DCIT CENTRAL CIRCLE-2(2) CHENNAI, CHENNAI V. THANGAMANI PERUMAL GOUNDER, PALLIPALAYAM

ITA 629/CHNY/2025

AI Insights

The case involves appeals by the Revenue against the orders of the Commissioner of Income Tax (Appeals) which had deleted the additions made by the Assessing Officer regarding undisclosed income from M/s. SRS Mining. The Tribunal examined whether the additions were justified based on the materials seized during a search operation and the subsequent legal and factual basis for these additions. The Tribunal concluded that the materials used for the additions were essentially 'dumb documents' without any evidentiary value, as they were not corroborated by any independent evidence linking the assessee to the transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714344 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: misc
• Other Referred Cases: CIT vs Lavanya land (P) Ltd, DCIT vs National Standard India Ltd, Senate Vs DCIT, Common Cause (A Registered Society) Vs. Union of India, ACIT Vs Satyapal Wassan, DCIT Central Circle-2(4) Chennai vs. O Pannerselvam, DCIT Central Circle-2(2) Chennai vs Karuppagounder Palaniswami, DCIT Central Circle-2(4) Chennai vs Vaithialingam, DCIT Central Circle-2(4) Chennai vs Vivek papisetty, DCIT Central Circle-2(4) Chennai vs P Ram Mohan Rao
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E.PAVUNA SUNDARI
• Assessee Lawyers: N. ARJUN RAJ
• Keywords: Set aside; Corroborative evidences; Income from undisclosed sources; Documents seized; Retraction; Search and seizure; Loose papers
• Section: 143(3); 142(1); 132; 131

Judgement Text

" आयकर अपीलीय अिधकरण,‘ए’ ᭠यायपीठ,चे᳖ IN THE INCOME TAX APPELLATE TRIBUNAL‘A’ BENCH, CHENNAI ŵी जॉजŊ जॉजŊ क े, उपाȯƗ एवं सुŵी एस.पȧावती, लेखा सद˟ क े समƗ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND Ms. S. PADMAVATHY, ACCOUNTANT MEMBER आयकरअपीलसं/.ITA Nos.:628 & 629/CHNY/2025 िनधाᭅरणवषᭅ/Assessment Years: 2015-16 & 2016-17 The Deputy Commissioner of Income Tax, Central Circle - 2(2), Chennai. Vs. Thangamani Perumal Gounder, 5/6/183, Govindampalayam Alampalayam, Pallipalayam 638 008. [PAN: ABCPT-7700-K] (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Ms. E. Pavuna Sundari, CIT ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri N. Arjun Raj, Advocate सुनवाई कᳱ तारीख/Date of Hearing : 23.07.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 04.08.2025 आदेश /O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: These two appeals at the instance of the Revenue are directed against two separate orders of the Commissioner of Income Tax (Appeals) - 19, Chennai both dated 10.12.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Years are 2015-16 and 2016-17. 2. The common issue involved in both the appeals, hence, they were heard together and are being disposed off by this consolidated order. The Printed from counselvise.com - 2 - ITA Nos.628 & 629/Chny/2025 solitary issue raised in both the appeals is with regard to deletion of alleged addition made on account of receipts from M/s. SRS Mining. 3. Brief facts of the case are as follows: 4. A search and seizure action under Section 132 of Act was conducted in the cases of M/s. SRS Mining, J. Sekar Reddy, K. Rethinam and S. Ramachandran, at No. 47, 49, VBC Solitaire, 3 Floor, Bazullah Road, T. Nagar, Chennai - 6000017 on 08.12.2016. During the course of search proceedings under section 132 of the Act in the case of Shri Sekar Reddy (M/s. SRS Mining) and others on 08.12.2016, certain incriminating materials were allegedly seized from the premise of M/s. SRS Mining. In this regard, a satisfaction note has been received from the ACIT, Central Circle 2(4), Chennai dated 15.07.2021, wherein, M/s. SRS Mining is assessed, that those seized materials contained date-wise noting of the amounts paid to persons in public service. The name and designation of the public servants involved were confirmed by the partners/employees of M/s. SRS Mining in their sworn statements recorded under section 132(4) of the Act, wherein, entries were relatable to the assessee, who was Industries Minister in Tamil Nadu Government during this period and the details are extracted at para 3.1 of the assessment order and the same is reproduced herein below for ready reference: Printed from counselvise.com - 3 - ITA Nos.628 & 629/Chny/2025 Date Name of the public servant as mentioned in the seized material Amount 10.10.2014 Minister of Industries 10000000 06.11.2014 Minister of Industries 10000000 09.03.2015 Minister of Industries 10000000 04.11.2015 M (Industries) 10000000 04.03.2016 Ind (M) 390000 13.06.2016 Minister of Industries 5000000 29.07.2015 M (I) 10000000 17.06.2016 Thangamani (M) 5000000 09.06.2015 M (I) 5000000 5. Accordingly, the Assessing Officer issued notice under section 153C of the Act dated 17.12.2021 to the assessee. In response to the notice, the assessee filed the return of income on 30.12.2021 declaring total income of ₹.4,00,830/- for AY 2015-16 and ₹.4,00,610/- for AY 2016-17. Subsequently, the Assessing Officer issued notices under section 143(2) and under section 142(1) of the Act on 10.02.2022 and on 11.02.2022 respectively. As a response to the said notice, a letter dated 21.02.2022 was filed seeking for various details from the Assessing Officer with reference to the search proceedings and the assessee also received a response from the Assessing Officer on 09.03.2022. In response to show- cause notice dated 09.03.2022, the assessee filed reply on 24.03.2022 and the reasons stated by the assessee and extracted at para 3.3 of the assessment order are reproduced herein below: (i) The proceedings were without jurisdiction as the time limit for transferring the information is 60 days from the date on which the last of the authorizations for search was executed as per section 132(9A) of the Act. Printed from counselvise.com - 4 - ITA Nos.628 & 629/Chny/2025 (ii) With regard to the receipt of money from M/s.SRS Mining, the assessee stated that he did not know any of the parties mentioned in the sworn statements and no-where in the sworn statement there was any mention that any amount was paid to the assessee. (ii) The allegations in the satisfaction note that certain payments have been made to him, have not been backed by any documentary evidences. (iv) It is a settled principle in law that no additions can be made merely on the basis of book entries or loose sheets. Reliance was placed on the following judicial decisions: (a) CIT vs Lavanya land (P) Ltd (2017) 83 taxmann.com 161 (Bombay) (b) DCIT vs National Standard India Ltd (2017) 85 taxmann.com 87 (Mumbai-Trib) (c) Senate Vs DCIT(2016) 68 taxmann.com 223 (Bangalore-Trib) The assessee also sought cross-examination of third parties wherever any statement was being relied upon for the purposes of this assessment. 6. However, the Assessing Officer did not accept the contentions of the assessee for the reasons stated in the assessment order at 3.4 are reproduced herein below for ready reference: (i) The denial of any transactions with M/s.SRS Mining and its associated persons is vague and not backed by any logic or evidences, given the influential position of the assessee in the public life. It is a matter in the exclusive domain of knowledge of the assessee and it is for the assessee to explain it in full. (ii) From the nature of entries in the seized materials and the explanation furnished by the author of the seized materials it is clear that payments have been made to various persons, in public life, including the assessee, who was then Minister in the Government of Tamilnadu (clearly mentioned as 'Minister Industries', \"M (Industries)\", \"Thangamani(M)\", \"M (I)\"\" Ind (M)\") (iii) The decision of the Hon'ble Supreme Court in the case of Common Cause (A Registered Society) Vs. Union of India (394 ITR 220) and other judicial decision are distinguishable in the case of the assessee, for the simple reason that the evidences found were not simple loose sheets or arbitrary notings. The entries found in the seized materials were in the form of proper accounts, maintained systematically, on daily basis, with tick marks showing that the entries have been verified with some basic documents. The entries have been logically explained Printed from counselvise.com - 5 - ITA Nos.628 & 629/Chny/2025 by the author of the entries, during the course of search. Hence, inferences are drawn not on the basis of mere sworn statements, surmises but on the basis of evidences and the explanations furnished. (iv) It is to be noted that Shri. Srinivasulu is a close associate of Shri. Sekar Reddy of M/s. SRS Mining and looking after his operations. The nature of seized materials are undisclosed account books containing monthly income-expenditure accounts. Considering the nature of the transactions and the nature of the personalities involved, maintenance of formal, clear and unambiguous books of accounts cannot be expected in such transactions, for obvious reasons. Sworn statement given during the course of search only will give the correct picture, as the deponent is free to depose the actual facts known to him/her, without being under the compulsive influence of his/her masters. Further, no other logical explanation has been given for the entries found in the seized materials. 7. By relying upon various case law, the Assessing Officer rejected the request of the assessee for cross-examination, objecting that the plea was vague without mentioning the person who has to be cross-examined and the points on which the cross-examination needed to be held. Considering the nature of entries made and explanation furnished by Shri Srinivasulu, author of the entries and presuming that the assessee has received the payments mentioned as stated herein above, the Assessing Officer completed the assessment under section 143(3) r.w.s 153C of the Act dated 28.03.2022 determining the total income of the assessee at ₹.3,04,00,830/-, inter alia, making addition of ₹. 3,00,00,000/- as income from other sources for AY 2015-16. On an identical facts, similar addition of ₹.2,53,90,000/- was made for AY 2016-17. 8. Aggrieved by the above assessment orders, the assessee carried the matter in appeal before the CIT(A). After considering the grounds of appeal, Printed from counselvise.com - 6 - ITA Nos.628 & 629/Chny/2025 relevant provisions, additional grounds raised by the assessee and written submissions as well as considering various case law, the ld. CIT(A) deleted the addition made by the Assessing Officer for both the assessment years under consideration by observing as under: 6.4.11 On examination of the above submission, it can be seen that the main contention raised by the Appellant is that the addition was made by denying opportunity of cross-examination and that the Appellant has never received the payment as referred by the A.O. on the basis of the seized material. 6.4.12 While going through the assessment order(s) for the A.Y. 2015-16, 2016-17 and 2017-18 it can be seen that, the A.O. made addition of undisclosed receipts of the Appellant from M/s. SRS Mining, based on the entries found in the note books seized from the office premises of the said firm during the course of search conducted in the cases of Shri M. Premkumar, Shri K. Srinivasulu, Shri J. Sekhar Reddy and M/s. SRS Mining on 08.12.2016 and the statement of Shri K. Srinivasulu recorded u/s 132(4) of the Act dated 10.12.2016 (from whose possession the material was seized) with regard to the contents of the said seized material. The undisclosed income quantified by the A.O. on the said material amounting to Rs.3,00,00,000/-, Rs. 2,53,90,000/- & Rs. 1,00,00,000 for A.Ys 2015-16, 2016-17 and 2017-18 respectively, as income from other sources. 6.4.13 In this regard, it is pertinent to observe that the addition towards undisclosed income of the Appellant represented by the payments allegedly received by him from M/s. SRS Mining was made by the A.O. by relying on the material seized from the premises of a third party (M's. SRS Mining) during the course of search conducted in the case of the said third party. The said material was neither seized from the premises of the Appellant nor was the same found to be in the handwriting of the Appellant. Such material seized in the case of a third party which is not in the hand writing of the Appellant does not constitute adequate evidence to draw any adverse inference against the Appellant, in the absence of any other corroborative evidence. This proposition has been laid down by the Hon'ble Delhi High Court in the case of CIT Vs Sant Lal [2020] 118 taxmann com 432 (Del), it was held therein that where a diary was seized in search of the premises of a third party allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from premises of assessee nor was it in handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. 6.4.14 The ratio of the above said decision is squarely applicable to the case of the Appellant as the AO has not referred to any cogent evidence applicable to the case of the Appellant. As evident from the assessment order(s) passed, it can be seen that the AO has not referred to any cogent material to corroborate that the entries made in the material seized from a third party which are purportedly the transactions made by the Printed from counselvise.com - 7 - ITA Nos.628 & 629/Chny/2025 said third party with the Appellant. It is also pertinent to observe that the seized material relied upon by the A.O. in drawing the inference, that the Appellant was in receipt of unaccounted amounts in cash from M/s. SRS Mining did not contain complete information to facilitate arriving at such an inference. The information available in the relevant seized material merely contained the date, amount of payment and the post held by the Appellant. There is absolutely no mention in the seized material regarding the nature of the said transactions of cash payments, the purpose of such payments and the precise identity of the recipient. An entry made in a diary or notebook by a third person with scant details cannot be used to fasten tax liability upon the person whose name does not appear at all or only the post held by the such person appears in the seized material, in the absence of any corroborative evidence to attribute the entries to such a person. Such seized material is liable to be treated as a dumb document, which does not have any evidentiary value in respect of the entries found therein, unless corroborative evidence is available which can provide necessary reliable basis for deciphering the nature and character of the said entries. 6.4.15 Another critical aspect which discredits the use of the entries in the seized material for concluding that the payments noted therein were made to the Appellant is the absence of any acknowledgement in the seized material by the Appellant of having received the said payments by way of appending his signature/initial against the said payments. If a third party unilaterally makes entries in a diary/note book showing payments to a person to suit his convenience, the payments cannot be inferred to have been made to the said person, unless here is corroborative evidence to establish the actual making of payments to the said person. There is no reference to such corroborative evidence in the assessment order. 6.4.16 At this juncture, it would be relevant to refer to the decision of Hon'ble ITAT, Jabalpur in the case of ACIT Vs Satyapal Wassan [TS-5104-ITAT-2007(Jabalpur)-O] (2008) 5 DTR 0202, wherein the Hon'ble ITAT stressed the importance of gathering corroborative evidence in support of the contents of a document, particularly when the document is bereft of necessary details and is not complete in all respects, by stating as under: \"For the sake of argument if we accept the submission of the learned Departmental Representative that the learned CIT(A) erred in accepting fresh evidence then what is left after ignoring those affidavits is the bare document No. 7 with the bare details as referred to above. The moot question now arises is whether any addition can be made on the basis of that document. We have already pointed out above that this document is bereft of necessary details about year of transaction, ownership of transaction, nature of transaction, necessary code for deciphering the figures. It may be possible that a document may not be complete in all respects as the businessmen or tax evaders may choose to record minimum details on a document and keep the rest in their memory. It is the duty of the AO to carry out necessary investigations by correlating the impugned document with other documents seized, with regular books of account, with record kept by outside agencies, such as banks or financial institutions or debtors/creditors and finally, Printed from counselvise.com - 8 - ITA Nos.628 & 629/Chny/2025 by recording the statements of concerned parties so as to fill up the gaps in confirming the inference arising from the documents for a proper charge of tax. Such correlation is necessary unless the document is capable of speaking giving full details so as to enable any intelligent person to find out the nature of transaction, the year of transaction, the ownership of the transaction and quantum thereof. Even in that situation, it is necessary to give opportunity to the assessee to offer his explanation and investigation be carried out to strengthen the direct inference arising from this document.\" 6.4.17 The proposition that addition cannot be made merely on the basis of entries in loose sheets found in the premises of a third party without bringing on record independent evidence to corroborate such entries has been reiterated in several decisions. Some of the decisions to this effect are MM Financiers (P) Ltd Vs. DCIT (2007) 107 TTJ (Chennai) 200, Regency Mahavir Properties Vs ACIT [2018] 169 ITD 35 (ITAT-Mumbai), ACIT Vs. Katrina Rosemary Turcotte [2017] 190 TTJ 681 (ITAT- Mumbai), DCIT Vs. Vipin Aggarwal [2017] 83 taxmann.com 6 (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD 85 (ΤΜ) ΙΠΑΤ, Τ.Σ Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd Vs ACTT [2000] 67 TTJ 247 (All). 6.4.18 In particular, it is of critical importance that the evidence to corroborate the entries indicating payments in the seized material found with a third party is available with specific reference to the fact regarding actual transfer of money from the said third party to the recipient named in the said entries in the seized material. The Hon'ble ITAT, Mumbai held in the case of Riveria Properties Private Limited Vs ITO in ITA No.250/MUM/2013 that the AO is required to bring further evidence on record to show that the money was actually exchanged between the parties in a case where there is no other evidence on record to prove that on-money was paid except the loose sheet found in the premise of a third party and admission made by the third party. The relevant part of the said decision is reproduced as under. \"In the present case on hand, except loose sheet found in the premises of third party and admission made by the third party in their assessment proceedings, there is no other evidence on record to prove that on money is paid. The assessing officer, without brought on record any evidence to prove that on money is exchanged between the parties, merely harping upon the loose sheet and the third party admission, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The AO is required to bring further evidence an record to show that actual on money is exchanged between the parties, but literally failed to do so. The A.O. did not conduct any independent enquiry relating to the value of the property instead, merely relied upon the statement given by the purchasers of the property, which is not correct. Further, there is no proof of origin and destination of on money. The A.O failed to prove the source of the purchasers as to how the money was arranged and also failed to prove the deployment of unaccounted money by the seller by any form of evidence. Under these circumstances, based on paper jottings as conclusive evidence on money cannot be brought to tax as Income from undisclosed sources.\" Printed from counselvise.com - 9 - ITA Nos.628 & 629/Chny/2025 6.4.19 The importance of having corroborative evidence on record to independently validate the entries of payments noted in the seized material found in the premises of a third party assumes much more significance where the alleged recipient of the said payments was the Speaker of Tamilnadu Legislative Assembly. The Hon'ble Supreme Court observed in the case of Common Cause Vs. Union of India (supra) as under with regard to the issue of ordering investigation against important constitutional functionaries based on entries made by third parties in loose papers or diaries: \"We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary. Officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence, we have apprehension whether it would be safe to even initiate investigation. In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of accounts but on random papers at any given point of time. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have correlation with the random entries. In case we do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basis of fictitious entries, in the absence of cogent and admissible material on record, lest liberty of an individual be compromised unnecessarily.\" 6.4.20 The above-mentioned decision of the Hon'ble Supreme Court stresses the need for exercising caution and for bringing on record relevant, reliable and cogent evidence to corroborate the entries found in loose sheets and note books regarding the payments allegedly made to important constitutional functionaries. so that the process of law is not abused by unscrupulous persons or business houses in order to achieve ulterior goals. Though the said decision was rendered in the context of ordering criminal investigation against important constitutional functionaries, the principle stated therein is broadly applicable to the income tax proceedings also. It is therefore all the more important that corroborative evidence is not available on record in support of the entries in the seized material found in the third party premises of M/s. SRS Mining, which are allegedly indicative of payments made to the Appellant. 6.4.21 In the light of the above discussion, it is necessary to examine whether the statement of Shri K.Srinivasulu recorded u/s 132(4) of the Act on 10.12.2016 represents corroborative evidence in respect of the entries found in the seized material purportedly in the abbreviated name of the post held by the Appellant. In this regard, Printed from counselvise.com - 10 - ITA Nos.628 & 629/Chny/2025 the undersigned is of the considered view that the said statement of Shri K. Srinivasulu does not serve as a corroborative evidence in respect of the entries in the seized material which allegedly have shown cash payments made to the Appellant. As clearly evident from his answer to Question No.3 of the statement, he gave a general statement that the entries in the seized note books represent incidental expenses paid to various persons. When there are numerous pages and entries in the seized material, such a general statement does not inspire confidence for drawing any conclusions in respect of specific entries appearing therein allegedly with the abbreviated name of the post held by the Appellant. There is no specific reference in the statement of Shri K. Srinivasulu that the entries in the seized note books appearing allegedly with the post held by the Appellant representing payments made to the Appellant only. There is nothing in the said statement even to remotely suggest that the entries appearing with the post held by the Appellant actually represent payments made to the Appellant, the details of facilitation services rendered by the Appellant to M/s SRS Mining for which the impugned payments were made and the identity of the person(s) who actually made the payments to the Appellant. The statement of Shri K. Srinivasulu merely mentions that the entries were made in the seized note books by him on the instructions of the partners of M/s SRS Mining. It is very clear from the same that he had no first-hand knowledge of the payments noted in the seized material and had merely noted whatever has been told to him by partners. In such an event, the statement of Shri K. Srinivasulu serves a very limited purpose of ascertaining the identity of the person who made the entries and nothing more. Since the entries were made by him on the instructions of the partners, it is the partners who were required to explain the exact identity of the recipients, the nature of payments, the purpose of payments and the identity of the person who made the payments. However, the material available on record does not suggest that the partners were examined on oath u/s 132(4) of the Act with regard to the relevant entries in the seized material of cash payments allegedly made to the Appellant. There is no reference to any such statement of the partners in the assessment orders. In the said facts and circumstances, the statement of Shri K. Srinivasulu can barely be considered as a corroborative evidence against the Appellant with regard to the entries in the seized material. 6.4.22 Further, it is pertinent to observe that even the said statement u/s 132(4) of the Act recorded during the course of search has been retracted by Shri K. Srinivasulu vide his letters dated 21.03.2017 and 23.03.2017 addressed to the DDIT(Inv), which were submitted by him through the Jail Superintendent when he was lodged in the jail. In the retraction letters, it was claimed by Shri K. Srinivasulu that the statement u/s 132(4) of the Act was given under coercion and duress and that he was under a state of mental shock, depression and physical exhaustion at the relevant point of lime due to the continuance of search action continuously for more than 3 days without a break and he not being allowed to sleep or take rest. He stated that he was not allowed to read the typed statement and his signature was obtained by force on the statement. He stated that he never paid any money to various persons as recorded in the typed statement. Further he also stated that he signed the statement in order to end the prolonged ordeal of intimidation, harassment and mental torture. Further, Shri K. Srinivasulu, has also reiterated his retraction in the course of the statement u/s 131 of the Act recorded by the AO on 30.03.2021 during the course of the assessment proceedings. Printed from counselvise.com - 11 - ITA Nos.628 & 629/Chny/2025 6.4.23 In the grounds of appeal, the Appellant has contended that the AO is wrong in making the addition by relying on the statement without allowing any cross- examination. It is brought on record that during the course of Appellate proceedings in the case of another Appellant Shri P. Ram Mohan Rao in whose case also similar addition was made towards undisclosed receipts from M/s. SRS Mining based on the same seized material and the same statement of Shri K.Srinivasulu, that Shri K.Srinivasulu has become non-cooperative and hostile during the course of preliminary examination of the said person by the AO on 19.12.2018 prior to the scheduled cross-examination by the said assessee. As the witness had turned hostile, the AO was of the opinion that the cross-examination would not serve any useful purpose, and he informed the said assessee that it is not feasible to provide an opportunity to cross-examine Shri K Srinivasulu. In view of the AO's communication of his inability to provide the opportunity to cross-examine Shri K.Srinivasalu and being of the view that not being provided with such opportunity is prejudicial to his interest, the said assessee filed a writ petition before the Hon'ble Madras High Court praying for issue of directions to the AO to permit him to cross-examine the witnesses relied on by the AO. The said writ petition was disposed off by the Hon'ble High Court vide order dated 27.12.2018 in WMP No. 40141 of 2018 arising out of WP No 34626 of 2018 by dismissing the said prayer. The Hon'ble High Court held that it does not find any infirmity in the order of the AO in refusing the request for cross- examination since the witness turned hostile. The Hon'ble Court however directed that if the AO were to rely on that part of the statement of Shri K Srinivasalu which is in favour of the revenue, the AO has to let in other reliable evidence to corroborate the same. Further, it is noticed that the Hon'ble Madras High Court observed in the case of the searched person M/s. SRS Mining Vs. Union of India (2022) 141 taxmann.com 272 (Mad) at para 9 of the order that the statement of Shri K Srinivasulu cannot be relied as he has turned hostile by giving specific retraction statement and that there is no need to accord permission to cross-examine him in view of the said reason. The relevant part of the order of the Hon'ble High Court is reproduced as under: \"The Court vide order dated 17-7-2019 allowed W.P.No.21166 of 2019 and permitted the petitioner to cross-examine Mr. Nagarathinam and Mr. Murugesan on 1-8-2019 at 12 noon. As regards Mr. K. Sreenivasalu, considering the submission of the ACIT that he had tumed hostile by giving specific retraction statement, this Court held that there would be no need to accord permission to cross-examine him and, accordingly, his statement was not to be relied\" 6.4.24 Since Shri K. Srinvasulu has retracted his sworn statement u/s 132(4) of the Act and has turned hostile, no useful purpose will be served in the case of the present Appellant also, if the opportunity to cross-examine Shri K. Srinivasulu is provided during the course of the Appellate proceedings also. In the said circumstances and having regard to the above-mentioned decisions of the Hon'ble Madras High Court, it needs to be held that the statement of Shri K. Srinivasulu cannot be used against the Appellant unless any other evidence to corroborate the same is brought on record by the AO. Printed from counselvise.com - 12 - ITA Nos.628 & 629/Chny/2025 6.4.25 In the assessment order(s), the AO made addition of the undisclosed income represented by the entries in the material seized from the premises of M/s SRS mining by placing reliance on the statement of Shri K Srinivasalu recorded u/s 132(4) of the Act on 10.12.2016. Apart from the same, it is noticed that the AO mentioned in the assessment order(s) that on perusal of the seized notebooks has revealed that payments were being made to various influential persons including persons in public service by M/s. SRS Mining on a regular basis and the name and designation of such Public servants involved in receiving the payments were confirmed by the partners of M/s SRS Mining in their sworn statements recorded u/s 132(4) of the Act. However, it is noticed on perusal of the sworn statements of the three partners of M/S SRS Mining (Shri S.Ramachandran, Shri J. Sekar Reddy and Shri. K. Rathinam) recorded u/s 132(4) of the Act on 08.12.2016 that no questions have been posed to them at all regarding the seized material allegedly containing details of payments made to various persons. In the case of K.P Varghese Vs. ITO (1981) 131 ITR 597, the Hon'ble Apex Court held that \"the onus of establishing that the conditions of taxability are fulfilled is always on the revenue and that throwing the burden of showing that there is no under- statement of consideration on the assessee would be to cast an almost impossible burden upon him to establish the negative, namely, that he did not receive any consideration beyond what has been declared by him. It needs to be held that the burden is on the revenue to adduce proper evidence to corroborate the contents of the seized material for the purpose of establishing that the Appellant was in fact in receipt of the payments as noted in the seized material\". It is evident that such a burden has not been discharged by the revenue in the case of the Appellant. 6.4.26 As per the decisions of the Hon'ble Apex Court in the cases of CBI Vs. VC Shukla & Others (1998) 3 SCC 410, Common Cause (A Registered Society) Vs. Union of India (2017) 77 taxmann.com 254 (SC) and Dhakeshwari Cotton Mills Lids. CIT (1954) 26 ITR 775 (SC) corroborative evidence is essential to support the evidence found in third party premise In order to properly appreciate the issue, it is useful to refer to the following extract from the decision of Hon'ble Apex Court in the case of Dakeswari Cotton Mills Ltd Vs. CIT (1954) 26 ITR 775 (SC): \"As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence, a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh (supra)\". 6.4.27 As evident from the decisions cited above, though it is true that the provisions of Evidence Act do not apply with the same rigor to the Income Tax proceedings, the AO is not entitled to make a pure guess and make an assessment without reference to Printed from counselvise.com - 13 - ITA Nos.628 & 629/Chny/2025 any evidence/material. It follows there from that addition cannot be made unless there is corroborative evidence to validate the entries found in the material seized from a third party. 6.4.28 It is seen that in the cases of CBI v. VC Shukla & Others and Common Cause (A Registered Society) v. UOI (supra), it was held that it is an established legal principle that every transaction even when recorded in the regular books need to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. This decision was rendered with reference to section 34 of the Indian Evidence Act. Though the technical rules of Evidence Act are not strictly applicable to Income Tax proceedings, the legal principle laid down by the Hon'ble Supreme Court in these cases that independent corroborative evidence is required in respect of entries in regular books of account when a liability is sought to be fastened based on such entries would be broadly applicable to Income tax proceedings also in cases where tax liability is sought to be fastened on an assessee based on entries found in the notebooks/loose sheets seized from a third party. 6.4.29 In the case of the Appellant, addition was made in the assessment order(s) for the A.Ys 2015-16, 2016-17 and 2017-18 based on the entries found in material seized from a third party. When the tax liability was sought to be fastened on the Appellant based on the said seized material, the AO was duty bound to prove the correctness of the entries in the seized material with independent corroborative evidence. However, it is noticed that no such corroborative evidence has been brought on record and relied upon by the AO in the assessment order. 6.4.30 It is also relevant to point out that Hon'ble ITAT, Bangalore held in the case of ACIT Vs. Shri B. S. Yediyurappa in ITA No. 14/Bang/2019 vide order dated 07.04.2022 that the addition made in the hands of the said person, who was the Chief Minister of the State of Karnataka during the relevant period, based on the entries of cash payments found recorded with the initials \"BSY\" in the material seized during the course of search conducted in the case of a third party is not sustainable in the absence of any evidence to corroborate the noting in the seized material. The said decision is squarely applicable to the facts of the present case. The relevant portion of the decision of the Hon'ble Tribunal is extracted as under: \"18. The payments are within the knowledge of the person, who written it. However, the said person denied the payment in the cross- examination and finally there is no evidence to suggest as to what they stand for and whom they referred to. Since the seized material is neither the regular books of account nor kept in the regular course of business of the assessee. They were not ITA No. 14 & CO 45/Bang/2019 Shri B.S. Yediyurappa 26 sufficient enough to fasten the liability on the present assessee, against whom they were sought to be used. The seized document collected by the department did not raise a reasonable ground to believe that there is a valid payment to the present assessee so as to award contract to the KNNL and the payment is relating to for awarding the contract of UBP. The seized material itself would not furnished evidences of the truth of their contents and Printed from counselvise.com - 14 - ITA Nos.628 & 629/Chny/2025 that was not corroborated by any further evidence so as to hold that the assessee has actually received the said payment. In view of this, we are of the opinion that the order of the earlier Bench in the cases of Shri D.S. Suresh Vs ACIT in ITA Nox462 & 463/Bang/2020 (AYS 2009-10 & 2011-12), dt 22.02.2021 and Shri D.V.Sadananda Gowda Vs ACIT in ITA No. 895/Bang/2019 (AY 2011-12), dt. 30.03.2021, are squarely applicable to the present facts of the case and accordingly in view of the above discussion, we confirm the deletion of the addition made by the CIT(A). Hence, the grounds raised by the Revenue are dismissed 6.4.31 As already discussed in detail in the preceding paragraphs, the seized material is in the nature of a dumb document which does not contain complete and unambiguous information to arrive at any conclusion based solely on the said material that the Appellant was in receipt of the payments found noted therein. There is no corroborative evidence to prove that the payments noted in the seized material have actually materialised and transfer of money has actually taken place between the concerned parties. Further, it is also significant to bring on record that neither the Authorized Officer nor the Assessing Officer had any occasion to cross verify the facts narrated in the seized material by way of recording statement from the Appellant. As evident from the Assessment Order it can be seen that the A.O. has issued a notice(s) u/s 153C of the Act on 17.12.2021, the assessee filed the Return(s) of Income on 30.12.2021, notice u/s 143(2) of the Act was issued on 10.02.2022 for AY(s) 2015-16 & 2016-17 and dated 04.03.2022 for AY 2017-18, notice u/s 142(1) of the Act was issued on 11.02.2022 for all the years under consideration, the assessee responded to the notice u/s 142(1) of the Act, and the Assessment(s) were completed on 28.03.2022 by passing an order(s) u/s 143(3) r.w.s. 153C of the Act. Thus, it can be very-well stated that the A.O. had completed the assessment in a mechanical manner without appreciation of facts. In view of these reasons, it is required to be considered that the AO has not discharged the onus cast upon the revenue to prove that the Appellant was actually in receipt of the payments reflected in the seized material with reliable and cogent independent evidences to corroborate the entries in the seized material. 6.4.32 During the course of the Appellate proceedings the Appellant has relied upon the various decisions of the jurisdictional tribunal which are squarely applicable to the facts and circumstances to the case of the Appellant. The following are the decisions that are relied upon:- (1) DCIT Central Circle-2(4) Chennai vs. O Pannerselvam in ITA No. 581 & 582/Chny/2023 dated 05.04.2024 (ii) DCIT Central Circle-2(2) Chennai vs Karuppagounder Palaniswami in ITA No. 125, 126, 127 and 213, 214, 215 Chny/2023 dated 03.04.2024 (iii) DCIT Central Circle-2(4) Chennai vs Vaithialingam in ITA No. 604,605,606/chny/2023 dated 03.04.2024 (iv) DCIT Central Circle-2(4) Chennai vs Vivek papisetty in ITA No. 211, 212 and 405/Chny/2023 dated 02.04.2024 Printed from counselvise.com - 15 - ITA Nos.628 & 629/Chny/2025 (v) DCIT Central Circle-2(4) Chennai vs P Ram Mohan Rao in ITA No. 223,224,225/Chny dated 02.04.2024 6.4.33 It is significant to bring on record that in all the above cases, the Commissioner of Income Tax (Appeals) has allowed the grounds raised by these Appellant(s) wherein the AO made addition(s) on the basis of the seized material that was found and seized from M/s. SRS Mining. The jurisdictional tribunal in the appeal of the Revenue in all the above cases were dismissed by upholding the order of the Commissioner of Income Tax (Appeals). 6.4.34 The undersigned in the background of the above judicial decisions(s) brought out supra and to have judicial discipline, Is of the considered view that the action of the A.O. in making the addition, without bringing corroborative evidence is not legally and factually sustainable. Accordingly, all the Grounds raised by the Appellant upon these issues are hereby treated as allowed and the A.O. is hereby directed to delete the addition of Rs.3,00,00,000/-, Rs. 2,53,90,000/- & Rs. 1,00,00,000/- for the AY(s) 2015- 16, 2016-17 and 2017-18. 9. Aggrieved by the appellate orders, the Revenue is in appeal before us for the assessment years 2015-16 and 2016-17. 10. The ld. DR Ms. E. Pavuna Sundari, CIT has submitted that the ld. CIT(A) erroneously deleted the additions made towards undisclosed income of ₹.3,00,00,000/- (AY 2015-16) and ₹.2,53,90,000/- (AY 2016-17) as unexplained money, which were found in the materials seized from the premises of M/s. SRS Mining, Chennai on the ground that the Assessing Officer failed to produce corroborative evidences to link the assessee to the entries, without appreciating that the seized material contained the entries referred to assessee which was further corroborated by sworn statement of Shri Srinivasulu, close associate of Shri Sekar Reddy of M/s. SRS Mining, recorded under section 132(4) of the Act, author of the seized material. She vehemently argued that the sworn statement which was retracted by Shri Printed from counselvise.com - 16 - ITA Nos.628 & 629/Chny/2025 Srinivasulu could not be relied upon without appreciating that the retraction was not based on any supporting evidence and without any alternate explanation to entries in the seized materials. She further argued that the observation of the ld. CIT(A) that the addition was made on the basis of dumb document is not correct, but the seized materials were in the form of entries mentioning the transactions maintained on regular basis. She further argued that the sworn statement recorded under section 132(4) of the act has evidentiary value for the reason that Shri Srinivasulu is a close associate of Shri Sekar Reddy of M/s. SRS Mining and retraction of the sworn statement by Shri Srinivasulu was only an afterthought (retraction by Shri Srinivasulu vide his letters dated 21.03.2017 and 23.03.2017). 11. The ld. DR, thus, prayed that the order of the ld. CIT(A) should be set aside and restored that of the Assessing Officer. 12. Per contra, the ld. AR Shri N. Arjun Raj, Advocate has submitted that the assessee has no connection of whatsoever nature and never had any transactions with M/s. SRS Mining as the Assessing Officer relied on certain entries/noting found in the loose sheets/note books seized from a thirty- party premises for the purpose of framing assessment. Otherwise also, though the assessee was holding influential position, mining was not coming under the jurisdiction of Industry Ministry. He argued that the entries in the loose sheets seized have no evidentiary value without there being Printed from counselvise.com - 17 - ITA Nos.628 & 629/Chny/2025 any corroborative evidence. He drew our attention to para 3.1 of the assessment order and argued that there was no iota of independent corroborative evidence relied on by the Assessing Officer to prove that the transactions as mentioned in the entries in the said document had actually taken place and at best, those entries alleged to be found in loose sheets/note books without any corroborative evidence can utmost be treated as dumb document and cannot be relied upon. 13. The ld. AR vehemently argued that the sworn statement recorded under section 132(4) of the Act from Shri K. Srinivasulu relied on by the Assessing Officer does not have the name of the assessee and hence the reliance placed by the Assessing Officer for making addition is completely erroneous and cannot be construed as incriminating seized material for the purpose of assuming jurisdiction under section 153C of the Act. He further argued that any presumption of the transactions on some vague and tenuous entries in the notebook is not rational and hence not legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction and took support from the judgement of Hon’ble Supreme Court in the case of CBI v. V.C. Shukla (1998) AIR SC 410. The same preposition has been once again reiterated by the Hon’ble Supreme Court in the case of Common Cause v. Union of India and Ors. That the dumb documents which are not forming part of regular books of account do Printed from counselvise.com - 18 - ITA Nos.628 & 629/Chny/2025 not possess any evidentiary value and are liable to be rejected in toto. He further argued that the entries in the loose sheet/notebook, as relied upon by the Assessing Officer has no evidentiary value as it was unsigned and does not throw any light on the undisclosed income of the assessee. He further argued that in the absence of acknowledgement in the seized materials by the assessee of having received the said payments by way of appending his signature or initial against the said payments, the alleged entries in the loose sheets cannot be conclusive evidence. He has further submitted that the third party made entries unilaterally showing payments to a person, such payments cannot be inferred to have been made to the said person unless there is a corroborative evidence to establish the actual making of payment to the said person and in fact, there is no such corroborative evidenced captured in the assessment order and relied upon various case law to support his contentions. He also argued that the presumption under section 132(4A) of the Act will be applicable only in respect of the searched person and as per the said section, if any document is found in the course of a search, then by legal fiction, a presumption has to be drawn that such document belongs to the person from whose possession or control it was found and the contents of such documents are true, as such, the presumption will not extend to a third party. Printed from counselvise.com - 19 - ITA Nos.628 & 629/Chny/2025 14. The ld. AR placed on record a paper book running into 467 pages by filing various decisions of the jurisdictional Benches of the ITAT emanating from the same search dated 08.12.2016 at the premises of M/s. SRS Mining based on the same dumb document and drew our attention to page 47 of the paper book and submitted that Shri Srinivasulu retracted the sworn statement vide his letters dated 21.03.2017 and 23.03.20217 addressed to the DDIT (Inv.), which was submitted through the Jail Superintendent, wherein, he had stated that the earlier statement given by him were made under coercion, mental pressure from the Income Tax Officers during the search proceedings and thus, the said document has no legal sanctity. The ld. AR strongly supported the order passed by the CIT(A) and prayed that by considering various decisions of this Bench, the grounds raised by the Revenue should be dismissed. 15. We have heard both the parties, perused the material available on record and gone through the case law placed on record. On perusal of the assessment order, we note that the Assessing Officer made the addition towards undisclosed income of the assessee represented by the payments allegedly received by the assessee from M/s. SRS Mining by relying upon the material seized from the premises of a third party, viz., M/s. SRS Mining during the course of search conducted in the case of the said third party. Thus, it is apparently clear that there was no search & seizure operation Printed from counselvise.com - 20 - ITA Nos.628 & 629/Chny/2025 carried under section 132 of the Act in the premises of the assessee and the assessment was concluded under section 143(3) r.w.s. 153C of the Act dated 28.03.2022 by using material seized from the premises of a third party and such material was not found to be in the handwriting of the assessee. Such material seized in the case of a third party which is not in the hand writing of the assessee does not constitute adequate evidence to draw any adverse inference against the assessee, in the absence of any other corroborative evidence. For the above proposition, the CIT(A) has rightly relied on the judgement of the Hon'ble High Court of Delhi in the case of CIT Vs. Sant Lal [2020] 118 taxmann com 432 (Del), it was held therein that where a diary was seized in search of the premises of a third party allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from premises of assessee nor was it in handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. Further, we note that the Assessing Officer has not referred to any cogent material to corroborate that the entries made in the material seized from a third party which are purportedly the transactions made by the said third party with the assessee. The ld. CIT(A) has observed that there is absolutely no mention in the seized material regarding the nature of the said transactions of cash payments, the purpose of such payments and the precise identity of the Printed from counselvise.com - 21 - ITA Nos.628 & 629/Chny/2025 recipient. An entry made in a diary or notebook by a third person with scant details cannot be used to fasten tax liability upon the person whose name does not appear at all or only the post held by the such person appears in the seized material, in the absence of any corroborative evidence to attribute the entries to such a person. Such seized material is liable to be treated as a dumb document, which does not have any evidentiary value in respect of the entries found therein, unless corroborative evidence is available which can provide necessary reliable basis for deciphering the nature and character of the said entries. We note that, with regard to the use of the entries in the seized material, the CIT(A) has observed that when a third party unilaterally makes entries in a diary/note book showing payments to a person to suit his convenience, the payments cannot be inferred to have been made to the said person, unless there is corroborative evidence to establish the actual making of payments to the said person in the form of acknowledgement in the seized material of having received the said payments by way of appending his signature/initial against the said payments. But, however, in the present case there is no reference to such corroborative evidence in the assessment order. 16. We note that the CIT(A) emphasized for the proposition that addition cannot be made merely on the basis of entries in loose sheets found in the premises of a third party without bringing on record independent evidence to Printed from counselvise.com - 22 - ITA Nos.628 & 629/Chny/2025 corroborate such entries has been reiterated in several decisions. Some of the decisions to this effect are MM Financiers (P) Ltd Vs. DCIT (2007) 107 TTJ (Chennai) 200, Regency Mahavir Properties Vs ACIT [2018] 169 ITD 35 (ITAT-Mumbai), ACIT Vs. Katrina Rosemary Turcotte [2017] 190 TTJ 681 (ITAT-Mumbai), DCIT Vs. Vipin Aggarwal [2017] 83 taxmann.com 6 (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD 85 (ΤΜ) ΙΠΑΤ, Τ.S. Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd Vs ACIT [2000] 67 TTJ 247 (All). We also note that by relying upon the judgement of the Hon’ble Supreme Court in the case of Common Cause v. Union of India (supra), the CIT(A) has rightly observed that reliable and cogent evidence to corroborate the entries found in loose sheets and note books regarding the payments allegedly made to the assessee is not available on record in support of the entries in the seized material found in the third party premises of M/s. SRS Mining. 17. With regard to the sworn statement of Shri K. Srinivasulu recorded under section 132(4) of the Act on 10.12.2016, we are not inclined to accept it represents corroborative evidence in respect of the entries found in the seized material purportedly in the abbreviated name of the post held by the assessee since the said statement of Shri K. Srinivasulu does not serve as a corroborative evidence in respect of the entries in the seized material which allegedly have shown cash payments made to the assessee. The Printed from counselvise.com - 23 - ITA Nos.628 & 629/Chny/2025 CIT(A) also observed that Shri Srinivasulu gave a general statement that the entries in the seized note books represent incidental expenses paid to various persons. When there are numerous pages and entries in the seized material, such a general statement does not inspire confidence for drawing any conclusions in respect of specific entries appearing therein allegedly with the abbreviated name of the post held by the assessee. There is no specific reference in the statement of Shri K. Srinivasulu that the entries in the seized note books appearing allegedly with the post held by the assessee representing payments made to the assessee only. There is nothing in the said statement even to remotely suggest that the entries appearing with the post held by the assessee actually represent payments made to the assessee, the details of facilitation services rendered by the assessee to M/s. SRS Mining for which the impugned payments were made and the identity of the person(s) who actually made the payments to the assessee. The statement of Shri K. Srinivasulu merely mentions that the entries were made in the seized note books by him on the instructions of the partners of M/s. SRS Mining. It is very clear from the same that he had no first-hand knowledge of the payments noted in the seized material and had merely noted whatever has been told to him by partners. In such an event, the statement of Shri K. Srinivasulu serves a very limited purpose of ascertaining the identity of the person who made the entries and nothing more. Since the entries were made by him on the instructions of the Printed from counselvise.com - 24 - ITA Nos.628 & 629/Chny/2025 partners, it is the partners who were required to explain the exact identity of the recipients, the nature of payments, the purpose of payments and the identity of the person who made the payments. However, the material available on record does not suggest that the partners were examined on oath under section 132(4) of the Act with regard to the relevant entries in the seized material of cash payments allegedly made to the assessee. There is no reference to any such statement of the partners in the assessment orders. Thus, the statement of Shri K. Srinivasulu can barely be considered as corroborative evidence against the assessee with regard to the entries in the seized material. 18. On perusal of the observations of the CIT(A) at para 6.4.22 of the impugned order, we note that even the said statement under section 132(4) of the Act recorded during the course of search has been retracted by Shri K. Srinivasulu vide his letters dated 21.03.2017 and 23.03.2017 addressed to the DDIT(Inv.), which were submitted by him through the Jail Superintendent when he was lodged in the jail. In the retraction letters, it was claimed by Shri K. Srinivasulu that the statement under section 132(4) of the Act was given under coercion and duress and that he was under a state of mental shock, depression and physical exhaustion at the relevant point of time due to the continuance of search action continuously for more than 3 days without a break and he not being allowed to sleep or take rest. Printed from counselvise.com - 25 - ITA Nos.628 & 629/Chny/2025 He stated that he was not allowed to read the typed statement and his signature was obtained by force on the statement. He stated that he never paid any money to various persons as recorded in the typed statements. Further, he also stated that he signed the statement in order to end the prolonged ordeal of intimidation, harassment and mental torture. Further, Shri Srinivasulu has also reiterated his retraction in the course of the statement under section 131 of the Act recorded by the Assessing Officer on 30.03.2021 during the course of assessment proceedings. 19. We also note that in the case of M/s. SRS Mining v. Union of India (2022) 141 taxmann.com 272 (Mad), the Hon’ble High Court of Madras has observed at para 9 of the order that the statement of Shri K. Srinivasulu cannot be relied upon as he has turned hostile by giving specific retraction statement and that there is no need to accord permission to cross-examine him in view of the said reason. By reproducing relevant portion of the judgement of the Hon’ble High Court of Madras, the CIT(A) has rightly observed at para 6.4.24 of the impugned order that it needs to be held that the statement of Shri K. Srinivasulu cannot be used against the assessee unless any other evidence to corroborate the same is brought on record by the Assessing Officer. Admittedly, the Assessing Officer failed to bring on record any other evidence to corroborate with regard to the alleged entries in the loose sheets/ notebook. Printed from counselvise.com - 26 - ITA Nos.628 & 629/Chny/2025 20. Further, we note that in the impugned order, the CIT(A) has relied on the judgement of the Hon’ble Supreme Court in the cases of CBI Vs. VC Shukla & Others (1998) 3 SCC 410, Common Cause (A Registered Society) Vs. Union of India (2017) 77 taxmann.com 254 (SC) and Dhakeshwari Cotton Mills Ltd. V. CIT (1954) 26 ITR 775 (SC), for the purpose of validation of entries found in the material seized from a third party, corroborative evidence is essential to support such evidence found in third party premises. In order to properly appreciate the issue, it is useful to refer to the following extract from the decision of Hon'ble Apex Court in the case of Dakeswari Cotton Mills Ltd Vs. CIT (1954) 26 ITR 775 (SC): “As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence, a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh (supra)”. 21. Further, in the cases of CBI v. VC Shukla & Others and Common Cause (A Registered Society) v. UOI (supra), the Hon’ble Supreme Court has held that it is an established legal principle that every transaction even when recorded in the regular books need to be independently corroborated Printed from counselvise.com - 27 - ITA Nos.628 & 629/Chny/2025 and proved when some liability is to be fastened in respect of such transactions. This decision was rendered with reference to section 34 of the Indian Evidence Act. Though the technical rules of Evidence Act are not strictly applicable to Income Tax proceedings, the legal principle laid down by the Hon'ble Supreme Court in these cases that independent corroborative evidence is required in respect of entries in regular books of account when a liability is sought to be fastened based on such entries would be broadly applicable to income tax proceedings also in cases where tax liability is sought to be fastened on an assessee based on entries found in the notebooks/loose sheets seized from a third party. When the tax liability was sought to be fastened on the assessee based on the said seized material from thirty party, before making addition in the assessment orders for AYs 2015-16 and 2016-17, the Assessing Officer was duty bound to prove the correctness of the entries in the seized material with independent corroborative evidence and admittedly no such corroborative evidence has been brought on record and relied upon by the AO in the assessment orders. 22. In view of the above discussions, it is amply clear that the seized material is in the nature of a dumb document which does not contain complete and unambiguous information to arrive at any conclusion based solely on the said material that the assessee was in receipt of the payments Printed from counselvise.com - 28 - ITA Nos.628 & 629/Chny/2025 found noted therein. There is no corroborative evidence to prove that the payments noted in the seized material have actually materialised and transfer of money has actually taken place between the concerned parties. Further, it is also significant to bring on record that neither the Authorized Officer nor the Assessing Officer had any occasion to cross verify the facts narrated in the seized material by way of recording statement from the assessee. As could be evident from the assessment orders it can be seen that the Assessing Officer has issued notice(s) under section 153C of the Act on 17.12.2021, the assessee filed the returns of income on 30.12.2021, notice under section 143(2) of the Act was issued on 10.02.2022 for AY(s) 2015-16 & 2016-17, notice under section 142(1) of the Act was issued on 11.02.2022 for both the years under consideration, the assessee responded to the notice under section 142(1) of the Act, and the assessments were completed on 28.03.2022 by passing an orders under section 143(3) r.w.s. 153C of the Act. Thus, it can very-well be stated that the Assessing Officer had completed the assessments in a mechanical manner without appreciation of facts. In view of these reasons, it is required to be considered that the Assessing Officer has not discharged the onus cast upon the revenue to prove that the assessee was actually in receipt of the payments reflected in the seized material with reliable and cogent independent evidences to corroborate the entries in the seized material. Printed from counselvise.com - 29 - ITA Nos.628 & 629/Chny/2025 23. The ld. AR brought on record the following case law in the form of paper book: i. DCIT v. Shri P. Rama Mohan Rao in ITA Nos. 223 to 225/Chny/2023 & Ors ii. DCIT v. Shri Vivek Papisetty in ITA No. 211/Chny/2023 &ors iii. DCIT v. Shri Karuppagounder Palaniswami in ITA Nos. 125 to 127/Chny/2023 & Ors iv. DCIT v. Shri Vaithilingam in ITA Nos. 604 to 606/Chny/2023 &ors v. DCIT v. Shri O. Paneerselvam in ITA Nos.581 & 582/Chny/2023 & Ors vi. DCIT v. Shri S. Elambharathi in ITA Nos. 220 & 221/Chny/2022 & Ors vii. ACIT v. Nallaammal Deivasigamani Venkatachalam in ITA Nos. 1291 & 1292/Chny/2023 Upon perusal of the above orders of this Tribunal, we note that the Coordinate Benches of this Tribunal has, after considering the facts and circumstances of the cases, appellate orders and assessment orders, dismissed the appeals filed by the Revenue, wherein, the Assessing Officer made additions on the basis of the seized material that was found and seized from M/s. SRS Mining during the search on 08.12.2016, in the absence of reliable and cogent independent evidences to corroborate the entries in the seized materials. 24. In the present case also, the Revenue has failed to bring on record any reliable and cogent independent evidences to corroborate the entries in the seized materials either before the CIT(A) during appellate proceedings or even before this Tribunal. Considering the case law placed on record and referred hereinabove, the entire facts and circumstances of the case, we find that the CIT(A) has rightly held that the action of the Assessing Officer Printed from counselvise.com - 30 - ITA Nos.628 & 629/Chny/2025 in making the addition without bring corroborative evidence is not legally and factually sustainable and deleted the additions made in both the assessment years under consideration are justified. Accordingly, the grounds raised by the Revenue are dismissed for both the assessment years. 25. In the result, both the appeals filed by the Revenue are dismissed. Order pronounced in the open court on 04th August, 2025 at Chennai. Sd/- (एस. पȧावती) (S. PADMAVATHI) लेखा सद᭭य/ACCOUNTANT MEMBER Sd/- (जॉजŊ जॉजŊ क े) (GEORGE GEORGE K.) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Date: 04.08.2025 Vm/- आदेशकᳱᮧितिलिपअᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकरआयुᲦ /CIT, Chennai/Salem 4. िवभागीयᮧितिनिध/DR 5. गाडᭅफाईल/GF. Printed from counselvise.com "