UNITED DEVELOPER,HYDERABAD V. DCIT., CENTRAL CIRCLE-3(1), HYDERABAD

CO 14/HYD/2025

AI Insights

The case involves appeals by the revenue against the orders of the Commissioner of Income Tax (Appeals) [CIT(A)], Hyderabad, which had arisen from the orders passed by the AO under Section 153C of the Income Tax Act, 1961, for the assessment years 2016-17 and 2017-18. The AO had made additions to the income of the assessee firm, United Developer, based on a document seized during search proceedings at a third party's premises, which allegedly contained details of unaccounted cash receipts from the sale of shops in a commercial complex. The CIT(A) had reduced the addition to 12% of the undisclosed cash receipts, which was contested by both the revenue and the assessee firm in their respective appeals and cross-objections. The Tribunal found that the additions were not substantiated by any corroborative evidence and were based solely on the unverified contents of the seized document.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773888 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Appeal Filed On: 06-06-2025
• Other Referred Cases: Commissioner of Income Tax (Central) Vs. A. Mahesh Reddy, CIT Vs. Smt. K.V. Lakshmi Savitri Devi, DCIT vs. Sunil Kumar Sharma, Addl. CIT v. Miss Lata Mangeshkar, Common Cause (A Registered Society) v. UOI, CIT v. Sant Lal, CIT vs. Mahabir Prasad Gupta, CIT Vs. Lanco Industries Ltd., CIT Vs. Smt. K.V. Lakshmi Savitri Devi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Question of law; Unexplained expenditure; Unexplained investment; Income from undisclosed sources; Document seized; Documents seized; Onus to prove; Principle of natural justice; Search and seizure; Loose papers; Procedural lapse
• Section: 132; 133A

Judgement Text

" आयर अपीलȣय Ûयायाͬधकरण मɅ, हैदराबाद ‘ए’ बɅच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad ŵी रवीश सूद, माननीय Ɋाियक सद˟ एवं ŵी मधुसूदन साविडया, माननीय लेखा सद˟ SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.Nos.452 & 453/Hyd/2025 (िनधाŊरण वषŊ/ Assessment Year(s): 2016-17 & 2017-18) DCIT Central Circle-3(1) Hyderabad Vs. United Developer Hyderabad [PAN : AADFU4034H] (अपीलाथŎ/ Appellant) (ŮȑथŎ/ Respondent) Cross Objection Nos.14/Hyd/2025 & 15/Hyd/2025 आयकर अपील सं./I.T.A.Nos.452 & 453/Hyd/2025 (िनधाŊरण वषŊ/ Assessment Year(s): 2016-17 & 2017-18) United Developer Hyderabad [PAN: AADFU4034H] Vs. DCIT Central Circle-3(1) Hyderabad करदाता का Ůितिनिधȕ/ Assessee Represented by : Shri A.V.Raghuram, Advocate, AR राजˢ का Ůितिनिधȕ/ Department Represented by : Shri Balakrishna, CIT-DR सुनवाई समाɑ होने की ितिथ/ Date of Conclusion of Hearing : 09.07.2025 घोषणा की तारीख/Date of Pronouncement : 24.09.2025 Printed from counselvise.com 2 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer O R D E R Ůित रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeals filed by the revenue are directed against the respective orders passed by the Commissioner of Income Tax (Appeals) [CIT(A)], Hyderabad-11 dated 13.01.2025, which in turn arises from the respective orders passed by the Assessing Officer (“the AO”) u/s 153C of the Income Tax Act, 1961 (for short “Act”) dated 17.02.2022 for the A.Y.2016-17 and A.Y. 2017-18. Also, the assessee company is before us as a cross-objector. Since common issues are involved in the captioned appeals and cross-objections, therefore, the same have been taken up and disposed of by a consolidated order. We shall first take up the appeal filed by the revenue and the cross- objection of the assessee firm for A.Y.2016-17, and the order therein passed shall apply mutatis mutandis for the purpose of disposing of the other appeal and cross-objection. 2. The Revenue has assailed the impugned order passed by the CIT(A) on the following grounds of appeal before us: Printed from counselvise.com 3 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer “1. The Ld. CIT(Appeals) erred both in law and on facts of the case in granting relief to the assessee. 2. Whether in the facts and circumstances of the case and in law, the Ld.CIT(A) is correct in holding that income is to be estimated @12% of the undisclosed cash receipts as against the addition made towards unaccounted cash receipts by the assessing officer? 3. Whether in facts and circumstances of the case and in law, the Ld.CIT(A) erred on facts in estimating income @ 12% of undisclosed cash receipts ignoring the fact that no evidence was adduced by the assessee about incurring of any expenditure against such undisclosed cash receipts? 4. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary.” 3. Also, the assessee firm is before us as a cross objector, raising the following objections. Printed from counselvise.com 4 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 4. Succinctly stated, the assessee firm, which is engaged in the real estate business, had filed its return of income for the A.Y. 2016-17 on 29.09.2016, declaring an income of Rs. 91,51,090/-. 5. Search and seizure proceedings u/s 132 of the Act were conducted on “Clarion Group” on 02.5.2018. M/s Jitender Roller Flour Mills, i.e., a partnership firm, in which some of the partners of the assessee firm have substantial interest was also covered in the aforesaid search proceedings. 6. During the course of the search proceedings conducted at the premises of M/s Jitender Roller Flour Mills, certain incriminating material was recovered from a laptop belonging to Shri Surender Jindal, i.e., a part-time accountant, who, inter alia, was managing the accounts of the searched party and also the assessee firm. 7. On a perusal of the record, we find that an incriminating document seized as Page 38 of Annexure A/JRFM/05 was found and seized. The seized document i.e. Annexure A/JRFM/05, Page 38 comprised of three parts with the heading “COMMERCIAL COMPLEX” Printed from counselvise.com 5 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer total sale 275 shops”, wherein, the first part mentioned the total number of shops available for sale floor wise, amount, and the cheque amount (separate), with the total of the above two amounts aggregating to Rs.33,96,50,000/; second part mentioned the floor-wise shops sold till 22.07.2016 (207 shops) again with details of amount and cheque amount (separate) aggregating to Rs.26,90,00,000/-; and the third part mentioned the advances received on 28.04.2016 with floor-wise details of shops, amount and the cheque amount (separate) aggregating to Rs.1,52,12,000/-. At the end of the aforesaid three parts, there appeared an amount of Rs. 5,54,38,000/-. For the sake of clarity, the aforesaid seized Page 38 of Annexure A/JRFM/05 is culled out, as under: Printed from counselvise.com 6 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 8. Apart from that, the AO observed that the search officials had also seized documents viz., Annexure A/JRFM/05, Pages 39 to 44, which too were recovered from the laptop of Mr. Surender Jindal (supra). On a perusal of the aforesaid seized documents viz., Page 39 to 44 (supra), it stood revealed that the same referred to the financial year-wise expenses up to 31.03.2016 in the name of the assessee firm, which were found to be accounted for and disclosed in its returns of income for the various assessment years. For the sake of clarity, the details of few of the aforesaid expenses appearing in the seized Printed from counselvise.com 7 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer document, viz., Page 39 to 44, reads as under (as culled out from the assessment order): 9. Although Page 38 of the seized Annexure-A/JRFM/05 did not make any mention of the name of the assessee firm, but the AO Printed from counselvise.com 8 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer observed that the other seized documents viz., Pages 39 to 44 of Annexure A/JRFM/05 not only referred to the name of the assessee firm, but also the expenses therein mentioned were found to be duly accounted for and disclosed in its returns of income filed for the various years. Thus, the A.O. based on the aforesaid facts held a conviction that the seized document viz., Page 38 of Annexure A/JRFM/05, also related to the assessee firm. 10. Also, we find that the AO, while framing the assessment observed that the contents of the seized document viz., Page 38 of Annexure A/JRFM/05 referred to shop-wise and floor wise sale details, which exactly tallied with the details of commercial shops sold, number of shops and the reference of a shop No.34 (small shop) in each of the ground floor and balance four floors of the commercial complex, i.e. “United Arcade” that was disclosed by the assessee firm to have been sold in its returns of income filed for the A.Y.2016-17 and A.Y.2017-18. Also, it was observed by the AO that the cheque component of the sale of shops as mentioned in the seized document, viz., Page 38 of Annexure A/JRFM/05 tallied with those accounted for by the assessee Printed from counselvise.com 9 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer firm in its sale register and books of accounts, but the cash component mentioned in the said incriminating document was not accounted for and disclosed as a part of the sale consideration of the said shops by the assessee firm. Further, the AO observed that Shri Jitender Kumar Gupta, the common partner of the assessee firm and the searched concern, on being queried about the aforesaid document that was recovered from the laptop of his part-time accountant, had expressed his unawareness about the contents of the same for the reason that he was not conversant about the financial dealings of the assessee firm. Thereafter, Shri Jitender Kumar Gupta vide his statement dated 29.05.2018, had disowned the contents of the seized material, and had, inter alia, submitted that he is a sleeping partner in the assessee firm, but as informed by Shri Mohammed Rouf, managing partner of the assessee firm the sale consideration of the shops was duly recorded in the books of accounts and no such unaccounted sale consideration of Rs.18.10 crores was received. Further, the AO observed that Shri Mohammed Rouf, managing partner of the assessee firm, on being queried, had also submitted that the sale Printed from counselvise.com 10 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer consideration of the shops sold by the assessee firm was duly accounted for in its books of accounts. 11. As is discernible from the assessment order, it transpires that the AO did not find favour with the explanation of the partners of the assessee firm, and concluded that the contents of the seized material i.e. Page 38 of Annexure A/JRFM/05 referred to the actual sale consideration (including on-money) that was received by the assessee firm on the sale of the shops in the Commercial Complex i.e. “United Arcade” both during the year under consideration and the immediately succeeding year for the reasons viz., (i) that the seized document i.e. Page 38 of Annexure A/JRFM/05 was recovered from the computer of the part-time accountant of the assessee firm that was lying in the business premises of M/s Jitender Flour Mills, Hyderabad, i.e, the searched concern in which, partners of the assessee firm had substantial interest; (ii) that the number of shops that were sold by the assessee firm (floor-wise) during the subject year i.e. A.Y.2016-17 and A.Y.2017-18 totaling to 275 (Nos.) tallied with the details of the shops sold (floor-wise) as was mentioned in the seized document Page 38 of Printed from counselvise.com 11 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Annexure A/JRFM/05; (iii) that the cheque component of the sale consideration that was received by the assessee firm and was accounted for in its books of accounts tallied with the amount of the sale consideration received through cheques as was mentioned in the seized document Page 38 of Annexure A/JRFM/05; and (iv) that though the seized document i.e. Page 38 of Annexure A/JRFM/05 did not mention the name of the assessee firm, but as the other seized documents i.e. Page Nos. 39 to 44 of Annexure A/JRFM/05 recovered from the same laptop of the part-time accountant not only mentioned the name of the assessee firm, but also referred to the details of the expenses that were accounted for by the assessee firm in its books of accounts for the year under consideration, therefore, it could safely be concluded that the seized document viz., Page No.38 of Annexure A/JRFM/05 (supra) was also relating to the affairs of the assessee firm; and (v). that as per the information available in the public domain the market value of the commercial property in the same commercial complex constructed by the assessee firm, i.e., “United Arcade” was Rs.17,500/- per sq. ft in respect of furnished shops located in the Printed from counselvise.com 12 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer ground floor and Rs. 9,000/- per sq. ft. in respect of semi furnished shops located on the second floor, therefore, the substantial variance between the said market value and the value for which the assessee firm had claimed to have sold the shops in its commercial complex, i.e., “United Arcade”, clearly revealed the suppression of the sale proceeds. Accordingly, the AO based on his aforesaid observations, concluded that the Page 38 of Annexure A/JRFM/05 referred to the actual sale consideration for which the assessee firm had sold 275 shops in its commercial complex, i.e. “United Arcade” for a total consideration of Rs.33,96,50,000/-, but had only admitted the cheque portion of Rs.11,52,00,000/- in its return of income for the A.Y. 2016-17 and A.Y. 2017-18, leaving behind the apparent cash component of sale consideration of Rs. 22,45,80,000/-. Accordingly, the AO observed that the contents of the seized document, viz. Page 38 of Annexure A/JRFM/05 revealed the actual sale consideration of 275 shops that were sold by the assessee firm in its commercial complex, i.e., “United Arcade”. Thus, the A.O., based on his aforesaid conviction, concluded that the assessee firm had not accounted for the cash component of Printed from counselvise.com 13 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Rs. 22,45,80,000/- that it had received as on-money on the sale of shops of its aforesaid commercial complex. Thereafter, the A.O., taking cognizance of the fact that the assessee firm had already offered an additional income of Rs. 1,25,00,000/-, thus held the balance amount of Rs. 21,20,80,000/- [Rs. 22,45,80,000 – Rs. 1,25,00,000) as its unaccounted income for the A.Y.2016-17 and A.Y. 2017-18. Thereafter, the AO, based on the aggregate of the cheque receipts that were admitted by the assessee firm in both the aforementioned years bifurcated the alleged on-money receipts, i.e., the cash component of the alleged unaccounted sale proceeds on a proportionate basis in the hands of the assessee firm for both the aforementioned years viz., (i). undisclosed cash received on sale of shops during the A.Y.2016-17: Rs. 9,45,37,047; and (ii). undisclosed cash received on sale of shops for A.Y.2017-18: Rs. 11,75,42,953/-. Accordingly, the AO vide his order passed u/s 153C of the Act, dated 17.02.2022, determined the income of the assessee firm for A.Y. 2016-17 at Rs 10,98,53,139/-. 12. Aggrieved, the assessee firm carried the matter in appeal before the CIT(A). Printed from counselvise.com 14 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 13. Ostensibly, the assessee firm in the course of the proceedings before the CIT(A) had assailed the order passed by the AO under Section 153C of the Act, dated 17.02.2022 for A.Y 2016-17, primarily on the ground that the AO had grossly erred in making the impugned addition of Rs. 9,45,37,047/- on account of the alleged on-money received from sale of shops. Elaborating on his contention, it was claimed by the assessee firm that now when its name was neither mentioned in the seized document i.e. Page 38 of Annexure A/JRFM/05, nor was it signed by any person, much less any of its partners, or indicated the details or names of the parties from whom the on-money was allegedly received, therefore, there was no justification for the A.O. to have made the impugned addition based on the said dumb document which was not seized from the premises of the assessee firm but from the premises of a third party. Also, it was emphasized by the assessee firm that in the course of the search proceedings conducted on M/s Jitender Roller Flour Mills (supra), as neither its partner, i.e. Mr. Jitender Kumar Gupta (supra) nor Mr. Surender Jindal, i.e., the part-time accountant from whose laptop the Printed from counselvise.com 15 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer said incriminating document was claimed to have been recovered, had ever stated that the contents of the said document pertained to the assessee firm, therefore, the same could not have been used as an evidence for drawing adverse inferences in the hands of the assessee firm. It was claimed by the assessee firm that, now when the identity of the author of the incriminating document and his motive for preparing the same were absolutely unverifiable, therefore, merely based on a suspicion, how so ever strong, no addition based on the unsubstantiated contents of the said dumb document whose authenticity itself was in serious doubt could have been made on presumptions. The assessee firm further submitted that as its claim that the entire amount of sale consideration received on the sale of the shops was duly accounted in its “books of accounts”, and no material was ever unearthed either in the course of search proceedings (conducted on the third party) or in the survey proceedings conducted on the assessee firm u/s 133A of the Act on 04.05.2018, which would reveal that any on-money was received by the assessee firm on the sale of the shops, therefore, the AO merely based on surmises and Printed from counselvise.com 16 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer conjectures had made the impugned addition, which cannot be sustained and is liable to be vacated. Also, the assessee firm submitted before the CIT(A) that the impugned incriminating document, i.e., Page 38 of Annexure A/JRFM/05 seized from the premises of the third party, viz. M/s Jitender Flour Mills (supra) did not even make any mention of its name. Elaborating further, it was the claim of the assessee firm that now when it was alleged by the AO that the assessee firm had received money over and about that was accounted for in its books of accounts, therefore, a very heavy onus was cast upon him to disprove the veracity of the sale consideration that was disclosed by the assessee firm in its duly audited “books of accounts” and prove to the contrary. Further, the assessee firm submitted that it could not be called upon to prove the negative, i.e, substantiate its claim that it had not received any on-money. The assessee firm to support its aforesaid claim had pressed into service the provisions of section 292C of the Act, which contemplates that in the course of the search proceedings conducted on a person, the presumption regarding the contents of the document seized during the course of the said proceedings is to be drawn only in Printed from counselvise.com 17 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer context of the person searched and the same cannot be extended to a third party. Also, the assessee firm had drawn support from the fact that neither of its partners viz., Mr. Jitender Kumar Gupta (supra) or Mr. Mohammad Rouf (supra0, nor its part-time accountant, i.e., Mr. Surendar Jindal, from whose laptop the incriminating material was recovered, had ever stated that the document pertained to the assessee firm. Also, the assessee firm had drawn support from the fact that during the course of survey proceedings conducted on it under Section 133A of the Act on 04.05.2018, various documents, including sale deeds and sale agreements, were impounded, but no evidence whatsoever, substantiating the receipt of any on-money on sale of the shops was found. The assessee firm had further stated that the AO had blindly relied upon the contents of the aforesaid seized document, viz., Page 38 of Annexure A/JRFM/05 that was seized from the premises of a third party and not that of the assessee firm, and had without carrying out any independent verification about the correctness of the contents of the same summarily concluded that the assessee firm had received on-money on sale of the shops of its commercial Printed from counselvise.com 18 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer complex i.e “United Arcade”. Elaborating further on his contention, the assessee firm had submitted that thought the AO, while framing the assessment had before him the complete details of all the purchasers of the shops along with their addresses, phone numbers etc., but he had dispensed with the basic requirement of examining the said parties and most arbitrarily drawn adverse inferences in its case. It was further stated that though the AO had 45 months available with him., i.e, the period falling between the date on which the search proceedings were conducted and the date on which the assessment was framed in the case of the assessee firm to make necessary enquiries and gather the requisite evidence to corroborate his allegation that the assessee firm had received sale consideration over and above that accounted for in its books of accounts, but he had summarily dispensed with the same and had made the impugned addition of on-money receipts solely based on the uncorroborated noting/scribbling in the loose sheet, that was prepared by some unidentified person and was seized from the premises of a third party. To sum up, it was the claim of the assessee firm, that the vague and dumb loose sheets found in the course of the Printed from counselvise.com 19 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer search proceedings conducted on a third party, though could lead to a suspicion, but, the same howsoever strong, on such standalone basis and in absence of any corroborative material cannot justify the drawing of adverse inference and making of an exorbitant addition in its hands. 14. Also, we find that the assessee firm had, raised an alternative contention before the CIT(A), wherein, it was stated by him that in case the view taken by the AO about the alleged receipt of unaccounted sale consideration by the assessee firm was to be accepted (though not admitted), then the addition could have been only restricted to the extent of the profit element embedded in the said gross receipts and the addition of the entire amount could not have been made. The assessee firm to support its aforesaid contention had submitted before the CIT(A) that in case, the entire addition of the alleged on-money was made in its case, then, that would result to a net profit of around 60%, which was not only abnormal, but unheard of in its line of business of construction, wherein it had during the subject year disclosed a gross profit rate of 6.9% on the sale of the constructed shops. Printed from counselvise.com 20 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 15. We find on a perusal of the CIT(A) order that, though he did not concur with the claim of the assessee firm that the contents of the seized document viz., Page 38 of Annexure A/JRFM/05 could not be acted upon for making the impugned addition on account of on-money receipt on the sale of shops of the commercial complex, i.e., “United Arcade”, but at the same time, he concurred with the alternative contention of the assessee firm that the addition of the entire amount of gross receipts was not justified. Accordingly, the CIT(A) restricted the addition in the hands of the assessee firm to the extent of 12% of the cash portion of sales, as against the addition of the entire amount of cash component that was made by the AO. For the sake of clarity, the observations of the CIT(A) are culled out as under: Printed from counselvise.com 21 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 22 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 23 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 24 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 25 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 26 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 27 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 28 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 29 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 30 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 31 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 32 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 33 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Printed from counselvise.com 34 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 16. The revenue aggrieved with the order of the CIT(A) has carried the matter in appeal before us. Also, the assessee firm is before us as a cross objector. 17. Shri A.V. Raghuram, Advocate, Ld. Authorized Representative (“A.R”, for short) for the assessee firm, at the threshold of hearing, submitted that the cross-objection filed by the assessee firm involves a delay of 47 days. Elaborating on the reason leading to the delay, the Ld. AR submitted that the same had crept in because the assessee firm had remained unaware of the appeal filed by the revenue before Printed from counselvise.com 35 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer the Tribunal. The Ld. AR submitted that it was only when a representative of the assessee firm had visited the office of the AO on 30.05.2025 to check the status of the consequential order passed by him pursuant to the order of the CIT(A), that he was informed that the Revenue had assailed the order passed by the CIT(A) before the Tribunal. On verification, it was gathered by the assessee firm that the notice issued by the registry of the Tribunal was dropped in the spam e-mail account of its representative, i.e., [e-mail], which had gone unchecked on the latter’s part. The Ld. AR submitted that the assessee firm, on gathering about the filing of the appeal by the revenue, had thereafter, without any further loss of time, filed the cross objection, which by the time involved delay of 44 days. The Ld. AR submitted that as the delay in filing of the cross objection had crept in because of a bonafide reason and not on account of any lackadaisical approach or malafide conduct of the assessee respondent/cross objector, therefore, the same in all fairness be condoned. Printed from counselvise.com 36 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 18. Per contra, the Ld. DR objected to the seeking of the condonation of the delay involved in the filing of the cross objection by the assessee firm. 19. We have given thoughtful consideration to the facts leading to the delay in filing of the cross-objection by the assessee firm in the backdrop of the facts narrated in its petition, which is supported by an “affidavit” dated 06.06.2025. We are of the firm conviction that in the totality of the facts as had been deposed by the assessee firm, the delay in filing of the cross-objection had crept in because of bonafide reasons and not on account of any lackadaisical approach on its part. We, thus, are of the view that the delay in filing the present cross- objection merits condonation. Our aforesaid view is supported by the recent decision of the Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31st January, 2025. The Hon'ble Apex Court while setting aside the order of the Hon'ble High Court of Chhattisgarh, which had approved the declining of the condonation of delay of 166 days by the Income-Tax Printed from counselvise.com 37 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Appellate Tribunal, Raipur Bench, had observed, that a justice-oriented and liberal approach should be adopted while considering the application filed by an appellant seeking condonation of the delay involved in filing the appeal. 20. As the assessee firm vide its cross objection has assailed the validity of the addition of Rs. 9.45 crores (supra) made by the AO on account of the alleged unaccounted sale consideration received by the assessee firm in cash, therefore, we deem it apposite to first deal with the said material aspect. 21. Shri A.V. Raghuram, Ld. Authorized Representative (for short, “AR”) for the assessee firm, at the threshold of hearing of the appeal, submitted that as the incriminating document, viz., Page 38 of Annexure A/JRFM/05 was seized from the laptop of Shri Surender Jindal, i.e. the part time accountant of the assessee firm, during the course of the search proceedings conducted at the premises of a third party, viz., M/s Jitender Roller Flour Mills and not from the premises of the assessee firm, therefore, a very heavy onus was cast upon the AO to prove, based on irrefutable corroborative material/evidence, that the Printed from counselvise.com 38 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer contents of the said seized document referred to the sale consideration received by the assessee firm on the sale of the shops of its commercial complex “United Arcade”, i.e. over and above the sale consideration that was disclosed in the registered sale deeds and accounted for in its duly audited books of accounts. Elaborating further on his contention, the Ld. AR submitted, that as per Section 292C of the Act, where any document is found in the possession or control of any person in the course of search proceedings conducted under Section 132 of the Act, it may be presumed that the contents of such document are true, but the said presumption is applicable only in context of such person who is found to be in possession or control of the said document and cannot be summarily extended to a third party. The Ld. AR further submitted that it is incomprehensible that the AO simply based on the uncorroborated contents of the seized document viz., Page 38 of Annexure A/JRFM/05, despite having a period of about 45 months from the date of search till the framing of the assessment, had without examining any of the purchasers of the shops summarily concluded that the assessee firm had received on-money on sale of Printed from counselvise.com 39 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer the shops. The Ld. AR vehemently submitted that as the seized document viz., Page 38 of Annexure A/JRFM/05 was recovered from the laptop found lying in the premises of a third party, therefore, the AO ought to have considered that both the contents of the said document and motive of the author were not free from doubts, and in all fairness, the same were indispensably required to be corroborated based on irrefutable documentary evidence. The Ld. AR submitted that Shri Jitender Kumar Gupta, partner of the assessee firm, who was not actively involved in the business of the assessee firm, on being confronted with the aforesaid seized document, i.e. Page 38 of Annexure A/JRFM/05 was oblivion of the contents of the same and had sought for some time for obtaining the requisite details from the managing partner. Thereafter, Shri Jitender Kumar Gupta (supra), vide his submission dated 29.05.2018, had clearly disowned the contents of the said seized material based on the information that was made available to him by the managing partner, and had stated that the sale consideration of the shops was duly recorded in the “books of accounts” of the assessee firm. Apart from that, Shri Mohammad Rouf, Printed from counselvise.com 40 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer i.e., the managing partner of the assessee firm, on being queried about the contents of the seized document, had also clearly denied the allegation and had stated that the sale consideration of the shops was duly recorded in the books of accounts of the assessee firm. The Ld. AR submitted that Shri Surender Jindal, i.e. the part-time accountant of the assessee firm from whose laptop the aforesaid incriminating document is stated to have been recovered, had also in his statement stated that the said seized document did not relate to the assessee firm. 22. The Ld. A.R. submitted that the AO, based on the dumb contents of the seized document, had, without carrying out the bare minimum verification, examination of the purchasers, and placing on record any corroborative material, made the impugned addition of the alleged on-money receipts on sale of shops in the hands of the assessee firm based on conjectures and surmises. The Ld.AR submitted that even the principle of preponderance of human probability clearly militated against the impugned addition made by the AO. Elaborating on his contention, the Ld. AR submitted that even if it Printed from counselvise.com 41 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer was to be presumed that the assessee firm had received unaccounted sale consideration on the sale of the shops, then, it is incomprehensible that it would have shared such sensitive and confidential information with its part-time accountant much the less allowed him to retain the said details in his laptop, knowing well that he was also providing his services to number of other parties. The Ld. AR submitted that though the seized document viz., Page 38, Annexure A/JRFM/05 referred to the same number of shops (floor-wise), and also the sale consideration that was received by the assessee firm through cheques and disclosed in its books of accounts tallied, but merely for the said reason the AO could not have inferred that the amount mentioned in the said seized document was the unaccounted sale consideration received by the assessee firm on sale of the shops of its commercial complex “United Arcade”. The Ld. AR to buttress his claim had relied upon the judgment of Hon’ble High Court of Andhra Pradesh in the case of Commissioner of Income Tax (Central) Vs. A. Mahesh Reddy, I.T.T.A.No.162 of 2014 dated 12.03.2014, Page No.84 to 86 of APB. The Ld. AR submitted that, involving identical facts, the Hon’ble High Court, while approving Printed from counselvise.com 42 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer the view taken by the Tribunal, had held that an addition based on surmises and conjectures by relying upon the contents of certain loose papers, without having any legal proof, cannot be sustained. 23. Further, the Ld. AR had relied upon the judgment of the Hon’ble High Court of Andhra Pradesh in the case of CIT Vs. Smt. K.V. Lakshmi Savitri Devi, I.T.T.A.563/2011 dated 10.12.2012. The Ld. AR submitted that involving identical facts as in the case of the present assessee firm, the department, in the course of the search proceedings conducted on a third party, had come across a diary, which revealed that certain cash was received from the assessee/respondent. Thereafter, the AO, based on the aforesaid contents of the diary, had made an addition in the hands of the assessee. On appeal, the Tribunal observed that there was no search action in the case of the assessee, and the seized material was not found from his premises but from the premises of a third party. It was observed that, merely based on the fact that the name of the assessee was mentioned in the loose sheet/incriminating document that was found in the course of the search proceedings conducted on the third party, there was no Printed from counselvise.com 43 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer justification for the Revenue to presume that the assessee had made the cash payment to the said third party. On appeal, the Hon’ble High Court had approved the view taken by the Tribunal, and concluded that the Revenue had failed to establish the nexus of the seized material with the assessee/respondent and had drawn inferences based on suspicion, conjectures, and surmises which cannot take the place of proof. Also, the Hon’ble High Court had concurred with the Tribunal that as the AO had not conducted any independent enquiry relating to the subject property that was purchased by the assessee, therefore, it had failed to discharge the onus that was cast upon it for proving that the incriminating document seized in the course of the search proceedings conducted on the third party revealed actual consideration paid by the assessee for the purchase of the said property. 24. The Ld. AR submitted that as the AO while framing the assessment in the case of the present assessee firm had failed to place on record any corroborative material, which would support the veracity of the contents of the seized document, i.e., Page 38 of Annexure A/JRFM/05, based on which, the addition of the alleged cash receipts Printed from counselvise.com 44 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer of unaccounted sale consideration was made in the hands of the assessee firm, therefore, the addition made by him cannot be sustained and is liable to be vacated. Also, the Ld. AR submitted that insofar reliance placed by the AO on the seized documents, i.e., Pages 39 to 44 of Annexure A/JRFM/05 was concerned, the same revealed the expenditure that was incurred by the assessee firm during the subject year and was recorded in its books of accounts. 25. The Ld. AR submitted that the controversy involved in the present appeal boils down to the solitary aspect, i.e., whether or not the exorbitant addition made by the AO on the basis of the contents of the seized document, i.e. Page 38 of Annexure A/JRFM/05 recovered from the laptop of Shri Surender Jindal, i.e, the part-time accountant of the assessee firm that was found lying in the business premises of M/s Jitender Roller Flour Mills, i.e., a third party, in the absence of any independent corroborative material proving the authenticity of the said contents and the motive of the author can be sustained? Printed from counselvise.com 45 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 26. Alternatively, the Ld. AR submitted that though the assessee firm is aggrieved with the very basis for making the impugned addition by the AO in the absence of any corroborative material, but, without prejudice, he is supporting the order of the CIT(A) to the extent he had scaled down the addition made by the AO. 27. Per contra, the Ld. CIT-DR submitted that though the incriminating document seized in the course of the search proceedings did not make any mention of the name of the assessee firm, but as it referred about the sale of the same number of shops (floor-wise) that were sold by the assessee firm in its commercial complex “United Arcade”, and also the cheque component of the sale consideration therein mentioned tallied with that as was disclosed in the registered sale deeds and the “books of accounts” of the assessee firm, therefore, it could safely be concluded that the amount mentioned in the seized document was the on-money/unaccounted sale consideration of the shops that was not disclosed by the assessee firm. Elaborating on his contention, the Ld. DR had taken us to the aforesaid seized document, i.e., Page 38 of Annexure A/JRFM/05. The Ld. DR submitted that the Printed from counselvise.com 46 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer first part of the seized document referred to the total number of shops that were available with the assessee firm for sale floor-wise, amount and cheque amount (separate), wherein, the total of the above two amounts aggregated to Rs. 33,96,56,000/-. Further, the second part of the seized document provided floor-wise details of the shops sold till 22.07.2016 (207 shops) along with amounts and cheque amount (separate), wherein the total of the said amounts aggregated to Rs. 26,90,00,000/-. Lastly, the third part of the seized document referred to the advances received on 28.04.2016 with floor-wise details of shops, amount and the cheque amount (separate), wherein the total of the said amounts aggregated to Rs. 1,52,12,000/-. The Ld. DR submitted that at the end of the aforesaid three parts, there was a mention of an amount of Rs. 5,54,38,000/-, which was apparently the balance amount that was receivable by the assessee firm after reducing the sales/advances received on the balance shops to be sold. The Ld. DR submitted that though the seized document was recovered from a laptop lying in the premises of M/s Jitender Roller Flour Mills, a third party, but some of the partners of the assessee firm had a Printed from counselvise.com 47 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer substantial interest in the said concern. Apart from that, the Ld. D.R. submitted that the seized document was recovered from the laptop of the common part-time accountant of the assessee firm and the searched concern. The Ld. D.R submitted that in the backdrop of the aforesaid facts it can safely be concluded that the “amount” mentioned in the seized document was the on-money/unaccounted sale consideration that was received by the assessee firm along with the cheque component on the sale of 275 shops in its commercial complex, i.e. “United Arcade”, both during the year under consideration and the immediately succeeding year. 28. We have thoughtfully considered the contentions advanced by the learned authorized representatives of both parties in the backdrop of the orders of the lower authorities, and the material available on record. 29. Admittedly, it is a matter of fact that the aforesaid incriminating document, i.e. Page 38 of Annexure A/JRFM/05 was seized in the course of the search proceedings conducted on “Clarion Group” on 02.05.2018, wherein the business premises of M/s Jitender Roller Printed from counselvise.com 48 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Flour Mills, i.e. a concern in which, some of the partners of the assessee firm had substantial interest was also covered. The incriminating document, i.e., Page 38 of Annexure A/JRFM/05, was recovered from the laptop of Shri Surender Jindal, i.e., the part-time accountant of the assessee firm, who was also maintaining the accounts of the searched concern and other parties. 30. As stated by the Ld. AR and rightly so, as the incriminating document, i.e Page 38 of Annexure A/JRFM/05 was recovered in the course of search proceedings conducted u/s 132 of the Act on M/s Jitender Roller Flour Mills (supra), from a laptop belonging to Shri Surender Jindal, i.e a part-time accountant that was found lying in the premises of the said searched concern, therefore, as per Section 292C of the Act, the presumption would be that the said document belonged to the person from whose possession the same was seized, i.e., either Shri. Surender Jindal (supra) to whom the laptop belonged or M/s Jitender Roller Flour Mills, the searched concern in whose premises the laptop was found. Section 132(4A)(i) of the Act clearly stipulates that when any document is found in the possession or control of any Printed from counselvise.com 49 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer person in the course of a search, it may be presumed that such document belongs to such person. It is similarly so provided in Section 292C(1)(i) of the Act. In other words, whenever a document is found from a person who is being searched, the normal presumption is that the said document belongs to that person and the contents of the same is presumed to be true qua the said person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or satisfaction that the document pertains to somebody else. There must be some cogent material available with the Assessing Officer before he arrives at a conclusion that the contents of such seized material relate to someone else, and surmises and conjectures cannot take the place of independent corroborative evidence. Reason being, in case the AO wants to take reliance for making addition on the documents found during the course of a search proceedings conducted on a third party, then the presumption u/s 132(4A) will not be available against the third party. Also, as per Section 292C of the Act, the presumption is that the contents of the said seized document were to be taken as true applied only to the person from whose possession the said Printed from counselvise.com 50 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer incriminating document was found and cannot be summarily extended to a third party. We, thus, are of a firm conviction that the AO had grossly erred in law and facts of the case by losing sight of the scope of the presumptions contemplated under Section 132(4A) and Section 292C of the Act, as per which the seized document, viz., Page 38 of Annexure A/JRFM/05 was to be presumed to be belonging to either Shri. Surender Jindal (supra) i.e. the owner of the laptop or M/s Jitender Roller Flour Mills, i.e. the searched concern in whose premises the laptop was found lying in the course of the search proceedings. Also, the contents of the seized document were to be taken as true only in the context of the said persons. To sum up, the A.O could not have in the absence of any corroborative material summarily drawn adverse inferences in the hands of the assessee firm based on the contents of the incriminating document i.e. Page 38 of Annexure A/JRFM/05 that was not seized from its premises, but was found to be in possession of and seized in the course of the search proceedings from the above mentioned third parties. Printed from counselvise.com 51 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 31. Although, we find on perusal of the seized document, i.e., Page 38 of Annexure A/JRFM/05, that the same refers to the same number of shops that were sold by the assessee firm i.e. 275 shops (floor-wise), and the cheque amounts therein mentioned aggregated to Rs.11,51,70,000/- viz., (i) A.Y. 2016-17: Rs.5,16,20,000/-; and (ii) A.Y. 2017-18: Rs.6,35,00,000/-, which except for a marginal difference of Rs. 50,000/- tallied with the sale consideration of shops that was disclosed by the assessee firm in its “books of accounts” at Rs.11,51,20,000/-, but are of a firm conviction, that the A.O on the said standalone basis was not justified to have summarily concluded without carrying out any verifications, examination of purchasers, and placing on record any corroborative material that the amounts mentioned in the said seized document was the unaccounted sale consideration that was received by the assessee firm on the sale of the shops of its commercial complex i.e. “United Arcade” that was not disclosed in its books of accounts. As the aforesaid seized document i.e., Page 38 of Annexure A/JRFM/05 was seized from the laptop of a part-time accountant, who was rendering his services to several Printed from counselvise.com 52 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer concerns, and the said laptop was recovered from the premises of a third party, i.e. M/s Jitender Roller Flour Mills (supra), therefore, there could have been no justification for the AO to have summarily acted upon the contents of the same for drawing adverse inferences and making exorbitant addition in the hands of the assessee firm, without placing on record any corroborative material supporting his said conviction. 32. Ostensibly, the AO had observed in the assessment order that during the survey proceedings conducted on the assessee firm u/s 133A of the Act on 04.05.2018, the complete details of the parties who had purchased the shops along with their addresses and telephone numbers were gathered by the department from the sale registers. We are unable to understand what had stopped the AO from carrying out necessary verification and examination of the purchasers of the shops about the consideration for which they had purchased the respective shops in the commercial complex i.e. “United Arcade”. We find substance in the Ld. AR’s claim that though the search proceedings were conducted on 02.05.2018 and the assessment was framed in the Printed from counselvise.com 53 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer case of the assessee firm under Section 153C of the Act on 18.11.2021, there were 45 months (approx.) available with the AO to carry out necessary verifications to corroborate his claim that the assessee firm had received sale consideration over and above that accounted for in its books of accounts, but we are afraid that the bare minimum that was expected on his part had not been done. We find substance in the Ld. AR’s claim that as the AO was relying upon the contents of a document retrieved from the laptop of a third party that was found lying at the premises of the searched concern viz., M/s Jitender Roller Flour Mills (supra), therefore, a very heavy onus was cast upon him to corroborate his allegation based on irrefutable material/evidence that the contents of the said seized document revealed receipt of on-money by the assessee firm on the sale of shops. We, say so, for the reason that now when it is throughout been the claim of the partners of the assessee firm that the sale consideration received on the sale of the shops of its commercial complex i.e. “United Arcade” was duly accounted for in the “books of accounts” of the assessee firm, therefore, the question of placing the Printed from counselvise.com 54 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer burden of proof to prove a negative fact could not have been cast upon it. Our aforesaid view is supported by the judgment of the Hon’ble High Court of Andhra Pradesh in the case of CIT Vs. Lanco Industries Ltd. (2000) 242 ITR 357 (AP). In the case before the Hon’ble High Court, the assessee company had issued a cheque of Rs. 10 lac towards commission to a non-resident for facilitating raising of share capital from the non-resident investors. However, the said cheque was returned by the commission agent for the reason that his company did not have a bank account in India. Later on, the commission agent vide his letter requested the assessee company to make payment of Rs. 10 lac along with the balance outstanding amount. However, the assessee company did not accept the request of the commission agent and make any payment to him. In the meantime, the assessee company was subjected to search proceedings. The search officials came across the “agreement” based on which commission was to be paid to the commission agent. The commission agent denied having received any commission. However, the A.O. took a view to the contrary and concluded that the assessee Printed from counselvise.com 55 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer company had made the payment to the commission agent after he had returned the cheque to the assessee company. The Hon’ble High Court in the backdrop of the aforesaid facts, had observed that the question of placing the burden of proof to prove a negative fact does not arise. It was further observed that as the revenue wanted the assessee company to prove a negative fact that no payment was made after the cheque was returned, therefore, no infirmity did arise from the view taken by the tribunal, which was not inclined to take into account the said unfructified transaction. 33. We may herein observe that regarding the admissibility of notings found in loose sheets seized from a third party premises, it is relevant to take note of the following principles laid down by the Hon'ble Supreme Court in the case of Common Cause (A Registered Society) v. UOI (2017) 394 ITR 220 (SC), which can safely be culled out as under:- (i) Entries in loose papers/sheets are irrelevant and not admissible under Section 34 of the Evidence Act. It is only where the Printed from counselvise.com 56 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer entries are in the books of account regularly kept, depending on the nature of occupation, that those are admissible; (ii) As to the value of entries in the books of account, such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. Even then, independent evidence is necessary as to the trustworthiness of those entries which is a requirement to fasten the liability; (iii) The meaning of account book would be spiral note book/pad but not loose sheets; (iv) Entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another; Printed from counselvise.com 57 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer (v) Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts; (vi) The Court has to be on guard while ordering an investigation against a person in the absence of some cogent legally cognizable material. When the material on the basis of which the investigation is sought is itself irrelevant to constitute evidence, it is not admissible in evidence. Accordingly, the Hon'ble Apex Court has held that the entries in loose papers/sheets alone are not admissible as conclusive proof against a third person. Even if such loose sheets are treated as books of account kept in the ordinary course of business, then also Printed from counselvise.com 58 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer entries therein shall not alone be sufficient evidence to charge a third person with liability. 34. It is, thus, incumbent upon the person relying upon those entries recorded in loose papers/sheets that are found in the course of search proceedings to prove that they are in accordance with facts. Reason being, if the presumption qua the notings found in the seized material is extended to a third party, i.e., the assessee, as in the present case before us, then any person for that matter can mention anyone's name in any loose paper/diary at his sweet will and that can be used to implicate such other person for no fault of his. Hence, these notings are required to be substantiated with some independent evidence or material which would show that they relate to or pertain to the assessee. In support of the foregoing proposition, we gainfully refer to the decision of the Hon'ble High Court of Delhi in the case of CIT v. Sant Lal (2020) 423 ITR 1 (Delhi). In this case, the Department had relied upon the notings of hundi in the diary seized from the premises of a third party. The said noting's allegedly contained entries of hundi transactions on behalf of parties, including Printed from counselvise.com 59 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer the assessee, whose names were written in abbreviated/code words. The Hon'ble High Court relied on its earlier decision in the case of CIT v. Mahabir Prasad Gupta, ITA NO. 814/2015, dated 20.10.2015, and held that no addition can be made in the hands of an assessee on the basis of any diary seized during the course of search proceedings conducted on a third party, since such diary was neither found at the assessee's premise and that the department had failed to provide any cogent material or gather any corroborative evidence to substantiate that it pertained to the assessee. The Court observed that the searched person could have written anyone's name on his own sweet will in his diary, and therefore, such noting on a stand-alone basis, along with the biased statement of the searched person, cannot be used as reliable evidence against the assessee. We may also gainfully rely on the guiding principles laid down by the Hon'ble High Court of Karnataka in the case of DCIT vs. Sunil Kumar Sharma, 159 taxmann.com 179, which was also seized with the question that as to whether 'loose sheets' under the Indian Evidence Act, 1872 can be relied upon to make addition Printed from counselvise.com 60 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer in the hands of an assessee, in absence of any independent corroboration. The Hon'ble High Court held that the 'loose sheets' do not constitute material evidence in relation to a third person and therefore set aside the notices issued u/s 153C of the Act, holding it to be void. Also, we find that the Hon’ble High Court of Bombay in the case of Addl. CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom), had come across an addition that was made in the hands of the assessee on the basis of the entries in the books of third persons. The Hon'ble High Court held that such an addition could not have been made only on the basis of the notings in the books of third persons. 35. Apart from that, we find substance in the Ld. AR’s contention that it is beyond the principles of preponderance of human probability that, in case the assessee firm was involved in the nefarious activity of receiving unaccounted sale consideration on the sale of shops of its commercial complex, i.e., “United Arcade”, then it would be so naïve to share such sensitive and confidential information with its part-time accountant. We not only find it Printed from counselvise.com 61 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer improbable and rather incomprehensible, that the assessee firm after sharing such confidential information with its part-time accountant, would have allowed him to retain the same in his personal laptop, knowing well that the same was being carried by him to the business premises of his different clients and could be misused either by him or by any other person who could easily have access to the said information. We find that the very basis of the impugned addition made in the hands of the assessee firm, i.e., the details of the alleged unaccounted sale consideration gathered by the search officials from the personal laptop of Shri. Surender Jindal, i.e., a part-time accountant, in the absence of any material corroborating such alleged receipts, militates against the principle of preponderance of human probability as had been emphasized by the Hon’ble Supreme Court in the case of Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC). 36. Be that as it may, we find that the partners of the assessee firm had throughout disowned the contents of the seized document i.e., Page 38 of Annexure A/JRFM/05, based on which, it was alleged Printed from counselvise.com 62 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer that the assessee firm had received on-money/unaccounted sale consideration on the sale of the shops of its commercial complex, i.e., “United Arcade”. We further find substance in the Ld. AR’s claim that though the assessee firm was during the course of the search proceedings conducted on M/s Jitender Flour Mills (supra) subjected to survey proceedings u/s 133A of the Act on 04.05.2018, but no incriminating material that would support the observation of the AO that the assessee firm had sold the shops over and above the sale consideration recorded in its books of accounts was found or unearthed in the course of the said proceedings. Rather, we find that the department in the course of the survey proceedings had impounded from the premises of the assessee firm the sale registers along with the copies of the registered sale deeds/agreements to sell, but had not come across any such material that evidenced receipt of on-money on sale of any of the 275 shops by the assessee firm during the subject year and immediately succeeding year. We are of the firm conviction that though the contents of the seized document viz., Page 38 of Annexure A/JRFM/05 raised a suspicion Printed from counselvise.com 63 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer or doubt about the veracity of the sale consideration of the shops that was disclosed by the assessee firm in its books of accounts, but, cannot shut our eyes to the settled position of law that suspicion, however strong, cannot take the place of proof. We are of the view that if the AO wanted to act upon the unsubstantiated contents of the seized document, viz., Page 38 of Annexure A/JRFM/05, which did not even make a mention of the name of the assessee firm, then in the totality of the facts therein involved, he ought to have carried out necessary verifications, examined the purchasers of the shops (whose complete details were available with him), and brought on record corroborative material that would have irrefutably evidenced and proved to the hilt that the assessee firm had received on- money/unaccounted sale consideration on the sale of the subject shops. Also, we cannot remain oblivion of the fact that neither the survey officials nor the AO while framing the assessment had brought on record any material, which would reveal that in the course of the survey proceedings conducted on the assessee firm u/s 133A of the Act on 04.05.2018, trail of the alleged on-money/unaccounted Printed from counselvise.com 64 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer sale consideration in any form, i.e., unexplained investment or unexplained expenditure was found that would have to some extent supported his allegation that the assessee firm had received on- money of Rs. 22.45 crores (supra) on the sale of the shops in its commercial complex. Further, the fact that Shri Surender Jindal, i.e., the part-time accountant of the assessee firm, had in his statement recorded by the department categorically stated that the contents of the seized document did not pertain to the assessee firm, can also not be lost sight of and brushed aside. We are of the firm conviction that now when the author of the seized document, viz., Page 38 of Annexure A/JRFM/05, i.e. Shri Surender Jindal (supra) had never stated that the amount mentioned in the said seized document was the unaccounted sale consideration received by the assessee firm on the sale of the shops of its commercial complex, i.e. “United Arcade”, therefore, the addition made by the AO by solely relying upon the unsubstantiated contents of the said seized document which have no legs to stand upon cannot be sustained. Printed from counselvise.com 65 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 37. We find that the Hon’ble High Court of Andhra Pradesh in the case of CIT Vs. Smt. K.V. Lakshmi Savitri Devi, I.T.T.A.563/2011, dated 10.12.2012, had come across facts identical to those involved in the present appeal before us. For the sake of clarity, we deem it apposite to cull out the observations of the Hon’ble High Court in the backdrop of the facts as were involved in the case before them, as under: “15. We are of the view that the Tribunal has rightly held that the registered document dt. 21-08-2006 under which the respondent purchased the above property showed that only Rs. 65.00 lakhs was paid to the vendor by the respondent; that there was no evidence to show that the respondent had paid Rs. 1.00 crore in cash also to the vendor; that no presumption of such payment of Rs. 1.00 crore in cash can be drawn on the basis of an entry found in a diary/loose sheet in the premises of C. Radha Krishna Kumar which is not in the respondent’s handwriting and which did not contain the name of the respondent or any date of payment on the name of the person who made the payment. It rightly held that the Revenue failed to establish the nexus of the seized material to the respondent and had drawn inferences based on suspicion, conjectures and surmises which cannot take the place of proof. We also agree with the Tribunal that the assessing officer did not conduct any independent enquiry relating to the value of the property purchased and the burden of proving the actual consideration in the purchase of the property is on the Revenue and it had failed to discharge the said burden.” Printed from counselvise.com 66 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer (emphasis supplied by us) Also, a similar view had been taken by Hon’ble High Court of Andhra Pradesh in the case of Commissioner of Income Tax (Central) Vs. A. Mahesh Reddy, I.T.T.A.No.162 of 2014 dated 12.03.2014. The Hon’ble High Court, while approving the view taken by the Tribunal, which had vacated the addition made by the A.O. based on loose papers that were found and seized from the assessee’s premises, had held that there was no justification for the AO to have made the impugned addition merely based on surmises and conjectures without having any legal proof of the same. The Hon’ble High Court had observed that the AO made the addition on the basis of the entries made in the loose sheets, which did not bear any signature or date. Comping back to the case of the assessee firm before us, we find that as the incriminating document viz., Page 38 of Annexure A/JRFM/05 was not even found in the possession or from the premises of the assessee firm, but from the possession and premises of a third party, therefore, drawing support from the aforesaid judgement, it can safely be concluded that the AO was statutorily obligated to have placed on record corroborative Printed from counselvise.com 67 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer material to substantiate his allegation that the contents of the said seized document revealed the unaccounted sale consideration that was received by the assessee firm on the sale of shops of its commercial complex, i.e., “United Arcade”, instead of drawing of adverse inferences on the basis of surmises and conjectures. 38. As is discernible from the assessment order, it is a matter of fact that the A.O had grossly failed to place on record any such independent corroborative material/evidence which would prove that the assessee firm had during the year under consideration and the immediately succeeding year received unaccounted sale consideration on the sale of shops in its commercial complex - “United Arcade”, i.e., over and above the sale consideration recorded in its duly audited “books of accounts”. In fact, we find that the A.O. had mainly harped on the unsubstantiated contents of the incriminating document, i.e., Page 38 of Annexure A/JRFM/05 that was seized from the laptop of a part-time accountant lying in the premises of a third party, i.e., M/s Jitender Roller Flour Mills (supra). We are unable to comprehend that now when the A.O, admittedly, had the complete details of the persons who had purchased Printed from counselvise.com 68 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer the shops in the commercial complex of the assessee firm, i.e., “United Arcade” and had with him their addresses, telephone numbers etc., then what stopped him from examining the said respective parties for verifying the claim of the assessee company that it had duly accounted the sale consideration of the shops in its audited “books of accounts”. We, thus, are of a strong conviction that the A.O. had grossly failed to carry out the necessary exercise which he was statutorily obligated to have carried out in case he intended to dislodge and disprove the claim of the assessee firm that it had not received any unaccounted sale consideration on the sale of the shops. We are of a firm conviction that, in case the A.O., based on the contents of the seized document, viz. Page 38 of Annexure A/JRFM/05 intended to discard the claim of the assessee firm that no amount over and above that accounted for in its “books of accounts” was received on the sale of shops, then he was obligated to have carried out a thorough probe, examination of the purchasers, and ought to have placed on record material proving to the contrary, which, we are afraid he had grossly failed to do. Printed from counselvise.com 69 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer 39. Although the carrying out of a thorough probe, examination of the purchasers, and placing on record of irrefutable material/evidence that would have supported the A.O’s claim that the assessee firm had received the amounts as mentioned in the seized document viz., Page 38 of Annexure A/JRFM/05 as unaccounted sale consideration on the sale of the shops of its commercial complex “United Arcade”, viz. Page 38 of Annexure A/JRFM/05 was indispensably required as corroborative material/evidence to support the addition made while framing the assessment, but we are afraid that the said failure on the part of the A.O. to discharge the said statutory obligation that was cast upon him cannot be undone at this stage. Our aforesaid view is supported by the judgment of the Hon’ble High Court of Delhi in the case of Commissioner of Income Tax Vs. Kamdhenu Steel and Alloys Ltd. (2014) 361 ITR 220 ( Del), wherein the Hon’ble High Court had while circumscribing the scope of powers of the Tribunal had, inter alia, observed that as the Tribunal acts purely as an appellate authority, therefore, it has to see whether the assessment framed by the AO, for that matter, Printed from counselvise.com 70 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer orders of the CIT(A) were according to law and purportedly framed on facts and whether there was sufficient material to support it. The Hon’ble High Court has observed that it is not for the Tribunal to start investigations and it is only to see as to whether the additions are sustainable and there is adequate material to support the same, and, if not, the addition has to be deleted. It was further observed that the tribunal would not order further inquiry. The Hon’ble High Court, while concluding as hereinabove, had observed that it is to be kept in mind that the AO is prosecutor as well as adjudicator and it is for the AO to collect sufficient material to make the addition. Further, it was observed that there may be exceptional circumstances in which such an inquiry can be ordered, but normally this course is not resorted to. For the sake of clarity, the observations of the Hon’ble High Court are culled out as under: “18. We may repeat what is often said, that a delicate balance has to be maintained while walking on the tight rope of Sections 68 and 69 of the Act. On the one hand, no doubt, such kind of dubious practices are rampant, on the other hand, merely because there is an acknowledgement of such practices would not mean that in any of such cases coming before the Court, the Court has to presume that the assessee in questions has indulged in that practice. To make the assessee responsible, there has to be Printed from counselvise.com 71 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer proper evidence. It is equally important that an innocent person cannot be fastened with liability without cogent evidence……………………………………………………... xxx xx xxx 20. During the arguments, we had posed these queries Learned counsel appearing for the Revenue understood the limitation of their case. For this reason, a fervent plea was made that this case be remitted back to the AOs to enable him to make further investigation. 21. However, in the facts and circumstances of these cases, it would be difficult to give such an opportunity to the Revenue. There are number of reasons for denying this course of action which are mentioned below: (i) It is not a case where some procedural defect or irregularity had crept in the order of the AO. Had that been the situation, and the additions made by the AO were deleted because of such infirmity, viz., violation of principle of natural justice, the Court could have given a chance to the AO to proceed afresh curing such procedural irregularity. One example of such a case would be when statement of a witness is relied upon, but opportunity to cross-examine is not afforded to the assessee. (ii) On the contrary, it is a case where the AO(s) did not collect the required evidence which they were supposed to do. To put it otherwise, once the assessee had discharged their onus and the burden shifted on the AO(s), they could not come out with any cogent evidence to make the additions. No doubt, as indicate by us above, the AO(s) could have embark upon further inquiry. If that is not done and the AO(s) did not care to discharge the onus which was laid down, for this \"negligence\" on the part of the AO(s), he cannot be provided with \"fresh innings\". (iii) The order of the AO(s) had merged in the order of the CIT(A) and in some of the cases before us and before the CIT(A), the assessees had succeeded. (iv) This Court is acting as appellate Court and has to act within the limitations provided under Section 26A of the Act. The appeals Printed from counselvise.com 72 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer can be entertained only on substantial questions of law. In the process, this Court is to examine as to whether the order of the Tribunal is correct and any substantial question of law arises therefrom. The Tribunal has passed the impugned orders, sitting as appellate authority, on the basis of available record. When the matter is to be examined from this angle, there is no reason or scope to remit the case back to the AO(s) once it is found that on the basis of material on record, the order of the Tribunal is justified. Even the Tribunal acts purely as an appellate authority. In that capacity, the Tribunal has to see whether the assessment framed by the AO, all for that matter, orders of the CIT(A) were according to law and purportedly framed on facts and whether there was sufficient material to support it. It is not for the Tribunal to start investigation. The Tribunal is only to see as to whether the additions are sustainable and there is adequate material to support the same if not the addition has to be deleted. At that stage, the tribunal would not order further inquiry. It is to be kept in mind that the AO is prosecutor as well as adjudicator and it is for the AO to collect sufficient material to make addition. There may be exceptional circumstances in which such an inquiry can be ordered, but normally this course is not resorted to.” 40. We find that the A.O. in the present case before us had except for harping upon the unsubstantiated contents of the seized document viz, Page 38 of Annexure A/JRFM/05 that was recovered from the laptop of the part-time accountant found in the course of the search proceedings from the premises of a third party, i.e., M/s Jitender Roller Flour Mills (supra), had despite having at his disposal more than sufficient period of 45 months, i.e., the time period between the date on which search proceedings were conducted on Printed from counselvise.com 73 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer M/s Jitender Flour Mills (supra) and the date of framing of assessment in the case of the assessee firm, failed to place on record any material/evidence which would support his claim that the assessee firm had received unaccounted sale consideration on the sale of the shops of its commercial complex i.e. “United Arcade” as was alleged by him. Rather, it would also be pertinent to point out that not only the A.O. had failed to examine any of the purchasers of the shops despite having access to their complete details i.e. names, addresses, telephone numbers etc. (as available in the sale registers that were impounded in the course of the survey proceedings conducted on the assessee firm on 04.03.2018), but also, there is no whisper in his assessment order that he had ever examined the author of the said seized document, Shri. Surender Jindal, i.e., the part-time accountant from whose laptop the said document was recovered, and enquired from him about the background and source of the notings in the seized document viz., Page 38 of Annexure A/JRFM/05. On the contrary, we find that Shri. Surendra Jindal (supra) had, in his statement, denied that the said document related Printed from counselvise.com 74 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer to the assessee firm. We, thus, based on the aforesaid facts, are of the firm conviction that the A.O. had merely based on unsubstantiated notings in the aforesaid seized document, viz. Page 38 of Annexure A/JRFM/05, without placing on record any corroborative material or evidence to support his allegation, has drawn adverse inferences regarding the sale consideration accounted for by the assessee firm on sale of shops of its commercial complex, i.e., “United Arcade”, and made the impugned additions in its case for both the subject year and the immediately succeeding year. As the A.O. had not cared to discharge the onus that was cast upon him, therefore, as observed by the Hon’ble High Court in the case Commissioner of Income Tax Vs. Kamdhenu Steel and Alloys Ltd. (supra), for this negligence on the part of the A.O., he cannot be provided with “fresh innings”. We, thus, in terms of our aforesaid observations, are unable to sustain the unsubstantiated additions of Rs. 21,20,80,000/-, viz. (i). A.Y.2016-17: Rs. 9,45,37,047; and (ii). A.Y.2017-18: Rs. 11,75,42,953/- made by the A.O. in the hands of the assessee firm for both the aforementioned Printed from counselvise.com 75 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer years. Accordingly, in terms of our aforesaid observations, we set aside the order of the CIT(A) and direct the A.O. to vacate the additions made in the hands of the assessee firm for A.Y.2016-17 and A.Y. 2017-18 of Rs. 9,45,37,047 and Rs. 11,75,42,953/-, respectively. 41. As we have allowed the cross-objection filed by the assessee firm and vacated the additions made by the A.O in A.Y 2016-17 and A.Y. 2017-18, therefore, we refrain from adjudicating the respective appeals filed by the revenue for both the said years, which, thus, having been rendered as academic in nature, are left open. 42. In the result, the cross-objections file d by the assessee firm in A.Y 2016-17 and A.Y 2017-18 are allowed, while the appeals filed by the revenue for both the said respective years, having been rendered as academic in nature, are dismissed in terms of our aforesaid observations. ……. ͧसतàबर, 2025 को खुलȣ अदालत मɅ सुनाया गया आदेश। Printed from counselvise.com 76 ITA No.452 & 453/Hyd/2025 and CO No.14 & 15/Hyd/2025 United Developer Order pronounced in the Open Court on 24th September, 2025. Sd/- Sd/- (मधुसूदन सावͫडया) (MADHUSUDAN SAWDIA) लेखा सदèय/ACCOUNTANT MEMBER Sd/- Sd/- (रवीश सूद) (RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER Sd/- Hyderabad, Dated 24.09.2025. #**L.Rama /SPS आदेशकी Ůितिलिप अŤेिषत/ Copy of the order forwarded to:- 1. िनधाŊįरती/The Assessee : United Developer, 4-6-73/2 & 3, Pillar No. 143, Attapur X Road, Mahadipatnam, Hyderabad. 2. राजˢ/ The Revenue : Deputy Commissioner of Income-tax, Central Circle-3(1), Aaykar Bhawan, Opp. LB Stadium, Bhasheerbagh. 3. The Principal Commissioner of Income Tax, Hyderabad 4. िवभागीयŮितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद /CIT- DR, ITAT, Hyderabad 5. गाडŊफ़ाईल / Guard file आदेशानुसार / BY ORDER Sr. Private Secretary ITAT, Hyderabad Printed from counselvise.com "