TaxTMI 
TaxTMI 
2026 (4) TMI 1541
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....ad a bearing on the determination of total income of the assessee for the year under consideration. The Revenue has also specifically assailed the finding of the Ld. CIT(A) in not accepting the Department's case that the person denoted by the code name "DD" in the notings appearing in the handwritten diaries and notebooks seized from the residence of Shri Jiten Pujari was none other than the present assessee, and in not appreciating the digital material allegedly found from the mobile phone of Shri Ratankant Sharma, including the contact saved as "DD Personal" and the mobile numbers 9112299971 and 9850051222, which according to the Department were attributable to the assessee. The Revenue has further challenged the conclusion of the Ld. CIT(A) that the alleged cash transactions of Rs.32,14,50,000 recorded in the seized diaries and digital examination of mobile phones of Shri Jiten Pujari and Shri Ratankant Sharma could not be treated as unexplained investment of the assessee. 2. The Revenue has thus raised the following grounds of appeal: "1. Whether on the facts and circumstances of the case and in law, the Ld CIT(A) erred in quashing the notice issued u/s 153C of the ....
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....ourse of hearing, the Ld. Authorised Representative submitted that the assessee had unfortunately expired in a plane crash on 28.01.2026 and, vide letter dated 03.02.2026, death certificate was placed on record with a request that his wife, Mrs. Sunetra Ajit Pawar, be brought on record as legal heir. It was also fairly stated that the grounds raised under Rule 27 were not being pressed. Accordingly, the legal heir was taken on record and the Rule 27 grounds were treated as not pressed. 4. We have heard the rival submissions of both the parties at considerable length, perused the orders of the lower authorities, and carefully examined the material placed before us. The Ld. CIT-DR, assailing the order of the Ld. CIT(A) in toto, submitted that the first appellate authority has committed a serious error in quashing the proceedings under section 153C and the assessment framed thereunder without examining the merits of the additions. According to him, once the appeal had been admitted and argued on all aspects, the Ld. CIT(A) ought to have adjudicated the additions made under sections 69, 69A or 69C, instead of restricting the decision only to the jurisdictional issue. It was submitte....
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....ti". Further, certain WhatsApp chats contained references to "Dada", which, according to the Department, is a name commonly associated with the assessee in his political and social circles. It was contended that the digital ledgers and the handwritten diaries contained matching entries and corresponding transaction figures, and when all these pieces are read together, they form a coherent evidentiary mosaic pointing unmistakably towards the assessee. The Revenue thus submitted that the Ld. CIT(A) erred in isolating each circumstance instead of appreciating the cumulative evidentiary effect. 8. The Ld. CIT-DR further relied upon the statements recorded from persons connected with Triton Group, including Shri Jiten Pujari, Shri Ratankant Sharma, and Shri Shivshankar Sharma. According to him, even if some of these statements were guarded or evasive, none of them conclusively demolished the Department's inference. It was submitted that Shri Jiten Pujari himself acknowledged that "DD" was a distinctive code used in the diaries for recording transactions involving large sums of money, and the absence of an explicit admission that it referred to the assessee would not be decisive again....
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....at the very foundation for initiation of proceedings under section 153C was absent in the present case. It was argued that section 153C mandates that the Assessing Officer must be satisfied that any money, bullion, jewellery, valuable article, books of account, or documents seized during the course of search either belong to or relate to a person other than the searched person, and further that the same have a bearing on the determination of total income of such other person. According to the assessee, neither of these conditions stood satisfied here. 12. The Ld. Counsel submitted that the documents seized during the search were loose diaries and notebooks found from the residence and possession of Shri Jiten Pujari. The assessee was neither the author of those documents nor their custodian, and admittedly his name did not appear anywhere therein. The entire action of the Assessing Officer rested only on the surmise that the abbreviation "DD" used in the diaries referred to the assessee. It was urged that such assumption is wholly speculative and legally impermissible, for the statute requires demonstrable and discernible nexus, not inferential guesswork. It was further submitte....
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....connect the assessee with the alleged transactions through a contact stored as "DD Personal" and through information obtained from the Truecaller application. It was argued that a publicly editable and crowd-sourced application cannot constitute legally admissible or reliable evidence in a quasi judicial proceeding, especially where the seized material itself does not contain the assessee's name or any identifying detail. It was also pointed out that Shri Ratankant Sharma, when examined, acknowledged knowing the assessee but categorically denied having any business relationship with him. Thus, instead of corroborating the Department's case, the oral evidence actually weakened it. 16. Another plank of the assessee's argument was founded upon the statutory presumptions under sections 132(4A) and 292C. According to the assessee, such presumptions are available only against the person from whose possession the documents are found, namely Shri Jiten Pujari, and cannot automatically be extended to a third party like the assessee. The law, according to the assessee, does not require a person to prove a negative fact, namely, to disprove connection with a document which neither names hi....
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.... assessee challenged both the initiation of proceedings under section 153C as well as the addition made on merits. It was contended that the seized documents were not found from the possession or control of the assessee, that his name did not appear anywhere in the seized diaries or notebooks, and that the mere use of the initials "DD" could not legally or factually justify attribution to him. It was specifically argued that Shri Jiten Pujari, from whose possession the diaries had been seized, had himself stated during search proceedings that "DD" was only a code used for recording high value transactions and that such entries were made on the instructions of another person in the Triton Group. It was thus contended that the conditions necessary for invoking section 153C were absent since the seized material neither belonged to nor demonstrably related to the assessee. 21. The Ld. CIT(A), after carefully examining the assessment order, the satisfaction note, the seized material relied upon by the Department, and the detailed submissions of the assessee, came to the conclusion that the proceedings initiated under section 153C were not legally sustainable. The first appellate auth....
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....is handwriting, any presumption could, if at all, operate only against him and not against the present assessee, from whose possession no such material had been found. The appellate authority further noticed that, for valid assumption of jurisdiction under section 153C, two conditions are indispensable: first, the seized documents must either belong to the other person or contain information that clearly relates to such person; and secondly, the Assessing Officer must be satisfied that such documents or information have a bearing on determination of total income of such person. On the facts of the case, he held that neither of these requirements stood satisfied, for the identity of "DD" had not been conclusively established, nor was there any material to demonstrate that the entries represented transactions carried out by or on behalf of the assessee. 24. The Ld. CIT(A) also found that the satisfaction note recorded by the Assessing Officer lacked any independent reasoning establishing the connection between the assessee and the seized documents and that substantial portions thereof appeared to be reproduced mechanically from the satisfaction note recorded in the case of the sea....
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....o the transaction entries appearing in the seized documents. Thus, the primary evidentiary link itself is conspicuously absent. 26. The action of the Assessing Officer in correlating the word "DD" with a contact saved in the personal phone of Shri Ratankant Sharma and then connecting it to the database in the "Truecaller" application appears to us to be highly tenuous and far-fetched. Such an inferential bridge, unsupported by direct evidence, is too fragile a foundation on which either jurisdiction under section 153C or an addition of Rs.32.14 crores can rest. One cannot lose sight of the fact that the law on this issue is fairly well settled that third-party loose sheets, unsigned digital data, or uncorroborated documents cannot be used as evidence against an assessee unless supported by independent and credible evidence, and unless, where relied upon through statements, due opportunity including cross-examination is made available. Here, none of the entries in the seized material could be correlated with the books of account of the assessee, nor was any independent material brought on record to connect the alleged cash notings with the assessee's financial affairs. 27. We ....
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....e, whatever presumption may arise, it arises qua the person from whose possession the documents were found, and cannot automatically be transposed onto the present assessee. 30. In Central Bureau of Investigation v. V.C. Shukla reported in (1998) 3 SCC 410, popularly known as the Jain Hawala Diaries case, the Hon'ble Supreme Court examined the evidentiary worth of entries in books and loose sheets under section 34 of the Evidence Act. The Court held that while entries in books of account may be admissible, loose sheets or loose papers are not "books" and therefore entries contained in such loose papers do not enjoy the same evidentiary status. Even where entries in books are admissible, their truthfulness still requires independent corroboration. The Court ultimately held that the truth of the entries in the Jain Hawala Diaries was not established by independent evidence. Similar observations were made by the Hon'ble Supreme Court in Common Cause v. Union of India reported in 394 ITR 220, where the Court held that loose papers do not possess evidentiary value sufficient to sustain adverse action against persons named or allegedly referred to therein. The ratio of these judgments....