RANGAMANI KRISHNAN,CHENNAI V. ACIT, CENTRAL CIRCLE-1(3), CHENNAI

ITA 453/CHNY/2025

AI Insights

The case involves five appeals by the assessee, Shri Rangamani Krishnan, against the orders of the Commissioner of Income Tax (Appeals), Chennai-18, which confirmed the additions made by the Assessing Officer under the head 'Unexplained Income' for the assessment years 2015-16 to 2019-20. The additions were based on entries found in a pen drive seized during a search operation at the premises of M/s.Golden Shelters Pvt. Ltd. and the NKV Krishna Group, which also included the premises of the assessee. The Tribunal examined the legality of the satisfaction recorded by the AO for reopening the assessments and the evidentiary value of the entries in the seized pen drive.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708187 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2015-2016
• Other Referred Cases: Sunil Kumar Sharma v. DCIT, Super Malls Pvt. Ltd. v. PCIT, Pepsi Foods Pvt. Ltd. v. ACIT, Calcutta Knitwears v. CIT, S.M. Aggarwal v. CIT, P.V. Kalyanasundaram v. CIT, Layer Exports Pvt. Ltd. v. ACIT, Mahendra Lalka v. DCIT, B.S. Yediyurappa v. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E.PAVUNA SUNDARI
• Assessee Lawyers: D.ANAND
• Keywords: Corroborative evidences; Unexplained cash credit; Unexplained investment; Document seized; Documents seized; Principle of natural justice; Search and seizure; Loose papers; Application of stay
• Section: 142(1); 132; 131; 69; 69C

Judgement Text

" आयकर अपीलीय अिधकरण,‘ ए’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ᮰ी एस एस िव᳡नेᮢ रिव, ᭠याियक सद᭭य एवं ᮰ी एस.आर.रघुनाथा, लेखा सद᭭य के समᭃ BEFORE SHRI S.S. VISWANETHRA RAVI, HON’BLE JUDICIAL MEMBER AND SHRI S.R.RAGHUNATHA, HON’BLE ACCOUNTANT MEMBER आयकर अपीलसं./ITA Nos.: 453, 454, 455, 456 & 457/Chny/2025 िनधाŊरण वषŊ / Assessment Years: 2015-16, 2016-17, 2017-18, 2018-19 & 2019-20 & SA Nos.41, 42, 43, 44 & 45/CHNY/2025 [In ITA Nos. 453, 454, 455, 456 & 457/CHNY/2025] Shri Rangamani Krishnan, 10/1, Varadappan Street, West Mambalam, Chennai – 600 033. [PAN:AIBPK 1957D] V. The Deputy Commissioner of Income Tax, Central Circle 1(2), Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथŎ की ओर से/Appellant by : Shri D. Anand, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. E. Pavuna Sundari, CIT सुनवाई कȧ तारȣख/Date of Hearing : 11.06.2025 घोषणा कȧ तारȣख/Date of Pronouncement : 17.07.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: These five appeals by the assessee are filed against different orders of the Commissioner of Income Tax (Appeals), Chennai-18, all dated 18.12.2024 for the assessment years 2015-16 to 2019-20. :-2-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 2. The assessee has raised similar grounds in all the five appeals. For the sake of brevity, we are reproducing the grounds of the very first assessment year 2015-16:- (A) On making addition of Rs.14,00,000/- as Unexplained Income under Section 69 of the Income Tax Act, 1961. (1) The additions of Rs. 14,00,000/- as Unexplained Income is arbitrary and without any basis. (2) The AO has failed to recognize and consider that the Appellant has categorically and vehemently denied the cash payments entries in my sworn statement given at the time of my presence on 11-2-202 0 in response to the Summon u/s 131 of the Income Tax Act, 1961 dated 7-2-2 020 issued by the DDIT/ADIT (Inv) 4(3), Chennai (3) The AO has erred in treating the said amount of Rs.14,00,000/- as Unexplained Income without any basis and Proof of Evidence. (4) The AO has failed to appreciate that Mr. Badri Narayana Choudhary Kota's statement and the cash payment entries found in his pen drive as alleged to have been made to the Appellant, are not true and correct. The payments and the entries said to have been made to the Appellant, are illogical and do not have any merits and not supported by any evidence. Mere entries made against the Appellant's name does not warrant addition under the head \"Unexplained Income\" (5) The AO has failed to consider the Appellant's letter dated 25-9-202 1 addressed to the AO and filed on 27-9-2021 in his office, in response to the AO's Notice under Section 142 (1) dated 23-9-2021, denying the alleged cash payments made to the Appellant. (B) Lacks jurisdiction and Principles of natural justice. a.. The AO has not acted within the principles of natural justice when he issued a notice under Section 142(1) dated 23-9-2021 and required the Appellant to furnish or cause to be furnished information on 24-9-2021 within a period or one day. b. The Appellant submitted his letter dated 25-9-2021 denying the receipt of cash payments alleged to have been made to him and the said letter also was filed in AO’s office on 27-9-2021 and the same is acknowledged. c. The AO has passed the order on 29-9-2021 to the surprise of the Appellant without giving an opportunity to the Appellant to justify and prove his claims. :-3-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 d. The AO has acted beyond his jurisdiction and also violated principles of natural justice by giving very short span of just 1 working day to provide the details. e. The CIT-Appeals 18 also has upheld the order of the AO by passing the order u/s 250 dated 18-12-2024 and has gone on record that the seized materials pertain to directly to the Appellant and constitutes incriminating evidence. The CIT- Appeals 18 has also mentioned in his order that the incriminating nature of the material are well established. Therefore the AO's reliance on such material is valid and sustainable in law. This is baseless and against the principles of natural justice. The CIT-Appeals 18 despite the Appellant's detailed submissions has not considered the Appellant's point of view. (C) General a. The Appellant craves leave to amend, alter, or delete all or any of the above grounds of appeal and to add any other grounds of appeal. b. For these grounds and for any other grounds that may urge at the time of hearing, it is prayed that Hon'ble CIT (Appeals), Central Circle 1 may please delete the addition of income amounting to Rs. 14,00,000/- under unexplained income under Section 69 of the Act. 3. The brief facts of the case are that the assessee is an individual professionally engaged in rendering audit and consultancy services. The assessee is a regular assessee under the provisions of the Income-Tax Act, 1961, (the Act) and has consistently complied with the statutory requirements relating to the filing of income tax returns. The assessee has been disclosing income derived from his professional activities in audit and consultancy on a regular basis, and his returns have been duly processed by the Department. The particulars of income returned by the assessee for the relevant assessment years are detailed below for reference. :-4-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 Asst.Year Return of Income filed u/s.139(1) of the Act. 2015-16 28,19,760/- 2016-17 13,24,410/- 2017-18 32,19,950/- 2018-19 24,62,150/- 2019-20 4,39,170/- 4. A search and seizure operation u/s.132 of the Act, was conducted on 16.10.2019 in the case of M/s.Golden Shelters Pvt. Ltd. and the NKV Krishna Group. The premises of the assessee were also covered in the course of the said search. During the search, certain materials, including a pen drive was seized from the residence of Mr.Badri Narayan Kota were relied by the department. Mr.Kota is alleged to be an associate and close acquaintance of Mr.N.K.V. Krishna, a key person linked to the searched entities. The seized pen drive allegedly contained data referring to unaccounted cash transactions, including supposed payments made to various individuals. The particulars found in the seized pen drive are detailed below: Feb-18 To Krishnan Sir Income Tax 2500000 This is money given to Krishnan who is an auditor Jun-16 Krishnan Sir 32000000 This is money given to Krishnan who is an auditor Jun-16 Krishnan Sir 4000000 This is money given to Krishnan who is an auditor Oct-16 Bharathi-Omr – Krishnan Sir 17400000 This is money given to Krishnan who is an auditor :-5-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 Oct-16 Krishnan Sir Income Tribunal - Prajit 10000000 This is money given to Krishnan who is an auditor Mar-17 Krishnan Sir- Income Tax 5000000 Mar-17 Krishnan Sir- Income Tax 15000000 This is money given to Krishnan who is an auditor Nov-15 Krishnan Sir 4000000 This is money given to Krishnan who is an auditor Dec-15 Krishnan Sir 5500000 This is cash given to auditor Krishnan Apr-17 Krishnan Sir- Income Tax 15000000 This is cash given to auditor Krishnan 5. The case of the assessee was centralized to Central Circle 1(2), Chennai, and notice u/s.153C of the Act was issued on 12.02.2021 covering various assessment years which included A.Y.2015-16 to 2019-20. Notice u/s.143(2) was issued for the A.Y.2020-21. In response to notice issued u/s.153C of the Act, the assessee filed his return of income on 18.02.2021 admitting the following income: A.Y. Return of Income filed u/s.139(1) of the Act Return of income filed in response to notice u/s.153C of the Act 2015-16 28,19,760 28,19,760 2016-17 13,24,410 13,24,410 2017-18 32,19,950 32,19,950 2018-19 24,62,150 24,62,150 2019-20 4,39,170 4,39,170 :-6-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 6. During the assessment proceedings, the AO issued a show cause notice dated 23.09.2021, calling for an explanation regarding certain cash payments allegedly to have been made to the assessee, based on the seized pen drive. The assessee categorically denied receipt of any such cash payments and clarified that while he had only provided professional services, including income-tax consultancy, to the group companies of Shri N.K.V. Krishna, he had disassociated from the said group from 2018 onwards due to professional reasons. Despite the assessee’s denial and the absence of any direct evidence to establish any receipt of cash by the assessee, the Assessing Officer proceeded to treat the following sums as an unexplained income in the hands of the assessee, solely based on alleged entries in the seized documents and statements of third parties by passing a separate order for all the following assessment years u/s.153C of the Act dated 29.09.2021. A.Y. Return of Income filed u/s.139(1) of the Act Return of income filed in response to notice u/s.153C of the Act Unexplained income 2015-16 28,19,760 28,19,760 14,00,000 2016-17 13,24,410 13,24,410 3,45,00,000 2017-18 32,19,950 32,19,950 8,98,50,000 2018-19 24,62,150 24,62,150 5,00,00,000 2019-20 4,39,170 4,39,170 1,20,00,000 :-7-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 7. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld.CIT(A), Chennai – 18. 8. Before the ld.CIT(A) the assessee reiterated that the addition was made without any corroborating evidence, documentary or otherwise, to establish the flow of funds to the assessee or to demonstrate any tangible link between the alleged entries and the assessee’s accounts or assets. Therefore, the assessee stated that the total assessed income as against the returned income of resulting in an addition under the head of unexplained income which is given hereunder is not warranted and hence prayed for deleting the same. A.Y. Return of income filed in response to notice u/s.153C of the Act Assessed income 2015-16 28,19,760/- 42,19,760/- 2016-17 13,24,410/- 3,58,24,410/- 2017-18 32,19,950/- 5,24,62,150/- 2018-19 24,62,150/- 9,30,69,950/- 2019-20 4,39,170/- 1,24,39,170/- 9. However, the ld.CIT(A) on perusal of the documents and submissions, confirmed the additions made by the AO by passing a separate order for the all the above said assessment years dated 18.12.2024. :-8-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 10. Aggrieved by the order of the ld.CIT(A) in confirming the addition made by the AO, the assessee has preferred the present appeals challenging the legality, validity, and correctness of the impugned assessment order. 11. Before us the ld.AR for the assessee Sri D.Anand, submitted that the Requirement of Recording Separate Satisfaction Notes for Each Assessment Year u/s.153C of the Act. The ld.AR stated that the proceedings-initiated u/s.153C of the Act in the assessee’s case are without jurisdiction and liable to be quashed for the foundational failure to record a valid and separate satisfaction note for each assessment year sought to be reassessed. The ld.AR invited our attention to page No.20 of the First appellate authorities order wherein the satisfaction for invoking jurisdiction has been reproduced. 12. The ld.AR submitted that the jurisdictional requirement of the satisfaction note is that; a. It must be in writing, dated, and signed by the Assessing Officer. b. Must be recorded before issuing notice u/s.153C. c. Should clearly identify the searched person u/s.132. :-9-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 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. -If AO is common for both, must record in the note that he is acting in both capacities. j. Should not be based on loose sheets or uncorroborated material (as per VC Shukla and Common Cause judgments). k. Must comply with judgments in: a) Calcutta Knitwears (SC) b) Pepsi Foods (Del HC) c) Super Malls (SC) d) Sunil Kumar Sharma (Kar HC) e) Ganpati Fincap (Del HC) :-10-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 13. It is a settled proposition in law that the satisfaction of the Assessing Officer, 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. The ld.AR submitted that a consolidated or omnibus satisfaction note encompassing multiple years without individualized reference to incriminating material for each year, as in the instant case, fails to meet the jurisdictional mandate and renders the entire proceeding void ab initio. 14. The ld.AR submitted that the aforesaid proposition finds clear support in 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.” :-11-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 15. 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 of the “other person,” which cannot be presumed in the absence of year-specific satisfaction. 16. In the present case, the ld.AR stated that the satisfaction note relied upon by the Revenue is common and undifferentiated across assessment years. There is no indication of any year-wise evaluation of material, nor is there any year-specific linkage between the seized documents and the income allegedly escaping assessment for each of the six years. Such a blanket satisfaction is contrary to statutory requirements and judicial interpretation and thus cannot confer valid jurisdiction u/s.153C of the Act. :-12-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 17. The ld.AR further submits that in the instant case, the addition of income made by the AO is based on loose sheets found in the house of a third party. The Revenue has not established the said loose sheets to be considered as evidence in law by producing corroborative evidence. The ld.AR further submitted that not only does the pen drive lack any identifying features such as the full name or address of the assessee, crucially, the statement of Mr.Badri Narayana Choudhary, who is the alleged custodian of the seized pen drive, does not support the Revenue’s case. In his sworn statement dated 11.02.2020, Mr.Choudhary merely identified the assessee as someone who had rendered professional consultancy to the group and had facilitated certain share acquisitions in CETEX Petrochemicals Pvt. Ltd. It does not establish that any cash was paid to the assessee, any amount was handed through the assessee for onward remittance to the Department to consider the same as incriminating in nature. 18. In view of the foregoing, the ld.AR submitted that the assessment proceedings initiated pursuant to a common satisfaction note, unaccompanied by specific year-wise satisfaction, are without jurisdiction and are liable to be declared null and void ab initio. Further, in the present case, the satisfaction note is founded solely :-13-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 on loose documents allegedly seized from third-party premises, which are unverified and uncorroborated. The ld.AR submitted that such a satisfaction note is legally untenable, as it lacks the foundational elements required u/s.153C of the Act. The ld.AR therefore contends that satisfaction recorded on the basis of such loose sheets, which have no evidentiary value in the eyes of law, constitutes nothing more than a speculative assertion. It cannot, therefore, form the jurisdictional basis for the assumption of proceedings u/s.153C of the Act. The ld.AR submitted that the satisfaction note, being vitiated in law, renders the entire proceedings unsustainable and liable to be quashed. 19. The ld.AR further submits that in the absence of authorship, confirmation, or corroboration, no presumption can arise u/s.4 of the Evidence Act or under the Income-tax Act. The present case falls, at best, within the “may presume” category, and even that foundational facts to trigger even \"may presume\" standard u/s.4 is absent in the instant case. Presumptions u/s. 4 are subject to foundational requirements: a) The fact from which the presumption arises must itself be established by evidence; b) Inferences must be logical, not speculative; :-14-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 c) Where the underlying document or material is disputed or unconfirmed, no presumption arises. This is particularly important when applying Section 69 of the Act or invoking presumptions u/s. 292C of the Act. 20. In the present case, the ld.AR stated that the pen drive was not seized from the assessee, the person from whom it was seized, has not stated that the entry pertains to the assessee and the assessee has categorically denied any such transaction or receipt. There is no other corroborating evidence, no bank entry, cash flow trail, asset creation, or confirmation from payer. The Courts have consistently held that presumptions must be exercised cautiously and only in the presence of corroborative evidence. The relevant decisions include: CIT v. Daulat Ram Rawatmull [(1973) 87 ITR 349 (SC)], wherein the Hon’ble Supreme Court held that: “A presumption cannot be raised in the air — it must rest on foundational facts. Suspicion, however strong, cannot replace evidence.” 21. Therefore, the ld.AR submitted that the reliance placed by the AO and the ld.CIT(A) on entries found in a pen drive seized from Mr.Badri Narayana Choudhary (Kota), to make addition in the hands of the assessee, is legally unsustainable. The presumption u/s.292C :-15-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 of the Act, does not extend to the assessee in the present case and cannot be used to attribute the contents of a third-party document to him in the absence of independent confirmation. 22. Section 292C of the Act creates a rebuttable presumption regarding the ownership and truthfulness of books, documents, or valuables found in the possession or control of a person during a search or survey. The text of the provision makes it abundantly clear that: \"…where any books of account, other documents… are found in the possession or control of any person in the course of a search under Section 132… it may be presumed that such documents belong to such person and the contents thereof are true.\" 23. Section 292C of the Act apply to the person from whom the material is seized. It creates no presumption against a third party unless further evidence establishes a nexus. In the present case, the pen drive was found in the possession of Mr.Badri Narayana Choudhary (Kota) not from the assessee, hence presumption, if at all, is against Mr.Kota, not the assessee. Further the ld.AR argued that it is incumbent upon the revenue to prove conclusively that the contents pertain to and implicate the assessee with independent :-16-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 material. Even assuming for argument’s sake that the presumption of ownership u/s.292C of the Act were to apply, the ld.AR submitted that there is no automatic presumption that the contents of a digital document are true as to third-party entries, unless corroborated. This is especially so where the document is disputed by the assessee, the author or custodian of the document has not confirmed the specific entry in question and there is no independent evidence linking the assessee to the contents. In the above context, the ld.AR relied on the following decisions CIT v. S.M. Aggarwal [(2007) 293 ITR 43 (Del)]: “The entries in third party documents cannot be presumed to be true without corroborative evidence.” CIT v. P.V. Kalyanasundaram [(2007) 294 ITR 49 (Mad)]: “Where there is no confirmation of the transaction or corroboration from either side, mere notings in seized material are insufficient to sustain addition.” Layer Exports Pvt. Ltd. v. ACIT [(2021) 129 taxmann.com 324 (ITAT Mumbai)] “Pen drive entries not supported by confirmation from the assessee or the person from whom it was seized are mere dumb documents and cannot justify additions.” :-17-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 24. The ld.AR submitted that deeming fiction u/s.292C of the Act cannot override the requirement u/s.69 of the Act, which mandates the AO to establish:  That the assessee was in possession of unexplained money;  That such money was not recorded in the books of account; and  That the assessee failed to offer a satisfactory explanation. 25. The Revenue has failed to establish these elements. The ld.AR submitted that Section 292C of the Act does not absolve the AO of the duty to prove actual receipt or possession of the impugned amount. It merely raises a rebuttable presumption, which stands discharged once the assessee denies the transaction and the Revenue fails to corroborate it. 26. In the case of Pepsi Foods Pvt. Ltd. v. ACIT [(2014) 367 ITR 112 (Del)], the Hon’ble Delhi High Court laid down the following principles relevant to Section 292C and third-party material: 1. Satisfaction u/s.153C of the Act must be specific and based on material that \"belongs to\" or \"relates to\" the other person - a vague or general reference is not sufficient. :-18-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 2. Documents recovered from a third party cannot be mechanically used against another assessee unless there is independent evidence to show a clear link. 27. The Revenue must establish that the document belongs to the assessee, pertains to the assessee, and is incriminating in nature, relevant to the assessment year. In the present case, the pen drive was seized from Mr.Badri Narayana Choudhary, but not from the assessee. Further the pen drive contained vague references like \"Krishnan Sir – IT\", but no full name, PAN, address, or direct reference to the assessee. The author of the pen drive has not confirmed that the entry pertains to the assessee and the assessee has categorically denied receiving any cash or being connected to such a transaction. Thus, it could be inferred that the pen drive fails the test of belonging, relevance, and incrimination as set forth in Pepsi Foods. 28. The pen drive in this case qualifies as a “dumb document” because: a) It was not seized from the assessee; b) It was not confirmed by the person from whose premises it was seized; :-19-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 c) It has no corroborating trail of cash receipt, deposit, asset creation, or expenditure. d) It has been denied by the assessee and not supported by any third-party confirmation. 29. This principle has been reinforced in Layer Exports Pvt. Ltd. v. ACIT [(2021) 129 taxmann.com 324 (ITAT Mumbai)] “Pen drive entries not supported by confirmation from the assessee or the person from whom it was seized are mere dumb documents and cannot justify additions.” CIT v. S.M. Aggarwal [(2007) 293 ITR 43 (Del)] “Third-party documents which are not confirmed or corroborated cannot be used as the sole basis for addition.” CIT v. P.V. Kalyanasundaram [(2007) 294 ITR 49 (Mad)] “Mere notings in seized documents, in the absence of confirmation, are insufficient to support addition.” 30. In light of the above submissions the ld.AR submitted that : 1. The pen drive seized from Mr.Kota is a dumb document - inadmissible in the absence of corroboration; 2. The presumption u/s.292C of the Act is inapplicable to the assessee and stands rebutted on facts; :-20-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 3. The principles laid down in Pepsi Foods squarely apply, rendering the satisfaction note invalid and the assessment without jurisdiction. Accordingly, the addition made u/s.69 of the Act, based solely on such unverified electronic entries, is arbitrary, without foundation, and deserves to be deleted in full. 31. The ld.AR submitted that the addition made by the AO and sustained by the ld.CIT(A) does not stand in the eyes of law even on merits of the case. He stated that the sole basis of the addition covering AY 2015-16 to 2019-20 is based on an entry in a pen drive seized from a third party, namely Mr. Badri Narayana Choudhary Kota. Both the AO and the first appellate authority appear to have presumed that the said entry, which contains a vague reference to “Krishnan Sir” and “Income Tax,” refers to the assessee and that the cash was received or routed by him for the purpose of paying taxes on behalf of the N.K.V. Krishna group. The ld.AR contended that this inference is wholly unsubstantiated. In the instant case the pen drive was not found in the assessee’s possession and the assessee’s name is neither explicitly mentioned or there is no acknowledgment or confirmation of receipt of any cash. Further :-21-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 there is no explanation from the alleged author that any such entry refers to or implicates the assessee. 32. Not only does the pen drive lack any identifying features such as the full name or address of the assessee, crucially, the statement of Mr.Badri Narayana Choudhary, who is the alleged custodian of the seized pen drive, does not support the Revenue’s case. In his sworn statement dated 11.02.2020, Mr.Choudhary merely identified the assessee as someone who had rendered professional consultancy to the group and had facilitated certain share acquisitions in CETEX Petrochemicals Pvt. Ltd. Nowhere in his statement does Mr. Choudhary claim that:  Any cash was paid to the assessee;  Any amount was handed through the assessee for onward remittance to the Department;  The assessee acted as an intermediary for cash payments towards tax dues. 33. On the contrary, the only reference made to the assessee in the said statement is that he had been professionally engaged by the N.K.V. Krishna Group to facilitate the acquisition of shares in CETEX Petrochemicals Pvt. Ltd., a transaction that was duly :-22-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 disclosed and is not under dispute in these proceedings. This limited professional engagement has no bearing on or nexus with the alleged cash movement reflected in the pen drive, and the Revenue’s attempt to extrapolate this admission to attribute credibility to unrelated entries without any corresponding statement from the author is entirely misconceived. 34. The ld.AR contended that it clearly shows that the conclusion of AO and ld.CIT(A) is not based on testimony, but on speculation. 35. Further, the ld.AR submitted that it is a trite law that where a document is neither admitted by the assessee nor confirmed by its alleged author, and in the absence of any independent corroborative material, such document has no evidentiary value in the eyes of law. The Hon’ble Supreme Court has, in unequivocal terms, held that entries in loose papers or unverified records seized from third parties are devoid of probative value unless they are confirmed by the author and corroborated by independent evidence. Common Cause v. Union of India [(2017) 11 SCC 731] \"Mere entries in third-party records, without independent corroboration or confirmation from the author, cannot be used to draw adverse inference. Such documents, being loose, unauthenticated and unexplained, are of no evidentiary value.\" (para 14, 20 and 27 of the judgment) :-23-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 CBI v. V.C. Shukla [(1998) 3 SCC 410] \"Loose sheets of paper or data files not forming part of books of account and not maintained in the regular course of business are not admissible as evidence. They are 'dumb documents' unless substantiated.\" 36. The ld.AR contended that applying the above principles to the present case, the Revenue’s reliance on the digital entry in the pen drive, bereft of authorship attribution or supporting material is entirely misplaced. No effort has been made by the Department to secure confirmation from Mr.Choudhary that the entry pertains to the assessee. No statement under oath, no cross-examination, and no supporting evidence has been brought on record. 37. Therefore, the ld.AR submitted that the ld.CIT(A) has proceeded on a fundamentally flawed premise in treating the assessee’s acknowledgment of professional involvement in a CETEX- related transaction as lending blanket credibility to the entire contents of a pen drive seized from a third party. The assessee has candidly acknowledged that he was professionally engaged by the N.K.V.Krishna group to facilitate a transaction involving the acquisition of shares in CETEX Petrochemicals Pvt. Ltd. This admission was specific, limited in scope, and pertains only to a :-24-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 distinct transaction in which the assessee acted in his professional capacity. However, the ld.CIT(A) has erroneously extrapolated this specific factual acknowledgment to lend credence to entirely unrelated entries in a third party digital record, namely a pen drive allegedly detailing cash payments, that forms the subject of the present addition. 38. The ld.AR further submits that the Revenue cannot be permitted to selectively rely on the assessee’s statements to suit its case, by accepting parts that are convenient (such as the assessee’s role in the CETEX facilitation) while simultaneously discarding the assessee’s categorical denial of ever having received any unaccounted cash. The ld.AR submits that law recognizes that where a statement is made by a party, it must be considered in its entirety, and not in isolation. This principle, recognized as the “doctrine of whole truth”, prevents selective appreciation of evidence. In Mehta Parikh & Co. v. CIT [(1956) 30 ITR 181 (SC)], the Hon’ble Supreme Court held that where an assessee makes a statement, the entirety of the statement must be evaluated, and it is impermissible for the Department to accept one part while discarding the rest without independent verification. Applying this principle, the Revenue cannot accept the assessee’s :-25-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 acknowledgment of professional engagement in the CETEX matter while simultaneously rejecting his unequivocal denial of receiving cash, without producing any further corroborative evidence. 39. The ld.AR contended that the ld. CIT(A) appears to have presumed that the existence of the entry in the pen drive, coupled with the assessee’s professional involvement, suffices to establish that the cash payment mentioned therein actually took place. 40. This presumption is legally flawed. As held in CIT v. P.V. Kalyanasundaram [(2007) 294 ITR 49 (Mad)] and CIT v. S.M.Aggarwal [(2007) 293 ITR 43 (Del)], **documents, notings or entries in third-party records, including digital devices, cannot be the sole basis of addition unless they are:  authenticated,  attributed to the assessee, and  corroborated by independent evidence.** 41. In this case, the pen drive was neither seized from the assessee, nor authenticated by him, nor linked to his conduct through any material evidence. :-26-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 42. The decision of the Bangalore Tribunal in B.S.Yediyurappa v. ACIT is squarely applicable to the facts of the present case and strongly supports the assessee’s contention that the addition based on seized pen drive from third party premises is unjustified in law and on facts. In the said case, the addition was based on deleted files retrieved from the computer of a third party and the person from whom the pen drive was seized did not confirm that the entries related to the assessee. The tribunal held that Section 292C is inapplicable since the document was not seized from the assessee. The same reasoning applies in the instant case of the assessee and the presumption under Section 292C cannot operate against the assessee. (Page 25 para 18 in B.S. Yediyurappa v. ACIT) 43. In the present case, Mr.Kota has not stated that the entry pertains to the assessee. The assessee in the present case has categorically denied receipt of any such amount or being connected to the entries. The Tribunal in Yediyurappa’s case(supra) held that documents not forming part of the regular books, uncorroborated and unauthenticated, are merely \"dumb documents\". The pen drive in the present case is of the same nature unverified, unconfirmed, and unsupported by any evidence of payment, receipt, or accounting. :-27-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 44. The ratio of Mahendra Lalka v. DCIT applies with full force to the present case. It supports the proposition that: The assessee, Shri Mahendra Lalka, is an individual assessed to tax at Lucknow. The case arose from a search and seizure operation conducted under Section 132 of the Income-tax Act in the case of M/s.Rishi Ganga Builders and Developers Pvt. Ltd. and its associated concerns, not on the assessee himself. During the search, a ledger was recovered from the computer of one Mr.Viral K.Patel, who was associated with the searched party. The ledger allegedly contained cash payment entries to various persons, including an entry in the name “Mahendra Bhai”. Based solely on that ledger entry, the Assessing Officer presumed that “Mahendra Bhai” referred to the assessee, and made an addition of ₹10 lakhs in his hands as unexplained income under Section 69A. The assessee denied any such transaction, and repeatedly sought cross-examination of Mr.Viral Patel, but no such opportunity was provided. The ledger was neither signed nor confirmed by the assessee or by Mr.Patel as relating to the assessee. There was also no corroborative evidence, no money trail, no statement from the payer, and no material found from the assessee’s premises. (page 2 para 3 and page 6 para 7 ) :-28-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 45. The Tribunal found that the AO had relied entirely on an unverified third-party ledger, which lacked authenticity and evidentiary value. Consequently, the Tribunal held that the ledger was a “dumb document”, and in the absence of any corroboration or cross-examination, the addition was unsustainable and had to be deleted. It was held that “Unverified digital entries seized from a third party, uncorroborated and denied by the assessee, are not sufficient to sustain additions under section 69.” Thus, it could be inferred that the addition based on seized pen drive in the present case is equally unsustainable, and deserves to be deleted in full. 46. In the case of Anand Jaikumar Jain v. ACIT (ITAT Mumbai) a search was conducted on the Dalmia Group u/s.132 of the Act. During the search, documents and electronic data (including pen drive contents) allegedly showing cash transactions involving the Dalmia Group and one “AJ/SJ” were found. Based on this material, the AO reopened the assessments of Shri Anand Jaikumar Jain, treating him as the person identified as “AJ” or “SJ” in the documents. The AO made a huge addition (₹47 crores in one year) on the presumption that the assessee had received cash :-29-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 compensation from Dalmia’s in respect of certain shareholding arrangements. The assessee categorically denied any such transaction and stated that he had no connection with the entries in the seized material. The seized documents were undated, unsigned, unauthenticated, and were not found in the assessee’s possession. The ld.CIT(A) and ITAT found that: a) The pen drive entries were not corroborated. b) The documents were seized from a third party. c) No direct or circumstantial evidence was brought on record to link the transactions to the assessee. d) The Dalmia’s themselves did not confirm any cash transaction with the assessee and disowned the pen drive contents before the Settlement Commission. 47. The ITAT upheld the ld.CIT(A)'s decision and deleted the addition in its entirety. (page 12 para 14 to page 15 para 15, page 20 para 20, page 21 para 22- Anand Jaikumar Jain’s case) Like in Anand Jaikumar Jain, the addition in the present case is based solely on an uncorroborated pen drive entry, seized from a third party, which is: a) Denied by the assessee, b) Unconfirmed by the custodian, and :-30-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 c) Lacking any corroborative evidence. The ITAT’s reasoning in Anand Jaikumar Jain provides strong judicial support to contend that the pen drive is a dumb document, and no addition can be sustained merely on the basis of such electronic records. Thus, the addition made on the basis of seized pen drive in the hands of the assessee is unjustified in law and on facts and must be deleted in full. 48. Manoj Madanlal Chhajed v. ACIT - (ITAT Pune, IT(SS)A Nos. 91 to 98/PUN/2022 & ITA No. 725/PUN/2022) Based on the diary notings and a statement recorded u/s.132(4) (which was later retracted), the AO made large additions u/s.68 (unexplained cash credit), 69, and 69C (unexplained investments and expenses). The ITAT held that the diary did not constitute speaking or corroborated evidence and that mere statements, especially when retracted, cannot form the basis of additions without supporting material. This case reinforces the principle that “Uncorroborated notings or loose documents especially if they lack transactional clarity, dates, parties, and amounts cannot be treated as valid evidence for additions under the Act.” (pages 22-40 and page 46 para 31 of the said order) :-31-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 49. The decision in Chhajed(supra) squarely supports the assessee’s position that the pen drive is a “dumb document”, and no addition can be made without independent, credible corroboration. 50. In view of the foregoing submissions, the ld.AR prayed that the impugned addition, being based solely on an uncorroborated and unauthenticated digital entry found in a pen drive seized from a third party, and unsupported by any statement, admission, or independent evidence linking the same to the assessee, is wholly untenable both in law and on facts. 51. The assessee humbly submits that the made in the impugned case addition suffers from a complete lack of evidentiary foundation, is founded on speculative inference, and has been made in breach of the settled principles governing the admissibility and reliability of third-party material. The addition is, therefore, liable to be deleted in toto, and the appeal may kindly be allowed in full. Per contra, the ld.DR relied on the orders of the AO and that of the ld.CIT(A). The ld.DR submitted that the findings of the AO and the ld.CIT(A) are very clearly shows that the amount of cash has been handed over to the assessee and hence addition made needs to be upheld. :-32-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 52. We have heard the rival contentions perused the material available on record and gone through the orders of the lower authorities along with judicial precedents relied on. The assessee is a chartered Accountant and consultant providing professional services, including income-tax consultancy, to the group companies of Shri N.K.V. Krishna, and had disassociated from the said group from 2018 onwards due to professional reasons. The assessee is regular in filing his income tax returns and had filed his return of income u/s.139(1) of the Act for the A.Y. 2015-16 to 2019-20. A search and seizure operation u/s.132 of the Act, was conducted on 16.10.2019 in the case of M/s.Golden Shelters Pvt. Ltd. and the NKV Krishna Group. The premises of the assessee were also covered in the course of the said search. During the search, certain materials, including a pen drive was seized from the residence of Mr.Badri Narayan Kota were relied by the department. Mr.Kota is alleged to be an associate and close acquaintance of Mr.N.K.V. Krishna, a key person linked to the searched entities. The seized pen drive allegedly contained data referring to unaccounted cash transactions, including supposed payments made to various individuals. The particulars found in the seized pen drive are detailed below: :-33-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 Feb-18 To Krishnan Sir Income Tax 2500000 This is money given to Krishnan who is an auditor Jun-16 Krishnan Sir 32000000 This is money given to Krishnan who is an auditor Jun-16 Krishnan Sir 4000000 This is money given to Krishnan who is an auditor Oct-16 Bharathi-Omr – Krishnan Sir 17400000 This is money given to Krishnan who is an auditor Oct-16 Krishnan Sir Income Tribunal - Prajit 10000000 This is money given to Krishnan who is an auditor Mar-17 Krishnan Sir- Income Tax 5000000 Mar-17 Krishnan Sir- Income Tax 15000000 This is money given to Krishnan who is an auditor Nov-15 Krishnan Sir 4000000 This is money given to Krishnan who is an auditor Dec-15 Krishnan Sir 5500000 This is cash given to auditor Krishnan Apr-17 Krishnan Sir- Income Tax 15000000 This is cash given to auditor Krishnan 53. We note that the sworn statement has been recorded during the search operations from Mr.Badri Narayana Choudhary, who is the alleged custodian of the seized pen drive. In his sworn statement dated 11.02.2020, Mr.Choudhary identified the assessee as someone who had rendered professional consultancy to the group and had facilitated certain share acquisitions in CETEX Petrochemicals Pvt. Ltd. :-34-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 54. Further, we note that Satisfaction Notes u/s.153C of the Act was recorded and obtained the approval from the competent authorities by the AO and issued notice u/s.153C of the Act. 55. Subsequently, the case of the assessee was centralized to Central Circle 1(2), Chennai, and notice u/s.153C of the Act was issued on 12.02.2021 covering various assessment years which included A.Y.2015-16 to 2019-20. In response to notice issued u/s.153C of the Act, the assessee filed his return of income on 18.02.2021 admitting the following income: A.Y. Return of Income filed u/s.139(1) of the Act Return of income filed in response to notice u/s.153C of the Act 2015-16 28,19,760 28,19,760 2016-17 13,24,410 13,24,410 2017-18 32,19,950 32,19,950 2018-19 24,62,150 24,62,150 2019-20 4,39,170 4,39,170 56. During the assessment proceedings, the AO issued a show cause notice dated 23.09.2021, calling for an explanation regarding certain cash payments allegedly to have been made to the assessee, based on the seized pen drive. The assessee categorically denied receipt of any such cash payments and clarified that while he had only provided professional services, including income-tax :-35-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 consultancy, to the group companies of Shri N.K.V. Krishna, he had disassociated from the said group from 2018 onwards due to professional reasons. Despite the assessee’s denial and the absence of any direct evidence to establish any receipt of cash by the assessee, the Assessing Officer proceeded to treat the following sums as an unexplained income in the hands of the assessee, solely based on alleged entries in the seized documents and statements of third parties by passing a separate order for all the following assessment years u/s.153C of the Act dated 29.09.2021. A.Y. Return of Income filed u/s.139(1) of the Act Return of income filed in response to notice u/s.153C of the Act Unexplained income 2015-16 28,19,760 28,19,760 14,00,000 2016-17 13,24,410 13,24,410 3,45,00,000 2017-18 32,19,950 32,19,950 8,98,50,000 2018-19 24,62,150 24,62,150 5,00,00,000 2019-20 4,39,170 4,39,170 1,20,00,000 On appeal filed by the assessee the ld.CIT(A) confirms the order of the AO. 57. The first issue raised by the assessee is validity of the satisfaction recorded by the AO for reopening the assessment of the assessee based on the incriminating material found during the search. We find the extract of the satisfaction notes for invoking the :-36-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 jurisdiction has been reproduced in page No.20 of the First appellate authorities’ order. On perusal of the satisfaction note recorded we find that the AO has recorded the same without specifying the incriminating materials, undisclosed income corresponding to each of the assessment years separately. It is only mentioned all the assessment year from 2014-15 to 2019-20 along with total amount of undisclosed income. 58. 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. c. Should clearly identify the searched person u/s.132. 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. :-37-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 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. -If AO is common for both, must record in the note that he is acting in both capacities. 59. 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: :-38-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 “...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.” 60. 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. 61. 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 :-39-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 assessment year in respect of the “other person,” which cannot be presumed in the absence of year-specific satisfaction. 62. In the present case, we find that a consolidated or omnibus satisfaction note encompassing multiple years without individualized reference to incriminating material for each year, fails to meet the jurisdictional mandate. Further, we also find that the satisfaction note recorded is for common and undifferentiated across assessment years. There is no indication of any year-wise evaluation of material, nor is there any year-specific linkage between the seized documents and the income allegedly escaping assessment for each of the six years. 63. Therefore, we cannot consider such a blanket satisfaction which is contrary to statutory requirements and judicial interpretation as a valid jurisdiction u/s.153C of the Act and hence in our considered view the entire proceeding which is based on such satisfaction note recorded is legally unsustainable and void ab initio. 64. The next issue raised by the ld.AR is in respect of the addition of income made by the AO is based on loose sheets found in the house of a third party. The pen drive lack any identifying features :-40-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 such as the full name or address of the assessee, crucially, the statement of Mr.Badri Narayana Choudhary, who is the alleged custodian of the seized pen drive, does not confirm the transactions/notings are related to the assessee. The sworn statement dated 11.02.2020 of Mr.Choudhary merely identified the assessee as someone who had rendered professional consultancy to the group and had facilitated certain share acquisitions in CETEX Petrochemicals Pvt. Ltd. It does not establish that any cash was paid to the assessee, any amount was handed through the assessee for onward remittance as incriminating in nature. 65. According to the ld.AR in the absence of authorship, confirmation, or corroboration, no presumption can arise u/s.4 of the Evidence Act or under the Income-tax Act and he further stated that the present case falls, at best, within the “may presume” category, and even that foundational facts to trigger even \"may presume\" standard u/s.4 is absent in the instant case. Presumptions u/s. 4 are subject to foundational requirements: a) The fact from which the presumption arises must itself be established by evidence; b) Inferences must be logical, not speculative; :-41-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 c) Where the underlying document or material is disputed or unconfirmed, no presumption arises. This is particularly important when applying Section 69 of the Act or invoking presumptions u/s.292C of the Act. 66. We find that in the facts of the present case, the pen drive was not seized from the assessee, the person from whom it was seized, has not stated that the entry pertains to the assessee and the assessee has categorically denied any such transaction or receipt. There is no other corroborating evidence, no bank entry, cash flow trail, asset creation, or confirmation from payer. 67. We concur with the arguments of the ld.AR in respect of the facts and circumstances of this case, wherein the material seized from the third parties are not corroborated with any other evidence or statement to prove that the undisclosed income was related to the assessee. This view of ours is fortified by the courts by holding consistently that the presumptions must be exercised cautiously and only in the presence of corroborative evidence in the following decision: 1. CIT v. Daulat Ram Rawatmull [(1973) 87 ITR 349 (SC)], wherein the Hon’ble Supreme Court held that: :-42-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 “A presumption cannot be raised in the air — it must rest on foundational facts. Suspicion, however strong, cannot replace evidence.” 68. Further, section 292C of the Act creates a rebuttable presumption regarding the ownership and truthfulness of books, documents, or valuables found in the possession or control of a person during a search or survey. The extract of the provision is given below: \"…where any books of account, other documents… are found in the possession or control of any person in the course of a search under Section 132… it may be presumed that such documents belong to such person and the contents thereof are true.\" Section 292C of the Act apply to the person from whom the material is seized. 69. On reading of the provision, in our considered opinion, it creates no presumption against a third party unless further evidence establishes a nexus. In the present case, it is undisputed fact that the pen drive was found in the possession of Mr.Badri Narayana Choudhary (Kota) not from the assessee, hence presumption, if at all, is against Mr.Kota, not the assessee. Now, it is incumbent upon the revenue to prove conclusively that the contents pertain to and implicate the assessee with independent material. Further, we :-43-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 concur with the argument of the ld.AR, even assuming for argument’s sake that the presumption of ownership u/s.292C of the Act were to apply, there is no automatic presumption that the contents of a digital document are true as to third-party entries, unless corroborated. This is especially so where the document is disputed by the assessee, the author or custodian of the document has not confirmed the specific entry in question and there is no independent evidence linking the assessee to the contents. In support of our above view, we take the help of the following decisions: CIT v. S.M. Aggarwal [(2007) 293 ITR 43 (Del)] “The entries in third party documents cannot be presumed to be true without corroborative evidence.” CIT v. P.V. Kalyanasundaram [(2007) 294 ITR 49 (Mad)]: “Where there is no confirmation of the transaction or corroboration from either side, mere notings in seized material are insufficient to sustain addition.” Layer Exports Pvt. Ltd. v. ACIT [(2021) 129 taxmann.com 324 (ITAT Mumbai)] “Pen drive entries not supported by confirmation from the assessee or the person from whom it was seized are mere dumb documents and cannot justify additions.” :-44-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 70. Further, we note that the deeming fiction u/s.292C of the Act cannot override the requirement u/s.69 of the Act, which mandates the AO to establish:  That the assessee was in possession of unexplained money;  That such money was not recorded in the books of account; and  That the assessee failed to offer a satisfactory explanation. 71. Therefore, in our considered opinion, the Revenue has failed to establish or to prove actual receipt or possession of the impugned amount. It merely raises a rebuttable presumption, which stands discharged once the assessee denies the transaction and the Revenue fails to corroborate it. 72. We take the support of the decision in the case of Pepsi Foods Pvt. Ltd. v. ACIT [(2014) 367 ITR 112 (Del)], the Hon’ble Delhi High Court laid down the following principles relevant to Section 292C and third-party material: 1. Satisfaction u/s.153C of the Act must be specific and based on material that \"belongs to\" or \"relates to\" the other person - a vague or general reference is not sufficient. :-45-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 2. Documents recovered from a third party cannot be mechanically used against another assessee unless there is independent evidence to show a clear link. The Revenue must establish that the document belongs to the assessee, pertains to the assessee, and is incriminating in nature, relevant to the assessment year. 73. In the current facts of the case the pen drive was seized from Mr.Badri Narayana Choudhary, but not from the assessee. Further we find that the pen drive contained vague references like \"Krishnan Sir – IT\", but no full name, PAN, address, or direct reference to the assessee. The author of the pen drive has not confirmed that the entry pertains to the assessee and the assessee has categorically denied receiving any cash or being connected to such a transaction. Thus, in our considered view and following the decision of the Hon’ble Delhi high court, it could be inferred that the pen drive fails the test of belonging, relevance, and incrimination as set forth in Pepsi Foods (supra). 74. On perusal of the present facts, the pen drive qualifies as a “dumb document” for the following reasons: 1. It was not seized from the assessee; :-46-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 2. It was not confirmed by the person from whose premises it was seized; 3. It has no corroborating trail of cash receipt, deposit, asset creation, or expenditure. 4. It has been denied by the assessee and not supported by any third-party confirmation. 75. We take the support of the decision wherein this principle has been reinforced in a) Layer Exports Pvt. Ltd. v. ACIT [(2021) 129 taxmann.com 324 (ITAT Mumbai)] “Pen drive entries not supported by confirmation from the assessee or the person from whom it was seized are mere dumb documents and cannot justify additions.” b) CIT v. S.M. Aggarwal [(2007) 293 ITR 43 (Del)] “Third-party documents which are not confirmed or corroborated cannot be used as the sole basis for addition.” c) CIT v. P.V. Kalyanasundaram [(2007) 294 ITR 49 (Mad)] “Mere notings in seized documents, in the absence of confirmation, are insufficient to support addition.” :-47-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 76. Therefore, considering the entire conspectus of the case discussed above, we find that 1. The pen drive seized from Mr.Kota is a dumb document – as this is inadmissible in the absence of corroboration; 2. The presumption u/s.292C of the Act is inapplicable to the assessee and stands rebutted on facts; and 3. The principles laid down in Pepsi Foods squarely apply, rendering the satisfaction note invalid and the assessment made is without jurisdiction. In view of the above, we are of the considered view that the AO and that of the Ld.CIT(A) have erred in arriving the conclusion to bring the impugned amounts to tax and hence we are inclined to delete the addition made u/s.69 of the Act, since the addition is based on solely on unverified electronic entries, which is arbitrary, without foundation. 77. Further, the ld.AR argued the case on merits and submitted that the sole basis of the addition covering AY 2015-16 to 2019-20 is based on an entry in a pen drive seized from a third party, namely Mr. Badri Narayana Choudhary Kota. Both the AO and the first appellate authority appear to have presumed that the said entry, which contains a vague reference to “Krishnan Sir” and :-48-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 “Income Tax,” refers to the assessee and that the cash was received or routed by him for the purpose of paying taxes on behalf of the N.K.V. Krishna group. 78. As we have already stated in our earlier observations, the pen drive was not found in the assessee’s possession and the assessee’s name is neither explicitly mentioned or there is no acknowledgment or confirmation of receipt of any cash. Further we find that there is no explanation from the alleged author that any such entry refers to or implicates the assessee and hence this inference is wholly unsubstantiated. 79. On perusal of the contents of the pen drive, it lacks any identifying features such as the full name or address of the assessee. We note that the revenue has completely relied on the statement of Mr.Badri Narayana Choudhary, who is the alleged custodian of the seized pen drive. However, we observed that the sworn statement dated 11.02.2020, Mr.Choudhary merely identified the assessee as someone who had rendered professional consultancy to the group and had facilitated certain share acquisitions in CETEX Petrochemicals Pvt. Ltd. That means, nowhere in his statement Mr.Choudhary stated that: :-49-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025  Any cash was paid to the assessee;  Any amount was handed through the assessee for onward remittance to the Department;  The assessee acted as an intermediary for cash payments towards tax dues. 80. We find that, on the contrary, the only reference made to the assessee in the said sworn statement is that he had been professionally engaged by the N.K.V.Krishna Group to facilitate the acquisition of shares in CETEX Petrochemicals Pvt. Ltd., a transaction that was duly disclosed and is not under dispute in these proceedings. According to the facts and circumstances of the case, we are of the view that, this limited professional engagement has no bearing on or nexus with the alleged cash movement reflected in the pen drive, and the Revenue’s attempt to extrapolate this admission to attribute credibility to unrelated entries without any corresponding statement from the author is entirely misconceived and hence the conclusion of AO and ld.CIT(A) is not based on testimony, but on speculation. 81. It is a trite law that where a document is neither admitted by the assessee nor confirmed by its alleged author, and in the :-50-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 absence of any independent corroborative material, such document has no evidentiary value in the eyes of law. The Hon’ble Supreme Court has, in unequivocal terms, in the following decisions held that entries in loose papers or unverified records seized from third parties are devoid of probative value unless they are confirmed by the author and corroborated by independent evidence. Common Cause v. Union of India [(2017) 11 SCC 731] \"Mere entries in third-party records, without independent corroboration or confirmation from the author, cannot be used to draw adverse inference. Such documents, being loose, unauthenticated and unexplained, are of no evidentiary value.\" (para 14, 20 and 27 of the judgment) CBI v. V.C. Shukla [(1998) 3 SCC 410] \"Loose sheets of paper or data files not forming part of books of account and not maintained in the regular course of business are not admissible as evidence. They are 'dumb documents' unless substantiated.\" 82. Therefore, applying the above principles to the present case, the Revenue’s reliance on the digital entry in the pen drive, bereft of authorship attribution or supporting material is entirely misplaced. In our considered view no effort has been made by the Department to secure confirmation from Mr.Choudhary that the entry pertains to the assessee. The department has not brought on record any statement under oath, cross-examination, or any supporting evidence to bring the said amount to taxation as undisclosed :-51-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 income. Hence, the action of the ld.CIT(A) cannot be countenanced in proceeding on a fundamentally flawed premise in treating the assessee’s acknowledgment of professional involvement in a CETEX- related transaction as lending blanket credibility to the entire contents of a pen drive seized from a third party. We note that the assessee has candidly acknowledged that he was professionally engaged by the N.K.V.Krishna group to facilitate a transaction involving the acquisition of shares in CETEX Petrochemicals Pvt. Ltd. Therefore, the above statement was very specific, limited in scope, and pertains only to a distinct transaction in which the assessee acted in his professional capacity. However, the AO and that of ld.CIT(A) has erroneously extrapolated this specific factual acknowledgment to lend credence to entirely unrelated entries in a third party digital record, namely a pen drive allegedly detailing cash payments, to treat the same as undisclosed income to make the addition. 83. We concur with the following argument of the ld.AR, that the Revenue cannot be permitted to selectively rely on the assessee’s statements to suit its case, by accepting parts that are convenient (such as the assessee’s role in the CETEX facilitation) while simultaneously discarding the assessee’s categorical denial of ever :-52-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 having received any unaccounted cash. The law recognizes that where a statement is made by a party, it must be considered in its entirety, and not in isolation. This principle, recognized as the “doctrine of whole truth”, prevents selective appreciation of evidence. In Mehta Parikh & Co. v. CIT [(1956) 30 ITR 181 (SC)], the Hon’ble Supreme Court held that where an assessee makes a statement, the entirety of the statement must be evaluated, and it is impermissible for the Department to accept one part while discarding the rest without independent verification. Applying this principle, the Revenue cannot accept the assessee’s acknowledgment of professional engagement in the CETEX matter and simultaneously rejecting his unequivocal denial of receiving cash, without producing any further corroborative evidence for the same. This presumption is legally flawed. As held in CIT v. P.V. Kalyanasundaram [(2007) 294 ITR 49 (Mad)] and CIT v. S.M.Aggarwal [(2007) 293 ITR 43 (Del)], **documents, notings or entries in third-party records, including digital devices, cannot be the sole basis of addition unless they are:  authenticated,  attributed to the assessee, and  corroborated by independent evidence.** :-53-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 84. Further, in the identical set of facts at Bangalore Tribunal’s decision in the case of B.S.Yediyurappa v. ACIT, strongly supports the assessee’s contention that the addition based on seized pen drive from third party premises is unjustified in law and on facts. In the said case, the addition was based on deleted files retrieved from the computer of a third party and the person from whom the pen drive was seized did not confirm that the entries related to the assessee. The Tribunal held that Section 292C is inapplicable since the document was not seized from the assessee. Therefore, the same reasoning applies in the instant case of the assessee and the presumption u/s.292C of the Act cannot operate against the assessee. (Page 25 para 18 in B.S.Yediyurappa v. ACIT) 85. In the present case, Mr.Kota has not stated that the entry pertains to the assessee. However, the assessee has categorically denied receipt of any such amount or being connected to the entries. The Tribunal in Yediyurappa’s case(supra) held that documents not forming part of the regular books, uncorroborated and unauthenticated, are merely \"dumb documents\". The pen drive in the present case is of the same nature unverified, unconfirmed, and unsupported by any evidence of payment, receipt, or accounting. :-54-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 86. The ratio of Mahendra Lalka v. DCIT, Lucknow Tribunal in ITA No.172/Lkw/2023 dated 18.07.2023 applies with full force to the present case. It supports the proposition that: The assessee, Shri Mahendra Lalka, is an individual assessed to tax at Lucknow. The case arose from a search and seizure operation conducted under Section 132 of the Income-tax Act in the case of M/s.Rishi Ganga Builders and Developers Pvt. Ltd. and its associated concerns, not on the assessee himself. During the search, a ledger was recovered from the computer of one Mr.Viral K.Patel, who was associated with the searched party. The ledger allegedly contained cash payment entries to various persons, including an entry in the name “Mahendra Bhai”. Based solely on that ledger entry, the Assessing Officer presumed that “Mahendra Bhai” referred to the assessee, and made an addition of ₹10 lakhs in his hands as unexplained income under Section 69A. The assessee denied any such transaction, and repeatedly sought cross-examination of Mr.Viral Patel, but no such opportunity was provided. The ledger was neither signed nor confirmed by the assessee or by Mr.Patel as relating to the assessee. There was also no corroborative evidence, no money trail, no statement from the payer, and no material found from the assessee’s premises. (page 2 para 3 and page 6 para 7 ) :-55-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 87. The Tribunal found that the AO had relied entirely on an unverified third-party ledger, which lacked authenticity and evidentiary value. Consequently, the Tribunal held that the ledger was a “dumb document”, and in the absence of any corroboration or cross-examination, the addition was unsustainable and had to be deleted. It was held that, “Unverified digital entries seized from a third party, uncorroborated and denied by the assessee, are not sufficient to sustain additions under section 69.” Thus, we could be inferred that the addition based on seized pen drive in the present case is equally unsustainable, and deserves to be deleted in full treating it as dumb document. 88. In the case of Anand Jaikumar Jain v. ACIT (ITAT Mumbai), in ITA No.3820 to 3823/Mum/2019 dated 22.04.2022 a search was conducted on the Dalmia Group u/s.132 of the Act. During the search, documents and electronic data (including pen drive contents) allegedly showing cash transactions involving the Dalmia Group and one “AJ/SJ” were found. Based on this material, the AO reopened the assessments of Shri Anand Jaikumar Jain, treating him as the person identified as “AJ” or “SJ” in the documents. The AO made a huge addition (₹47 crores in one year) on the :-56-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 presumption that the assessee had received cash compensation from Dalmia’s in respect of certain shareholding arrangements. The assessee categorically denied any such transaction and stated that he had no connection with the entries in the seized material. The seized documents were undated, unsigned, unauthenticated, and were not found in the assessee’s possession. The ld.CIT(A) and ITAT found that: a) The pen drive entries were not corroborated. b) The documents were seized from a third party. c) No direct or circumstantial evidence was brought on record to link the transactions to the assessee. d) The Dalmia’s themselves did not confirm any cash transaction with the assessee and disowned the pen drive contents before the Settlement Commission. The ITAT upheld the ld.CIT(A)'s decision and deleted the addition in its entirety. (page 12 para 14 to page 15 para 15, page 20 para 20, page 21 para 22- Anand Jaikumar Jain’s case) 89. The addition in the present case is also based solely on an uncorroborated pen drive entry, seized from a third party similar to the decision of the Anand Jaikumar Jain v. ACIT (Supra), which is: :-57-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 a) Denied by the assessee, b) Unconfirmed by the custodian, and c) Lacking any corroborative evidence. The Tribunal’s reasoning in Anand Jaikumar Jain (supra) case provides strong judicial support to contend that the pen drive is a dumb document, and no addition can be sustained merely on the basis of such electronic records. Thus, we are of the considered opinion that the addition made on the basis of seized pen drive in the hands of the assessee is not sustainable in the eyes of law and on facts and hence liable to be deleted. 90. In the case of Manoj Madanlal Chhajed v. ACIT - (ITAT Pune, IT(SS)A Nos. 91 to 98/PUN/2022 & ITA No. 725/PUN/2022) at Pune Tribunal held as below: The AO made large additions u/s.68 (unexplained cash credit), 69, and 69C (unexplained investments and expenses) based on the diary notings and a statement recorded u/s.132(4) (which was later retracted). The Tribunal held that the diary did not constitute speaking or corroborated evidence and that mere statements, especially when retracted, cannot form the basis of additions without supporting material. This case reinforces the principle that “Uncorroborated notings or loose documents especially if they lack transactional clarity, dates, parties, and amounts cannot be treated as valid evidence for additions under the Act.” (pages 22-40 and page 46 para 31 of the said order) :-58-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 The decision in Manoj Madanlal Chhajed(supra) case squarely supports the assessee’s position that the pen drive is a “dumb document”, and hence the made by the AO cannot be sustained as there is no independent and credible corroboration. 91. In the present facts and circumstances of the case, the impugned addition made by the AO and confirmed by the ld.CIT(A) is based solely on an uncorroborated and unauthenticated digital entry found in a pen drive seized from a third party dehors of any further material / evidence brought on record by the revenue to support the additions made. Hence, the seized pen drive alleged as incriminating material and relied by the department is not supported by any statement, admission, or independent evidence linking the same to the assessee, is wholly untenable both in law and on facts. Therefore, in our considered view and respectfully following the various judicial precedents discussed (supra) we are setting aside the order of the ld.CIT(A) and direct the AO to delete the additions made u/s.68 of the Act. 92. Since, all the five appeals of the assessee are decided in favour of the assessee, the stay application filed by the assessee for :-59-: ITA. Nos:453 to 457/Chny/2025 & SA Nos.41 to 45/Chny/2025 all the five assessment years becomes infructuous and hence dismissed. 93. In the result all the five appeals filed by the assessee for the A.Y.2015-16 to 2019-20 are allowed and all the five stay applications filed by the assessee are dismissed. Order pronounced in the open court on 17th July, 2025 at Chennai. Sd/- Sd/- (एस एस िवʷनेũ रिव) (S.S. VISWANETHRA RAVI) Ɋाियक सद˟/JUDICIAL MEMBER (एस. आर.रघुनाथा) (S. R. RAGHUNATHA) लेखा सद˟/ACCOUNTANT MEMBER चे᳖ई/Chennai, ᳰदनांक/Dated, the 17th July, 2025 RSR आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT – Chennai 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "