TaxTMI 
TaxTMI 
2026 (5) TMI 1201
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.... passed by the Assessing Officer is barred by limitation as per the Provisions of Section 153 of Income Tax Act. 4. On the facts and circumstance of the case and in law, Learned CIT(A) is not justified in sustaining the addition of Rs. 287,00,00,000/- under section 56(2)(x) of the Act. 5. On the facts and circumstance of the case and in law, the addition made by the AO which was sustained by Learned CIT(A) is not justified without observing the fact that whether to treat the pen drive as admissible evidence the certificate under section 65B of the evidence act shall reflect the conditions prescribed under section 65B. 6. On the facts and circumstance of the case and in law, Learned CIT(A) is not justified in sustaining the addition made by the AO without observing the fact that data relied upon is found in the premises and possession of third party without Corroborative evidence. 7. On the facts and circumstance of the case and in law, Learned CIT(A) is not justified in sustaining the addition under Section 56(2)(x) as the appellant has not sold any land for which the alleged consideration has been received as suspected by revenue authorities. ....
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....the Assessee has stated at Bar that the assessee does not press ground no.2 and the same may be dismissed as not pressed. 6. On the other hand, the learned DR has no objection if ground no.2 of assessee's appeal is dismissed as not pressed. 7. We, therefore, dismiss ground no.2 of assessee's appeal being not pressed. 8. Ground no.3 the assessee has challenged the validity of assessment order passed by the Assessing Officer being barred by limitation as provided u/sec. 153 of the Act. 9. The assessee is an individual and filed the return of income for the year under consideration on 30.12.2022 admitting total income of Rs. 2,01,70,360/-. There was a search and seizure operation u/sec. 132 of the Act carried out on 31.10.2022 in the case of the assessee. The case of the assessee was selected for scrutiny under "Compulsory Manual Selection" by issuing a notice u/sec. 143(2) of the Act on 28.06.2023. The Assessing Officer has completed the assessment u/sec. 143(3) of the Act on 27.09.2024 at a total income of Rs. 289,01,70,360/-. The assessee challenged the assessment order by filing an appeal before the learned CIT(A) but could not succeed. 10. Before the Tribunal, the ....
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....the Assessee has submitted that the assessment order passed by the Assessing Officer on 27.09.2024 is invalid being barred by limitation and liable to be set aside. In support of his contention, he has relied upon the decision of this Tribunal dated 18.02.2026 in case of Shri Srinivasa Reddy Yeturu, Hyderabad vs. DCIT, Central Circle-1(2), Hyderabad in ITA.No.1898/Hyd./2025 and submitted that on identical facts arising from the same search and seizure action, the Tribunal has decided this issue in favour of the assessee and against the Revenue. 11. On the other hand, the learned DR has submitted that the language of sec. 153 read with Clause-(xii) of Explanation-1 contemplates the exclusion of the time period wasted in receiving the books of account or seized material by the Assessing Officer up to 180 days. Therefore, the exclusion period up to 180 days has to be calculated from the date of search till the receipt of books of account/seized material. He has relied upon the Orders of the authorities below. 12. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee was subjected to search and seizure action u/sec.....
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....the limitation after exclusion of the time period lost in receiving the books of account/seized material will reckoned from the date when the Assessing Officer has received the books of account subject to the condition that the said period cannot be more than 180 days. In the case in hand, the books of account were received on 11.05.2023 and therefore, only 41 days were lost by the Assessing Officer out of the limitation period of 12 months reckoning from 01.04.2023 and ending on 31.03.2024. Thus, after giving the benefit of Clause-(xii) of Explanation-1 to sec. 153 of the Act, if the clear 12 months period is available with the Assessing Officer reckoning from 11.05.2023 then, the limitation will expire will expire on 11.05.2024. In other words, if 41 days are excluded from the limitation period reckoning from 01.04.2023 then, the clear 12 months limitation would expire on 11.05.2024. Even otherwise Clause-(xii) of Explanation-1 to sec. 153 compensate the time period lost by Assessing Officer in recovery of books of account or other seized material and not to provide more than 12 months after receiving the seized material. An identical issue has been considered by this Tribun....
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....e Act, it is not an extension of limitation provided for completion of assessment, but it is only exclusion of time taken by the A.O of the searched person which was lost by the A.O of the assessee for assessing the income of the assessee up to a maximum of 180 days. Therefore, while computing the limitation period, the period of 180 days starting from the date of search to ending on the date of handing over books of accounts should be excluded for computing period of limitation. Therefore, in our considered view, if the time taken by the A.O of the searched person covered during the limitation period, then the entire time taken by the A.O for handing over the books of account not exceeding 180 days can be excluded. In case, the time taken by the A.O for handing over the seized material partially goes under the limitation period and partially goes under the other financial year or non-limitation period, then only the time lapsed by the A.O during the limitation period alone should be excluded, because clause (xii) of explanation (1) to section 153 of the Act is only excludes the period taken by the A.O for handing over the books of account but, it shall not extend the period up to ....
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....is conducted on 25/03/2023 and the books of account are handed over on 30/09/2023, then the period not exceeding 180 days shall be excluded, because the entire period is covered under limitation period for the Assessment. Year 2022-23. However, in a situation like in the present case, if search is initiated on 4/1/2023 and the books of accounts are handed over on 22/08/2023, although the A.O had taken more than 180 days for handing over the books of accounts, but in view of clause (xii) of explanation (1) of section 153, the period not exceeding 180 days shall be excluded for the purpose of computing the limitation period. However, the fact remains that, in the present case, the period taken by the AO for handing over books of account is covered in two financial years, i.e. (1) from 4-1-2023 to 31-03-2023 in financial year 2022-23 and (ii) the period from 1-4-2023 to 22-08-2023 in financial year 2023-24. Further, in the present case, for the Assessment. Year 2022-23, limitation period starts from 1-4-2023. The time taken by the AO for handing over books of accounts to the AO of the assessee starting from 4/1/2023 to 31/03/2023 is not included in the above limitation period. Since, ....
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....ication of fact and interpretation of law. The evidences which was relied upon by the Assessing Officer was discovered during the course of search of the premises of M/s. Phoenix and M/s. Sreenidhi Group on 23.08.2022. Further even the notings in the said material which is an excel sheet saved in a pendrive and two registers maintained by these third parties found and seized from the custody of the employees of these third parties reflecting the transactions relating to these third parties. Therefore, the excel sheet found and seized during the search and seizure action of the third parties as well as from the possession of the third parties cannot be regarded as an incriminating material for making an addition in the hand of the assessee as the assessee was neither a signatory of the seized material nor the same was prepared by the assessee or acknowledged any transaction of alleged cash receipt by the assessee. The learned Authorised Representative of the Assessee has thus contended that the entries made unilaterally by third party in the excel sheet/loose sheet without the knowledge of the assessee or without authentication of the assessee, has no evidentiary value in the case o....
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.... 109 taxmann.com 388 (Patna-HC); ii. Order of ITAT, Ahmedabad in the case of Sheth Akshay Pushpavadan vs. DCIT [2010] 130 TTJ 42 (Ahmedabad-Tribu.); 14. The learned Authorised Representative of the Assessee has further contended that the provisions of sec. 132(4A) r.w.s.292C of the Act are not applicable in respect of the said seized documents in relation to the assessee because the said document was not found and seized from the possession of the assessee but it was seized during the course of a separate search in the case of third party. Therefore, no presumption can be raised that the seized documents belongs to the assessee under the provisions of sec. 132(4A) r.w.s.292C of the Act. In support of his contention, he has relied upon the Judgment of Hon'ble Gujarat High Court in the case of Pr. CIT, Surat-1 vs. Gaurang Bhai Pramod Chandra Upadhyay in R/Tax Appeal No.98 of 2020 with R/Tax Appeal Nos.100,103 and 104 of 2020, dated 25.02.2020. He has also relied upon Judgment of Hon'ble Patna High Court in the case of Dharmaraj Prasad Bibhuti vs. ITAT, Patna [2019] 109 taxmann.com 388 (Patna-HC) and submitted that presumption u/sec. 292C can be drawn only on such person f....
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....e witness wherein the witness has denied any transaction or cash payment to the assessee. Though the search was conducted in the case of the assessee on 31.10.2022 however, neither any undisclosed cash nor any unaccounted investment or unaccounted assets were found during the search and seizure action in the case of the assessee. Thus, the addition made by the Assessing Officer based on the inadmissible evidence militates the facts of any undisclosed cash or unaccounted investment detected during the search in the case of the assessee. Thus, the learned Authorised Representative of the Assessee has submitted that the provisions of sec. 56(2)(x) are not attracted in the facts and circumstances of the case when the transaction itself is not proved and disputed by the assessee. He has relied upon the decision of ITAT, Visakhapatnam in the case of P Koteswara Rao vs. DCIT, Central Circle in ITA.Nos.251 and 252/ Viz./2012 and submitted that the Tribunal has passed the said order by relying on earlier decision of ITAT, Hyderabad Bench in the case of K.V. Lakshmi Savitri Devi vs. ACIT [2012] 148 TTJ 157 which has been affirmed by the Hon'ble Andhra Pradesh High Court in ITTA No.563 of 201....
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....n 23.08.2022. The relevant facts and findings recorded by the Assessing Officer in Para nos.6.6 to 8.3 are as under: "6.6. All the above cash transactions mentioned in the material seized during the course of Search action in the case of M/s Phoenix Group & M/s Sreenidhi Group on 23.08.2022 vide annexure DSM/A/06 and annexure DSM/A/09 corroborate the fact that M/s Sreenidhi & M/s. Phoenix group of entities have made cash payments to the tune of Rs. 405,00,00,000/- to Sri Chennamaneni Mithun Chand as found from the excel workbook, "Receipts & Payments 11.04.2022". Further, the correctness of the above excel workbook "Receipts & Payments11.04.2022" was confirmed by Sri Naresh Girisala who is the cash handler of M/s Phoenix Group and M/s Sreenidhi Group of entities. Sri KUVSS Srihari, key Director of M/s Phoenix Group and M/s Sreenidhi Group has not only confirmed the correctness of the above excel workbook but also could explain various columns of the workbook. This shows the importance attributed to the excel workbook "Receipts & Payments 11.04.2022" and also the fact that the workbook is monitored at the highest level. Further, the assessee, Sri Chennamaneni Mithun Chand a....
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....irmed the payments to Sri Ch Mithunchand, the assessee. 7.1. Statement of Sri Nandipati Rajendra Prasad was recorded by the DDIT(Inv.), Unit-l(1), Mumbai during the search on Honer Group, and further a statement of Sri Nandipati Rajendra Prasad was also recorded u/s.131 by the DDIT(Inv.), Unit-1(3), Hyderabad on 19.10.2022 with regard to the cash payments made on behalf of Honer Group to Sri Naresh Girisala of Phonenix/Sreenidhi Group. When confronted with the entries found in the excel sheet 'Receipts & Payments 11.04.2022.xlsx' maintained by Sri Naresh Girisala, Sri Nandipati Rajendra Prasad deposed that the transactions shown to me are mostly cash payments made by Honer Group to Sri Naresh Girisala. But, it is seen that Naresh Girisala has maintained these transactions in coded format by reducing the amounts by a factor of 100. The same transactions are also maintained by me in the form of pocket diaries indicating actual amounts of cash payments. As seen in the extract, I have delivered cash totalling to Rs. 345.29 Crores to Sri Naresh Girisala on behalf of Honer Group as per directions received from my boss Sri Swapna Kumar". The relevant extract from the stat....
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....stant Sri Balakrishna Bhogineni with respect to cash advances for purchase of land at Moosapet. Further, during the search in Honer Group and excel sheet named "NHR Amounts.xisx" was found. Sri Nandipati Rajendra Prasad confirmed the contents of the excel sheet as details of the cash handed over by him to Sri Naresh Girisala. 7.2. On reconciliation of the cash receipts by Sri Naresh Girisala from Honer Group, as per the excel sheet and registers maintained by Sri Naresh Girisala and entries in the pocket diaries and excel sheet maintained by Sri Nandipati Rajendra Prasad, it is seen that the cash payments of Rs. 358.49 Crores was made by Honer Group to Sri Naresh Girisala during the period 07.09.2021 to 21.08.2022. During the same period, i.e., from 06.09.2021 to 02.08.2021, cash payments of Rs. 405 Crores was made by Sri Naresh Girisala to the assessee, Sri Ch. Mithunchand. As per the depositions of key personnel of Honer Group, the payments were made for the purchase of land at Moosapet by Honer Group. Further, as per narrations noted against payments made to the assessee, it is clearly shown as paid towards Land Advance/60, Land Payment/60, etc. Sri Naresh Girisala has ....
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....ng the same period from Honer Group for purchase of 60 acres of land at Moosapet, the narration of "Land Advance/60", Land Payment/60" mentioned against payments made to the assessee, clearly confirm the fact of cash payments to the assessee, and the receipt of the same by the assessee at his residence, etc., on the said dates. Further, the purpose for which the cash payments were made to the assessee is also absolutely clear, ie., for the purchase of land by Honer Group from GOCL. The dates of registration of the lands in favour of Honer Group by GOCL during the same period during which the amounts were paid in cash to the assessee also reiterates the fact that the payments to the assessee was for the purpose of facilitation of purchase of moosapet land by Honer Group. 7.6. In view of the foregoing discussion, it is clear that the assessee, Sri Cherinamaneni Mithun Chand was in receipt of cash to the tune of Rs. 405,00,00,000/- on various dates during the F.Y.2021-22 and F.Y.2022-23 from M/s Phoenix group and M/s Sreenidhi group of entities, on behalf of Honer Group. The cash received by the assessee during the F.Y.2021-22 relevant to A.Y.2022-23 is Rs. 287,00,00,000/- an....
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....ources". The aggregate value of such sums amount to Rs. 287,00,00,000/- for the Asst. Year 2022-23 and Rs 118,00,00,000/- for the Asst. Year 2023-24. 8.3. In view of the above, the sum of Rs. 287,00,00,000/- being the cash amounts received by the assessee during the relevant financial year 2021-22 is brought to tax as income chargeable under the head "Income from Other Sources as per the provisions of sec. 56(2)(x) of the Act for Asst. Year 2022-23. (Addition: Rs. 287,00,00,000/-)" 18.1. Thus, undisputedly the seized material was found from the possession of M/s. Phoenix and M/s. Sreenidhi Group in a search carried out on 23.08.2022 and not from the possession of the assessee in a subsequent search and seizure action carried out in the case of the assessee on 31.10.2022. The Assessing Officer has referred to the statements of Sri Naresh Girisala which was recorded u/sec. 132(4) of the Act on 27.08.2022. The Assessing Officer in Para no.7.3 of the assessment order stated that the transactions of cash payment as recorded in the seized material are in respect of the land sold by Gulf Oil Company Limited [in short "GOCL"] to Honer Group measuring 60 acres of land situated a....
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....le deeds and consideration as recorded in the sale deeds which are undisputedly between the Honer Group and GOCL. The Assessing Officer has not brought any material on record to show how the assessee has any right to receive the alleged cash as per the transactions in the seized material. 18.2. Further during the proceedings before the learned CIT(A) a remand report was called from the Assessing Officer and the in the remand proceedings the assessee was allowed to cross examine Sri Naresh Girisala on 03.03.2026. In the cross examination statement Sri Naresh Girisala has denied any cash payment to the assessee. Even he has explained that the statement recorded on 27.08.2022 during the course of search and seizure proceedings was given under duress, fear and due to constant question from the search party. He has reiterated his stand that he brought this fact to the notice of the DDIT (Inv.) by filing a retraction affidavit dated 09.09.2022 and dated 09.01.2023. He has also referred to his statement given on 17.02.2025 before ACIT, Central Circle-2(3), Hyderabad. The entire statement recorded on 03.03.2026 is placed at Page nos.789 to 801 of the paper book. The relevant part of the....
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....essment order in my own case for AY 2022-23, wherein It was mentioned that some excel entries were allegedly recorded by you. Did you record any of these entries in the excel sheet maintained by you showing cash payments made in the name of Mithun Chand? Ans: Sri Naresh Girisala: I don't remember having maintained any such excel sheet. I am unaware of the entries. Q8) Sri Chennamaneni Mithun Chand: On what basis did you record the remarks column against the cash payments made to Mithun Chand Land? Did you personally know that the said payments are towards purchase of land of 60 acres at Kukatpally/Moosapet by the Honer Group? Ans: Sri Naresh Girisala: I do not remember and I don't have any idea of the cash payment. Further, I also bring to the notice that I have filed a retraction affidavit dated 09.09.2022 before the DDIT(Inv), Unit-1(1), Mumbai on 09.01.2023 regarding the same. I have also given a statement on 17.02.2025 before the ACIT, Central Circle-2(3), Hyderabad. Sd/-MITHUN CHAND Sd/-PRATHYUSH SARASA Sd/- NARESH GIRISALA Assesse....
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....thorities below. We have also carefully considered the relevant evidences considered by the A.O. for making additions towards unexplained cash payments. Admittedly, during the course of search proceedings under section 132 of the Act, in the case of M/s. Vamsiram Group, incriminating evidence in the form of diary and pen drive was found and seized which contains various cash transactions. It is also an admitted fact that during the course of survey under section 133A of the Act, nothing was found or impounded from the premises of the assessee, 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. took support fro....
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....essed into service against the assessee with regard to material seized during the course of search from the premises of a third party, unless there is corroborative evidence. Therefore, in our considered view, the addition made by the A.O. on the basis of third party evidence without any corroborative evidence cannot be sustained. 28. Further, the documents found during the course of search are claimed to have been recorded by M/s. Vamsiram Group by truncating last two zeros. The A.O. has arrived at the above conclusion from the statements recorded from Shri Chandrasekhar 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 to M/s. Vamsiram Group Builders. Once again, we do not subscribe ....
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....rely upon the statements of the employees of M/s. Vamsiram Group as corroborative oral evidence, but said statements lack any evidentiary value, because these statements were retracted subsequently. Further, there is no specific question about the payment made by the assessee was put to the Managing Director of M/s. Vamsiram Group or to the employees of M/s. Vamsiram Group Builders, therefore, the generalized statements recorded from the employees cannot be considered as conclusive evidence to allege cash payments made by the assessee. 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. 29. 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, the assessee 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 for ....
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.... receipts or bills submitted by the assessee so as to conclude that M/s. Vamsiram Builders has received cash payments for purchase of commercial space. The A.O. has not brought on record any evidence to prove that there is exchange of cash between the parties. It is very important for the A.O. to bring further evidence, including cash receipts, to support the entries contained in the seized documents, as held by the Hon'ble Bombay High Court in the case of CIT Vs. Lavanya Land Pvt. Ltd. (supra), 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 ....
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....assessee, in our considered view, the conclusion drawn by the Ld. CIT(A) that there is clear evidence of cash payments is contrary to the material available on record and cannot be accepted. Therefore, for the above reasons, addition made by the A.O. for cash payments cannot be sustained." 18.4. The Hon'ble Bombay High Court in the case of ACIT vs. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom.) has also dealt with the issue of inadmissible evidence and held as under: "The assessee who is an acknowledged play-back singer, submitted her returns of income for the assessment years 1962-63, 1963-64 and 1964-65, disclosing professional receipts of Rs. 1,43,650 Rs. 1,38,251 and Rs. 1,19850, respectively. The returns were principally based upon the diaries which were maintained by the assessee in which proper entries were made in respect of receipts received by her for the professional work done by her as a playback singer. From the diaries, M/s Ghanekar & Co., a firm of Chartered Accountants, used to write regular accounts. The assessee had produced confirmatory letters from all the producers regarding the correctness of payments shown to have been made by them. The Income-tax ....
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....aracter suggesting that the practice of receiving part remuneration in black was prevalent among cine stars which was of no avail to prove any specific instance against the assessee. The only specific evidence which required scrutiny was that furnished by the two entries and the statements of N. Vasudev Menon and C. S. Kumar. On a scrutiny of the two entries as well as the evidence of the two witnesses the Tribunal took the view that even that evidence did not carry the department's case any further and in that view of the matter the Tribunal deleted the additions made by the Income-tax Officer. The department has sought the reference to this court on three questions of law which are said to arise out of the Tribunal's order and out of the three questions which appear at page 6 of the application and in respect whereof rule has been issued, questions Nos. 2 and 3 are really dependent upon the answer to the first question as to whether on the facts and circumstances of the case the Tribunal was justified in ignoring the entries in the ledger of Vasu Films relating to the payment made by the said firm to the assessee. 4. In our view, the question has been framed by t....
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....tions of law arise. 5. Mr. Joshi tried to urge before us that in paragraph 5 of its order the Tribunal has found fault with the entries appearing in the ledger on the ground that there were no corresponding entries in the day-book of the firm covering there same period and the Tribunal further observed that no attempt was made to explain the absence of relevant entries in the day-book and for that reason the Tribunal rejected the entries in the ledger on which reliance was placed. Mr. Joshi tried to urge that, after all, the entries in the ledger were the entries in a book which was not meant for being disclosed to the income-tax authorities because it contained the entries pertaining to the payment in "black" and the day-book for the relevant period that was available was a day-book meant for being produced before the taxing authorities as it contained entries pertaining to all legal and white payments and naturally in such day-book no corresponding entries would be found. So no importance should have been attached by the Tribunal to the absence of a day-book containing the corresponding entries. In the first place it must be pointed out that this is not the only reason f....
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....n the absence of any corroborative evidence or any further enquiry/verification conducted by the Assessing Officer. Hence, in the facts and circumstances of the case as discussed above we hold that the addition made by the Assessing Officer based on the excel sheet taken from the pendrive seized from the third party in the absence of any corroborative evidence as well as in the absence of any connection of the assessee with the transaction of sale and purchase of the land in question and role of the assessee to receive the alleged cash is not sustainable and liable to be deleted. 19. As regards the objection raised by the assessee regarding the evidentiary value of the said seized material as taken from the pendrive in the absence of Certificate u/sec. 65B of Indian Evidence Act, 1872 is concerned, there is no dispute that the said document was taken from the pendirve which is a digital mode of record and therefore, the admissibility of the digital evidence is subject to the provisions of sec. 65B of the Evidence Act. In the case in and, when no such Certificate is taken or brought on record then, such material which is taken from the pendrive/computer system is having no eviden....
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....dence as per the provisions of section 65B of Indian Evidence Act. Therefore, we are of the considered view that such inadmissible seized material is not sustainable in the eyes of law. Thus, the assessment order passed in the case of the assessee on 31/3/2022 is not a valid assessment order in the eyes of law and it deserves to be set aside." 19.1. Accordingly, in the absence of the satisfaction of the conditions as provided u/sec. 65B of the Indian Evidence Act the extract taken from the pendrive is not an admissible evidence and hence, the addition made by the Assessing Officer on the basis of such inadmissible evidence is not sustainable in law. Thus, when the evidence relied upon by the Assessing Officer suffers from infirmities and inadmissibility then, the entries in such material are not sufficient to prove that the assessee has received the cash. Similarly, the Hon'ble Bombay High Court in the case of PCIT, Central-2 vs. Umesh Ishrani [2019] 108 taxmann.com 437 (Bom.HC) in Para nos.1 to 3 held as under: "1. This Appeal is filed by the revenue to challenge the judgment of Income Tax Appellate Tribunal. Following question is presented for our consideration; ....
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.... of the assessee and consequently, the presumption u/sec. 132(4A) and sec. 292C of the Act cannot be raised against the assessee. The deeming fiction provided u/sec. 132(4A) and 292C of the Act cannot be extended beyond the prescribed situation and facts. The Hon'ble Gujarat High Court in the case of PCIT, Surat-1 vs. Gaurangbhai Pramodchandra Upadhyay in R/Tax Appeal No.98 of 2020 with R/Tax Appeal Nos.100, 103 and 104 of 2020, dated 25.02.2020 has considered this issue in Para nos.3 to 9 as under: "3. This Tax Appeal under Section 260A of the Income Tax Act, 1961 (for short the "Act-1961") is at the instance of the Revenue and is directed against the order dated 12.07.2019 passed by the Income Tax Appellate Tribunal, Ahmedabad in ITA No.216/SRT/2017 for the Assessment Year 2013-14. 4. The facts giving rise to this appeal may be summarized as under:- 4.1. A search action under Section 132 of the Act-1961 was carried out on 18.02.2014 in the group cases of Creative Trendz Group of Surat. 4.2. During the course of the search action few incriminating documents were recovered and seized from the residence of one Shri Piyush Ghanshyam Modi, Residing ....
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....referred an appeal before the ITAT. The ITAT, its impugned order, dismissed the appeal preferred by the Revenue. 4.9. Being dissatisfied with the order passed by the Appellate Tribunal, the Revenue is here before this Court with the present appeal. 5. The Revenue has proposed the following questions of law for the consideration of this Court. "5(1) Whether on the facts and circumstances of the case and in aw, the Hon'ble ITAT is right in upholding the order of Ld CIT(A) in deleting the penalty under Section 271E of the IT Act ignoring that penalty under Section 271E has been levied after considering material seized in the course of search under Section 132 of the IT Act on 18.02.2014 and based on statement recorded? (ii) Whether on the facts and circumstances of the case in law, the Hon'ble ITAT is right in upholding the order of Ld. CIT(A) in deleting the penalty under Section 271E of the IT Act holding that presumption of Section 132(4A) as well as Section 292 of the IT Act is not available in the case of the assessee ignoring that material seized in the case of Shri Piyush Modi and statement recorded of Shri Dilip C Sojithra, who categ....
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....to suggest that he assessee has taken any loan in cash or repaid any loan in cash and done the transactions reflected in the seized material recovered from third party. Therefore, considering the totality of the facts, we find no reason to deviate from findings recorded by the Ld.CIT(A). Accordingly, the appeal of the Revenue in respect of penalty under Section 271D and 271E is dismissed. Consequently, all the grounds of appeal of the Revenue as reproduced above are dismissed." 7. Thus, the learned Tribunal consideration the following aspects:- A. The addition of interest payment under Section 69C on the basis of the of the Act-1961 was made documents seized from a third party. B. Such documents seized from the third party reflected loan transactions in cash. 8. The Tribunal took notice of the fact that such documents were not found or recovered from the possession of the assessee. In such circumstances, no presumption under Section 132(4A) as well as under Section 292C of the Act-1961 could be drawn. The Tribunal also took notice of the fact that the Assessing Officer had based his findings on the basis of a statement, but the statement has not ....
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....mped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of section 132A, had been found in the possession or control of that person in the course of a search under section 132. 24. Submissions of learned Sr. Standing Counsel for the Income Tax Department is that the seized cash was unexplained money in terms of section 69A of the IT Act and the same had not been explained either by the appellant or his father-in-law. It was further submitted that in terms of section 158BB(3) of the IT Act, the burden of proving to the satisfaction of the Assessing Officer that any undisclosed income had already been disclosed in any return of income filed by the assessee before the comm....
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....arge amount of cash was recovered from the residential premises of the assessee. The tribunal noted that the books of account did not show any connection with the cash recovered from the assessee. The tribunal held that the assessee had not been able to rebut the presumption under section 132 (4A) of the I.T. Act and held that the addition made under section 69A of the Act was justified. It was held that when an assessee is found in possession of currency, it is for him to prove that he is not the owner of the currency and it is not for the revenue to prove that the assessee is the owner of the currency found in his possession. his possession. In our opinion, the position settled in case of Sukh Rom (supra), in fact supports the case of the appellant because in the present case it is Deo Lal Sah, from whose residential premises the cash was seized who is also claiming to be the owner of the said seized cash but is not being believed by the Revenue. (3) Chuharmal (supra): This case was cited with reference to pages 254 and 255 by the learned Sr. Standing Counsel for the Income Tax Department dealing with the section 110 of the Evidence Act. From perusal of the rele....
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....plaining the seized cash, there remains no doubt that the refusal of the respondents to not accept the entire cash found in course of search to be the undisclosed income of Deo Lal Sah, in absence of any material to the contrary. is illegal." 21.2. Therefore, it is held by the Hon'ble Patna High Court that the presumption u/sec. 132(4A) and 292C can be raised only when the document is found from the possession of the assessee during the course of search and seizure action and no adverse inference can be drawn against the assessee on the basis of the document found and seized from the possession of the third party. Hence, the said seized material found and seized from the possession of the third party cannot be considered as belonging to the assessee even by application of the provisions of sec. 132(4A) as well as sec. 292C of the Act. 22. The assessee has also objection against the addition made u/sec. 56(2)(x) of the Act when the transaction itself is disputed by the assessee. For ready reference, the provisions of sec. 56(2)(x) is quoted as under: "Sec.56(2) - In particular, and without prejudice to the generality of the provisions of sub-section (1), the following....
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....stance of the case and in law, Learned CIT(A) is not justified in sustaining the addition of Rs. 118,00,00,000/- under section 56(2)(x) of the Act. 4. On the facts and circumstance of the case and in law, the addition made by the AO which was sustained by Learned CIT(A) is not justified without observing the fact that whether to treat the pen drive as admissible evidence the certificate under section 65B of the evidence act shall reflect the conditions prescribed under section 65B. 5. On the facts and circumstance of the case and in law, Learned CIT(A) is not justified in sustaining the addition made by the AD without observing the fact that data relied upon is found in the premises and possession of third party without Corroborative evidence. 6. On the facts and circumstance of the case and in law, Learned CIT(A) is not Justified in sustaining the addition under Section 56(2)(x) as the appellant has not sold any land for which the alleged consideration has been received as suspected by revenue authorities. 7. On the facts and circumstance of the case, the Learned CIT(A) is not justified in sustaining the addition made by the AO as addition is ma....
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....s of the addition made by the Assessing Officer based on the seized material found and seized from the third party in a separate search. The addition is made by the Assessing Officer based on the same seized material and statements as relied upon by the Assessing Officer for the assessment year 2022-2023. We have already considered the issue on merits for the assessment year 2022-2023 on all the aspects of the matter and our findings for the assessment year 2022-2023 shall follow mutatis mutandis for the assessment year 2023-2024. Therefore, the addition made by the Assessing Officer for the assessment year 2023-2024 is deleted. We Order accordingly. 28. In the result, appeal ITA.No.980/Hyd./2026 of the assessee for the assessment year 2023-2024 is allowed. 29. To sum-up, both the appeals of the Assessee are allowed. A copy of this common order be placed in the respective case files Order pronounced in the open Court on 15.05.2026. ============= Document 1 Sworn statement of Sri Chennamaneni Mithunchand, s/o Sri Chennamaneni Bhaskar Rao, aged 48 years, r/o Flat No.E-501, My Home Bhooja, Silpa Gram Craft Village, Raidurg, Hyderabad, recorded u/s.131 in his own cas....
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....st time now. Q.8 As per the findings during the search in the case of Honer Group, It was found that Rs.358,49,00,000/- in cash was handed over to Sri Naresh Girisala, cash handler of M/s Phoenix/Sreenidhl Group during the period 07.09.2021 to 12.08.2022. As per the findings during the search in the case of Phoenix/Sreenidhi Group, It was found that during the same period, amount of Rs.405,00,00,000/- was handed over to you. Please comment. Ans As I have said in my earlier statements, I do not have any financial transactions with Honer Group or Phoenix/Sreenidhi Group. I do not know why the entries were made in my name. I do not have any financial transactions or any sale/purchase transactions of any immovable property with them. I do not own any immovable property in Kukatpally or Hitec City. Q.9 As per information in public domain, Gulf Oil originally announced sale of the 60 Acre land parcel located at Moosapet, Hyderabad to Square Infra City Private Limited at an average price of Rs.10 Crores per acre. The market price of the said land, as per Information available ranges from Rs.25-30 Crores, thus giving rise to speculation that there is huge on-money component in the....
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....405 Crores received by you were utilized/transferred or handed over. Ans I have not received the alleged amount of Rs.405 Crores. I never had any financial or property transactions with any of the above entities. I have never received any cash from any of the above entities. Q.13 Do you have anything to say ?. Ans No. 23/07/24 I have read the above statement and found it to be correctly recorded as per my version. The statement was given on my own free will without any force, threat or coercison. lifting CHENNAMANEMI MITHUN Before Als 23/09/24 CHAUD gerbisicher of income Tax Document 4 CERTIFICATE U/S 658 OF THE INDIAN EVIDENCE ACT. 1872 A SRINIVASA RA (Name)( PAN NO. A IMPA6853N state the following that I am an employee/partner/director/proprietor of Messers. Polisetty Somasundaram after referred to as firm / company /LLP /AOP /Proprietary Firm ) Located at Messers. Polisetty Somasundaram no S-24-31, Mangalagiri Road, Guntur 522001 (here after referred to as Premises). 1 A SEINWAGA RAO (Nome) state that by virtue of being employee / partner /director / proprietor in firm / company / LLP/AOP/Proprietary Firm, I and my employees uses the se....