AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 757
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....the "AY/AYs"] 2012-13, 2015-16 and 2018-19; and * Protective additions made in the hands of the assessee M/s.Help Line Motor Finance for the AYs 2012-13 and 2018-19. 3. The relevant details of each appeal are as under: i. ITA No. 656/CHNY/2025: Appeal against the order of the Ld.CIT(A) dated 26.12.2024 [DIN & Order No.ITBA/APL/S/250/2024-25/1071587377(1)], arising from the assessment order dated 29.12.2019 passed u/s. 143(3) r.w.s. 153A of the Act for the AY 2012-13 in the case of M/s.No.1 Auto Finance; ii. ITA No.657/CHNY/2025: Appeal against the order of the Ld.CIT(A) dated 26.12.2024 [DIN & Order No. ITBA/APL/S/250/2024-25/1071589720(1)], arising from the assessment order dated 29.12.2019 passed u/s. 143(3) r.w.s. 153A of the Act for the AY 2015-16 in the case of M/s.No.1 Auto Finance; iii. ITA No. 658/CHNY/2025: Appeal against the order of the Ld.CIT(A) dated 26.12.2024 [DIN & Order No. ITBA/APL/S/250/2024-25/1071593412(1)], arising from the assessment order dated 29.12.2019 passed u/s. 143(3) r.w.s. 153A of the Act for the AY 2018-19 in the case of M/s. No.1 Auto Finance; iv. ITA No. 622/CHNY/2025: Appeal against the order of the....
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.... the assessee firms and certain other constituent concerns. iii. Panchnama dated 13.09.2017 bearing reference ANN/SM/RK/B&D/S-1 -- One long-sized register titled "STL Notes," containing entries reflecting loans advanced by certain constituent entities of the No.1 Auto Finance Group. iv. Panchnama dated 13.09.2017 bearing reference ANN/SM/RK/ED/S -- Two compact CPUs containing the server data of M/s. No.1 Auto Finance and M/s. Help Line Motor Finance, respectively. 7. In relation to the above, a statement u/s. 132(4) of the Act was recorded from Mr. R. Kathiresan, the Managing Partner of the assessee firms. 8. In addition to the aforementioned facts, a search u/s. 132 of the Act was conducted in the case of M/s.Viswas Promoters Private Limited, Madurai on 29.11.2017. During the course of the said search, a pen drive was seized, which contained an Excel sheet reflecting entries pertaining to a cash loan of Rs. 1,00,00,000/- alleged to have been advanced by M/s. No.1 Auto Finance to Shri S.Seetharaman during the period from March 2015 to June 2016. The said Excel sheet also contained entries indicating payment of interest by Shri S. Seetharaman to M/s. No.1 Aut....
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....e basis, encompassing all the assessment years under consideration in a consolidated manner. 16. Issue No.1 & 2: Addition of unaccounted deposits and interest on alleged deposits 16.1 During the course of the search proceedings, a statement u/s. 132(4) of the Act was recorded from Shri R.Kathiresan, Managing Partner and Coordinator of the assessee firms. In response to Question No.11 posed by the Authorized Officer on 11.08.2017, Shri R. Kathiresan stated that the assessee firms had accepted cash deposits amounting to Rs. 6,83,07,000/- during the FY 2010-11, relevant to the AY 2011-12. It is pertinent to note that the assessment year under consideration is AY 2012-13. The relevant question and answer are reproduced below: Question: Answer: 16.2 Further, Shri R. Kathiresan, in his statement dated 10.08.2017 in response to Question No.20, deposed that the financial concerns associated with him predominantly received deposits in cash, with occasional receipts through cheques. He further undertook to furnish the list of such depositors before the AO. He also sought additional time to submit details of further cash deposits received during the FYs 2010 11 to 2....
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.... AO proposed to assess the said sum of Rs. 6,83,07,000/- as taxable income in the hands of M/s No.1 Auto Finance on a substantive basis and, in the alternative, in the hands of M/s Helpline Motor Finance on a protective basis for the impugned assessment year i.e., AY 2012-13 notwithstanding that the amount pertained to FY 2010--11 relevant to AY 2011--12. 16.6 Furthermore, pursuant to the response provided to Question No.8 in the statement recorded on 11.08.2017, wherein an interest rate of 18% per annum was stated, the AO computed the interest payable on the disputed deposits at Rs. 1,22,95,260/- for each of the relevant assessment years. The said amount was accordingly proposed to be brought to tax, both substantively and protectively, in the hands of the respective assessee firms for the assessment years under consideration. 16.7 In response to the show cause notice issued by the AO, the assessee firms submitted that all 74 firms operating from the searched premises are distinct and independent assessable entities. It was further submitted that the hard disk seized during the course of the search operation contains detailed records pertaining to each of the said firms, inc....
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....ibutable to the said alleged deposits, for each of the Assessment Years from AYs 2012-13 to AY 2018-19, again assessed substantively in the hands of M/s.No.1 Auto Finance and protectively in the hands of M/s.Help Line Motor Finance. However, in respect of the additions made towards interest payments on the alleged deposits, the appeals for AYs 2012-13, 2015-16, and 2018-19 in the case of M/s. No.1 Auto Finance, and AYs 2012-13 and 2018-19 in the case of M/s.Help Line Motor Finance, are presently under consideration before us at the instance of the Revenue. For the remaining years, no appeals have been preferred by the Revenue owing to the low tax effect involved. 16.14 Aggrieved of the above additions, assessee firms preferred appeals before the Ld.CIT(A), who vide orders dated 26.12.2024 deleted both the substantive and protective additions observing as under: - "6.2.6 The undersigned after careful examination of the facts and records of the case, the statement recorded u/s 132(4) of the Act, and submissions made by the appellant, the key findings and observations are as under. 6.2.7 The AO observed that deposits amounting to Rs. 6,83,07,000/- were unaccounted....
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....s lacked genuineness, identity, and creditworthiness, citing the absence of depositor details, field inquiries revealing non-existent depositors, and the introduction of funds under fictitious names. However, the appellant argued that these conclusions were drawn without verifying the information in the seized computer disc or conducting thorough inquiries into the records maintained by the group firms. 6.2.11 The AO also added interest payments at the rate of 18% per annum on the alleged unexplained deposits, amounting to Rs. 1,22,95,260/- for each assessment year from AY 2012-13 to AY 2018-19. This addition was based on the presumption that interest was paid only to the partners of the group firms. The appellant challenged this finding, asserting that the AO failed to substantiate the interest payments with any evidence from the seized materials. 6.2.12 The appellant submitted that the AO relied heavily on the sworn statement of Shri R. Kathiresan, ignoring the detailed records available in the seized computer disc. The appellant also claimed that the AO misinterpreted and mistranslated the statement, leading to incorrect conclusions about the nature and quantum....
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.... selected by the AO in the present case) in the hands of the appellant firm is not permissible. Accordingly, all the grounds raised by the appellant upon this issue are hereby treated as allowed. 6.2.15.3 Further, The AO failed to establish any evidence that unequivocally linked the deposits and interest solely to the appellant firm. Given the absence of any corroborative evidence, the substantive assessment in the appellant's hands is inappropriate. Accordingly, all the grounds raised by the appellant upon this issue are hereby treated as allowed. 6.2.15.4 The AO dismissed the deposits as unexplained due to the alleged non-existence of depositors. However, the appellant provided detailed records extracted from the seized computer disc, showing the deposits' acceptance, repayment, and outstanding balances. These records were not adequately reconciled with the AO's findings. The principles of natural justice demand that the AO conclusively prove that the deposits are unaccounted, which the AO failed to do. The findings of the AO, based on presumptions and incomplete inquiries, are legally untenable. Therefore, the addition on account of deposits requires to be ....
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....s of the 74 Firms which are functioning at the premise are as under: DEPOSITS BREAKUP DETAILS AS ON 31.03.12 S.NO NAME OF THE FIRM PAN Opening Balance as 01.04.11 add:New Deposits Received LESS: Deposits Closed closing Balance 31.03.12 1 NO.1 AUTO FINANCE AAHFN3793J 36,25,000 35,000 1,50,000 35,10,000 2 CHENGKATHIR AUTO FINANCE AAGFC4102K 35,76,000 C C 35,76,000 3 CHENGKATHIR INVESTMENTS AAGFC3468E 32,66,000 5,00,000 2,02,000 35,64,000 4 CHENGKATHIR ENTERPRISES AAGFC4103J 35,96,000 90,000 5,80,000 31,06,000 5 CHENGKATHIR LEASINGS AAGFC4104R 34,83,000 6,00,000 4,00,000 36,83,000 6 DHANIGAIMURUGAN AUTO FINANCE AAGFD7804B 34,56,000 7,48,000 8,53,000 33,51,000 7 DHANIGAIMURUGAN INVESTMENTS AAGFD7803G 36,16,000 70,000 4,10,000 32,76,000 8 DHANIGAIMURUGAN ENTERPRISES AAGFD7705F 31,25,000 6,00,000 37,25,000 9 DHANIGAIMURUGAN LEASINGS AAGFD7802H 34,38,000 2,00,000 1,82,000 34,56,000 10 AMBHIGAPATHY AUTO FINANCE AAQFA4311A 34,87,000 1,00,000 1,82,000 34,....
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.... HELPLINE MOTOR FINANCE AAFFH3971E 36,32,000 0 1,00,000 35,32,000 39 ANJUGAM AUTO FINANCE AAQFA6168B 36,28,000 0 1,40,000 34,88,000 40 ANJUGAM FINANCIER AAQFA4122R 35,14,000 5,00,000 4,50,000 35,64,000 41 ANJUGAM LEASINGS AAQFA4120P 35,23,000 50,000 45,000 35,28,000 42 ANJUGAM INVESTMENTS AAQFA4308M 38,25,000 2,00,000 2,50,000 37,65,000 43 KARKUZAZI AUTO FINANCE AAJFK9174C 35,78,000 2,00,000 3,60,000 34,18,000 44 KARKUZAZI MOTOR FINANCE AAJFK8186G 37,03,000 2,00,000 95,000 38,08,000 45 KARKUZAZI LEASINGS AAJFK8555F 33,80,000 2,00,000 2,50,000 33,30,000 46 ARULMOZHI AUTO FINANCE AAQFA6167Q 39,25,000 C 1,02,000 38,23,000 47 ARULMOZHI INVESTMENTS AAQFA4904K 37,24,000 0 3,75,000 33,49,000 48 ARULMOZHI LEASINGS AAQFA4123Q 37,67,000 0 2,80,000 34,87,000 49 KALANJIAM AUTO FINANCE AAJFK8392G 32,38,000 5,00,000 3,42,000 33,96,000 50 KALANJIAM INVESTMENTS AAJFKB184E 32,20,000 1,00,000 3,50,000 29,70,000 51 KALANJIAM LEASIN....
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....d the entire cash deposit were accounted in the books of account of the Appellant. 6.2.15.9 The failure on the part of the AO to correlate the addition to the proper assessment year undermines the validity of the assessment for AY 2012-13, rendering the addition untenable in law. However, it is a settled principle in tax jurisprudence that such statements, unless corroborated with concrete evidence, cannot form the sole basis for additions. The appellant's retraction of the statement, combined with the Assessing Officer's failure to conduct independent verification, considerably undermines the validity of the addition made by the AO. 6.2.15.10 In this regard the Hon'ble Chennai Tribunal in the case of ACIT v. Saveeta Institute of Medical and Technical Sciences [2012] 25 taxmann.com 138 (Chennai -Trib) has held that addition made on the basis of the sworn statement recorded u/s 132(4) of the Act cannot be sustainable and further held that the admission made u/s 132(4) by the Special Officer of the College could not even be treated as a valid piece of evidence. 6.2.15.11 In the case of Shri. Ganesh Trading Company v. CIT [2013] 30taxmann.com170/214 ....
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....e Revenue is in appeal before us. 16.16 The Ld.DR, Ms.E.Pavuna Sundari, CIT, placed substantial reliance on the findings recorded by the AO and contended that the Ld.CIT(A) has erred in deleting the additions made. The Ld.DR, therefore, prayed that the additions made by the AO be upheld and the grounds of appeal raised by the Revenue be allowed. 16.17 Per contra, the Ld.AR, Shri R. Venkata Raman, Chartered Accountant, contended that the addition of Rs. 6,83,07,000/- made by the AO on account of alleged unaccounted cash deposits was not based on any incriminating material found during the course of search proceedings, nor was it supported by any evidence of actual deposits having been received during the AY 2012-13. Instead, the said addition was solely predicated upon the sworn statement of Shri Kathriesan, wherein he purportedly deposed that a sum of Rs. 6,83,07,000/- constituted cash deposits allegedly received during the FY 2010-11, relevant to AY 2011-12. 16.18 It was further submitted by the Ld. AR that the AO has erroneously made the impugned addition in AY 2012-13 in respect of transactions which, even as per the sworn statement relied upon, pertained to AY 2011-12.....
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....on does not warrant any interference. The Ld. AR, therefore, prayed that the orders passed by the Ld.CIT(A) be upheld and the appeals preferred by the Revenue be dismissed. 16.23 We have carefully considered the rival submissions advanced by both the parties, perused the material available on record, and thoroughly examined the orders passed by the lower authorities. It is an undisputed fact that the AO made an addition of Rs. 6,83,07,000/- on account of alleged unaccounted cash deposits, along with a further addition of Rs. 1,22,95,260/- towards purported consequential interest, for the relevant assessment years in question. The basis of the said additions was solely the sworn statement of Shri R. Kathiresan, who is the Managing Partner of the assessee firms. It is further admitted by the Revenue that Shri R.Kathiresan, in his sworn deposition, stated that the sum of Rs. 6,83,07,000/- represented cash deposits received by the assessee firms and other constituent group entities during the FY 2010-11, relevant to the AY 2011-12. However, despite this clear and specific assertion, the AO proceeded to make the addition in AY 2012-13, ostensibly on the ground that the assessee firms....
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....san, who, during the course of search proceedings, stated that the assessee firms had accepted cash deposits of Rs. 6,83,07,000/- during FY 2010-11, corresponding to AY 2011-12. Crucially, the deposition makes no mention whatsoever of any annual interest payments of Rs. 1,22,95,260 on the alleged cash deposits. Nor does it indicate that such interest payments were made in AY 2012-13 or any subsequent assessment years. 16.28 It is a settled position in law that mere reliance on a sworn statement, in the absence of corroborative evidence, is not sufficient to justify additions under the Income Tax Act, 1961. Judicial precedents have consistently held that statements recorded under oath during search or survey operations must be supported by independent material evidence in order to sustain an addition. The Hon'ble Supreme Court and various High Courts have reiterated that evidentiary value of such statements, in isolation, is limited and cannot form the sole basis for additions unless duly corroborated with contemporaneous documentary evidence. 16.29 In the instant case, the Revenue has failed to discharge its burden of proof by not placing on record any material evidence apart....
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....upon any incriminating material unearthed during the course of the search conducted under the provisions of the Act. Accordingly, such addition falls beyond the ambit of assessment permissible u/s. 153A of the Act, in relation to an assessment year that has not abated. As such, the said addition is not sustainable in law and is liable to be deleted. 16.34 We are, therefore, of the considered opinion that the additions made by the AO, both on a substantive and protective basis, lack legal tenability and hence we find merit in deletion made by the ld.CIT(A) on this ground alone. Consequently, the corresponding additions made towards interest for the respective assessment years are also rendered unsustainable, which has been deleted by the ld.CIT(A) as the underlying interest additions have not been upheld. 16.35 Upon a careful and considered examination of the assessment order passed by the AO, it is observed that the AO has made an addition in respect of certain alleged unaccounted cash deposits, treating the same as undisclosed income of the assessee firms for the AY 2012-13. The basis for such addition appears to be the purported failure on the part of the assessee firms to ....
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....sue are that during the course of assessment proceedings for the AY 2015-16 in the case of the assessee firm, M/s.No.1 Auto Finance, the AO was in possession of certain information arising out of a search action conducted on 29.11.2017, u/s. 132 of the Act in the case of M/s.Viswas Promoters Private Limited, Madurai. 17.2 In the course of the said search, an Excel sheet was seized which contained notings pertaining to cash loans advanced and repayments made thereon, including interest payments by one Shri S.Seetharaman, Managing Director of M/s.Viswas Promoters Private Limited, to various parties. Upon examination of the said document, the AO observed that the assessee had allegedly advanced a sum of Rs. 1,00,00,000/- in cash to Shri S.Seetharaman during the month of March 2015. The AO further noted that the outstanding amount was subsequently reduced to Rs. 25,00,000/- in June 2016. 17.3 Based on the aforesaid findings, the AO issued a show cause notice to the assessee, proposing to treat the said amount as unexplained loan advanced by the assessee. In response, the assessee contended that the loose sheet, being an uncorroborated third party document found in an unrelated se....
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.... at the third party premise during the course of the independent search conducted in the case of M/s. Visvas Promoters Pvt Ltd, Madurai. The search in the case of M/s. Visvas Promoters Pvt Ltd, Madurai was conducted on 29.11.2017. Consequent to the findings made in this search, no enquiries were made by the AO to confront the evidences collected, with the Appellant Firm and verify its genuineness. In the absence of any such enquiry, there was no occasion neither on the part of the Authorised Officer nor the AO to record any statement from the Appellant in this regard. The issue was highlighted before the Appellant only by way of a show cause notice issued during the course of assessment proceedings and the assessment was completed for the AY 2015-16. 6.3.7 When the AO is confident about the transaction stated in the assessment order based upon the seized material, he should have made a reasonable enquiries before arriving at a conclusion that the Appellant has actually advanced such loans and received such interests as discussed in the assessment order. The Appellant during the course of Appellate proceedings has strongly contended that the evidence relied upon by the AO i....
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.... such transaction. 6.3.10 A narration made in a excel sheet by a third person with scant details cannot be used to fasten tax liability upon the person. Further in this regard, it is also necessary to refer to the decision of Hon'ble Supreme Court in the case of State of Kerala vs KT Shadulli and Nalla Kandy Yusuf 1977 UPTC 363, where it has been observed that, it is quite possible that the author of the seized documents may have mentioned certain transactions in their books of accounts either to embarrass the assessee or due to animus or business rivalry or such other reasons which could only be established when the department examines such author of the document. In the absence of any corroborative evidence to attribute the entries to such a person. Such seized material is liable to be treated as a flawed document, which does not have any evidentiary value in respect of the entries found therein, unless corresponding corroborative evidence is available which can provide necessary reliable basis for deciphering the nature and character of the said entries. 6.3.11 At this juncture, it would be relevant to refer to the decision of Hon'ble ITAT, Jabalpur in the ....
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.... ITD 35 (ITAT-Mumbai), ACIT Vs. Katrina Rosemary Turcotte [2017] 190 TTJ 681 (ITAT-Mumbai), DCIT Vs. Vipin Aggarwal [2017] 83 taxmann.com 6 (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD 85 (TM) IΠΑΤ, T.S Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd Vs ACTT [2000] 67 TTJ 247. 6.3.13 In particular, it is of critical importance that the evidence to corroborate the entries indicating the advancement of loan and interest payments in the seized material found with a third party is available with specific reference to the fact regarding actual transfer of money from the said third party to the recipient named in the said entries in the seized material. The Hon'ble ITAT, Mumbai held in the case of Riveria Properties Private Limited Vs ITO in ITA No.250/MUM/2013 that the AO is required to bring further evidence on record to show that the money was actually exchanged between the parties in a case where there is no other evidence on record to prove that on-money was paid except the loose sheet found in the premise of a third party and admission made by the third party. The relevant part of the said decision is reproduced as under: ....
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.... in third party premise. In order to properly appreciate the issue, it is useful to refer to the following extract from the decision of Hon'ble Apex Court in the case of Dakeswari Cotton Mills Ltd Vs. CIT (1954) 26 ITR 775 (SC): "As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence, a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh (supra)". 6.3.16 As discussed supra, the seized material relied upon by the AO, more particularly the excel sheet which was found and s....
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....ngs have been affirmed by the jurisdictional tribunal in the case of DCIT vs. M/s. Appu Direct Pvt Ltd in ITA No. ITA Nos.: 665 & 666/Chny/2023 & CO Nos.: 37 & 38/Chny/2023 dated 24.01.2024. 6.3.18 In view of the above, the undersigned is of the considered view that as the AO has failed to bring any cogent and corroborative evidence to prove that the narrations made in the seized excel sheet about the advancement of loan and receipt of interest, the addition made by the AO based upon such seized material can only be presumptive or fictious. Accordingly, the additions made by the AO in respect of advance of loan and receipt of interest lacks merits and cannot be sustainable. In this back drop all the grounds raised by the Appellant upon this issue are hereby treated as allowed and the AO is hereby directed to delete the addition of Rs. 1,00,00,000/- and the interest of Rs. 2,48,000/- made for the AY 2015-16 and Rs. 19,32,000/- for the A.Y. 2016-17." 17.9 Aggrieved by the deletion of additions by the Ld.CIT(A), the Revenue is in appeal before us. 17.10 The ld.DR, Ms.E.Pavuna Sundari, CIT, submitted that during the course of the search conducted at the premises of M/s.V....
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.... addition of Rs. 1,00,00,000/- and consequential interest of Rs. 2,48,000/- made by the AO and deleted by the Ld.CIT(A). The AO made an addition in the hands of the assessee on the basis of excel sheet noting maintained by Shri S.Seetharaman of M/s.Viswas Promoters Private Limited. In his sworn statement, Shri S.Seetharaman has clearly stated that the loan from Karur parties was arranged through Shri Senthilvel. Thus, Shri S.Seetharaman has never deposed that the assessee has advanced loan of Rs. 1.00 crore either to him or to M/s.Viswas Promoters Private Limited. 17.15 We have observed that the AO has never conducted any enquiry with Shri Senthilvel, in spite of being named by Shri S.Seetharaman in his sworn statement. The AO has also not conducted an enquiry to ascertain the actual lender. The assessee cannot be expected to prove the negative. Further, it is not the case of the AO with credible evidence to demonstrate that the assessee has actually advanced loan to either Shri S.Seetharaman or M/s.Viswas Promoters Private Limited. Thus, in our considered view that the statement of Shri S.Seetharaman is irrelevant in making an addition in the hands of the assessee. 17.16 The....
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....etc, were found neither during the course of search of Christy group of concerns or during the course of search in the business premises of the assessee to corroborate the entries found in the excel sheets. Besides the same, it is noticed that no evidences of undisclosed asset, undisclosed expenditure including undisclosed investment etc were found in the course of search in the business premises of the appellant. It is therefore evident that, no documentary or other evidences to corroborate the entries of cash receipts and payments in the excel sheets were found to support the findings of the AO that said transactions are unaccounted transactions and are outside the books of accounts of the assessee. We further noted that, the AO neither during the assessment proceedings has made any reference to statements recorded u/s. 132(4) of the Act during the course of search in Christy group of cases or in the case of the assessee with reference to excel sheets found during the course of search to verify the contents recorded therein. Neither the person from whom said documents was found was examined nor the appellant or its partners was confronted with those evidences to verify t....
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....ged unaccounted loan and interest respectively, in the hands of the assessee for the AY 2015-16. The Ld.CIT(A)'s findings are based on cogent reasoning which have not been effectively rebutted by the Revenue. In the absence of any perversity or material irregularity in the order passed by the Ld.CIT(A), we find no merit in the grounds of appeal raised by the Revenue with respect to the impugned additions. Accordingly, the grounds of appeal preferred by the Revenue for the AY 2015-16, insofar as they relate to the addition of the alleged unaccounted loan and the corresponding interest thereon, are hereby dismissed. 18. Issue No.5: Addition of unexplained cash 18.1 The facts relevant to the issue are, during the course of a search operation conducted at the business premises of the assessee firms, cash amounting to Rs. 1,10,10,000/- was found and seized. Upon verification of the books of account, the Authorized Officer observed that the aggregate cash balance reflected in the books of all the 74 partnership firms operating from the said premises, as on the date of search, was Rs. 2,38,52,901/-. Accordingly, it was noted that the recorded cash balance exceeded the actual phy....
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....ct, the Department seized cash aggregating to Rs. 1.10 crore, a computer hard disk, certain discharged promissory notes, files, and loose sheets. The assessee further explained that the seized hard disk contained contemporaneous business records maintained on a day-to-day basis. It was submitted that Shri M. Kathiresan, at the time of recording his statement, did not have access to the said data and, as such, responded to queries based on his personal recollection and without the aid of the seized materials. 18.8 Subsequently, upon obtaining access to the seized digital data, the assessee submitted that the consolidated cash balance available across all 74 firms as on the date of search aggregated to Rs. 2,38,52,901/-. In support of the reconciliation, it was explained that a loose sheet titled "Errattu Bakki", found during the search, contained a list of payments totalling Rs. 99,16,169/-, which, although made, had not been contemporaneously recorded in the books of account. Additionally, a sum of Rs. 23,92,000/- was stated to have been withdrawn by Shri Kathiresan for the purpose of settling dues payable to retiring partners, which again had not been recorded in the books as o....
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....rs who had received funds from Shri Kathiresan. In the absence of satisfactory compliance and in view of the above findings, the AO rejected the objections raised by the assessee firms and proceeded to make an addition towards unexplained cash. 18.14 Before the Ld.CIT(A), the assessee firms reiterated the submissions previously made before the AO. The Ld.CIT(A), vide order dated 26.12.2024, deleted the substantive addition to the extent of Rs. 1,04,65,268/-, while sustaining an unreconciled amount of Rs. 5,34,732/-. Further, the Ld.CIT(A) deleted the protective addition of Rs. 1,10,10,000/- in its entirety. The relevant observations of the Ld.CIT(A) are as under:- "6.4.4 The undersigned has carefully examined the issue under consideration. As evident in the assessment order it can be seen that during the course of search conducted on 10.08.2017 at the premises of M/s. No.1 Auto Finance and M/s. Helpline Motor Finance, an amount of Rs. 1,10,10,000/- was found and seized. The books of accounts of the two firms, however, reflected a total cash balance of Rs. 2,38,52,901/-. The Appellant in the statement recorded on 10.08.2017 has clearly stated that a cash balance as per t....
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.... Rs. 1,10,10,000/- represents deposits, including principal and interest, received over a period of time. More significantly, he clarified that these amounts pertain to all 74 firms collectively, and it cannot be attributed to any specific firm or business concern. This broad association with multiple entities creates ambiguity regarding the true nature and source of the cash. 6.4.8 Further in the recorded statement, at no point did Shri R. Kathiresan explicitly stated that the physical cash was unaccounted or outside the purview of regular books of account. In this regard the AO has not brought on record any corroborative evidence to suggest that the cash was not disclosed in the books of the appellant or the 74 firms mentioned. In the absence of any such findings, the presumption of treatment of the physical cash found as unaccounted cannot hold good. It may be appreciated that on the day of search itself on 10.08.2017 in answer to question No. 11 and 12, Shri Kathiresan has clearly stated that the cash balance available in respect of the 74 Firms which are functioning at the premise stood at Rs. 2,38,52,901/-. During the course of the Assessment Proceedings, the Appella....
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....Ld.DR contended that the entire business activity of money lending was, in substance and in practice, carried out exclusively by the two assessee entities, viz., M/s.No.1 Auto Finance and M/s.Help Line Motor Finance. Therefore, the Ld.DR submitted that the existence and functioning of the other 72 partnership firms was merely on paper and not supported by any independent financial records. 18.17 The Ld. DR further argued that the reconciliation statement furnished by the assessee, which purportedly contained consolidated cash balances of the group entities, could not be relied upon in the absence of verifiable and contemporaneous documentation evidencing separate business operations or independent cash flows of the said 72 firms. In view thereof, it was submitted that the reconciliation of cash as attempted by the assessee lacks evidentiary value and does not inspire confidence. 18.18 It was also emphasized by the Ld.DR that during the course of search proceedings, a significant mismatch was noticed between the physical cash found and the book balances maintained by the assessee firms. Despite multiple opportunities, the assessee failed to satisfactorily reconcile the discrep....
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....established and cannot be questioned. 18.24 Referring to pages 5 and 6 of the paper book, the Ld.AR submitted that the cash balance as per the consolidated books of accounts of the 74 firms stood at Rs. 2,38,52,901/-, and the same cannot be attributed solely to the assessee firms. It was further submitted that the physical cash found during the course of search amounted to Rs. 1,10,10,000/-, which is significantly less than the book balance. Therefore, the Ld.AR argued that addition on account of unexplained cash is not tenable in law, as such addition is permissible only where the physical cash exceeds the recorded book balance. In the present case, since the book balance is higher than the physical cash found, the question of making an addition does not arise. 18.25 The Ld.AR further contended that the physical cash of Rs. 1,10,10,000/- found during the course of the search pertains to the operations of all 74 partnership firms collectively and cannot be imputed solely to the assessee firms under consideration. Inviting attention to the reconciliation statement placed at page 7 of the paper book, the Ld.AR submitted that the variance between the book balance and the physica....
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.... 18.29 Hence, the Ld.AR concluded by reiterating his request for dismissal of the appeal filed by the Revenue and for affirmation of the relief granted by the Ld. CIT(A). 18.30 We have duly considered the rival contentions advanced by both parties, perused the material available on record, and carefully examined the orders passed by the authorities below. 18.31 It is an admitted fact that during the course of the search conducted u/s. 132 of the Act on 10.08.2017, a sum of Rs. 1,10,10,000/- in cash was found and seized from the business premises shared by multiple entities, including the assessee firms. In the course of the said search proceedings, a statement was recorded from Shri R.Kathiresan, the Managing Partner and principal coordinator of the group entities, wherein he stated that the physical cash found represented the aggregate cash balances of all 74 firms operating from the searched premises. 18.32 It was also ascertained during the search that the cash balance as per the books of account maintained by all 74 firms was Rs. 2,38,52,901/-. The discrepancy between the book balance and the physical cash was sought to be reconciled before the AO by the assessee firm....
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....as explicitly mentioned by Shri Kathiresan in response to Question No.3 of his sworn statement recorded on 11.08.2017, which is also referred to in Paragraph 20 of the AO's order. In respect of the payments amounting to Rs. 23,92,000/-, the assessee firms furnished a detailed list identifying the firms from which the payments had been made. 18.38 It is observed that the AO has neither refuted these submissions with any adverse evidence nor established that the reconciliation is prima facie incorrect or fabricated. In the absence of any material brought on record to discredit the reconciliation submitted by the assessee firms, we find no justification to disregard the same. 18.39 We concur with the finding of the Ld.CIT(A) that the onus lies on the Revenue to establish, beyond reasonable doubt, that the seized cash represents unexplained money. In the present case, the Revenue has failed to discharge such burden. Additionally, we agree with the submission of the Ld.AR that, considering the book balance exceeded the physical cash found, and given that the variance stood reconciled barring a marginal difference, there was no occasion to invoke the provisions for addition of unex....
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....¯ படà¯à®Ÿà®¿à®¯à®²à®¾à®• உஙà¯à®•à®³à¯à®•à¯à®•à¯ கேளà¯à®µà®¿ எண௠: 12. Cash Balance As 2, 38, 52, 901 /- inBurz எஙà¯à®•à®¿ இடà¯à®ªà¯à®ªà¯ வைகà¯à®•à®ªà¯à®ªà®Ÿà¯à®Ÿà¯à®³à¯à®³à®œà¯ ? Lizar port : 12 635 Dorim Cash Balance Ro 2,38, 52, 901/ .. Document 6 (à¯à®³à¯à®³ எண௠: 5 நடதà¯à®¤à¯à®®à¯ சோதனையன௠பொதà¯? நாஙà¯à®•à®³à¯ தஙà¯à®•à®³à®¤à¯ அலà¯à®µà®²à®• அரகà¯à®•à®°à®¿à®²à¯ 1, 10, 10,000/ _ இரà¯à®¨à¯à®¤à®¤à¯. இநà¯à®¤ பணதà¯à®¤à®¿à®±à¯à®•à®¾à®© ஆதாரம௠மறà¯à®±à¯à®®à¯ எநà¯à®¤ நிறà¯à®µà®©à®¤à¯à®¤à®....