TaxTMI 
TaxTMI 
2025 (4) TMI 2038
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....eals as well. The brief facts of the case, as noted, are that, the assessee is engaged in the business of trading of Garnet, Ilmenite, Rutile and Zircon. Search u/s 132 of the Act was carried out in the group concerns of VV Group on 25.10.2018. In the course of the said search, several incriminating materials were seized, which inter alia suggested that the assessee had supplied huge quantity of Ilmenite to M/s VV Group, which represented the assessee's unaccounted sales and therefore, the premises of the assessee was also subjected to search. The Authorized Officer found a green-colored diary [which was marked as ANN/MP/VVTP/B&D/S] from the office of the Head of the Finance &Accounts of M/s VV Group, which inter alia included details of unaccounted cash payments made by M/s VV Group to various business concerns; and that the noting's at Pages 112 & 113, in his view, contained unaccounted business dealings of VV Group with the assessee. Also, another loose-sheet folder was found and seized as annexure ID marked ANN/MP/VVPT/LS/S (Sl No. 3), in which certain cash receipts with quantity details were found to be noted, which the GM (Finance & Accounts) of VV Group, in his statement rec....
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.... 2.1 The Ld CIT(A) erred in deleting the addition made towards unaccounted Sales made to M/s. V.V.group of companies, though Sri. Ramesh, Managing director of assessee company admitted in his sworn statement that the assessee company made sales to M/s.V V group of companies through Shri.Thangaraj @ Jayapal, employee of assessee company and such sales were partly accounted in the books of the assessee and consideration for unaccounted sales was received in the form of cash. 2.2 The Ld.CIT(A) failed to appreciate that the statement of Sri. Ramesh was further strengthened by the sworn statement of Shri.Thangaraj dated 02/02/2019, in which he stated that he had received uncrossed cheques from M/s.VV group and cash withdrawn were returned to Managing partners of VV group. But Shri. Thangaraj could not provide any evidence to substantiate returning of cash as such. 2.3 The Ld.CIT(A) erred in holding that the addition towards unaccounted cash sales of Ilmenite, Zircon & Rutile was made on the basis of mail backups seized from third party premises and not on the basis of any incriminating materials found in the premises of the assessee company, without appreciating that m....
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....at, search operation u/s 132 of the Act was conducted both in the case of VV Group and the assessee on 25.10.2018. In the course of search, certain incriminating material pertaining to the assessee were found from the premises of the VV Group. The dispute in the present case revolves around the issue that, as to whether the AO could have legally made addition on the basis of un corroborated material found in the course of search from third party premises in the assessments framed u/s 153A of the Act for the unabated years. It has now been well settled in law by the Hon'ble Supreme Court in the case of PCIT vsAbhisar Buildwell (P) Ltd. (454 ITR 212) that, no addition can be made in unabated assessments in the absence of any incriminating material found in the course of search. The conclusion recorded by the Hon'ble Apex Court at Para 14 of their order is noted to be as follows: "14. In view of the above and for the reasons stated above, it is concluded as under: (i) that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment under section 153A; (ii) all pending assessments/reassessments s....
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.... assessment order, the appellant raised various issues by way of additional grounds (supra) and the submissions upon it, the undersigned has taken up the same for adjudication upon merits. While going through the facts of the case it is obvious that the incriminating materials were not seized from the business premises of the appellant. The AO has completely relied upon the mail back up taken during the course of search at the business premise of VV Group. Only by analyzing the back up and the bank statements, the AO arrived at the conclusion that VV group has booked expenditure by way of bearer cheque issued in the name of many persons including Shri.Jayapal. the AO in the assessment order at page No. 12 & 13 has observed about the transaction files attached to the mail communications "soft copy of all files are enclosed (3 XL Files-name starting as A2)". Further, in respect of the bank payment summaries, details regarding payments to shri. Jayapal for the purchase of Illiminte, Zircon, Rutile fort the FYs form 2012-13 to 12016-17 were culled out and tabulated [soft copy of all files are enclosed (6XL files and a word file name starting as A3] The undersigned during the course of ....
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.... mail and bank statements rather than based upon incriminating materials seized during the course of search. The regular books of accounts ( bank accounts) maintained by the third parties at any stretch of imagination cannot be treated as "incriminating material"[PCIT Vs Param Diary Ltd ITA No. 37 /2021 (Delhi HC)] 7.4.15 The AO in the assessment order passed u/s 153A of the Act has relied upon the details that were created post search and attempted to treat the same as "incriminating material" completed the assessment u/s 153A of the Act . In addition the so called back up mail relied upon by the AO in the assessment order were not seized at the premises of the appellant company. Obviously, the action of the AO in treating the same as incriminating material and making additions in the hands of the appellant is factually incorrect and legally not tenable. 7.4.16 The appellant during the course of appellate proceedings has brought to the notice of the undersigned about the statement recorded from Ms. K.Chitra (CA) who is looking after the accounts of M/s. VV Minerals in answer to question No. 117 has deposed as under:- Q.117 State whether the books of acco....
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....ring the course of search to arrive at a meaningful legal conclusion in accordance with the law. 7.4.19 The AO in the assessment order has relied upon a part of the statement and arrived at a erroneous conclusion that the Appellant company is involved in unaccounted sales. In this regard the Hon'ble Chennai Tribunal in the case of ACIT v. Saveeta Institute of Medical and Technical Sciences [2012] 25 taxmann.com 138 (Chennai -Trib) has held that addition made on the basis of the sworn statement recorded u/s 132(4) of the Act cannot be sustainable and further held that the admission made u/s 132(4) by the Special Officer of the College could not even be treated as a valid piece of evidence. 7.4.20 In the case of Shri. Ganesh Trading Company v. CIT [2013] 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held that a statement made u/s 132(4) of the Act is a piece of evidence but the same is not conclusive particularly because it is self-incriminating. Accordingly it was concluded that no liability could be fastened solely on the basis of sworn statement. In arriving at this decision, the Court followed the judgement in the case of KailashbenManharlalChoski ....