DCIT, CENTRAL CIRCLE 1, GUNTUR V. BTC PRIVATE LIMITED, GUNTUR

ITSSA 4/VIZ/2025

AI Insights

The case involves the Deputy Commissioner of Income Tax, Central Circle - 1, Guntur, as the appellant, and BTC Private Limited, as the respondent, concerning the assessment years 2013-14, 2015-16, 2017-18, and 2018-19. The appeals were based on the orders of the Learned Commissioner of Income Tax (Appeals), Visakhapatnam, which had earlier provided relief to the assessee. The main contention revolved around the admissibility and evidentiary value of the seized materials (pendrive and excel sheets) during a search operation on M/s. Polisetty Somasundaram, which were used to make additions to the assessee's income. The tribunal examined whether the additions made by the Assessing Officer were justified based on the materials seized from a third party and the legal provisions under the Income Tax Act, particularly sections 132(4) and 132(4A).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633573 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: Collector, Land Acquisition v. MST. Katiju and others, M/s. Polisetty Somasundaram v. DCIT, Central Circle-1, Guntur, M/s Cargo Handling Private Workers Pool Vs. DCIT Central Circle-1,Visakhapatnam, Ambalal Sarabhai Enterprise Ltd Vs. KS Infraspace LLP Limited and Another, Sumati Dayal v CIT, CIT v. Durga Prasad More
• Laws Referred To: Income Tax Act, 1961, Indian Evidence Act, 1872
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Corroborative evidences; Income from undisclosed sources; Documents seized; Tax effect; Search and seizure
• Section: 142(1)

Judgement Text

"आयकर अपीलीय अधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM (HYBRID HEARING) श्री िीरिल्ली दुर्ाा राि,न्याधयकसदस्यएिंश्रीएसबालाक ृष्णन, लेखासदस्यक ेसमक्ष BEFORE SHRI VEERAVALLI DURGA RAO, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपीलसं./IT (SS) A.Nos. 1, 2, 3 & 4/VIZ/2025 (निर्धारणवर्ा/ Assessment Years: 2013-14, 2015-16, 2017-18 & 2018-19) Dy. Commissioner of Income Tax Central Circle - 1 1st Floor, C.R. Building Kannavarithota, Guntur – 522004 Andhra Pradesh v. BTC Private Limited 4-4-120, Chandramouli Nagar Guntur- 522007 Andhra Pradesh [PAN: AAACB9061D] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri M.V. Prasad, CA राजस्व का प्रतततितित्व/ Department Represented by : Dr.Satyasai Rath, CIT(DR) सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 04.06.2025 घोर्णध की तधरीख/Date of Pronouncement : 09.06.2025 आदेश /O R D E R PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER: 1. These appeals are filed by the Revenue against different orders of Learned Commissioner of Income Tax (Appeals), Visakhapatnam – 3 IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 2 [hereinafter in short “Ld.CIT(A)”] vide respective DIN & Order No. as stated below:- ITA No. & A.Y. DIN & Order No. Dated IT(SS)A No. 1/VIZ/2025 (A.Y. 2013-14) ITBA/APL/S/250/2024-25/1069777680(1) 18.10.2024 IT(SS)A No. 2/VIZ/2025 (A.Y. 2015-16) ITBA/APL/S/250/2024-25/1069738607(1) 17.10.2024 IT(SS)A No. 3/VIZ/2025 (A.Y. 2017-18) ITBA/APL/S/250/2024-25/1069738504(1) 17.10.2024 IT(SS)A No. 4/VIZ/2025 (A.Y. 2018-19) ITBA/APL/S/250/2024-25/1069738385(1) 17.10.2024 2. Since the assessee is same, these appeals are combined and heard together and a consolidated order being passed. 3. At the outset, Ld. Departmental Representative [hereinafter in short “Ld.DR”] submitted that the appeals have been filed with a delay of nine days and also filed a petition for condonation of delay. The contents in the petition are reproduced below: “1. The order of the Hon'ble CIT (A)-3, Visakhapatanam in the above mentioned case in Appeal No.CIT(A), Visakhapatnam-3/10370/2016-17 dated 18/10/2024 was received in the office of the Pr.CIT (Central), Visakhapatnam on 18/10/2024.The due date for filing the appeal expired on 31/12/2024. I am filing the appeal on 10/01/2025. There is a delay of 9 days in filing the appeal. 2. I humbly submit that in this case, the approval granted by the PCIT(Central), Visakhapatnam was received on 09.01.2025 due missing of the file in the office as the official dealing with the said file was on leave. Efforts were made to trace out the file and finally the file could be traced. 3. I humbly submit that the delay in filing is only due to the missing of the file as the official concerned was on leave and circumstances beyond my control. I, therefore, request the Hon'ble ITAT to kindly condone the delay of 10 days and kindly admit the appeal. IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 3 4. Ld. Authorised Representative [hereinafter “Ld.AR”] did not object to the submissions of the Ld. DR. 5. Considered the submissions of both parties, on a perusal of the petition and the reasons explained therein for the delay in filing the appeals, we find the revenue is prevented with reasonable cause in filing the appeal in time. The revenue could properly explain the delay in filing the appeals, therefore following the ratio in the decision of the Hon’ble Supreme Court in the case of Collector, Land Acquisition v. MST. Katiju and others, [1987] 167 ITR 471, we condone the delay of 9 days and admit the appeals for disposing of the same on merits. IT(SS)A Nos. 1 & 4/VIZ/2025(A.Y. 2013-14 & 2018-19) 6. At the outset, Ld.AR submitted that in IT(SS)A Nos. 1& 4/VIZ/2025 the tax effect is below the specified limit as mentioned in CBDT Circular No.09/2024 dated 17.09.2024 and hence both the appeals are not maintainable. 7. On the other hand, Ld. DR did not object to the same. 8. We have heard both the sides and perused the material available on record. It is an undisputed fact that the tax effect as mentioned in Form No 36 with respect to IT(SS)A No. 1/VIZ/2025 is Rs. 8,75,337/- and IT(SS)A No.4/VIZ/2025 is Rs. 21,59,428/- for the A.Ys.2013-14 and 2018-19 IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 4 respectively. The CBDT vide Circular No. 09/2024 dated 17.09.2024 relied on by the Ld.AR specifies the monetary limit of tax effect for filing the appeal before Judicial Forums, and as specified by the Circular the limit for filing an appeal before ITAT is Rs. 60 lakhs. In both the appeals as cited above, since the tax effect is below the specified limit of Rs. 60 Lakhs, appeals filed by the revenue in IT(SS)A Nos. 1 & 4/VIZ/2025 is not maintainable and hence dismissed. 9. In the result, appeals of the revenue are dismissed. IT(SS)A Nos. 2&3/VIZ/2025 (A.Ys. 2015-16 & 2017-18) 10. Since grounds raised by the revenue for both these appeals are identical, we now take up the appeal in IT(SS)A No. 2/VIZ/2025 for the A.Y.2015-16 as a lead appeal. IT(SS) A No. 2/VIZ/2025 (A.Y. 2015-16) 11. Brief facts of the case are that, assessee is a Company engaged in the business of tobacco trading and allied activities like processing, packing and sale of tobacco in domestic markets. Assessee filed its return of income for the A.Y.2015-16 on 29.09.2015 admitting a total income of Rs. 36,47,940/-. Consequent to search and seizure operation conducted in M/s. Polisetty Somasundaram Group of cases on 28.01.2020, a pendrive was found which was IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 5 seized vide annexure A/PSS/CORP/19 and copies of the contents of the pendrive were seized vide annexure A/PSS/CORP/18. The seized material contain the details of unaccounted cash transactions made by M/s. Polisetty Somasundaram. After centralising the case with DCIT, Central Circle – 1 with the permission of Pr.CIT, Vijayawada and basing on the seized material a notice under section 153C of Income Tax Act, 1961 (in short ‘Act’) issued on 04.12.2021 and served on the assessee on the same day. In response to the notice assessee filed return of income. Subsequently, notice under section 143(2) was issued on 16.03.2022. Thereafter notices under section 142(1) of the Act was issued on 13.01.2022 and 18.02.2022 requiring the assessee to furnish the nature of transactions and source in respect of the following cash transactions made with M/s. Polisetty Somasundaram: - Date Cash payments made to M/s. Polisetty Somasundaram Cash Payments by M/s. Polisetty Somasundaram 26-JUN-14 10000000 11-JUN-14 7500000 28-JUL-14 5000000 30-MAR-15 3500000 30-MAR-15 2500000 30-MAR-15 4000000 30-MAR-15 3000000 30-MAR-15 732900 Total 1,37,32,900 2,25,00,000 12. Ld. Assessing Officer [hereinafter in short “Ld. AO\"] observed that as per the sworn statement recorded under section 132(4) of the Act during the search IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 6 operation on 08.06.2020 Shri Polisetty Shyam Sundar, Managing Partner of M/s.Polisetty Somasundaram admitted that the said transactions are unaccounted cash transactions made outside their regular books of accounts amounting to Rs.2,25,00,000/- pertaining to unaccounted cash payments and Rs.1,37,32,900/- towards unaccounted cash receipts. 13. During the course of assessment proceedings, assessee was confronted by the Ld. AO with the evidence in the form of sworn statement recorded under section 132(4) of the Act. The assessee denied the said transactions and submitted that he never entered into cash transactions with M/s. Polisetty Somasundaram. Ld. AO however did not accept the contentions of the assessee. Ld. AO relying on the cash book in the form of loose sheet seized as annexure A/PSS/CORP/18 Page Nos. 104, 113 & 144 asked M/s. Polisetty Somasundaram (Firm) about the transactions appeared in the unaccounted cash books vide notice under section 142(1) of the Act dated 22.01.2022. In response the firm replied that the above loan transactions are carried between Sri Bommidala Sri Krishnamurthy and his son-in-law Sri P.ShyamSundar. Ld.AO observed that Sri Bommidala Sri Krishnamurthy is Managing director of “M/s. BTC Private Limited” (assessee) and therefore did not accept the explanation of M/s. Polisetty Somasundaram. Subsequently show-cause notice (SCN) dated 03.03.2022 was issued to the assessee. In reply to SCN wherein the assessee reiterated that he has not made any cash transaction with IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 7 M/s.Polisetty Somasundaram. Further, another show-cause notice dated 20.03.2022 was issued and served on the assessee. Assessee again reiterated the same reply. Ld. AO by observing that the said transactions are not entered in the assessee’s regular books of accounts treated an amount of Rs.2,25,00,000/- and Rs.1,37,32,900/- as unexplained income and added to the total income of the assessee. 14. On being aggrieved by the order of the Ld. AO, assessee filed an appeal before Ld. CIT(A). Ld. CIT(A) relying on the decision of the Co-ordinate Bench in the case of M/s. Polisetty Somasundaramv. DCIT, Central Circle-1, Guntur in ITA No. 172 to 180/VIZ/2023 dated 18.08.2023 held as follows: - “6.7. In the appellant’s case, the assessment proceedings were completed u/s. 153C of the I.T. Act for the A.Y. 2015-16. The Search was conducted in the case of M/s Polisetty Somasundaram group and not on the appellant. Proceedings u/s. 153C were initiated basing upon the information contained in the pendrive seized during the search conducted on M/s Polisetty Somasundaram. In para no.5 of the assessment order, it was clearly stated that “narration of the entries in unaccounted cash book maintained by the M/s Polisetty Somasundaram, seized vide A/PSS/CORP/18 are very particular about the identity of the person with whom the said transaction was done.” The Hon’ble Jurisdictional ITAT passed judgment in the case of M/s Polisetty Somasundaram Vs. DCIT Central Circle-1 Guntur in which it was held that the information contained in the seized pendrive (as mentioned supra) cannot be considered as admissible evidence. In the present case, AO has used information contained in the same pendrive while making additions of Rs. 1,37,32,900/- and Rs. 2,25,00,000/- for the A.Y. 2015-16. These amounts are emanating from the seized material vide Annexure A/ PSS/CORP/18 which is nothing but the print out of excel sheets taken from the said pendrive. The AO has made additions solely relying upon the excel sheets taken from the pendrive which was seized during the search in the case of M/s Polisetty Somasundaram. The Hon’ble jurisdictional ITAT in the case of searched party i.e. M/s Polisetty Somasundaram held that the pendrive seized vide annexure A/PSS/CORP/19 is inadmissible evidence. Since Hon’ble Jurisdictional ITAT has held in the searched party’s i.e. M/s Polisetty Somasundaram case that the assessment order passed basing IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 8 upon inadmissible seized material is not valid the same ratio is applicable to the present case. 6.8. Further, the appellant relied upon Hon’ble Jurisdictional ITAT decision in the case of M/s Cargo Handling Private Workers Pool Vs. DCIT Central Circle-1,Visakhapatnam wherein Hon’ble ITAT held that CIT(Appeals) is bound to follow the decision of the Hon’ble Jurisdictional Tribunals. While rendering the judgement Hon’ble Jurisdictional High Court has referred to the following decisions of Hon’ble Supreme Court and Hon’ble High Courts – (i) Hon’ble High Court decision in the case of Agarwal Warehousing and Leasing Ltd Vs. CIT (257 ITR 235) (ii) Hon’ble Bombay High Court decision in the case of Bank of Baroda Vs. H.C. Shrivatsava & Another (256 ITR 385) 6.9. In the facts of the case and respectfully following the decisions of the Hon’ble Jurisdictional ITAT, the additions of Rs. 1,37,32,900/- and Rs.2,25,00,000/- for the A.Y. 2015-16 made on the basis of information contained in inadmissible seized material is hereby deleted. Hence, additional legal ground no.3 is allowed, as this ground is allowed the solitary addition made in the assessment orders u/s. 153C for the A.Y.s 2015-16 gets deleted and appellant succeeds in getting full relief. In view of this, the general grounds, grounds related to merit of the case and other additional legal grounds no.1 and 2 becomes infructuous and need no separate adjudication.” 15. On being aggrieved by the order of the Ld. CIT(A), revenue is in appeal before us by raising following grounds of appeal: - “1. The order of the Ld.CIT(A) is erroneous both on the facts and in law. 2. The Ld.CIT(A) has erred in summarily allowing the appeal of the assessee on sole ground of non-admissible seized material evidence used by the Assessing Officer during the assessment proceedings u/s.153C, consequent to search action conducted in the case of M/s Polisetty Somasundaram group. 3. The Ld.CIT(A) erred in giving a finding that the pen drive seized from the business premises of M/s Polisetty Somasundaram group and marked as Annexure A/PSS/CORP/19 was an inadmissible digital evidence as held by Hon’ble ITAT in the case of M/s Polisetty Somasundaram and hence the same can’t be considered as a valid digital evidence in the case of the assessee. The Ld.CIT(A) ought to have IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 9 appreciated the fact that the said decision of Hon’ble ITAT was not accepted by the Department and further appeal to High Court was filed and the same is pending adjudication as on date. The Ld.CIT(A) ought to have appreciated the fact that the finding of Hon’ble ITAT either had not attained any finality or accepted by the Department as on date and thus, relying on the said decision of Hon’ble ITAT would be adverse in the interest of Revenue. 4. The Ld.CIT(A) erred in allowing relief to the assessee by considering the decision of Hon’ble ITAT in the case of M/s Polisetty Somasundaram, by ignoring the fact that the seized pendrive was an independent primary source of evidence u/s 65B of Indian Evidence Act and when the extracts of the said pen drive were confronted to the key person of M/s Polisetty Somasundaram group, he never raised an objection with regard to the contents of the said seized pendrive. 5. The Ld.CIT(A) erred in not appreciating the fact that the seized material marked as A/PSS/CORP/18 consists hard copies in the form of printouts of excel sheets. The Ld.CIT(A) ought to have appreciated the fact that though the seized material in the form of pendrive marked as A/PSS/CORP/19 was an inadmissible evidence, the seized material marked as A/PSS/CORP/18 was in fact in the form of hard copies and thus it can’t be ignored while allowing the relief to the assessee. 6. The Ld.CIT(A) erred in allowing relief to the assessee based on the decision of Hon’ble ITAT in the case of M/s Polisetty Somasundaram group, though the key person of the searched group, i.e. Sri Polisetty Shyam Sundar of Polisetty Soma Sundaram group, had confirmed the financial transactions done with the assessee in his sworn statement u/s 132(4) dt. 08.06.2020. 7. The Ld.CIT(A) erred in allowing relief to the assessee that it had never questioned the validity of the seized material during the course of scrutiny proceedings,before Assessing Officer and it is only an afterthought. The Ld.CIT(A) ought not to have considered the afterthought claim made by the assessee and it was raised by the assessee only after the relief got by the searched person, M/s. Polisetty Somasundaram, before Hon’ble ITAT on validity of the seized material. 8. The Ld.CIT(A) has erred in not considering the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities in this case, the Pendrive. Reference is invited to the decision of Hon’ble Supreme Court in the case of Ambalal Sarabhai Enterprise Ltd Vs. KS Infraspace LLP Limited and Another in Civil Appeal No(s). 9346 of 2019 dated 6th January, 2020, wherein pertaining to whatsapp evidence, the Hon'ble Supreme Court observed that \"The WhatsApp messages, which are virtual verbal communications, are matters of evidence with regard to their meaning and its contents to be proved during trial by evidence_ in _chief and cross-examination. The emails and WhatsApp IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 10 messages will have to be read and understood cumulatively to decipher whether there was a concluded contract or not\". In this case, there is a virtual verbal communication and the same is matter of evidence, as in case of evidence derived from pendrive, and by completion of transaction, a concluded contract and electronic evidences derived from pendrive subsumes the same with conviction. 9. The Ld.CIT(A) has erred in not considering the evidence that was found and seized in the form of Pendrive and print outs of excel sheets as the same has evidentiary value as per the provisions of sec 65A and sec 65B of Indian Evidence Act 1872. 10. The Ld.CIT(A) has erred in not considering the sworn statement of the key person of the searched group i.e. Sri Polisetty Shyam Sundar of Polisetty Soma Sundaram group recorded u/s 132(4) on 08.06.2020, wherein he had confirmed receipt of cash on various dates from the assessee and he also confirmed that all these cash transactions were outside regular books of accounts. Accordingly, he admitted the cash receipts as additional income in the hands of M/s. Polisetty Somasundaram. The Ld.CIT(A) ought to have considered the decision of Hon’ble Apex Court in the case of B Kishore Kumar Vs DCIT 62 Taxmann.com 215 (SC) (2015), wherein the Hon’ble Apex Court dismissed the SLP filed by the assessee thus wholly relying on 132(4) statement as strong piece of evidence. 11. Reliance is placed on the judgment of Hon’ble Supreme Court in the case of Sumati Dayal v CIT (1995) 214 ITR 801 (SC) wherein it was held that Surrounding circumstances and test of applying human probabilities “Though an apparent must be considered real until it was shown that there were reasons to believe that the apparent was not real in the case where a party relied on selfserving recitals in document, it was for that party to establish the truth of those recitals. Taxing authorities were entitled to look into the surrounding circumstances to find out the reality of the recitals.” 12. Reliance is further placed on the judgment of Hon’ble Supreme Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) (546,547) wherein it was held that “Science has not yet invented any instrument to test the reliability of the evidence placed before a Court or a Tribunal. Therefore, the Courts and the Tribunals have to judge the evidence before them by applying the test of Human Probabilities. Human minds may differ as to reliability of a piece of evidence, but that sphere decision of the final fact-finding authority is made conclusive by law. 13. Any other ground that may be urged at the time of hearing.” IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 11 16. The grounds raised by the Revenue are mostly in argumentative nature. However, the issue emanating from the above grounds is with respect to the deletion of addition by the Ld. CIT(A) by relying on the decision of the Jurisdictional ITAT in the case of M/s. Polisetty Somasundaram v. DCIT, Central Circle-1, Guntur (supra). 17. On this issue, Ld. DR submitted that the revenue has filed an appeal before the Hon’ble High Court against the decision of the Tribunal in M/s.Polisetty Somasundaram v. DCIT, Central Circle-1, Guntur (supra) and hence the same cannot be considered as attained any finality. Further, he also vehemently argued that the seized material A/PSS/CORP/18 consists of hard copies in the form of excel sheet printouts and hence cannot be considered as inadmissible evidence. Further he also contended that Shri Polisetty Shyam Sundar of M/s. Polisetty Somasundaram has confirmed the financial transactions in his sworn statement under section 132(4) of the Act dated 08.06.2020. Ld. DR thus submitted that Ld. CIT(A) erred in not considering the printouts of the excel sheets, as the same has no evidentiary value as per provisions of section 65B of the Indian Evidence Act, 1872. Ld. DR in the grounds of appeal has relied on the following case laws:- i. Decision of the Hon’ble Supreme Court in the case of Ambalal Sarabhai Enterprise Ltd Vs. KS Infraspace LLP Limited and Another in Civil Appeal No(s). 9346 of 2019 dated 06.01.2020. IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 12 ii. Hon’ble Supreme Court in the case of Sumati Dayal v CIT (1995) 214 ITR 801 (SC). iii. Hon’ble Supreme Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) (546,547). 18. Ld. DR therefore pleaded that the order of the Ld. AO be upheld. 19. On the other hand, Ld.AR submitted that as per the provisions of section 132(4) of the Act a sworn statement recorded can be considered as evidence only in the hands of the assessment of the searched persons but not in the case of other than the searched persons. Further he submitted that as per Section 132(4) of the Act the Incriminating Material found and seized in A/PSS/CORP/18 shall be presumed to apply to the searched person only and not to any other person. Further, he submitted that no corroborative evidences have been brought on record by the Ld. AO to consider the cash entries in the hands of the assessee. He further submitted that there is no handwriting evidence in the loose sheets considered for the purposes of making the additions. Further Ld.AR also reiterated the pendrive was found in the premises of other person but not in the premises of the assessee. Ld.AR relied on the following decisions:- i. Decision of the Hon’ble Delhi High Court in the case of CIT v. Sant Lal [202] 118 taxmann.com 432 (Del.) ii. Decision of the Hon’ble Bombay High Court in the case of PCIT v. Umesh Ishrani [2019] 108 taxmann.com 437 (Bombay). IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 13 iii. Decision of the Hon’ble Delhi High Court in the case of CIT v. Vivek Aggrawal [2015] 56 taxmann.com 7 (Delhi). 20. He further submitted that the Judicial pronouncements in the cases as cited above have clearly held that addition cannot be made in the hands of the assessee merely on the basis of entries in loose sheets found in the premises of third party without bringing on record any independent evidences to corroborate such entries for making addition in the hands of the assessee. He therefore pleaded that even on merits the addition is not justifiable and deserves to be deleted. 21. We have heard rival contentions and perused the material available on record including the written submissions of the assessee. It is the case of the Ld.AO that the assessee has entered into unaccounted cash transactions seized vide annexure A/PSS/CORP/19 which is the pendrive and the contents of the pendrive seized vide annexure A/PSS/CORP/18 wherein the details of the cash transactions are entered into by search party M/s. Polisetty Somasundaram. Basing on that seized material the Ld. AO made an addition of Rs.3,62,32,900/- as unaccounted cash receipts and payments. However, the contention of the Ld.AR is that the printout seized vide annexure A/PSS/CORP/18 are printouts from the pendrive vide annexure A/PSS/CORP/19. As submitted by the Ld.AR this Tribunal in the case of M/s. Polisetty Somasundaram v. DCIT, Central Circle-1, Guntur (supra) held that the seized pendrive is not admissible evidence IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 14 since the revenue has not followed the procedure laid down in section 65B of the Indian Evidence Act. We are of the considered view that since the seized pendrive cannot be considered as admissible evidence as laid down in M/s.Polisetty Somasundaram v. DCIT, Central Circle-1, Guntur (supra) the contents of the pendrive have no evidentiary value. 22. The case laws relied on the Ld.DR is distinguishable on the facts that the Hon’ble Supreme Court of India in Sumati Dayal v. CIT (supra) has considered the ratio laid down in CIT v. Durga Prasad (supra), whereas it was not in regard to the search assessment and hence cannot be applied to the instant case. 23. In the light of the above discussion and after carefully perusing the case laws cited by rival parties, we find that the Ld.CIT(A) has rightly followed the ratio laid down by the Jurisdictional ITAT in the case of M/s. Polisetty Somasundaram (supra) and hence we find no infirmity in the order of the Ld.CIT(A) resulting in dismissal of the grounds raised by the revenue. 24. This legal ground raised by the revenue is dismissed. 25. On merits, Ld.AR filed a petition for raising additional grounds of cross objections in accordance of Rule 27 of ITAT Rules which is reproduced below:- “1. On the facts and circumstances of the case the addition made of Rs.3,62,32,900/- (Unexplained Income of Rs. 1,37,32,900/- and Unaccounted Income of Rs. 2,25,00,000/-) basing on the material found during the course of search proceedings in case of third party without any corroborative evidence is unsustainable before law. IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 15 2. On the facts and circumstances of the case, the applicability of provisions of Section 132(4A) of the I.T.Act, the incriminating material found and seized in Annexure A/PSS/CORP/18 may be presumed as belong to the searched person only but not to the person other than the searched person. 3. On the facts and circumstances of the case, the statement recorded from the authorized person of M/s.Polisetty Somasundaram under Section 132(4) of the I.T.Act, can be considered as correlative evidence only in the hands of assessment of searched person but not in the case of person other than the searched person's assessment.” 26. We thoughtfully gone through the submissions of the Ld.AR regarding the applicability of provisions of section 132(4) of the Act and section 132(4A) of the Act, accordingly, in our view the seized material was found during the search in the premises of M/s. Polisetty Somasundaram and the Incriminating Material found in the seized material belongs to the searched person and not to the assessee. Section 132(4) and 132(4A) of the Act are extracted below for reference: - “Section 132(4) in The Income Tax Act, 1961 (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. [Explanation. - For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act.] (4A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 16 possession or control of any person in the course of a search, it may be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.]” 27. Accordingly, from the plain reading of the above section it can be safely concluded that any article/books of accounts etc., found in the possession or control of person in the course of search shall be presumed to belong to searched person and therefore no additions can be made based on those documents in the hands of any other person without linking it with additional corroborative evidences implicating the assessee. In the instant case no such corroborative evidences having nexus with the incriminating documents seized in the third party premises have been placed before us by the revenue to substantiate the additions made in the hands of the assessee based on the incriminating material found and seized from the searched person. Accordingly, by relying on the various judicial pronouncements as cited by the Ld.AR supporting the grounds as submitted in the paper book, we are of the considered view that addition made by the Ld. AO even on merits cannot be IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 17 sustained and hence deserves to be deleted. Accordingly, the grounds raised by the assessee as per Rule 27 of ITAT Rules is allowed. 28. In the result, appeal of the revenue is dismissed and the cross objections raised by the assessee in accordance with Rule 27 of ITAT Rules are allowed. IT(SS)A No. 3/VIZ/2025 (A.Y. 2017-18) 29. Coming to the appeal relating to A.Y. 2017-18, since the issues and facts in this appeal are identical, the decision taken in revenue’s case for the A.Y.2015-16 as in preceding paras shall mutatis mutandis, applicable to IT(SS)A No. 3/VIZ/2025. Accordingly, appeal filed by the revenue is dismissed. 30. To sum-up, appeals filed by the revenue are dismissed. Order pronounced in the open court on 09th June,2025. Sd/- (िीरिल्ली दुर्ाा राि) (VEERAVALLI DURGA RAO) न्याधयक सदस्य/JUDICIAL MEMBER Sd/- (एस बालाक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Dated: 09.06.2025 Giridhar, Sr.PS IT (SS) A. Nos. 1, 2, 3 & 4/VIZ/2025 BTC Private Limited Page No. 18 आदेश की प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to :- 1. निर्धाररती/ The Assessee : BTC Private Limited 4-4-120, Chandramouli Nagar Guntur- 522007 Andhra Pradesh 2. रधजस्व/ The Revenue : Dy. Commissioner of Income Tax Central Circle - 1 1st Floor, C.R. Building Kannavarithota, Guntur – 522004 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "