Shri V.Jayaraman, Coimbatore V. DCIT, Coimbatore

ITSSA 8/CHNY/2009

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3744 (ITAT-CHENNAI)
• Duration Of Justice: 13 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 04-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Tangible material; Block assessment; Set aside
• Section: 131; 143(3); 158BC; 158BD

Judgement Text

आयकरअपीलीयअिधकरण,‘डी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI Įीमहावीर ͧसंह, उपाÚय¢एवंĮी मनोज क ु मार अĒवाल, लेखा सदèयके सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकरअपीलसं./IT(SS)A No.:8/CHNY/2009 Block Period : 01.04.1985 to 13.02.1996 Shri V. Jayaraman, 32,Thiruvenkatasamy Road, R.S. Puram, Coimbatore 641 002. PAN: ACTPJ 5248C v. The DCIT, Central Circle-I, Coimbatore. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮकᳱओरसे/Appellant by : Shri G. Baskar & Shri I. Dinesh, Advocates ᮧ᭜यथᱮकᳱओरसे/Respondent by : Shri M. Swaminathan, Sr. Standing Counsel स ु नवाई कȧ तारȣख/Date of Hearing : 15.06.2022 घोषणा कȧ तारȣख/Date of Pronouncement : 29.06.2022 आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of order of the Deputy Commissioner of Income-tax, Central Circle-I, Coimbatore u/s.158BD r.w.s. 158BC/143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide dated 29.12.2008 for the block period 01.04.1985 to 13.02.1996. 2 IT(SS)A No.8/Chny/2009 2. The only issue in this appeal of assessee is as regards to framing of block assessment u/s.158BC & 143(3) of the Act by the AO making addition of Rs.39,00,000/- on account of one paper seized during search which jotted some payments made to assessee admitted by one Shri V. Ponnambalam during statement recorded u/s.132 of the Act on 13.02.1996. 3. The assessee has raised two grounds i.e., block assessment is barred by limitation and secondly on merits that there is absolutely no material to establish that the payment of Rs.39,00,000/- was made by Shri V. Ponnambalam as he had no transaction with Tamilnadu Textile Corporation Ltd. 3.1 At the time of hearing before us, the ld.counsel for the assessee has not argued the issue of limitation and hence, the same is dismissed as not-pressed. 4. The facts regarding the merits of the case are that the original block assessment order was framed by the DCIT, Central Circle-I, Coimbatore u/s. 143 (3) r.w.s. 158BD of the Act vide order dated 29.10.1998. The assessee carried the matter before Tribunal in appeal and Tribunal in the first round in IT(SS)A No.181/Mds/98, 3 IT(SS)A No.8/Chny/2009 set aside the assessment order vide order dated 27.06.2002 and directed the AO for fresh adjudication by considering various materials examined by the special court and the orders passed thereon. The Tribunal in para 3 observed as under:- 3. The saree scam was subject matter of consideration by the Special Court appointed for the purpose. The present assessee was entrusted with the procurement and supply. It was in the course of such function that one of the persons who was entrusted with the procurement and supply to the assessee was found to have stated paying Rs. 39 lakhs to the assessee. The person so stated was already charge sheeted and he was examined by the Special Court. Though the assessee may not have been charge-sheeted but the assessee having faced with direct statement by one of the persons that he had paid Rs. 39 lakhs to the assessee, the matter assumes serious concern. The order of assessment having been framed in the instant case and in the case of Mr. Ponnambalam by one and the same Assessing Officer, and since the assessee having occupied a post during a period which was the period of scam followed by statement given by a person of having paid the assessee Rs. 38 lakhs, and considering that in the case of Mr. Ponnambalam by means of separate order the matter is being remanded to the Assessing Officer for fresh adjudication by considering the various materials examined by the Special Court and the order passed thereon, we are of the view that in the fitness of things and in accordance with the principles of natural justice this issue should also be re- examined by the Assessing Officer. He shall allow the assessee opportunity of cross-examining Ponnambalam. He may also carry out such enquiry as may be necessary and the assessee shall co-operate in this regard. The appeal is accordingly restored to the file of the Assessing Officer for considering the directions above. The appeal is treated as allowed in part. 4.1 Consequent to Tribunal’s order, setting aside the block assessment, the ACIT, Circle-II, Coimbatore passed order u/s.158BD r.w.s. 158BC r.w.s. 143(3) of the Act vide order dated 26.03.2004 repeating the same addition. This block 4 IT(SS)A No.8/Chny/2009 assessment order was again challenged before Tribunal and Tribunal in IT(SS)A 49/Mds/2004 vide order dated 18.03.2005, again remanded the matter back to the file of the AO by giving the following directions in para 4 and the relevant portion reads as under:- “Here, in the present case, in documents it is written as Chairman and it is further strengthened by the statement of SriV. Ponnambalam as preliminary statement recorded during the search. Subsequently, Sri V. Ponnambalam retracted the statement. Now the Assessing Officer should have examined Sri R. Sreenivasan to find out the truth and even the concept of human probabilities should have to be taken into consideration. In view of the above discussion, we have no hesitation in setting aside the block assessment and remitting the same to the file of the Assessing Officer to frame the block assessment afresh after examining the relevant materials as well as Sri R. Sreenivasan.” 4.2 In consequence to Tribunal’s order dated 18.03.2005, the block assessment was again completed by the ACIT, Circle-II, Coimbatore u/s.158BD r.w.s 158BC r.w.s. 143(3) of the Act vide order dated 22.03.2006 and the same was again set aside by the Tribunal in IT(SS)A No.135/Mds/06 vide order dated 31.01.2008. The Tribunal in this, discussed the merits of the case vide para 10 to 13 and set aside the matter to the file of the AO to redo the assessment by observing as under:- “10. Now coming to the merits of the case, there is a categorical record in the form of seized material for payment of Rs.39,00,000 to the chairman, who is the assessee before us. The entry in the note book found at the premises of Mr. J. Murugesan, No.94, Jagannatha Nagar, Peelamedu, 5 IT(SS)A No.8/Chny/2009 Coimbatore by search action on 13.2.96 vide seized material bearing no.KR/S/ B&D/48 containing the payment of Rs.39,00,000 on various dates to the Chairman, the details of which are as follows: Date Amount Rs. 1.8.95 1,00,000 6.9.95 10,00,000 12.9.05 10,00,000 22.10.95 2,00,000 10.11.95 10,00,000 16.12.95 4,00,000 29.01.96 2,00,000 ----------- 39,00,000 ------------ The A.O had put these facts to the assessee on 19.2.96 while recording a sworn statement vide qn.no.1 1. In reply to that the assessee stated that the assessee has not received any amount mentioned above and also stated in reply to qn.no.12 that he does not know Shri J. Murugešan. To qn.no.13 also, he stated he is not connected with that payment and has not received any amount. 11. Further while recording statement from Shri. V. Ponnambalam on 13.2.96 he has stated inter alia as reply to qn.no.26 that he has paid Rs.4 lakhs to Mr. Jayaraman, Chairman, TNTC, (6.12.95). "Further as a answer to qn.no 26 he has stated that to obtain order from TNTC money has to be given to Chairman and hence he had given the said amount. Further in reply to qn no.27 he has stated that regarding payment of Rs.2,00,000 to the M.D. of TNTC found entered in the spiral book taken from house, the hand writing was of his business friend Mr. Ruso: 12. On the basis of the above particulars, the ACIT, Central Circle had written a letter to the assessee proposing addition of Rs.39,00;000/-. For this the assessee filed a letter dated 25.8.98 and clarified to the A.O as follows: "The alleged payments to the extent of RS.39 lacs by Mr. v. Ponnambalam to Chairman might have been made to Chairman of any corporation or company and not necessarily to TNTC,Coimbtore. As have already said I did not know that person at all. Then how 6 IT(SS)A No.8/Chny/2009 could he make any cash payment to me without knowing me personally. Further I did not have any authorized dealing with anybody during my career as Chairman of TNTC, Coimbatore. So it is highly arbitrary and unjust to tax me to such a huge extent on suspicion and surmise. I am a person with limited means having regular agricultural income from ancestral agricultural lands of Punjai 15.22 hectares equivalent to 37.59 acres near Pollachi. A zerox copy of the Patta book and a zerox copy of the V.O. certificate are attached in proof of agricultural land holding and agricultural income. The title deeds relating to my agricultural lands deposited with Land Development Bank, Pollachi South long time back when the loan was availed by my late father, A. Varadaraj Chettiar were not returned to me till now even though the loans are discharged. So I am not able to file with a zerox copy of the title deeds. My father died in 1990 and am the only son, of my father. I got a release deed executed in my favour by my mother and three sisters and a zerox copy of the same, is enclosed." 13. This payment has also been confirmed by Mr. Ponnambalam in his statement given u/s.132(4) as narrated in the facts of the case. On the above basis, the A.O made addition of Rs.3,00,000/-. The assessee categorically denied the receipt of Rs.39,00,000/-. Now the question is whether the entries found in the books of accounts maintained by the third parties and the sworn statement u/s.13 and statement u/s. 132(4) collected from the third parties can be a basis for addition in the block assessment made u/s.158BD r.w.s158BC of the 1.T Act 961. Admittedly there is no search in the case of the assessee. Consequent to the search in the case of other assessees, statement was collected from the assessee under oath on 19.2.96. In the statement recorded from the assessee, he categorically denied receipt of the impugned amount. The Department has not collected any evidence from the assessee towards the receipt of the impugned amount. The statement collected from other parties is some piece of evidence. The A.O has to establish the link between the sworn statement with the other books of accounts seized either from the assessee or from other parties. The statement collected from other parties does not give definite authority to the A.O to make an addition on this count and the statement of the other parties is not a conclusive one. The assessee has every right to rebut the statement collected from the other parties by producing the evidence. The revenue authorities can not automatically presume the things. The actual things 7 IT(SS)A No.8/Chny/2009 depend upon facts and circumstances of each case. The authorities concerned should draw the conclusion judicially depending upon the facts and circumstances of the case. There is no conclusive presumption. The statement collected from Shri Ponnambalam show the payment of Rs.4 lakhs to the assessee and he has stated that the said amount was paid to the assessee, who-was the Chairman of TNTC, for collecting order from the TNTC. For making addition, the A.O relied on the seized material bearing no.KR/S/B&D/48 seized from Shri. J. Murugesan on 13.2.96. The A.O has not established the nexus between this seized material to the assessee. There is no seized material collected from the assessee. The revenue authorities have not found any circumstantial evidence from the assessee in the form of any investments, or assets, movables or immovables like cash, jewellery etc. Further there is no evidence collected by the Department in the form of bank statement. Representing deposit of the impugned amount by the assessee or any books of accounts where the assessee has made entries. The assessment is made on inadequate materials. The A.O can not draw inference on the basis of suspicion, conjecutures or surmise. Suspicion, howsoever strong can not take the place of material in support of the findings of the AO. The A.O should act in a judicial manner proceeded with judicial spirit and should come to a judicial conclusion. The A.O is required to act fairly as a reasonable person and not arbitrarily or capriciously. An assessment made on inadequate material can not stand on its own leg. Hence we are unable to uphold the order of A.O. Hence in the interest of natural justice, we set aside the entire assessment to the file of A.O denovo to appraise the entire facts of the case and frame assessment afresh. The A.O should bear in mind the judgment of the Hon’ble Supreme Court in the case of Cit vs. P.V. Kalyanasundaram (294 ITR 49), the order of the tribunal in the case of M.M. Finance P Ltd vs. DCIT (107 TTJ 200), Bansal Strips P Ltd. Vs. ACIT (99 ITD 177) and the judgment of jurisdictional High Court in the case of CIT vs. G.K. Senniappan (284 ITR 220). 4.3 The AO,consequent to the Tribunal’s order dated 31.01.2008, passed block assessment order u/s.158BD r.w.s 158BC r.w.s.143(3) of the Act (the present block assessment order under dispute) vide order dated 29.12.2008. 8 IT(SS)A No.8/Chny/2009 5. Brief facts are that the assessee, an individual, had been regularly assessed to Income-tax and was Chairman of Tamilnadu Textiles Corporation Ltd., during the period 13.06.1994 to 29.03.1996. The TN Government sponsored a scheme for supply of sarees and dhotis to the poor during pongal season every year and likewise the TN Government supplied uniform to school children under the Social Welfare Schemes. The Tamilnadu Textile Corporation Ltd., a state owned Corporation was entrusted with the work of procuring specific quantity of materials required for being distributed by the Corporation through enlisted suppliers. The material was procured by the Corporation and finally supplied to the District Social Welfare Department as per the directions issued by the Corporation. The assessee Shri V. Jayaraman was the Chairman of Tamilnadu Textile Corporation Ltd., during this period. A search action was conducted in the office premises of the corporation, business and residential premises of some of the suppliers of sarees and dhotis including one Shri V. Ponnambalam, who has supplied sarees and dhotis under the scheme. During the course of search from the residence of Shri J. Murugesan at 94, Jagannath Nagar, Coimbatore, a paper containing the details of payment made to Chairman amounting to Rs.39,00,000/- on various dates, as detailed below was found:- 9 IT(SS)A No.8/Chny/2009 Chairman 1.8.95 1,00,000 6.9.95 10,00,000 12.9.05 10,00,000 22.10.95 (Madurai) 2,00,000 10.11.95 10,00,000 16.12.95 4,00,000 29.01.96 2,00,000 The total payment comes to Rs.39 lakhs. The AO while completing block assessment order again repeated the addition of Rs.39 lakhs by noting the facts as under:- “8. Thus having found that there is a prima-facie evidence for the payment to the assessee, the Hon’ble Tribunal observed for the payment to the assessee, the Hon’ble Tribunal observed that “The revenue authorities have not found any circumstantial evidence from the assessee in the form of any investments or assets, movables and immovables like cash, jewellery etc. Further there is no evidence collected by the Department in the form of bank statement representing deposit of the impugned amount by the assessee or any books of accounts where the assessee has made entries. The assessment was made on inadequate materials. The Assessing Officer can not draw inference on the basis of suspicion. Persons like the assessee cannot be expected to keep or have such evidence against them involving receipt of speed money. Only ordinarily people will be careless enough to leave or keep such evidence against them available. The assessee is a politically popular figure. The financial needs of such persons cannot be easily gauged, for the reason that the bane of the society is such that too much is expected of the politicians by the layman. The money received in this case could have been spent on such eventualities as giving relief to the poor, needy and distraught people. The relationship and the circumstances are very special between the payer Shri. V. Ponnamblam and the assessee on the one hand and the assessee and beneficiaries of his dole on the other. The money received might have been spent for any cause. In this context the following judicial observations are worth mentioning:- 10 IT(SS)A No.8/Chny/2009 "Whether corroboration of the testimony of a single witness is or is not necessary, must depend upon the facts and circumstances of each case and no general rule can be laid down in a matter like th s and much depends upon the judicial discretion of the Judge before whom the case comes (Vadivelu Thevar Vs. State of Madras (1957 SCJ 527)" Justice Mr. Rohatgi remarked "There is no computerized rule. Nor are judges computers. It must always depend on the circumstances of each case and the quality of the evidence of the single witness. In this case we find there is abundant evidence direct and circumstantial to prove the guilt of the appellants. In such circumstances as always, the court has to separate the grain from the chaff" Neither the number of witnesses nor the quantity of evidence is material. It is the quality that matters. In many special relations, the burden of showing the truth of the matter is shifted under statutory provisions to the party who is better likely to know the reality. Hence to find out evidence for such transactions which are within the special knowledge of the assessee is to expect recovery of such material is to ask for the performance of the impossible. Further, the AO finally repeated the addition by observing as under:- Consequently, the assessment has to be made of the receipt is evidenced and the circumstances are explained by the payer Shri. V. Ponnambalam that money had to be paid to get continues orders and the details of such transactions are recorded in the seized material. The subsequent application of the income is within the special knowledge of the assessee. It is true that as pointed out by the ITAT there is no seized documents as a result of search conducted in the case of the assessee, since no search was conducted in his case. In the absence of such direct material evidencing the transaction seized from the assessee, necessarily and inevitably reliance has to be placed on the materials seized from Shri. V. Ponnambalam and his statement explaining the facts and circumstances of the transaction. Hence the sum of Rs.39 11 IT(SS)A No.8/Chny/2009 lakhs involved in the said transaction is brought to tax as income income accruing in the hands of the assessee and received by him. Aggrieved, assessee came in appeal before the Tribunal. 6. The ld.counsel for the assessee Shri G. Baskar, first of all took us through the statement recorded from Shri V. Ponnambalam, son of Shri Vairavanathan on 13.02.1996 during the course of search and the relevant questions for this case are question Nos.25 to 27 and answer of the same reads as under:- 25. Large amount have deposited in your account with Bank of Baroda, Ram Nagar Main Branch. Give your explanation for the same ? Several drafts have been sent from your account to various addresses. For whom those drafts have been sent and what are the addresses? Ans. I will deposit the cheques received from TNTC, in my account with Bank of Baroda. From the above said deposit, I will send cheques to the following persons:- 1 Senthil Textiles, Kurinchi Nagar Extn., Tirupur Rs.3,00,000/- 2 Ponni Mills, Somanur Rs.3,00,000/- 3 Nallasivam, Kavindambadi, Erode Rs.2,00,000/- 4 Mani Textiles, Ramnagar, Coimbatore Rs.7,60,000/- 5 Kotta Balusamy, Erode Rs. 89,000/- 6 Srinivas Enterprises, No.32, Ahimsapuram, 5 th St, Sellur, Madurai -2. (cheque dt. 6.9.95) Rs.23,00,000/- 7 Sri Veni Enterprises, Madurai – 2. Rs.3,26,000/- 8 Subramaniyam Textiles, Oppanakkara Street, Coimbatore-1. Rs.3,00,000/- 12 IT(SS)A No.8/Chny/2009 I have paid cash to the following persons: 1 (self) Ponnambalam (Nallasivam, Erode) Rs.1,00,000/- 2 Mr. Jayaraman, Chairman, TNTC (6.2.95) Rs.4,00,000/- 3 Sakthi Printers Chinthamani Thoppu, Chinthamani Pudur, Tiruchi Road, Coimbatore Rs. 50,000/- 4. Murugesan, MAM Traders, Erode Rs.1,50,000/- 5. Self Rs. 50,000/- 6. Self (23.12.95) Rs. 6,000/- 7. Self (13.1.96) Rs.4,99,000/- 8. Mani Textiles, Ramnagar, Coimbatore Rs.2,70,000/- 26. You have stated that on 06.12.95 you have given Rs.4,00,000/- to Mr. Jayaraman, Chairman, T.N.T.C. Could you reply the reason for which it was given? Ans. If an order is to be obtained from T.N.T.C. money has to be given to the Chairman. So, I had given the said amount. 27. From the Spiral book taken from house, it is seen that you have given Rs.2,00,000/- to the Managing Director, TNTC and to the A.D. Rs.1,00,000/-. Can you state the reason for it? Ans. The handwriting found in the said book is not mine. It is the handwriting of my business friend Mr. Ruso. The information regarding the above has to be obtained only from him. 6.1 Further, ld.counsel for the assessee took us through the statement of assessee i.e., Shri Pollachi V. Jayaraman, son of Shri Varadarajan on 19.02.96 during the course of search, wherein vide Question No.4 to 14, the questions asked by the Authorized Officer was recorded on this very issue and the same reads as under:- 4. Your Textile Society in 1995 has purchased washed cotton fabric from M/s. Prasanna Textiles and Chemicals at 102, Angammal lay-out, Lali Road, Coimbatore-2. This company’s invoice Number from 24 to 50. The 13 IT(SS)A No.8/Chny/2009 total procurement value is more than Rs.7 Crores. Why has this been purchased ? On what classification was this procurement made? Ans: These clothes were supplied as uniform to School children, children who benefit from the Mid-day Meal Scheme. I am not aware of the procurement regulations. Only the company executives know the same. 5. M/s. Prasanna Textiles and Chemicals of 102, Angammal Lay-out, Coimbatore-2 and 43, Vivekananda Road, Ramnagar, Coimbatore-2 mentioned in the above question is not found in the above mentioned addresss. In our enquiries it has been proved that there are no such companies in the said addresses. It is seen from the records that you have procured clothes for Rs.7 Crores from a non-existing company. We require an explanation from you? Ans: I do not know anything about this. 6. Who will be able to give us details regarding the above query? Ans: The details are known only to the procurement committee of the company. 7. Your Society had purchased cotton threads in the year 1995 from the following companies:- a) Sree Sakthi Pannari Amman Traders, 75, Erode Road, Goundampadi, Periyar District. b) Sree Sabari Traders 751, Erode Road, Goundampadi, Periyar Dt. c) Sree Karunambika Enterprises, 158, Sathi Road, Goundampadi From the above mentioned companies, cotton threads to the value of Rs.2,92,50,000/- was purchased. What were the regulations that were followed while making the procurement? Ans: I do not know the details about that. 8. The three companies mentioned in the above enquiry does not function on the above mentioned addresses. Therefore, you could not have made the cotton thread procurement from the companies. You give an explanation. Ans: I do not come to know about these details. I do not know about these. 14 IT(SS)A No.8/Chny/2009 9. Your Textile Society has purchased the cotton threads from the following companies: (i) M.P. Textiles, Thathampalayam, Periya Puthur Post, Pugalur via Annur Union. (ii) Talent Cotton and Yarn Corporation, 43, Vivekananda Road, Ram Nagar. (iii) Anash Sri Yarns and Fabric Company, 14, Jothipuram, Alangadu MAngalam Road, Thirupur. There are bills that purchases of cotton threads valued at Rs.2,07,60,000/- from the three companies. But these companies do not exist. Tell us how did you make these procurements from them? Ans: I do not know anything about this. 10. Your Society has procurement from the following companies: (i) Rajaganapathy Traders, No.151, Srinivasa Park, Santhaipettai Road, Sevvaipettai, Salem. (ii) Lakshmi Traders, 80-B, Cuddalore-2. (iii) Thirumala Traders, 32, Vth Street, Chellur, Madurai. There are bills relating to the purchases from the above companies. Are these companies functioning and are really in existence? Ans: I do not know anything about them. 11. There was a search in the address of Thiru J. Murugesan, 94, Jagannatha Nagar, Peelamedu, Coimbatore on 13.2.1996. The record KR/S/B&D/48 which was seized from the house of Thiru J. Murugesan shows how the cash was given to you in the following manner: Date Amount Rs. 1.8.95 1,00,000 6.9.95 10,00,000 12.9.05 10,00,000 22.10.95 2,00,000 10.11.95 10,00,000 16.12.95 4,00,000 29.01.96 2,00,000 ----------- 39,00,000 ------------ 15 IT(SS)A No.8/Chny/2009 Why were there above mentioned amounts given to you? Ans: I did not receive any amount mentioned above. 12. Do you know J. Murugesan? I do not met him at all. I do not know about him 13. I will show you the record KR/S/B&D/48 which was seized from the house of J. Murugesan. It has been recorded In this that the amounts mentioned in query No.11 were given to you. Give us your explanation. Ans: I am not connected with the payment of the above amounts. I did not receive any amount. 14. Do you want to say anything else? Ans: I am related only to the policy declarations of the Society. I am not connected with the day to day affairs. There is nothing more to say. 6.2 The ld.counsel for the assessee only made submission that what is the material available with the Department particularly when the assessee Shri V. Jayaraman as well as the person from whom this paper was found, Shri V. Ponnambalam has denied the transaction, as is clear from the above questions and answers of the statement recoded from both the persons. The ld.counsel stated that there is no material except a bald paper which does not indicate who this ‘Chairman’ is and it is neither signed by anyone and there is no address of anyone. There are some jottings of amounts and dates except this there is no other document found during the course of search from the premises of Shri V. Ponnambalam. The ld.counsel for the assessee stated that what is the corroborative material or what is the tangible material which proves that these 16 IT(SS)A No.8/Chny/2009 payments were received by the assessee because this paper does not indicate the name of the assessee or any connection with that of the assessee, which proves that these payments were made to the assessee specifically when this paper was denied by the person i.e. Shri V. Ponnambalam and the assessee, Shri V. Jayaraman. In such circumstances, the ld.counsel stated that unless and until any corroborative evidence or tangible material available with the Department, no action can be taken or addition made in the block assessment while framing assessment. For this, relied on the following case laws:- 1. ITAT, Calcutta in the case of ACIT vs. Sri Radheshyam Poddar, 41 ITD 449 (CAL.) 2. ITAT, Hyderabad in the case of DCIT vs. C. Krishna Yadav, 12 Taxmann.com 4 (Hyd) 3. Hon’ble Supreme Court in the case of Common Cause vs. Union of India, 77 Taxmann.com 243(SC) 4. ITAT, Bangalore in the case of ACIT vs. Rajan Pai, 109 Taxmann.com 90 (Bang) 5. ITAT, Delhi in the case of Neeraj Goel vs. ACIT in ITA No.5951/Del/2017 6. ITAT, Mumbai in the case of ITO vs. Kranti Impex in ITA No.1229/Mum/2013 7. On the other hand, the ld. Senior Standing counsel for the revenue argued that as per the directions of the Tribunal cross examination was allowed on 05.03.2004 of Shri V. Ponnambalam by Shri V. Jayaraman. During the proceedings Shri V. Ponnambalam replied he did not meet Shri V. Jayaraman 17 IT(SS)A No.8/Chny/2009 anywhere except in the Income Tax Office. Prior to this on 09.10.1998 Shri V. Ponnambalam was cross examined by Shri V.Jayaraman, wherein Shri. Ponnambalam clearly stated that he has made the statement on the direction of Shri R. Sreenivasan. The statement given by Shri V. Ponnambalam at the time of cross examination cannot be relied upon. The reasons for giving a different statement than one given on 13.0.21996 (before ADIT (inv)) is not convincing and therefore the statement given at the time of cross examination can only be a result of an afterthought. Ld Senior Standing Counsel argued that Shri V. Ponnambalam was the Chairman of TNTC from 13.06.1994 to 29.03.1996 and the entries in the book relate to the same period made by Shri V. Ponnambalam in the normal course of carrying on business and there is no reason to doubt the Veracity of the statement on oath given by Shri V. Ponnambalam at the time of search on 13.02.1996. Hence the sum of Rs.39,00,000/- was treated as income from other sources and brought to tax for the block period 01.04.1985 to 13.12.1996 was completed on 25.03.2004 in the first round and again and again the matter was set aside by the tribunal as noted above. He further stated that in order to examine again (on the basis of sworn statement of Shri R. Sreenivasan) a notice u/s 131 of 18 IT(SS)A No.8/Chny/2009 the IT Act, 1961 was issued to Shri Ponnambalam at the present address available in record, but the same was returned un-served with postal remarks "Left". It is also worthwhile to mention here that the facts, narrated in the original sworn statement of Shri V. Ponnambalam has been given voluntarily at the time of search on 13.02.1996 without any discussion and guidance from other persons, hence the same has to be treated as the correct. Also the assessee Shri Jayaraman was given sufficient opportunity to cross examine Shri Ponnambalam and Shri R. Sreenivasan. No additional statement other than those on the basis of which cross examination was allowed to the assessee were recorded from these persons and hence giving further opportunity to the assessee does not arise. Hence, the sum of Rs.39,00,000/- was treated as income from other sources and brought to tax. Third time Block assessment for the block period 01.04.1985 to 13.12.1996 was completed on 22.03.2006. 7.1 He Further stated that again aggrieved with the assessment order dated 22.0.32006, assessee preferred an appeal before ITAT for the 3 rd time and ITAT for the 3 rd time set aside the block assessment and remitted the same to file of the AO to frame the block assessment afresh after establishing nexus between seized 19 IT(SS)A No.8/Chny/2009 material and the assessee as there is no seized material collected from the assessee. ITAT vide its order directed the AO to bear in mind the judgment of the Hon'ble Supreme Court in the case of CIT Vs P. V. Kalyanasundaram (294 ITR 49), the order of the Tribunal in the case of M.M. Finance P Ltd. Vs DCIT (107TT) 200). Bansal Strips P. Ltd. Vs ACIT (99 ITD 177) and the judgment of jurisdictional High Court in the case of CIT Vs G. K. Senniappan (284 ITR 220).Keeping in View, the directions issued by the ITAT, opportunities were given to the assessee. The assessee has not rebut the statement of Shri V. Ponnambalam that he paid the assessee the amounts withdrawn from his bank account with bank of Boards, Ram Nagar Branch, Coimbatore. The assessee also failed to prove that the entries in the seized materials are wrong whereas Shri V. Ponnambalam never retracted from the statement. 7.2 Ld. Senior Standing Counsel finally argued that the nexus between the seized material and the assessee has to be appreciated in the background of Shri V. Ponnambalam statement that he paid the amounts to the assessee in the hope of getting continuous orders. Hence in view of all facts and circumstances of the case assessment is completed holding the amount of RS.39,00,000/- as the undisclosed income of the assessee during the block period 20 IT(SS)A No.8/Chny/2009 01.04.1985 to 13.02.1996. Again aggrieved with the assessment order dated 29.12.2008 passed by the DCIT, Central Circle -1, Coimbatore assessee preferred an appeal before ITAT for the 4 th time in IT (SS) A. No.8/Mds/2009 (the present appeal). The Revenue's contention is that the assessee failed to establish that there is no nexus between the materials seized during search and him. The nexus between the seized material and the assessee has to be appreciated in the background of Shri V. Ponnambalamn statement that he paid the amounts to the assessee in the hope of getting Continuous orders. Hence in the above facts and circumstances of the case the Block Assessment order of the Assessing officer is to be confirmed 8. We have heard rival contentions and gone through facts and circumstances of the case. We noted that except one piece of paper on which it is written in heading “Chairman” and various dates are given against which some amount is written (we have noted this fact in para 5 above). The basis of addition of this Rs.39 lakhs is paper found from one Shri J Murugesan. No doubt, he is one of the suppliers of sarees and dhotis for Tamilnadu Textile Corporation Ltd., and supplying sarees and dhotis during the period. But, it is noted that Shri V. Ponnambalam as well as Shri V. Jayaraman both 21 IT(SS)A No.8/Chny/2009 denied the transaction and has not admitted this paper and Revenue could not bring any tangible material or corroborative material which corroborates this paper with the alleged payments made by Shri V. Ponnambalam to the assessee Shri V. Jayaraman. We noted that even during the course of search, the investigation wing of the Department has not collected any evidence either from the assessee or from Shri V. Ponnambalam towards the receipt of the above alleged amounts found this simpliciter one page which is undated, unnamed and had no way connect the assessee with Shri V. Ponnambalam. Moreover, the statements recorded from Shri V. Ponnambalam and Shri V. Jayaraman categorically denied the receipt of any payment or the authenticity of the paper. It is admitted that notings are not in the name of Shri V. Ponnambalam or of the assessee, Shri V. Jayaraman. We are of the view that the Revenue authorities has erred only presuming the things that this paper belongs to assessee and these are payments made by Shri V. Ponnambalam to the assessee for procuring orders of supplies of sarees and dhotis. The actual things depend on facts and circumstances of each case. We are of the view that the authorities concerned should have drawn the conclusion judicially depending upon the facts and circumstances of the case but in the present case, there is no conclusive presumption. We noted that in one 22 IT(SS)A No.8/Chny/2009 statement of Shri V. Ponnambalam, it is shown that payment of Rs.4 lakhs on 06.12.1995 was made by him to the assessee and assessee who was Chairman of Tamilnadu Textile Corporation for collecting the orders for supply of materials. But, we noted that the AO for making addition relied on the seized material bearing No. KR/S/B&D/48 seized from Shri J. Murugesan on 13.02.1996. We noted that the AO has not established any nexus of these payments with any tangible or underlying material and without any basis made these additions. Accordingly, in the absence of any evidence, we delete the addition and allow the appeal of the assessee. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29 th June, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 29 th June, 2022 RSR आदेशकᳱᮧितिलिपअᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकरआयुᲦ (अपील)/CIT(A) 4. आयकरआयुᲦ /CIT 5. िवभागीयᮧितिनिध/DR 6. गाडᭅफाईल/GF.