RAMASAMY RAJASEHAR,PERAMBALUR V. ACIT, CENTRAL CIRCLE-2, TRICHY

CO 29/CHNY/2025

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which deleted a protective addition of Rs.14,91,00,000 made by the Assessing Officer (AO) towards unexplained investments allegedly made by the assessee, Ramasamy Rajasehar, a former CFO of the Dhanalakshmi Srinivasan Group. The additions were based on documents seized during a search operation under section 132 of the Income-tax Act, 1961. The AO made a protective addition in the assessee's hands despite no substantive addition being made in the hands of the companies involved for the assessment year 2014-15. The CIT(A) found that the assessee had not made the investments and that his name was misused by the group for these transactions. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of substantive evidence linking the assessee to the investments and the procedural flaws in the satisfaction note under section 153C.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787258 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-11-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-04-2025
• Other Referred Cases: CIT v. Smt. Saraswati Devi [1995] 212 ITR 445 (Raj.), Suresh K. Jajoo v. Asstt. CIT [2010] 39 SOT 514 (Mum.), Super Malls Pvt. Ltd. v. PCIT [(2020) 423 ITR 281 (SC)], Pepsi Foods Pvt. Ltd. v. ACIT [(2014) 367 ITR 112 (Del)], Calcutta Knitwears [(2014) 362 ITR 373 (SC)], Sunil Kumar Sharma v. DCIT (W.A. No. 830 of 2022 and connected matters, dated 22.01.2024) 469 ITR 197(Kar)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS; C.I.T
• Assessee Lawyers: D.ANAND
• Keywords: Set aside; Additional evidence; Reasonable cause; Corroborative evidences; Unexplained cash credit; Unexplained investment; Salary income; Income from undisclosed sources; Document seized; Documents seized; Onus to prove; Search and seizure; Accommodation entries; Share purchase agreement; Bogus
• Section: 69

Judgement Text

" आयकर अपील य अ धकरण, ‘बी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI \u0015ी एस एस \u0018व\u001aवने\u001b र\u0018व, \u000eया यक सद य एवं \u0015ी एस. आर. रघुनाथा, लेखा सद य क े सम% BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 3336/Chny/2024 & C.O.No.29/Chny/2025 (in ITA No.: 3336/Chny/2024) नधा&रण वष& / Assessment Year: 2014-15 ACIT, Central Circle -2, Trichy. vs. Ramasamy Rajasehar, 274-C, Thuraiyur Road, Perambalur, Trichy – 621 212. (अपीलाथ(/Appellant) [PAN: AOOPR-5362-Q] ()*यथ(/Respondent/ Cross Objector ) Assessee by : Shri. D. Anand, Advocate Department by : Mr. Shiva Srinivas, C.I.T. सुनवाई क+ तार ख/Date of Hearing : 29.10.2025 घोषणा क+ तार ख/Date of Pronouncement : 20.11.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM: The present appeal filed by the Revenue and the cross-objections preferred by the Assessee are directed against the order dated 10.10.2024 passed by the Learned Commissioner of Income Tax (Appeals)-19, Chennai [hereinafter referred to as the “Ld. CIT(A)”], arising out of the assessment framed u/s.143(3) r.w.s 153C of the Income-tax Act, 1961 [hereinafter referred to as the “Act”], vide assessment order dated 20.12.2019 passed by the Assistant Commissioner of Income Tax, Central Circle-1, Trichy [hereinafter referred to as ‘the AO’], in relation to the Assessment Year 2014-15. Since facts are identical and issues are common, appeal filed by the Printed from counselvise.com :-2-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 Revenue and cross objections filed by the assessee were heard and are being disposed of by this consolidated order. 2. The Revenue has raised the following grounds in I.T.A.No.3336/CHNY/2024: “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 deleting the addition of Rs.14,91,00,000/- made towards unexplained investment u/s.69 by holding the addition as protective in nature without taking cognizance of the fact that for AY 2014-15, this impugned investments found vide seized documents ANN/RR/NS/LS at the residence of the present assessee at Perambulur in the two entities of the Dhanalakshmi Srinivasan Group have not been considered towards addition to total income of any other entities thereby rendering this addition in the hands of the assessee substantive. 2.1 The Ld.CIT(A) erred in not appreciating the fact that the said impugned investment of Rs.14,91,00,000/- has not been taxed twice in any entities of the Dhanalakshmi Srinivasan Group including the present assessee but on the contrary with the order of the Ld.CIT(A) this impugned investment will not be taxed in any hands at all thereby resulting in loss of Revenue despite the finings of the search. 3. The Ld.CIT(A) order is perverse on account of the fact of his observation in para 6.3.21 of his order that to “assessee the same investments protectively in the hands of the appellant while simultaneously assessing them in the hands of the respective entities in different assessment years other than 2014-185 tantamount to double taxation” without taking cognizance of the facts of the case where this observation is not factually correct vis-à-vis the unexplained investment or the entities of the Dhanalakshmi Srinivasan Group. 4. For these grounds and any other ground 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 assessee has raised the following grounds of cross objections in C.O.No.29/CHNY/2025: “1.1 The order of the Ld.CIT(A) is correct and in consonance with law and facts to the extent it allows the appeal of the Respondent/ Cross-objector. 1.2 The CIT(A) has rightly deleted the addition on the ground that there was no corroborative evidence to substantiate the investments made by the Respondent-Assessee during the A.Y.2014-15. Printed from counselvise.com :-3-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 1.3 The CIT(A) has rightly deleted the addition on the ground that the Respondent-Assessee is not a resourceful person to make such huge investments. 1.4 The CIT(A) has rightly deleted the addition on the ground that there being no substantive addition made in the case of the companies M/s. VASAN CONSTRUCTIONS COMPANY & M/s. DS BUILDERS, there could be no protective assessment in the case of the Assessee. 1.5 The CIT(A) rightly deleted the addition on the ground that the impugned addition tantamount to double addition in as much as the additions in respect of share application money is taxed at the hands of the company for the earlier A.Ys., 2.1 The CIT(A) having deleted the addition on the ground that there being no corroborative evidence ought to have held that loose sheets does not partake the character of incriminating materials and as such it is only dumb document which has no VALUE. 2.2 The CIT(A) having taken note of the fact that the impugned addition was initially made on a protective basis, ought to have ascertained the satisfaction note recorded u/s.153C of the IT Act. 2.3 The CIT(A) ought to have held that there is no proper satisfaction accorded u/s.153C of the IT Act which is very clear from the change of stand by the Income Tax Department. 2.4 The CIT(A) has rightly deleted the addition after considering the submissions of Mr. Kathiravan Srinivasan and the AO cannot improve his case no by taking a new ground altogether that the said investment ought to be taken in substantive manner. 3. Any other ground of Cross Objection that may be taken up at the time of hearing.” 4. At the outset, it is observed that there is a delay of 63 days in the filing of the Cross-Objections by the assessee. Upon due consideration of the submissions made by both the parties, and having regard to the facts and circumstances of the case, we are satisfied that the assessee was prevented by reasonable cause from filing the Cross-Objections within the time prescribed under the statute. Accordingly, in the interest of justice and equity, the delay in filing the Cross-Objections is hereby condoned, and the Cross-Objections are admitted for adjudication on merits. Printed from counselvise.com :-4-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 5. The brief facts of the case, as emanating from the record, are that the assessee is an individual and was the former CFO of M/s.Dhanalakshmi Srinivasan Charitable and Educational Trust (DS Trust). A search and seizure operation u/s.132 of the Act was conducted in the case of the said trust on 15.02.2018. Consequent thereto, various related entities and key individuals, including the residential premises of the assessee, were also covered under the said search action. During the course of the search, certain documents and loose sheets purportedly indicating investments allegedly made by the assessee in M/s.Vasan Construction Company Private Limited and M/s.Dhanalakshmi Srinivasan Builders Private Limited were found and seized from the assessee’s residence. 6. On the basis of the seized materials, the AO recorded the satisfaction as contemplated u/s.153C of the Act and consequently issued notice under the said provision on 27.08.2019. In response, the assessee filed his return of income on 20.09.2019. Thereafter, notice u/s.143(2) of the Act was issued on 09.10.2019. Upon request, the AO also furnished to the assessee the reasons recorded for initiating proceedings u/s.153C of the Act. 7. The AO noted that certain loose sheets, marked as Annexure No.ANN/RR/NS/LS/S, were seized from the residence of the assessee. The AO observed that these loose sheets contained details of investments recorded against the name of the assessee in the aforementioned entities. Based on such seized materials, the AO tabulated the alleged investments as under: Printed from counselvise.com :-5-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 S. No Seized material reference Name of the entity Amount of investment (Rs.) 1 Page 19 M/s Vasan Construction Company Private Limited 1,75,00,000 2 Page 21 M/s Vasan Construction Company Private Limited 2,98,00,000 3 Page 22 M/s Dhanalakshmi Srinivasan Builders Private Limited 5,02,00,000 4 Page 23 M/s Dhanalakshmi Srinivasan Builders Private Limited 5,16,00,000 Total 14,91,00,000 8. The AO reproduced the relevant seized pages in the assessment order. The AO further observed that in his statement recorded u/s.132(4) of the Act on 17.02.2018, the assessee denied having made any such investments and claimed that his name had been misused by diverting funds from the DS Trust. The AO held that the assessee failed to substantiate his claim with cogent documentary evidence. According to the AO, the books of account of the said companies were duly audited by a reputed Chartered Accountant, and therefore it was improbable that such substantial investments could have been incorporated in their financial records without due verification. The AO accordingly issued a show-cause notice dated 06.11.2019 proposing to treat the above sum of Rs.14,91,00,000 as unexplained investment u/s.69 of the Act in the hands of the assessee. 9. In response, the assessee contended that he was merely an employee of the group, without the financial capacity to make such investments. It was submitted that due to differences with the management he was compelled to relinquish his employment, and that during his tenure he was compelled to sign various papers for which he could not take responsibility. The assessee also submitted that the seized papers did not bear his signature and, therefore, no adverse inference could be drawn. The assessee accordingly urged the AO to drop the proposed addition. Printed from counselvise.com :-6-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 10. The AO rejected the assessee’s explanation, observing that if the assessee was merely an employee without financial means, it was highly unlikely that the group companies would record such substantial investments in their books in his name. The AO also noted that the assessee had filed proceedings before various judicial forums after his removal from directorship of M/s.Vasan Construction Company Private Limited, wherein he had asserted minority shareholding in the said concerns. According to the AO, these facts contradicted the assessee’s contention that he was compelled to sign the documents relating to the alleged investments. 11. The AO further held that the seized materials were in fact found at the assessee’s premises, contrary to the assessee’s assertion that nothing was recovered from him. The AO also observed that the absence of the assessee’s signature on the seized papers was not decisive for the purpose of determining the nature of the documents. It was noted that substantive additions in respect of the alleged investments were made in the hands of the respective companies as unexplained cash credits. The AO, therefore, proceeded to make a protective addition of Rs.14,91,00,000/- in the hands of the assessee u/s.69 of the Act towards unexplained investments in the aforesaid concerns. 12. Accordingly, the assessment was completed u/s.143(3) r.w.s 153C of the Act on 20.12.2019, determining the total income at Rs.9,06,72,400/-, after including the aforesaid protective addition of Rs.14,91,00,000/- to the loss of Rs.5,84,27,600/- declared in the return of income. Printed from counselvise.com :-7-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 13. Aggrieved of the above assessment order, assessee carried the matter before the Ld.CIT(A) who vide the impugned order dated 10.10.2024 deleted the protective addition of Rs.14,91,00,000/- made by the AO. 14. During the course of the appellate proceedings before the Ld.CIT(A), the assessee submitted that he was merely an employee of the Dhanalakshmi Group and that his name had been misused by compelling him to sign various documents, the contents of which he was allegedly unaware. It was contended that, as his concerns were disregarded, he was constrained to leave the employment of the group in November 2015. The assessee further stated that he had never received any communication from the concerned companies in the capacity of a shareholder. In view thereof, it was urged that he was not a genuine shareholder and that no investment, as alleged, had been made by him. 15. The assessee also submitted that his personal immovable property had been furnished only as a collateral security for a bank loan availed by M/s.Vasan Construction Company Private Limited, where he was then serving as a director. According to the assessee, the said company removed him from directorship without releasing the collateral furnished by him. In this regard, the assessee had instituted proceedings before the NCLT seeking to restrain M/s.Vasan Construction Company Private Limited from removing him as a director. It was thus contended that such proceedings had no nexus whatsoever with the alleged investments attributed to him. The assessee further argued that the documents relied upon by the AO were never seized from his premises, were unsigned, and were unsupported by any corroborative material to demonstrate that he had made the impugned investments. Printed from counselvise.com :-8-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 16. The assessee additionally contended that the issue had already been examined in the assessments of M/s.Dhanalakshmi Srinivasan Builders Private Limited for A.Ys. 2012-13 and 2013-14, further in the hands of M/s.Vasan Construction Company Private Limited for the A.Y.2013-14, and had no relevance to A.Y. 2014-15. Accordingly, initiation of proceedings u/s.153C of the Act for the impugned assessment year was claimed to be without jurisdiction and bad in law. 17. The assessee also drew attention to the statement of Shri S.Kathiravan, Vice Chairman of the Dhanalakshmi Srinivasan Group, recorded u/s.132(4) of the Act on 18.02.2018, wherein it was admitted that the investments in the impugned companies were routed through bogus concerns to accommodate the group’s unaccounted income. On the strength of this admission, it was urged that the investments in the shares of the companies represented the group’s undisclosed income and, therefore, could not be assessed as unexplained investment in the hands of the assessee. 18. In light of the above submissions, the assessee contended before the Ld.CIT(A) that the protective addition of Rs.14,91,00,000/- made in his hands was wholly unwarranted and liable to be deleted. 19. Upon considering the submissions of the assessee, the Ld.CIT(A) deleted the protective addition of Rs.14,91,00,000/- in the hands of the assessee observing as under: - “6.3.9 On examination of the various grounds ( 2 to 18) raised by the appellant, it can be seen that the grounds raised revolve around the core issue of the protective addition made invoking the provisions of section u/s 69 of the Act for the AY 2014-15. Printed from counselvise.com :-9-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 6.3.10 The appellant, during the course of appellate proceedings has submitted that he was an employee of Dhanalakshmi Srinivasan Group since 1989. Despite limited formal education, the individual completed a postgraduate degree through correspondence while working for the group. His role mainly involved in executing tasks and following instructions given by the group’s leadership, namely Mr. A. Srinivasan, Mr. S. Kathiravan, and their family members. The appellant claimed that the names of employees were used in various transactions without their knowledge, and they signed documents in good faith. Over time, they raised concerns about the propriety of certain actions but were forced to continue working under the same circumstances until they left the group in November 2015. After leaving the group, the appellant has been running a BPCL dealership. However, during the course of search in the Dhanalakshmi Srinivasan Group on 15.02.2018, the appellant’s residence was also subjected to search. Consequent to findings of the search the AO, framed a Protective Assessment Order in the case of the appellant. The appellant in his submission relies upon the sworn statements from Shri S. Kathiravan, the Vice Chairman of Dhanalakshmi Srinivasan Group, which confirm that the investments in question were made using unaccounted money from the group and, not by him. 6.3.11 As evident in the assessment order passed, the burden of proof rests on the revenue authorities to substantiate any additions made to an assessee's income. In this case, the AO has chosen to make protective addition relying upon the seized materials and conclusively made the substantive addition in the respective entities for a different assessment years. 6.3.12 Now the issue before the undersigned is to evaluate as to whether these materials convincingly demonstrate that the appellant was responsible for the investments in question. The appellant contends that he did not make the investments, which he attributes to the misappropriation of his name by the management of the Dhanalakshmi Srinivasan Group. 6.3.13 Then undersigned observes that the loose sheets seized during the course of search, which gives details of huge investments, are the primary basis for the AO’s conclusion to make the protective addition. However, the undersigned notes that the mere existence of these documents does not automatically establish the appellant’s liability for the investments. The documents must be examined in the context of the appellant's role within the group and his assertions regarding the unauthorized use of his name. In the present case, the AO has not provided substantive evidence to demonstrate that the appellant had actual control or knowledge over these investments. Further the AO in the assessment order passed has himself made a categorical findings that “ it is a fact that the assessee was only an employee of the group and apparently he does not have the means to invest such huge amount in the companies of the group,” 6.3.14 Further, in the appellant's statement, he has specifically denied making the investments and claimed that his name was used without his consent, is a critical aspect of this appeal. While the AO dismissed this claim as inconsistent and unsupported, the undersigned is constrained to consider the circumstances surrounding the appellant's employment within the group and the nature of the transactions. The appellant has asserted that he was Printed from counselvise.com :-10-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 not in a position to make such huge investments and that the management of the group engaged in practices that obscured the true nature of the transactions. The undersigned is of the view that the AO should have conducted a more thorough investigation into these claims, more particularly considering that the appellant was an employee without substantial financial resources to make such huge investments. 6.3.15 The AO's reasoning appears to be primarily based on the presumption that significant investments could not be recorded under the name of an employee without due verification. While the AO is correct in noting that large sums should be treated with caution, it is crucial to analyse whether there were any circumstances that justified the transactions being recorded in the appellant's name. The mere fact that the appellant was an employee does not eliminate the possibility of him being a legitimate investor, especially if the management exercised control over the documentation processes. 6.3.16 The undersigned is of the view that the AO's reliance on the seized documents as definitive proof of the appellant's involvement lacks adequate corroboration. The materials should ideally be supported by additional evidence, such as bank statements, transaction records, or testimony from other key individuals involved in the investments. Without such corroborative evidence, the conclusion drawn by the AO appears to be speculative and insufficient to uphold the protective addition. 6.3.17 As evident in the assessment order, the AO contemplated the addition in the hands of the appellant as a protective measure. On examination of records, the undersigned observes that the AO in the case of M/s. Vasan Construction Company, for the AY 2013-14 has made the substantive addition of Rs. 1,95,82,000/- and Rs. 1,68,50,000/- as unexplained investment in the form of Share application money from the bogus entities Balaji Traders and Tripathi Traders alleged to be the proprietary concern of the appellant. Further in the case of M/s. DS Builders, for the AY 2012-13, the AO has made a substantive addition of Rs. 2,85,00,000/- and Rs. 2,43,00,000/- as unexplained investment in the form of Share application money from the bogus entities Balaji Traders and Tripathi Traders alleged to be the proprietary concern of the appellant. It is pertinent to bring on record that the appellant in the statement recorded during the course of search has clearly stated that he does not have any independent source of income other the salary income to make these investments. The relevant extract of the same is reproduced her as under. Q-14. Please go through the pages 19 to 25 once again. Your attention is drawn to the investments made by you in entities such as M/s Balaji Traders, Trupathi Traders, Vasan Construction Company etc., wherein you have invested Crores of rupees in the form of either Unsecured loan or Shares. Explain in detail, the sources for the same. Also, please state the bank account numbers of these entities. Ans: As deposed earlier, I did not have independent source of income other than my salary while working in M/s Dhanalakshmi Srinivasan group. As such, I did not do any of the above investment. My name was used to make these investments by taking out funds from the DS Trust. I remember that I have neither issued any banking instruments nor signed any applications to Printed from counselvise.com :-11-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 facilitate any fund transfer for the entities referred above. These entries may also be Cash entries, in order to introduce funds. I am not aware of any bank accounts for these entities.\" From the above deposition, the appellant being an employee of the Dhanalakshmi Srinivasan Group of concerns has no other source other than his salary income. The AO has not brought on record any evidence to prove that the appellant is resourceful person to make such huge investments. 6.3.18 At this juncture, it is significant to bring on record that, the AO has chosen to make the protective addition in the hands of the appellant in the AY 2014-15. On examination of the assessment order(s) passed in the case of M/s. Vasan Construction Company & M/s. DS Builders, there exists no corresponding substantive addition made for the AY 2014-15. Without there being any substantive addition, making addition as a protective measure is not appropriate and lacks merits. 6.3.19 It is pertinent to note that Protective assessment is a precautionary assessment. The object of a protective assessment is that in case substantive addition is made in the hands of other person and in case assessment fails, Department must get the tax from the person in whose hands the protective assessment is made. [refer- CIT v. Smt. Saraswati Devi [1995] 212 ITR 445 (Raj.)] 6.3.20 Also, an assessment can be considered as protective only when there is substantive assessment and, thus, substantive assessment has to precede protective assessment. [refer- Suresh K. Jajoo v. Asstt. CIT [2010] 39 SOT 514 (Mum.)]. 6.3.21 It is brought on record; the AO has not made any substantive addition in respect of the relevant entities for the year under consideration (AY 2014- 15). As there exists no substantive addition made in the AY 2014-15 in the hands of the corresponding entities i.e. M/s. Vasan Construction Company & M/s. DS Builders , the undersigned is of the considered view that the protective addition made in the hands of the appellant is unsustainable in the eyes of law. Further, the undersigned recognizes the principle that income cannot be taxed twice. The AO’s decision to assess the same investments protectively in the hands of the appellant while simultaneously assessing them in the hands of the respective entities in different assessment years other than AY 2014-15 tantamount to double taxation. In this backdrop the protective addition made is devoid of merits. Accordingly, all the grounds raised upon the core issue of addition made is treated as allowed and the AO is directed to delete the protective addition of Rs. 14,91,00,000/- made u/s 69 of the act for the AY 2014-15.” 20. The Ld.DR, appearing on behalf of the Revenue, vehemently supported the order of the AO and placed reliance on the grounds of appeal filed by the Revenue. The Ld.DR accordingly prayed that the order of the Ld.CIT(A) be set aside and that the grounds raised by the Revenue be allowed. Printed from counselvise.com :-12-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 21. The Ld.AR, appearing on behalf of the assessee and adverting specifically to Ground Nos.2.2 and 2.3 of the Cross-Objections, raised a jurisdictional challenge to the validity of the assumption of jurisdiction u/s.153C of the Act. The Ld. AR, drawing attention to the satisfaction note recorded by the AO, submitted that the said satisfaction note is a consolidated note covering AYs 2012-13 to 2018-19, and that no independent or separate satisfaction has been recorded for A.Y. 2014-15. It was argued that the absence of a year-specific satisfaction vitiates the assumption of jurisdiction and consequently renders the impugned assessment invalid. 22. The Ld. AR further submitted that no substantive addition has been made in the case of M/s.Vasan Construction Company Private Limited or M/s.Dhanalakshmi Srinivasan Builders Private Limited in the relevant assessment year. In the absence of any substantive assessment in the hands of the said companies, the protective addition of Rs.14,91,00,000/- made in the hands of the assessee is, according to the Ld. AR, unsustainable in law and has been rightly deleted by the Ld. CIT(A). 23. Placing reliance on the detailed findings of the Ld.CIT(A), the Ld.AR submitted that the appellate order is not perverse or there is no infirmity and accordingly prayed that the same be upheld. 24. We have considered the rival submissions and perused the material available on record, as well as the judicial precedents relied upon by the Ld.AR. From the facts emerging on record, it is evident that the assessee was a former employee of the Dhanalakshmi Srinivasan Group and was consequently covered in the course of a Printed from counselvise.com :-13-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 search operation conducted in the said group. During the search at the assessee’s premises, certain incriminating materials were seized, on the basis of which the AO recorded satisfaction u/s.153C of the Act. The AO noted that the assessee was shown as a shareholder in M/s.Vasan Construction Company Private Limited and M/s.Dhanalakshmi Srinivasan Builders Private Limited. On this premise, the AO proposed to treat a sum of Rs.14,91,00,000/- as unexplained investment u/s.69 of the Act. The assessee objected to the proposed addition, contending that he was merely an employee of the group, that his name had been misused, and that he had never made any such substantial investments. The AO, however, rejected the assessee’s explanation and proceeded to make a protective addition of Rs.14,91,00,000/- u/s.69 of the Act, observing that substantive additions had already been made in the hands of the respective companies in respect of unexplained cash credits. In appeal, the Ld.CIT(A) deleted the impugned addition. We observed that the Ld.CIT(A) found that no substantive addition existed in the hands of the alleged companies for the A.Y.2014- 15, and in the absence of such substantive addition, no protective addition could survive in the hands of the assessee. The Ld.CIT(A) further held that the AO had not demonstrated that the assessee had actual knowledge of, or control over the alleged investments. The Ld.CIT(A) observed that the AO failed to carry out any meaningful or comprehensive investigation, especially considering the assessee’s status as an employee with no substantial financial capacity to make investments of this magnitude. It was also noted that the AO had not brought any corroborative evidence on record to show that the assessee had in fact made the impugned investments. In the absence of such evidence, the conclusions drawn by the AO were held to be speculative and insufficient to sustain the protective addition. In view of the foregoing findings, the Ld.CIT(A) deleted the protective addition made by the AO. Printed from counselvise.com :-14-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 25. We shall first address the legal issue urged by the Ld.AR on the validity of the consolidated satisfaction note recorded by the AO. On perusal of the satisfaction note recorded by the AO, we find that the AO has recorded the same without specifying the undisclosed income corresponding to each of the assessment years separately. It is only mentioned all the assessment year from 2012-13 to 2018-19. Further, there is no mention about the name of the M/s.Dhanalakshmi Srinivasan Builders Private Limited in the said note. 26. The recording of satisfaction is not a mere formality. The satisfaction recorded by the AO should be as per the jurisdictional requirement as detailed below: a. It must be in writing, dated, and signed by the Assessing Officer. b. Must be recorded before issuing notice u/s.153C of the Act. c. Should clearly identify the searched person u/s.132 of the Act. d. Must describe the seized documents/assets and reference panchnama/annexures. e. Must contain a finding that the seized material belongs to / pertains to / relates to the other person (i.e., the assessee). f. Must establish that the seized material has a bearing on the other person’s income. g. Should demonstrate application of mind, not use mechanical or vague language. h. Must specify the assessment years involved and record separate satisfaction for each year. i. If the AO of searched person and other person are different: - Note must mention transmission of material and satisfaction to AO of the other person. Printed from counselvise.com :-15-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 - If AO is common for both, must record in the note that he is acting in both capacities. 27. These conditions have been further crystalised by the catena of decisions of the various courts as detailed below; a) The satisfaction note should not be based on only loose sheets or uncorroborated material. (CBI v. V.C. Shukla [(1998) 3 SCC 410] and Common Cause v. Union of India [(2017) 11 SCC 731] judgments). b) The Division Bench judgment of the Hon’ble Karnataka High Court in Sunil Kumar Sharma v. DCIT (W.A. No. 830 of 2022 and connected matters, dated 22.01.2024) 469 ITR 197(Kar) [Page 53 para 36 and page 91 para 53] [SLP dismissed by Hon’ble Supreme court dated 21.10.2024], where it was categorically held as follows: “...Further, satisfaction note is required to be recorded under Section 153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the appellant / Revenue.” 28. It is a settled proposition in law that the satisfaction of the AO, as required u/s.153C(1) of the Act, must not only be contemporaneous and in writing, but must also be specifically relatable to each of the six assessment years proposed to be reopened. 29. This view is further fortified by the Hon’ble Supreme Court in Super Malls Pvt. Ltd. v. PCIT [(2020) 423 ITR 281 (SC)], wherein it was laid down that the satisfaction contemplated u/s.153C of the Act is a sine qua non for the assumption of jurisdiction and must be recorded distinctly for each year. A failure to do so, strikes at the root of the assessment. Moreover, the Hon’ble Delhi High Court in Pepsi Foods Pvt. Ltd. v. ACIT [(2014) 367 ITR 112 (Del)] and the Hon’ble Supreme Court in Calcutta Knitwears [(2014) 362 ITR 373 (SC)] have emphasized that the AO must demonstrate a live and direct nexus between the seized material and the relevant assessment year in respect Printed from counselvise.com :-16-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 of the “other person,” which cannot be presumed in the absence of year-specific satisfaction. 30. In the present factual matrix, upon a careful and considered examination of the record, we observe that the AO has merely recorded a consolidated or omnibus satisfaction note purporting to cover multiple assessment years in a single stroke, without undertaking the statutorily mandated exercise of correlating the seized material to each specific assessment year. Such a composite satisfaction, bereft of any year-wise delineation or individualized reference to incriminating material, does not satisfy the foundational jurisdictional requirement contemplated u/s.153C of the Act. 31. It is a settled proposition, fortified by judicial pronouncements, that the satisfaction recorded by the AO must exhibit clear, unambiguous, and year-specific nexus between the seized documents and the income alleged to have escaped assessment for each of the six assessment years. In the instant case, we find that the satisfaction note is wholly common and undifferentiated across the years. There is no indication whatsoever of any independent, year-wise appraisal of the material seized, nor is there any linkage drawn between the documents relied upon and the corresponding assessment years sought to be reopened. 32. Such a blanket recording of satisfaction, devoid of statutory compliance and contrary to the interpretative principles laid down by various Courts, cannot be regarded as a valid assumption of jurisdiction u/s.153C of the Act. The jurisdictional Printed from counselvise.com :-17-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 defect, going to the very root of the proceedings, renders the entire exercise undertaken by the AO legally untenable. 33. In view of the foregoing and respectfully following the judicial precedents (supra), we are constrained to hold that the satisfaction note recorded by the AO u/s.153C of the Act is bad in law. Consequently, the assessment order dated 20.12.2019 passed u/s.143(3) r.w.s 153C of the Act, being founded upon an invalid and unsustainable jurisdictional premise, is void ab initio and liable to be quashed. We accordingly quash the impugned assessment order. Thus, the legal ground raised by the assessee in grounds of Cross-Objections is allowed. 34. Coming to the next issue regarding the validity of a protective addition made in the hands of the assessee without a corresponding substantive addition in the hands of the alleged investing companies, we note from the assessment orders passed in the cases of M/s.Vasan Construction Company Private Limited and M/s.Dhanalakshmi Srinivasan Builders Private Limited for A.Y. 2014-15, it is evident that no substantive addition of Rs.14,91,00,000/- has been made therein on account of the alleged investment. From these undisputed facts, it is clear that the AO has proceeded to make a protective assessment in the hands of the present assessee, despite the absence of any substantive assessment on the very same transaction in any other case for the relevant assessment year. It is a well-settled legal principle that a protective assessment can be sustained only when there is a corresponding substantive assessment, in the case of another assessee pertaining to the same income or transaction in the same assessment year. The underlying rationale for this principle is that the Assessing Officer, being uncertain as to the person in whose hands a particular Printed from counselvise.com :-18-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 income is assessable owing to conflicting claims by multiple parties or by the same party across different assessment years may safeguard the interest of the Revenue by making a substantive assessment in the case where, based on the facts on record, he believes the income is primarily assessable, and simultaneously make a protective assessment in the alternative case. 35. Thus, the existence of a substantive assessment is a condition precedent for making a protective assessment in respect of the same income and for the same assessment year. In the present case, in the absence of any substantive addition in the hands of the alleged companies for A.Y.2014-15, the protective addition made in the hands of the assessee cannot be sustained. 36. In the instant case, the AO has made a protective assessment in the hands of the assessee for A.Y.2014-15 in respect of the alleged unexplained investment in the share capital of M/s.Vasan Construction Company Pvt. Ltd. and M/s.Dhanalakshmi Srinivasan Builders Pvt. Ltd. It is an admitted position that the corresponding substantive additions were already made in the hands of the aforesaid companies in the preceding assessment years. The Ld.CIT(A) has recorded a categorical finding that, in the case of M/s.Vasan Construction Company Pvt. Ltd. for A.Y. 2013-14, the same AO while framing the assessment, has made substantive additions of Rs.1,95,82,000/- and Rs.1,68,50,000/- on account of alleged unexplained investment in the nature of share application money stated to have been received from the so- called non-genuine concerns, viz., Balaji Traders and Tripathi Traders, which were alleged to be proprietary concerns of the present assessee. Likewise, in the case of M/s.Dhanalakshmi Srinivasan Builders Pvt. Ltd. for A.Y. 2012-13, the same AO in the Printed from counselvise.com :-19-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 assessment, has made substantive additions of only Rs.2,85,00,000/- and Rs. 2,43,00,000/- on similar grounds. 37. It is therefore evident that, for A.Y. 2014-15, no substantive addition has been made in the hands of the said companies in respect of any alleged investment relatable to the assessee added in the assessment amounting Rs.14.91 Crores. In the absence of any such substantive assessment in the hands of the companies, the very foundation for sustaining a protective addition in the hands of the assessee does not survive. It is a settled principle that a protective assessment can be justified only when a corresponding substantive assessment exists in another hand. 38. In view of the above factual matrix, we hold that the protective addition of Rs.14,91,00,000/- made by the AO in the hands of the assessee towards alleged unexplained investment is unsustainable in law. We accordingly endorse the finding of the Ld.CIT(A) in deleting the said protective addition. 39. Our aforesaid view stands fortified by the decisions of the Coordinate Benches of this Tribunal, wherein it has been consistently held that a protective addition cannot be sustained in the hands of an assessee unless a substantive assessment for the very same assessment year has been validly made in the hands of another person. In this regard, we take the support of the decision of the Delhi Tribunal, in the case of ITO v. Fussy Financial Services Pvt. Ltd. [ITA No. 4227/Del./2014], wherein the Tribunal held as under: \"We further note that the analysis of the investment account reveal that the company has made investment of Rs.5,04,01,000/. The statement given by Sh. PN Jha assumes importance wherein he categorically admitted that the Printed from counselvise.com :-20-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 company was doing the business of investment and finance and during the year the bank accounts of the company have been used to provide the accommodation entries. The addition of Rs.3,17,67,951/- made by the Assessing Officer on protective basis, which is not sustainable in the eyes of law, because in this case the AO himself stated in the assessment order that the Department is looking after the cases of beneficiaries and the amounts channelized through this group would be taxed in the hands of the beneficiaries, the amount of total credits of Rs.3,17,67,951/- made in its bank account with Kotak Mahindra Bank, KG Marg, New Delhi, during the year is added to the income of the assessee on protective basis. In this case we find that AD has not made any substantive assessment. There may be substantive assessment without any protective assessment, but there cannot be any protective assessment without there being a substantive assessment. Keeping in view of the facts and circumstances of the present case, we are of the considered view that Ld. CIT(A) has rightly deleted the addition in dispute, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the issue in dispute and reject the ground raised by the Revenue.\" 40. The Mumbai Tribunal Bench, in the case of E.Suresh K. Jajoo vs., ACIT, Cirdcle-4(2), Mumbai [2010] 39 SOT 514 (Mum.) under identical set of facts held as under : \"Keeping in mind the principles as explained above, let us see whether the assessment for assessment year 2001-02 can be said to be a protective assessment. We have already extracted the order of the Assessing Officer for assessment year 2001-02 in para-3 of this order. 27. The gist of the conclusion of the Assessing Officer in assessment for assessment year 2001-02 is that he refers to the assessee's submission regarding the date of transfer being on 12-4-2000 when the broker raised the bill dated 12-4-2000 after scheduled pay in/pay-out of securities to Stock Exchange was completed only on 12-4-2000. The Assessing Officer has accepted the above claim of the assessee but expressed a doubt that the transaction could be said to be completed on 30-3-2000 as per the contract note of the broker because the subsequent events like delivery of share certificate and receipt of payment are only formalities and, therefore, when these formalities are completed the date of sale would relate back to the date of the broker's contract note. The Assessing Officer was also satisfied on looking into the ledger account of the assessees as per the books of the broker that payment was made only on 12-4-2000. Finally, the Assessing Officer taxed the capital gain as a long-term capital gain as offered by the assessee. The Assessing Officer made the following observations : \"As the assessee has already offered this income in assessment year 2001- 02, the same is assessed in this year to protect the interest of the revenue.\" Printed from counselvise.com :-21-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 Whether the above observations are enough to conclude that the assessment of the capital gain as long-term capital gain in assessment year 2001-02 by the Assessing Officer was only a protective assessment? We have already seen the ratio laid down by the Hon'ble Supreme Court in the case of Lalji Haridas (supra) wherein the Hon'ble Supreme Court while recognizing the concept of protective assessment has very clearly laid down that there must be an exhaustive enquiry and the question as to who is liable to pay (in this case which year the capital gain is to be assessed and whether as long-term capital gain in assessment year 2001-02 or short-term capital gain in assessment year 2000-01) should be determined after hearing objections. He should determine the question in the case of one person (in this case In one assessment year) and then conclude the proceedings in the case of the other person (in this case in other year) in whose case assessment has to be made protectively. Thus, protective assessment has to be done only after substantive assessment is done. An assessment can be considered as protective only when there is substantive assessment. Thus, substantive assessment has to precede protective assessment.” 41. We further observe from the seized documents relied upon by the AO, as reproduced in the assessment order, it becomes evident that apart from a mere mention of the assessee’s name in certain loose sheets, there is no tangible or corroborative material brought on record to substantiate the allegation that the assessee had actually infused cash to the extent of Rs.14,91,00,000/- towards share application money or share capital in the two companies referred to by the AO during the impugned assessment year. In such circumstances, we concur with the findings of the Ld.CIT(A) that in the absence of any supporting evidence, the inference drawn by the AO regarding the alleged investment is purely conjectural and not founded on verifiable facts, and therefore, the protective addition cannot be sustained. 42. We also take cognizance of a categorical observation recorded by the AO in the assessment order itself, wherein it has been admitted that the assessee was only an employee of the group, and prima facie did not possess the financial wherewithal to make investments of such magnitude in the said companies. Having made such an observation, the AO was duty-bound to conduct a more comprehensive and Printed from counselvise.com :-22-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 meaningful enquiry to establish that the assessee had either exercised control over, or had knowledge of, the alleged investments routed into the two companies. No such enquiry or verification appears to have been undertaken. In the absence of such investigation, the mere presence of loose sheets cannot, in law, be regarded as sufficient evidence to fasten liability upon the assessee for unexplained investment. 43. Further, we take note of the sworn statement of Shri S.Kathiravan, recorded u/s.132(4) of the Act on 18.02.2018, wherein he has clearly affirmed that the contributions and investments in the companies were made through certain bogus entities used for channelizing the group’s unaccounted income. The deponent has also referred to certain partnership firms allegedly related to the assessee through which investments were purportedly routed. This statement, in our considered view, militates against the AO’s conclusion and further weakens the foundation for making a protective addition in the hands of the assessee. 44. We also observe that the assessee had filed petitions before the National Company Law Tribunal (NCLT) to safeguard his personal property, which had been furnished as collateral security, pursuant to his removal from the directorship of the employer companies. The mere filing of such petitions, absence of substantive evidence demonstrating actual investment, cannot, by itself, be construed as proof of the assessee’s financial involvement in the companies, as rightly held by the Ld.CIT(A). 45. In view of the aforesaid factual and legal analysis, we are of the firm opinion that the AO was not justified in making a protective addition of Rs.14,91,00,000/- in Printed from counselvise.com :-23-: I.T.A. No.:3336 /Chny/2024 & C.O.No.29/Chny/2025 the hands of the assessee u/s.69 of the Act, in respect of alleged unexplained investment. The Ld.CIT(A) has rightly evaluated the factual matrix and deleted the impugned protective addition. Therefore, we find no infirmity in the order of the Ld.CIT(A) warranting our interference. Accordingly, the grounds of appeal raised by the Revenue are dismissed, and the grounds of cross-objections raised by the assessee are partly allowed. 46. In the result, appeal filed by the Revenue is dismissed and the Cross-Objection filed by the assessee is partly allowed. Order pronounced in the court on 20th November, 2025 at Chennai. Sd/- Sd/- (एस एस िव\u0005ने\b रिव) (S.S. VISWANETHRA RAVI) ाियक सद\u000f/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद\u000f/Accountant Member चे\u0017ई/Chennai, िदनांक/Dated, the 20th November, 2025 SP आदेश की ितिलिप अ ेिषत/Copy to: 1. अपीलाथ\"/Appellant 2. #थ\"/Respondent 3.आयकर आयु$/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय ितिनिध/DR 5. गाड) फाईल/GF Printed from counselvise.com "