DEPUTY COMMISSIONER OF INCOME TAX, NUMGAMBAKKAM V. JAGANNATHAN SEKAT, CHENNAI

ITA 2220/CHNY/2024

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 15761 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILAY BARAN SOM
• Assessee Lawyers: R. VENKATA RAMAN
• Keywords: Set aside; Question of law; Corroborative evidences; Unexplained investment; Document seized; Documents seized; Retraction; Principle of natural justice; Search and seizure; Loose papers; Opportunity of cross examination; Tangible material
• Section: 147; 142(1); 48; 132; 153A; 131; 43; 22; 69; 13; 153C; 133A; 191; 158BD; 20

Judgement Text

" आयकर अपीलीय अिधकरण, ‘ए’\u0001यायपीठ, चे\tई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , \u000bाियक सद\u0011 एवं एवं एवं एवं \u0001ी जगदीश, लेखा सद\f क े सम\u0015 BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.2220/Chny/2024 िनधा\u000eरणवष\u000e/Assessment Year: 2016-17 The DCIT, Central Circle-2(4), Chennai. v. Shri Jagannathan Sekat, No.5 Fifth Street, Gopalapuram, Chennai-600 086. [PAN: BCDPS 4688 G] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) Department by : Mr. Nilay Baran Som, CIT Assessee by : Mr. R. Venkata Raman, CA सुनवाईक\u001cतारीख/Date of Hearing : 03.12.2024 घोषणाक\u001cतारीख /Date of Pronouncement : 28.02.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-19, Chennai, (hereinafter in short ‘the Ld. CIT(A)’), dated 24.06.2024 for the Assessment Year (hereinafter in short ‘AY’) 2016-17. 2. The Revenue has raised the following legal grounds: 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2 The Ld.CIT(A) erred in holding that the AO lacked jurisdiction to invoke the provisions of section 153C of the Act w statements recorded u/s 132(4) and 131(1A) of the Act from Shri Balakrishnan Ramamoorthy and Shri Javvaji Ramanjenyulu, arrived at the satisfaction after drawing up a satisfaction note & Notice u/s.153C of IT Act was issue assessee on 25.01.2021. 3. The Ld.CIT(A) erred in not appreciating the fact that the AO concluded that the assessee has made an investment to the tune of Rs.51.75 Crores towards the purchase of shares of R.V. Sathyanarayana in M/s.. Jothirmayee Es and completed the assessment by treating the amount of Rs.51.75 Crores as unexplained investment u/s 69 r.w.s. 115BBE of the Act and passed order u/s 143(3) r.w.s. 153C of the Act on 30.09.2021 based on seized material notings recorded in Page No. 26 which were seized vide ANN/NN/JR/LS/S. which revealed that the assessee had made payments for purchasing shares held by Shri. R. Satyanarayana in M/s. Jothirmayee Estates, over and above the amounts dis of accounts.. 4. The Ld.CIT(A) erred in observing that the material found in the premises of a third party and not having entries in the handwriting of the assessee could not be used to draw adverse inference in the case of the assessee Section 132(4A) r.w.s 292C of IT Act provides for a presumption that the contents of documents found during the course of search are true and though such presumption is rebuttable, the onus is on the assessee to furnish evidence or explanations to re 5. The Ld.CIT(A) erred in holding that the statements were retracted by Shri Javvaji Ramanjenyulu & hold no value is wrong in view of Madras High Court decision in A. J. Ramesh Kumar v. Dy. CIT (2022) 441 ITR 495 (Mad.) (HC)/(2022) 139 taxman lay on the appellant to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the e recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion indicating that there was an element of compulsion for appellant to make such statement.\" 6. The Ld CIT(A)'s reliance on Singh (2011) 140 TTJ 233 (Pune) is erroneous as the facts of the cited case are distinguishable to the extent that in that case, it had been found that the incriminating material did not establish correlation with any assess respect of which notice u/s 153C of IT Act had been issued in that case. In the instant case, the AO has in the satisfaction note clearly referred to the entries in seized documents as well as further corroboration in the form of statements of Sh Ramamoorthy implicating the payments made for acquiring shares. 7. The Ld CIT(A)'s reliance on the case of PCIT v Abhisar Buildwell P Ltd in CA No 6580 of 2021 dated 24.4.2023 in support of his observation that order u/s 153C of the Act had been passe material is erroneous as the decision is not applicable to the facts of the present case as the satisfaction note drawn up by the AO in this case clearly specified the specific material seized during the course of t further corroborated as per statements recorded from Sh Ramamoorthy. ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 2 :: 2 The Ld.CIT(A) erred in holding that the AO lacked jurisdiction to invoke the provisions of section 153C of the Act when the AO relying upon the sworn statements recorded u/s 132(4) and 131(1A) of the Act from Shri Balakrishnan Ramamoorthy and Shri Javvaji Ramanjenyulu, arrived at the satisfaction after drawing up a satisfaction note & Notice u/s.153C of IT Act was issue assessee on 25.01.2021. 3. The Ld.CIT(A) erred in not appreciating the fact that the AO concluded that the assessee has made an investment to the tune of Rs.51.75 Crores towards the purchase of shares of R.V. Sathyanarayana in M/s.. Jothirmayee Es and completed the assessment by treating the amount of Rs.51.75 Crores as unexplained investment u/s 69 r.w.s. 115BBE of the Act and passed order u/s 143(3) r.w.s. 153C of the Act on 30.09.2021 based on seized material notings recorded in Page No. 267 (backside) and in Pages 276-279 of the loose sheet, which were seized vide ANN/NN/JR/LS/S. which revealed that the assessee had made payments for purchasing shares held by Shri. R. Satyanarayana in M/s. Jothirmayee Estates, over and above the amounts disclosed in the books 4. The Ld.CIT(A) erred in observing that the material found in the premises of a third party and not having entries in the handwriting of the assessee could not be used to draw adverse inference in the case of the assessee Section 132(4A) r.w.s 292C of IT Act provides for a presumption that the contents of documents found during the course of search are true and though such presumption is rebuttable, the onus is on the assessee to furnish evidence or explanations to rebut the same. 5. The Ld.CIT(A) erred in holding that the statements were retracted by Shri Javvaji Ramanjenyulu & hold no value is wrong in view of Madras High Court decision in A. J. Ramesh Kumar v. Dy. CIT (2022) 441 ITR 495 (Mad.) (HC)/(2022) 139 taxmann.com 190 (Mad.), where it has held that \"the burden lay on the appellant to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion indicating that there was an element of compulsion for appellant to make such statement.\" 6. The Ld CIT(A)'s reliance on Singhad Technical Education Society v ACIT (2011) 140 TTJ 233 (Pune) is erroneous as the facts of the cited case are distinguishable to the extent that in that case, it had been found that the incriminating material did not establish correlation with any assessment year in respect of which notice u/s 153C of IT Act had been issued in that case. In the instant case, the AO has in the satisfaction note clearly referred to the entries in seized documents as well as further corroboration in the form of statements Sh Ramamoorthy implicating the payments made for acquiring shares. 7. The Ld CIT(A)'s reliance on the case of PCIT v Abhisar Buildwell P Ltd in CA No 6580 of 2021 dated 24.4.2023 in support of his observation that order u/s 153C of the Act had been passed without relying upon any incriminating material is erroneous as the decision is not applicable to the facts of the present case as the satisfaction note drawn up by the AO in this case clearly specified the specific material seized during the course of the search as well as further corroborated as per statements recorded from Sh Ramamoorthy. /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 2 The Ld.CIT(A) erred in holding that the AO lacked jurisdiction to invoke the hen the AO relying upon the sworn statements recorded u/s 132(4) and 131(1A) of the Act from Shri Balakrishnan Ramamoorthy and Shri Javvaji Ramanjenyulu, arrived at the satisfaction after drawing up a satisfaction note & Notice u/s.153C of IT Act was issued to the 3. The Ld.CIT(A) erred in not appreciating the fact that the AO concluded that the assessee has made an investment to the tune of Rs.51.75 Crores towards the purchase of shares of R.V. Sathyanarayana in M/s.. Jothirmayee Estates and completed the assessment by treating the amount of Rs.51.75 Crores as unexplained investment u/s 69 r.w.s. 115BBE of the Act and passed order u/s 143(3) r.w.s. 153C of the Act on 30.09.2021 based on seized material notings 279 of the loose sheet, which were seized vide ANN/NN/JR/LS/S. which revealed that the assessee had made payments for purchasing shares held by Shri. R. Satyanarayana in closed in the books 4. The Ld.CIT(A) erred in observing that the material found in the premises of a third party and not having entries in the handwriting of the assessee could not be used to draw adverse inference in the case of the assessee when Section 132(4A) r.w.s 292C of IT Act provides for a presumption that the contents of documents found during the course of search are true and though such presumption is rebuttable, the onus is on the assessee to furnish 5. The Ld.CIT(A) erred in holding that the statements were retracted by Shri Javvaji Ramanjenyulu & hold no value is wrong in view of Madras High Court decision in A. J. Ramesh Kumar v. Dy. CIT (2022) 441 ITR 495 (Mad.) n.com 190 (Mad.), where it has held that \"the burden lay on the appellant to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be arlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion indicating that there was an element of ad Technical Education Society v ACIT (2011) 140 TTJ 233 (Pune) is erroneous as the facts of the cited case are distinguishable to the extent that in that case, it had been found that the ment year in respect of which notice u/s 153C of IT Act had been issued in that case. In the instant case, the AO has in the satisfaction note clearly referred to the entries in seized documents as well as further corroboration in the form of statements Sh Ramamoorthy implicating the payments made for acquiring shares. 7. The Ld CIT(A)'s reliance on the case of PCIT v Abhisar Buildwell P Ltd in CA No 6580 of 2021 dated 24.4.2023 in support of his observation that order u/s d without relying upon any incriminating material is erroneous as the decision is not applicable to the facts of the present case as the satisfaction note drawn up by the AO in this case clearly he search as well as further corroborated as per statements recorded from Sh Ramamoorthy. 8. For these grounds and any other grounds including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. 3. The facts of the case as noted are that, the assessee is an individual who is also a partner in a firm, M/s SRS Mining, which is engaged in the business of letting out heavy duty ve the assessee had filed his return of income on 30.03.2018 declaring total income of Rs.3,11,69,970/ the Act was conducted upon M/s SRS Mining on 08.12.2016, in which the assessee also is a partner. Pursuant to the said search, notice u/s 153A of the Act was issued for the relevant year on 18.08.2017, in response to which, the assessee filed his return of income declaring the same sum as originally declared u/s 139 of the Act assessee was taken for scrutiny and the assessment was completed u/s 143(3) of the Act vide order dated 06.02.2020 at total income of Rs.38,08,36,637/- after making an addition of Rs.7,96,66,667/ Aggrieved by this order in appeal. 4. It was brought to our notice that, there was another search u/s 132 of the Act which was conducted in the group cases of Shri Danda Brahmanandam, Shri Javvaji Ramanjenyulu, Shri Balakrishnan Ramamoorthy & others on 21.02.2019. In the course of search, at the residence of Shri Javvaji Ramanjenyulu, loose papers were seized and ID ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 3 :: 8. For these grounds and any other grounds including amendment of grounds that may be raised during the course of the appeal proceedings, the order of ppeals) may be set aside and that of the Assessing Officer be The facts of the case as noted are that, the assessee is an individual who is also a partner in a firm, M/s SRS Mining, which is engaged in the business of letting out heavy duty vehicles. For the relevant A.Y. 2016 the assessee had filed his return of income on 30.03.2018 declaring total income of Rs.3,11,69,970/-. In the meanwhile, search action u/s 132 of the Act was conducted upon M/s SRS Mining on 08.12.2016, in which the sessee also is a partner. Pursuant to the said search, notice u/s 153A of the Act was issued for the relevant year on 18.08.2017, in response to which, the assessee filed his return of income declaring the same sum as originally declared u/s 139 of the Act. It is noted that the case of the assessee was taken for scrutiny and the assessment was completed u/s 143(3) of the Act vide order dated 06.02.2020 at total income of after making an addition of Rs.7,96,66,667/ Aggrieved by this order, the assessee is noted to have disputed the same It was brought to our notice that, there was another search u/s 132 of the Act which was conducted in the group cases of Shri Danda Brahmanandam, Shri Javvaji Ramanjenyulu, Shri Balakrishnan Ramamoorthy & others on 21.02.2019. In the course of search, at the residence of Shri Javvaji Ramanjenyulu, loose papers were seized and ID /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 8. For these grounds and any other grounds including amendment of grounds that may be raised during the course of the appeal proceedings, the order of ppeals) may be set aside and that of the Assessing Officer be The facts of the case as noted are that, the assessee is an individual who is also a partner in a firm, M/s SRS Mining, which is engaged in the hicles. For the relevant A.Y. 2016-17, the assessee had filed his return of income on 30.03.2018 declaring total . In the meanwhile, search action u/s 132 of the Act was conducted upon M/s SRS Mining on 08.12.2016, in which the sessee also is a partner. Pursuant to the said search, notice u/s 153A of the Act was issued for the relevant year on 18.08.2017, in response to which, the assessee filed his return of income declaring the same sum as . It is noted that the case of the assessee was taken for scrutiny and the assessment was completed u/s 143(3) of the Act vide order dated 06.02.2020 at total income of after making an addition of Rs.7,96,66,667/-. , the assessee is noted to have disputed the same It was brought to our notice that, there was another search u/s 132 of the Act which was conducted in the group cases of Shri Danda Brahmanandam, Shri Javvaji Ramanjenyulu, Shri Balakrishnan Ramamoorthy & others on 21.02.2019. In the course of search, at the residence of Shri Javvaji Ramanjenyulu, loose papers were seized and ID Marked ANN/NN/JR/LS/S. It was noted that certain recorded on Page No. 267 which was explained by Shri Javvaji Ramanjenyulu in his statement u/s 132(4) of the Act, to be discussion regarding sale of shares of M/s Bhavya Construction Co. and that, according to him, the corroborate with their books of accounts and in case of any discrepancy, he shall offer the same as his undisclosed income. The relevant question and his answer is noted to be as “ Q. No. 24 I am showing you loose sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing Principal along with interest workings and also certain amounts and also certain amounts shown as paid. Kindl same and explain the transactions. Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sale of shares of M/s Bhavya Constructions company between the partners. I am unable to recognize the has written down the same. These are calculations that have been made which can be corroborated from the books of accounts of all shareholders. If the same cannot be explained, I shall offer the amounts mentioned herein if I am not able to explain the same.” 5. It was specifically brought to our notice that, Shri Javvaji Ramanjenyulu from whose possession and control these loose sheets were found had nowhere named the assessee or even remotely suggested that these noting’s related to him. Rather, he had initially these noting’s may pertain to his group and that he shall corroborate the same later. In the course of same search conducted at the residence of ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 4 :: Marked ANN/NN/JR/LS/S. It was noted that certain noting’s recorded on Page No. 267 and 276 to 279 of these bunch of loose papers, which was explained by Shri Javvaji Ramanjenyulu in his statement u/s 132(4) of the Act, to be discussion regarding sale of shares of M/s Bhavya Construction Co. and that, according to him, the noting’s books of accounts and in case of any discrepancy, he shall offer the same as his undisclosed income. The relevant question and his answer is noted to be as follows: - “ Q. No. 24 I am showing you loose sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing Principal along with interest workings and also certain amounts and also certain amounts shown as paid. Kindly go through the same and explain the transactions. Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sale of shares of M/s Bhavya Constructions company between the partners. I am unable to recognize the handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of accounts of all shareholders. If the same cannot be explained, I shall offer the amounts mentioned herein as undisclosed income if I am not able to explain the same.” It was specifically brought to our notice that, Shri Javvaji Ramanjenyulu from whose possession and control these loose sheets were found had nowhere named the assessee or even remotely suggested related to him. Rather, he had initially may pertain to his group and that he shall corroborate the same later. In the course of same search conducted at the residence of /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat noting’s were found bunch of loose papers, which was explained by Shri Javvaji Ramanjenyulu in his statement u/s 132(4) of the Act, to be discussion regarding sale of shares of M/s Bhavya noting’s would books of accounts and in case of any discrepancy, he shall offer the same as his undisclosed income. The relevant question “ Q. No. 24 I am showing you loose sheet documents vide 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing Principal along with interest workings and also certain amounts y go through the Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sale of shares of M/s Bhavya Constructions company between the partners. I am handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of accounts of all shareholders. If the same cannot be explained, I as undisclosed income It was specifically brought to our notice that, Shri Javvaji Ramanjenyulu from whose possession and control these loose sheets were found had nowhere named the assessee or even remotely suggested related to him. Rather, he had initially averred that may pertain to his group and that he shall corroborate the same later. In the course of same search conducted at the residence of Shri Balakrishnan Ramamoorthy seized and the statement of Shri recorded on 22.02.2019, wherein, he had No. 26 as under:- “Q 26. Although you have agreed for the final settlement of Rs. 65crores with the above parties, how did you agree for the sum of Rs.19 Crores as per the MoU dated 22.09.2017. Ans. Shri J. Sekar Reddy has given a sum of Rs. 26 crore to Shri Sathyananyana to acquire 50% of share in Joythirmaye Estate) in cash and Rs.9 crores through banking channel. He has also paid a sum of Rs.8.5 crores to cash and Rs. 5 crores to Shri A.P. Nandakumar, MLA by way of cash in lieu of original contribution of Rs. 40 Lakhs paid to the vendors in 2010 in the same way he has agreed to pay Rs.46 crore by way of cash and Rs.19 Crores channel. But we have received only Rs. 13.10 crores bank on various dates.” 6. The Authorized Officer upon analysis of the above-mentioned loose sheets ANN/NN/JR/LS/S [P seized from the residence of Shri Javva above statement of Shri correlation between the figures. He, therefore, again recorded a statement u/s 131(1A) of the Act from Shri Javvaji Ramanjenyulu on 05.07.2019. In this statemen have stated that, he had mistakenly inferred the loose relating to M/s Bhavya Construction Co. According to him, these loose noting’s were not in his handwriting and may have been written by some unknown person and therefore he could not explain its contents. He also said that, there are no details of payer or payee on the said sheet and ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 5 :: Balakrishnan Ramamoorthy, some loose sheets were found and seized and the statement of Shri Balakrishnan Ramamoorthy recorded on 22.02.2019, wherein, he had inter alia replied to Question “Q 26. Although you have agreed for the final settlement of Rs. 65crores with the above parties, how did you agree for the sum ores as per the MoU dated 22.09.2017. Ans. Shri J. Sekar Reddy has given a sum of Rs. 26 crore to Shri Sathyananyana to acquire 50% of share in Joythirmaye Estate) in cash and Rs.9 crores through banking channel. He has also paid a sum of Rs.8.5 crores to Shri Gandhi, MLA in cash and Rs. 5 crores to Shri A.P. Nandakumar, MLA by way of cash in lieu of original contribution of Rs. 40 Lakhs paid to the vendors in 2010 in the same way he has agreed to pay Rs.46 y way of cash and Rs.19 Crores through bank channel. But we have received only Rs. 13.10 crores bank on various dates.” The Authorized Officer upon analysis of the noting’s loose sheets ANN/NN/JR/LS/S [Pages 26 seized from the residence of Shri Javvaji Ramanjenyulu in light of the above statement of Shri Balakrishnan Ramamoorthy, noted certain correlation between the figures. He, therefore, again recorded a statement u/s 131(1A) of the Act from Shri Javvaji Ramanjenyulu on 05.07.2019. In this statement, Shri Javvaji Ramanjenyulu is noted to have stated that, he had mistakenly inferred the loose relating to M/s Bhavya Construction Co. According to him, these loose were not in his handwriting and may have been written by some own person and therefore he could not explain its contents. He also said that, there are no details of payer or payee on the said sheet and /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat , some loose sheets were found and Balakrishnan Ramamoorthy was replied to Question “Q 26. Although you have agreed for the final settlement of Rs. 65crores with the above parties, how did you agree for the sum Ans. Shri J. Sekar Reddy has given a sum of Rs. 26 crore to Shri Sathyananyana to acquire 50% of share in Joythirmaye Estate) in cash and Rs.9 crores through banking channel. He Shri Gandhi, MLA in cash and Rs. 5 crores to Shri A.P. Nandakumar, MLA by way of cash in lieu of original contribution of Rs. 40 Lakhs paid to the vendors in 2010 in the same way he has agreed to pay Rs.46 through banking channel. But we have received only Rs. 13.10 crores bank on noting’s found in the ages 267, 276 to 279] ji Ramanjenyulu in light of the , noted certain correlation between the figures. He, therefore, again recorded a statement u/s 131(1A) of the Act from Shri Javvaji Ramanjenyulu on t, Shri Javvaji Ramanjenyulu is noted to have stated that, he had mistakenly inferred the loose noting’s to be relating to M/s Bhavya Construction Co. According to him, these loose were not in his handwriting and may have been written by some own person and therefore he could not explain its contents. He also said that, there are no details of payer or payee on the said sheet and thus he is unable to make out the context of these averred that, these noting’s transactions. The relevant explanation given by him, is noted to be as under: - “The loose sheets stated in the above paragraph having placed before me once again for my comments a fresh. In this regard the essential character of t are written by an unknown person and there are no details of Payer or payee and there are no details to whom it pertains to and finally these does not provide any guidance or inference that is meaningful from the examina the time of search the pressure under which I was giving the statement though I could not recognize the hand writing as well as the underline numbers I thought it could be relating to transactions of M/s. Bhavya Constructions whi that my inference is incorrect and I completely deny the answer that was provided at the time of search and the answer that is provided now shall replace the same. Further it may be appreciated that during the course of search various materials have been seized pertaining to various business entities where I am either a partner or a director or has some business interest. The review of all the material together with sheets mentioned in this question does not even remotely corroborate to an can be assumed to have been undertaken by me or my family members. In other words, these loose sheets referred in this question remain an unrelated and irrelevant to my business or personal transactions. Thus the sheet to have any relevance to me.” 7. Again, it is observed that, even in this statement, Shri Javvaji Ramanjenyulu had not named the a that the scribblings found on this loose sheet, which admittedly had no details of payer or payee, pertained to the assessee. Later on, again on 08.07.2019, the Authorized Officer again confronted Shri Ramamoorthy regarding h residence on 22.02.2019 wherein he had averred that the assessee had ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 6 :: thus he is unable to make out the context of these noting’s noting’swere not related to him or his business transactions. The relevant explanation given by him, is noted to be as “The loose sheets stated in the above paragraph having placed before me once again for my comments a fresh. In this regard the essential character of these loose sheets is such that they are written by an unknown person and there are no details of Payer or payee and there are no details to whom it pertains to and finally these does not provide any guidance or inference that is meaningful from the examination of the same. While at the time of search the pressure under which I was giving the statement though I could not recognize the hand writing as well as the underline numbers I thought it could be relating to transactions of M/s. Bhavya Constructions which I now conclude that my inference is incorrect and I completely deny the answer that was provided at the time of search and the answer that is provided now shall replace the same. Further it may be appreciated that during the course of search erials have been seized pertaining to various business entities where I am either a partner or a director or has some business interest. The review of all the material together with sheets mentioned in this question does not even remotely corroborate to any kind of underlying transaction that can be assumed to have been undertaken by me or my family members. In other words, these loose sheets referred in this question remain an unrelated and irrelevant to my business or personal transactions. Thus the sheets should not be reckoned to have any relevance to me.” Again, it is observed that, even in this statement, Shri Javvaji Ramanjenyulu had not named the assessee/respondent or had suggested that the scribblings found on this loose sheet, which admittedly had no details of payer or payee, pertained to the assessee. Later on, again on 08.07.2019, the Authorized Officer again confronted Shri regarding his deposition which was recorded at his residence on 22.02.2019 wherein he had averred that the assessee had /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat noting’s. He further to him or his business transactions. The relevant explanation given by him, is noted to be as “The loose sheets stated in the above paragraph having placed before me once again for my comments a fresh. In this regard hese loose sheets is such that they are written by an unknown person and there are no details of Payer or payee and there are no details to whom it pertains to and finally these does not provide any guidance or inference tion of the same. While at the time of search the pressure under which I was giving the statement though I could not recognize the hand writing as well as the underline numbers I thought it could be relating to ch I now conclude that my inference is incorrect and I completely deny the answer that was provided at the time of search and the answer that is Further it may be appreciated that during the course of search erials have been seized pertaining to various business entities where I am either a partner or a director or has some business interest. The review of all the material together with sheets mentioned in this question does not even y kind of underlying transaction that can be assumed to have been undertaken by me or my family members. In other words, these loose sheets referred in this question remain an unrelated and irrelevant to my business or s should not be reckoned Again, it is observed that, even in this statement, Shri Javvaji or had suggested that the scribblings found on this loose sheet, which admittedly had no details of payer or payee, pertained to the assessee. Later on, again on 08.07.2019, the Authorized Officer again confronted Shri Balakrishnan is deposition which was recorded at his residence on 22.02.2019 wherein he had averred that the assessee had made cash payments to Shri required to provide evidence in this regard. Shri Ramamoorthy is noted t “With regard to Rs 26 crore paid to RV Satynarayana for the purpose of acquiring his share in M/s. JME. I once again reiterate that dandaBrahamandam and R.V Sathynaryana are only the investors and they do not have any intention t the disputed property. All along the investor demanded the double the amount of the investment made by them. Hence on the very date of the sale deed dated 4.03.2014 in the name of Ms. JME, on the very same day they have executed the sale agreement on entering the sale agreement, in my favour I have also paid the sale advance of Rs 10 lakhs by of cash to the partnership firm that is M/s. JME. As per the sale agreement I have to return the 60 crore within a p from the sanction plan from the appropriate authority. As stated above the investor DandeBrahamanadam invested Rs 15 crore and another investor Mrs. Sathyanaryana also invested Rs 15 crore. This agreement being the final settlement of Rs 35 crores to RV Sathynarayana, As per the agreement the investor RV Sathynarayana was entitled for Rs 30 core towards his investment but the final settlement was settled to RV Sathyanannyana on November December, 2015. For that interest has been calculated for the period March 2015 to December, 2015 amounting to Rs 5 crore and in all totaling to Rs.35 crore. Out of this 35 crores, J. Sekar had paid Rs 26 crore by way of cash to RV Sathynarayana and the remining 9 crores is paid by way of cheques or through bank channels. I also wish to add that Shri. Ramanjenyulu being the political mediator for Minister K.C. Veeramani (Minister for commercial taxes for the state of Tamilnadu) and through him being the mediator J.Sekarreddy acquire 50% share of RV Sathynarayana in M/s. JME for which Sekar Reddy has paid Rs 10 crore by way of cash as a brokerage/commission charges to Mr. Ramanjenyulu.” 8. It is noted that although Shri implicated the assessee of making cash payments to Shri but no proof or evidence was given by him, as requisitioned by the authorized officer while deposing him. ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 7 :: made cash payments to Shri Sathyananyana and others, and also required to provide evidence in this regard. Shri is noted to have responded as under: “With regard to Rs 26 crore paid to RV Satynarayana for the purpose of acquiring his share in M/s. JME. I once again reiterate that dandaBrahamandam and R.V Sathynaryana are only the investors and they do not have any intention t the disputed property. All along the investor demanded the double the amount of the investment made by them. Hence on the very date of the sale deed dated 4.03.2014 in the name of Ms. JME, on the very same day they have executed the sale agreement on 14.03.2014 for Rs. 60 Crores. At the time of entering the sale agreement, in my favour I have also paid the sale advance of Rs 10 lakhs by of cash to the partnership firm that is M/s. JME. As per the sale agreement I have to return the 60 crore within a period of 1 year or from the date of approval from the sanction plan from the appropriate authority. As stated above the investor DandeBrahamanadam invested Rs 15 crore and another investor Mrs. Sathyanaryana also invested Rs 15 crore. This agreement being the logical conclusion for arriving the final settlement of Rs 35 crores to RV Sathynarayana, As per the agreement the investor RV Sathynarayana was entitled for Rs 30 core towards his investment but the final settlement was settled to RV Sathyanannyana only in the month of November December, 2015. For that interest has been calculated for the period March 2015 to December, 2015 amounting to Rs 5 crore and in all totaling to Rs.35 crore. Out of this 35 crores, J. Sekar had paid Rs 26 crore by way of cash RV Sathynarayana and the remining 9 crores is paid by way of cheques or through bank channels. I also wish to add that Shri. Ramanjenyulu being the political mediator for Minister K.C. Veeramani (Minister for commercial taxes for the state of nd through him being the mediator J.Sekarreddy acquire 50% share of RV Sathynarayana in M/s. JME for which Sekar Reddy has paid Rs 10 crore by way of cash as a brokerage/commission charges to Mr. Ramanjenyulu.” It is noted that although Shri Balakrishnan Ramamoorthy implicated the assessee of making cash payments to Shri Sathyananyana but no proof or evidence was given by him, as requisitioned by the authorized officer while deposing him. /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat and others, and also required to provide evidence in this regard. Shri Balakrishnan “With regard to Rs 26 crore paid to RV Satynarayana for the purpose of acquiring his share in M/s. JME. I once again reiterate that dandaBrahamandam and R.V Sathynaryana are only the investors and they do not have any intention to buy the disputed property. All along the investor demanded the double the amount of the investment made by them. Hence on the very date of the sale deed dated 4.03.2014 in the name of Ms. JME, on the very same day they have executed the sale 14.03.2014 for Rs. 60 Crores. At the time of entering the sale agreement, in my favour I have also paid the sale advance of Rs 10 lakhs by of cash to the partnership firm that is M/s. JME. As per the sale agreement I have to return the eriod of 1 year or from the date of approval from the sanction plan from the appropriate authority. As stated above the investor DandeBrahamanadam invested Rs 15 crore and another investor Mrs. Sathyanaryana also invested Rs 15 the logical conclusion for arriving the final settlement of Rs 35 crores to RV Sathynarayana, As per the agreement the investor RV Sathynarayana was entitled for Rs 30 core towards his investment but the final settlement ly in the month of November December, 2015. For that interest has been calculated for the period March 2015 to December, 2015 amounting to Rs 5 crore and in all totaling to Rs.35 crore. Out of this 35 crores, J. Sekar had paid Rs 26 crore by way of cash RV Sathynarayana and the remining 9 crores is paid by way of cheques or through bank channels. I also wish to add that Shri. Ramanjenyulu being the political mediator for Minister K.C. Veeramani (Minister for commercial taxes for the state of nd through him being the mediator J.Sekarreddy acquire 50% share of RV Sathynarayana in M/s. JME for which Sekar Reddy has paid Rs 10 crore by way of cash as a Balakrishnan Ramamoorthy had Sathyananyana but no proof or evidence was given by him, as requisitioned by the 9. In view of the above, it is observed that, the c was again reopened by issue of notice u/s 153C of the Act dated 25.01.2021. According to the assessee however, the said notice was not accompanied by the relevant satisfaction note and, therefore, the assessee did not file the return of observed that, the AO, thereafter issued notice u/s 142(1) of the Act dated 10.02.2021 calling for details. The assessee is noted to have sought an adjournment and again requested for the copy of the satisfaction n It is observed that, similar letter was again filed by the assessee on 25.03.2021 reiterating the same request. Although neither the satisfaction-note nor the relevant seized material was provided, the assessee is noted to have filed his return of inc notice u/s 153C of the Act on 01.05.2021. Thereafter, the AO had called for details vide notice dated 17.09.2021, and the assessee again sought the copies of the seized material and satisfaction note vide letter dated 21.09.2021. The AO is noted to have issued a final show cause notice dated 24.09.2021 proposing to make an addition of Rs.41,75,00,000/ with reference to the above premises of Shri Javvaji Ramanjenyulu. For arriving at the impugne figure, the AO is noted to have undertaken permutations & correlations of the figures found mentioned in Page 267 (backside) of document ID marked ANN/NN/JR/LS/S and inferred that, the ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 8 :: In view of the above, it is observed that, the case of the assessee was again reopened by issue of notice u/s 153C of the Act dated 25.01.2021. According to the assessee however, the said notice was not accompanied by the relevant satisfaction note and, therefore, the assessee did not file the return of income in response to this notice. It is observed that, the AO, thereafter issued notice u/s 142(1) of the Act dated 10.02.2021 calling for details. The assessee is noted to have sought an adjournment and again requested for the copy of the satisfaction n It is observed that, similar letter was again filed by the assessee on 25.03.2021 reiterating the same request. Although neither the nor the relevant seized material was provided, the assessee is noted to have filed his return of income in response to the notice u/s 153C of the Act on 01.05.2021. Thereafter, the AO had called for details vide notice dated 17.09.2021, and the assessee again sought the copies of the seized material and satisfaction note vide letter dated AO is noted to have issued a final show cause notice dated 24.09.2021 proposing to make an addition of Rs.41,75,00,000/ with reference to the above noting’s found on loose papers from the premises of Shri Javvaji Ramanjenyulu. For arriving at the impugne figure, the AO is noted to have undertaken permutations & correlations of the figures found mentioned in Page 267 (backside) of document ID marked ANN/NN/JR/LS/S and inferred that, the noting’s /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat ase of the assessee was again reopened by issue of notice u/s 153C of the Act dated 25.01.2021. According to the assessee however, the said notice was not accompanied by the relevant satisfaction note and, therefore, the income in response to this notice. It is observed that, the AO, thereafter issued notice u/s 142(1) of the Act dated 10.02.2021 calling for details. The assessee is noted to have sought an adjournment and again requested for the copy of the satisfaction note. It is observed that, similar letter was again filed by the assessee on 25.03.2021 reiterating the same request. Although neither the nor the relevant seized material was provided, the ome in response to the notice u/s 153C of the Act on 01.05.2021. Thereafter, the AO had called for details vide notice dated 17.09.2021, and the assessee again sought the copies of the seized material and satisfaction note vide letter dated AO is noted to have issued a final show cause notice dated 24.09.2021 proposing to make an addition of Rs.41,75,00,000/- found on loose papers from the premises of Shri Javvaji Ramanjenyulu. For arriving at the impugned figure, the AO is noted to have undertaken permutations & correlations of the figures found mentioned in Page 267 (backside) of document ID noting’s on Page 279 suggested that total consideration finalized by 50% share in one entity, M/s Jyothirmayee Estate was Rs.41.75 crores which comprised of the settlement amount agreed with Shri R Satyanarayana comprising of principal of Rs.15 crores and interest of Rs.26.75 crores. Further, the included payments made to different persons, representing different beneficiaries, each of whom who had invested Rs.40 lacs each for Rs.2 crores as advance vide sale agreement dated 18.10.2010. The AO thereafter, correlated the 278, where a figure of Rs.9.10 crores was mentioned, which according to AO, tallied with the amount of Rs.9.10 crores paid across different dates by the assessee to Shri R Satyanarayana, and who confirmed by Shri Danda Brahmanandam in his sworn statement dated 07.07.2019. With these permutations & correlations, the AO is noted to have linked the scribblings found on backside of Page 267 to 279 and concluded tha Satyanarayana was not only Rs.9.10 crores but further sum of Rs.41.75 crores was paid in cash. The relevant contents of the show cause notice, is observed to be as follows: \"From the above discussion on this issue in page 279, the total consideration finalized by you for acquiring 50% shares in M/s Jyothirmayee Estates was Rs 41,75,00,000/ total consideration of Rs 41.75 crores comprises of settlement to be made to R. Saty Jyothirmayee Estate (Principal Rs 15,00,00,000 plus interest Rs ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 9 :: suggested that total consideration finalized by the assessee for acquiring 50% share in one entity, M/s Jyothirmayee Estate was Rs.41.75 crores which comprised of the settlement amount agreed with Shri R Satyanarayana comprising of principal of Rs.15 crores and interest of Rs.26.75 crores. Further, the AO also inferred that this settlement amount included payments made to different persons, representing different beneficiaries, each of whom who had invested Rs.40 lacs each for Rs.2 crores as advance vide sale agreement dated 18.10.2010. The AO , correlated the noting’s found on Page 279 with that of Page 278, where a figure of Rs.9.10 crores was mentioned, which according to AO, tallied with the amount of Rs.9.10 crores paid across different dates by the assessee to Shri R Satyanarayana, and whose ledger account was confirmed by Shri Danda Brahmanandam in his sworn statement dated 07.07.2019. With these permutations & correlations, the AO is noted to have linked the scribblings found on backside of Page 267 to 279 and concluded that the actual consideration paid toShri R Satyanarayana was not only Rs.9.10 crores but further sum of Rs.41.75 crores was paid in cash. The relevant contents of the show cause notice, is observed to be as follows:- \"From the above discussion on this issue, it can be seen from the noting in page 279, the total consideration finalized by you for acquiring 50% shares in M/s Jyothirmayee Estates was Rs 41,75,00,000/ total consideration of Rs 41.75 crores comprises of settlement to be made to R. Satyanarayana in lieu of his 50% shares held with M/s Jyothirmayee Estate (Principal Rs 15,00,00,000 plus interest Rs /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat the assessee for acquiring 50% share in one entity, M/s Jyothirmayee Estate was Rs.41.75 crores which comprised of the settlement amount agreed with Shri R Satyanarayana comprising of principal of Rs.15 crores and interest of AO also inferred that this settlement amount included payments made to different persons, representing different beneficiaries, each of whom who had invested Rs.40 lacs each for Rs.2 crores as advance vide sale agreement dated 18.10.2010. The AO found on Page 279 with that of Page 278, where a figure of Rs.9.10 crores was mentioned, which according to AO, tallied with the amount of Rs.9.10 crores paid across different dates se ledger account was confirmed by Shri Danda Brahmanandam in his sworn statement dated 07.07.2019. With these permutations & correlations, the AO is noted to have linked the scribblings found on backside of Page 267 with Pages 276 t the actual consideration paid toShri R Satyanarayana was not only Rs.9.10 crores but further sum of Rs.41.75 crores was paid in cash. The relevant contents of the show cause notice, , it can be seen from the noting in page 279, the total consideration finalized by you for acquiring 50% shares in M/s Jyothirmayee Estates was Rs 41,75,00,000/-. The said total consideration of Rs 41.75 crores comprises of settlement to be anarayana in lieu of his 50% shares held with M/s Jyothirmayee Estate (Principal Rs 15,00,00,000 plus interest Rs 26,75,00,000). Further the said consideration of Rs 41.75 crores also comprises of the settlement to be made to different people namely Shri Santhosh (representing Shri Gandhi), Shri Prasad (representing A.P.Nandhakumar) and Shri Uttam Chand (representing Shri Sekar Reddy) who had invested Rs 40 Lakhs each for Rs 2 Crores as advance vide sale agreement dated 18.10.2010. The noting found in page you to R.Satyanarayana on different dates amounting to Rs 9,10,00,000/-, The same is confirmed by the ledger account submitted by Shri Danda Brahmanandam vide his Annexure Q.No. 13 of the sworn s 07.07.2019 during the post search investigations. Hence a part of the transaction that was found in page no 267 (backside) and in page 276 279 stands validated with respect to the actual consideration as recorded in the books of accounts. In view of the same, the remaining noting pertaining to the same subject stands validated too, unless it is proved contrary by you with admissible evidences. Further, the found in page 277 and 276 refers to the disbursal of the to principal and interest on various dates to R.Satyanarayana and others as mentioned above by the assesee. In view of the above, a show cause notice was issued on 23.09.2021 as to why an amount of Rs. 41.75 Crore paid by assessee toward purchasing the shares of Shri R Satyanarayana held with Ms. Jyothmayee Estates and in the hands of others as discussed above after ascertaining their respective shares, in the hands of the assessee as unexplained investment for different financial years\" 10. The assessee is noted to have not responded to the above show cause, for the reason that the AO neither provided the seized material or satisfaction note or copies of the relevant statements being relied upon by him. The AO accordingly proceeded to ma crores, as set out in his show cause and further added another sum of Rs.10 crores, by way of cash commission paid in relation to this acquisition of stake in M/s Jyothirmayee Estate, by relying on the statement of Shri Balakris completed the assessment u/s 153C/143(3) of the Act vide order dated ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 10 :: 26,75,00,000). Further the said consideration of Rs 41.75 crores also comprises of the settlement to be made to different people namely Shri anthosh (representing Shri Gandhi), Shri Prasad (representing A.P.Nandhakumar) and Shri Uttam Chand (representing Shri Sekar Reddy) who had invested Rs 40 Lakhs each for Rs 2 Crores as advance vide sale agreement dated 18.10.2010. The noting found in page 278 refer to the amount paid by cheque by you to R.Satyanarayana on different dates amounting to Rs , The same is confirmed by the ledger account submitted by Shri Danda Brahmanandam vide his Annexure-6 to his answer to Q.No. 13 of the sworn statement recorded from him u/s. 131(1A) on 07.07.2019 during the post search investigations. Hence a part of the transaction that was found in page no 267 (backside) and in page 276 279 stands validated with respect to the actual consideration as in the books of accounts. In view of the same, the remaining noting pertaining to the same subject stands validated too, unless it is proved contrary by you with admissible evidences. Further, the found in page 277 and 276 refers to the disbursal of the total amount namely the principal and interest on various dates to R.Satyanarayana and others as mentioned above by the assesee. In view of the above, a show cause notice was issued on 23.09.2021 as to why an amount of Rs. 41.75 Crore paid by assessee toward purchasing the shares of Shri R Satyanarayana held with Ms. Jyothmayee Estates and in the hands of others as discussed above after ascertaining their respective shares, in the hands of the assessee as unexplained investment for different financial years\" The assessee is noted to have not responded to the above show cause, for the reason that the AO neither provided the seized material or satisfaction note or copies of the relevant statements being relied upon by him. The AO accordingly proceeded to make the addition of Rs.41.75 crores, as set out in his show cause and further added another sum of Rs.10 crores, by way of cash commission paid in relation to this acquisition of stake in M/s Jyothirmayee Estate, by relying on the Balakrishnan Ramamoorthy. The AO is noted to have completed the assessment u/s 153C/143(3) of the Act vide order dated /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 26,75,00,000). Further the said consideration of Rs 41.75 crores also comprises of the settlement to be made to different people namely Shri anthosh (representing Shri Gandhi), Shri Prasad (representing A.P.Nandhakumar) and Shri Uttam Chand (representing Shri Sekar Reddy) who had invested Rs 40 Lakhs each for Rs 2 Crores as advance 278 refer to the amount paid by cheque by you to R.Satyanarayana on different dates amounting to Rs , The same is confirmed by the ledger account submitted 6 to his answer to tatement recorded from him u/s. 131(1A) on 07.07.2019 during the post search investigations. Hence a part of the transaction that was found in page no 267 (backside) and in page 276- 279 stands validated with respect to the actual consideration as in the books of accounts. In view of the same, the remaining noting pertaining to the same subject stands validated too, unless it is proved contrary by you with admissible evidences. Further, the found in tal amount namely the principal and interest on various dates to R.Satyanarayana and others In view of the above, a show cause notice was issued on 23.09.2021 as to why an amount of Rs. 41.75 Crore paid by assessee towards purchasing the shares of Shri R Satyanarayana held with Ms. Jyothmayee Estates and in the hands of others as discussed above after ascertaining their respective shares, in the hands of the assessee as The assessee is noted to have not responded to the above show cause, for the reason that the AO neither provided the seized material or satisfaction note or copies of the relevant statements being relied upon by ke the addition of Rs.41.75 crores, as set out in his show cause and further added another sum of Rs.10 crores, by way of cash commission paid in relation to this acquisition of stake in M/s Jyothirmayee Estate, by relying on the . The AO is noted to have completed the assessment u/s 153C/143(3) of the Act vide order dated 30.09.2021 after making the aforesaid addition to the total income of the assessee. Overall,therefore, it is observed that, the basis of the impu addition was primarily the statement of Shri basis which the AO had interpreted the rough scribblings found on loose sheets seized from the premises of Shri Javvaji Ramanjenyulu. 11. Being aggrieved by the order of the AO, t an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) was pleased to delete the impugned addition, both on merits as well as on the legal ground. The Ld. CIT(A), on merits, held that, the loose sheets were dumb in nature and could not be inferred against the assessee. He also found the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy the impugned addition by holding as under: “6.3.11 While going through the seized material relied by the AO, it can be seen that, it does not contain the signature of the Appellant for having paid the amount as narrated in the seized material and also the date of payment, mode of payment. The AO on the bas statement(s) recorded u/s 132(4) & 131 (1A) of the Act from Shri Javvaji Ramanjenyulu and Shri Balakrishnan Ramamoorthy has perceived the narration in the loose sheet are the alleged payments made by the Appellant for the purchase of 50% shares i Jothirmayee Estates. It is noted that neither the Investigation Officer nor the AO had any occasion to cross examine the issue with the Appellant at any point of time. No enquiry was made neither during the course of search nor during the course of significant to bring on record that no statement of any kind was recorded from the Appellant confronting about the materials seized during the course of search and about the contents of the statement recorded from Shri Javvaji Ramamoorthy either by the Investigating Officer nor by the Assessing Officer. In the absence of any such confrontation with the Appellant, the ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 11 :: 30.09.2021 after making the aforesaid addition to the total income of the therefore, it is observed that, the basis of the impu addition was primarily the statement of Shri Balakrishnan Ramamoorthy basis which the AO had interpreted the rough scribblings found on loose sheets seized from the premises of Shri Javvaji Ramanjenyulu. Being aggrieved by the order of the AO, the assessee had preferred an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) was pleased to delete the impugned addition, both on merits as well as on the legal ground. The Ld. CIT(A), on merits, held that, the noting’s re dumb in nature and could not be inferred against the assessee. He also found the statements of Shri Javvaji Ramanjenyulu & Balakrishnan Ramamoorthy to be unreliable and therefore deleted the impugned addition by holding as under:- While going through the seized material relied by the AO, it can be seen that, it does not contain the signature of the Appellant for having paid the amount as narrated in the seized material and also the date of payment, mode of payment. The AO on the bas statement(s) recorded u/s 132(4) & 131 (1A) of the Act from Shri Javvaji Ramanjenyulu and Shri Balakrishnan Ramamoorthy has perceived the narration in the loose sheet are the alleged payments made by the Appellant for the purchase of 50% shares i Jothirmayee Estates. It is noted that neither the Investigation Officer nor the AO had any occasion to cross examine the issue with the Appellant at any point of time. No enquiry was made neither during the course of search nor during the course of assessment proceedings. It is significant to bring on record that no statement of any kind was recorded from the Appellant confronting about the materials seized during the course of search and about the contents of the statement recorded from Shri Javvaji Ramanjenyulu and Shri Balakrishnan Ramamoorthy either by the Investigating Officer nor by the Assessing Officer. In the absence of any such confrontation with the Appellant, the /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 30.09.2021 after making the aforesaid addition to the total income of the therefore, it is observed that, the basis of the impugned Balakrishnan Ramamoorthy, basis which the AO had interpreted the rough scribblings found on loose sheets seized from the premises of Shri Javvaji Ramanjenyulu. he assessee had preferred an appeal before the Ld. CIT(A). On appeal, the Ld. CIT(A) was pleased to delete the impugned addition, both on merits as well as on the legal noting’s found in the re dumb in nature and could not be inferred against the assessee. He also found the statements of Shri Javvaji Ramanjenyulu & to be unreliable and therefore deleted While going through the seized material relied by the AO, it can be seen that, it does not contain the signature of the Appellant for having paid the amount as narrated in the seized material and also the date of payment, mode of payment. The AO on the basis of the statement(s) recorded u/s 132(4) & 131 (1A) of the Act from Shri Javvaji Ramanjenyulu and Shri Balakrishnan Ramamoorthy has perceived the narration in the loose sheet are the alleged payments made by the Appellant for the purchase of 50% shares in M/s. Jothirmayee Estates. It is noted that neither the Investigation Officer nor the AO had any occasion to cross examine the issue with the Appellant at any point of time. No enquiry was made neither during the assessment proceedings. It is significant to bring on record that no statement of any kind was recorded from the Appellant confronting about the materials seized during the course of search and about the contents of the statement Ramanjenyulu and Shri Balakrishnan Ramamoorthy either by the Investigating Officer nor by the Assessing Officer. In the absence of any such confrontation with the Appellant, the Appellant had no occasion for cross examination of the above persons. Thus the AO has proceeded to complete the assessment based upon the materials seized and the statements recorded during the course of search unilaterally. travelled in a direction as navigated by the Investiga 6.3.12 It is noted in the instant case that the said loose sheet relied upon by the AO 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 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) , wherein it was held that “ seized in search of the premises of a third party allegedly containing entries of hundi transactions on behalf of various pa 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 6.3.13 The ratio case of the Appellant, applicable to the not referred to any in the loose sheet transactions made in the seized material cash payments, the of such transaction. with scanty details whose name does evidence to attribute is liable to be treated evidentiary value corroborative evidence basis for deciphering 6.3.14 At this juncture, it would be relevant to refer to the decision of Hon'ble ITAT, Jabalpur in the case of ACIT Vs Satyapal 5104-ITAT-2007(Jabalpur) 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 n stating as under: ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 12 :: Appellant had no occasion for cross examination of the above persons. e AO has proceeded to complete the assessment based upon the materials seized and the statements recorded during the course of search unilaterally. It is evident in the assessment order that the AO has travelled in a direction as navigated by the Investigation Officer. It is noted in the instant case that the said loose sheet relied upon by the AO 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 'ble Delhi High Court in the case of CIT Vs Sant Lal [2020] 118 taxmann com 432 (Del) , wherein it was held 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.” ratio of the above decision is squarely applicable Appellant, as the AO has not referred to any cogent case of the Appellant. In the present case, any cogent material to corroborate that the sheet seized from a third party which are purportedly made by the Appellant and there is absolutely material regarding the nature of the said transactions the purpose of such payments and the precise transaction. A narration made in a loose sheet by a details cannot be used to fasten tax liability upon does not appear at all. In the absence of any corroborative attribute the entries to such a person. Such seized treated as a dumb document, which does not value in respect of the entries found therein, evidence is available which can provide necessary deciphering the nature and character of the said entries. At this juncture, it would be relevant to refer to the decision of Hon'ble ITAT, Jabalpur in the case of ACIT Vs Satyapal 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 /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat Appellant had no occasion for cross examination of the above persons. e AO has proceeded to complete the assessment based upon the materials seized and the statements recorded during the course of It is evident in the assessment order that the AO has tion Officer. It is noted in the instant case that the said loose sheet relied upon by the AO was neither seized from the premises of the Appellant nor was the same found to be in the handwriting of the Appellant. Such 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 'ble Delhi High Court in the case of CIT Vs Sant Lal [2020] 118 where a diary was seized in search of the premises of a third party allegedly containing rties 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 applicable to the cogent evidence case, the AO has noting made purportedly the absolutely no mention transactions of precise identity a third person upon the person corroborative seized material not have any therein, unless necessary reliable entries. At this juncture, it would be relevant to refer to the decision of Wassan [TS- 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 ot complete in all respects, by … 6.3.15 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 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 (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD 85 (TM) IΠΑΤ, T.S Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd Vs ACTT [2000] 67 TTJ 247 (All). 6.3.16 In particu 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 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 m between the parties in a case where there is no other evidence on record to prove that on the premise of a third party and admission made by the third party. The relevant part of th \"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 on 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 ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 13 :: 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 to this effect are MM Financiers (P) Ltd Vs. DCIT (2007) 107 TTJ (Chennai) 200, Regency Mahavir Properties Vs ACIT [2018] 169 ITD 35 Mumbai), ACIT Vs. Katrina Rosemary Turcotte [2017] 190 TTJ Mumbai), DCIT Vs. Vipin Aggarwal [2017] 83 taxmann.com (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD 85 (TM) IΠΑΤ, T.S Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd Vs ACTT [2000] 67 TTJ 247 (All). 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 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 ndisclosed income. The AO is required to bring further evidence on 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 nstead, 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 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 /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 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 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 Mumbai), ACIT Vs. Katrina Rosemary Turcotte [2017] 190 TTJ taxmann.com 6 (ITAT Chandigarh), S.P Goyal Vs DCIT [2002] 82 ITD 85 (TM) IΠΑΤ, T.S Venkatesan Vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd lar, 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 oney was actually exchanged between the parties in a case where there is no other evidence on money was paid except the loose sheet found in the premise of a third party and admission made by the third party. The \"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 ndisclosed income. The AO is required to bring further evidence on 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 nstead, 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 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.\" 6.3.17 Further in the case of K.P Varghese Vs. ITO (1981) 131 ITR 597, the Hon'ble Apex Court held that “ conditions of taxability are fulfilled is always on the revenue and that throwing the burden of showing that there is no under consideration on the assesse 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 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 burden has not been Appellant. 6.3.18 As per the decisions of the Hon'ble Apex Court in the case of Dhakeshwari Cotton Mills Lids. CIT (1954) 26 ITR 775 (SC) has held that corroborative evidence is essential to support the evidence party premise. In order to properly appreciate the issue, it is pertinent 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 se with the learned Solicitor 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 ev 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 refer 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 6.3.19 As evident from the decisions cited above, the AO is not entitled to make a pure guess and make an assessment without reference to any evidence / material. It follows there, that no addition can be made unless entries found in the material seized from a third party. 6.3.20 As discussed supra, the seized material relied upon by the AO, more particularly the loose sheet which was found and seized at third party premise when the same was not in the handwriting of the ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 14 :: money cannot be brought to tax as income from undisclosed ther 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- consideration on the assesse 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 As per the decisions of the Hon'ble Apex Court in the case of Dhakeshwari Cotton Mills Lids. CIT (1954) 26 ITR 775 (SC) has held that corroborative evidence is essential to support the evidence found in third . In order to properly appreciate the issue, it is pertinent 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 \"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 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)\". As evident from the decisions cited above, the AO is not entitled to make a pure guess and make an assessment without reference to any evidence / material. It follows there, that no addition can be made unless there is corroborative evidence to validate the entries found in the material seized from a third party. As discussed supra, the seized material relied upon by the AO, more particularly the loose sheet which was found and seized at third se when the same was not in the handwriting of the /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat money cannot be brought to tax as income from undisclosed ther in the case of K.P Varghese Vs. ITO (1981) 131 ITR the onus of establishing that the conditions of taxability are fulfilled is always on the revenue and that -statement of consideration on the assesse 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 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 ”. It is evident that such a discharged by the revenue in the case of the As per the decisions of the Hon'ble Apex Court in the case of Dhakeshwari Cotton Mills Lids. CIT (1954) 26 ITR 775 (SC) has held that found in third . In order to properly appreciate the issue, it is pertinent 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 cond contention, we are in entire agreement 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 idence, a court of law, but there the agreement ends; because it is equally clear that in making the assessment section (3) of Section 23 of the Act, the Income Tax Officer is not entitled to make a pure guess and make an ence 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 case of Seth Gurmukh Singh (supra)\". As evident from the decisions cited above, the AO is not entitled to make a pure guess and make an assessment without reference to any evidence / material. It follows there, that no addition there is corroborative evidence to validate the As discussed supra, the seized material relied upon by the AO, more particularly the loose sheet which was found and seized at third se when the same was not in the handwriting of the Appellant as well as the sellers of the land, obviously such loose sheets can only be in the nature of a dumb document. The AO cannot arrive at any conclusion based solely on the said material that the App her spouse have actually paid on property. 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 6.3.21 The AO in the assessment order has relied upon the statement recorded from Shri. Balakrishnan Ramamoorthy to arrive at a conclusion that the Appellant has paid a share held by Shri. Sathynarayan in M/s. Jyothirmaya Estates. In this regard the Appellant in the written submission, has agitated upon the addition made based upon the statement recorded from third party and without providing various judicial decisions. It is a settled law that a statement of a third party cannot be unilaterally utilized against the Appellant as evidence to frame the assessment. Statements of third parties w noting on loose she relating to transaction of on being tested in cross absence of any supporting evide addition of undisclosed income in the hands of the assessee. This was so held in the case of Prarthana Construction (P.) Ltd. v. Dy. CIT [2001] 118 Taxman 112 (Ahd. 6.3.22 In the case of CIT v. Ashwani Gupta (Delhi), addition was made on the basis of the statement of a third party. Copies of the seized documents were not provided to the assessee. No opportunity of cross given before utilisation of his own judgment in the case of CIT v. SMC Share Brokers Ltd. [2007] 159 Taxman 306 (Delhi), the High Court deleted the addition on the premise that there was violation of the principles of natural justice. 6.3.23 In a case, in the course of search of the assessee, certain loose papers were seized indicating advance of money and earning of interest. The assessee stated that the papers belonged to his daughter. This was denied by the daughter in her statement. Therefore, the amounts was made in the assessee's hands. On these facts, in CIT v. S.M. Aggarwal [2007] 162 Taxman 3 (Delhi), it was held that the statement of a third party (ie, daughter of the assessee) not subjected to cross-examination cannot be cons ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 15 :: Appellant as well as the sellers of the land, obviously such loose sheets can only be in the nature of a dumb document. The AO cannot arrive at any conclusion based solely on the said material that the App her spouse have actually paid on-money payment for purchase of property. 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. The AO in the assessment order has relied upon the statement recorded from Shri. Balakrishnan Ramamoorthy to arrive at a conclusion that the Appellant has paid an amount of Rs. 51.75 Crores to acquire share held by Shri. Sathynarayan in M/s. Jyothirmaya Estates. In this regard the Appellant in the written submission, has agitated upon the addition made based upon the statement recorded from third party and without providing any opportunity of cross examination and relied upon various judicial decisions. It is a settled law that a statement of a third party cannot be unilaterally utilized against the Appellant as evidence to frame the assessment. Statements of third parties with regard to the noting on loose sheets seized in the course of search of their premises relating to transaction of on-money without their adverse statement being tested in cross-examination by the affected party and in the absence of any supporting evidence cannot be made the basis for addition of undisclosed income in the hands of the assessee. This was so held in the case of Prarthana Construction (P.) Ltd. v. Dy. CIT [2001] 118 Taxman 112 (Ahd.-Trib.) (Mag.). In the case of CIT v. Ashwani Gupta [2010] 191 Taxman 51 (Delhi), addition was made on the basis of the statement of a third party. Copies of the seized documents were not provided to the assessee. No opportunity of cross-examination of the adverse party was given before utilisation of his statement. On these facts, following its own judgment in the case of CIT v. SMC Share Brokers Ltd. [2007] 159 Taxman 306 (Delhi), the High Court deleted the addition on the premise that there was violation of the principles of natural justice. case, in the course of search of the assessee, certain loose papers were seized indicating advance of money and earning of interest. The assessee stated that the papers belonged to his daughter. This was denied by the daughter in her statement. Therefore, the amounts was made in the assessee's hands. On these facts, in CIT v. S.M. Aggarwal [2007] 162 Taxman 3 (Delhi), it was held that the statement of a third party (ie, daughter of the assessee) not subjected examination cannot be considered relevant or admissible. In /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat Appellant as well as the sellers of the land, obviously such loose sheets can only be in the nature of a dumb document. The AO cannot arrive at any conclusion based solely on the said material that the Appellant and money payment for purchase of property. There is no corroborative evidence to prove that the payments noted in the seized material have actually materialised and transfer of the concerned parties. The AO in the assessment order has relied upon the statement recorded from Shri. Balakrishnan Ramamoorthy to arrive at a conclusion Rs. 51.75 Crores to acquire share held by Shri. Sathynarayan in M/s. Jyothirmaya Estates. In this regard the Appellant in the written submission, has agitated upon the addition made based upon the statement recorded from third party and any opportunity of cross examination and relied upon various judicial decisions. It is a settled law that a statement of a third party cannot be unilaterally utilized against the Appellant as evidence to ith regard to the ets seized in the course of search of their premises money without their adverse statement examination by the affected party and in the nce cannot be made the basis for addition of undisclosed income in the hands of the assessee. This was so held in the case of Prarthana Construction (P.) Ltd. v. Dy. CIT [2001] [2010] 191 Taxman 51 (Delhi), addition was made on the basis of the statement of a third party. Copies of the seized documents were not provided to the examination of the adverse party was statement. On these facts, following its own judgment in the case of CIT v. SMC Share Brokers Ltd. [2007] 159 Taxman 306 (Delhi), the High Court deleted the addition on the premise case, in the course of search of the assessee, certain loose papers were seized indicating advance of money and earning of interest. The assessee stated that the papers belonged to his daughter. This was denied by the daughter in her statement. Therefore, addition of the amounts was made in the assessee's hands. On these facts, in CIT v. S.M. Aggarwal [2007] 162 Taxman 3 (Delhi), it was held that the statement of a third party (ie, daughter of the assessee) not subjected idered relevant or admissible. In the absence of any corroboration by cross the seized document was a dumb document. The addition was deleted. 6.3.24 In the case of Bangodaya Cotton Mills Ltd. v. CIT [2009] 182 Taxman 151 (Ca documents (correspondence) relating to a property transaction seized from the premises of a third party. The order was set aside as no opportunity of cross when it was the case of the assessee that these documents were forged, was afforded. 6.3.25 In the case of Prakash Chand Nahta v. CIT [2008] 170 Taxman 520 (MP), it was held that no addition u/s 69 could be made based on the statement of a third party withou examination of the adverse party. In this case, the assessee contended that the silver articles were purchased from 'R'. However, 'R' denied the transaction in his statement recorded behind the back of the assessee. The Assessing Officer made the addition without allowing cross examination of 'R'. Copy of the statement of 'R' recorded was not provided to the assessee. The Assessing Officer also ignored the affidavit filed by the assessee. He solely relied on the statement of for the addition. The addition was deleted. 6.3.26 In the case of B. Ramakrishnaiah v. ITO [2010] 39 SOT 379 (Hyd.-Trib.), the Assessing Officer made addition of a certain amount in the hands of the assessee based on the entry of a transaction relati a property deal in the books of 'B' who was a third party. No opportunity for cross-examination was afforded to the assessee with reference to the material gathered from the third party. The Tribunal held that the Assessing Officer cannot base his as material collected by him to frame the assessment without affording opportunity of cross of implied affording of opportunity advanced by the department that the statement of the assessee was recorded on the same issue. The addition was deleted. 6.3.27 In the case of M. Anpukutty v. State of Kerala [1964] 14 STC 489, it was held that the entries in the name of the assessee in the books of account of a third party would not give jurisdiction to the Assessing Officer to frame the assessment by utilising su unilaterally unless the assessee was afforded opportunity to cross examine the said party. The assessee can question the said party to ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 16 :: the absence of any corroboration by cross-examination, it was held that the seized document was a dumb document. The addition was deleted. In the case of Bangodaya Cotton Mills Ltd. v. CIT [2009] 182 Taxman 151 (Cal.), additions were made on the basis of some documents (correspondence) relating to a property transaction seized from the premises of a third party. The order was set aside as no opportunity of cross-examination of the connected parties, particularly n it was the case of the assessee that these documents were forged, 6.3.25 In the case of Prakash Chand Nahta v. CIT [2008] 170 Taxman 520 (MP), it was held that no addition u/s 69 could be made based on the statement of a third party without affording opportunity of cross examination of the adverse party. In this case, the assessee contended that the silver articles were purchased from 'R'. However, 'R' denied the transaction in his statement recorded behind the back of the assessee. essing Officer made the addition without allowing cross examination of 'R'. Copy of the statement of 'R' recorded was not provided to the assessee. The Assessing Officer also ignored the affidavit filed by the assessee. He solely relied on the statement of for the addition. The addition was deleted. In the case of B. Ramakrishnaiah v. ITO [2010] 39 SOT 379 Trib.), the Assessing Officer made addition of a certain amount in the hands of the assessee based on the entry of a transaction relati a property deal in the books of 'B' who was a third party. No opportunity examination was afforded to the assessee with reference to the material gathered from the third party. The Tribunal held that the Assessing Officer cannot base his assessment on the statement and material collected by him to frame the assessment without affording opportunity of cross-examination. The Tribunal did not accept the plea of implied affording of opportunity advanced by the department that the e assessee was recorded on the same issue. The addition In the case of M. Anpukutty v. State of Kerala [1964] 14 STC 489, it was held that the entries in the name of the assessee in the books of account of a third party would not give jurisdiction to the Assessing Officer to frame the assessment by utilising su unilaterally unless the assessee was afforded opportunity to cross examine the said party. The assessee can question the said party to /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat examination, it was held that the seized document was a dumb document. The addition was deleted. In the case of Bangodaya Cotton Mills Ltd. v. CIT [2009] 182 l.), additions were made on the basis of some documents (correspondence) relating to a property transaction seized from the premises of a third party. The order was set aside as no examination of the connected parties, particularly n it was the case of the assessee that these documents were forged, 6.3.25 In the case of Prakash Chand Nahta v. CIT [2008] 170 Taxman 520 (MP), it was held that no addition u/s 69 could be made based on t affording opportunity of cross- examination of the adverse party. In this case, the assessee contended that the silver articles were purchased from 'R'. However, 'R' denied the transaction in his statement recorded behind the back of the assessee. essing Officer made the addition without allowing cross- examination of 'R'. Copy of the statement of 'R' recorded was not provided to the assessee. The Assessing Officer also ignored the affidavit filed by the assessee. He solely relied on the statement of 'R' In the case of B. Ramakrishnaiah v. ITO [2010] 39 SOT 379 Trib.), the Assessing Officer made addition of a certain amount in the hands of the assessee based on the entry of a transaction relating to a property deal in the books of 'B' who was a third party. No opportunity examination was afforded to the assessee with reference to the material gathered from the third party. The Tribunal held that the sessment on the statement and material collected by him to frame the assessment without affording examination. The Tribunal did not accept the plea of implied affording of opportunity advanced by the department that the e assessee was recorded on the same issue. The addition In the case of M. Anpukutty v. State of Kerala [1964] 14 STC 489, it was held that the entries in the name of the assessee in the books of account of a third party would not give jurisdiction to the Assessing Officer to frame the assessment by utilising such material unilaterally unless the assessee was afforded opportunity to cross- examine the said party. The assessee can question the said party to explain as to how the relevant entry was made in its books and its nexus with the assessee. 6.3.28 The unders order has merely relied upon the statement and arrived at a conclusion that the Appellant has paid the amount by way of cash to acquire 50% shares in M/s. Jothirmayee Estates. Further the AO, has also failed t bring it on record the retraction statement recorded from Shri Javvaji Ramanjenyulu on 05.07.2019. The relevant portion of the answer to question no. 22 is reproduced as under : ……. 6.3.29 In this regard t Saveeta Institute of Medical and Technical Sciences [2012] 25 taxmann.com 138 (Chennai basis of the sworn statement recorded u/s 132(4) of the Act cannot be sustainable and further held that the admission made u/ Special Officer of the College could not even be treated as a valid piece of evidence. In the present case, the statement recorded u/s 132(4) of the act was subsequently retracted in the statement recorded u/s 131 (1a) of the Act. 6.3.30 In the case of Shri. Ganesh Trading Company v. CIT [2013] 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held that a statement made u/s 132(4) of the Act is a piece of evidence but the same is not conclusive particularly because it is self Accordingly it was concluded that no liability could be fastened solely on the basis of sworn statement. In arriving at this decision, the Court followed the judgement in the case of Kailashben Manharlal Choski v. CIT [2010] 174 Taxmann 466( G 6.3.31 Further the Hon’ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v State of Kerala [1973] ITR 18 (SC) has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and furthe to the person who makes the admission to show that it is incorrect. At the outset it can be stated that where the admission is tied up with incriminating evidence found in the course of search, the principle laid down by the Apex absence of evidence an admission can no longer be an evidence to support any addition. 6.3.32 In addition, the Apex Court in the case of Kasmira Singh v. State of Madhya Pradesh AIR 1952 SC 159, has obs correct way to approach a case of confession is to marshal evidence against the accused excluding the confession altogether from consideration. Where the case can be decided independent of confession, then, it is not necessary to take help o ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 17 :: explain as to how the relevant entry was made in its books and its nexus with the assessee. The undersigned observes that the AO in the assessment order has merely relied upon the statement and arrived at a conclusion that the Appellant has paid the amount by way of cash to acquire 50% M/s. Jothirmayee Estates. Further the AO, has also failed t bring it on record the retraction statement recorded from Shri Javvaji Ramanjenyulu on 05.07.2019. The relevant portion of the answer to question no. 22 is reproduced as under :- In this regard the jurisdictional tribunal in the case of ACIT v Saveeta Institute of Medical and Technical Sciences [2012] 25 taxmann.com 138 (Chennai -Trib) has held that addition made on the basis of the sworn statement recorded u/s 132(4) of the Act cannot be sustainable and further held that the admission made u/s 132(4) by the Special Officer of the College could not even be treated as a valid piece of evidence. In the present case, the statement recorded u/s 132(4) of the act was subsequently retracted in the statement recorded u/s 131 In the case of Shri. Ganesh Trading Company v. CIT [2013] 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held that a statement made u/s 132(4) of the Act is a piece of evidence but the same is not conclusive particularly because it is self-inc Accordingly it was concluded that no liability could be fastened solely on the basis of sworn statement. In arriving at this decision, the Court followed the judgement in the case of Kailashben Manharlal Choski v. CIT [2010] 174 Taxmann 466( Guj) . Further the Hon’ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v State of Kerala [1973] ITR 18 (SC) has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and further observed that it is open to the person who makes the admission to show that it is incorrect. At the outset it can be stated that where the admission is tied up with incriminating evidence found in the course of search, the principle laid down by the Apex Court will no longer hold good. Obviously, in the absence of evidence an admission can no longer be an evidence to support any addition. In addition, the Apex Court in the case of Kasmira Singh v. State of Madhya Pradesh AIR 1952 SC 159, has observed that the correct way to approach a case of confession is to marshal evidence against the accused excluding the confession altogether from consideration. Where the case can be decided independent of confession, then, it is not necessary to take help of confession. /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat explain as to how the relevant entry was made in its books and its he AO in the assessment order has merely relied upon the statement and arrived at a conclusion that the Appellant has paid the amount by way of cash to acquire 50% M/s. Jothirmayee Estates. Further the AO, has also failed to bring it on record the retraction statement recorded from Shri Javvaji Ramanjenyulu on 05.07.2019. The relevant portion of the answer to he jurisdictional tribunal in the case of ACIT v. Saveeta Institute of Medical and Technical Sciences [2012] 25 Trib) has held that addition made on the basis of the sworn statement recorded u/s 132(4) of the Act cannot be s 132(4) by the Special Officer of the College could not even be treated as a valid piece of evidence. In the present case, the statement recorded u/s 132(4) of the act was subsequently retracted in the statement recorded u/s 131 In the case of Shri. Ganesh Trading Company v. CIT [2013] 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held that a statement made u/s 132(4) of the Act is a piece of evidence but incriminating. Accordingly it was concluded that no liability could be fastened solely on the basis of sworn statement. In arriving at this decision, the Court followed the judgement in the case of Kailashben Manharlal Choski v. Further the Hon’ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v State of Kerala [1973] ITR 18 (SC) has held that an admission is an extremely important piece of evidence but it r observed that it is open to the person who makes the admission to show that it is incorrect. At the outset it can be stated that where the admission is tied up with incriminating evidence found in the course of search, the principle laid Court will no longer hold good. Obviously, in the absence of evidence an admission can no longer be an evidence to In addition, the Apex Court in the case of Kasmira Singh v. erved that the correct way to approach a case of confession is to marshal evidence against the accused excluding the confession altogether from consideration. Where the case can be decided independent of f confession. 6.3.33 Thus, in the instant case of the Appellant, it can be stated that the AO has primarily relied upon the statement(s) recorded from the third parties and the loose sheets seized, during the course of search at third party premise and ut hands of the Appellant without bring any cogent and corroborative evidence on record. In view of this the addition contemplated by the AO based upon such evidences can no longer be sustainable upon merits. 12. The Ld. CIT(A), thereafter, held that, even the satisfaction recorded by the AO was defective, as the could not be said to pertain or relate to the assessee and therefore the assumption of jurisdiction u/s 153C of th Now the Revenue is in appeal before us. 13. Assailing the action of the Ld. CIT(A), the Ld. CIT, DR appearing on behalf of the Revenue, the AO. Taking us through the statemen Ramamoorthy in light of the ANN/NN/JR/LS/S Pages 267, 276 to 279 seized from the premises of Shri Javvaji Ramanjenyulu, he argued that, the figures mentioned in the noting’s stood correlated w Ramamoorthy and that, one could make out from the figures mentioned that, payment of Rs.9.10 crores and Rs.41.75 crores was made by the assessee, out of which the former was by cheque and the latter in cash. According to him therefore, the AO had rightly made the impugned addition. He further submitted that, the burden was on the assessee to show that the statement given by Shri ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 18 :: Thus, in the instant case of the Appellant, it can be stated that the AO has primarily relied upon the statement(s) recorded from the third parties and the loose sheets seized, during the course of search at third party premise and utilized the same in making the addition in the hands of the Appellant without bring any cogent and corroborative evidence on record. In view of this the addition contemplated by the AO based upon such evidences can no longer be sustainable upon merits. The Ld. CIT(A), thereafter, held that, even the satisfaction recorded by the AO was defective, as the noting’s found in the loose sheet could not be said to pertain or relate to the assessee and therefore the assumption of jurisdiction u/s 153C of the Act was also held to be invalid. Now the Revenue is in appeal before us. Assailing the action of the Ld. CIT(A), the Ld. CIT, DR appearing on , vehemently supported the findings recorded by the AO. Taking us through the statement of Shri in light of the noting’s found on loose sheets ID marked ANN/NN/JR/LS/S Pages 267, 276 to 279 seized from the premises of Shri Javvaji Ramanjenyulu, he argued that, the figures mentioned in the stood correlated with the deposition given by Shri and that, one could make out from the figures mentioned that, payment of Rs.9.10 crores and Rs.41.75 crores was made by the assessee, out of which the former was by cheque and the latter in cash. cording to him therefore, the AO had rightly made the impugned addition. He further submitted that, the burden was on the assessee to show that the statement given by Shri Balakrishnan Ramamoorthy /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat Thus, in the instant case of the Appellant, it can be stated that the AO has primarily relied upon the statement(s) recorded from the third parties and the loose sheets seized, during the course of search at ilized the same in making the addition in the hands of the Appellant without bring any cogent and corroborative evidence on record. In view of this the addition contemplated by the AO based upon such evidences can no longer be sustainable upon merits.” The Ld. CIT(A), thereafter, held that, even the satisfaction-note found in the loose sheet could not be said to pertain or relate to the assessee and therefore the e Act was also held to be invalid. Assailing the action of the Ld. CIT(A), the Ld. CIT, DR appearing on vehemently supported the findings recorded by t of Shri Balakrishnan found on loose sheets ID marked ANN/NN/JR/LS/S Pages 267, 276 to 279 seized from the premises of Shri Javvaji Ramanjenyulu, he argued that, the figures mentioned in the ith the deposition given by Shri Balakrishnan and that, one could make out from the figures mentioned that, payment of Rs.9.10 crores and Rs.41.75 crores was made by the assessee, out of which the former was by cheque and the latter in cash. cording to him therefore, the AO had rightly made the impugned addition. He further submitted that, the burden was on the assessee to Balakrishnan Ramamoorthy was inadmissible and that simply because the assessee was n opportunity cross-examine would not render his statement to be unreliable, particularly when he had confirmed his original statement in the post search enquiries as well. On the validity of assumption of jurisdiction u/s 153C of the Act, he sub dispute the fact that the satisfaction note was recorded prior to issue of notice u/s 153C of the Act dated 25.01.2021 and therefore the same could not be held as defective. He further contended that the contents of the satisfaction note made it clear that, the ID marked ANN/NN/JR/LS/S contained entries which pertained or related to the assessee, and which was further corroborated by the statements of Shri Javvaji Ramanjenyulu & Shri therefore, according to him, the Ld. CIT(A) was unjustified in holding the issuance of notice u/s 153C of the Act to be bad in law. 14. The Ld. AR, on the other hand, supported the order of Ld. CIT(A). He first invited our attention marked ANN/NN/JR/LS/S basis which the satisfaction note was recorded by the AO. He showed us that, these notings were rough scribblings, which did not contain any names, details of payer or payee or any other specifics, basis which a prudent person could suggest that it related to the assessee. He further invited our attention to provisions of Section 132(4) of the Act and argued that, the authorized officer was empowered to ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 19 :: inadmissible and that simply because the assessee was n examine would not render his statement to be unreliable, particularly when he had confirmed his original statement in the post search enquiries as well. On the validity of assumption of jurisdiction u/s 153C of the Act, he submitted that, the Ld. CIT(A) did not dispute the fact that the satisfaction note was recorded prior to issue of notice u/s 153C of the Act dated 25.01.2021 and therefore the same could not be held as defective. He further contended that the contents of satisfaction note made it clear that, the noting’s found in loose sheets ID marked ANN/NN/JR/LS/S contained entries which pertained or related to the assessee, and which was further corroborated by the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy therefore, according to him, the Ld. CIT(A) was unjustified in holding the issuance of notice u/s 153C of the Act to be bad in law. The Ld. AR, on the other hand, supported the order of Ld. CIT(A). He first invited our attention to the noting’s found on loose sheets ID marked ANN/NN/JR/LS/S basis which the satisfaction note was recorded by the AO. He showed us that, these notings were rough scribblings, which did not contain any names, details of payer or payee or any other ics, basis which a prudent person could suggest that it related to the assessee. He further invited our attention to provisions of Section 132(4) of the Act and argued that, the authorized officer was empowered to /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat inadmissible and that simply because the assessee was not afforded examine would not render his statement to be unreliable, particularly when he had confirmed his original statement in the post search enquiries as well. On the validity of assumption of mitted that, the Ld. CIT(A) did not dispute the fact that the satisfaction note was recorded prior to issue of notice u/s 153C of the Act dated 25.01.2021 and therefore the same could not be held as defective. He further contended that the contents of found in loose sheets ID marked ANN/NN/JR/LS/S contained entries which pertained or related to the assessee, and which was further corroborated by the statements of shnan Ramamoorthy and therefore, according to him, the Ld. CIT(A) was unjustified in holding the The Ld. AR, on the other hand, supported the order of Ld. CIT(A). found on loose sheets ID marked ANN/NN/JR/LS/S basis which the satisfaction note was recorded by the AO. He showed us that, these notings were rough scribblings, which did not contain any names, details of payer or payee or any other ics, basis which a prudent person could suggest that it related to the assessee. He further invited our attention to provisions of Section 132(4) of the Act and argued that, the authorized officer was empowered to question the person from whose possession were found. He brought to our notice that, these loose sheets were found from the possession of Shri Javvaji Ramanjenyulu, and as already noted by us (supra), this person had nowhere named or implicated the assessee in relation to these noting’s later statement dated 05.07.2019, Shri Javvaji Ramanjenyulu had pleaded ignorance of the incriminated the assessee in any manner. According to him theref when the noting’s on the loose sheets itself was bald and lacking any specific details and the person from whose possession it was found, was also unable to explain the same, the Ld. CIT(A) had rightly concluded that these noting’s did not pertain to not have validly assumed jurisdiction u/s 153C of the Act. He, thereafter, pointed out to us, that the entire case of the AO in fact rested on the testimony of Shri Balakrishnan Ramamoorthy 08.07.2019, which was used by the authorized officer to interpret these loose notings. He contended that, the purported correlation drawn by the authorized officer based on the testimony of Shri Ramamoorthy linking the figures with the loose papers ID marked ANN/NN/JR/LS/S was a pure guesswork and not based on any tangible material. The Ld. AR were not found from the possession or control or premises of Shri ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 20 :: question the person from whose possession and control these documents were found. He brought to our notice that, these loose sheets were found from the possession of Shri Javvaji Ramanjenyulu, and as already noted by us (supra), this person had nowhere named or implicated the assessee noting’s. The Ld. AR emphasized that, even in the later statement dated 05.07.2019, Shri Javvaji Ramanjenyulu had pleaded ignorance of the noting’s on these loose sheets, and had not incriminated the assessee in any manner. According to him theref on the loose sheets itself was bald and lacking any specific details and the person from whose possession it was found, was also unable to explain the same, the Ld. CIT(A) had rightly concluded that did not pertain to the assessee and therefore the AO could not have validly assumed jurisdiction u/s 153C of the Act. He, thereafter, pointed out to us, that the entire case of the AO in fact rested on the Balakrishnan Ramamoorthy dated 22.02.2019 & 019, which was used by the authorized officer to interpret these loose notings. He contended that, the purported correlation drawn by the authorized officer based on the testimony of Shri linking the figures with the loose noting’s papers ID marked ANN/NN/JR/LS/S was a pure guesswork and not based on any tangible material. The Ld. AR reminded us that, these loose papers were not found from the possession or control or premises of Shri /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat and control these documents were found. He brought to our notice that, these loose sheets were found from the possession of Shri Javvaji Ramanjenyulu, and as already noted by us (supra), this person had nowhere named or implicated the assessee . The Ld. AR emphasized that, even in the later statement dated 05.07.2019, Shri Javvaji Ramanjenyulu had on these loose sheets, and had not incriminated the assessee in any manner. According to him therefore, on the loose sheets itself was bald and lacking any specific details and the person from whose possession it was found, was also unable to explain the same, the Ld. CIT(A) had rightly concluded that the assessee and therefore the AO could not have validly assumed jurisdiction u/s 153C of the Act. He, thereafter, pointed out to us, that the entire case of the AO in fact rested on the dated 22.02.2019 & 019, which was used by the authorized officer to interpret these loose notings. He contended that, the purported correlation drawn by the authorized officer based on the testimony of Shri Balakrishnan found in loose papers ID marked ANN/NN/JR/LS/S was a pure guesswork and not based that, these loose papers were not found from the possession or control or premises of Shri Balakrishnan Ramamoorthy contents of these noting’s 15. The Ld. AR additionally placed before us, the details of the litigation between the related parties of the assessee and Shri Ramamoorthy, which began much prior to the date of search i.e. 31.12.2019. He particularly passed by the Hon’ble Madras High Court in Cr 30501 of 2018 & 2690 of 2019 dated 18.10.2023 where deal involving M/s Jyothimaye Estate, the Hon’ble High Court after examining the material including the MOU (referred by Shri Ramamoorthy in his depositions dated 22.02.2019 & 08.07.2019) found that the claims made by Shri and that he had played fraud by cheating and of trust to cause wrongful loss and that, there was no such agreement between the parties and also that, no such cash transactions had taken place between them. The Ld. AR argued that, even if the aforesaid decision of Hon’ble Madras High Court is kept aside for a moment, the fact that, there was dispute/litigation between the assessee and Shri Balakrishnan Ramamoorthy Ramamoorthy was a biased person who him, would have on purpose, made false & frivolous statements against the assessee due to the animosity between them. He thus submitted that, ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 21 :: Balakrishnan Ramamoorthy and therefore using his testimony to infer the noting’s was arbitrary and so, unjustified. The Ld. AR additionally placed before us, the details of the litigation between the related parties of the assessee and Shri , which began much prior to the date of search i.e. 31.12.2019. He particularly invited our attention to the recent order passed by the Hon’ble Madras High Court in Criminal Original of 2018 & 2690 of 2019 dated 18.10.2023 wherein qua this same deal involving M/s Jyothimaye Estate, the Hon’ble High Court after examining the material including the MOU (referred by Shri in his depositions dated 22.02.2019 & 08.07.2019) found that the claims made by Shri Balakrishnan Ramamoorthy and that he had played fraud by cheating and committed criminal breach of trust to cause wrongful loss and that, there was no such agreement between the parties and also that, no such cash transactions had taken between them. The Ld. AR argued that, even if the aforesaid decision of Hon’ble Madras High Court is kept aside for a moment, the fact that, there was dispute/litigation between the assessee and Shri Balakrishnan Ramamoorthy clearly showed that, Shri was a biased person who has an axe to grind him, would have on purpose, made false & frivolous statements against the assessee due to the animosity between them. He thus submitted that, /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat and therefore using his testimony to infer the unjustified. The Ld. AR additionally placed before us, the details of the litigation between the related parties of the assessee and Shri Balakrishnan , which began much prior to the date of search i.e. invited our attention to the recent order riginal Petition No. in qua this same deal involving M/s Jyothimaye Estate, the Hon’ble High Court after examining the material including the MOU (referred by Shri Balakrishnan in his depositions dated 22.02.2019 & 08.07.2019) found to be frivolous criminal breach of trust to cause wrongful loss and that, there was no such agreement between the parties and also that, no such cash transactions had taken between them. The Ld. AR argued that, even if the aforesaid decision of Hon’ble Madras High Court is kept aside for a moment, the fact that, there was dispute/litigation between the assessee and Shri clearly showed that, Shri Balakrishnan has an axe to grind, according to him, would have on purpose, made false & frivolous statements against the assessee due to the animosity between them. He thus submitted that, this was a classic case where mentionanyone’s name sweet will and which can be used toimplicate such other person for no fault of the latter. He accordingly urged that, the impugned addition was unsustainable and that the Ld. CIT(A) had rightly deleted the same. 16. We have heard both the parties and perused the material on record placed before us. In the several grounds raised in the appeal, the Revenue has agitated the Ld. CIT(A)’s action of holding the invocati jurisdiction u/s 153C of the Act to be invalid and also deleting the addition of Rs.51.75 crores made by way of unexplained investment u/s 69 of the Act on merits. We first take up the legal issue of jurisdiction of the AO to assess the assessee u/s the action of the AO inter Act without satisfying the mandatory condition precedent prescribed by Section 153C of the Act i.e. the AO has not recorded a val note before assumption of jurisdiction u/s 153C of the Act. 17. Section 153C of the Act is a special provision for assessment income of 'any other person', who is department but shall be the Act, provided the AO is satisfied that (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 22 :: this was a classic case where any person for that matter can mentionanyone’s name in relation to any loose paper / diary at their can be used toimplicate such other person for no He accordingly urged that, the impugned addition was that the Ld. CIT(A) had rightly deleted the same. We have heard both the parties and perused the material on record placed before us. In the several grounds raised in the appeal, the Revenue has agitated the Ld. CIT(A)’s action of holding the invocati jurisdiction u/s 153C of the Act to be invalid and also deleting the addition of Rs.51.75 crores made by way of unexplained investment u/s 69 of the Act on merits. We first take up the legal issue of jurisdiction of the AO to assess the assessee u/s 153C of the Act. The legal challenge is against inter-alia to validly usurp jurisdiction u/s. 153C of the without satisfying the mandatory condition precedent prescribed by Section 153C of the Act i.e. the AO has not recorded a val note before assumption of jurisdiction u/s 153C of the Act. ection 153C of the Act is a special provision for assessment income of 'any other person', who is a third party not searched by the but shall be assessed in the manner prescribed the Act, provided the AO is satisfied that — any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat rson for that matter can loose paper / diary at their can be used toimplicate such other person for no He accordingly urged that, the impugned addition was that the Ld. CIT(A) had rightly deleted the same. We have heard both the parties and perused the material on record placed before us. In the several grounds raised in the appeal, the Revenue has agitated the Ld. CIT(A)’s action of holding the invocation of jurisdiction u/s 153C of the Act to be invalid and also deleting the addition of Rs.51.75 crores made by way of unexplained investment u/s 69 of the Act on merits. We first take up the legal issue of jurisdiction of the AO to The legal challenge is against to validly usurp jurisdiction u/s. 153C of the without satisfying the mandatory condition precedent prescribed by Section 153C of the Act i.e. the AO has not recorded a valid satisfaction note before assumption of jurisdiction u/s 153C of the Act. ection 153C of the Act is a special provision for assessment of third party not searched by the in the manner prescribed u/s. 153A of any money, bullion, jewellery or other valuable article or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to a person other than the person referred to in section 153A. 18. We find that, it is now a settled position of law that, the AO of the non-searched person (assessee, in read with 153A of the Act, only when he is satisfied, from a perusal of the books of account or documents or assets seized or requisitioned from the premises of searched person ( that it had a bearing in the determination of the total income of the non searched person, i.e. the assessee. The satisfaction of Assessing Officer should be objective and has to be based upon cogent material. The reason for it is that, section 132(4 when inter alia any document is found in the possession or control of any person in the course of a search, it may be presumed that such document belongs to such person (the searched person). The presumption as to asset, books of accounts, etc. is governed by section 292C(1)(i) of the Act which presumes that the same belong or belongs to the person from whom the said assets/documents were found during the course of search u/s. 132 or survey u/s. 133A of the Act. In other asset/document is found from a person who is being searched, the normal presumption is that the said asset/document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or 'satisfact ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 23 :: any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to a person other than the person referred to in section We find that, it is now a settled position of law that, the AO of the searched person (assessee, in this case) can issue notice u/s 153C read with 153A of the Act, only when he is satisfied, from a perusal of the books of account or documents or assets seized or requisitioned from the premises of searched person (Shri Javvaji Ramanjenyulu, in this case), that it had a bearing in the determination of the total income of the non searched person, i.e. the assessee. The satisfaction of Assessing Officer should be objective and has to be based upon cogent material. The reason for it is that, section 132(4A)(i) of the Act clearly stipulates that, any document is found in the possession or control of any person in the course of a search, it may be presumed that such document belongs to such person (the searched person). The presumption as to , books of accounts, etc. is governed by section 292C(1)(i) of the Act which presumes that the same belong or belongs to the person from whom the said assets/documents were found during the course of search u/s. 132 or survey u/s. 133A of the Act. In other words, whenever an asset/document is found from a person who is being searched, the normal presumption is that the said asset/document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or 'satisfaction' that the asset/document in fact /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to a person other than the person referred to in section We find that, it is now a settled position of law that, the AO of the this case) can issue notice u/s 153C read with 153A of the Act, only when he is satisfied, from a perusal of the books of account or documents or assets seized or requisitioned from the , in this case), that it had a bearing in the determination of the total income of the non- searched person, i.e. the assessee. The satisfaction of Assessing Officer should be objective and has to be based upon cogent material. The of the Act clearly stipulates that, any document is found in the possession or control of any person in the course of a search, it may be presumed that such document belongs to such person (the searched person). The presumption as to , books of accounts, etc. is governed by section 292C(1)(i) of the Act which presumes that the same belong or belongs to the person from whom the said assets/documents were found during the course of search words, whenever an asset/document is found from a person who is being searched, the normal presumption is that the said asset/document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a ion' that the asset/document in fact belongs/pertains/relates to somebody else (third party like assessee in this case). There must be some cogent material available with the Assessing Officer, which was unearthed during search, basis which he/she arrives at the satisfaction that does not relate to the searched person but to somebody else. Surmise and conjecture cannot take the place of 'satisfaction' and the same interpretation has been given by various courts. 19. In this context, we gainfully rely on the decision of the Hon'ble Apex Court in the case of CIT Vs Singhad Technical Education Society (397 ITR 344), wherein the Hon'ble Supreme Court upheld the decision of the Hon'ble Bombay High Court reported in 378 I that, unless and until the AO can establish document correlation between what has been seized from the 'Searched person' and - how the same is incriminating in nature qua each of the assessment years in question for which jurisdiction u/s. 153C is sought to be invoked for the 'other Person' - assessee qua the said assessment year would be without the satisfying the jurisdictional fact required to invoke section 153C o our attention in this regard to the following excerpts of the decision of the Hon'ble Supreme court in (supra), wherein their Lordships took note of the Hon'ble High Court's findings while confirming Tribunal's view, which is as ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 24 :: belongs/pertains/relates to somebody else (third party like assessee in this case). There must be some cogent material available with the Assessing Officer, which was unearthed during search, basis which he/she at the satisfaction that, the contents of the seized asset/document to the searched person but to somebody else. Surmise and conjecture cannot take the place of 'satisfaction' and the same interpretation has been given by various courts. In this context, we gainfully rely on the decision of the Hon'ble Apex CIT Vs Singhad Technical Education Society , wherein the Hon'ble Supreme Court upheld the decision of the Hon'ble Bombay High Court reported in 378 ITR 84 by observing that, unless and until the AO can establish document-wise (or asset wise) correlation between what has been seized from the 'Searched person' how the same is incriminating in nature qua each of the assessment r which jurisdiction u/s. 153C is sought to be invoked then the notice issued under section 153C to the assessee qua the said assessment year would be without the satisfying the jurisdictional fact required to invoke section 153C of the Act. We draw our attention in this regard to the following excerpts of the decision of the Hon'ble Supreme court in Sinhgad Technical Education Society's case , wherein their Lordships took note of the Hon'ble High Court's rming Tribunal's view, which is as under: /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat belongs/pertains/relates to somebody else (third party like assessee in this case). There must be some cogent material available with the Assessing Officer, which was unearthed during search, basis which he/she seized asset/document to the searched person but to somebody else. Surmise and conjecture cannot take the place of 'satisfaction' and the same In this context, we gainfully rely on the decision of the Hon'ble Apex CIT Vs Singhad Technical Education Society , wherein the Hon'ble Supreme Court upheld the decision TR 84 by observing wise (or asset wise) correlation between what has been seized from the 'Searched person' - how the same is incriminating in nature qua each of the assessment r which jurisdiction u/s. 153C is sought to be invoked then the notice issued under section 153C to the assessee qua the said assessment year would be without the satisfying f the Act. We draw our attention in this regard to the following excerpts of the decision of the Sinhgad Technical Education Society's case , wherein their Lordships took note of the Hon'ble High Court's under: -- \"6. The tribunal has found that incriminating material seized and stated to be pertaining to all six assessment years did not establish any co relation document words, the tribunal concluded that the present matter indicates that the issue of notice could be on the basis that there is specific incriminating information in possession of the Assessing Officer. It is in these circumstances that the tribunal found a the impugned order that the revenue's assertion that the Assessing Officer is empowered under the statute to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted and therefore the satisfaction which is recorded in the satisfaction note is enough, is erroneous. Therefore, the notice cannot be upheld and such stand of the revenue cannot be accepted. The reasons, th be found in paragraph 9 and 10 of the impugned order. If certain items pertain to assessment year 2004 assumed, that the documents seized or incriminating material giving information are specific and to all that they were concluded assessments. They could not have been disturbed. The documents in question are neither incriminating ones nor unaccounted transactions of the assessee. They also did not relate to the four assessment years. It is in these circumstances that the tribunal found that it will not be possible to uphold the stand of the revenue that overall approach in matters of concealment by the group assessee and all the discoveries of the search on Shri Navale and to be taken into account while forming the satisfaction. The satisfaction note was very closely examined and the reasons assigned by the Assessing Officer were found to be silent about the assessment year in which specific incrimina hidden information was discovered or seized by the revenue from the assessee. In the circumstances, the general satisfaction and as recorded in the note is not enough. The tribunal has found that with regard t cash and jewellery, the explanation of the assessee was that he had agricultural properties and derived agricultural income. That income was utilised to acquire jewellery that was belonging to him and his family. With regard to cash and stated to be reco granting admissions, we do not find that any inquiries were made. There is absolutely nothing to indicate as to in which educational courses, the education is imparted and institution granted to the technical courses merit obtained in XIIth standard HSC exam. If any fee structure is approved and cash component is therefore collected over and above the sanctioned fees are matters which ought to have been gone into and there cannot be a general or vague satisfaction as is relied upon. ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 25 :: \"6. The tribunal has found that incriminating material seized and stated to be pertaining to all six assessment years did not establish any co relation document-wise with the assessment year in question. In othe words, the tribunal concluded that the present matter indicates that the issue of notice could be on the basis that there is specific incriminating information in possession of the Assessing Officer. It is in these circumstances that the tribunal found and as indicated in paragraph 8 of the impugned order that the revenue's assertion that the Assessing Officer is empowered under the statute to assess or reassess the total income of six assessment years immediately preceding the assessment the previous year in which such search is conducted and therefore the satisfaction which is recorded in the satisfaction note is enough, is erroneous. Therefore, the notice cannot be upheld and such stand of the revenue cannot be accepted. The reasons, th be found in paragraph 9 and 10 of the impugned order. If certain items pertain to assessment year 2004-05 or thereafter then it cannot be assumed, that the documents seized or incriminating material giving information are specific and to all assessment years. The tribunal found that they were concluded assessments. They could not have been disturbed. The documents in question are neither incriminating ones nor unaccounted transactions of the assessee. They also did not relate to sment years. It is in these circumstances that the tribunal found that it will not be possible to uphold the stand of the revenue that overall approach in matters of concealment by the group assessee and all the discoveries of the search on Shri Navale and it concerns, will have to be taken into account while forming the satisfaction. The satisfaction note was very closely examined and the reasons assigned by the Assessing Officer were found to be silent about the assessment year in which specific incriminating information or unaccounted or undisclosed hidden information was discovered or seized by the revenue from the assessee. In the circumstances, the general satisfaction and as recorded in the note is not enough. The tribunal has found that with regard t cash and jewellery, the explanation of the assessee was that he had agricultural properties and derived agricultural income. That income was utilised to acquire jewellery that was belonging to him and his family. With regard to cash and stated to be recovered from the students for granting admissions, we do not find that any inquiries were made. There is absolutely nothing to indicate as to in which educational courses, the education is imparted and institution-wise. Whether the admissions are the technical courses merit-wise or on the basis of marks obtained in XIIth standard HSC exam. If any fee structure is approved and cash component is therefore collected over and above the sanctioned fees are matters which ought to have been gone into and there cannot be a general or vague satisfaction as is relied upon. /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat \"6. The tribunal has found that incriminating material seized and stated to be pertaining to all six assessment years did not establish any co- wise with the assessment year in question. In other words, the tribunal concluded that the present matter indicates that the issue of notice could be on the basis that there is specific incriminating information in possession of the Assessing Officer. It is in these nd as indicated in paragraph 8 of the impugned order that the revenue's assertion that the Assessing Officer is empowered under the statute to assess or reassess the total income of six assessment years immediately preceding the assessment the previous year in which such search is conducted and therefore the satisfaction which is recorded in the satisfaction note is enough, is erroneous. Therefore, the notice cannot be upheld and such stand of the revenue cannot be accepted. The reasons, therefor are to be found in paragraph 9 and 10 of the impugned order. If certain items 05 or thereafter then it cannot be assumed, that the documents seized or incriminating material giving assessment years. The tribunal found that they were concluded assessments. They could not have been disturbed. The documents in question are neither incriminating ones nor unaccounted transactions of the assessee. They also did not relate to sment years. It is in these circumstances that the tribunal found that it will not be possible to uphold the stand of the revenue that overall approach in matters of concealment by the group assessee and it concerns, will have to be taken into account while forming the satisfaction. The satisfaction note was very closely examined and the reasons assigned by the Assessing Officer were found to be silent about the assessment year in ting information or unaccounted or undisclosed hidden information was discovered or seized by the revenue from the assessee. In the circumstances, the general satisfaction and as recorded in the note is not enough. The tribunal has found that with regard to cash and jewellery, the explanation of the assessee was that he had agricultural properties and derived agricultural income. That income was utilised to acquire jewellery that was belonging to him and his family. vered from the students for granting admissions, we do not find that any inquiries were made. There is absolutely nothing to indicate as to in which educational courses, the wise. Whether the admissions are wise or on the basis of marks obtained in XIIth standard HSC exam. If any fee structure is approved and cash component is therefore collected over and above the sanctioned fees are matters which ought to have been gone into and there cannot be a general or vague satisfaction as is relied upon. 9. We are of the opinion that the tribunal's conclusion cannot be termed as perverse and given the above these appeals raises any substantial question of l accordingly dismissed. No costs.\" 20. And the aforesaid finding of Hon'ble High Court has been affirmed by the Hon'ble Supreme Court by observing as under: 18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertai Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co document-wise, with these four Assessment Years. Since this requirement under section 153C of the Act is essential fo under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the S was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004 the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior respondent, argued that notice in respect of Assessment Years 2000 and 2001-02 was even time barred. 19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same grou Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000 time barred. However, in necessary to enter into this controversy.\" (Emphasis supplied) 21. In the light of the above legal position, we now revert back to the facts of the present case. In order to test the validity of the jurisdict AO to legally usurp the jurisdiction u/s. 153C against a third party who ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 26 :: 9. We are of the opinion that the tribunal's conclusion cannot be termed as perverse and given the above-noted factual background. None of these appeals raises any substantial question of law. They are accordingly dismissed. No costs.\" And the aforesaid finding of Hon'ble High Court has been affirmed by the Hon'ble Supreme Court by observing as under: 18. The ITAT permitted this additional ground by giving a reason that it jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertai Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co wise, with these four Assessment Years. Since this requirement under section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom ussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000 02 was even time barred. 19. We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001 time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy.\" (Emphasis supplied) In the light of the above legal position, we now revert back to the facts of the present case. In order to test the validity of the jurisdict AO to legally usurp the jurisdiction u/s. 153C against a third party who /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 9. We are of the opinion that the tribunal's conclusion cannot be termed noted factual background. None of aw. They are And the aforesaid finding of Hon'ble High Court has been affirmed 18. The ITAT permitted this additional ground by giving a reason that it jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, wise, with these four Assessment Years. Since this r assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the atisfaction Note and the material which was disclosed therein was culled out and it showed that the same 05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom ussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 19. We, thus, find that the ITAT rightly permitted this additional ground nd on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that 01 and 2001-02 was view of our aforementioned findings, it is not necessary to enter into this controversy.\" (Emphasis supplied) In the light of the above legal position, we now revert back to the facts of the present case. In order to test the validity of the jurisdiction of AO to legally usurp the jurisdiction u/s. 153C against a third party who has not been searched, we have to ascertain whether Assessing Officer satisfied the condition-precedent before issue of notice u/s. 153C of the Act, for which we need to examin 22. It has to be kept in mind that of the satisfaction note jurisdiction, we have to examine the satisfaction recorded as it is. There are case laws which throws light in the context of examining the legal validity of Satisfaction recorded by the AO while re assessment u/s. 147 of the Act. It is settled law that reasons as recorded for reopening the reassessment are to be examined basis. Neither anything can be added to anything can be deleted from the reasons so recorded. The Hon'ble Bombay High Court in the case of Wadkar [2004] 137 Taxman 479/268 ITR 332 Lordships have, inter alia, held are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No addition can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons not recorded by him. He has to speak through the reasons.\" Their Lordships added that \" the reason recorded should be assessee guessing for reasons. Reasons provided the li conclusion and the evidence…..\" ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 27 :: has not been searched, we have to ascertain whether Assessing Officer precedent before issue of notice u/s. 153C of the Act, for which we need to examine the contents of the satisfaction note. It has to be kept in mind that, when the challenge is to the validity of the satisfaction note which, the AO has recorded to assume jurisdiction, we have to examine the satisfaction recorded as it is. There case laws which throws light in the context of examining the legal validity of Satisfaction recorded by the AO while re assessment u/s. 147 of the Act. It is settled law that reasons as recorded for reopening the reassessment are to be examined on a 'stand thing can be added to the reasons so recorded nor be deleted from the reasons so recorded. The Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. v. R.B. Wadkar [2004] 137 Taxman 479/268 ITR 332 Lordships have, inter alia, held \"it is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No addition can be made to those reasons. No llowed to be drawn on the basis of reasons not recorded by him. He has to speak through the reasons.\" Their Lordships added that \" the reason recorded should be self-explanatory and should not keep the assessee guessing for reasons. Reasons provided the link between the conclusion and the evidence…..\". Therefore, reasons are to be examined /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat has not been searched, we have to ascertain whether Assessing Officer precedent before issue of notice u/s. 153C of the e the contents of the satisfaction note. when the challenge is to the validity the AO has recorded to assume jurisdiction, we have to examine the satisfaction recorded as it is. There case laws which throws light in the context of examining the legal validity of Satisfaction recorded by the AO while re-opening the assessment u/s. 147 of the Act. It is settled law that reasons as recorded on a 'stand-alone' the reasons so recorded nor be deleted from the reasons so recorded. The Hon'ble Hindustan Lever Ltd. v. R.B. wherein their \"it is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No addition can be made to those reasons. No llowed to be drawn on the basis of reasons not recorded by him. He has to speak through the reasons.\" Their Lordships added that and should not keep the nk between the . Therefore, reasons are to be examined only on the basis of reasons as recorded by the AO. This analogy/ratio decidendi of the Hon'ble High court is applicable to the 'Satisfaction prepared by the AO whe third person (assessee in this case) against whom he/AO proposed to invoke the special provision and issue notice under section 153C of the Act. 23. In light of the above legal position, we now revert to involved in the present case. the satisfaction note was the seized from the premises of observed to have merely relied upon the obscure loose papers, and the statements of Balakrishnan Ramamoorthy these loose papers pertained to the assessee, in order to assume jurisdiction u/s 153C of the Act light of their statements, we find that, the conclusions drawn by the AO are not forthcoming from the documents and statements is not supported by any corroborative evide Pages 267, 276 to 279 contained rough noting’s or payee. Also, there were no sign or signature or acknowledgment by the assessee, or that, any abbreviation etc. was mentioned which would ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 28 :: only on the basis of reasons as recorded by the AO. This analogy/ratio decidendi of the Hon'ble High court is applicable to the 'Satisfaction prepared by the AO when he recorded his satisfaction note in respect of a third person (assessee in this case) against whom he/AO proposed to invoke the special provision and issue notice under section 153C of the In light of the above legal position, we now revert to involved in the present case. It is noted that, the foundational premise of the satisfaction note was the loose papers marked as ANN/NN/JR/LS/S seized from the premises of Shri Javvaji Ramanjenyulu merely relied upon the obscure noting’s loose papers, and the statements of Shri Javvaji Ramanjenyulu Balakrishnan Ramamoorthy to draw his conclusion that the these loose papers pertained to the assessee, in order to assume isdiction u/s 153C of the Act. Having perused these loose light of their statements, we find that, the conclusions drawn by the AO are not forthcoming from the documents and statements,andt is not supported by any corroborative evidence. It is observed that, the 276 to 279 of document ID marked ANN/NN/JR/LS/S noting’s of figures and that there was no details of payer or payee. Also, there were no sign or signature or acknowledgment by the any abbreviation etc. was mentioned which would /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat only on the basis of reasons as recorded by the AO. This analogy/ratio decidendi of the Hon'ble High court is applicable to the 'Satisfaction-Note' n he recorded his satisfaction note in respect of a third person (assessee in this case) against whom he/AO proposed to invoke the special provision and issue notice under section 153C of the In light of the above legal position, we now revert to the facts It is noted that, the foundational premise of ANN/NN/JR/LS/S Shri Javvaji Ramanjenyulu. The AO is noting’s made in the Shri Javvaji Ramanjenyulu&Shri to draw his conclusion that the noting’s on these loose papers pertained to the assessee, in order to assume Having perused these loose noting’s in light of their statements, we find that, the conclusions drawn by the AO ,andthe analysis It is observed that, the of document ID marked ANN/NN/JR/LS/S of figures and that there was no details of payer or payee. Also, there were no sign or signature or acknowledgment by the any abbreviation etc. was mentioned which would suggest the noting’s to be remotely relating to the assessee. More particularly, we note that, the person ( whose possession and control these loose papers were found had initia explained these noting’s Co. and had also undertaken to correlate the accounts and that in case of any discrepancy, he would offer the same to tax as his own undisclosed income. presumption laid down in Section 132(4A) of the Act that the documents found in the course of search shall be presumed to belong to the searched person, was reinforced by the searched person ( Ramanjenyulu, in this case) in his deposition recorded u/s 132(4) of the Act dated 21.02.2019. At the cost of repetition, the relevant excerpts of the searched person from whose possession these loose sheets were found is reproduced hereunder: “ Q. No. 24 I am showing you loo pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing Principal along with interest workings and also certa also certain amounts shown as paid. Kindly go through the same and explain the transactions. Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sale of shares of M/s Bhavya Constructions co between the partners. I am unable to recognize the handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of accounts of all shareholders. If the same cannot b undisclosed income if I am not able to explain the same.” 24. We also note that, later on, statement recorded u/s 131 of the Act dated 05.07.2019 had although ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 29 :: to be remotely relating to the assessee. More particularly, we note that, the person (Shri Javvaji Ramanjenyulu whose possession and control these loose papers were found had initia noting’s to be relating to one M/s Bhavya Construction Co. and had also undertaken to correlate the noting’s with their books of accounts and that in case of any discrepancy, he would offer the same to tax as his own undisclosed income. We therefore note that, the presumption laid down in Section 132(4A) of the Act that the documents found in the course of search shall be presumed to belong to the searched person, was reinforced by the searched person ( case) in his deposition recorded u/s 132(4) of the . At the cost of repetition, the relevant excerpts of the searched person from whose possession these loose sheets were hereunder: - “ Q. No. 24 I am showing you loose sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing Principal along with interest workings and also certain amounts and also certain amounts shown as paid. Kindly go through the same and explain the Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sale of shares of M/s Bhavya Constructions co between the partners. I am unable to recognize the handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of accounts of all shareholders. If the same cannot be explained, I shall offer the amounts mentioned herein as undisclosed income if I am not able to explain the same.” We also note that, later on, Shri Javvaji Ramanjenyulu statement recorded u/s 131 of the Act dated 05.07.2019 had although /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat to be remotely relating to the assessee. More Shri Javvaji Ramanjenyulu) from whose possession and control these loose papers were found had initially to be relating to one M/s Bhavya Construction with their books of accounts and that in case of any discrepancy, he would offer the same to We therefore note that, the presumption laid down in Section 132(4A) of the Act that the documents found in the course of search shall be presumed to belong to the searched person, was reinforced by the searched person (Shri Javvaji case) in his deposition recorded u/s 132(4) of the . At the cost of repetition, the relevant excerpts of the searched person from whose possession these loose sheets were se sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts in amounts and also certain amounts shown as paid. Kindly go through the same and explain the Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sale of shares of M/s Bhavya Constructions company between the partners. I am unable to recognize the handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of accounts of all shareholders. e explained, I shall offer the amounts mentioned herein as Shri Javvaji Ramanjenyulu in his statement recorded u/s 131 of the Act dated 05.07.2019 had although retracted his original statement and submitted that, he had under a mistaken impression presumed these Construction Co., but, at the same time, he clearly pleaded ignorance of the contents of these loose sheets since they w handwriting and therefore he expressed his inability to explain the same. The searched person, Shri Javvaji Ramanjenyulu rejected the ownership of these loose papers by stating that they do not pertain to him or his related business entities, which we find was accepted by the Revenue at face value. The relevant portion of his statement, is again being reproduced “The loose sheets stated in the above paragraph having placed before me once again for my comme character of these loose sheets is such that they are written by an unknown person and there are no details of Payer or payee and there are no details to whom it pertains to and finally these does not provide any guidance or inference that is meaningful from the examination of the same. While at the time of search the pressure under which I was giving the statement though I could not recognize the hand writing as well as the underline numbers I thought it could be r transactions of M/s. Bhavya Constructions which I now conclude that my inference is incorrect and I completely deny the answer that was provided at the time of search and the answer that is provided now shall replace the same. Further it may be materials have been seized pertaining to various business entities where I am either a partner or a director or has some business interest. review of all the material together with sheets mentioned i question does not even remotely corroborate to any kind of underlying transaction that can be assumed to have been undertaken by me or my family members. In other words, these loose sheets referred in this question remain an unrelated and irrelevant to my business or personal transactions. Thus the sheets should not be reckoned to have any relevance to me. ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 30 :: retracted his original statement and submitted that, he had under a mistaken impression presumed these noting’s to relate to M/s Bhavya Construction Co., but, at the same time, he clearly pleaded ignorance of the contents of these loose sheets since they were not in his own handwriting and therefore he expressed his inability to explain the same. Shri Javvaji Ramanjenyulu is noted to have simply rejected the ownership of these loose papers by stating that they do not is related business entities, which we find was accepted by the Revenue at face value. The relevant portion of his statement, is again being reproduced below: - “The loose sheets stated in the above paragraph having placed before me once again for my comments a fresh. In this regard the essential character of these loose sheets is such that they are written by an unknown person and there are no details of Payer or payee and there are no details to whom it pertains to and finally these does not provide uidance or inference that is meaningful from the examination of the same. While at the time of search the pressure under which I was giving the statement though I could not recognize the hand writing as well as the underline numbers I thought it could be r transactions of M/s. Bhavya Constructions which I now conclude that my inference is incorrect and I completely deny the answer that was provided at the time of search and the answer that is provided now shall replace the same. Further it may be appreciated that during the course of search various materials have been seized pertaining to various business entities where I am either a partner or a director or has some business interest. review of all the material together with sheets mentioned i question does not even remotely corroborate to any kind of underlying transaction that can be assumed to have been undertaken by me or my family members. In other words, these loose sheets referred in this question remain an unrelated and to my business or personal transactions. Thus the sheets should not be reckoned to have any relevance to me. (emphasis supplied) /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat retracted his original statement and submitted that, he had under a to relate to M/s Bhavya Construction Co., but, at the same time, he clearly pleaded ignorance of ere not in his own handwriting and therefore he expressed his inability to explain the same. is noted to have simply rejected the ownership of these loose papers by stating that they do not is related business entities, which we find was accepted by the Revenue at face value. The relevant portion of his statement, is “The loose sheets stated in the above paragraph having placed before nts a fresh. In this regard the essential character of these loose sheets is such that they are written by an unknown person and there are no details of Payer or payee and there are no details to whom it pertains to and finally these does not provide uidance or inference that is meaningful from the examination of the same. While at the time of search the pressure under which I was giving the statement though I could not recognize the hand writing as well as the underline numbers I thought it could be relating to transactions of M/s. Bhavya Constructions which I now conclude that my inference is incorrect and I completely deny the answer that was provided at the time of search and the answer that is provided now shall appreciated that during the course of search various materials have been seized pertaining to various business entities where I am either a partner or a director or has some business interest. The review of all the material together with sheets mentioned in this question does not even remotely corroborate to any kind of underlying transaction that can be assumed to have been undertaken by me or my family members. In other words, these loose sheets referred in this question remain an unrelated and to my business or personal transactions. Thus the sheets should not be reckoned to have any relevance to me.” (emphasis supplied) 25. From the above narrated facts, it is therefore observed that, not only were the noting’s on loose sheets obscure in as mu deduced whether they are receipt or payments whether they are in relation to any particular transaction payer or payee. Also, the searched person from whose possession these loose sheets were found was not able to explain the contents of the same properly. The decisive observation from the above narrated facts is that, neither the loose sheets nor the statement of searched person in any manner incriminated the assessee or was there any suggestion noting’s therein pertained or related to the assessee. On these facts, we find merit in the Ld. CIT(A)’s finding that, the satisfaction by the AO on the basis of these loose papers and statement of Javvaji Ramanjenyulu suffered no document-wise correlation between what has been seized from the searched person and how was assessee. We thus countenance the following findings of the Ld. CIT(A): “6.5.2 The Appellant upon receipt of the copy of satisfactory note and the seized material relied upon by the AO to initiate proceedings against the Appellant raised additional grounds agitating upon the issue of defective satisfaction recorded. The issue rais been carefully examined. The AO in the satisfaction note recorded before initiating proceedings u/s 153C of the Act has relied upon the noting contained in the loose sheet seized vide ANN/JR/LS/S dated 23.02.2019 seized from a t sheet was seized from the residence of Shri Javvaji Ramanjenyulu did not reveal to have any nexus with the Appellant. Further as brought out by the Appellant in the written submission about the statement recorded from Shri Javvaji Ramanjenyulu on the date of search u/s ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 31 :: From the above narrated facts, it is therefore observed that, not on loose sheets obscure in as much as it deduced whether they are receipt or payments, nor it can be concluded whether they are in relation to any particular transaction or, who were the payer or payee. Also, the searched person from whose possession these nd was not able to explain the contents of the same The decisive observation from the above narrated facts is that, neither the loose sheets nor the statement of searched person in any manner incriminated the assessee or was there any suggestion therein pertained or related to the assessee. On these facts, we find merit in the Ld. CIT(A)’s finding that, the satisfaction by the AO on the basis of these loose papers and statement of suffered from fundamental infirmity, as there was wise correlation between what has been seized from the and how was the same incriminating in nature assessee. We thus countenance the following findings of the Ld. CIT(A): The Appellant upon receipt of the copy of satisfactory note and the seized material relied upon by the AO to initiate proceedings against the Appellant raised additional grounds agitating upon the issue of defective satisfaction recorded. The issue raised by the Appellant has been carefully examined. The AO in the satisfaction note recorded before initiating proceedings u/s 153C of the Act has relied upon the noting contained in the loose sheet seized vide ANN/JR/LS/S dated 23.02.2019 seized from a third party premise. The said seized loose sheet was seized from the residence of Shri Javvaji Ramanjenyulu did not reveal to have any nexus with the Appellant. Further as brought out by the Appellant in the written submission about the statement ed from Shri Javvaji Ramanjenyulu on the date of search u/s /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat From the above narrated facts, it is therefore observed that, not ch as it cannot be nor it can be concluded or, who were the payer or payee. Also, the searched person from whose possession these nd was not able to explain the contents of the same The decisive observation from the above narrated facts is that, neither the loose sheets nor the statement of searched person in any manner incriminated the assessee or was there any suggestion that the therein pertained or related to the assessee. On these facts, we find merit in the Ld. CIT(A)’s finding that, the satisfaction-note recorded by the AO on the basis of these loose papers and statement of Shri from fundamental infirmity, as there was wise correlation between what has been seized from the the same incriminating in nature qua the assessee. We thus countenance the following findings of the Ld. CIT(A):- The Appellant upon receipt of the copy of satisfactory note and the seized material relied upon by the AO to initiate proceedings against the Appellant raised additional grounds agitating upon the issue ed by the Appellant has been carefully examined. The AO in the satisfaction note recorded before initiating proceedings u/s 153C of the Act has relied upon the noting contained in the loose sheet seized vide ANN/JR/LS/S dated hird party premise. The said seized loose sheet was seized from the residence of Shri Javvaji Ramanjenyulu did not reveal to have any nexus with the Appellant. Further as brought out by the Appellant in the written submission about the statement ed from Shri Javvaji Ramanjenyulu on the date of search u/s 132(4) on 21.02.2019 to 23.02.2019 wherein the Authorised officer sought his explanation about the loose sheet seized vide ANN/NN/JR/LS/S in pages 266 admitted as under : “ Q. No. 24 I am showing you loose sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing Principal along with interest workings and also certain amounts and also certain amounts shown as paid. Kindly go through the same and explain the transactions. Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sa Bhavya Constructions company between the partners. I am unable to recognize the handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of account shareholders. If the same cannot be explained, I shall offer the amounts mentioned herein as undisclosed income if I am not able to explain the same.” 6.5.3 From the above deposition it is very clear that the seized material relied upon by the AO defective in nature. It is a settled law that for initiating proceedings u/s.153C, recording of satisfaction note is mandatory and in the absence of the same, the entire proceedings would be void ab was held by the Hon’ble Supreme Court in the case of CIT vs. Calcutta Knitwears [2014] 362 ITR 673 (SC). Wherein the Hon’ble Apex Court had at paragraph 44 of its order held that; “44. In the result, we hold that for the purpose of Section 158BD of the Act a by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other person.” 26. The Ld. CIT, DR before us laid much emphasis on the statement of Shri Balakrishnan Ramamoorthy statement would demonstrate correlation between the the loose sheets with the satisfaction drawn by the A ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 32 :: 132(4) on 21.02.2019 to 23.02.2019 wherein the Authorised officer sought his explanation about the loose sheet seized vide ANN/NN/JR/LS/S in pages 266-279, wherein he has categorically under :- “ Q. No. 24 I am showing you loose sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing along with interest workings and also certain amounts and also certain amounts shown as paid. Kindly go through the same and explain the transactions. Ans. I have gone through the said documents carefully. This is regarding the discussions regarding the sale of shares of M/s Bhavya Constructions company between the partners. I am unable to recognize the handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of account shareholders. If the same cannot be explained, I shall offer the amounts mentioned herein as undisclosed income if I am not able to explain the same.” From the above deposition it is very clear that the seized material relied upon by the AO in recording the satisfaction note is defective in nature. It is a settled law that for initiating proceedings u/s.153C, recording of satisfaction note is mandatory and in the absence of the same, the entire proceedings would be void ab-initio. The same s held by the Hon’ble Supreme Court in the case of CIT vs. Calcutta Knitwears [2014] 362 ITR 673 (SC). Wherein the Hon’ble Apex Court had at paragraph 44 of its order held that; “44. In the result, we hold that for the purpose of Section 158BD of the Act a satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other The Ld. CIT, DR before us laid much emphasis on the statement of Shri Balakrishnan Ramamoorthy and has contended that reading of his statement would demonstrate correlation between the noting’s the loose sheets with the satisfaction drawn by the AO u/s 153C of the /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 132(4) on 21.02.2019 to 23.02.2019 wherein the Authorised officer sought his explanation about the loose sheet seized vide 279, wherein he has categorically “ Q. No. 24 I am showing you loose sheet documents vide ANN/NN/JR/LS/S in pg nos. 276 to 279 seized from your residential premises during the course of search u/s 132 of the Income Tax Act, 1961 containing certain amounts representing along with interest workings and also certain amounts and also certain amounts shown as paid. Kindly go through the Ans. I have gone through the said documents carefully. This is le of shares of M/s Bhavya Constructions company between the partners. I am unable to recognize the handwriting and I am not aware who has written down the same. These are calculations that have been made which can be corroborated from the books of accounts of all shareholders. If the same cannot be explained, I shall offer the amounts mentioned herein as undisclosed income if I am not able From the above deposition it is very clear that the seized in recording the satisfaction note is defective in nature. It is a settled law that for initiating proceedings u/s.153C, recording of satisfaction note is mandatory and in the absence initio. The same s held by the Hon’ble Supreme Court in the case of CIT vs. Calcutta Knitwears [2014] 362 ITR 673 (SC). Wherein the Hon’ble Apex Court “44. In the result, we hold that for the purpose of Section 158BD satisfaction note is sine qua non and must be prepared by the assessing officer before he transmits the records to the other assessing officer who has jurisdiction over such other The Ld. CIT, DR before us laid much emphasis on the statement of and has contended that reading of his noting’s found in O u/s 153C of the Act. Accordingly, we find that, the case of the Revenue hinges solely on the statement of Shri Balakrishnan Ramamoorthy 08.07.2019. Before examining his statement, it is relevant to keep in mind the contemporaneous fact which assumption is being sought to be assumed by the AO u/s 153C of the Act were not found from the possession or control of Balakrishnan Ramamoorthy As noted earlier, on the same date, on which was searched, Shri Balakrishnan Ramamoorthy residential premises. In his statement, he had made reference to a certain settlement, to which, according to him, the assessee w and towards which he claimed that the assessee had paid cash of Rs.26 crores. The Ld. AR has rightly pointed out that the Q No. 26 to which, Balakrishnan Ramamoorthy him with reference to (Pages 267, 276 to 279). in his answer to Q No.7 Ramamoorthy had divulged further details regarding this settlement giving specific dates and amounts along with names of several persons involved therein, but he was unable to produce any proof or evidence to back his allegations against the persons named by him. We again take note of the fact that, even this answer was ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 33 :: Act. Accordingly, we find that, the case of the Revenue hinges solely on Shri Balakrishnan Ramamoorthy dated 22.02.2019 & 08.07.2019. Before examining his statement, it is relevant to keep in mind the contemporaneous fact that, these loose papers, on the basis of which assumption is being sought to be assumed by the AO u/s 153C of the Act were not found from the possession or control of Balakrishnan Ramamoorthy in the course of search conducted upon him. ier, on the same date, on which Shri Javvaji Ramanjenyulu Shri Balakrishnan Ramamoorthy was also searched at his residential premises. In his statement, he had made reference to a certain settlement, to which, according to him, the assessee was also a party to, and towards which he claimed that the assessee had paid cash of Rs.26 crores. The Ld. AR has rightly pointed out that the Q No. 26 to which, Balakrishnan Ramamoorthy gave the foregoing answer was not put up to him with reference to the loose papers ID marked ANN/NN/JR/LS/S 276 to 279). It is also observed that, in the later statement, in his answer to Q No.7 (already reproduced earlier), Shri Balakrishnan had divulged further details regarding this settlement giving specific dates and amounts along with names of several persons involved therein, but he was unable to produce any proof or evidence to back his allegations against the persons named by him. We again take note of the fact that, even this answer was never given in relation to /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat Act. Accordingly, we find that, the case of the Revenue hinges solely on dated 22.02.2019 & 08.07.2019. Before examining his statement, it is relevant to keep in that, these loose papers, on the basis of which assumption is being sought to be assumed by the AO u/s 153C of the Act were not found from the possession or control of Shri in the course of search conducted upon him. Shri Javvaji Ramanjenyulu was also searched at his residential premises. In his statement, he had made reference to a certain as also a party to, and towards which he claimed that the assessee had paid cash of Rs.26 crores. The Ld. AR has rightly pointed out that the Q No. 26 to which, Shri gave the foregoing answer was not put up to ANN/NN/JR/LS/S It is also observed that, in the later statement, Shri Balakrishnan had divulged further details regarding this settlement giving specific dates and amounts along with names of several persons involved therein, but he was unable to produce any proof or evidence to back his allegations against the persons named by him. We again take never given in relation to loose papers ID marked thus find ourselves in agreement with the Ld. AR that, it is not comprehensible as to how were these answers given Ramamoorthy taken as a basis t material from the possession and control of Shri 27. Rather we find that it was the authorized officer who had undertaken permutations and combinations to correlate the figures mentioned by Shri Balakrishnan Ramamoorthy loose noting’s found from the premises of Shri thereafter himself inferred that, these which we find to be far cogent basis and lacking any corroborative material to back the same. According to us therefore, even the statement of Ramamoorthy did not carry any evidentiary value to correlate the found in loose sheets ID marked ANN/NN to assume jurisdiction u/s 153C of the Act. Moreover, the statements of Shri Balakrishnan Ramamoorthy reasons which we have discussed in detail (infra), and hence, the AO was unjustified in relying on such self presumptuous inferences qua the seized material. ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 34 :: loose papers ID marked ANN/NN/JR/LS/S (Pages 267, 276 to 279). thus find ourselves in agreement with the Ld. AR that, it is not comprehensible as to how were these answers given Shri Balakrishnan taken as a basis to draw satisfaction qua the seized material from the possession and control of Shri Javvaji Ramanjenyulu Rather we find that it was the authorized officer who had undertaken permutations and combinations to correlate the figures akrishnan Ramamoorthy in his statements with the found from the premises of Shri Javvaji Ramanjenyulu thereafter himself inferred that, these noting’s pertained to the assessee, which we find to be far-fetched based on pure guesswork hav cogent basis and lacking any corroborative material to back the same. According to us therefore, even the statement of Shri Balakrishnan did not carry any evidentiary value to correlate the found in loose sheets ID marked ANN/NN/JR/LS/S qua the assessee so as to assume jurisdiction u/s 153C of the Act. Moreover, the statements of Shri Balakrishnan Ramamoorthy was evidently biased & unreliable, for reasons which we have discussed in detail (infra), and hence, the AO was d in relying on such self-serving statement to draw his presumptuous inferences qua the seized material. /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat 276 to 279). We thus find ourselves in agreement with the Ld. AR that, it is not Shri Balakrishnan o draw satisfaction qua the seized Javvaji Ramanjenyulu. Rather we find that it was the authorized officer who had undertaken permutations and combinations to correlate the figures in his statements with the Javvaji Ramanjenyulu and pertained to the assessee, fetched based on pure guesswork having no cogent basis and lacking any corroborative material to back the same. Shri Balakrishnan did not carry any evidentiary value to correlate the noting’s /JR/LS/S qua the assessee so as to assume jurisdiction u/s 153C of the Act. Moreover, the statements of was evidently biased & unreliable, for reasons which we have discussed in detail (infra), and hence, the AO was serving statement to draw his 28. It is reiterated at this juncture that, to assume jurisdiction u/s 153C of the Act, the AO is required to demonstrate that, or ‘documents’, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to a person searched. Having regard to our above discussions, we are of considered view, that the ‘loose papers’ fo Javvaji Ramanjenyulu (searched person) did not pertain to the assessee nor did the information contained therein relate to the assessee. Even the searched person, as noted above, had never stated so in his depositions dated 21.02.2019& 05.07.2019. Further, the statement of Shri Balakrishnan Ramamoorthy was neither found to be in possession or control of the seized material impugned before us and even his depositions were not with refer the impugned seized material. According to us therefore, no prudent person properly instructed in law could have inferred marked ID ANN/NN/JR/LS/Sto relate or pertain to the assessee. Therefore, the assertion of AO in the 'Satis incriminating material qua the assessee any legal basis/evidence/material, in this respect in the satisfaction note erroneous. ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 35 :: It is reiterated at this juncture that, to assume jurisdiction u/s 153C of the Act, the AO is required to demonstrate that, any ‘books of account’ , seized or requisitioned, pertains or pertain to, or any information contained therein, relates to another person, apart from the person searched. Having regard to our above discussions, we are of considered view, that the ‘loose papers’ found from the premises of Shri (searched person) did not pertain to the assessee nor did the information contained therein relate to the assessee. Even the person, as noted above, had never stated so in his depositions & 05.07.2019. Further, the statement of Shri Balakrishnan Ramamoorthy, who though was searched at the same time, was neither found to be in possession or control of the seized material impugned before us and even his depositions were not with refer the impugned seized material. According to us therefore, no prudent person properly instructed in law could have inferred the seized material ANN/NN/JR/LS/Sto relate or pertain to the assessee. he assertion of AO in the 'Satisfaction Note' that these are incriminating material qua the assessee qua AY 2016-17,does not have any legal basis/evidence/material, and therefore the finding of fact by AO in this respect in the satisfaction note, is held to be /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat It is reiterated at this juncture that, to assume jurisdiction u/s 153C ‘books of account’ , seized or requisitioned, pertains or pertain to, or any , apart from the person searched. Having regard to our above discussions, we are of und from the premises of Shri (searched person) did not pertain to the assessee nor did the information contained therein relate to the assessee. Even the person, as noted above, had never stated so in his depositions & 05.07.2019. Further, the statement of Shri , who though was searched at the same time, was neither found to be in possession or control of the seized material impugned before us and even his depositions were not with reference to the impugned seized material. According to us therefore, no prudent the seized material ANN/NN/JR/LS/Sto relate or pertain to the assessee. faction Note' that these are ,does not have the finding of fact by AO held to be perverse and 29. Overall therefore, since pertaining or relating to during the search conducted on Javvaji Ramanjenyulu, the satisfaction note prepared by satisfy the requirement of law as stipulated u/s. 153C of the Act and since the legal requirement has not been met in the \"satisfaction note\" recorded by the AO, the very assumption of the jurisdiction for AY 201 17 is held to be bad in t Court in the case of CIT v. Sinhgad Technical Education Society (supra) and, therefore, quashing the order impugned before us 30. We also find merit in the alternate contention of the Ld. AR for the assessee that, the impugned satisfaction note was of ‘loose sheets’, which does not come under the ambit and scope of 'books of entry' or as 'evidence' this, we have carefully examined the law declared by the Hon'ble Apex Court with regard to acceptance of loose sheets Shukla [1998] 3 SCC 410 judgment, it was observed \"16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected referred to in the provisions of the Act relating to the relevancy of facts; ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 36 :: Overall therefore, since there was no incriminating material pertaining or relating to the assessee which has been unearthed/seized during the search conducted on 21.02.2019 from the premises of , the satisfaction note prepared by the AO does not satisfy the requirement of law as stipulated u/s. 153C of the Act and since the legal requirement has not been met in the \"satisfaction note\" recorded by the AO, the very assumption of the jurisdiction for AY 201 bad in the eyes of law as held by the Hon'ble Supreme CIT v. Sinhgad Technical Education Society and, therefore, we uphold the Ld. CIT(A)’s order on this aspect quashing the order impugned before us. We also find merit in the alternate contention of the Ld. AR for the assessee that, the impugned satisfaction note was made out on the basis , which does not come under the ambit and scope of 'evidence' under the Indian Evidence Act have carefully examined the law declared by the Hon'ble Apex Court with regard to acceptance of loose sheets in the case of [1998] 3 SCC 410, wherein at paragraphs 16 to 18 of the observed as under: \"16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant to another when it is connected with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat there was no incriminating material the assessee which has been unearthed/seized from the premises of Shri the AO does not satisfy the requirement of law as stipulated u/s. 153C of the Act and since the legal requirement has not been met in the \"satisfaction note\" recorded by the AO, the very assumption of the jurisdiction for AY 2016- he eyes of law as held by the Hon'ble Supreme CIT v. Sinhgad Technical Education Society we uphold the Ld. CIT(A)’s order on this aspect We also find merit in the alternate contention of the Ld. AR for the made out on the basis , which does not come under the ambit and scope of ian Evidence Act, 1872. For have carefully examined the law declared by the Hon'ble Apex n the case of V.C. at paragraphs 16 to 18 of the \"16. To appreciate the contentions raised before us by the learned counsel for the parties it will be necessary at this stage to refer to the material provisions of the Act. Section 3 declares that a fact a relevant with the other in any of the ways referred to in the provisions of the Act relating to the relevancy of facts; and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides that evidence may be given in any suit or proceeding of the existence or non-existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as under:- \"34. Entries in books of account wh of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any person with liability.\" 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of busine also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value f with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this probative value need be assessed. 18. \"Book\" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. L termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have placed reliance, the Court observed: collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sen put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book…I think the term \"book\" in S. 34 aforesaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for t I have no hesitation in holding that unbound sheets of paper in ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 37 :: and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides evidence may be given in any suit or proceeding of the existence or existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as \"34. Entries in books of account when relevant - Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any ity.\" 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement ein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. \"Book\" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have ce, the Court observed:- \" In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to the moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book…I think the term \"book\" in S. esaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say what is not a book for the purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat and those provisions are to be found in Section 6 to 55 appearing in Chapter II. Section 5, with which Chapter II opens, expressly provides evidence may be given in any suit or proceeding of the existence or existence of every fact in issue and the facts declared relevant in the aforesaid section, and of no others. Section 34 of the Act reads as Entries in book of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire but such statements shall not alone be sufficient evidence to charge any 17. From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been ss. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement ein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part or charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which we are concerned, fulfil the requirements of the above section so as to be admissible in question is answered in the affirmative then only its 18. \"Book\" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to oose sheets or scraps of paper cannot be termed as 'book' for they can be easily detached and replaced. In dealing with the work 'book' appearing in Section 34 in Mukundram vs. Dayaram [AIR 1914 Nagpur 44], a decision on which both sides have \" In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind se of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book…I think the term \"book\" in S. esaid may properly' be taken to signify, ordinarily, a collection of sheets of paper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is he purposes of S. 34, and I have no hesitation in holding that unbound sheets of paper in whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S.34.\" 31. The aforesaid observations are noted to be reasoning and we are in full agreement with it. Applying the above tests, it must be held that the loose sheets 267, 276 to 279 cannot be regarded as seized in course of search. We also gainfully refer to the decision of t Hon'ble Supreme Court in the case of Society) Vs Union of India (394 ITR 220) to 282 of the judgment, \"278. With respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of \"books of accounts\" and has held that such entries in loose papers/sheets are irrelevant and not admissible under s where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of entries in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that even then independent trustworthiness of those entries which is a requirement to fasten the liability. 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The following extract being relevant is quoted herein below: (SCC pp.423 27, paras 14 and 20) \"14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under section following words: \"70. ….an account presupposes the existence of two ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 38 :: whatever quantity, though filled up with one continuous account, are not a book of account within the purview of S.34.\" observations are noted to bein accordance with good reasoning and we are in full agreement with it. Applying the above tests, it must be held that the loose sheets ID marked ANN/NN/JR/LS/S 267, 276 to 279 cannot be regarded as ‘books of accounts’ of search. We also gainfully refer to the decision of t Hon'ble Supreme Court in the case of Common Cause (A Registered Society) Vs Union of India (394 ITR 220)wherein at paragraphs 278 to 282 of the judgment, it has been observed as under: respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by same is relevant for the purpose of decision of this case also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of \"books of accounts\" and has held that such entries in loose papers/sheets are irrelevant and not admissible under section 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The extract being relevant is quoted herein below: (SCC pp.423 27, paras 14 and 20) \"14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under section following words: \"70. ….an account presupposes the existence of two /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat whatever quantity, though filled up with one continuous account, are not ordance with good reasoning and we are in full agreement with it. Applying the above tests, ANN/NN/JR/LS/S Pages ‘books of accounts’ or ‘documents’ of search. We also gainfully refer to the decision of the Common Cause (A Registered at paragraphs 278 respect to the kind of materials which have been placed on record, this Court in V.C. Shukla case has dealt with the matter though at the stage of discharge when investigation had been completed by also. This court has considered the entries in Jain Hawala Diaries, note books and file containing loose sheets of papers not in the form of \"books of accounts\" and has held that such entries in loose papers/sheets are irrelevant and ection 34 of the Evidence Act, and that only where the entries are made in the books of accounts regularly kept, depending on the nature of occupation, that those are admissible. 279. It has further been laid down in V.C. Shukla case as to value of in the books of account, that such statements shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the 280. This court has further laid down in V.C. Shukla that meaning of account book would be spiral note book/pad but not loose sheets. The extract being relevant is quoted herein below: (SCC pp.423- 27, paras 14 and 20) \"14. In setting aside the order of the trial court, the High Court accepted the contention of the respondents that the documents were not admissible in evidence under section 34 with the following words: \"70. ….an account presupposes the existence of two persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. The credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the said diaries were not being maintained on day of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were m do not find a mention in full. they have been shown in abreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to. counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the aforesaid section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, i 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entrie persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for argument's sake that the above books were books of account relating to a business still they would not be admissible under section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contempor at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meaning 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) \"37. In Beni v. Bisan Dayal [AIR 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must b the transaction to which the entries relate an din absence of such evidence no relief can be given to the party who relies upon such entries ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 39 :: persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the entries arising out of a contract. They do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the re not being maintained on day-to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were m do not find a mention in full. they have been shown in abreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what they stand for and whom they refer to.\" 20. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a person for his own benefit. According to Mr. Sibal, in business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the contrary, only contained entries of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for ake that the above books were books of account relating to a business still they would not be admissible under section 34 as they were not regularly kept. It was urged by him that the words 'regularly kept' mean that the entries in the books were contemporaneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon the dictionary meanings of the words 'account' and 'regularly kept'. 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) \"37. In Beni v. Bisan Dayal [AIR 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate an din absence of such evidence no relief can be given to the party who relies upon such entries /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat persons such as a seller and a purchaser, creditor and debtor. Admittedly, the alleged diaries in the present case are not records of the y do not contain the debts and credits. They can at the most be described as a memorandum kept by a person for his own benefit which will enable him to look into the same whenever the need arised to do for his future purpose. Admittedly the to day basis in he course of business. There is no mention of the dates on which the alleged payment were made. In fact the entries there in are on monthly basis. Even the names of the persons whom the alleged payments were made do not find a mention in full. they have been shown in abreviated form. Only certain 'letters' have been written against their names which are within the knowledge of only the scribe of the said diaries as to what \" 20. Mr. Sibal, the learned counsel for the Jains, did not dispute that the spiral note books and the small pads are 'books' within the meaning of Section 34. He, however, strongly disputed the admissibility of those books in evidence under the section on the ground that they were neither books of account nor they were regularly kept in the course of business. he submitted that at best it could be said that those books were memoranda kept by a n business parlance 'account' means a formal statement of money transactions between parties arising out of contractual or fiduciary relationship. Since the books in question did not reflect any such relationship and, on the s of monies received from one set of persons and payment thereof to another set of persons it could not be said, by any stretch of imagination that they were books of account, argued Mr. Sibal. He next contended that even if it was assumed for ake that the above books were books of account relating to a business still they would not be admissible under section 34 as they were not regularly kept. It was urged by him that the words 'regularly aneously made at the time the transactions took place but a cursory glance of the books would show that the entries were made therein long after the purported transactions took place. In support of his contentions he also relied upon s of the words 'account' and 'regularly kept'. 281. With respect to evidentiary value of regular account book, this Court has laid down in V.C. Shukla, thus: (SCC p.433, para 37) \"37. In Beni v. Bisan Dayal [AIR 1925 Nagpur 445] it was observed tat entries in book s of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books e independent evidence of the transaction to which the entries relate an din absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha [ A. I. R. 1953 Pepsu 113] having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that suc evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumben upon the person relying upon those entries to prove that the were in accordance with facts. 282. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under section 34 so as to con mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court.\" 32. From the above, i that a sheet of paper containing shown to form part of the books of accounts regularly maintained by the searched assessee or his business entities, material evidence. Following the law declared by the Hon'ble Apex Court, we are of the view that the notice dated 25.01.2021 issued by the AO u/s 153C of the Act for the relevant year was bad in law. 33. We now come to the grounds raised by the Revenue challenging the Ld. CIT(A)’s order for deleting the impugned addition on merits. As noted above, the addition made by the AO was based on the loose papers ID marked ANN/NN/JR/LS/S and statements of Shri Javvaji ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 40 :: to support his claim against another. In Hira Lal v. Ram Rakha [ A. I. R. 1953 Pepsu 113] the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumben upon the person relying upon those entries to prove that the were in accordance with facts. 282. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by From the above, it is established in law by the Hon'ble Apex Court that a sheet of paper containing rough scribblings in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, cannot be said to llowing the law declared by the Hon'ble Apex Court, that the notice dated 25.01.2021 issued by the AO u/s 153C of the Act for the relevant year was bad in law. We now come to the grounds raised by the Revenue challenging the A)’s order for deleting the impugned addition on merits. As noted above, the addition made by the AO was based on the noting’s ID marked ANN/NN/JR/LS/S and statements of Shri Javvaji /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat to support his claim against another. In Hira Lal v. Ram Rakha [ A. I. R. the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been prove, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business re relevant whenever they refer to a matter in which the court has to enquire was subject to h entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that the were in 282. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under stitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by Hon'ble Apex Court in loose form, not shown to form part of the books of accounts regularly maintained by the cannot be said to constitute llowing the law declared by the Hon'ble Apex Court, that the notice dated 25.01.2021 issued by the AO u/s We now come to the grounds raised by the Revenue challenging the A)’s order for deleting the impugned addition on merits. As noted noting’s found on ID marked ANN/NN/JR/LS/S and statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy. contents of the noting’s necessary to keep in mind that the presumption u/s 132(4A) of the Act regarding the contents of seized material is only against the searched person and not to any other third party, which is the assessee in the present case. Reason being that, if any material at third party premises is presumed to at its face value, then any person for that matter can mention name in any loose paper / diary at their sweet will and that can be used to implicate such other person for no fault of the latter. entry made in a diary or notebook by a third person with scant details cannot be used to fasten tax liability on the person therein, in the absence of corroborative evidence in the decisions of the V.C. Shukla (supra)and Union of India (supra 34. We also gainfully refer to the decision of Hon’ble Punjab & Haryana High Courtin the case of TMI 451). In the decided case, be non-speaking document in as much as it does not contain any intelligible narration in support of the inference drawn by the Assessing Officer that it reflected unaccounted transactions carried out by the ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 41 :: Ramanjenyulu & Shri Balakrishnan Ramamoorthy. Before adverting to the noting’s, which forms basis of the impugned addition, it is necessary to keep in mind that the presumption u/s 132(4A) of the Act regarding the contents of seized material is only against the searched y other third party, which is the assessee in the present case. Reason being that, if anynoting’s found in the seized at third party premises is presumed to pertain to the assessee, at its face value, then any person for that matter can mention name in any loose paper / diary at their sweet will and that can be used implicate such other person for no fault of the latter. Accordingly, entry made in a diary or notebook by a third person with scant details be used to fasten tax liability on the person, whose name appears therein, in the absence of corroborative evidence. Our view finds support in the decisions of the Hon’ble Supreme Court in the case of and Common Cause (A Registered Society) Vs supra). We also gainfully refer to the decision of Hon’ble Punjab & Haryana n the case of CIT v. Khosla Ice & General Mills In the decided case, the impugned loose paperswerefound to speaking document in as much as it does not contain any narration in support of the inference drawn by the Assessing Officer that it reflected unaccounted transactions carried out by the /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat e adverting to the , which forms basis of the impugned addition, it is necessary to keep in mind that the presumption u/s 132(4A) of the Act regarding the contents of seized material is only against the searched y other third party, which is the assessee in the found in the seized pertain to the assessee, at its face value, then any person for that matter can mention anyone’s name in any loose paper / diary at their sweet will and that can be used Accordingly, an entry made in a diary or notebook by a third person with scant details whose name appears . Our view finds support Hon’ble Supreme Court in the case of C.B.I. v. tered Society) Vs We also gainfully refer to the decision of Hon’ble Punjab & Haryana CIT v. Khosla Ice & General Mills (2013 (1) loose paperswerefound to speaking document in as much as it does not contain any narration in support of the inference drawn by the Assessing Officer that it reflected unaccounted transactions carried out by the assessee outside the regular books of account. dumb document, is to be made the basis to fasten tax liability on the assessee, the burden is on the AO to establish with corroborative evidence, that the nature of entries contained therein reflect income. Thus, the AO has to establish, various entries contained in the seized document reflect unaccounted transactions effected by the assessee. that, in the absence of any material to support the nature and ownersh of the entries found in the seized document, no addition is permissible as undisclosed income, by merely arithmetically totaling various figures jotted down on such document. 35. Useful reference in this regard is also made to the decision of the ITAT, Hyderabad in the case of (2) TMI 403 -ITAT wherein it was held that, where from the loose notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any part transaction, thenin such basis of such document. 36. Similar view is noted to have been expressed by ITAT Mumbai the case of ACIT v. Layers Exports P. Ltd (88 taxmann.com 620) wherein it was held that no addition could be simply made on the basis of ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 42 :: assessee outside the regular books of account. It was held that, w dumb document, is to be made the basis to fasten tax liability on the assessee, the burden is on the AO to establish with corroborative that the nature of entries contained therein reflect income. AO has to establish, with necessary corroborative evidence, that various entries contained in the seized document reflect unaccounted transactions effected by the assessee. The Hon’ble High Court thus held in the absence of any material to support the nature and ownersh of the entries found in the seized document, no addition is permissible as by merely arithmetically totaling various figures jotted down on such document. Useful reference in this regard is also made to the decision of the in the case of Sri Y. Siddaiah Naidu Vs ACIT 2015 wherein it was held that, where from the loose , it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any part such circumstances, no addition can be made on the basis of such document. Similar view is noted to have been expressed by ITAT Mumbai ACIT v. Layers Exports P. Ltd (88 taxmann.com 620) wherein it was held that no addition could be simply made on the basis of /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat held that, when a dumb document, is to be made the basis to fasten tax liability on the assessee, the burden is on the AO to establish with corroborative that the nature of entries contained therein reflect income. with necessary corroborative evidence, that various entries contained in the seized document reflect unaccounted The Hon’ble High Court thus held in the absence of any material to support the nature and ownership of the entries found in the seized document, no addition is permissible as by merely arithmetically totaling various figures Useful reference in this regard is also made to the decision of the Sri Y. Siddaiah Naidu Vs ACIT 2015 wherein it was held that, where from the loose , it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular circumstances, no addition can be made on the Similar view is noted to have been expressed by ITAT Mumbai in ACIT v. Layers Exports P. Ltd (88 taxmann.com 620) wherein it was held that no addition could be simply made on the basis of uncorroborated notings in the loose papers found during the search because addition on account of alleged payment made simply on the basis of uncorroborated noting and scribbling on person has no evidentiary value and is unsustainable and bad in law. 37. Having regarding to this position of law, we now advert to the noting’s found in the seized loose papers ID Marked ANN/NN/JR/LS/S, Pages 267, 276 to 279 from the premises of The seized material which is placed on record shows certain figures. It does not contain details of any payer or p any specific deal or transaction. There is absolutely no mention in the seized material regarding the nature of the said transaction of cash payments, the purpose of such payments and precise identity of the transaction. We therefore noting’s relate to the assessee as it from the assessee’s side assessee. No other incriminating evidence was found in the course of search conducted upon Shri Javvaji Ramanjenyulu which would correlate or justify these notings. The Ld. AR has rightly pointed out that, even in the earlier search conducted upon the assessee on incriminating material was found to suggest th acquiring stake in M/s M/s Jyothirmayee Estate. no credence can be given to these vague loose notings ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 43 :: uncorroborated notings in the loose papers found during the search because addition on account of alleged payment made simply on the basis of uncorroborated noting and scribbling on loose sheets made by some no evidentiary value and is unsustainable and bad in law. Having regarding to this position of law, we now advert to the found in the seized loose papers ID Marked ANN/NN/JR/LS/S, Pages 267, 276 to 279 from the premises of Shri Javvaji Ramanjenyulu The seized material which is placed on record shows certain figures. It does not contain details of any payer or payee or particulars of any specific deal or transaction. There is absolutely no mention in the seized material regarding the nature of the said transaction of cash payments, the purpose of such payments and precise identity of the transaction. We therefore find it very strange to believe that the assessee as it also does not contain any attestation side, being not having any name or seal of the No other incriminating evidence was found in the course of search conducted upon Shri Javvaji Ramanjenyulu which would correlate or justify these notings. The Ld. AR has rightly pointed out that, even in the earlier search conducted upon the assessee on 08.12.2016 incriminating material was found to suggest that it had paid any cash for acquiring stake in M/s M/s Jyothirmayee Estate. Being so can be given to these vague loose notings. In absence of any /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat uncorroborated notings in the loose papers found during the search because addition on account of alleged payment made simply on the basis loose sheets made by some no evidentiary value and is unsustainable and bad in law. Having regarding to this position of law, we now advert to the found in the seized loose papers ID Marked ANN/NN/JR/LS/S, Shri Javvaji Ramanjenyulu. The seized material which is placed on record shows certain jottings of ayee or particulars of any specific deal or transaction. There is absolutely no mention in the seized material regarding the nature of the said transaction of cash payments, the purpose of such payments and precise identity of the very strange to believe that these does not contain any attestation being not having any name or seal of the No other incriminating evidence was found in the course of search conducted upon Shri Javvaji Ramanjenyulu which would correlate or justify these notings. The Ld. AR has rightly pointed out that, even in 08.12.2016, no at it had paid any cash for Being so, we hold that, In absence of any corroborative evidence to attribute the entries to the non i.e. the assessee. We find that, the Ld. CIT(A) had rightly treated loose papers as dumb noting’s entries found therein. Before us also, the Revenue was not able to show any corroborative evidence available with them necessary reliable basis for deciphering the said entries. 38. Rather we find that the entire premise of the Revenue is based sheerly on guess work by shooting arrows in the dark. Clearly, the noting’s considered on a stand On overall conspectus of facts, it appears that, even the Investigating authorities were not able to make out any meaning out of these and the searched person (Shri Javvaji Ramanjenyulu whose possession and control these dated 21.02.2019, was also not able to explain the same but guessed that it may pertain to one of their transaction relating to M/s Bhavya Constructions. It is obse given by one Shri 22.02.2019) in the context of some settlement claims assessee that, the authorized officer is noted to have undertaken a permutation &combination exercise and inferred that some of the figures jotted in these loose sheets correlated with the settlement matters ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 44 :: corroborative evidence to attribute the entries to the non-searched person assessee. We find that, the Ld. CIT(A) had rightly treated noting’s having no evidentiary value in respect of entries found therein. Before us also, the Revenue was not able to show any corroborative evidence available with them which would provide necessary reliable basis for deciphering the nature and character of the Rather we find that the entire premise of the Revenue is based sheerly on guess work by shooting arrows in the dark. Clearly, the idered on a stand-alone basis are obscure and non On overall conspectus of facts, it appears that, even the Investigating authorities were not able to make out any meaning out of these and the searched person (Shri Javvaji Ramanjenyulu in this case) from possession and control these noting’s were found, in his statement was also not able to explain the same but guessed that it may pertain to one of their transaction relating to M/s Bhavya Constructions. It is observed that, later on, when examining the answer given by one Shri Balakrishnan Ramamoorthy (statement dated 22.02.2019) in the context of some settlement claims inter alia assessee that, the authorized officer is noted to have undertaken a combination exercise and inferred that some of the figures jotted in these loose sheets correlated with the settlement matters /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat searched person assessee. We find that, the Ld. CIT(A) had rightly treated these evidentiary value in respect of entries found therein. Before us also, the Revenue was not able to show which would provide nature and character of the Rather we find that the entire premise of the Revenue is based sheerly on guess work by shooting arrows in the dark. Clearly, the alone basis are obscure and non-speaking. On overall conspectus of facts, it appears that, even the Investigating authorities were not able to make out any meaning out of these noting’s in this case) from in his statement was also not able to explain the same but guessed that it may pertain to one of their transaction relating to M/s Bhavya examining the answer (statement dated inter alia with the assessee that, the authorized officer is noted to have undertaken a combination exercise and inferred that some of the figures jotted in these loose sheets correlated with the settlement matters averred by Shri Balakrishnan Ramamoort accordingly noted to have again examined the searched person (Shri Javvaji Ramanjenyulu) from whose possession and control, these were found on 05.07.2019, who, this time around submitted that, these noting’s did not relate to M/s Bhavya Constructions but at the same time, he was unable to explain the context of these distanced himself from it by submitting that it did not relate to him. Then again, the authorized officer examined Shri Balakrishnan on 08.07.2019 and prodded matters with the assessee and this time he is noted to have divulged further details giving several figures and several names involved in the settlement, albeit without any p again correlated these details with the ANN/NN/JR/LS/S Pages 267, 276 to 279 and inferred that certain aggregated to Rs.9.10 crores, which was paid by the assessee to Shri Satyanarayana for acquiring stake in M/s Jyothirmayee Estate. Accordingly, he inferred that the balance books payments of Rs.41.75 crores made to Shri R. Satyanarayana in relation to this acquisition. Later on, based Balakrishnan Ramamoorthy had also paid cash commission of Rs.10 crores for getting this deal ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 45 :: averred by Shri Balakrishnan Ramamoorthy. The Authorized accordingly noted to have again examined the searched person (Shri Javvaji Ramanjenyulu) from whose possession and control, these 2019, who, this time around submitted that, these relate to M/s Bhavya Constructions but at the same time, he was unable to explain the context of these noting’s distanced himself from it by submitting that it did not relate to him. Then again, the authorized officer examined Shri Balakrishnan on 08.07.2019 and prodded him regarding the details of the settlement matters with the assessee and this time he is noted to have divulged further details giving several figures and several names involved in the without any proof or evidence. The authorized officer again correlated these details with the noting’s found on the loose sheets ANN/NN/JR/LS/S Pages 267, 276 to 279 and inferred that certain aggregated to Rs.9.10 crores, which was paid by the assessee to Shri Satyanarayana for acquiring stake in M/s Jyothirmayee Estate. Accordingly, he inferred that the balance noting’s related to the out of books payments of Rs.41.75 crores made to Shri R. Satyanarayana in relation to this acquisition. Later on, based solely on the statement of Balakrishnan Ramamoorthy, the AO further assumed that the assessee had also paid cash commission of Rs.10 crores for getting this deal /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat hy. The Authorized Officer is accordingly noted to have again examined the searched person (Shri Javvaji Ramanjenyulu) from whose possession and control, these noting’s 2019, who, this time around submitted that, these relate to M/s Bhavya Constructions but at the same time, noting’s. Rather he distanced himself from it by submitting that it did not relate to him. Then again, the authorized officer examined Shri Balakrishnan Ramamoorthy him regarding the details of the settlement matters with the assessee and this time he is noted to have divulged further details giving several figures and several names involved in the roof or evidence. The authorized officer found on the loose sheets ANN/NN/JR/LS/S Pages 267, 276 to 279 and inferred that certain noting’s aggregated to Rs.9.10 crores, which was paid by the assessee to Shri R. Satyanarayana for acquiring stake in M/s Jyothirmayee Estate. related to the out of books payments of Rs.41.75 crores made to Shri R. Satyanarayana in ly on the statement of Shri , the AO further assumed that the assessee had also paid cash commission of Rs.10 crores for getting this deal facilitated, which led to the impugned addition of Rs.51.75 crores [Rs.41.75 crores + Rs.10 c 39. Having taken note of the above, we find that the entire exercise conducted by the AO to make the impugned addition on the basis of the noting’s found in loose sheets was based on guesswork and conjectures. Clearly, the seized material showed be unaccounted transactions. These are unsigned documents and not supported by any corroborative material.Being so, the seized material relied by the AO for making the also not speaking in conjunction with some other evidence which the authorities found during the course of search or post search investigation. Thus, the well settled legal position is that a non without any corroborative material or such document has not materializ income of the assessee which had not been disclosed in the regular books of accounts of the assessee has to be d assessment to be framed pursuant to search and seizure action. support of our foregoing conclusion, we gainfully refer to the decision of the Hon'ble Supreme Court, in the case of (P.) Ltd. (66 ITR 692) obvious that it is not open to the income tax authorities to deduce the nature of the document from the purported intention, by going behind the ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 46 :: facilitated, which led to the impugned addition of Rs.51.75 crores [Rs.41.75 crores + Rs.10 crores]. Having taken note of the above, we find that the entire exercise conducted by the AO to make the impugned addition on the basis of the found in loose sheets was based on guesswork and conjectures. eized material showed vague figures presumed by the AO to be unaccounted transactions. These are unsigned documents and not supported by any corroborative material.Being so, the seized material making the addition is not speaking one in itself and also not speaking in conjunction with some other evidence which the authorities found during the course of search or post search investigation. Thus, the well settled legal position is that a non-speaking documen out any corroborative material or evidence on record and finding that not materialized into transactions giving rise to income of the assessee which had not been disclosed in the regular books of accounts of the assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. support of our foregoing conclusion, we gainfully refer to the decision of the Hon'ble Supreme Court, in the case of Motors & General Stores 92)wherein it was observed that,\"it is, therefore, obvious that it is not open to the income tax authorities to deduce the nature of the document from the purported intention, by going behind the /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat facilitated, which led to the impugned addition of Rs.51.75 crores Having taken note of the above, we find that the entire exercise conducted by the AO to make the impugned addition on the basis of the found in loose sheets was based on guesswork and conjectures. gue figures presumed by the AO to be unaccounted transactions. These are unsigned documents and not supported by any corroborative material.Being so, the seized material addition is not speaking one in itself and also not speaking in conjunction with some other evidence which the authorities found during the course of search or post search investigation. speaking document evidence on record and finding that ed into transactions giving rise to income of the assessee which had not been disclosed in the regular books isregarded for the purpose of assessment to be framed pursuant to search and seizure action. In support of our foregoing conclusion, we gainfully refer to the decision of Motors & General Stores \"it is, therefore, obvious that it is not open to the income tax authorities to deduce the nature of the document from the purported intention, by going behind the document or to consider the substance of the matter or to ac part and reject it in part or to rewrite the document, merely to suite purpose of revenue. 40. We find that the conclusions reached by the on assumptions without bringing corroborative material on record. It is settled position of law that no addition in the assessment can be made merely based on assumptions, suspicion, guess work and conjuncture or on irrelevant inadmissible material. Reliance can be placed in this regard on the following decisions: (i) Dhirajlal Girdharilal v. CIT [1954] 26 ITR 736 (SC) (ii) Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) (iii) CIT v. Maharajadhiraja Kameshwar Singh of Darbhanga [1933] 1 ITR 94 (PC) (iv) Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) (v) Umacharan Shaw & Bros v. CIT [1959] 37 I (vi) Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) 41. We particularly find the reliance placed by the Ld. CIT(A) in support of his above findings on the decision of the Hon’ble Delhi High Court in the case of CIT v. Sant Lal (423 ITR 1) the Department relied upon the the premises of third party. The said of hundi transactions on behalf of parties including assessee whose names were written in abbreviated/code words. The Hon'ble Delhi High Court relying on its earlier decision in the case of ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 47 :: document or to consider the substance of the matter or to ac part and reject it in part or to rewrite the document, merely to suite We find that the conclusions reached by the AO are merely based on assumptions without bringing corroborative material on record. It is ion of law that no addition in the assessment can be made merely based on assumptions, suspicion, guess work and conjuncture or on irrelevant inadmissible material. Reliance can be placed in this regard on the following decisions: CIT [1954] 26 ITR 736 (SC) Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) CIT v. Maharajadhiraja Kameshwar Singh of Darbhanga [1933] 1 ITR 94 (PC) Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) Umacharan Shaw & Bros v. CIT [1959] 37 ITR 271 (SC) Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) We particularly find the reliance placed by the Ld. CIT(A) in support of his above findings on the decision of the Hon’ble Delhi High Court in CIT v. Sant Lal (423 ITR 1) to be of relevance. epartment relied upon the noting’s of hundi in the diary seized from the premises of third party. The said noting’s allegedly contained entries of hundi transactions on behalf of parties including assessee whose names re written in abbreviated/code words. The Hon'ble Delhi High Court relying on its earlier decision in the case of CIT v. Mahabir Prasad /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat document or to consider the substance of the matter or to accept it in part and reject it in part or to rewrite the document, merely to suite are merely based on assumptions without bringing corroborative material on record. It is ion of law that no addition in the assessment can be made merely based on assumptions, suspicion, guess work and conjuncture or on irrelevant inadmissible material. Reliance can be placed in this regard CIT v. Maharajadhiraja Kameshwar Singh of Darbhanga [1933] 1 ITR 94 (PC) We particularly find the reliance placed by the Ld. CIT(A) in support of his above findings on the decision of the Hon’ble Delhi High Court in be of relevance. In this case, of hundi in the diary seized from allegedly contained entries of hundi transactions on behalf of parties including assessee whose names re written in abbreviated/code words. The Hon'ble Delhi High Court CIT v. Mahabir Prasad Gupta in ITA No. 814 of 2015 dated 20 held that no addition can be made in the hands of anasses basis of any diary seized during the course of search proceedings of a third party, since such diary was neither found at the assessee’s premise and that thedepartment had failed to provide any cogent material or gather any corroborativeevidence assessee. The Court observed that thesearched person could have written anyone’s name on his own sweet will in his diaryand therefore such noting on stand-alone basis along with the biased statement of thesearched person cannot be used as a reliable evidence against the assessee 42. For the above reasons, we therefore concur with the Ld. CIT(A) that the noting’s found in loose papers from third party premises cannot be unilaterally used to make addition in hands of onus is on the Revenue to establish the veracity of the same with corroborative evidence by bringing cogent material on record, to back the same, which we find the Revenue has failed to do so, in the present case. 43. Now we come to the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy which was relied upon by the AO to justify the impugned addition. As noted earlier, the statements of the searched person (Shri Javvaji Ramanjenyulu) from whose possession and control, these noting’s ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 48 :: Gupta in ITA No. 814 of 2015 dated 20-10-2015 is noted to have no addition can be made in the hands of anasses basis of any diary seized during the course of search proceedings of a hird party, since such diary was neither found at the assessee’s premise and that thedepartment had failed to provide any cogent material or gather any corroborativeevidence to substantiate that it pertained to the assessee. The Court observed that thesearched person could have written anyone’s name on his own sweet will in his diaryand therefore such noting alone basis along with the biased statement of thesearched person cannot be used as a reliable evidence against the assessee For the above reasons, we therefore concur with the Ld. CIT(A) that found in loose papers from third party premises cannot be unilaterally used to make addition in hands of the assessee, and that the onus is on the Revenue to establish the veracity of the same with corroborative evidence by bringing cogent material on record, to back the same, which we find the Revenue has failed to do so, in the present case. to the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy which was relied upon by the AO to justify the impugned addition. As noted earlier, the statements of the searched person (Shri Javvaji Ramanjenyulu) from whose possession and were found, did not incriminate the assessee in /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat is noted to have no addition can be made in the hands of anassessee on the basis of any diary seized during the course of search proceedings of a hird party, since such diary was neither found at the assessee’s premise and that thedepartment had failed to provide any cogent material or to substantiate that it pertained to the assessee. The Court observed that thesearched person could have written anyone’s name on his own sweet will in his diaryand therefore such noting alone basis along with the biased statement of thesearched person cannot be used as a reliable evidence against the assessee. For the above reasons, we therefore concur with the Ld. CIT(A) that found in loose papers from third party premises cannot be the assessee, and that the onus is on the Revenue to establish the veracity of the same with corroborative evidence by bringing cogent material on record, to back the same, which we find the Revenue has failed to do so, in the present case. to the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan Ramamoorthy which was relied upon by the AO to justify the impugned addition. As noted earlier, the statements of the searched person (Shri Javvaji Ramanjenyulu) from whose possession and were found, did not incriminate the assessee in any manner. He had neither explained the assessee at any point of time. Rather, he initially admitted that these noting’s relates to his transactions in promised to correlate and provide the details later, but subsequently on 05.07.2019, he submitted under oath that, his initial statement was erroneous and that these loose sheets were not drawn up by him and therefore he was unable to explain its contents. We thus observe that, this statement of the searched person (Shri Javvaji Ramanjenyulu) cannot be used to draw any adverse inference against supports the assessee’s case that these loose sheets co obscure noting’s which were not at all comprehensible and thus lacked any evidentiary value to justify the impugned addition in the hands of the assessee. 44. We now proceed to examine the statement of which is the genesis of the impugned addition. It is noted that, Ramamoorthy had made certain statements as a logic for cash payments were made by the assessee to further observed that, cash transactions being conducted by the assessee with several persons but no proof or evidence was adduced in relation to such averments. Before analyzing the contents of this statement, t to our notice that, this person ha ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 49 :: any manner. He had neither explained the noting’s nor had he named the assessee at any point of time. Rather, he initially admitted that these relates to his transactions in M/s Bhavya Constructions which he promised to correlate and provide the details later, but subsequently on 05.07.2019, he submitted under oath that, his initial statement was erroneous and that these loose sheets were not drawn up by him and as unable to explain its contents. We thus observe that, this statement of the searched person (Shri Javvaji Ramanjenyulu) cannot be used to draw any adverse inference against the assessee. Rather, it supports the assessee’s case that these loose sheets contained dumb and which were not at all comprehensible and thus lacked any evidentiary value to justify the impugned addition in the hands of the We now proceed to examine the statement of Shri B Ramamoorthy esis of the impugned addition. It is noted that, made certain statements as a logic for suggesting that s were made by the assessee to Shri R Satyanarayana. further observed that, Shri B Ramamoorthy has made several cash transactions being conducted by the assessee with several persons but no proof or evidence was adduced in relation to such averments. Before analyzing the contents of this statement, the Ld. AR has brought to our notice that, this person had made the same frivolous statements /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat nor had he named the assessee at any point of time. Rather, he initially admitted that these M/s Bhavya Constructions which he promised to correlate and provide the details later, but subsequently on 05.07.2019, he submitted under oath that, his initial statement was erroneous and that these loose sheets were not drawn up by him and as unable to explain its contents. We thus observe that, this statement of the searched person (Shri Javvaji Ramanjenyulu) cannot the assessee. Rather, it ntained dumb and which were not at all comprehensible and thus lacked any evidentiary value to justify the impugned addition in the hands of the Shri B Ramamoorthy, esis of the impugned addition. It is noted that, Shri B suggesting that Shri R Satyanarayana. It is has made several claims of cash transactions being conducted by the assessee with several persons but no proof or evidence was adduced in relation to such averments. Ld. AR has brought d made the same frivolous statements before the Hon’ble Madras High Court in connection with the complaint filed relating to Cheque Bounce Case We note that, the Hon’ble Madras High Court has adjudicated the said complaint case vide order dated 18.10.2023 wherein it has been held that, Shri B Ramamoorthy has simply stated concocted stories naming politicians and Government officials, which did not have any basis. It was further observed on analysis of the entire facts that had acted in a dishonest manner to induce M/s which the assessee also held stake, to hand over their hard earned money to them and when they realized h stopped the cheque payments due to which, case under the Negotiable Instruments Act against the assessee raising frivolous claims. The Hon’ble High Court is noted to have categorically held that, there was no dealing in Rs.46 crores claimed to have been transacted in cash by Shri B Ramamoorthy was never agreed to be paid false, frivolous and baseless. Having regard to these observations Hon’ble Madras High Court, it is clear that the statements of Shri B Ramamoorthy is false having 45. In view of our above findings, we thus agree with the assessee that the statement of Shri B Ramamoorthy qua the assessee, but it was also riddled with discrepancies, fancy ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 50 :: before the Hon’ble Madras High Court in connection with the complaint filed relating to Cheque Bounce Case, much prior to the date of search. Hon’ble Madras High Court has adjudicated the said t case vide order dated 18.10.2023 wherein it has been held that, Shri B Ramamoorthy has simply stated concocted stories naming politicians and Government officials, which did not have any basis. It was further observed on analysis of the entire facts that, Shri B Ramamoorthy had acted in a dishonest manner to induce M/s Jyothirmaye Estate which the assessee also held stake, to hand over their hard earned money to them and when they realized his fraud and breach of trust stopped the cheque payments due to which, Shri B Ramamoorthy case under the Negotiable Instruments Act against the assessee raising The Hon’ble High Court is noted to have categorically held that, there was no dealing in cash transactions and that the sum of Rs.46 crores claimed to have been transacted in cash by Shri B never agreed to be paid and that itwas false, frivolous and baseless. Having regard to these observations High Court, it is clear that the statements of Shri B having no credence. In view of our above findings, we thus agree with the assessee that Shri B Ramamoorthy not only suffered from serious bias , but it was also riddled with discrepancies, fancy /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat before the Hon’ble Madras High Court in connection with the complaint , much prior to the date of search. Hon’ble Madras High Court has adjudicated the said t case vide order dated 18.10.2023 wherein it has been held that, Shri B Ramamoorthy has simply stated concocted stories naming politicians and Government officials, which did not have any basis. It was , Shri B Ramamoorthy Jyothirmaye Estate in which the assessee also held stake, to hand over their hard earned money breach of trust, they had Shri B Ramamoorthy filed case under the Negotiable Instruments Act against the assessee raising The Hon’ble High Court is noted to have categorically cash transactions and that the sum of Rs.46 crores claimed to have been transacted in cash by Shri B and that itwas absolutely false, frivolous and baseless. Having regard to these observations of the High Court, it is clear that the statements of Shri B In view of our above findings, we thus agree with the assessee that not only suffered from serious bias , but it was also riddled with discrepancies, fancy theories and sensationalized claims, and that his statement was not backed by any evidence or proof. misrepresented the facts and had distorted the same in prejudicing the mind of the facts discussed above that the statement given by was tainted with the sole intent to falsely implicate the assessee. Further, the above findings of the Hon’b Shri B Ramamoorthy statement was not reliable. 46. It is also observed that the AO prior to completing the assessment had not even given the copies of the statements of to the assessee leave aside an opportunity of cross the fact that his statement was back. We do not countenance this action of the AO keeping in the dark by not furnis he should have been fair enough to give an opportunity to assessee to meet the allegation, if any have been discovered during Ramamoorthy. Further, t assessee to cross examine statement, which was also and in accordance with principles of natural ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 51 :: theories and sensationalized claims, and that his statement was not backed by any evidence or proof. Shri B Ramamoorthy is noted to have misrepresented the facts and had distorted the same in his depositi prejudicing the mind of the authorized officer. It is apparent from the facts discussed above that the statement given by Shri B Ramamoorthy was tainted with the sole intent to falsely implicate the assessee. Further, the above findings of the Hon’ble jurisdictional High Court shows that, Shri B Ramamoorthy was not a credible witness and therefore his statement was not reliable. It is also observed that the AO prior to completing the assessment had not even given the copies of the statements of Shri B Ramamoorthy to the assessee leave aside an opportunity of cross-examination, given the fact that his statement was admittedly recorded behind the assessee's We do not countenance this action of the AO keeping urnishing the statement of Shri B Ramamoorthy should have been fair enough to give an opportunity to assessee to if any, against the assessee, which according to AO, have been discovered during the search conducted upon Further, the AO should have provided an opportunity to assessee to cross examine Shri B Ramamoorthy to test the veracity of also not done by AO. Had the AO acted in fairness and in accordance with principles of natural justice, the serious bias in the /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat theories and sensationalized claims, and that his statement was not is noted to have his deposition for authorized officer. It is apparent from the Shri B Ramamoorthy was tainted with the sole intent to falsely implicate the assessee. Further, le jurisdictional High Court shows that, was not a credible witness and therefore his It is also observed that the AO prior to completing the assessment Shri B Ramamoorthy examination, given admittedly recorded behind the assessee's We do not countenance this action of the AO keeping the assessee Shri B Ramamoorthy and should have been fair enough to give an opportunity to assessee to which according to AO, the search conducted upon Shri B he AO should have provided an opportunity to to test the veracity of his . Had the AO acted in fairness justice, the serious bias in the statement of Shri B Ramamoorthy in preceding paragraph, would have come to the forefront at the time of assessment itself. By not providing the copy of statement used against the assessee and the opportunity of cross view, the impugned addition stood vitiated in law. we rely on the ratio of the decision of the Hon'ble Supreme Court in Andaman Timber Industries v. CCE (62 taxmann. decided case, the addition was made against the assessee (Andaman Timber Industries) by the AO by relying on the statement of two witnesses namely Sri Sreeram Tekriwal and Sri Laxmidas Panchmati. Even though the assessee pleaded for cross witnesses, the AO did not give opportunity to the assessee and when the action of the AO was confirmed by the appellate authorities, the Hon'ble Supreme Court examined the omission on the part of the AO not providing opportunity to assessee to cross examine of t held that it was a serious flaw and since the statements of those witnesses were made the basis of the impugned order this omission on the part of AO makes the order nullity inasmuch as it amounted to violation of principles of natural jus view, the impugned addition made by the AO on the sole basis of the biased and unproven unjustified and invalid. ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 52 :: Shri B Ramamoorthy, his false testimony etc., as discussed in preceding paragraph, would have come to the forefront at the time of assessment itself. By not providing the copy of statement used against ssee and the opportunity of cross-examination, in our considered view, the impugned addition stood vitiated in law. For this finding of ours, we rely on the ratio of the decision of the Hon'ble Supreme Court in Andaman Timber Industries v. CCE (62 taxmann.com 3) the addition was made against the assessee (Andaman Timber Industries) by the AO by relying on the statement of two witnesses namely Sri Sreeram Tekriwal and Sri Laxmidas Panchmati. Even though the assessee pleaded for cross-examination of these two ses, the AO did not give opportunity to the assessee and when the action of the AO was confirmed by the appellate authorities, the Hon'ble Supreme Court examined the omission on the part of the AO not providing opportunity to assessee to cross examine of two witnesses and held that it was a serious flaw and since the statements of those witnesses were made the basis of the impugned order this omission on the part of AO makes the order nullity inasmuch as it amounted to rinciples of natural justice. Accordingly, in our considered addition made by the AO on the sole basis of the biased and unproven statement of Shri B Ramamoorthy invalid. /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat , his false testimony etc., as discussed in preceding paragraph, would have come to the forefront at the time of assessment itself. By not providing the copy of statement used against examination, in our considered For this finding of ours, we rely on the ratio of the decision of the Hon'ble Supreme Court in com 3). In the the addition was made against the assessee (Andaman Timber Industries) by the AO by relying on the statement of two witnesses namely Sri Sreeram Tekriwal and Sri Laxmidas Panchmati. examination of these two ses, the AO did not give opportunity to the assessee and when the action of the AO was confirmed by the appellate authorities, the Hon'ble Supreme Court examined the omission on the part of the AO not wo witnesses and held that it was a serious flaw and since the statements of those witnesses were made the basis of the impugned order this omission on the part of AO makes the order nullity inasmuch as it amounted to Accordingly, in our considered addition made by the AO on the sole basis of the statement of Shri B Ramamoorthy was both 47. Overall, therefore, the purported notings on loose sheets a statements of Shri Javvaji Ramanjenyulu & Shri Ramamoorthy relied upon by the AO to justify the impugned addition is held to be unjustified both on facts and in law. For the reasons discussed above, we therefore find no reason to interf CIT(A) deleting the impugned addition on its merits as well. 48. In the result, appeal filed by the Order pronounced on the Sd/- (जगदीश) (JAGADISH) लेखा सद\f/ACCOUNTANT MEMBER चे\u0003ई/Chennai, \u0005दनांक/Dated: 28th February TLN आदेश क\r \u000eितिलिप अ\u0014ेिषत/Copy to 1. अपीलाथ\u0010/Appellant 2. \u0011\u0012थ\u0010/Respondent 3. आयकरआयु\u0018/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u0011ितिनिध/DR 5. गाड फाईल/GF ITA No.2220/Chny/20 Shri Jagannathan Sekat :: 53 :: Overall, therefore, the purported notings on loose sheets a statements of Shri Javvaji Ramanjenyulu & Shri relied upon by the AO to justify the impugned addition is held to be unjustified both on facts and in law. For the reasons discussed above, we therefore find no reason to interfere with the order of Ld. CIT(A) deleting the impugned addition on its merits as well. In the result, appeal filed by the Revenue is dismissed. Order pronounced on the 28th day of February, 2025, in Chennai. Sd/ /ACCOUNTANT MEMBER (एबी टी. (ABY T. VARKEY \u0001याियक सद\bय/JUDICIAL MEMBER February, 2025. Copy to: Chennai / Madurai / Salem / Coimbatore. /Chny/2024 (AY 2016-17) Shri Jagannathan Sekat Overall, therefore, the purported notings on loose sheets and the statements of Shri Javvaji Ramanjenyulu & Shri Balakrishnan relied upon by the AO to justify the impugned addition is held to be unjustified both on facts and in law. For the reasons discussed ere with the order of Ld. CIT(A) deleting the impugned addition on its merits as well. Revenue is dismissed. , in Chennai. Sd/- . वक ) ABY T. VARKEY) /JUDICIAL MEMBER Chennai / Madurai / Salem / Coimbatore. "