TaxTMI 
TaxTMI 
2025 (2) TMI 1354
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....r drawing up a satisfaction note & Notice u/s.153C of IT Act was issued to the assessee on 25.01.2021. 3. The Ld.CIT(A) erred in not appreciating the fact that the AO concluded that the assessee has made an investment to the tune of Rs. 51.75 Crores towards the purchase of shares of R.V. Sathyanarayana in M/s.. Jothirmayee Estates and completed the assessment by treating the amount of Rs. 51.75 Crores as unexplained investment u/s 69 r.w.s. 115BBE of the Act and passed order u/s 143(3) r.w.s. 153C of the Act on 30.09.2021 based on seized material notings recorded in Page No. 267 (backside) and in Pages 276-279 of the loose sheet, which were seized vide ANN/NN/JR/LS/S. which revealed that the assessee had made payments for purchasing shares held by Shri. R. Satyanarayana in M/s. Jothirmayee Estates, over and above the amounts disclosed in the books of accounts.. 4. The Ld.CIT(A) erred in observing that the material found in the premises of a third party and not having entries in the handwriting of the assessee could not be used to draw adverse inference in the case of the assessee when Section 132(4A) r.w.s 292C of IT Act provides for a presumption that the content....
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....ividual who is also a partner in a firm, M/s SRS Mining, which is engaged in the business of letting out heavy duty vehicles. For the relevant A.Y. 2016-17, the assessee had filed his return of income on 30.03.2018 declaring total income of Rs. 3,11,69,970/-. In the meanwhile, search action u/s 132 of the Act was conducted upon M/s SRS Mining on 08.12.2016, in which the assessee also is a partner. Pursuant to the said search, notice u/s 153A of the Act was issued for the relevant year on 18.08.2017, in response to which, the assessee filed his return of income declaring the same sum as originally declared u/s 139 of the Act. It is noted that the case of the assessee was taken for scrutiny and the assessment was completed u/s 143(3) of the Act vide order dated 06.02.2020 at total income of Rs. 38,08,36,637/- after making an addition of Rs. 7,96,66,667/-. Aggrieved by this order, the assessee is noted to have disputed the same in appeal. 4. It was brought to our notice that, there was another search u/s 132 of the Act which was Brahmanandam, Shri Ramamoorthy & others conducted in the group cases Javvaji Ramanjenyulu, Shri on 21.02.2019. In the course of of Shri Danda Balakrishnan ....
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....hri J. Sekar Reddy has given a sum of Rs. 26 crore to Shri Sathyananyana to acquire 50% of share in Joythirmaye Estate) in cash and Rs. 9 crores through banking channel. He has also paid a sum of Rs. 8.5 crores to Shri Gandhi, MLA in cash and Rs. 5 crores to Shri A.P. Nandakumar, MLA by way of cash in lieu of original contribution of Rs. 40 Lakhs paid to the vendors in 2010 in the same way he has agreed to pay Rs. 46 crore by way of cash and Rs. 19 Crores through banking channel. But we have received only Rs. 13.10 crores bank on various dates." 6. The Authorized Officer upon analysis of the noting's found in the above-mentioned loose sheets ANN/NN/JR/LS/S [Pages 267, 276 to 279] seized from the residence of Shri Javvaji Ramanjenyulu in light of the above statement of Shri Balakrishnan Ramamoorthy, noted certain correlation between the figures. He, therefore, again recorded a statement u/s 131(1A) of the Act from Shri Javvaji Ramanjenyulu on 05.07.2019. In this statement, Shri Javvaji Ramanjenyulu is noted to have stated that, he had mistakenly inferred the loose noting's to be relating to M/s Bhavya Construction Co. According to him, these loose noting's were not in....
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....assessee had made cash payments to Shri Sathyananyana and others, and also required to provide evidence in this regard. Shri Balakrishnan Ramamoorthy is noted to have responded as under: "With regard to Rs 26 crore paid to RV Satynarayana for the purpose of acquiring his share in M/s. JME. I once again reiterate that dandaBrahamandam and R.V Sathynaryana are only the investors and they do not have any intention to buy the disputed property. All along the investor demanded the double the amount of the investment made by them. Hence on the very date of the sale deed dated 4.03.2014 in the name of Ms. JME, on the very same day they have executed the sale agreement on 14.03.2014 for Rs. 60 Crores. At the time of entering the sale agreement, in my favour I have also paid the sale advance of Rs 10 lakhs by of cash to the partnership firm that is M/s. JME. As per the sale agreement I have to return the 60 crore within a period of 1 year or from the date of approval from the sanction plan from the appropriate authority. As stated above the investor DandeBrahamanadam invested Rs 15 crore and another investor Mrs. Sathyanaryana also invested Rs 15 crore. This agreement being the log....
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.... 41,75,00,000/- with reference to the above noting's found on loose papers from the premises of Shri Javvaji Ramanjenyulu. For arriving at the impugned figure, the AO is noted to have undertaken permutations & correlations of the figures found mentioned in Page 267 (backside) of document ID marked ANN/NN/JR/LS/S and inferred that, the noting's on Page 279 suggested that total consideration finalized by the assessee for acquiring 50% share in one entity, M/s Jyothirmayee Estate was Rs. 41.75 crores which comprised of the settlement amount agreed with Shri R Satyanarayana comprising of principal of Rs. 15 crores and interest of Rs. 26.75 crores. Further, the AO also inferred that this settlement amount included payments made to different persons, representing different beneficiaries, each of whom who had invested Rs. 40 lacs each for Rs. 2 crores as advance vide sale agreement dated 18.10.2010. The AO thereafter, correlated the noting's found on Page 279 with that of Page 278, where a figure of Rs. 9.10 crores was mentioned, which according to AO, tallied with the amount of Rs. 9.10 crores paid across different dates by the assessee to Shri R Satyanarayana, and whose ledg....
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....e Estates and in the hands of others as discussed above after ascertaining their respective shares, in the hands of the assessee as unexplained investment for different financial years" 10. The assessee is noted to have not responded to the above show cause, for the reason that the AO neither provided the seized material or satisfaction note or copies of the relevant statements being relied upon by him. The AO accordingly proceeded to make the addition of Rs. 41.75 crores, as set out in his show cause and further added another sum of Rs. 10 crores, by way of cash commission paid in relation to this acquisition of stake in M/s Jyothirmayee Estate, by relying on the statement of Shri Balakrishnan Ramamoorthy. The AO is noted to have completed the assessment u/s 153C/143(3) of the Act vide order dated 30.09.2021 after making the aforesaid addition to the total income of the assessee. Overall, therefore, it is observed that, the basis of the impugned addition was primarily the statement of Shri Balakrishnan Ramamoorthy, basis which the AO had interpreted the rough scribblings found on loose sheets seized from the premises of Shri Javvaji Ramanjenyulu. 11. Being aggrieved by the o....
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....oes not constitute adequate evidence to draw any adverse inference against the Appellant, in the absence of any other corroborative evidence. This proposition has been laid down by the Hon'ble Delhi High Court in the case of CIT Vs Sant Lal [2020] 118 taxmann com 432 (Del), wherein it was held that "where a diary was seized in search of the premises of a third party allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from premises of assessee nor was it in handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary." 6.3.13 The ratio of the above decision is squarely applicable to the case of the Appellant, as the AO has not referred to any cogent evidence applicable to the case of the Appellant. In the present case, the AO has not referred to any cogent material to corroborate that the noting made in the loose sheet seized from a third party which are purportedly the transactions made by the Appellant and there is absolutely no mention in the seized material regarding the nature ....
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....changed 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: "In the present case on hand, except loose sheet found in the premises of third party and admission made by the third party in their assessment proceedings, there is no other evidence on record to prove that on money is paid. The assessing officer, without brought on record any evidence to prove that on money is exchanged between the parties, merely harping upon the loose sheet and the third party admission, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The AO is required to bring further evidence on record to show that actual on money is exchanged between the parties, but literally failed to do so. The A.O. did not conduct any independent enquiry relating to the value of the property instead, merely relied upon the statement given by the purchasers of the property, which is not correct. Further, there is no proof of origin and de....
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....rly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh (supra)". 6.3.19 As evident from the decisions cited above, the AO is not entitled to make a pure guess and make an assessment without reference to any evidence / material. It follows there, that no addition can be made unless there is corroborative evidence to validate the entries found in the material seized from a third party. 6.3.20 As discussed supra, the seized material relied upon by the AO, more particularly the loose sheet which was found and seized at third party premise when the same was not in the handwriting of the Appellant as well as the sellers of the land, obviously such loose sheets can only be in the nature of a dumb document. The AO cannot arrive at any conclusion based solely on the said material that the Appellant and her spouse have actually paid on-money payment for purchase of property. There is no corroborative evidence to prove that the payments noted in the seized material have actually materialised and transfer of money has actually taken place between the concerned parties. 6.3.21 The AO in the assessment order has relied upon the statement reco....
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....ls Ltd. v. CIT [2009] 182 Taxman 151 (Cal.), additions were made on the basis of some documents (correspondence) relating to a property transaction seized from the premises of a third party. The order was set aside as no opportunity of cross-examination of the connected parties, particularly when it was the case of the assessee that these documents were forged, was afforded. 6.3.25 In the case of Prakash Chand Nahta v. CIT [2008] 170 Taxman 520 (MP), it was held that no addition u/s 69 could be made based on the statement of a third party without affording opportunity of cross- examination of the adverse party. In this case, the assessee contended that the silver articles were purchased from 'R'. However, 'R' denied the transaction in his statement recorded behind the back of the assessee. The Assessing Officer made the addition without allowing cross- examination of 'R'. Copy of the statement of 'R' recorded was not provided to the assessee. The Assessing Officer also ignored the affidavit filed by the assessee. He solely relied on the statement of 'R' for the addition. The addition was deleted. 6.3.26 In the case of B. Ram....
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....y v. CIT [2013] 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held that a statement made u/s 132(4) of the Act is a piece of evidence but the same is not conclusive particularly because it is self-incriminating. Accordingly it was concluded that no liability could be fastened solely on the basis of sworn statement. In arriving at this decision, the Court followed the judgement in the case of Kailashben Manharlal Choski v. CIT [2010] 174 Taxmann 466( Guj) . 6.3.31 Further the Hon'ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v State of Kerala [1973] ITR 18 (SC) has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and further observed that it is open to the person who makes the admission to show that it is incorrect. At the outset it can be stated that where the admission is tied up with incriminating evidence found in the course of search, the principle laid down by the Apex Court will no longer hold good. Obviously, in the absence of evidence an admission can no longer be an evidence to support any addition. 6.3.32 In addition, the Apex Court in the case of Kasmira Sin....
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.... Ld. CIT(A) did not dispute the fact that the satisfaction note was recorded prior to issue of notice u/s 153C of the Act dated 25.01.2021 and therefore the same could not be held as defective. He further contended that the contents of the satisfaction note made it clear that, the noting's found in loose sheets ID marked ANN/NN/JR/LS/S contained entries which pertained or related to the assessee, and which was further corroborated by the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy and therefore, according to him, the Ld. CIT(A) was unjustified in holding the issuance of notice u/s 153C of the Act to be bad in law. 14. The Ld. AR, on the other hand, supported the order of Ld. CIT(A). He first invited our attention to the noting's found on loose sheets ID marked ANN/NN/JR/LS/S basis which the satisfaction note was recorded by the AO. He showed us that, these notings were rough scribblings, which did not contain any names, details of payer or payee or any other specifics, basis which a prudent person could suggest that it related to the assessee. He further invited our attention to provisions of Section 132(4) of the Act and argued that, the auth....
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....alakrishnan Ramamoorthy to be frivolous and that he had played fraud by cheating and committed criminal breach of trust to cause wrongful loss and that, there was no such agreement between the parties and also that, no such cash transactions had taken place between them. The Ld. AR argued that, even if the aforesaid decision of Hon'ble Madras High Court is kept aside for a moment, the fact that, there was dispute/litigation between the assessee and Shri Balakrishnan Ramamoorthy clearly showed that, Shri Balakrishnan Ramamoorthy was a biased person who has an axe to grind, according to him, would have on purpose, made false & frivolous statements against the assessee due to the animosity between them. He thus submitted that, this was a classic case where any person for that matter can mention anyone's name in relation to any loose paper / diary at their sweet will and which can be used to implicate such other person for no fault of the latter. He accordingly urged that, the impugned addition was unsustainable and that the Ld. CIT(A) had rightly deleted the same. 16. We have heard both the parties and perused the material on record placed before us. In the several grounds rais....
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....t. In other words, whenever an asset/document is found from a person who is being searched, the normal presumption is that the said asset/document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or 'satisfaction' that the asset/document in fact belongs/pertains/relates to somebody else (third party like assessee in this case). There must be some cogent material available with the Assessing Officer, which was unearthed during search, basis which he/she arrives at the satisfaction that, the contents of the seized asset/document does not relate to the searched person but to somebody else. Surmise and conjecture cannot take the place of 'satisfaction' and the same interpretation has been given by various courts. 19. In this context, we gainfully rely on the decision of the Hon'ble Apex Court in the case of CIT Vs Singhad Technical Education Society (397 ITR 344), wherein the Hon'ble Supreme Court upheld the decision of the Hon'ble Bombay High Court reported in 378 ITR 84 by observing that, unless and until the AO can establish document-wise (or asset wise) correlation between what has been seized ....
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.... the group assessee and all the discoveries of the search on Shri Navale and it concerns, will have to be taken into account while forming the satisfaction. The satisfaction note was very closely examined and the reasons assigned by the Assessing Officer were found to be silent about the assessment year in which specific incriminating information or unaccounted or undisclosed hidden information was discovered or seized by the revenue from the assessee. In the circumstances, the general satisfaction and as recorded in the note is not enough. The tribunal has found that with regard to cash and jewellery, the explanation of the assessee was that he had agricultural properties and derived agricultural income. That income was utilised to acquire jewellery that was belonging to him and his family. With regard to cash and stated to be recovered from the students for granting admissions, we do not find that any inquiries were made. There is absolutely nothing to indicate as to in which educational courses, the education is imparted and institution-wise. Whether the admissions are granted to the technical courses merit-wise or on the basis of marks obtained in XIIth standard HSC exam. If an....
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....hat notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy." (Emphasis supplied) 21. In the light of the above legal position, we now revert back to the facts of the present case. In order to test the validity of the jurisdiction of AO to legally usurp the jurisdiction u/s. 153C against a third party who has not been searched, we have to ascertain whether Assessing Officer satisfied the condition-precedent before issue of notice u/s. 153C of the Act, for which we need to examine the contents of the satisfaction note. 22. It has to be kept in mind that, when the challenge is to the validity of the satisfaction note which, the AO has recorded to assume jurisdiction, we have to examine the satisfaction recorded as it is. There are case laws which throws light in the context of examining the legal validity of Satisfaction recorded by the AO while re-opening the assessment u/s. 147 of the Act. It is settled law that reasons as recorded for reopening the reassessment are to be examined on a 'stand-alone' basis. Neither anything can be added to the reas....
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....that, the person (Shri Javvaji Ramanjenyulu) from whose possession and control these loose papers were found had initially explained these noting's to be relating to one M/s Bhavya Construction Co. and had also undertaken to correlate the noting's with their books of accounts and that in case of any discrepancy, he would offer the same to tax as his own undisclosed income. We therefore note that, the presumption laid down in Section 132(4A) of the Act that the documents found in the course of search shall be presumed to belong to the searched person, was reinforced by the searched person (Shri Javvaji Ramanjenyulu, in this case) in his deposition recorded u/s 132(4) of the Act dated 21.02.2019. At the cost of repetition, the relevant excerpts of the searched person from whose possession these loose sheets were found is reproduced hereunder: - " Q. No. 24 I am showing you loose sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing Principal along with interest workings and also certain amounts and also certain amounts show....
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....ess entities where I am either a partner or a director or has some business interest. The review of all the material together with sheets mentioned in this question does not even remotely corroborate to any kind of underlying transaction that can be assumed to have been undertaken by me or my family members. In other words, these loose sheets referred in this question remain an unrelated and irrelevant to my business or personal transactions. Thus the sheets should not be reckoned to have any relevance to me." (emphasis supplied) 25. From the above narrated facts, it is therefore observed that, not only were the noting's on loose sheets obscure in as much as it cannot be deduced whether they are receipt or payments, nor it can be concluded whether they are in relation to any particular transaction or, who were the payer or payee. Also, the searched person from whose possession these loose sheets were found was not able to explain the contents of the same properly. The decisive observation from the above narrated facts is that, neither the loose sheets nor the statement of searched person in any manner incriminated the assessee or was there any suggestion that the noting&#....
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....tioned herein as undisclosed income if I am not able to explain the same." 6.5.3 From the above deposition it is very clear that the seized material relied upon by the AO in recording the satisfaction note is defective in nature. It is a settled law that for initiating proceedings u/s.153C, recording of satisfaction note is mandatory and in the absence of the same, the entire proceedings would be void ab-initio. The same was held by the Hon'ble Supreme Court in the case of CIT vs. Calcutta Knitwears [2014] 362 ITR 673 (SC). Wherein the Hon'ble Apex Court had at paragraph 44 of its order held that; "44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person." 26. The Ld. CIT, DR before us laid much emphasis on the statement of Shri Balakrishnan Ramamoorthy and has contended that reading of his statement would demonstrate correlation between the noting's found in the loose sheets with the satisfaction drawn by the AO u/s 153C of the Act. Accordingly....
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....ent of Shri Balakrishnan Ramamoorthy did not carry any evidentiary value to correlate the noting's found in loose sheets ID marked ANN/NN/JR/LS/S qua the assessee so as to assume jurisdiction u/s 153C of the Act. Moreover, the statements of Shri Balakrishnan Ramamoorthy was evidently biased & unreliable, for reasons which we have discussed in detail (infra), and hence, the AO was unjustified in relying on such self-serving statement to draw his presumptuous inferences qua the seized material. 28. It is reiterated at this juncture that, to assume jurisdiction u/s 153C of the Act, the AO is required to demonstrate that, any 'books of account' or 'documents', seized or requisitioned, pertains or pertain to, or any information contained therein, relates to another person, apart from the person searched. Having regard to our above discussions, we are of considered view, that the 'loose papers' found from the premises of Shri Javvaji Ramanjenyulu (searched person) did not pertain to the assessee nor did the information contained therein relate to the assessee. Even the searched person, as noted above, had never stated so in his depositions dated 21.02.2019&....
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....t relating to the relevancy of facts; and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under :- "34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability." 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still....
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....so gainfully refer to the decision of the Hon'ble Supreme Court in the case of Common Cause (A Registered Society) Vs Union of India (394 ITR 220) wherein at paragraphs 278 to 282 of the judgment, it has been observed as under: "278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of "books of accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of entries in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and th....
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....lationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'. 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) "37. In Beni v. Bisan Dayal [AIR 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liab....
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....D marked ANN/NN/JR/LS/S and statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy. Before adverting to the contents of the noting's, which forms basis of the impugned addition, it is necessary to keep in mind that the presumption u/s 132(4A) of the Act regarding the contents of seized material is only against the searched person and not to any other third party, which is the assessee in the present case. Reason being that, if any noting's found in the seized material at third party premises is presumed to pertain to the assessee, at its face value, then any person for that matter can mention anyone's name in any loose paper / diary at their sweet will and that can be used to implicate such other person for no fault of the latter. Accordingly, an entry made in a diary or notebook by a third person with scant details cannot be used to fasten tax liability on the person, whose name appears therein, in the absence of corroborative evidence. Our view finds support in the decisions of the Hon'ble Supreme Court in the case of C.B.I. V. V.C. Shukla (supra)and Common Cause (A Registered Society) Vs Union of India (supra). 34. We also gainfully refer to t....
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....payee or particulars of any specific deal or transaction. There is absolutely no mention in the seized material regarding the nature of the said transaction of cash payments, the purpose of such payments and precise identity of the transaction. We therefore find it very strange to believe that these noting's relate to the assessee as it also does not contain any attestation from the assessee's side, being not having any name or seal of the assessee. No other incriminating evidence was found in the course of search conducted upon Shri Javvaji Ramanjenyulu which would correlate or justify these notings. The Ld. AR has rightly pointed out that, even in the earlier search conducted upon the assessee on 08.12.2016, no incriminating material was found to suggest that it had paid any cash for acquiring stake in M/s M/s Jyothirmayee Estate. Being so, we hold that, no credence can be given to these vague loose notings. In absence of any corroborative evidence to attribute the entries to the non-searched person i.e. the assessee. We find that, the Ld. CIT(A) had rightly treated these loose papers as dumb noting's having no evidentiary value in respect of entries found therein. Be....
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....ee Estate. Accordingly, he inferred that the balance noting's related to the out of books payments of Rs. 41.75 crores made to Shri R. Satyanarayana in relation to this acquisition. Later on, based solely on the statement of Shri Balakrishnan Ramamoorthy, the AO further assumed that the assessee had also paid cash commission of Rs. 10 crores for getting this deal facilitated, which led to the impugned addition of Rs. 51.75 crores [Rs. 41.75 crores + Rs. 10 crores]. 39. Having taken note of the above, we find that the entire exercise conducted by the AO to make the impugned addition on the basis of the noting's found in loose sheets was based on guesswork and conjectures. Clearly, the seized material showed vague figures presumed by the AO to be unaccounted transactions. These are unsigned documents and not supported by any corroborative material. Being so, the seized material relied by the AO for making the addition is not speaking one in itself and also not speaking in conjunction with some other evidence which the authorities found during the course of search or post search investigation. Thus, the well settled legal position is that a non-speaking document without any....
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....see on the basis of any diary seized during the course of search proceedings of a third party, since such diary was neither found at the assessee's premise and that the department had failed to provide any cogent material or gather any corroborative evidence to substantiate that it pertained to the assessee. The Court observed that the searched person could have written anyone's name on his own sweet will in his diary and therefore such noting on stand-alone basis along with the biased statement of the searched person cannot be used as a reliable evidence against the assessee. 42. For the above reasons, we therefore concur with the Ld. CIT(A) that the noting's found in loose papers from third party premises cannot be unilaterally used to make addition in hands of the assessee, and that the onus is on the Revenue to establish the veracity of the same with corroborative evidence by bringing cogent material on record, to back the same, which we find the Revenue has failed to do so, in the present case. 43. Now we come to the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy which was relied upon by the AO to justify the impugned addition. As not....
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....ust, they had stopped the cheque payments due to which, Shri B Ramamoorthy filed case under the Negotiable Instruments Act against the assessee raising frivolous claims. The Hon'ble High Court is noted to have categorically held that, there was no dealing in cash transactions and that the sum of Rs. 46 crores claimed to have been transacted in cash by Shri B Ramamoorthy was never agreed to be paid and that it was absolutely false, frivolous and baseless. Having regard to these observations of the Hon'ble Madras High Court, it is clear that the statements of Shri B Ramamoorthy is false having no credence. 45. In view of our above findings, we thus agree with the assessee that the statement of Shri B Ramamoorthy not only suffered from serious bias qua the assessee, but it was also riddled with discrepancies, fancy theories and sensationalized claims, and that his statement was not backed by any evidence or proof. Shri B Ramamoorthy is noted to have misrepresented the facts and had distorted the same in his deposition for prejudicing the mind of the authorized officer. It is apparent from the facts discussed above that the statement given by Shri B Ramamoorthy was tainted w....