AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 753
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....td., located at Alegaon, District Pune. 4. It was gathered that Shri Sagar Omprakash Shah was one of the key personnel involved in managing the affairs of Daund Sugar Pvt. Ltd., particularly overseeing the Mumbai operations. He was reportedly coordinating procurement across departments and worked in close liaison with the top management. During the course of the search, a grey-coloured diary belonging to Shri Sagar Shah was found and seized. The said diary contained several cash entries, which were treated as incriminating in nature. 5. These diary entries were confronted to Shri Sagar Shah during his statement recorded under Section 132(4) on 09/10/2021. Relevant extracts of his statement have been reproduced in the assessment order. From these, the Assessing Officer inferred that the cash entries reflected unaccounted money received by Shri Sagar Shah from the assessee, Mr. Parth Ajit Pawar, and utilised as per the latter's instructions. A summary of the diary entries is reproduced below: Sr No. Nature of Transaction Transaction Amount (in Rs.) Financial Year Relevant page no. of diary Receipts of Cash mentioned in the Diary 1 Unaccounted cash ....
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....ty of cross-examination had been provided. Recognising the fundamental principle of natural justice, the CIT(A) directed the AO to provide an opportunity for cross-examination. Pursuant to this direction, a remand report dated 24/02/2025 was submitted, wherein a detailed cross-examination of Shri Sagar Shah was undertaken. The relevant portion of the cross-examination reads as follows: "Q.4 It has come to my notice that during the Income Tax search proceedings, entries of certain cash transactions were found with you. In response to the same, you have stated that the cash was handed over by me to you. Why did you give such a statement? Ans. At the onset I would like to state that I was under tremendous stress and pressure during the search. There were certain conditions and situations around me which created so much of pressure and along with this a lot of pressure was being exerted from outside and I was not able to think through rationally and just wanted to get over with the proceedings. There was no outside legal help or consultancy available at that point of time. So my answers were not thought out and not coherent. Q.5 Why did you state that PP mean....
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....you. Please confirm the same. Ans. Yes, the notings in that diary are done by me. As I have stated earlier, these were in the nature of random scribblings and notings. Q.11 It is seen from the statement recorded u/s 132(4) during the course of search proceedings that you have stated that the cash was provided to you by Shri Parth Pawar. Now you are saying that Shri Parth Pawar has never had any financial dealings with you and has never given you any cash. Why is there a change of stance? Ans. As stated earlier, I was under tremendous stress and pressure during the search. There were certain conditions and situations around me which created so much of pressure and along with this a lot of pressure was being exerted from outside and I was not able to think through rationally and just wanted to get over with the proceedings. Along with this as I have said this also earlier that the notings were randon notings and were not recordings of any financial transactions. Q.12 If the cash doesn't belong to Shri Parth Pawar, please state as to who gave you this cash. Ans. As stated earlier, these were random notings done by me and at this point I don....
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....agar Shah is said to have mentioned that the cash recorded in the diary was received from the assessee, Shri Parth Ajit Pawar. On the strength of this singular statement, the Assessing Officer inferred that the assessee had given cash totalling Rs. 1,69,10,100/- and proceeded to invoke Section 69A to treat it as unexplained money. 12. The assessee, in his appeal before the learned CIT(A), raised a threefold challenge firstly, that the statement of Shri Sagar Shah was recorded behind his back and without affording any opportunity for cross-examination; secondly, that the diary entries were seized not from the assessee but from a third party, and therefore could not form the basis of an addition; and thirdly, that there was no corroborative material evidencing any cash transaction with the assessee. The learned CIT(A), appreciating the principles of natural justice, directed the Assessing Officer to provide the opportunity of cross-examination, and a remand report was accordingly submitted after re-examining Shri Sagar Shah. 13. The relevant portions of the cross-examination and re-examination have been reproduced earlier in this order. The substance of the statement, however, ....