TaxTMI 
TaxTMI 
2026 (2) TMI 1464
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....re directed against the orders passed by the Learned Commissioner of Income Tax (Appeals)-20, Chennai (hereinafter referred to as "the Id. CIT(A)"), dated 31.07.2024, except in the case of PP Enterprises (Oddanchatram), wherein the order of the Id. CIT(A) is dated 05.08.2024. The impugned orders of the Id. CIT(A) emanate from the assessment orders passed by the Assistant Commissioner of Income Tax, Central Circle-3, Coimbatore (hereinafter referred to as "the Assessing Officer" or "AO"), u/s. s 153A read with sections 143(3) / 144 and section 153C read with sections 143(3) / 144 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), pertaining to the Assessment Years 2010-11 to 2018-19, the particulars whereof are set out hereunder: S.No Assessee Assessment Years (hereinafter referred to as 'AY') Date of order Order passed u/s. 1 PP Financiers (Oddanchatram) 2010-11 to 2018-19 28.12.2019 153A r.w.s.144 2 PP Financiers (Chennai) 2015-16 to 2018-19 30.12.2019 153A r.w.s.144 3 PP Financiers (Karur) 2014-15 to 2018-19 28.12.2019 153A r.w.s.143(3) 4 PP Enterprises (Bengaluru) 2016-17 to 2018-19 ....
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.... justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 2.2 A perusal of the aforesaid decision clearly demonstrates that the expression "sufficient cause" is required to be construed liberally, and that where substantial justice and technical considerations are placed in opposition, the cause of substantial justice must prevail, as the opposite party cannot claim any vested right in the perpetuation of injustice occasioned by an inadvertent or non- deliberate delay. 2.3 In view of the above, we are satisfied that sufficient cause exists for the delay in filing the appeals, and it is evident that the assessee could not have gained any advantage by instituti....
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...., the Revenue has preferred four appeals challenging the deletion of the protective additions in the aforesaid cases, whereas the remaining 57 appeals have been filed by the 11 assessee assailing the confirmation of the substantive additions. 5. During the course of hearing, the Learned Authorised Representative (hereinafter referred to as "the Id.AR") for the assessee sought directions from the Tribunal for production of the sanctions, statutory approvals, and seized materials pertaining to all the assessee. The said direction was duly issued by us, pursuant to which the Learned Departmental Representative (hereinafter referred to as "the Id.DR") complied and produced the requisite records. Both the ld.AR for the assessee and the ld.DR have placed detailed written submissions on record and have also filed various paper books in support of their respective contentions. The issues arising in the present appeals are dealt with assessee-wise in the succeeding paragraphs of this order. 6. In respect of the assessees whose assessments have been framed u/s.153C of the Act, the ld.AR has raised preliminary legal objections seeking annulment of the assessments on the grounds that: ....
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....that a satisfaction note which is general, vague, and casual, without recording particulars of escapement of income, quantification thereof, or linkage to a specific assessment year, reflects lack of proper application of mind and is therefore bad in law, rendering the consequent assessment proceedings invalid. 9. The ld.AR further submitted that a proforma for recording satisfaction u/s.153C has been placed on record by the ld.DR. It was pointed out that the said proforma merely states that the seized documents pertain to the concerned assessee and does not disclose how such satisfaction was arrived at, nor does it indicate how the seized material has a bearing on the determination of total income, much less that it represents undisclosed income. 9.1 It was further submitted that the examination note, also placed on record by the ld.DR and stated to constitute the satisfaction u/s.153C, is undated, and therefore cannot be regarded as having been recorded prior to the issuance of notice u/s. 153C. According to the ld.AR, the said examination note is at best a communication seeking approval from the Joint Commissioner, and cannot be equated with a legally valid satisfaction no....
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....lso placed on the judgment of the Hon'ble Supreme Court in CIT v. Calcutta Knitwears [2014] 43 taxmann.com 446 (SC), to submit that the statute merely mandates that satisfaction be recorded, without prescribing the manner or format thereof, and that courts should not add to or subtract from the language of the statute. Reference was made to paragraphs 23, 26, and 34 of the said judgment to emphasize the principles of literal and harmonious interpretation. 13. The Id.DR further referred to the judgment of the Hon'ble Karnataka High Court in DCIT v. Sunil Kumar Sharma (supra), contending that paragraph 36 reflects only the submissions of counsel and paragraph 53 constitutes obiter dicta rather than the ratio decidendi. Reliance was also placed on the decisions in Union of India v. Dhanwanti Devi (21.08.1996) and State of Orissa v. Dhirendra Sundar Das (Civil Appeal No. 4646 of 2019) to submit that dismissal of an SLP does not amount to declaration of law under Article 141 of the Constitution. 13.1 On the aforesaid basis, it was argued that the decision in Indian National Congress v. DCIT (supra), being a later and more direct pronouncement on the issue of combined satis....
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....f the Tribunal in ACIT v. Subash Jivraj Jain (supra), after considering Indian National Congress v. DCIT (supra), has followed Sunil Kumar Sharma (supra), particularly noting the dismissal of the Revenue's SLP by the Hon'ble Supreme Court. 17. The Id.AR further contended that the decision of the Hon'ble Supreme Court in CIT v. Calcutta Knitwears (supra) was rendered in the context of section 158BD of the Act, and therefore the principles laid down therein cannot be mechanically applied to proceedings u/s.153C of the Act. It was submitted that the satisfaction contemplated u/s.158BD necessarily pertains to a single assessment, namely, the determination of undisclosed income for the block period, whereas u/s.153C, separate assessments are required to be framed for each assessment year falling within the scope of the provision. 17.1 In support of this distinction, reliance was placed on the judgment of the Hon'ble Supreme Court in PCIT v. Abhishar Buildwell (P.) Ltd. [2023] 454 ITR 212 (SC), wherein it has been authoritatively held that, for the purposes of assessments u/s.153A/153C, the assessment years are to be classified into abated and unabated years, and th....
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....cted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A :" 19. The ld.DR, through a tabulation filed along with the written submissions, sought to correlate the seized material referred to in the satisfaction note with the respective assessment years, and thereby contended that the satisfaction recorded makes reference to the relevant years. However, it is an undisputed fact that the satisfaction recorded u/s.153C of the Act does not contain assessment year-wise particulars of the incriminating material proposed to be relied upon for the purpose of determination of total income. 19.1 In view of the ratio laid down in Prashant Joshi v. ITO [(2010) 1 taxmann.com 90 (Bom)], we hold that the ld.DR cannot seek to improve, supplement, or cure the defects in the satisfaction note by subsequently furnishing a tabulation mapping the seized material to the relevant assessment years. 19.2 As regards the reliance placed by the ld. DR on the decision of the Hon'ble Delhi High Court in Indian National Congress v. DCIT (supra), we find that the Hon'ble High Court has made the following observations: "24 .......
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....or recording separate satisfaction for each year, does not advance the case of the Revenue. Even the said Manual, in paragraph 1.8, mandates that a "proper satisfaction" must be recorded prior to issuance of notice u/s.153C of the Act. For the reasons discussed hereinabove namely, that the satisfaction recorded is consolidated, not relatable to individual assessment years, and does not correlate the seized material with the respective assessment years, we hold that the satisfaction recorded in the present cases is not a proper satisfaction in the eyes of law, and does not even conform to the standards prescribed under the said Investigation Manual. 20.4 Further, the decision in Indian National Congress v. DCIT (supra) does not support the stand of the Revenue, as it clearly stipulates that the satisfaction note must encapsulate incriminating material pertaining to the assessment years concerned, a condition which remains unmet in the present cases. Consequently, we hold that the satisfaction notes recorded u/s.153C of the Act in the cases of the assessees do not satisfy the requirements of law and, therefore, vitiate the entire assessment proceedings. 21. Turning to the issue....
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....liable to be quashed. We hold accordingly and quash the assessment." 23. So far as the decision of the Hon'ble Delhi High Court in the case of Indian National Congress vs. DCIT (supra) relied on by Ld.DR is concerned, we find no doubt there is a favourable decision in favour of the Revenue on the issue of combined satisfaction. However, it has been held in various decisions that when there are two views possible on an issue and there is no decision of the jurisdictional High Court on that issue, then the view which is favourable to the assessee has to be adopted. We find the Hon'ble Supreme Court in the case of CIT vs. Naga Hills Tea Co. Ltd. (1973) 89 ITR 236 (SC) at page 240 has observed as under: "If a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well-accepted view of law." 24. Further, the Hon'ble Supreme Court recently in the case of M/s. A.P. Electrical Equipment Corporation vs. The Tahsildar & Ors. (supra) has held that if two decisions of this Court appear inconsistent with each other, the High Courts are not to follow....
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....the instant case also the Assessing Officer has passed a combined satisfaction note for assessment years 2012-13 to 2018- 19, therefore, respectfully following the decision of the Co-ordinate Bench of the Tribunal in the case of Chitra Narendra Parmar vs. ACIT (supra) (to which both of us are parties), we hold that the assessment proceedings initiated u/s 153C of the Act on account of combined satisfaction are not valid in law and accordingly the same are quashed. Since the assessee succeeds on this legal ground, the grounds challenging the addition on merit are not being adjudicated being academic in nature. The appeal of the assessee is accordingly allowed." 25. In a similar vein, the Jodhpur Bench of the Tribunal, in Anjana Constructions v. ACIT [2025] 128 ITR (Trib) 148 (Jodhpur), has also held as follows: "The Hon'ble Supreme Court in case of Sunil Kumar Sharma (supra) upheld the order of the Hon'ble Karnataka High Court in DCIT VS Sunil Kumar Sharma (2024) 469 ITR 197 (Kar). We respectfully follow the order of Hon'ble Karnataka High Court which was duly affirmed by the Hon'ble Supreme Court accordingly, the initiation notice u/s 153C is quashed. Ac....
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....utory mandate, thereby vitiating the assessment proceedings for the assessment years 2010-11 to 2018-19 in the case of the assessee. 28.2 Even if the decision of the Hon'ble Delhi High Court in Indian National Congress v. DCIT (supra) is considered, it is clear that in that case, although the satisfaction note was combined, it nevertheless contained specific reference to incriminating material for each assessment year. Such a feature is absent in the present case. Therefore, even the said decision does not support the Revenue but, on the contrary, supports the assessees, as there is nothing in the satisfaction note to indicate that the material relating to each relevant assessment year was considered while recording satisfaction. We have already held that any attempt to supplement the satisfaction note at this stage would not cure the defect or render it compliant with section 153C of the Act. 29. The next legal issue raised by the ld.AR, as Ground No.5 in the modified grounds, relates to the approval u/s.153D of the Act, which is challenged on the grounds that it was issued without application of mind, and further, that it is a composite approval, not in conformity with ....
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....31. With regard to the last contention raised by the ld.AR, namely that the JCIT could not have understood Tamil and therefore could not have comprehended the seized material in Tamil, and consequently that the approval u/s.153D is devoid of application of mind, it is noted that the ld.DR has placed on record an affidavit sworn by Shri Narendra Kumar Naik, the approving authority for the assessment orders passed by the Assessing Officer. In the affidavit, Shri Naik has stated that the Assessing Officer, being a native of Tamil Nadu, had explained the contents of the seized documents wherever they were in the vernacular Tamil language, from time to time. 31.1 In view of the aforesaid affidavit, we are inclined to accept the explanation furnished by Shri Narendra Kumar Naik, and therefore the approval u/s.153D cannot be held to be lacking application of mind merely on the ground that Shri Naik did not know Tamil. 32. However, the ld.AR submitted that the approval u/s.153D in the case of the assessee (an individual) has been drafted in a generic manner, repeatedly referring to "assessee firm" and failing to address any issues specifically relevant to the assessee's case. Fur....
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....d. v. DCIT/ACIT [2025] 10 TMI 143 (ITAT Delhi); ● Umesh Sadashiv Thakre v. ACIT [2025] 175 taxmann.com 951 (ITAT Nagpur); ● YRCE Educare Pvt. Ltd. v. ACIT [2025] 8 TMI 1363 (ITAT Nagpur); ● Kehar Singh v. DCIT [2025] 126 ITR (Trib) 609 (Delhi); ● Apple Commodities Ltd. v. DCIT [2025] 126 ITR (Trib) 623 (Delhi); ● Pushpanjani Construction P. Ltd. v. DCIT [2025] 128 ITR (Trib) 201 (Del); ● PCIT v. Believe Constructions (P.) Ltd. [2025] 180 taxmann.com 63 (Del); and ● Dheeraj Chaudhary v. ACIT [2025] 178 taxmann.com 360 (Delhi Trib.). 35. The ld.AR further submitted that the approvals u/s.153D in the present cases are combined approvals, which is contrary to the specific statutory requirement. It was contended that such combined approvals vitiate the assessment proceedings, relying on the decisions in PCIT v. Sapna Gupta (supra), PCIT v. Shiv Kumar Nayyar [2024] 6 TMI 29 (Delhi High Court), Tish Consultants Pvt. Ltd. v. DCIT [2025] 7 TMI 173 (ITAT Delhi), Dheeraj Chaudhary v. ACIT (supra), PCIT v. Shivgori Builders (P.) Ltd. [2025] 180 taxmann.com 180 (Delhi), and ACIT v. Splend....
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....he Authorized Representative of the assessee Shri Haja Ali has appeared before me periodically and the relevant issues and seized documents were discussed in presence of the Assessing Officer G Karthikeyan. That, the Authorised Representative has also discussed regarding working of undisclosed income to apply before the Hon. Income Tax Settlement Commissioner (ITSC), however the assessee didn't proceed with the application before ITSC. 8. That, I have constantly supervised the proceedings as Range Head and discussed issues from time to time with the Assessing Officer and therefore at the time of submitting the draft assessment order, I was well acquainted with the facts, issues and findings of the cases. Therefore, after due diligence, I used to approve those draft orders, after necessary corrections and modification, if required. 9. That, the approval has been accorded after due diligence and complete understanding of the facts and issues with prior application of mind and as per the Search and Seizure manual of CBDT dated 22.12.2006." 38. On this point, the ld.AR placed reliance on the decision of the Third Member in Dheeraj Chaudhary v. ACIT [20....
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....ment, cannot act on the advice given by an outsider even though he may be an authority higher in rank to him in official hierarchy. Higher authorities that include Additional CIT/JCIT under whom the Assessing Officer is administratively under control, are not entitled to give opinion or advice in regard to assessment proceedings being quasi-judicial in nature. This is, however, subject to the provisions of Section 144A of the Act, where the assessee or the Assessing Officer suo moto can refer the matter but, for that, he has to invoke this provision. This view is supported by Hon'ble Bombay High Court in the case of Dinshaw Darabshaw Shroff v. CIT [1943] 11 ITR 172, wherein it is held that although the Assessing Officer making an assessment is not acting as a court of law, it is clear that while framing assessment is acting in quasi-judicial capacity, and he ought to conform to the more elementary rules of judicial procedure, and in particular to conduct the case himself, and not allow somebody else, even his superior officer, to interfere in the conduct of the case. What to talk of superior authority, Hon'ble Supreme Court in the case of Union of India v. Tata Engineering ....
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....he Assessing Officer, casts a very heavy duty on the said high ranking authority to see to it that the requirement of the previous approval, envisaged in the Section is not turned into an empty formality. Needless to say that before granting approval, the Additional CIT/Joint CIT, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer and the approval must reflect the application of mind to the facts of the case. The CBDT itself recognized the importance of this provision and the above laid down principle and hence issued Manual of Office Procedure in February, 2023 in exercise of powers u/s. 119 of the Act. Vide Para 9 of Chapter 3 of Volume-II (Technical), a clear procedure is devised i.e., how an approval is to be granted for draft assessment for passing of assessment order in search cases. According to the Manual, the Assessing Officer should submit the draft assessment order for such approval well in time along with docketed in the order sheet, a copy of the draft assessment order, covering letter filed in the relevant miscellaneous records folder. Even, it is noted that due opportunity of b....
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....f mind, particularly where the approving authority is fully aware of the background material. Similar reliance was placed on the decision of the Allahabad Tribunal in Ramji Vaish v. DCIT (ITA Nos.36, 37, 38, 101, 125, 126, 127/ALLD/2023). On the issue of consolidated approval, the ld. DR also referred to the Investigation Manual dated 22.12.2006 to contend that a consolidated approval would suffice for the purposes of section 153D of the Act. 41. In rebuttal, the ld.AR furnished a table to demonstrate that the decisions relied upon by the ld. DR have been rendered inapplicable by the decision of the Third Member in Dheeraj Chaudhary v. ACIT [2025] 178 taxmann.com 360 (Delhi-Trib) (TM), the relevant portions of which have been reproduced in the written submissions. 42. We have carefully considered the rival submissions, perused the written submissions and examined the documents placed on record, including the affidavit filed by Shri Narendra Kumar Naik, JCIT, on behalf of the Revenue. At the outset, and without entering into the merits of the legal issue concerning section 153D of the Act, we note that the said affidavit seeks to explain the procedure followed in the search as....
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.... from 01.04.2017 and hence the same is applicable for the financial year 2016-2017 and the assessment year 2017-2018. Further the amendment to section 115BBE is directly related to demonetization which would be evident from objects and reasons for such amendment. In order to consider the same, the objects and reasons of Taxation Laws (Second Amendment) Bill 2016 is extracted hereunder: ........ 17. in the aforesaid objects and reasons nowhere it is stated that due to "demonetization" the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs.500 and Rs. 1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object "that instead of allowing people to find illegal ways of converting their black money into black again", it is evident that the government is intended to impose the same for future transactions. Especially the use of word "again" in the object would clearly indicate it is for future transactions i.e. fro....
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.... in Ghanshyamdas Johari (41 Taxmann.com 295) has held that once jewellery falls within the ambit of Instruction No. 1916, no addition can be made in respect of the same. Similar conclusions have been reached in CIT v. Ratanlal Vyaparilal Jain [2011] 339 ITR 351 (Guj), CIT v. Satya Narain Patni [2014] 366 ITR 325 (Rajasthan) and CIT v. Ghanshyam Das Johri [2014] 41 Taxmann.com 295 (Allahabad). Accordingly, we hold that the value of the gold belongs to the assessee from whose premises it was seized and therefore this ground of the assessee is dismissed. However, the addition cannot be sustained, as the jewellery is covered by Instruction No.1916, and in any event the assessment itself is invalid for the reasons stated earlier. 52. The ld.AR has further contended that the higher rate of tax u/s. 115BBE cannot be invoked for assessment years prior to AY 2018- 19. Although this issue is now academic, having followed the decision of the Hon'ble Madras High Court in S.M.I.L.E. Microfinance Limited v. ACIT (SCC OnLine Mad 8416), we have held in the case of P. Palanisamy that the enhanced rate of 60% u/s. 115BBE is not applicable to transactions occurring before 01.04.2017. The ra....
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....d). Accordingly, we hold that the value of the gold belongs to the assessee from whose premises it was seized and therefore this ground of the assessee is dismissed. However, the addition cannot be sustained since the jewellery is covered by Instruction No. 1916 and, in any event, the assessment is invalid for the reasons stated above. 57. The ld.AR has further contended that the higher rate of tax u/s.115BBE of the Act cannot be invoked for assessment years prior to AY 2018-19. Although this issue is now academic, following the decision of the Hon'ble Madras High Court in S.M.I.L.E. Microfinance Limited v. ACIT (SCC OnLine Mad 8416), we have held in the case of P. Palanisamy that the enhanced rate of 60% u/s.115BBE of the Act is not applicable to transactions occurring before 01.04.2017. The ratio of that decision shall apply mutatis mutandis to the present case of the assessee. IV. L.Karuppusamy - AYs 2017-18 and 2018-19 Α.Υ. ITA NO. 2017-18 224 / Chny / 2025 2018-19 225 / Chny / 2025 58. It is observed that the factual circumstances relating to the issue u/s.153C of the Act in the case of L.Karuppusamy are identical to those in the ca....
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....made any substantial submissions with regard to the cash seized from the assessee's premises. Accordingly, we hold that the cash belongs to the assessee from whose premises it was recovered, and this ground of the assessee is dismissed. However, the addition cannot be sustained, as the assessment proceedings have been held to be void for the reasons stated above. 64. The ld.AR has also contended that the higher rate of tax u/s.115BBE cannot be invoked for assessment years prior to AY 2018-19. Although this issue is rendered academic, following the decision of the Hon'ble Madras High Court in S.M.I.L.E. Microfinance Limited v. ACIT (SCC OnLine Mad 8416), we have held in the case of P. Palanisamy that the enhanced rate of 60% prescribed u/s. 115BBE is not applicable to transactions occurring prior to 01.04.2017. The ratio of that decision shall apply mutatis mutandis to the present case. VI. PP Financiers (Oddanchatram) - AYs 2010-11 to 2018-19 A.Y. ITA NO. 2010-11 220 / Chny / 2025 2011-12 201 / Chny / 2025 2012-13 202 / Chny / 2025 2013-14 203 / Chny / 2025 2014-15 204 / Chny / 2025 2015-16 205 / Chny / 2025 2016-17 206 ....
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....dition can be sustained in the hands of the firm because the alleged capital/contribution on which the proposed additions are based is not unexplained. The seized material itself records the names of the contributors, a fact which the Assessing Officer has acknowledged at several places in the assessment order. 68. The written submissions of the Ld.AR are reproduced below: "Based on the following points, it is most humbly submitted that there is no evidence to establish that the seized material belongs to or pertains to the assessee firm. 1. The seized pages referred to by the Assessing Officer do not contain any reference to the firm's name, business details, address, PAN, or any other identifying particulars. The mere presence of the word "Partners" or initials does not ipso facto establish that the material belongs to the assessee firm. In absence of exclusive identification, mere mentioning of individuals who are partners in multiple entities cannot be used to attribute ownership of the documents to a particular firm. 2. The Assessing Officer has attempted to establish ownership on the footing that some seized documents bear signatures purporte....
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....his can also be understood as some kind of an inducement given to the persons who gave the statement by not using it against them. Further these statements recorded in terms of section 131 lack evidentiary value. 7. The Ld.DR in the course of his submissions explained the modus operandi by stating that Shri.P.Palanisamy was the controlling person and that the books belong to the firm and these are regular books and not mere loose sheets. In this connection, it is most humbly submitted that these are not regular books maintained by the firm as alleged by the Ld.DR and it cannot be taken as belonging to the firm, particularly in the light of demonstrable evidence to show that the books do not belong to the firm in the preceding paras and the tables annexed to this submission. Though the Ld.DR in the course of his submissions urged that the books found in the firm's premises must be taken as belonging to the firm, it is humbly submitted that no evidence was produced to show which books were belonging to which firm. At any rate, section 292C is only a presumption which is rebuttable and in the light of the overwhelming evidence to show that the books do not belong to the f....
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....ther scope nor justification for adding the amounts as unexplained income in the firm's hands. 11. Copy of seized material named as "THITTAM DOC1 DDGL to THITTAM DOC5 DDGL" in the Pen Drive given by the Department is kept in S.No.2 of Paper Book 3 (Pages 2 to 50 of Paper Book 3). It is not known whether these documents belong to PP Financiers, Oddanchatram or PP Enterprises, Oddanchatram. It is unclear as to how the Assessing Officer has arrived at the quantum of addition based on the above documents is unclear. 12. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon'ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 - 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon'ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in ITA No.272 Ahd 2024 Ahmedabad ITAT (Pages 260 - 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate o....
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....ubmitted that the books were maintained in proper format and consolidated figures were readily available. It was further submitted that the seized material reflected meticulous and accurate accounting across all firms and individual businesses, and demonstrated that the main partner, Shri P.Palanisamy, ensured thorough examination and monthly approval of accounts that he exercised complete control over the business and that no funds were siphoned off by employees or partners. The Ld.DR relied on the assessment order and the ld.CIT(A) order, and submitted that the Assessing Officer had invoked the presumption u/s.292C with detailed reasoning, asserting that the seized material found at the premises of the concerned assessee belonged to them. The Ld.DR also submitted that the retractions made by the partners of the assessee firms were recorded two years after their initial statements, and that the fictional entity was introduced only at that later stage; therefore, it was submitted that such retractions were not reliable on the facts of the case. 71. The relevant portions of the submissions of the Ld.DR, which are common to the assessee group, are reproduced below: "3. Su....
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....ooks maintained are daily, weekly and monthly basis for receipts and payments and the monthly books are named as thittam books. This modus of accounting system is followed in all the firms of the group in different places. This is very evident from the fact that the two-digit system of suppression is established by the assessee in all the business firms and the same modus of the two-digit suppression system the assessee has followed in his personal accounts as well. This is very evident from the facts narrated in the assessment order that the expenditures of mobile recharge, petrol charge etc are in single digits with two-digit suppression in the personal accounts of P Palanisamy. The receipts, expenditure and the loan accounts, capital contribution etc are all entered with two-digit suppression mode which was confirmed by the partners/ employees who were present during the search in different firms and the statements were recorded u/s. 132(4) of the Income Tax Act 1961. In the sworn statement recorded u/s 132(4) from N Sundaramoorthy, partner of PP Enterprises Oddanchatram dated 11.08.2017 in Q No. 18, the partner has confirmed the two-digit suppression system with example. The sa....
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....of seized thittam notes. The extract of the same is attached herewith, wherein the Ld.AR compared the signature of Mr.P.Palanisamy with in the thittam books with that of his signature in Sale deed, the same is extracted herewith for clarification. A bare look at the signatures clarifies the initials and the regular signature. The assessee's claim of existence of a different entity Apart from-the detailed discussion of the above paragraphs of establishment, management and total control of the entire entities of the Group by Shri P Palanisamy, the modus operandi and why and how the books of accounts seized from the respective firm's premises belong to the respective business firms/entities are also explained pointwise in the CIT(A) order in the case of Palanisamy in the paragraphs 7.2.4 to 7.2.6. This is apart from the plethora of the documents, evidences and books off accounts that were seized during the search find brought out by the Assessing Officer during the assessment proceedings of which the sample documents were scanned and made part of the assessment order, along with the Sworn statements recorded from the partners, employees and debtors i....
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.... 4. Submission on the maintenance of accounting system of assessee group - As example PP Financiers, Karur: The Accounting Systems /Modus operandi maintained in the Group Entities: M/s. P.P.Financiers Karur (AY 2018-19): The accounting system and the modus operandi that are followed in all the entities are same and therefore one entity is detailed here discussion, PP Financiers, Karur. It is to be submitted that the Ld.AR during the hearings had raised doubts about the scanned sample copies of seized documents in overall context in few instances. In this connection, it is submitted that the scanned copies are sample pages of the seized books of accounts which are daily, weekly, monthly books and thittam books which are running ledgers for many years. Incriminating material namely "Thittam Books" which were seized, are nothing but monthly ledger accounts of the business. The entire books of accounts were scanned and provided to the assessee Counsel as per the directions of the Tribunal. These documents are running ledgers in each of the firms and businesses and the scanned copies in the assessment order reflects the crux of the unaccounted accou....
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....age No17, the working partner Shri DS Palanisamy in the sworn statement u/s 132(4) of the Act admitted the seized books of accounts and the total outstanding loan of the assessee firm. The Table in page 19 represents the debtors whose statements were recorded and whose loan amounts are reflected in the assessee's books of accounts with the two-digit suppression system. The assessee firm has the modus of last two digits in the paisa column to suppress the income/ profits and other entries in the accounts. This was also confirmed by one of the managing Partner of the firm Mr. D.S Palanisamy. This practice of suppression of two- digits did not just stop with the firm alone this it was the similar practice happening all across the firms as the system established by P Palanisamy. Further, the page No.27 the order reflects the total loan outstanding in the 3 business lines of the firm and consolidated monthly books of the three money lending businesses. The pages 28 and 29 reflects the breakup and the outstanding debtors and the scanned copies of the seized books of the accounts. Also, the entire loan register is available and the same is referred in the assessment order in page No.3....
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....e, why and how the retraction is not valid and the solid presumption u/s. 292C of the Income Tax Act. The Assessing Officer has invoked the presumption u/s.292C of the Act with elaborate reasoning in the assessment orders. Detailed Discussions made by the Ld. CIT(A) The legal issues and the grounds pertaining to the fictional entity, presumption u/s 292C etc was discussed in very detail by the Ld. CIT(A) in the appellate order. The detailed discussion is included in the paragraphs starting from 7.2.1 to 7.2.40 (PP Financiers Karur AY 2018- 19) of the appellate order. The Ld CIT(A) has considered all the submissions made by the assessee and made detailed findings on all the issues that are raised by the assessee. The CIT(A) has discussed about the retraction that was made after two years,' the fictional entity that was brought as afterthought by the assessee, the presumption u/s.292C of the Act etc and with detailed discussion dismissed the grounds." 72. The specific rebuttal advanced by the Ld.DR to the contentions raised by the Ld.AR, with respect to PP Financiers (Oddanchatram), is reproduced below: "M/s. P.P. Financiers Oddanchatram, Th....
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....rrent A/c No.31162298466' handwritten on top of the page. When the referred seized material is a blank page, merely on account of bank account number being handwritten on one of the pages out of the bulk of materials seized along with the fact that there is no other corroborative reference in the rest of the seized materials pointing towards the assessee makes the attribution of seized material to the assessee is untenable. 74. Further, the Ld.DR has pointed to the minutes of the meeting signed by Shri P.Palnisamy and S.Kabilan who are partners of the assessee firm and urged that this was a clear piece of evidence to show that the books belonged to the assessee firm. However, we find that on comparison of signatures in Page 2 of the Paper Book which has the partnership deed containing signature of all partners of the firm with the minutes of meeting at page 44 of Paper book, it can be seen that the minutes of the meeting has more signatories who are not partners of the assessee firm. We find that signatures in S.No.3,4,5 and 7 & 9 are not that of the partners of the assessee firm. When we questioned this, the Ld.DR responded that the minutes could have been signed by proxies....
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....rom a particular fact. It is of three types, (i) "may presume", (ii) "shall presume" and (iii) "conclusive proof". "May presume" leaves it to the discretion of the Court to make the presumption according to the circumstances of the case. "Shall presume" leaves no option with the Court not to make the presumption. The Court is bound to take the fact as proved until evidence is given to disprove it. In this sense such presumption is also rebuttable. "Conclusive proof gives an artificial probative effect by the law to certain facts. No evidence is allowed to be produced with a view to combating that effect. In this sense, this is irrebuttable presumption" Relying on the above decision of the Hon'ble Supreme Court, we find that the presumption u/s.292C by usage of the word "may" gives discretionary powers to adopt the presumption and also makes the presumption rebuttable. 79. The surrounding circumstances, namely i) the absence of any exclusive identification of the assessee firm, ii) the admitted multiplicity of entities where Shri P.Palanisamy is a partner, iii) the unreliability of sole reference to a bank number referred in a blank page of the seized material as evidence,....
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....3390 / Chny / 2024 2017-18 3391 / Chny / 2024 2018-19 3392 / Chny / 2024 82. Since we have refrained from adjudicating the legal issue of approval u/s.153D of the Act for the reason that the issue is kept open as held in the case of P.Palanisamy in para 42 and 43(supra), we proceed to adjudicate the appeal on merits of the case. The year-wise additions made by the Assessing Officer are tabulated as follows: A.Y. Undisclosed investment u/s.69 Undisclosed business income u/s.28 Unexplained money u/s.69A Outstanding loan as per Thittam Note Chit income, Interest income less salary expenses computed by AO Cash balance as per Thittam Books added. Cash seized included in the year of search 2014-15 - 36,90,225 - 2015-16 - 1,62,93,605 - 2016-17 6,40,88,000 3,15,64,230 15,750 2017-18 15,65,82,300 5,23,40,904 7,90,835 2018-19 2,18,12,000 6,18,47,746 87,59,025 Total 24,24,82,300 16,57,36,710 95,65,610 83. The Ld.AR contended, with considerable emphasis, that the seized materials relied upon b....
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.... In contrast, the seized documents record participation of 32, 28, and 29 individuals, including several persons who are not partners of the assessee firm, as established by comparing Page 23 (list of partners) with Pages 112, 113, and 114 (pages containing alleged meeting attendance records). This inconsistency clearly demonstrates that the seized book does not belong to the assessee firm. The presence of signatures of persons who are not partners of the assessee firm in the "meeting of partners" further goes against the presumption that these records pertain to the assessee firm. 4. The seized material shows that profits are being equally divided among 18 individuals under the notation "Messiar's Drawing." As against this, the partnership deed expressly sets out specific profit-sharing ratios among partners, which are unequal and distinct, thus establishing that the seized material does not belong to the assessee firm. 5. The individuals mentioned in the seized documents are partners in several entities and not exclusively in the assessee firm. Merely their names appearing in seized material does not conclusively prove that the books belong....
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....e the amounts brought in as capital / contribution, which form the basis of addition, is not unexplained as the seized material clearly refers to the names of the contributors which the Assessing Officer himself states in various places in the assessment order. 9. The Assessing Officer has alleged that unexplained capital was introduced "under the guise of depositors." However, there is nothing whatsoever in the seized material to suggest that the monies were introduced in the guise of depositors. The allegation is purely based on assumption and surmise, not on any concrete evidence. When the documents explicitly record partner contributions, attributing those amounts to fictitious depositors is beyond the contents of the seized material and legally untenable. 10. Without any loan outstanding, interest alone has been computed for A.Ys.2014-15 and 2015-16, which clearly shows that the addition based on alleged seized material is without any logic or reasoning. 11. Without prejudice to the above contentions, even if the presumption u/s.292C is invoked and it is presumed that the seized papers reflect true contents then any addition based on such presumption....
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....rd the rival arguments and perused the written submissions, paper books and all other materials placed on record. Upon careful consideration of the submissions of the Ld.DR and the material on record, it is apparent that even the Department acknowledges that Shri P.Palanisamy was operating and controlling multiple entities/firms across various locations, following a common accounting methodology. Such a fact, by itself, lends support to the assessee's primary contention that mere references such as "PP/Partners" cannot, without more evidence, establish that the seized material relates exclusively to the assessee firm when there are multiple firms operating from each of the different locations (each of them having a different set of partners as is evidenced by the partnership deeds of the different firms furnished as part of the paper books filed by the assessee). The documents must contain clear and exclusive identification, such as the firm's name, address, PAN, business particulars, etc., to enable attribution to the assessee firm. We find that the AO has referred to the statement of Shri.D.S.Palanisamy, partner of the assessee firm, which is in Tamil and has been reprodu....
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....elongs to or pertains to the assessee firm. We further find that there is a noting against the entry "Messiar's drawing" in the seized material indicating that profit is equally split between 18 partners whereas the share of profit as per partnership deed is different as we can see from Page 12 & 13 of the Paper Book and also there are 19 partners in the appellant as against 18 mentioned against in the noting against the entry "Messiar's drawing" 87. We further find that reliance on the "thittam" books being initialed as "PP" is not a reliable basis to connect the books to the assessee, for the reason the P.Palanisamy is partner in various firms across various locations and therefore presence of his initials alone does not conclusively prove that the books belong to or pertain to the assessee. Moreover, the initials appearing in the seized material are not uniform and differ from page to page, including the pages relied upon in the assessment order. Therefore, the reliance placed on such initials is legally untenable. The page referred to in the assessment order is reproduced below, which demonstrates that the signature of the Shri.P.Palanisamy does not correspond wit....
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....ionary powers to adopt the presumption and also makes the presumption rebuttable. 92. The surrounding circumstances, namely i) the absence of any exclusive identification of the assessee firm, ii) the admitted multiplicity of entities where Shri P. Palanisamy is a partner iii) presence of signature of non-partners in the meeting of partners and payment of sitting fees to non-partners and iv) the initials relied upon not being uniform in the seized materials and further being absent in some sized materials, render the attribution of the seized material to the assessee firm speculative at best. Therefore, in the instant case, while there is evidence to the contrary, there is no evidence to show that the seized material belongs to or pertains to the appellant. We further note that without any outstanding loan, interest alone has been computed for A.Ys. 2014-15 & 2015-16 at Rs.36,90,225/- and Rs.1,62,93,605/-, respectively which points towards unreliability of the seized material. Further, the seized documents themselves record the names of persons who introduced monies as capital contributions or funds. Once the documents identify the contributors, the foundational premise of treat....
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....l Cash seized 2015-16 1,15,47,219 49,97,408 - 2016-17 16,84,756 1,26,12,474 - 2017-18 18,02,995 1,10,64,554 - 2018-19 3,97,480 46,34,647 6,18,560 Total 1,54,32,450 3,33,09,083 6,18,560 96. The Ld.AR argued forcefully that the documents seized, upon which the Assessing Officer has based the impugned additions, do not belong to the assessee firm. It was contended that the seized records referred to in the assessment order are replete with inconsistencies and therefore do not provide any evidence to establish that they pertain to the assessee firm. It was further submitted that even if it is presumed that the seized material belongs to the assessee firm, no addition can be sustained on the basis of capital contributions or funds, which form the foundation of the additions, since the seized documents themselves disclose the identities of the contributors. This fact has also been acknowledged by the Assessing Officer at various points in the assessment order. The written submissions of the Ld.AR are reproduced below: "Based on the following points, it is most humbly submitted that there is no evidence to establis....
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....vidence. Therefore, it is most humbly submitted that the addition is not warranted in the facts and circumstances of the case. ⮚ Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon'ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 - 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon'ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in ITA No.272 Ahd 2024 Ahmedabad ITAT (Pages 260 - 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A. Ys.2015-16 to 2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19. The reference to relevant page numbers in the assessment orders for assessment years 2015-16 to 2018-19 in connection with the above points are enclosed in a table format along with explanation as annexure 1 to 4 to this sub....
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....eproduced statements, along with the translations furnished by the Ld.AR, shows that Shri G.Periasamy does not admit that the seized material belongs to the assessee firm or forms part of its books of account. The statements refer only generally to the finance business and profit-sharing arrangements. Although the Assessing Officer contends that Shri G.Periasamy "confirmed" that the books were maintained by the assessee firm, there is no such confirmation in the statements, nor does Shri G.Periasamy identify the seized loose sheets/ books as connected with the firm or forming part of its accounts. Consequently, the Assessing Officer's conclusion is contrary to what is recorded in the statement and therefore reliance on the statement of Shri G. Periasamy is not relevant. Accordingly, in the instant case there is no evidence to show that the books belong to or pertain to the assessee firm. 101. On the presumption u/s.292C we find that Section 292C uses the words "it may be presumed" and the Hon'ble Apex Court in P. R. Metrani v. CIT 287 ITR 209 (SC) explained the concept of presumptions and expression "may be presumed" as under- "22. A presumption is an inference ....
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....s on merits, and the remaining grounds on merits are not adjudicated and are left open. 103. However, it is noted that the Ld.AR has raised several grounds on merits but has not made any substantive submissions regarding the cash seized from the premises of the assessee amounting to Rs.6,18,560/- which has been added as unexplained money u/s.69A in the A.Y.2018-19. Therefore, we hold that the cash belongs to the assessee from whose premises it was seized and dismiss this ground of the assessee. 104. On the next issue, the Ld.AR has contended that the provisions of section 115BBE, which prescribe higher rates of tax, cannot be invoked for assessment years prior to AY 2018-19. Although this issue has become academic, following the decision of the Hon'ble Madras High Court in S.M.I.L.E Microfinance Limited v. ACIT (SCC OnLine Mad 8416), we have held in the case of P. Palanisamy that the enhanced rate of 60% prescribed u/s. 115BBE is not applicable to transactions that occurred prior to 01.04.2017. The ratio of the decision on this issue in P. Palanisamy shall apply mutatis mutandis to the case of the assessee. IX. PP Enterprises (Bengaluru) - AYs 2016-17 to 2018-19 &Al....
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....g merely "dumb documents", have no evidentiary value unless supported by corroborative material. In absence of any linkage between this loose sheet and the assessee firm, no substantive addition can legally be sustained merely on such loose, unsigned, uncorroborated document. Reliance is placed on the following cases where it has been held that addition cannot be made based on loose sheets, in S.No.1 to 5 of Case Law Book - 1: Particulars Page No. Para No. DCIT v Sunil Kumar Sharma [2024] 165 taxmann.com 846 (SC) 3 - DCIT v Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) 19 26 Common Cause (A Registered Society) v UOI [2017] 77 taxmann.com 245 (SC) 49 to 52 16 to 21 CBI v V.C. Shukla and Others (1998) 3 SCC 410 85, 86 37, 38, 39 Shri Rajeshbhai Jivraj Desai v DCIT in ITA No.2291 / AHD / 2017 - Ahmedabad ITAT 103, 105, 106 7, 10.5 ⮚ It is further submitted that the addition cannot be made in the hands of the firm since the amounts mentioned in the loose sheet clearly refers to the names of the contributors. It is submitted that, even if the presumption u/s.292C is invoked and it is presumed that....
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....r seized material referred in the assessment order being ANN/PPE/14, ANN/PPE/15 & ANN/PPE/18 has not been available and therefore it is not known how the Department has arrived at the assessed income. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon'ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 - 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon'ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in ITA No.272 Ahd 2024 Ahmedabad ITAT (Pages 260 - 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A. Ys.2016-17 to 2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19. The reference to relevant page numbers in the assessment orders for assessment years 2016-17 to 2018-19 in connection with the above points are enclosed in a t....
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....mat. 110. On the presumption u/s.292C we find that Section 292C uses the words "it may be presumed" and the Hon'ble Apex Court in P. R. Metrani v. CIT 287 ITR 209 (SC) explained the concept of presumptions and expression "may be presumed" as under- "22. A presumption is an inference of fact drawn from other known or proved facts. It is a rule of law under which courts are authorized to draw a particular inference from a particular fact. It is of three types, (i) "may presume", (ii) "shall presume" and (iii) "conclusive proof". "May presume" leaves it to the discretion of the Court to make the presumption according to the circumstances of the case. "Shall presume" leaves no option with the Court not to make the presumption. The Court is bound to take the fact as proved until evidence is given to disprove it. In this sense such presumption is also rebuttable. "Conclusive proof gives an artificial probative effect by the law to certain facts. No evidence is allowed to be produced with a view to combating that effect. In this sense, this is irrebuttable presumption" Relying on the above decision of the Hon'ble Supreme Court, we find that the presumption u/s.292C ....
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..... 112. It is further noted that the Ld.AR raised several grounds on merits but did not advance substantial submissions regarding the cash seized from the premises of the assessee amounting to Rs.37,01,940/- which has been added as unexplained money u/s.69A in the A.Y.2018-19. Consequently, we hold that the cash belongs to the assessee from whose premises it was seized, and this ground of the assessee is dismissed. 113. On the next issue, the Ld.AR contended that the enhanced rate of tax u/s.115BBE cannot be invoked for assessment years prior to AY 2018-19. Although this issue has become academic, relying on the decision of the Hon'ble Madras High Court in S.M.I.L.E. Microfinance Limited v. ACIT (SCC OnLine Mad 8416), we have held in the case of P. Palanisamy that the higher rate of 60% prescribed u/s. 115BBE is not applicable to transactions occurring prior to 01.04.2017. The ratio of that decision is applied mutatis mutandis to the facts of the present case. X. PP Enterprises (Oddanchatram) - AYs 2017-18 & 2018-19: A.Y. ITA NO. 2017-18 3365 / Chny / 2024 2018-19 3366 / Chny / 2024 114. The facts pertaining to the issue u/s.153C in the case of PP E....
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....ent order and argued that there is no evidence to connect the seized material exclusively to the assessee firm. Even if it is assumed, arguendo, that the seized material pertains to the assessee, the additions cannot be sustained because the alleged capital contributions or funds reflected in the seized material are not "unexplained." The documents themselves clearly record the names of the persons who made the contributions, a fact which the Assessing Officer has also acknowledged at several places in the assessment order. The written submissions filed by the Ld.AR are reproduced below: "Based on the following points, it is most humbly submitted that there is no evidence to establish that the seized material belongs to or pertains to the assessee firm. 4. The Assessing Officer relies upon a statement of N. Sundaramoorthy referring to the alleged commencement of regular business of assessee firm on 04.09.2016. This is factually incorrect because the partnership deed itself was executed only on 19.12.2016. Hence, no business could have been carried out by the assessee firm before that date. The statement relied upon has been subsequently retracted and therefore rel....
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....Department is only trying to use a pick and choose to attack the assessee firm and let go of the persons who gave the statements. This can also be understood as some kind of an inducement given to the persons who gave the statement by not using it against them. Further these statements recorded in terms of section 131 lack evidentiary value. 15. The Ld.DR in the course of his submissions explained the modus operandi by stating that Shri.P.Palanisamy was the controlling person and that the books belong to the firm and these are regular books and not mere loose sheets. In this connection, it is most humbly submitted that these are not regular books maintained by the firm as alleged by the Ld. DR and it cannot be taken as belonging to the firm, particularly in the light of demonstrable evidence to show that the books do not belong to the firm in the preceding paras and the tables annexed to this submission. Though the Ld. DR in the course of his submissions urged that the books found in the firm's premises must be taken as belonging to the firm, it is humbly submitted that no evidence was produced to show which books were belonging to which firm. At any rate, section 292C....
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.... the firm's hands. 11. Copy of seized material named as "THITTAM DOC1 DDGL to THITTAM DOC5 DDGL" in the Pen Drive given by the Department is kept in S.No.2 of Paper Book 3 (Pages 2 to 50 of Paper Book 3). It is not known whether these documents belong to PP Financiers, Oddanchatram or PP Enterprises, Oddanchatram. It is unclear as to how the Assessing Officer has arrived at the quantum of addition based on the above documents. 12. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon'ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 - 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon'ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in ITA No.272 Ahd 2024 Ahmedabad ITAT (Pages 260 - 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A.Y.2017-18 when the same would be applicable only for the transac....
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....f the paper books filed by the assessee). For the documents to be attributable to the assessee, there must be clear indication such as the firm's name, address, PAN, or other business particulars. The Ld. DR relied on the statement of Shri.N.Sundaramoorthy who has said in his statement that the regular business of the appellant commenced on 04.09.2016 and stated that the entries in the seized material also start from 04.09.2016 and therefore the books belong to be appellant firm. The Ld. AR has controverted this by enclosing the partnership deed in the Paper Book which shows that the appellant firm was formed only on 19.12.2016. Therefore, we find that the statement of Shri. N. Sundaramoorthy does not hold credence as it is factually incorrect and seized material cannot be taken to belonging to appellant based on the statement of Shri. N. Sundaramoorthy alone. Further the Ld. DR relied upon a document referring to the same as "Consortium of lenders" and stated that the name of Shri P.Palanisamy and other partners are forming part of it thereby making it clear that the seized material belonged to the assessee. We find that the "Consortium of lenders" mentioned by AO in Page 42 o....
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....esumption is also rebuttable. "Conclusive proof gives an artificial probative effect by the law to certain facts. No evidence is allowed to be produced with a view to combating that effect. In this sense, this is irrebuttable presumption" Relying on the above decision of the Hon'ble Supreme Court, we find that the presumption u/s.292C by usage of the word "may" gives discretionary powers to adopt the presumption and also makes the presumption rebuttable. 121. The surrounding circumstances namely, i) the absence of exclusive identification of the assessee firm, ii) the admitted existence of multiple entities where Shri P.Palanisamy is a partner iii) Unreliability of statement of Shri.N.Sundaramoorthy iv) the consortium of lenders referring to 38 people while the assessee firm has only 18 partners, render any attribution of the seized documents to the assessee firm speculative at best. Therefore, in the instant case, there is no evidence to show that the seized material belongs to or pertains to the assessee. More importantly, the seized material itself records the names of persons who introduced funds as capital contributions. Where the documents identify the contributors,....
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....he seized material, as referred to in the assessment order, contains several inconsistencies and defects, and therefore does not furnish any evidence capable of establishing that the material is connected with the assessee firm. 125. It was further argued that even assuming, for the sake of argument, that the seized material belongs to the assessee firm, the additions cannot be sustained because the alleged capital contributions/advances on which the additions are based are not "unexplained". The seized records themselves specifically identify the names of the persons who made such contributions, a fact that has been acknowledged by the Assessing Officer at various places in the assessment order. 126. The written submissions of the Ld.AR are reproduced hereunder: "Based on the following points, it is most humbly submitted that there is no evidence to establish that the seized material belongs to or pertains to the assessee firm and even if it is presumed so, the addition cannot be made in the hands of the firm since the amounts brought in as capital / contribution, which form the basis of addition, is not unexplained as the seized material clearly refers to the names....
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....ed and therefore it is beyond preponderance of probabilities to assume the assessee has paid huge advance without any having executed any document in this regard. When no transaction has materialized, there is no "investment" capable of being taxed u/s. 69. Reliance is placed on the following cases where it has been held that addition cannot be made based on loose sheets, in S.No.1 to 5 of Case Law Book - 1: Particulars Page No. Para No. DCIT v Sunil Kumar Sharma [2024] 165 taxmann.com 846 (SC) 3 - DCIT v Sunil Kumar Sharma [2024] 159 taxmann.com 179 (Karnataka) 19 26 Common Cause (A Registered Society) v UOI [2017] 77 taxmann.com 245 (SC) 49 to 52 16 to 21 CBI v V.C.Shukla and Others (1998) 3 SCC 410 85,86 37,38,39 Shri Rajeshbhai Jivraj Desai v DCIT in ITA No.2291 / AHD / 2017 - Ahmedabad ITAT 103, 105, 106 7,10.5 5. The Assessing Officer states that Shri. P. Ragupathy admitted that payment of Rs.10,12,50,000/- to land owners as advance to mark / reserve the property. It is most humbly submitted that the alleged admission of Shri. P. Ragupathy was recorded during survey u/s.133A and therefore the statement ha....
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....books of accounts available at head office at No.21, First Floor, 17th E Cross, LBS Nagar, Indira Nagar 2nd Stage (Page 131 of Paper Book 3), which is not the address of PP Constructions which is located at Karur. Further the AO has assumed that the entire consideration for the project of Rs.10,12,50,000/- has been paid in cash which is impossible Further, having chosen to let go of the persons who have received the purported moneys, the Department cannot use a pick and choose method to take action only against the assessee by assessing the same as income of the assessee. 7. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon'ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 - 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon'ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in ITA No.272 Ahd 2024 Ahmedabad ITAT (Pages 260 - 270 of CL book). Therefo....
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....he seized documents. The same is corroborative to the seized documents and has the evidentiary value. The arguments of the assessee do not have any merits as it omits the seizure of the incriminating documents. The complete details of land transactions and the cumulative corroborative evidences impounded were elaborately detailed in the page number 16 (B- l) of the Assessment order of Shri Raghupathy (AY 2018-19). The impounded documents include bank statements, details of the payments made to the concerned parties, the cash vouchers duly signed by the recipients acknowledging the cash received by the concerned persons etc. The sworn statement was recorded based on the incriminating evidences; that impounded materials and the sworn statement corroborative incriminating material are evidences as per the Act. The land consideration was added in the hands of Mr. P. Ragupathy Protectively, as he did not provide cash and bank reconciliation. All these deposits were made during the demonetization period to be transferred through bank account and all these are available record. The cumulative evidences that are part of the seized documents and assessment record conclusively establish that....
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....exus or evidence demonstrating that the firm has actually invested in Karur Apartment construction, and in the presence of evidence to the contrary available in the seized material, the addition u/s.69 of the Act in the hands of the assessee firm does not have any justification. 131. On the presumption u/s.292C we find that Section 292C uses the words "it may be presumed" and the Hon'ble Apex Court in P. R. Metrani v. CIT 287 ITR 209 (SC) explained the concept of presumptions and expression "may be presumed" as under- "22. A presumption is an inference of fact drawn from other known or proved facts. It is a rule of law under which courts are authorized to draw a particular inference from a particular fact. It is of three types, (i) "may presume", (ii) "shall presume" and (iii) "conclusive proof". "May presume" leaves it to the discretion of the Court to make the presumption according to the circumstances of the case. "Shall presume" leaves no option with the Court not to make the presumption. The Court is bound to take the fact as proved until evidence is given to disprove it. In this sense such presumption is also rebuttable. "Conclusive proof gives an artificial p....
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....him and his associates and that the records were maintained at an address unrelated to the assessee. Further, the Ld. AR stated that even to the date of hearing, the impugned land has not been registered in the name of the assessee and this has not be controverted. We find it against preponderance of probabilities to image that such huge money would have been given without property being registered in the names of the persons alleged to have given such money. Therefore, the protective addition based on the impugned loose sheet cannot be sustained and the ld. CIT(A) has rightly deleted the same. 134. On the next issue, the Ld.AR has contended that the enhanced tax rate u/s.115BBE cannot be invoked for assessment years prior to AY 2018-19. Although this issue becomes academic, following the decision of the Hon'ble Madras High Court in S.M.I.L.E Microfinance Ltd. v. ACIT (SCC OnLine Mad 8416), we have held in the case of P. Palanisamy that the enhanced rate of 60% u/s.115BBE is not applicable for transactions occurring before 01.04.2017. The ratio of that decision shall apply mutatis mutandis to the present case. 135. In the result, appeal filed by the assessee and departmen....
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....5-16 Allowed ITA 3372/CHNY/2024 [A] Palanisamy Raghypathy 2016-17 Allowed ITA 3373/CHNY/2024 [A] Palanisamy Raghupathy 2017-18 Allowed ITA 3374/CHNY/2024 [A] Palanisamy Raghupathy 2018-19 Allowed ITA 3375/CHNY/2024 [A] Sellamuthu Kabilan 2012-13 Allowed ITA 3376/CHNY/2024 [A] Sellamuthu Kabilan 2013-14 Allowed ITA 3377/CHNY/2024 [A] Sellamuthu Kabilan 2014-15 Allowed ITA 3378/CHNY/2024 [A] Sellamuthu Kabilan 2015-16 Allowed ITA 3379/CHNY/2024 [A] Sellamuthu Kabilan 2016-17 Allowed ITA 3380/CHNY/2024 [A] Sellamuthu Kabilan 2017-18 Allowed ITA 3381/CHNY/2024 [A] Sellamuthu Kabilan 2018-19 Allowed ITA 3382/CHNY/2024 [A] P.P. Enterprises 2017-18 Allowed ITA 3383/CHNY/2024 [A] M/s. P.P. Enterprises 2018-19 Allowed ITA 3384/CHNY/2024 [A] M/s. P.P. Constructions 2015-16 Allowed ITA 3385/CHNY/2024 [A] M/s. P.P. Constructions 2016-17 Allowed ITA 3386/CHNY/2024 [A] M/s. P.P. Constructions 2017-18 Allowed ITA 3387/CHNY/2024 [A] M/s. P.P. Constructions 2018-19 Allowed ITA 3388/CHNY/2024 [A] M/s. ....
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....e approval u/s 153D of the IT Act is hereby accorded to the Assessing Officer to complete the assessments determining the assessed Income as proposed in the draft assessment orders as below, AY Detected Income Returned Income Assessed Income 2010-11 0 30,47,350 2,17,18,410 2011-12 0 22.64,560 26.86,240 2012-13 0 25,16,470 7,26,45,962 2013-14 0 19,92,190 4,65,48,446 2014-15 0 15,79,510 6,44,31,332 2015-16 0 24,36,430 6,77,39,220 2016-17 3,25,68,000 34,74,770 14,49,24,688 2017-18 2,83,13,555 32,63,380 21,96,46,369 2018-19 2,75,83,635 42,75,760 40.20.65,483 35 5. Tax computation shall be personally verified by the Assessing Officer and shall ensure that the appropriate penalty proceedings are Initiated as per latest amendment wherever it is applicable. 6. The Assessing Officer shall forward copies of the Assessment Orders to this office for records, soon after the assessments are completed. (DR.NARENDRAKUMAR NAIK, I.R.S.) Joint Commissioner of Income-tax Central Range, Coimbatore. To: The Assistant Commissioner of Income-tax, Central Circle-3, Coimbatore. Document 2 Case Law relied on by DR Kailash Gahlot v DCIT ITA No.3431 / Del / 2023 The substan....
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....the approval granted by the Additional CIT is bad in law and consequent assessment order passed in all these six assessment years is bad in law." Ramji Vaish & Ors v DCIT & Ors ITA No.36 / Alld / 2023 Para 44: Assessee has not been able to prove that the JCIT gave the approvals mechanically, while the department has placed both guidelines and the uncontroverted affidavit of the approving authority. Therefore we are not able to hold the view that the approvals have been rendered mechanically, without reference to the materials on record Para 50: Approval to be granted for each assessment year and therefore set aside to obtain approvals in accordance with law. It is evident from approval itself, which has been issued for individual assesses by referring to "firm" and based on the other discrepancies pointed out i.e,, . Numbers in the table of additions provided does not add up. . Undisclosed income is mentioned as "00" in some of the years. that the approval has been issued blatantly without application of mind. Dheeraj Chaudrary v ACIT [2025] taxmann.com 360 (Delhi-Trib) 9TM) -Enclosed in S.No.7 of Case Law Book - 3 Paras 8 & 9 (Pages 82 and 83 of CL Book-3) ....
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.... as 5684 13216 58 Jaments 4. 15 15 94897 94897 8 1119 200gratis Pro8-129 58180 vor Pour Valy 50600 00 190520 00 Og nor utin. 94 10 20 PO 241020 ADLO 518/8.1 7 Document 5 AAOFPSEB2P- PPFINANCIERS ITBAJAFUS/2502024-2511087172851(1) sale deed is compared with 'Initials' put on Thittam books; it is clear that the way he writes PP in complete signature is same as the style in which he signed in initials on Thittam Books. (initialled in thittam books) (signature in sale deed) 7.2.6.1 It shows that Iteis Smi P. Palanisamy who has signed gionthy consolidation of Thittam Books which establishes that seized |books perain to appellant firm SHIONDA WAAAYMONTARApartner of appellant firm has also accepted Document 6 திடà¯à®Ÿà®®à¯ 78 2 1.8.16 To. 31.8.16 à®®à¯à®•à¯à®•à®¿à®Ÿà¯à®Ÿ இயலà¯à®ªà¯ 272651 78000 00 21820159 7800000 1 10589 80 21419 2152 1058980 0)LUNDI221 14200000 q: (86)800] 2152 450 00 FL:593,58212 980 00 UNBrin Limon 183316 00 OLUNSL 2100 000 Ling 37000 00 உடà....
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....9/20 Res onain stitmy $21000 Olaq Limax 75. gun ners 177 00 BURL A 43 00 dicendo Bin aria BILAR 1 dieon Strinn 32 10 115 15% 200,00 W 7700,00 Banesi 1 MI 160 20000,00 € OMLeti mail 1250000 1.50 86000 00 6-3 42000 Dourada 2416:00 2.10101:00:00 416420000/ Dommicos 10 193403:0019340300 363900,00 310000 A OK& 29 Depuisin laviel amint unión Tan niner 109, 08100 MI4 8600 Witten 22021 2007 6:00 Olay Don mina 1115183.00 2531/06 135 800 185519 00 Downtime 82 25BA ( 201 les original 125 165740,00 (1 22920 00/ 189 161200:00 # 1000 00 410 1, 000:00 + 300000. 470940,00 + 1992000 9 திடà¯à®Ÿà®®à¯. 85 16 1. 3.17 To 31.3.17 திடà¯à®Ÿà®®à¯, 89 24 .7. 17 70 31. 7.17 shame : 62 0 50 1.3.17 to 31.3.17 Dans: 58 66 1.7.17 do 31.7.17 Socio - 20 49 Dph 4 tym 0-03 to TH1. 17 03.1 703-53 2 28 Su gen 01.07.17 h0 01.001 Bon SUL FON 2026 15% division 2002600- og 204 2277200/ Bien 2020 75000 QUEMminori 200 159000/ Orijinal -2014 47120 00 the Beach with $488.00....