TaxTMI 
TaxTMI 
2026 (5) TMI 176
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....see in ITA No.283/Hyd/2025 for the assessment year 2021-22 and the grounds of appeal are reproduced as under: "1. The order of the Ld. CIT(Appeals) is erroneous on the facts of the case and contrary to the provisions of law. 2) On the facts and circumstances of the case and in law, the assessment order u/s. 143(3) r.w.s 147 of the Income Tax Act ("Act") is void ab initio, as the re-assessment proceedings initiated by the issue of notice u/s. 148 without due compliance with the requirements of sections 148 and 148A is without jurisdiction and unsustainable in law. 3) On the facts and circumstances of the case and in law, the assessment order u/s. 143(3) r.w.s 147 of the Act is void ab initio, as the prior approval for the issue of notice u/s. 148 was accorded by the specified authority u/s. 151 in a mechanical manner without proper application of mind. 4) On the facts and circumstances of the case and in law, the assessment order u/s. 143(3) r.w.s 147 is unsustainable in law, since the approval u/s. 148B has been accorded by the Range Head in a mechanical manner without proper application of mind. 5) On the facts and circumstances of the ....
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....arat Kumar Kondreddy, spouse of one of the partners of the appellant firm, had made on-money payments in cash for acquisition of immovable property by the appellant firm. 12). Any other legal or factual grounds that may be urged at the time of hearing of the appeal." 3. The brief facts of the case are that, the assessee is a partnership firm engaged in the business of real estate and filed its return of income for the assessment year 2020-21 declaring total income of Rs. 6,91,660/-. Subsequently, a search and seizure operation under section 132 of the Income Tax Act, 1961 (for short "the Act") was conducted in the case of M/s. Vamsiram Group and other related parties on 06.12.2022 and as a part of the said search proceedings, survey action under section 133A of the Act was also carried out in the case of the assessee. During the course of search and post-search investigation in the case of M/s. Vamsiram Group, incriminating material in the form of loose sheets, diary and digital data in pen drives was found and seized, which contained details of various cash transactions relating to different persons, including certain entries in the name of the assessee firm. 4. Bas....
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....A.O., however, was not convinced with the explanation furnished by the assessee and according to the A.O., the incriminating material found during the course of search clearly established that the assessee had made cash payments towards purchase of commercial property, which were not recorded in the regular books of account. The A.O. further observed that the entries found in the seized material, coupled with the statements recorded from the employees of M/s. Vamsiram Group, clearly indicate that the transactions were recorded by suppressing the last two digits and therefore, the actual amount of cash payments has to be computed by adding two zeros to the figures recorded in the seized documents. Accordingly, the A.O. treated the amount of Rs. 3,00,00,000/- as unexplained money under section 69 of the Act, and added the same to the total income of the assessee. 6. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee filed detailed written submissions and challenged both the validity of reassessment proceedings as well as the addition made towards unexplained money. The assessee submitted that the reassessm....
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....tries found in the seized material contain specific details such as date, particulars and amounts of transactions and therefore, the same cannot be considered as dumb documents without evidentiary value. The Ld. CIT(A) was of the view that the seized material clearly establishes that the assessee had made cash payments towards purchase of commercial property and merely because the documents were found from the premises of a third party, the evidentiary value of such documents cannot be ignored, especially when the entries contained therein specifically refer to the assessee. The Ld. CIT(A) further observed that the assessee has failed to satisfactorily explain the entries recorded in the seized material and also failed to discharge the onus cast upon it to rebut the findings of the A.O. The Ld. CIT(A), after considering the facts and circumstances of the case, upheld the action of the A.O. in treating the amount of Rs. 3,00,00,000/- as unexplained money under section 69 of the Act and sustained the addition made in the assessment order. Thus, the Ld. CIT(A) rejected the contentions of the assessee both on the issue of validity of reassessment proceedings as well as on merits of the....
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....a Upadhyay (R/Tax Appeal No.98 of 2020 and others dated 25.02.2020). The Ld. counsel for the assessee also relied on the following decisions : 1. SMC Share Brokers Ltd. Vs. DCIT reported in (2008) 22 SOT 7 (ITAT Delhi) 2. Prarthana Constructions (P) Ltd. Vs. DCIT reported in (2001) 118 Taxman 112 (ITAT Ahmedabad). 3. Straptex (India) (P) Ltd. Vs. DCIT reported in [2003] 84 ITD 320 (ITAT Mumbai) 4. Vinit Ranawat Vs. ACIT reported in [2017] 88 taxmann.com 428 (ITAT Pune) 5. Harmohinder Kaur Vs. DCIT reported in [2021] 124 taxmann.com 68 (ITAT Amritsar) 6. ACIT Vs. Kishore Lal Balwani Rai reported in [2007] 17 SOT 380 (ITAT Chandigarh) 7. Rama Traders Vs. First ITO reported in [1998] 25 ITO 599 (ITAT Patna) (TM) 8. Sheth Akshay Pushpavadan Vs. Dy. CIT reported in [2010] 130 TTJ 42 (ITAT Ahmedabad UO) 9. Jai Kumar Jain Vs. ACIT reported in (2007) 11 SOT 61 (ITAT Jaipur) (URO) 14. The Ld. counsel for the assessee firm further submitted that, the A.O. has relied upon the pen drive and the diary found from the premises of M/s. Vamsiram Group. The assessee firm denied the transactions recorded by the third ....
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....ssessee firm further submitted that, the additions made by the A.O. towards unexplained cash payments are purely on the basis of documents found in the premises of M/s. Vamsiram Group. The assessee firm has already disowned the documents found in the premises of M/s. Vamsiram Group, because the above documents are not in the handwriting of the assessee firm. Further, there is no corroborative evidence available with the A.O. for actual cash payments between the assessee firm and M/s. Vamsiram Group. In the absence of any corroborative evidence for actual cash transactions between the assessee firm and M/s. Vamsiram Group, the allegation of the A.O. on the basis of oral statements of two individuals (though subsequently retracted) is merely on the basis of suspicion and surmises without there being any conclusive evidence of payment of cash. Since the additions made by the A.O. are without any corroborative evidence, the same cannot be sustained. The Ld. CIT(A), without appreciating the relevant facts, simply on the basis of evidence found from the premises of third party and statements of accounting personnel of M/s. Vamsiram Group Builders, has concluded that there is clear eviden....
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....rvey under section 133A of the Act, nothing was found or impounded from the premises of the assessee firm, which relates to the additions made by the A.O. towards unexplained cash payments. The A.O. made additions towards cash payments by adding two zeros to the amounts recorded in the diary on the basis of statements recorded from Shri A. Chandrasekhar and Shri Regu Venkata Vara Prasad, wherein they have deposed that the entries in the diary were recorded by truncating last two zeros. According to the A.O., M/s. Vamsiram Group indulged in cash transactions and the same has been recorded by truncating last two zeros and therefore, the amounts recorded in the incriminating evidence have been arrived at by adding two zeros. The A.O. inferred that the assessee firm has paid on-money for purchase of commercial space from M/s. Vamsiram Group. Therefore, the entire amount of cash payments culled out from the seized diary has been treated as unexplained cash payments of the assessee firm and added back to the total income. On appeal, the Ld. CIT(A) accepted the reasons given by the A.O. to treat the unexplained cash payments. 17. We have gone through the relevant arguments of the learn....
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....khar Atla and Shri Regu Venkata Vara Prasad, who during the course of search recorded statements under section 132(4) of the Act, wherein they deposed that the entries contained in the diary have been recorded by truncating last two zeros. The A.O., on the basis of statements recorded from two individuals, has reached a conclusion that the entries in the diary have been recorded by truncating last two zeros and accordingly added two zeros to the amounts recorded therein and arrived at total cash payments alleged to have been made by the assessee firm to M/s. Vamsiram Group Builders. Once again, we do not subscribe to the reasons given by the A.O. for the simple reason that, the loose sheets found during the course of search from third party premises were neither in the handwriting of the assessee firm nor containing any signature of the assessee firm. Once the documents are neither in the handwriting of the assessee firm nor bearing any signature of the assessee firm, then on the basis of third party statements without any confrontation to the assessee firm for its rebuttal, the additions cannot be made. In the present case, no such corroborative documentary evidence by way of sign....
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.... the assessee firm. Therefore, in our considered view, in the absence of any corroborative evidence and merely on the basis of statements of two individuals, additions cannot be made. 19. We further note that, the maker of the statement is answerable to the contents, however, unless the said documents are found in the premises of the assessee firm, the assessee firm need not to explain the said documents and is also not answerable to the statements of third parties. In the present case, neither the A.O. has brought on record any corroborative evidence to support the statements of the third parties nor confronted the said statements of the third party to the assessee firm for its rebuttal. Since the assessee firm denied any cash payments to M/s. Vamsiram Group and further, the A.O. does not have any evidence to support the finding that the entries contained in the diary represent unaccounted cash payments of the assessee firm, in our considered view, merely on the basis of statements of third parties, no addition can be made. This legal position has been laid down by the Hon'ble Delhi High Court in the case of CIT Vs. Sant Lal (supra) wherein it has been held that where the diary....
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....a), wherein it was held that the addition made under section 69C of the Act, towards cash payments based on the contents of seized documents is not sustainable where there is no material to conclusively show that huge amounts revealed from seized documents were actually transferred from one side to another. This decision was further fortified by the decision of the Hon'ble Supreme Court in the case of Pr. Commissioner of Income-tax Vs. Krutika Land (P.) Ltd. reported in [2019] 103 taxmann.com 9 (SC). The ITAT, Visakhapatnam in the case of P. Koteswara Rao Vs. DCIT (supra) has also considered an identical issue and held that the maker of a statement can bind himself with the said statement, but it cannot bind others without there being any further evidence on record. The Tribunal further noted that, the A.O. failed to note that admission of other parties cannot be considered as conclusive evidence against the assessee unless there is corroborative evidence on record. In the present case, the addition made by the A.O. is only on the basis of loose sheets found during the course of search from the premises of a third party without any corroborative evidence. The assessee firm denied t....