NARENDRA SAMPATLAL BAFNA, AHMEDNAGAR V. INCOME TAX OFFICER,WARD-1,AHMEDNAGAR, AHMEDNAGAR

CO 25/PUN/2024

• Counselvise Citation: 2524523 RSA 2024
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-08-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-08-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 05-07-2024
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KEYUR PATEL
• Assessee Lawyers: PRASAD BHANDARI
• Keywords: Income from undisclosed sources; Search and seizure; Loose papers; Document seized; Opportunity of cross examination; Source of fund; Corroborative evidences; Third party statement; Retraction; Reason to believe; Documents seized; Reassessment proceedings; Set aside
• Section: 147; 148; 132; 143(3); 142(1); 153A; 250; 143(2); 69A; 13; 22; 153C; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND SHRI VINAY BHAMORE, JUDICIAL MEMBER ITA No.688/PUN/2024 Assessment Year : 2017-18 ITO, Ward-1, Ahmednagar Vs. Narendra Sampatlal Bafna Bafna Tyre and Auto, Ujwal Complex, Station Road, Ahmednagar – 414001 PAN: AAVPB7561N (Appellant) (Respondent) CO No.25/PUN/2024 Assessment Year : 2017-18 Narendra Sampatlal Bafna Bafna Tyre and Auto, Ujwal Complex, Station Road, Ahmednagar – 414001 Vs. ITO, Ward-1, Ahmednagar PAN: AADCV5473G (Cross Objector) (Respondent) Assessee by : Shri Prasad Bhandari Department by : Shri Keyur Patel, CIT Date of hearing : 05-08-2024 Date of pronouncement : 19-08-2024 O R D E R PER R.K. PANDA, VP : This appeal filed by the Revenue is directed against the order dated 12.02.2024 of the CIT(A) / NFAC, Delhi, relating to assessment year 2017-18. The assessee has filed the Cross Objection against the appeal filed by the Revenue. For the sake of convenience, the appeal filed by the Revenue and the Cross 2 ITA No.688/PUN/2024 CO No.25/PUN/2024 Objection filed by the assessee were heard together and are being disposed of by this common order. 2. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 02.02.2018 declaring total income of Rs.18,16,300/- which was revised on 22.07.2018 declaring total income at Rs.31,47,670/-. Subsequently, the Assessing Officer on the basis of information received from the Investigation wing that the assessee has taken cash loan of Rs.6,20,00,000/- from various parties through Mr. Sachin Nahar, which is not reflected in the return of income and therefore has escaped assessment, reopened the assessment by recording the following reasons: “Reasons recorded for reopening AY 2017-18 reads as follows: "1. Brief Facts of the case: In original return of income for AY 2017-18 was filed by the assessee on 02.02.2018 by declaring Total Income of Rs.18,16,300/-. The Income was revised on 15.02.2018 by declaring Total Income of Rs.22,77,170/-. The Income was further revised on 22.07.2018 by declaring Total income of Rs. 31,47,670/-. This case was not subjected to Scrutiny assessment u/s. 143(3) of the Act. 2. Brief details of information collected/received by AO : In this case information in respect of Shri NARENDRA SAMPATLAL BAFNA, being Cash loan of Rs.6,20,00,000/- was received from DCIT Central Circle 1(1) Pune through the Insight Portal. The Information was passed on by the DCIT Central Circle 1(1) Pune on the basis of the details emerged during the statement recorded u/s. 132(4) of Shri Sachin Nahar during the course of Search and Post Search enquiries in the case of Shri Sachin Nahar by the Investigation Wing and also during the course of the enquiries conducted during the course of Search assessment by the Central Circle 1(1) Pune. Search and Seizure action u/s. 132 of Income Tax Act, 1961 was carried out in the case of Shri Sachin M. Nahar on 01.08.2017 by the DDIT(Inv.), Unit-1 (4), Pune. Shri Sachin Nahar is working as finance broker. He is working as middleman who provides a platform for those investors who are having surplus fund and the borrowers who are in the need of funds. During search in his statement u/s. 1'32(4) of the Act, he stated that he is doing his business through 3 ITA No.688/PUN/2024 CO No.25/PUN/2024 cheque as well as in cash and explained the modus operandi of his business. Shri Sachin Nahar has admitted that various parties have taken cash loans from various other parties through him, since he was a broker between these two parties. Shri Sachin Nahar has received commission for this transaction. The details of the parties who have taken cash loans, have been obtained from Shri Sachin Nahar. There is also a mention of these persons in the seized documents. During search at his residence, various notebooks, notepad and loose papers were found and seized as Bundle No 1 to 28 . In his statement recorded u/s. 132(4) of the Act at his residence on 02.08.2017, Shri Sachin Nahar stated that this seized material contain details of his money lending business in Cash and the Notings therein are related to Principal amount lent by lenders & borrowed by borrowers, names of lenders & borrowers, interest component etc. In the said seized registers, there are two types of notings, one which contains the accounts of borrowers and other registers contain notings of names of investors (depositors) in coded words. Here it is important to mention that Sachin Nahar used to write the name of investors and borrowers in certain coded words. Further the amounts mentioned in the seized documents are short by three zeros. For example for amount 100000, the noting is made 100 in seized registers. During the Search action as well as post search enquiries, Shri Sachin Nahar was asked to submit the details of all coded names and exact amount mentioned against their names so that exact identity of those persons can be ascertained. In this regard, a statement of Shri Sachin Nahar was also recorded u/s. 131 of the Act on 17.11.2017 & 27.11.2017. During the assessment proceeding, once again Shri Sachin Nahar was asked to submit the above said details. On the basis of details provided by Shri Sachin Nahar, particularly name, PAN, mobile no. and other details, efforts have been made to identify various Depositors and Borrowers. In this regards, the details of the following Borrower who has borrowed amount mentioned in table below in CASH. Sl. No. Name PAN Amount Deposited in CASH (Rs.) 1 Narendra Sampatlal Bafna AAVPB7561N 6,20,00,000/- The above transaction took place in cash. In the case of borrowers, since they have borrowed funds in cash, it is violation of provisions of section 269SS & 269T of the Act and the interest amount paid by them in cash is their unaccounted income. Shri NARENDRA SAMPATLAL BAFNA (PAN: AAVPB7561N), has taken cash loan of Rs.6,20,00,000/- from various parties through Shri Sachin Nahar during the FY 2016-17 relevant to AY 2017-18. During the course of the Search action u/s. 132(4) of the IT Act, statement u/s. 132(4) of the IT Act, 1961 of Shri Sachin Nahar was recorded wherein Shri Sachin Nahar has admitted these facts and submitted the related documents regarding cash loan taken by the party and submitted the details submission containing name of the above mentioned person viz Shri NARENDRA SAMPATLAL BAFNA (AAVPB7561N) and the Assessment Year in which the transactions were made. On the basis of the Statement recorded 4 ITA No.688/PUN/2024 CO No.25/PUN/2024 u/s. 132(4) of Shri Sachin Madanlal Nahar during the course of the Search action and on the basis of the Statements recorded u/s. 131 during the course of the Post Search proceedings and during the course of the Search assessment proceedings it is hereby confirmed that Shri NARENDRA SAMPATLAL BAFNA (PAN: AAVPB7561N), has taken cash loan of Rs.6,20,00,000/- from various parties through him. 3. Analysis of information collected/received by AO: The transactions of the assessee Shri NARENDRA SAMPATLAL BAFNA (PAN: AAVPB7561N), viz Cash loan of Rs.6,20,00,000/- from various parties through Shri Sachin Nahar, is not reflecting in the Return of income and enclosures of AY 2017-18. Therefore, the Cash loan of Rs.6,20,00,000/- taken by Shri NARENDRA SAMPATLAL BAFNA from various parties through Shri Sachin Madanlal Nahar is an escaped assessment within the meaning of section 147 of the IT Act. 4. Basis of reason to believe and details of escapement of income: The transactions of the assessee Shri NARENDRA SAMPATLAL BAFNA being Cash Loan of Rs.6,20,00,000/- from various parties through Shri Sachin Madanlal Nahar are in cash with an objective to evade the taxes. The transactions of the assesseeNARENDRA SAMPATLAL BAFNA (PAN: AAVPB7561N), viz Cash loan of Rs.6,20,00,000/- from various parties through Shri Sachin Nahar is in cash and not reflected into the balance sheet of the assessee are with an objective to evade the taxes. Therefore, I have reason to believe that the Cash Loans of Rs.6,20,00,000/- taken by NARENDRA SAMPATLAL BAFNA from various parties through Sachin Nahar is an escaped assessment within the meaning of Explanation 2(b) to Section 147 of the IT Act.” 3. Accordingly the Assessing Officer issued notice u/s 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on 31.03.2021 requesting the assessee to file the return of income. In response to the notice issued u/s 148, the assessee filed the return on 07.04.2021 declaring total income of Rs.31,47,670/-. The Assessing Officer thereafter issued statutory notices u/s 143(2) and 142(1) of the Act which were duly served on the assessee. The Assessing Officer also supplied the reasons recorded for reopening of the assessment as requested by the assessee. 5 ITA No.688/PUN/2024 CO No.25/PUN/2024 4. During the course of assessment proceedings the Assessing Officer asked the assessee to explain as to why the amount of Rs.6,20,00,000/- received by the assessee as cash loan from various parties through Shri Sachin Nahar should not be added u/s 69A of the Act and brought to tax by invoking the provisions of section 115BBE of the Act. The assessee replied that the provisions of section 69A of the Act are not applicable in the case of the assessee since as per the reasons for reopening, the assessee has received cash loan from various parties through Shri Sachin Nahar i.e. if the money is borrowed, it cannot be considered as the assessee’s own money. Further, the assessee also denied the allegation of the Revenue that he has taken any cash loan from Shri Sachin Nahar during the year. The assessee submitted that he does not know Shri Sachin Nahar at all. Apart from the above, the assessee also contended that the proceedings in the case of the assessee should have been initiated and completed u/s 153C of the Act as the information pertaining to the assessee was received during the course of search proceedings. 5. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. So far as the validity of the re-assessment proceedings that it should have been completed u/s 153C of the Act is concerned, the Assessing Officer noted that as a result of search and seizure action u/s 132 of the Act in the premises of Shri Sachin Nahar, some incriminating documents showing that Shri Sachin Nahar had provided cash loans to various parties were found. The Assessing Officer of Shri Sachin Nahar passed on the information to the Assessing 6 ITA No.688/PUN/2024 CO No.25/PUN/2024 Officer of the assessee. Since the information contained fresh material, the Assessing Officer has rightly reopened the assessment u/s 148 of the Act. According to the Assessing Officer, since the incriminating material seized did not belong to the assessee but only contained material regarding undisclosed income of the assessee, the provisions of section 153C of the Act need not be invoked and notice u/s 148 of the Act was rightly issued. 6. So far as the continuous denial of the assessee that no amount was received from Shri Sachin Nahar is concerned, the Assessing Officer held that the department has clear evidence to show that Shri Sachin Nahar has provided some sums to the assessee during the year and the name of the assessee is clearly mentioned in the table as found in the loose sheets. The Assessing Officer rejected the request of the assessee to provide the necessary documents which are the basis of reopening of the assessment. He also rejected the request of the assessee for cross examination of Shri Sachin Nahar. Rejecting the various explanations given by the assessee and invoking the provisions of section 69A r.w.s. 115BBE of the Act, the Assessing Officer made addition of Rs.6,20,00,000/- as unexplained money in the hands of the assessee. 7. Before the CIT(A) / NFAC the assessee made elaborate submissions, based on which the CIT(A) / NFAC called for a remand report from the Assessing Officer. However, despite two opportunities granted, the Assessing Officer did not send any reply. Since no reply or comments or any request for further time for 7 ITA No.688/PUN/2024 CO No.25/PUN/2024 furnishing reply or comments in the matter was received from the Assessing Officer, the CIT(A) / NFAC proceeded to decide the appeal on the basis of submissions filed by the assessee and material available before him. He held that the assessment should have been made u/s 153C and not u/s 147 of the Act. Further addition also cannot be made u/s 69A of the Act especially when Shri Sachin Nahar has stated that the assessee had taken loan and there is no other corroborative evidence. He also observed that neither copy of the statement was provided to the assessee nor produced or made available during the appellate proceedings and neither any reply was sent in the matter. The relevant observations of the CIT(A) / NFAC deleting the addition as well as cancelling the re-assessment proceedings read as under: “Ground Nos.2 to 5 relate to challenging the validity of reopening of assessment proceedings carried out under section 147 of the Income Tax Act, 1961 and the addition made of Rs.6,20,00,000 under section 69A of the Income Tax Act on account of unexplained cash loans availed from various parties through Sh. Sachin M. Nahar. All these grounds of appeal are taken up together for adjudication. An analysis of letter No.Pn/DCIT. Cen. Cir.1(1)/Sharing of Info./2020-21 dated 05.03.202 of ACIT, Central Circle 1(1), Pune and reasons recorded show that the appellant has taken loans amounting to Rs.6,20,00,000/- through Shri Sachin M. Nahar and that there is violation of provisions of section 269SS & 269T of the Act. Further, this information merged during the course of the Search action u/s. 132(4) of the Act and the statement recorded u/s 132(4) wherein it has been stated that Shri Sachin M. Nahar has admitted that he has submitted the related documents regarding cash loan taken by the appellant assessee Shri Narendra Sampatlal Bafna. It has been further stated that during search at residence of Shri Sachin M. Nahar, various notebooks, notepad and loose papers were found and seized as Bundle No 1 to 28 which contain details of his money lending business in cash and the Notings therein are related to principal amount lent by lenders and borrowed by borrowers, names of lenders and borrowers, interest component etc. Further, the same was reconfirmed by Shri Sachin Nahar through statement recorded u/s 131 of the Act on 17-11-2017 & 27.11.2017 and during assessment proceedings by ACIT, Central Circle 1(1), Pune, Shri Sachin Nahar was again 8 ITA No.688/PUN/2024 CO No.25/PUN/2024 asked to submit the above said details. During the course of assessment proceedings, the assessee had requested the AO to share the documents/details on the basis of which the reasons are recorded for opening the assessment. Further, the assessee stated that loose sheets/diary seized during the survey/search operation, without corroborative evidence have no authenticity and cannot be relied upon and in support relied on following judicial pronouncements. 1) CBI Vs Shukla [1998] CrI. LI 1905 (Supreme Court) 2) Smt. Harmohmder Kaur v. DCIT (ITAT Amritsar) Appeal Number ITA No.568/Asr/2018 Date o judgement/Order: 16/01/2020 Related Assessment Year 2009-10 Courts: All ITAT ITATT Amritsar 3) In case of Sahara India Limited, The Income Tax Settlement Commission (ITSC) has observed as under 4) Commissioner of Income Tax vs. P.V. Kalyanasundaram (2007) 212 CTR 0097: (2007) 294 ITR 0049: (2007) 164 Taxman 0078 (Supreme Court) 5) Commissioner of Income Tax vs. P.V. Kalyanasundaram (2006) 203 CTR 0449: (2006) 282 ITR 0259: (2006) 155 Taxman 0454 (Madras High Court) The assessee also relied on the guidelines issued by Hon'ble Bombay High Court in the case of Tata Financial services Ltd- vs- ACOIT- which inter alia, directed the revenue to adhere to certain guidelines to be followed for reassessment proceedings, (a) While communicating the reasons for re-opening the assessment, a copy of the standard form/request sent by the Assessing Officer for obtaining approval of the Superior Officer should itself be provided to the assessee. This would contain comment or endorsement of the Superior Officer with his name, designation and date. The Assessing Officer shall not merely state the reasons in the letter addressed to the assessee. (b) If the reasons make reference to any other document or a letter or a report, such document or letter or report should be enclosed to the reasons. Such a portion as it does not bear reference to the assessee concerned could be redacted. (c) The order disposing of the objections should deal with each objection and give proper reasons for the conclusion. (d) A personal hearing shall be given and minimum seven working days advance notice of such personal hearing shall be granted. 9 ITA No.688/PUN/2024 CO No.25/PUN/2024 (e) if the Assessing Officer is going to rely on any judgment/order of any Tribunal or Court reference/citation of these judgments/orders shall be provided along with notice for personal hearing so that the assessee will be able to deal with/distinguish these judgments/orders. During assessment proceedings, the assessee also requested AO to grant personal hearing in the matter and cross examination of Shri Sachin Nahar. In City Life Projects Pvt Ltd vs ITO Ward 6(2), New Delhi, ITAT Delhi SMC Bench, New Delhi [1TA No. 2668/Del/2019 (A.Y. 2010-11) dated 17.09.2021], following the decision of the coordinate bench of the Tribunal in the case of Naval Oil and Containers Private Limited ITA No. 852/DEL/2019 and also the decision in the case of Adarsh Agarwal 777/DEL/2019 and also the decision in the case of Saurashtra Colour Toner Private Limited ITA No. 6276/Del/2018, has held as stated in Para 7.1 of the order that, "once reassessment proceedings was initiated on the basis of incriminating material found in the search of 3rd party then the provisions of section 153C of the I.T. Act were applicable which exclude the application of section 147 and 148 of the I.T. Act and notice u/s 148 of the Act and proceeding u/s 147 are illegal and void ab initio." Similarly in the case of Smt. Samanthapudi Lavanya vs ACIT, Central Circle, Vijayawada, the ITAT Visaskhapatnam Bench, Visakhapatnam [ITA No. 704/Viz/2019 to 706/Viz/2019 (A.Y. 2009-10 to 2011-12) dated 27.04.2021, in a bunch of appeals on identical issues, has held that, "10.1. As per section 153C of the Act, notwithstanding anything contained in section 139, 147, 148, 149, 151 and 153, where the AO is satisfied that any money, bullion, jewellery, valuable article or thing seized or requisitioned belongs to or the books of accounts or documents seized or pertains or pertain to or any other information contained therein relates to a person other than the person referred to in section 153A (searched person), then the AO of the searched person handover the books of accounts, documents or valuable articles or things or documents or the assets to the officer having jurisdiction over such other person and the AO of such other person shall proceed against each such other person and issue notice and assess or reassess the income as per section 153C of the act. As provided in section 153C once the conditions are satisfied for invoking the jurisdiction u/s 153C and the assessment must be made u/s 153C only, but not under section 147 of the Act." From Para 10, 11 and 12 of the assessment order, it is clear that the reassessment proceedings have been initiated on the basis of the statement of Sh. Sachin M Nahar and based on material in seized documents. There is no Para 13 in the assessment order which has been referred in the Assessment Order and again in Paragraph 20 of the assessment order. Further, there is no dispute as to nature of transaction in question and it has been stated to be loan taken by the appellant (LIABILITY) and the same can by no stretch of imagination be treated as income in the absence of any other corroborative evidences and hence no addition u/s 69A can be made in such a 10 ITA No.688/PUN/2024 CO No.25/PUN/2024 case. In Para 11 also there is mention of seized materials as Bundles No. 1 to 28 but neither the copy of same were provided to the Assessee nor produced / made available during the appellate proceedings and neither any reply was sent in the matter. In view of the above, Ground No. 4 of the appeal is allowed. Neither during the assessment proceedings nor during the appellant proceedings nor in the assessment order, there is disclosure of the evidences based on which assessment has been framed except stating that statement of Sh. Sachin Nahar were recorded u/s 132(4) and 131 of the Act and that there is some material as seized as Bundle No 1 to 28 which contain details of his money lending business in cash and the Notings herein are related to principal amount lent by lenders and borrowed by borrowers, names of lenders and borrowers, interest component etc. Further, the same was reconfirmed by Shri Sachin Nahar through statement recorded u/s. 131 of the Act on 1711 2017 & 27 11 2017 and during assessment proceedings by ACIT Central Circle 1(1), Pune, Shri Sachin Nahar was again asked to submit the above said details. During the course of assessment proceedings, the assessee had requested the AO to share the documents/details on the basis of which the reasons are recorded for opening the assessment. Though it has been stated in the assessment order that details are contained in Paragraph 13 of the assessment order but there is no Paragraph 13 of the assessment order and no reply was sent by the Assessing Officer in response to the queries / comments raised during the appellate proceedings. In view of the above, Ground Nos. 3 and 5 of the appeal are allowed. As regards the issue as to whether the initiation of proceedings u/s 147 versus u/s 153C is concerned, the detailed discussion in the matter has already been made. As the facts and circumstances of the present case are similar to the case laws and decisions cited above, the notice u/s 148 of the Act and the proceedings u/s 147 are held to be illegal and void ab initio as assumption of jurisdiction by the AO u/s 147 is bad in law and hence ground no 2 is allowed. Considering the totality of the facts and circumstances of the case, submissions made on behalf of the appellant, following the decisions of various High Courts and Tribunals and discussions made above, I find that the addition made of Rs.6,20,00,000 u/s 69A cannot be sustained in this case and hence the addition made of Rs. 6,20,00,000 is directed to be deleted and ground numbers 2 to 5 of the appeal are allowed.” 8. Aggrieved with such order of the CIT(A) / NFAC, the Revenue is in appeal before the Tribunal by raising the following grounds: 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in holding the notice u/s 148 of the Act and the proceedings u/s 147 as illegal and void ab initio by ignoring the fact that no material pertaining to or belonging to the assessee was found in the search on third 11 ITA No.688/PUN/2024 CO No.25/PUN/2024 party and therefore the AO has correctly initiated proceedings u/s 147 of the Act as there was no jurisdiction available to Assessing Officer to assess the income of the assessee under section 153C. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.6,20,00,000/- u/s 69A by holding that no addition can be made u/s 69A being the nature of transaction is loan taken and ignoring the fact that the assessee has denied such transaction during assessment proceedings without supporting evidence and the AO has therefore rightly taxed the said transaction u/s 69A. 3. Whether on facts and circumstances of the case and in law, the Ld. CIT(A) erred in ignoring the fact that mere mentioning a wrong section by the AO is not fatal as held by the Hon'ble ITAT(SMC)"C" Bench, Bangalore in the case of Shri Arif Vs ACIT in ITA No.976/Bang/2022 . 4. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in holding that the assessment should have been made u/s 153C of the Act, when the Hon'ble Bombay High court in the case of CIT Central-III, Mumbai Vs. M/s Arpit Land Pvt. Ltd. with CIT Central-III, Mumbai Vs. M/s Ambit Reality Pvt. Ltd. in Income Tax Appeal No.83 of 2014 upheld the decision of the ITAT that when the documents seized during the search action were not belonging to the person other than the person searched upon, then the assessing officer did not have jurisdiction u/s 153C of the Act and issue notice to the assessee, other than the assessee searched upon? 5. Whether on facts and circumstances of the case, the Ld. CIT(A) is legally justified in passing the appellate order without providing sufficient time to submit remand report. Had sufficient time been given, the AO could have provided seized material to the assessee and cross examination would have been possible? 9. The assessee has also filed Cross Objections raising the following grounds merely in support of the order of the CIT(A) / NFAC: 1. On the facts and m the circumstances of the case and in law, the Ld. Assessing Officer erred in objecting the order of Resp. CIT(A) -NFAC without considering the fact that the addition is made on the basis of loose sheets / diary seized/impounded during the search operation, without corroborative evidence. Hence, addition made is not, justified at all 2. On the facts and in the Circumstances or the case and in law the Ld. Assessing Officer erred in objecting the order of Resp. CIT(A)-NFAC without considering the fact that the assessment is completed without 12 ITA No.688/PUN/2024 CO No.25/PUN/2024 providing the relevant portion of seized materials on the basis of which reasons are recorded and the addition of Rs.6,20,00.000 is made. Hence, addition made is not Justified at all. 3. On the facts and in the Circumstances of the case and in law, the Ld. Assessing Officer erred in objecting the order of Resp. CIT(A)-NFAC without considering the fact that the addition is made without granting the cross-examination of Shri Sachin Nahar and without providing relevant documents such as copy of statement recorded of Shri Sachin Nahar. Hence, addition made is not justified at all 10. The Ld. DR strongly challenged the order of CIT(A) / NFAC in holding that the provisions of section 153C of the Act are applicable and not u/s 147. He submitted that when no material pertaining to or belonging to the assessee was found in the search at the premises of Shri Nahar, the reopening of the assessment was valid which was based on certain information. The Assessing Officer after having reason to believe that the income has escaped assessment, has reopened the assessment by following due process of law. Therefore, the order of the CIT(A) / NFAC quashing the re-assessment proceedings is not correct. So far as the merit of the case is concerned, he submitted that although the CIT(A) / NFAC has called for the remand report from the Assessing Officer, however, without waiting for the report of the Assessing Officer, he has passed the order. Therefore, he has no objection if the matter is restored to the file of the CIT(A) / NFAC for adjudication of the matter afresh after obtaining the remand report. 11. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the CIT(A) / NFAC. Referring to para 22 of page 8 of the assessment order, the Ld. Counsel for the assessee submitted that the Assessing Officer 13 ITA No.688/PUN/2024 CO No.25/PUN/2024 without disclosing the basic documents and without providing the opportunity to cross-examine Shri Sachin Nahar has passed the order, which is not correct. Referring to page 18 of the order of the CIT(A) / NFAC, the Ld. Counsel for the assessee drew the attention of the Bench to the letter written by the DCIT, Central Circle -1, Pune to the Assessing Officer sharing certain information according to which Shri Sachin Nahar, in his statement recorded u/s 132(4) of the Act has stated to have given certain loans to the assessee. Apart from this, neither there is any evidence available with the Assessing Officer nor any such evidence supplied to the assessee. 12. Referring to the decision of the Pune Bench of the Tribunal in the case of Pradeep Amrutlal Ranwal vs. TRO vide ITA No.334/PN/2013, order dated 30.05.2014 for the assessment year 2004-05, copy of which is placed in the case law compilation, he submitted that the Tribunal in the said decision has held that the presumption u/s 132(4A) of the Act is available only in respect of the person from whom the paper is seized and it cannot be applied against a third party and therefore, no addition can be made on the basis of the evidence found with the third party. It has been held that the presumption u/s 132(4) of the Act could be used only against the person from whose premises the documents are found and not against the person whose name appears in the seized papers. He submitted that in my case also no other corroborative evidence was found other than the statement recorded u/s 132(4) of the Act. 14 ITA No.688/PUN/2024 CO No.25/PUN/2024 13. The Ld. Counsel for the assessee referring to the decision of the Hon’ble Bombay High Court in the case of Addl.CIT vs. Ms Lata Mangeshkar reported in 97 ITR 696 (Bom) submitted that the Hon’ble Bombay High Court in the said decision has held that mere entries in the accounts regarding payments to the assessee were not sufficient as there was no guarantee that the entries were genuine. The Hon’ble High Court accordingly upheld the order of the Tribunal deleting the addition by holding that there was no proof that the amounts in question represented income from undisclosed sources belonging to the assessee. 14. Referring to page 9 of the assessment order, he submitted that the assessee has categorically denied to have taken any cash loan from Shri Sachin Nahar and therefore, in absence of any evidence before the Assessing Officer, he could not have made any addition merely on the basis of the third party statement. Referring to the CBDT Instruction No.F.No.286/98/2013-14 (Inv-11) dt 18.12.2014, he submitted that the Board has clearly directed the Field Officers that no addition should be made in absence of any credible evidence since additions made on the basis of statements recorded during the survey or search proceedings are retracted subsequently. Referring to the following decisions, he submitted that under identical circumstances the Co-ordinate Benches of the Tribunal have deleted such additions which were made merely on the basis of third party statements and not based on any credible evidence. 15 ITA No.688/PUN/2024 CO No.25/PUN/2024 i) M/s. Dhananjay Marketing Pvt. Ltd. vs. DCIT vide IT(SS)A No.65/PUN/2017 for the assessment year 2014-15, order dated 19.05.2021 ii) Prabhat Chandra S Jain vs. ACIT vide ITA Nos.1325 to 1329/PN/2013 for AYs. 2004-05 to 2008-09, order dated 16.09.2015 iii) Atul Tantia vs. DCIT vide ITA No.492/Kol/2021 for A.Y. 2018-19, order dated 28.03.2023 15. The Ld. DR in his rejoinder drew the attention of the Bench to the provisions of section 250(4) of the Act and submitted that as per the said provisions, the CIT(A) may, before disposing of any appeal, make such further enquiry as he thinks fit or may direct the Assessing Officer to make further enquiry and report the result of the same to him. He submitted that the CIT(A) / NFAC in the instant case has failed in his duty and therefore the order of the CIT(A) / NFAC deleting the addition of Rs.6,20,00,000/- should be set aside and the order of the Assessing Officer be upheld. 16. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed by both the sides. We have also considered the various decisions cited before us. We find the Assessing Officer, on the basis of information available that the assessee has taken cash loan of Rs.6,20,00,000/- from various persons through Shri Sachin Nahar, who made a statement u/s 132(4) of the Act to this effect during the course of search proceedings at his premises and on the basis of entries found in the loose sheets and other books of account maintained by him, reopened the assessment u/s 147 of the Act after recording reasons which have already been 16 ITA No.688/PUN/2024 CO No.25/PUN/2024 reproduced earlier. Since the assessee could not give any satisfactory explanation regarding the loan of Rs.6,20,00,000/- provided by Shri Sachin Nahar, the Assessing Officer, invoking the provisions of section 69A of the Act read with section 115BBE made addition to the total income of the assessee. We find the CIT(A) / NFAC quashed the re-assessment proceedings holding that the proper course of action before the Assessing Officer should have been u/s 153C of the Act. He also deleted the addition on merit by holding that the said addition was made merely on the basis of the statement recorded u/s 132(4) of the Act of Shri Sachin Nahar and no other corroborative material or evidence was available with the Assessing Officer. Further, despite two reminders, the Assessing Officer could not supply any evidence to the CIT(A) / NFAC regarding the existence of such material before him based on which the addition was made. 17. So far as the first issue raised by the Revenue in the grounds of appeal challenging the order of the CIT(A) / NFAC in quashing the re-assessment proceedings are concerned, we find that the case of the assessee was reopened on the basis of information received from the DCIT, Central Circle – 1, Pune according to which details emerged during the statement recorded u/s 132(4) of the Act of Shri Sachin Nahar and during search and post search enquiries by the Investigation wing and also during the course of enquiries conducted during search proceedings by the Central Circle – 1(1), Pune that the assessee has received cash loan of Rs.6,20,00,000/- through Shri Sachin Nahar. Further, the various documents, note books, note pads and loose sheets found during the course of 17 ITA No.688/PUN/2024 CO No.25/PUN/2024 search contained the business details of Shri Sachin Nahar. The provisions of section 153C of the Act read as under: “153C. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A : .................” 18. A perusal of the above provisions shows that the same is applicable if any money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to or any books of account or documents seized or requisitioned pertains or pertain to or any information contained therein relates to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and issue notice and assess or re-assess the income of the other person in accordance with the provisions of section 153A of the Act (emphasis supplied by us). 18 ITA No.688/PUN/2024 CO No.25/PUN/2024 19. In the instant case, the reopening of the assessment was based on the basis of information that emerged from the statement of Shri Sachin Nahar u/s 132(4) and on the basis of details of notings in his money lending business which contained the name of the assessee as stated by the Assessing Officer. We find the letter No.Pn/DCIT/Cen.Cir.1(1)/Sharing of lnfo./2020-21/dated 05.03.2021 of ACIT Central Circle 1(1), Pune addressed to the Income Tax Officer, Ward 1, Ahmednagar which reads as under: "To The Income Tax Officer, Ward 1, Ahmednagar Sub: Sharing of Information in the case of Shri Sachin Nahar -reg. Ref: This office letter No. Pn/DCIT/CC 1(1)/Info./2019-20 dated 10.06.2019 Reference may kindly be made to this office letter No. Pn/DCIT/CC 1(1)/Info./2019-20 dated 10.06.2019 vide which information about the cash loan was provided to you. In the case of Shri Sachin Nahar, Search was carried out on 04/08/2017, wherein Shri Sachin Nahar has admitted that various parties have taken cash loans from other parties through him, since he was a broker between these two parties, Shri Sachin Nahar has received commission for this transaction. The details of the parties who have taken cash loans have been obtained from Shri Sachin Nahar. There is also a mention of these persons in the seized documents (copy enclosed). 2. The case of NARENDRA BAFNA (PAN: AAVPB7561N), who has taken cash loan from various parties through Shri Sachin Nahar, pertains to your charge. The copy of statement recorded u/s. 132(4) of the IT Act, 1961 on 04.08.2017 of Shri Sachin Nahar as well as related documents regarding cash loan taken by the party along with the related pages of Shri Sachin Nahar's submission containing name of the above mentioned person and the Assessment Years in which the transactions were made are enclosed herewith for reference and necessary action at your end." 20. We find the Assessing Officer at para 2 of the reasons recorded has mentioned as under: 19 ITA No.688/PUN/2024 CO No.25/PUN/2024 “During search at his residence, various notebooks, notepad and loose papers were found and seized as Bundle No 1 to 28. In his statement recorded u/s. 132(4) of the Act at his residence on 02.08.2017, Shri Sachin Nahar stated that this seized material contain details of his money lending business in Cash and the Notings therein are related to Principal amount lent by lenders & borrowed by borrowers, names of lenders & borrowers, interest component etc. In the said seized registers, there are two types of notings, one which contains the accounts of borrowers and other registers contain notings of names of investors (depositors) in coded words. Here it is important to mention that Sachin Nahar used to write the name of investors and borrowers in certain coded words. Further the amounts mentioned in the seized documents are short by three zeros. For example for amount 100000, the noting is made 100 in seized registers.” 21. From the above it is clear that certain documents were seized from the premises of Shri Sachin Nahar which contained information relating to the present assessee. Therefore, the provisions of section 153C are applicable as according to the said section, it is applicable if any information contained in the seized document relates to the assessee. 22. Under these circumstances and in view of the detailed reasoning given by the CIT(A) / NFAC based on various decisions, we uphold the order of the Ld. CIT(A) / NFAC that the reopening of the assessment u/s 147 was not valid and the proper course of action that should have been taken by the Assessing Officer was u/s 153C as the provisions of section 153C of the Act are clearly applicable to the facts of the case. We, therefore, uphold the order of the CIT(A) / NFAC on the issue of validity of re-assessment proceedings. The first issue raised by the Revenue is accordingly dismissed. 20 ITA No.688/PUN/2024 CO No.25/PUN/2024 23. So far as the addition of Rs.6,20,00,000/- which was deleted by the CIT(A) / NFAC is concerned, we do not find any infirmity in the order of the CIT(A) / NFAC on this issue. Admittedly, the addition was made on the basis of the statement recorded u/s 132(4) of the Act of Shri Sachin Nahar and no other evidence whatsoever was available with the Assessing Officer except this statement. The assessee during the course of assessment proceedings has denied to have made any transaction with Shri Sachin Nahar and he has even stated that he does not know Shri Sachin Nahar. Under these circumstances, it was incumbent upon the Assessing Officer to supply the necessary evidence other than the statement recorded u/s 132(4) of Shri Sachin Nahar to fasten liability on the assessee. 24. It has been held in various decisions that the presumption u/s 132(4A) of the Act is available only in respect of a person from whom the paper is seized. It cannot be applied against the third party and hence no addition could be made on the basis of the evidence found with the third party. The presumption u/s 132(4A) of the Act could be used only against the person from whose premises the documents are found and not against the person whose name is appearing in the seized papers. We find an identical issue had come up before the Pune Bench of the Tribunal in the case of Pradeep Amrutlal Ranwal vs. TRO (supra). The Tribunal in the said decision deleted the addition by observing as under: “5.3 According to us, the additions made by the Assessing Officer were not justified in the facts and circumstances vis-à-vis of the assessee. As discussed earlier, during the course of search in the case of Dhariwal Group, the only 21 ITA No.688/PUN/2024 CO No.25/PUN/2024 documents found on the basis of which the addition u/s 69A has been made in the case of the assessee are in the form of two loose papers wherein amounts of ₹ 4.80 Crores and ₹ 30 lacs were noted against the name "Mr. Pradeep Runwal". Apart from this, no evidence has been found to suggest that the assessee had actually received the said amount or that the assessee had entered into any transaction with Dhariwal Group. There is no evidence on record to suggest that the assessee has previous business relations with the Dhariwal Group. In the absence of any documentary evidence to suggest the same, it could not be presumed that the amounts reflected in the loose papers were the income of the assessee received from Dhariwal Group. It has been the consistent stand of the assessee that there may be many persons of the name Pradeep Runwal in Pune and there was no specific evidence to suggest that the said notings pertained to the assessee. Hence, it was not justified as to how, in the absence of any other corroborative details, the Assessing Officer has assumed that the amounts reflected the income of the assessee himself, while the assessee has no business dealings of his with Dhariwal Group. The Assessing Officer has not brought on record any evidence to suggest that Dhariwal Group has admitted that the amounts were paid to the assessee. Hence, simply because the name of the assessee is noted on the seized papers does not mean that the addition could be made in the hands of the assessee. Since no evidence was found relating to the existence of any transaction between the assessee and Dhariwal Group and in the absence of any corroborative evidence to suggest that the assessee had actually received the said amount, no addition could be made merely on the basis of noting in loose papers found during the search proceedings in the case of Dhariwal Group against the name of the assessee. 5.4 The presumption u/s 132(4A) is available only in respect of the person from whom the paper is seized. It could not be applied against a third party and hence, no addition could be made on the basis of the evidence found with third party. The presumption u/s. 132(4A) could be used only against the person from whose premises the documents are found and not against the person whose name appears in the seized papers. 5.5 In this case, the addition has been made on the basis of the documents found with Dhariwal Group and thus, the presumption u/s. 132(4A) could not be used against the assessee since no incriminating documents were found with it. In the case of ACIT Vs. Lata Mangeshkar (Miss) (1974) 97 ITR 696 (Bom), the addition was made in the hands of the assessee on the basis of the entries in the books of third persons. Hon'ble Bombay High Court held that such addition could not be made only on the basis of the notings in the books of third persons. The facts of the present case are covered by the decision of Lata Mangeshkar (supra). It is a settled legal position that the decision of jurisdictional High Court is binding on all authorities below it. Thus, the reliance placed by the Assessing Officer on the loose papers is not justified at all. Therefore, the question of making any addition is not justified in the absence of other corroborative evidence to that effect. 22 ITA No.688/PUN/2024 CO No.25/PUN/2024 5.6 Without prejudice to the above, the learned Authorized Representative submitted that the Assessing Officer was not justified in making the additions by relying on the provisions of section 114 of the Indian Evidence Act. The concerned Assessing Officer has referred the aforesaid section which states that the court may presume that the evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. It is pertinent to mention this rule applies to the cases wherein it is evident or an established fact that a particular evidence or document was in possession of the assessee. For example, an owner of a land may well be expected to be in possession of a 7/12 extract of the said land in order to check whether the said land was used for agricultural purposes. In the present case, the provisions relied by the Assessing Officer are not applicable, the assessee is not withholding any documents. The case of department is that the amount mentioned on the seized paper found with the Dhariwal Group indicates that the assessee has received the amount, therefore, the burden was on the Assessing Officer to establish the same. The reliance placed on the provisions of section 114 of Indian Evidence Act is misplaced. 5.7 As stated above, it has been consistent stand of the assessee that the assessee has had no business relations whatsoever with the Dhariwal Group. Further, apart from the noting on paper with the name 'Pradeep Runwal, there is no corroborative evidence in this regard against the assessee. In such circumstances, where the assessee has not entered into any transaction with the Dhariwal Group, one certainly could not expect the assessee to be in possession of any evidence to suggest that it has not entered into any such transaction except for his books of account which have already been verified by the concerned Assessing Officer. Hence, the Assessing Officer was not justified in placing reliance on the provision of section 114 of the Indian Evidence Act. 5.8 It was further submitted on behalf of assessee that the Assessing Officer was not justified in making the addition by relying on the provisions of section 80 of the Indian Evidence Act which states that there is a presumption that the documents produced before the court as record of evidence are genuine. In this regard, the stand of the assessee is that in the case of assessee, document produced was merely in the form of a rough noting wherein certain amounts were written against the name 'Pradeep Runwal'. As discussed earlier, there may be many people of that name in Pune and in the absence of any other corroborative evidence to that effect. In such a situation, it cannot be inferred that it belongs to the assessee. 5.9 While making the addition of ₹ 5.10 crores as stated above, the CIT(A) relied on the following decisions of Sumati Dayal vs. CIT [(1995) 214 ITR 801(SC)], CIT vs. Durga Prasad More [(1969)72 ITR 807(SC], Himmatram Laxminarain vs. CIT [(1986)161 ITR 7(P&H)], CIT vs. Ganapathi Mudaliar [(1964)53 ITR 623(SC)] and CIT vs. Lacchman Dass Oswal [(1980)126 ITR 446(P&H)]. In this regard, the stand of the assessee has been that the case laws relied by the Assessing Officer are differentiable on facts and hence, the same are not applicable to the case of the assessee. In all the cases relied by the Assessing 23 ITA No.688/PUN/2024 CO No.25/PUN/2024 Officer, the fact that the assessee had actually earned income or received amounts by way of cash credits, unexplained investment etc. was not under dispute. The issue related to whether the receipts were received from genuine lenders or whether the investments or receipts were a part of the disclosed sources of income of the assessee. We find that in the present case, the issue in question itself is whether rough noting on loose paper found in the course of search at the premises of third person could be assumed the income from the assessee as in the cases relied by the Assessing Officer. This fact has not been established in the case of assessee, therefore, the case laws relied by the Assessing Officer are clearly distinguishable on facts and hence, not applicable to the case of the assessee. 5.10 According to CIT(A), the name of the assessee appears on the seized papers and seized documents give a detailed and minute noting of the transactions of Dhariwal Group. He has stated that Shri Sohanraj Mehta has admitted that the documents were written by him and most of the papers were written in marwadi language. The CIT(A) referred to the fact that Shri Mehta had admitted that the papers belonged to Dhariwal Group. In para 4.3, the CIT(A) states that when the author of the paper has accepted the notings made by him, in that event, the document is having great evidentiary value and could not be rejected. As regards, the objection of the assessee that no evidence was found to indicate that the assessee had received the amount, the CIT(A) referred to the fact of acceptance of the paper by Shri Mehta and considering the fact that the modus operandi was clarified by Shri Mehta, the addition was rightly made by the Assessing Officer, has been held by CIT(A). He has referred to various decisions in support of the addition made. Firstly, he has relied upon the decision of ITAT Third Member in the case of Khopade Kisanrao Manikrao [74 ITD 25]. In this regard, the stand of assessee is that the decision in the case before Third Member was not applicable to the facts of the present case. In the said case, the assessee was searched and documents were found indicating on money received on sale of plots. On the basis of the documents found, the Assessing Officer estimated the income from on money which was held to be valid. In that case, the issue that no addition could be made on the basis of documents found with third party was neither raised nor applicable. Thus, according to us, the said decision has no application to the facts of the assessee's case. 5.11 The CIT(A) in para 2.5 has placed reliance upon ITAT, Pune decision in the case of Dhanvarsha Builders and Developers Pvt. Ltd. [102 ITD 375]. In the said case, the assessee was searched and documents were found indicating on money received by the assessee. It was held that the document was found with the assessee and therefore, the A.O. was justified in making the addition. Even in this case, the issue of no addition can be made on the basis of documents found with third party was not raised. The CIT(A) has further referred to the decision of ITAT, Mumbai in the case of P. R. Patel Vs. DCIT [(2001) 78 ITD 51 (Mum)] for the proposition that seized papers cannot be called dumb paper because they indicate date, amount and calculation. There is no dispute with the above proposition. The papers are found pertaining to Dhariwal Group as admitted by Shri Mehta and therefore, these documents may be relevant for deciding the issue in the case of Dhariwal Group. However, in the absence of any corroborative 24 ITA No.688/PUN/2024 CO No.25/PUN/2024 evidence, the addition could not be made in the hands of the assessee on the basis of the said papers. 5.12 The CIT(A) has further relied upon ITAT Third Member decision in the case of Dhunjibhoy Stud and Agricultural Farm Vs. DCIT [(2002) 82 ITD 18 (PUNE)(TM)], In this case, the assessee was a builder and had sold flat to one Mr. Tanna. There was search on Mr. Tanna wherein a document was found indicating flat purchased from the assessee firm and the amount of cheque and cash paid. The amount of cheque paid was tallying with the books and therefore, it was held that cash was paid as noted on the paper. Mr. Tanna had also accepted the fact that cash was paid to the assessee. In these facts, ITAT held that since there was transaction between assessee and Shri Tanna and also the fact that the amounts paid by cheque tallied, the addition was rightly made. The assessee rightly submitted that the said decision is not applicable to the facts of the present case. Firstly, there is no transaction between the assessee and Dhariwal Group. Secondly, there is no corroborative evidence found which could suggest that the assessee had received any amount. The Assessing Officer and CIT(A) have also not brought on record any evidence to suggest that the payment was made to the assessee. Accordingly, considering the factual position, the decision in the case of Dhunjibhoy Stud and Agricultural Farm is not applicable in the case of assessee. 5.13 The CIT(A) has relied on the decision in the case of Vasantibai N. Shah Vs. CIT [(1995) 213 ITR 805 (Bom)]. In this case, the issue was regarding validity of reassessment proceedings. The assessee had made a false disclosure. Subsequently, the case was reopened. Hon'ble High Court held that the reopening was valid since the assessee herself had made a false disclosure. Thus, the facts are totally different from the present case and hence, the ratio of Vasantibai N. Shah (supra) is not applicable to the assessee's case. The CIT(A) further relied on the decision in the case of Green Valley Builder v. CIT [(2008) 296 ITR 225 (Ker)]. In the said case, the assessee was engaged in real estate business and it had sold certain plots. The assessee stated that the plots were sold at Rs.1750/- per cent while the Assessing Officer on the basis of evidences held that actually the lands were sold at Rs.4,000/- per cent. Hon'ble High Court held that the additions made were correct. The said decision is not applicable to the facts of the present case. The CIT(A) has further relied upon the decision in the case of Chuharmal Vs. CIT [(1988) 172 ITR 250 (SC)] for the proposition that documentary evidence plays an important part. There is no dispute to the said proposition but in the absence of any corroborative evidence no addition could be made in the hands of the third party. 5.14 We find that in Thakkar Developers Ltd. [IT A No. 581/PN/08], ITAT in paras 3 and 4 held as under:- "The above said Shri Kolhe was examined, cross examined and re- examined and no evidence was gathered from him to establish that the contents of the seized documents were correct and true. Thus, in the absence of any corroborative evidence in the present case, the said seized document has to be treated as a dumb document as rightly observed by the CIT(A). The A.O. dismissed the retraction of the statement dated 25 ITA No.688/PUN/2024 CO No.25/PUN/2024 29.03.2003 by filing an affidavit as an after thought and self serving. The A.O. concluded that the facts mentioned in the seized documents clearly indicated that the statement given on 29.03.2003 was true and correct. The A.O. has not brought on record any material or corroborative evidences to come to these conclusions. The reasons given by the A.O. in this regard are without any basis and support. The affidavit filed by Shri Kolhe remained uncontroverted and which is against the settled legal position on the issue that the contents of the affidavit be rejected by confronting the same to the deponent which is missing in this case. Nothing was shown by the A. O. that there was any other material co related to the seized documents. The A.O. was not justified in rejecting the contents of the affidavit as mentioned above. The A.O. further relied on the presumptions u/s 132(4A) of the Act on the ground that this section was very clear that the contents of book of account and other documents may be presumed to be true and presumption can be drawn even on the third person who was not searched u/s 132 of the Act. The A.O. further rejected the submissions given by the assessee in his paper book dated 28.12.2007 reiterating the same stand. The A.O. has drawn inferences and presupposes relying on surmises and conjectures. The ITAT Mumbai Bench in their decision in the case of Straptex (India) Pvt. Ltd. [84 ITD 320 (Mum), clearly held that the presumption u/s 132(4A) is applicable only against the person from whom possession the books of accounts or other documentary were found and not against any other person. It is held that as per Section 132(4A) where any books of account or document is found in the possession and control of any person in the course of the search, it is to be presumed that they belong to " such person". Thus, clearly the presumption is in respect of the person from whom they were found. The use of the word "to such person" in the said Section means the person from whom the books of account or documents were found. Clause (ii) of Section 132 (4A) provides that the contents of such books of account or documents are true. This presumption can be applied only against the person from whose possession the books of account or the document were found. Therefore, the A.O. was not justified in applying the provisions of Section 132(4'A) to the assessee in the present case who was not searched u/s 132 of the Act nor the document was found and seized from, their possession. Even, otherwise, such presumption u/s 132(4A) of the Act is not conclusive and rebuttable one". 6. Similar view has been taken by ITAT, Pune in Amit D Irshid [ITA No.988/PN/11] that presumption u/s. 134(4A) is available only against the person from whose possession the document is found and not against the third person. In the absence of clinching evidence against the third person as stated above, no action could be taken against him. In such a situation, the Assessing Officer was not justified to make addition in question in assessee’s case. In view of above, we are of the view that the addition made by the Assessing Officer is not justified and the same is directed to be deleted. It is pertinent to mention here that this case is being decided in its facts and circumstances; it cannot be applied to other cases as such. 7. In the result, appeal filed by the assessee is allowed.” 26 ITA No.688/PUN/2024 CO No.25/PUN/2024 25. We find the Pune Bench of the Tribunal in the case of M/s. Dhananjay Marketing Pvt. Ltd. vs. DCIT vide IT(SS)A No.65/PUN/2017 for the assessment year 2014-15, order dated 19.05.2021 has observed as under: “35. Further, we notice that both Assessing Officer as well as CIT(A) misdirected themselves by applying presumption u/s 132(4A) of the Act. The provision of section 132(4A) incorporates the rule of evidence relating to material found during course of search. On plain reading of said provision, it is evident that it has application in the case of searched person, in whose hands the material was found and seized. The presumption envisaged under said provision cannot be extended to assessment of third party. The CBDT also recognized the principle that no addition can be made on mere statement made u/s 132(4) without bringing any corroborative evidence. The CBDT Circular reads as under :- “Admissions of undisclosed income under coercion/pressure during search/survey - Instances/ complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. The Board has emphasized upon the need to focus on gathering evidences during Search/ Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.—Letter [F.No. 286/98/2013- IT (INV.II)], dated 18-12-2014.” 36. In the present case, the additions are made merely based on statement of third parties without bringing on record any corroborative evidence. No such addition can be made in the light of above discussed legal position.” 26. The various other decisions relied on by the Ld. Counsel for the assessee in the paper book also supports his case to the proposition that no addition can be made in the hands of the assessee merely on the basis of the statement recorded u/s 132(4A) of the Act in absence of any other evidence against the assessee. We further find that the Assessing Officer on page No.9 of the assessment order has 27 ITA No.688/PUN/2024 CO No.25/PUN/2024 mentioned that details were provided to the assessee as per para 13 of the order which reads as under: “23. Further, the loose sheets found in the premise of Sachin Nahar containing the name of the assessee has been produced in Paragraph 13 already.” 27. However, there is no such para 13 in the assessment order and the Ld. DR also fairly conceded that there is no such para 13 in the order. 28. We further find from the reasons recorded as well as the assessment order that the assessee, according to the Assessing Officer, has taken loan from Shri Sachin Nahar which is a liability. However, the Assessing Officer has treated the same as income u/s 69A of the Act. Once the Assessing Officer himself has accepted that the assessee has taken loan through Shri Sachin Nahar, although the assessee denies to have taken any such loan, the provisions of section 69A of the Act could not have been invoked. Further, as mentioned earlier, neither during the course of assessment proceedings nor during the course of appellate proceedings, the Assessing Officer has brought on record any evidence based on which the assessment has been made except the statement of Shri Sachin Nahar recorded u/s 132(4). We have already mentioned in the preceding paragraphs that the addition cannot be made merely on the basis of the statement recorded u/s 132(4) of the Act as the presumption u/s 132(4A) of the Act is available only in respect of the person from whom the paper is seized. It cannot be applied against the third party and hence, no addition could be made on the basis of evidence found with the third party. In this view of the matter and in view of the detailed discussion by the 28 ITA No.688/PUN/2024 CO No.25/PUN/2024 CIT(A) / NFAC on this issue, we do not find any infirmity in his order deleting the addition of Rs.6,20,00,000/- on merit. Accordingly, the order of the CIT(A) / NFAC on this issue is also upheld. Thus, the appeal filed by the Revenue is dismissed. 29. The grounds raised by the assessee in the Cross Objection are merely in support of the order of the CIT(A) / NFAC. Since we have upheld the order of the CIT(A) / NFAC both legally and factually, therefore, the grounds raised by the assessee in the Cross Objection become infructuous and accordingly, the same are dismissed. 30. In the result, the appeal filed by the Revenue and the CO filed by the assessee are dismissed. Order pronounced in the open Court on 19 th August, 2024. Sd/- Sd/- (VINAY BHAMORE) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT प ु णे Pune; दिन ांक Dated : 19 th August, 2024 GCVSR 29 ITA No.688/PUN/2024 CO No.25/PUN/2024 आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 12/13.08.2024 Sr. PS/PS 2 Draft placed before author 13.08.2024 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order