TaxTMI 
TaxTMI 
2025 (2) TMI 1411
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....e cases are identical, all these appeals and COs are disposed of by way of this consolidated order. Facts of the case: 2. A search operation was conducted in the case of Venus Group on 10-03-2015, during which certain loose papers and an unaccounted cash book were seized. Based on these documents, the Assessing Officer reopened the assessments under section 147 of the Act by issuing notices under section 148 of the Act, alleging that the assessees had received unaccounted cash through accommodation entries. In response to the reassessment notices, the assessees reiterated their originally declared income and denied any involvement in unaccounted cash transactions. The AO, relying on the seized material, made additions under section 69A of the Act, treating the amounts as unexplained money. The CIT(A), upon appeal, deleted the additions. Details of the facts are tabulated as follows: Particulars Shri Vighnaharta Realty Pvt. Ltd. Shiv Ganga Properties Pvt. Ltd. Return Filing Date (Original Return) Original return was not filed as mentioned by the AO in his order 22/08/2012 Total Income Declared in Original Return Rs. Nil Rs. Nil Date of Search Acti....
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....found during the course of search and relied upon by the AO for making addition in appellant's case are dumb documents as they do not contain the name or address of the appellant, they do not contain initials of the appellant, they are not in the handwriting of the concerned persons of the appellant company, they state that they are estimate' and AO has not brought anything on record that persons in whose premises search is conducted have stated that the documents are related to the appellant. No statement of any concerned person or any other corroborate evidences regarding payment in cash have been referred while making impugned addition. It is abundantly clear from the facts narrated hereinabove that the documents relied upon by the AO do not lead us to the conclusion reached by the AO" and the Ld. CIT(A) has rightly deleted the addition of Rs. 12,35,00,000/- made by the AO on account of undisclosed income u/s. 69A of the Act. 2. Your Respondent craves right to add, amend, alter, modify, substitute, delete or modify all or any of the above grounds of cross objection." Assessee's CO No.108/Ahd/2019 (in ITA No.2112/Ahd/2018) - AY 2012-13 - Shivganga Property Hol....
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....facts in failing to properly appreciating the written submission of the appellant company and various judicial pronouncements relied upon by the appellant company thereto. 3. Such and further relief as the nature and circumstances of the case may justify. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing." Assessee's appeal in ITA No.2206/Ahd/2018 - Shivganga Property Holders Pvt.Ltd. vs. ITO. "1. The Ld. CIT (A) has grossly erred in law and on facts in allowing the appeal partly. He ought to have allowed the appeal fully in accordance with the grounds of appeal raised by the appellant before him. I. LACK OF JURISDCITION:- The entire proceedings are invalid and ex facie bad in law as the same are not supported by ingredients of the statutory provisions under which initiation of proceedings is done. Hence all subsequent proceedings in furtherance to illegal initiation of proceedings are mere continuation of illegality in perpetuity. II. CHALLENING THE VALIDITY OF ISSUANCE OF NOTICE U/S, 148 OF THE ACT AND REOPENING THE ASSESSMENT U/S. 1....
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....onduct any independent verification or obtain corroborative evidence linking the alleged transactions to the assessee. Additionally, the assessee asserts that its written submissions and judicial precedents were not properly considered, leading to an incorrect legal conclusion. 6. During the hearing before us, the Authorized Representative (AR) of the assessee contended that the AO has wrongly invoked reassessment proceedings under section 147 of the Act by issuing a notice under section 148 of the Act, instead of initiating proceedings under section 153C of the Act, which specifically governs cases where incriminating material is found during a search on a third party. The AR argued that the AO's reliance on entries related to Greenstone Agro Product and Infrastructure Pvt. Ltd. (Greenstone) and Sanjeet Motor Finance Ltd. (SMFL), as recorded in the reasons for reopening, does not justify the invocation of section 147 of the Act and renders the reassessment proceedings void ab initio. The AR stated that the AO relied on handwritten notations and loose papers found at the premises of Venus Group, which allegedly reflected unaccounted cash transactions. The AR further stated that ....
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....h Court in the case of Saloni Prakash Kumar vs. Income-tax Officer reported at [2023] 458 ITR 452, which deals with the applicability of Section 153C vs. Section 148A of the Act in reassessment cases. 8. We have carefully considered the grounds raised by the assessee, the arguments advanced by both parties, and the judicial precedents relied upon. The primary contention of the assessee is that proceedings should have been initiated under section 153C of the Act instead of section 147 of the Act, as the material relied upon by the AO originated from a search on a third party. The assessee has placed reliance on the decision of the Hon'ble Supreme Court in the case of ITO vs. Vikram Sujitkumar Bhatia (supra), which held that when documents "pertain" to a person other than the searched person, proceedings must be initiated under Section 153C of the act and not under Section 147 of the Act. Further, reliance was placed on the decision of this Bench in the case of Sai Krupa Developers vs. ACIT (ITA No. 248/Ahd/2023), where the Tribunal quashed reassessment proceedings under Section 147 of the Act, holding that when seized material directly relates to another assessee, Section 153C of....
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.... provision does not override the power of reassessment under Section 147, provided the AO has independently applied his mind and formed a reason to believe that income has escaped assessment. 8.2. The Hon'ble Madras High Court in the case of Saloni Prakash Kumar (supra) held that Section 153C of the Act is merely an enabling provision that allows the issuance of notice notwithstanding the provisions of Sections 139, 147, 148 of the Act, etc. However, it does not preclude the department from reopening an assessment under Section 148A(b) of the Act for the purpose of completing the assessment under Section 147. The Revenue relied on this ruling to support the validity of reassessment proceedings under Section 147 of the Act, asserting that even if third-party material is involved, the AO is not restricted to using only Section 153C of the Act and can proceed under Section 147 of the Act if independent satisfaction is recorded. The judicial principle laid down by the Hon'ble court directly supports the view taken by the CIT(A) and the AO, affirming that the notice under Section 148 was validly issued. 8.3. We are of the opinion that the presence of a specific provision gover....
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....e has challenged the deletion of the addition under Section 69A by the CIT(A), arguing that the seized documents clearly indicate unaccounted cash transactions linked to the assessee. It is contended that the AO had valid grounds to treat the documents as evidence of undisclosed income, as they correlated with entities connected to the assessee. The Revenue further asserts that the CIT(A) erred in treating the seized documents as 'dumb documents' despite their references to financial dealings. On the other hand, the assessee, in its cross-objection, supports the deletion of the addition, arguing that the seized documents neither bore its name nor were corroborated with independent evidence. 8.5. The seized documents, as detailed in the AO's order, primarily consist of handwritten notations and loose sheets found during the search conducted at the premises of Venus Group. These documents contained coded references to financial transactions allegedly representing unaccounted cash dealings. The AO observed that these notations correlated with transactions involving Greenstone and SMFL. The AO's analysis linked the entries in the seized documents to financial activit....
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.... despite its repeated demand, it was not granted the opportunity to cross-examine the directors of the lender companies or the key persons of Venus Group, whose statements, if any, had been relied upon by the AO. In support of this contention, the assessee placed reliance on the decision of the Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata - II [(2015) 62 taxmann.com 3 (SC)] and some other judicial precedents including the decisions of the Hon'ble Gujarat High Court in the case of CIT vs. Ramanbhai B. Patel (Tax Appeal No. 207 to 210 of 2008), wherein it was held that any addition made without affording the assessee the right to cross-examine the persons whose statements have been relied upon violates the principles of natural justice and is unsustainable in law. It was also held that failure to provide crossexamination renders any addition legally unsustainable. 8.7. The CIT(A), after considering the submissions of the assessee, deleted the addition. The CIT(A) found that the seized documents did not bear the assessee's name, signature, or any direct linkage to the assessee. CIT(A) also found that the entries reli....
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....to the assessee. The CIT(A) highlighted that the AO had incorrectly linked the figures in the seized documents with the assessee's transactions. The CIT(A) observed that no effort was made by the AO to explain how the handwritten entries were decoded to establish their linkage with the assessee. The CIT(A) also highlighted that the AO had incorrectly linked the figures in the seized documents with the assessee's transactions. The CIT(A) observed that no effort was made by the AO to explain how the handwritten entries were decoded to establish their linkage with the assessee. The CIT(A) also found that no independent statement or submission from Venus Group or any other concerned party confirmed the authenticity of the notations and the AO failed to establish that these were actual cash transactions undertaken by the assessee. 11.2. The CIT(A) held that loose sheets found in third-party premises, without further corroboration, could not be relied upon for making additions under Section 69A of the Act. Reliance was placed on various judicial precedents including that of jurisdictional high court where it was held that loose sheets and unverified documents, without independent corr....