar, Bangalore. 2) Office premises of M/s. Coffee Day Global Ltd. at: No.23/2, Coffee Day Square, Vittal Mallya Road, Bangalore. (iv): Date of seizure of such material ... 21.09.2017. (v) Particulars of the relevant Panchnama .. 1) Panchnama dated 07.11.2017. (Residence of Shri. K.M. Deekshith at: No.19, PMR Residency, Vysya Bank Layout, 34th Main, 4"> Cross, J.P. Nagar, Bangalore.) 2) Panchnama dated 14.11.2017. (Office premises of M/s. Coffee Day Global Ltd. at: No.23/2. Coffee Day Square, Vittal Mallya Road, Bangalore.) (vi) Annexure/S.No./Pg.No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Relevant extract of the statement dated 23.09.2017 are reproduced below: 3. During the course of search proceedings at your residence and also in office certain incriminating documents related to unsecured loans were found and seized as CCDGLTS/1. I am showing you the same. Please go through it and explain. Ans Sir I have gone through the documents seized in office premises and also the data maintained in my laptop. These are the parties who have given unsecured loans in both cash and cheque. The unsecured loan has been collected by me under directions of Mr. VG Siddhartha. 4. Please state the names of the parties who have given unsecured loan in cash and cheque as per the seized document and data maintained by you in laptop: Ans The names of the parties who have given unsecured loans in cash and cheque are as follows: · Prakash Talreja . Mahesh Ramchand · Chaman LaJ Please the amount of the cash loan taken from the above mentioned parties and also state the rate of interest to be paid. 5. otas 23/09/17 का कारà¥à¤¯à¤¾à¤²à¤¯ ( Joner of became in Document 3 Ans Sir the amount of cash loan taken....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¥à¸² * * * : 05.03.2019 Place : Bengaluru. Document 4 Appeal No. CIT(A)-11/BNG/10196/10197/10198/10199/10201/2019-20 Shri Prakash Bhajandas Talreja A.Y. 2014-15 to 2018-19 4. From the perusal of the above statement of Shri. Deekshith, it may be observed that he has stated that in the financial year 2013-14 Shri. V G Siddhartha has obtained loan of Rs. 12.75Crore in cash at the rate of interest of 2% per month. Further, he has also confirmed in the statement that interest amount of Rs.3 Crores per annum was paid to Shri. Prakash Talreja for FY 2014-15, FY 2015-16 and FY 2016-17 in cash. Also, he has stated for FY 2017-18, Shri. Prakash Talreja has been paid interest of Rs.10 lakh in cash. Accordingly, during the course of post search proceedings, summons u/s 131 was issued to Shri. Prakash B Talreja and a sworn statement was recorded on 18.12.2017. In the sworn statement, the statement of Shri. K M Deekshith along with the evidences were confronted to Shri. Prakash B Talreja. The relevant portion of the statement of Shri. Prakash Talreja recorded on 18.12.2017 is reproduced as below: I am showing you the statement of they & Miksheeth recorded op 211201" was Ist a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e letter dated 11.11.2019 stated as under: "With reference to the above mentioned Assessment year, it is submitted that a show-cause notice was received dtd 04/11/2019 to enable me to show cause as to why unaccounted income of Rs.12,75,00,000 should not be considered as an addition in my hands. During the course of search proceedings at the residence of Sri KM Deekshith at the office of M/s Coffee Day Global Limited, certain evidences of receipt and payment of cash was found. On perusal of such documents, it was found that there were certain cash receipts by Sri VG Siddhartha. When the documents were confronted to Sri DM Deekshith in the sworn statement recorded u/s 132(4), he had stated that Sri V G Siddhartha has obtained a loan of Rs. 12.75 Crores during FY 2013-14 and paid interest at the rate of 2% per month. He had also stated that a sum of Rs. 3 crores per annum was paid to me for FY 2014- 15, FY 2015-16 and FY 2016-17. Additionally, a sum of Rs. 10 lakhs was also paid as interest for FY 2017-18. In response to the above, I would like to state that I have not lent any amount by cash to M/s Shivan and Co. Whatever sums were advanced to them was only through cheques /....
X X X X Extracts X X X X
X X X X Extracts X X X X
....view of the fact that no incriminating documents were found in my possession during the course of search at my office and residential premises, the income returned by me may kindly be accepted and justice rendered. In case your Honour were to take any adverse action on this issue, I request that I be allowed to cross-examine the said Mr K M Deekshith, to establish that the amount was not advanced." 10. The assessee's response has been analysed and is found to be not acceptable due to the reasons discussed as follows. The assessee has stated that that he has not lent any amount by cash to M/s Shivan and Co. Whatever sums were advanced to was only through cheques / RTGS and the same was accounted in the name of Mr Sri Madhusudhan S Patel (assessee's brother in-law) for whom issessee held the Power of Attorney. The total amount lent on behalf of Sri सà¥à¤¤à¥‡ का कारà¥à¤¯à¤¾à¤²à¤¯ issinner of tocom लिय (अपील)-11 z Tax (Appeals/-1] . Oje the Comunico . Bengaluru = 11 * * Page 40 of 52 Document 7 Appeal No. CIT(A)-11/BNG/10196/10197/10198/10199/10201/2019-20 Shri Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hence the contention of the assessee is not acceptable and the amount of Rs.12,75,00,000/- is treated as unaccounted income of the assessee in A.Y.2014-15 and brought to tax as unexplained investment u/s.69. कारà¥à¤¯à¤¾ er of income Tax EST लय ( (अपालि)-11 (Appeals) Page 41 of 52 Day Gp - Bengaluru * Document 8 4882 4es60mg 300 Tonghim 65 4 5182 -338 Thursday 07/09/17 8192 65-0 ceom 25 -. HSN -20 -- cope 10 - - 15 -. 16 .. K-R. Plader 1 23 -0 Internation 48-0 A-AS Capital 50-0 Cash 50 -- 1 161 - ~ SCB 1 100 0 Kirlli Doshi - 1 500 -. Katog 590 - 0 Roto 60 mg 860- 4 cafe (-339) -250 - . Tonalin 22000 - a 1 BOJ05 5183- Uss -- 16-35- 1967 uss - 17-65- - 1966 ver - 16.00 1969 Plem 1920 Adv 48.82 K-R. Plader 1 BOJ05 Document 9 30 Els 280 Toggling 300 Cofer 25 Bhovomore Expoli/Sonuc 68 Monday 08/09/17 - -338 HO 1 0 1 675- 10 - Hesdu 15-a Copen 10 - 0 58 V 1 15-0 ANNASIV 1 50.0 Cash 1 5- 0 Credit card 1 500- ~ BojoJU 675-0 30 Els 280 Toggling 3....