V SATHYAMOORTHY&CO,ERODE V. DCIT, CENTRAL CIRCLE -2, COIMBATORE

ITA 1023/CHNY/2024

AI Insights

The case involves M/s. V. Sathyamoorthy & Co., a resident firm, which filed an appeal against the assessment order passed under sections 143(3) read with 153A of the Income Tax Act, following a search operation. The primary issues in the appeal were the disallowance of wages payable, and additions made under sections 69 and 69C for unexplained investments and expenditures, respectively. The Tribunal examined the evidentiary value of the documents and statements provided during the search and subsequent assessments, ultimately finding that the additions made were not substantiated by adequate evidence.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472357 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 29-07-2024
• Assessment Year: 2019-2020
• Appeal Filed On: 12-04-2024
• Other Referred Cases: CIT vs. Sunil Kumar Sharma, CBI vs. V.C. Shukla, Common Cause vs. UOI, ITO vs. Kranti Impex Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.CLEMENT RAMESH KUMAR LD
• Assessee Lawyers: S. SRIDHAR LD
• Keywords: Unexplained expenditure; Unexplained investment; Income from undisclosed sources; Retraction; Principle of natural justice; Loose papers; Bogus loan; Bogus
• Section: 143(3); 132; 153A; 139(1); 69; 113; 69C

Judgement Text

" आयकर अपीलीय अिधकरण “सी” \u000eा यपीठ चे\u0013ई म\u0016। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, CHENNAI मा ननीय \u0019ी एबी टी. वक\u001f, \u000eा ियक सद\" एवं माननीय \u0019ी मनोज क ुमार अ'वाल ,लेखा सद\" क े सम)। BEFORE HON’BLE SHRI ABY T. VARKEY, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No.1023/Chny/2024 (िनधा*रण वष* / Assessment Year: 2019-20) M/s. V. Sathyamoorthy & Co. 41, Patel Road, Near Blood Bank, Erode-638 001. बनाम/ Vs. DCIT Central Circle-2 Coimbatore. \u0002थायीलेखासं./जीआइआरसं./PAN/GIR No. AACFV-0222-D (अपीलाथ\u001c/Appellant) : (\u001f थ\u001c / Respondent) अपीलाथ\u001c की ओर से/ Assessee by : Shri S. Sridhar (Advocate)- Ld.AR \u001f थ\u001c की ओर से/Revenue by : Shri R. Clement Ramesh Kumar (CIT)-Ld. DR सुनवाईकीतारीख/Date of Hearing : 29-07-2024 घोषणाकीतारीख /Date of Pronouncement : 09-10-2024 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1.1 Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of an order passed by learned Commissioner of Income Tax (Appeals), Chennai-20, [CIT(A)] on 31-03-2024 in the matter of an assessment framed by Ld. Assessing Officer (AO) u/s 143(3) r.w.s. 153A of the Act on 04-05-2022. 1.2 The grounds raised by the assessee read as under: - 1. The order of the CIT (Appeals) - 20, Chennai dated 31.03.2024 vide DIN & Order No. ITBA/APL/S/250/2023-24/1063746103(1) for the abovementioned Assessment Year is contrary to law, fact and in circumstances of the case. 2 2. The CIT (Appeals) - 20, Chennai erred in confirming the assumption of jurisdiction under Section 153A of the Act and further erred in confirming the search assessment order passed in terms of Section 153A of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment completed by making the disputed addition(s) in the absence of valid incriminating seized material relatable to such addition(s) should be reckoned as nullity in raw and further ought to have appreciated that the judicial trend in this regard was completely over looked and brushed aside in passing the impugned order there by vitiating the related findings. 4. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 5. The CIT (Appeals) - 20, Chennai erred in confirming the addition of Rs.4,24,49,502/- on the presumption of wages payable claimed in the month of March of the relevant assessment year as bogus without assigning proper reason and justification. 6. The CIT (Appeals) - 20, Chennai failed to appreciate that the wages expenses were actually incurred by the Appellant in the normal course of business and the disallowance of such expenses as not genuine was wholly unjustified and not sustainable both on facts and in law. 7. The CIT (Appeals) - 20, Chennai failed to appreciate that the Appellant had rectified the return of income filed u/s 153A of the Act in claiming the actual expenses relatable to the assessment year under consideration and further ought to have appreciated that the Assessing Officer having considered the reversal of such provision in the said return of income, the action to deny the claim of actual expenses relatable to the assessment year under consideration would distort the financial results of the Appellant Company. 8. The CIT (Appeals) - 20, Chennai failed to appreciate that the wages expenses were wrongly denied both in the year of claim (as per original return of income) as well as in the actual year of outflow (as per 153A return) would defy the principles of fairness in taxation there by vitiating the related findings in the impugned order. 9. The CIT (Appeals)- 20, Chennai failed to appreciate that having not found any discrepancy in the expenditure incurred by the Appellant and further having not disputed the fact that the major portion of wages payable being paid through proper banking channels, the findings recorded in doubting the genuineness of such expenses was wholly unjustified and unwarranted thereby negating the related findings in the impugned order. 10. The CIT (Appeals) - 20, Chennai failed to appreciate that the return of income filed in response to the notice issued u/s 153A of the Act should be construed as implied retraction to the statement recorded at the time of search and further ought to have appreciated that the presumption of non retraction till date was wholly unjustified especially in view of its contention before both the lower authorities. 11. The CIT (Appeals) - 20, Chennai failed to appreciate that there was no independent examination carried out by the Revenue despite the availability of entire documents forming part of the search records and the sole reliance on the statement recorded in the absence of any corroborative evidence should be reckoned as bad in law. 12. The CIT (Appeals) - 20, Chennai erred in sustaining the addition of Rs. 85,00,000/- on the presumption of salary payable as bogus without assigning proper reasons and justification. 13. The CIT (Appeals) - 20, Chennai failed to appreciate that the provisions of Section 69 of the Act had no application to the facts of the present case and further ought to have appreciated that the pre-requisite conditions for attracting the provisions in Section 69 of the Act was not satisfied in the present case there by vitiating the disputed addition. 3 14. The CIT (Appeals) - 20, Chennai failed to appreciate that the seized material relied upon by the Assessing Officer had no evidentiary value and further ought to have appreciated that the addition made solely based on the statement recorded at the time of search and the loose sheet(s) in the absence of corroborative evidence should be reckoned as bad in law. 15. The CIT (Appeals) - 20, Chennai failed to appreciate that the contents of the seized material only relate to the projected figures in relation to TWAD project and further ought to have appreciated that the assessment of projected figures as unexplained investment on various facets was wrong, erroneous, incorrect, invalid and not sustainable both on facts and in law. 16. The CIT (Appeals) - 20, Chennai failed to appreciate that the Assessing Officer had not brought on record any evidence establishing the movement of cash / flow of funds nor identified the disputed sum in the form of any asset thereby vitiating the sustenance of the addition made by invoking the provisions of Section 69 of the Act. 17. The CIT (Appeals) - 20, Chennai failed to appreciate that the explanation offered by the Appellant were not considered in proper perspective while dealing with the grounds raised and further ought to have appreciated that the factual position was further clarified by the Partner of the Appellant firm during the post search proceedings there by vitiating the related findings in the impugned order. 18. The CIT (Appeals) - 20, Chennai failed to appreciate that in any event the assessment of such presumed investment as unexplained in the hands of the Appellant firm thereby negating the addition made in this regard and further ought to have appreciated that the sustenance of the disputed sum in the hands of the Appellant was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 19. The CIT (Appeals)-20, Chennai erred in sustaining the addition of Rs.20,33,00,000/- as unexplained expenditure u/s 69C of the Act based on the excel sheet found at the time of search without assigning proper reasons and justification. 20. The CIT (Appeals)-20, Chennai failed to appreciate that the provisions of Section 69C of the Act had no application to the facts of the present case and further ought to have appreciated that the pre-requisite for attracting the provisions in Section 69C of the Act was not satisfied in the present case thereby vitiating the disputed addition. 21. The CIT (Appeals) - 20, Chennai failed to appreciate that the excel sheet relied upon by the Assessing Officer should not be construed as 'incriminating seized material' and further ought to have appreciated that the contents of the seized material reflecting the actual expenses incurred by the Appellant on various projects which were duly accounted in the books of accounts there by vitiating the addition made. 22. The CIT (Appeals)-20, Chennai failed to appreciate that there was no independent examination carried out by the Revenue despite the availability of entire documents including the expenses incurred on various projects forming part of the search records and the mechanical addition made by treating the contents of the excel sheet as unaccounted expenses incurred relatable to the projects already captured in the audited financials solely relying on the statement recorded from the accountant in the absence of any corroborative evidence should be reckoned as bad in law. 23. The CIT (Appeals) - 20, Chennai failed to appreciate that the explanation offered by the Appellant was not considered in proper perspective while dealing with the grounds raised and further ought to have appreciated that the factual position was further clarified by the Partner of the Appellant firm during the post search proceedings there by vitiating the related findings in the impugned order. 24. The CIT (Appeals) - 20, Chennai failed to appreciate that in any event the assessment of such presumed unexplained expenditure in the hands of the Appellant firm there by negating the addition made in this regard. 4 25. The CIT (Appeals) - 20, Chennai failed to appreciate that the entire re computation of the taxable total income on various facets was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 26. The CIT (Appeals) - 20, Chennai failed to appreciate that there was no effective/reasonable opportunity granted before passing the impugned order and search assessment order and further ought to have appreciated that any order passed in violation to the Principles of Natural Justice should be reckoned as nullity in law. As is evident, the issues that fall for our consideration are – (i) disallowance of wages payable for Rs.424.49 Lacs; (ii) Addition of unexplained investment u/s 69 for Rs.85 Lacs; (iii) Addition u/s 69C for Rs.2033 Lacs. 1.3 The Ld. AR advanced arguments and referred to various documents as placed on record. The Ld. CIT-DR also advanced arguments and supported the orders of lower authorities. This appeal was heard along with other appeals of the assessee for several assessment years. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. 1.4 The assessee being resident firm filed return of income for this year u/s 139(1). The assessee was subjected to search action u/s 132 on 28- 10-2020. Accordingly, an assessment was framed u/s 143(3) r.w.s. 153A on 04-05-2022 making certain additions in the hands of the assessee. Post search-proceedings, notice u/s 153A was issued to the assessee on 30-04-2021. The assessee filed return of income and disclosed certain additional income. The details of the same could be tabulated as under: - No. A.Y. Date of filing of return u/s 139(1) Income returned u/s 139(1) Income assessed u/s.143(3) Returned Income u/s.153A Rs. Additional Income disclosed Rs. A B C D E F (F-D) 1 2015-16 08.09.2015 10,89,38,240 11,02,35,450 12,97,210 2 2016-17 10.02.2017 5,52,28,000 NA 5,72,95,360 20,67,360 3 2017-18 23.01.2018 15,78,68,530 NA 19,07,00,920 3,28,32,390 5 4 2018-19 15.12.2018 11,39,91,610 NA 11,58,49,610 18,58,000 5 2019-20 30.01.2020 14,40,23,110 NA 30,74,07,590 16,33,84,480 6 2020-21 31.03.2021 20,40,75,060 NA 36,16,07,280 15,75,32,220 7 2021-22 31.03.2022 67,59,66,220 NA NA NA It is evident that the assessee offered additional income of Rs.1633.84 Lacs in this year. 2. Disallowance of Wages Payable 2.1 This addition is based on notings found in Measurement books (M Books) for labor payments and excel sheets. Upon comparison of these documents with regular Tally Data, discrepancies were found and Ld. AO concluded that the assessee booked wages payable in the last month of various financial years to suppress profits. After rejecting assessee’s submissions, Ld. AO made addition of Rs.424.49 Lacs on account of wages payable. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 2.2 We find that identical issue has been decided by us in assessee’s appeal for AY 2017-18, ITA No.1021/Chny/2024 as under: - Our findings and adjudication 4. Upon perusal of ledger extracts of wages payable and salaries payable as placed on record at Page Nos. 70 to 112 of the paper-book Volume-II, it could be seen that as on 01- 04-2016, the wages payable are for Rs.62.75 Lacs which have fully been paid by the assessee by 30-04-2016. The assessee has made provision of wages payable for AY 2017-18 for Rs.391.07 Lacs which, as per the statements made during the course of search proceedings, are booked artificially to suppress the profit of this year. The assessee has reversed / not considered this provision while filing the return of income u/s 153A and it has already offered additional income to that extent. The Ld. AO has already concurred with this fact. Another finding of Ld. AO is that on comparison of workers’ wages expenses for FY 2018-19 as maintained in Tally system vis-à-vis actual wage payments as per excel sheets, it was found that for the month of April, 2018 to June, 2018, the workers’ wages expenses accounted in the tally system was lesser than the actual payment made during the year. The payments that were made through banks were used to set-off the previous year wages payable even though the wages expenses were incurred during FY 2018-19. On these facts, it was to be concluded that the expenditure, per-se, was not bogus but it was only a timing difference of making a claim. The assessee made advance provision for wages in one year and adjusted the same in subsequent wages actually paid from such provisions without claiming the wages in next year. The motive was to suppress the profit of a particular year. This being so, when the provision itself has been reversed in a 6 particular year, the payment thereof in the next year would be allowable to the assessee as expenses of subsequent year. If the same is not allowed, the assessee would suffer disallowance in both the years. 5. The assessee has reconciled the income as filed u/s 139(1) and as filed u/s 153A (placed on Page No.280 of Paper Book Volume-1) as under: - Year FY 14-15 FY I5-16 FY I6-17 FY 17-18 FY I8-19 FY 19-20 FY 20-21 Original Return of Income Filed u/s 139(1) 10,89,38,235 5,52,27,996 15,78,68,526 11,39,91,605 14,45,24,107 29,07,17,231 67,59,66,220 Wages Payable - Reversed 50,91,741 62,74,999 3,91,07,396 4,24,49,502 6,04,23,983 Actual Wages Paid Claimed -50,91,741 -62,74,999 -3,91,07,396 -4,24,49,502 Salary Payable - Reversed 14,84, 105 33,72,150 49,18,047 Actual Salary Paid Claimed -14,84,105 -33,72, 150 Sub Contractor - Reversed 11,85,29,029 1,40, 18,600 Purchase - Reversed 2,35,08,822 5,53,25,652 Additions - Asst.143 (3) 30,05,474 Esha Sales Reversed -68,00,000 -6,00,000 Revised Income as per Return Filed in response to Notice U/s 153A 11,02,35,450 5,72,95,358 19,07,00,923 11,58,49,606 30,79,08,589 36,16,07,280 67,59,66,220 It could be seen that the assessee has reversed provision of wages payable for Rs.62.75 Lacs in FY 2015-16 and claimed the same on actual payment basis in FY 2016-17. The same is very much clear from the above reconciliation. Since the provision as wrongly claimed in return of income filed u/s 139(1) has now been reversed in return of income filed u/s 153A, the payment made in subsequent year would be allowable as deduction in the subsequent year. If the same is not allowed, the assessee would suffer double disallowance which is wholly unjustified Therefore, considering the fact of the case, the amount of Rs.62.75 Lacs would be allowed as deduction to the assessee during AY 2017- 18. We order so. 6. Similarly, in respect of salaries payable, it could be seen that the assessee has reversed provision of Salaries payable for Rs.14.84 Lacs during FY 2015-16 and claimed deduction of the same on actual payment basis. Therefore, the disallowance, to that extent, could not be upheld. The balance provision of Rs.14.69 Lacs has been made on 31-03- 2017. The aggregate provision as on 31-03-2017 was Rs.29.53 Lacs which has fully been paid by the assessee through banking channels in the month of April and May, 2017 which is evident from ledger of salaries payable as placed on Page No.109. Therefore, the impugned disallowance of Rs.29.53 Lacs, in toto, is not sustainable in law. We order so. The corresponding ground raised by the assessee stand allowed. 7 Facts being pari-materia the same in this year, taking the same view, we delete the impugned addition as made by Ld. AO. The corresponding grounds as raised by the assessee stand allowed. 3. Addition of unexplained investment u/s 69 for Rs.85 Lacs 3.1 The addition has been made on the basis of certain excel sheet titled ‘15%’ and “12%’ as found during search which allegedly contained entries related to capital introduction by the partners for Rs.85 Lacs in this year. After rejecting assessee’s submissions, Ld. AO added the same to the income of the assessee. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 3.2 We find that identical issue has been decided by us in assessee’s appeal for AY 2018-19, ITA No.1022/Chny/2024 as under: - Our Adjudication on this issue 4. We find that the impugned issue emanates from certain loose sheets which have been kept on Page Nos. 113 to 118 of Paper book Volume II wherein tabulation with certain details specified as capital and investment is mentioned. The Accountant, Shri Vinoth at the time of search (Page No. 46 & 47 of Volume I) had stated that the above sums were received as loan by the promoters in their individual capacity from Private Financiers for the purpose of TWAD WSIS, Namakkal Construction Project. It was further stated by him that the expenses / cash payments specified in the disputed loose sheet were not for business purposes. However, he also mentioned that though interest entries were there in the loose sheets, such entries were mere calculations made by him the same were not actual interest payments made. Upon perusal of the same, the only conclusion, if any, that could be drawn was that the mentioned sums could have been received in individual capacity from private financiers for TWAD construction project. Further, the sums were expanded for non-business purpose. He also stated that the computations were not actual interest payments but mere computations. Going by this statement, even if presumed to be true, in any eventuality such sums as mentioned in the sheets could not be considered to be the income of the assessee firm since the amounts, at the most, were received in individual capacity and the same were expanded for non-business purposes only. Therefore, this statement would not lend any credence to the case of Ld. AO while making impugned additions in the hands of the assessee-firm. Going by this statement, no case of impugned addition could be made out against the assessee-firm. 5. Proceeding further, Managing Partner, Shri Anandavadivel, at the time of search (Page No. 120 & 121 of Volume I) stated that part of the disputed amount was already accounted for in the books of accounts. However, he admitted that Rs.8.8 Crores was unaccounted cash utilized for the civil construction project. This statement run contrary to the statement of Shri Vinoth. The partner stated that partial amount was accounted whereas partial amount was unaccounted. In such a case, no addition to the extent of accounted portion could have been made in the hands of the assessee. Nevertheless, no 8 exercise has been carried out by Ld. AO to verify the statement of the partner and bring on record evidences to fortify the same. Further, nothing has been said by the partner on the source of investment and there is no admission with respect to the same. In any case, the statement of Shri Vinoth as well as the statement of the partner runs contrary to each other. Also, the statement made by managing partner is without any corroborative evidence. This statement also does not support confirmation of impugned addition in the hands of the assessee-firm. 6. Post search proceedings, the Managing Partner stated that the cash was introduced by the individual partners out of their unaccounted loans and unaccounted cash generated from the assessee-firm. No statement was recorded from Shri Vinoth. Even going by this statement, no inference of unaccounted income could be made against the assessee. The assessee was subjected to search proceedings and after considering every incriminating material as found therein, the assessee already admitted additional income and Ld. AO made further additions in earlier years. Therefore, whatever unaccounted income has been earned by the assessee-firm in earlier years, the same has already been brought to tax and therefore, no further addition could be made in the hands of the assessee at the time of expansion thereof. This statement also does not support the case of Ld. AO in making impugned additions. 7. We also find that during the course of the assessment as well as appellate proceedings, the appellant had taken a stand that these sheets would have no evidentiary value since the same merely contain projections to examine the project feasibility of a construction project which has been carried out in subsequent years. As per the statement of Shri Vinoth, these are not actual interest payment but mere calculations of interest. The said statement, in our considered opinion, strengthens the version put forth by the assessee before lower authorities. When the loose sheets contains mere calculations and not actual interest payment then the same would lose its evidentiary value and no concrete conclusion could be drawn on the basis of the same. 8. Also, from the statement of Shri Vinoth, it is clear that he did not have complete knowledge of the transactions. He merely stated the above sum was received by the promoters in their individual capacity from private financiers for the purpose of construction project. He also mentioned that interest calculations made by him were not actual interest payments made. Apparently, that person lack complete knowledge of these transactions. No particulars of financiers as stated by him have been brought on record. This statement is not corroborated with any independent evidences forming part of the search records. Not even single financiers have been identified during proceedings before lower authorities. There is no direct evidence for borrowing money and utilization of the same for the TWAD project which has taken place in subsequent years. No enquiry has been made from Shri Vinoth post search proceedings. Under these circumstances, his statement would not hold much evidentiary value in the absence of any other evidence corroborating the same. The reference made in the projections should be construed as projections for monetizing the funding of the project and there could not be any presumption of unaccounted loans / cash being introduced unless details thereof have been brought on record. There is no evidence for actual borrowing of money by the partners. 9. Similarly, the statement of Managing Partner has contradictions. During search, he has stated that part of the amount spent was accounted for in the books of accounts. There is no such evidence brought on record by any of the lower authorities. Post search proceedings, the partner stated that the source of cash introduction was unaccounted loans refunded by the parties and interest earned from these loans and unaccounted cash generated in the firm. Thus, there is clear contradiction in these statements and no addition 9 could be made merely by relying upon the same unless the same is supported by any corroborative evidence on record. 10. Upon perusal of loose excel sheet as extracted in the assessment order, it could be seen that these sheets lacks sufficient details to form an opinion of actual cash introduction by the partners of the firm. The same merely contain certain computation of interest only without suggesting anything more. The complete details of the transactions could not be deciphered from the same. The same do not have any details as to source of alleged capital introduction by the partners. Under these circumstances, not much credence could be given to this document to make impugned additions in the hands of the assessee in the absence of corroboration of entries as contained therein. 11. The Hon’ble Karnataka High Court in its recent decision titled as CIT vs. Sunil Kumar Sharma (159 Taxmann.com 179; 22.01.2024), rendered in the context of Sec.153C, held that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. The Hon’ble Court referred to the decision of Hon’ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) as well as another decision in Common Cause vs. UOI (supra) while arriving at such a conclusion. The Hon’ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) held that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon’ble Supreme Court is that independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case. Pertinently, Special Leave Petition (SLP) of revenue against this decision has been dismissed by Hon’ble Supreme Court on 20-08-2024 which is reported as 165 Taxmann.com 846. We are of the opinion that aforesaid principle as laid down by Hon’ble Court would apply to the facts of the present case before us and same strengthens the arguments of Ld. AR. Similarly, Mumbai Tribunal, in the case of ITO vs. Kranti Impex Pvt. Ltd. (ITA No.1229/Mum/2013) held that when the seized papers were undated having no acceptable narration and did not bear the signature of any party, they are in the nature of dumb documents having no evidentiary value and could not be taken to be the sole basis for determination of undisclosed income of the assessee. The onus would be on revenue to collect cogent evidences to corroborate the nothings therein. The ratio of other decisions as cited by the assessee during first appeal also supports the case of the assessee. 12. Upon cumulative consideration of aforesaid facts and reasoning, we would hold that impugned additions as made by Ld. AO, merely on the basis of loose sheets without corroboration thereof, was not adequate enough to draw adverse inference of cash flows against the assessee. Therefore, we delete the same and allow the corresponding grounds as raised by the assessee. The Ld. AO is directed to recompute the income of the assessee in terms of our adjudication. Facts being pari-materia the same in this year, taking the same view, we delete the impugned addition as made by Ld. AO. The corresponding grounds as raised by the assessee stand allowed. 10 4. Addition of alleged cash expenses u/s 69C for Rs.2033 Lacs 4.1 This addition is based on an excel sheet titled ‘sheet 7’ as found during search proceedings. The same allegedly contained unaccounted cash payments for non-business purposes as admitted by Shri Vinoth, GM. The assessee did not explain the source of the expenditure. The assessee refuted the allegation of Ld. AO and submitted that the same was nothing but project-wise expenditure in total. It was normal business practice to maintain cost centre wise expenses to arrive at the performance and financial position of various projects. The notings were estimated project expenditure only. However, going by the statement of Shri Vinoth and Shri S. Anandavadivel during search proceedings, Ld. AO rejected the submissions of the assessee and added the amount of Rs.2033 Lacs to the income of the assessee as unexplained cash expenses. 4.2 During appellate proceedings, the assessee reiterated that notings were merely approximate project expenditure at various sites. The losses sheets were dumb document having no evidentiary value and the same could not be taken as the sole basis of making impugned addition in the hands of the assessee. Reliance was placed on various judicial decisions to support the argument that addition was on mere suspicion, surmises and conjectures. Reference was made to the decision of Hon’ble High Court of Madras in the case of CIT vs. J. Dinesh Mehta (TCA No.84/2020) besides various other decisions. 4.3 The Ld. CIT(A) held that both the persons admitted that the sheets represent actual cash expenditure incurred by the assessee. Therefore, the argument that this was dumb document could not be accepted. The retraction during assessment proceedings was merely an after-thought 11 and no credence could be given to such statement. The case laws being relied upon by the assessee were held to be distinguishable. Finally, the impugned addition was confirmed against which the assessee is in further appeal before us. Our Adjudication on this issue 5. We find that the impugned addition stem from loose sheet found during search which is placed on Page No.252 of Volume II wherein certain amounts have been stated against the projects being carried out by the assessee. The same read as under: - TSS I TGode I 6,30,00,000 M9+ALM2+Sl+C0.5 VSS Vadavalli 3,10,00,000 M9+S1+CO5 GSS Gandhi 1,69,00,000 M8+S1+CO.5 TSS II T.Gode - II 97,00,000 M8+S1+CO.5 SSS Rajan 3,32,00,000 M8+S1+CO.5 JPS Jayakondam 2,53,00,000 M7.5+ALM2+PA0.5+S0.5+C0.25 NNSS Nehru 2,42,00,000 M8+S1+C0.5 TOTAL 20,33,00,000 The whole case of Ld. AO is based on this loose sheet only. Shri Vinoth, at the time of search, stated that the same were unaccounted cash payments while executing the contract projects. The Managing Partner Shri Anandavadivel, at the time of search, confirmed the aforesaid statement. However, post search proceedings, the Managing Partner retracted the earlier statement by stating that the dispute loose sheet was not gone through thoroughly and there was no time granted for verifying the accounting in the regular books of accounts. He further stated that the amounts forming part of the disputed loose sheet denotes 12 the expenses incurred towards purchases and wages at various sites. The assessee, thus, denied that the entries as mentioned therein represent unaccounted cash expenditure and the same was nothing but a MIS report for the purpose of discussion. The notings were approximate project expenditure of different sites of the assessee’s projects. Thus, the statements have been contradicted and therefore, the same would loose its evidentiary value. Before lower authorities, the assessee has taken a stand that the aforesaid sheet has no evidentiary value since the same merely contain approximate project expenses only. It was the further submissions that whatever the expenses were incurred, the same was accounted for in the regular books of accounts and therefore, the impugned addition would not be sustainable in the eyes of law. 6. Upon perusal of aforesaid notings, it could be seen that, on stand- alone basis, no inference of cash payment could be drawn against the assessee. The notings lack even the basis details i.e., date of payment, the persons to whom payments were made and the source of such payments. The notings are bald notings which do not convey much meaning. The figures as mentioned in the sheet are round figures without any more details which support the fact that these are mere estimations only. The sheet, in our considered opinion, is merely in the nature of dumb document having no evidentiary value. These sheets even lack basic details so as to form an opinion of cash payment by the assessee. The complete details of the transactions could not be deciphered from the same. Under these circumstances, not much credence could be given to this document to make impugned additions in the hands of the assessee in the absence of corroboration of entries as 13 contained therein. Therefore, the presumption of unaccounted / unexplained expenditure in terms of Sec. 69C is arbitrary and without any corroborative evidence establishing the same. There is no direct evidence of any cash payment by the assessee. Not even a single concrete evidence has been brought on record to establish that the assessee, in fact, has incurred cash expenditure which was not accounted for in the regular books of accounts. It could be seen that the assessee was subjected to search proceedings and after considering every incriminating material as found therein, the assessee already admitted additional income and Ld. AO made further additions in earlier years. Therefore, even otherwise, each and every unaccounted income whatever has been earned by the assessee-firm in earlier years, the same has already been brought to tax and therefore, no further addition could be made in the hands of the assessee at the time of expansion thereof. All these facts lends credence to the arguments of Ld. AR. 7. The Hon’ble Karnataka High Court in its recent decision titled as CIT vs. Sunil Kumar Sharma (159 Taxmann.com 179; 22.01.2024), rendered in the context of Sec.153C, held that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. The Hon’ble Court referred to the decision of Hon’ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) as well as another decision in Common Cause vs. UOI (supra) while arriving at such a conclusion. The Hon’ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) held that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect 14 of such transactions. The legal principle as laid down by Hon’ble Supreme Court is that independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case. Pertinently, Special Leave Petition (SLP) of revenue against this decision has been dismissed by Hon’ble Supreme Court on 20-08-2024 which is reported as 165 Taxmann.com 846. We are of the opinion that aforesaid principle as laid down by Hon’ble Court would apply to the facts of the present case before us and the same strengthens the arguments of Ld. AR. Similarly, Mumbai Tribunal, in the case of ITO vs. Kranti Impex Pvt. Ltd. (ITA No.1229/Mum/2013) held that when the seized papers were undated having no acceptable narration and did not bear the signature of any party, they are in the nature of dumb documents having no evidentiary value and could not be taken to be the sole basis for determination of undisclosed income of the assessee. The onus would be on revenue to collect cogent evidences to corroborate the nothings therein. The ratio of other decisions as cited by the assessee during first appeal also supports the case of the assessee. 8. Upon cumulative consideration of aforesaid facts and reasoning, we would hold that impugned additions as made by Ld. AO merely on the basis of loose sheets without corroboration thereof, was not adequate enough to draw adverse inference of unexplained cash expenditure. Therefore, we delete the same and allow the corresponding grounds as raised by the assessee. The Ld. AO is directed to recompute the income of the assessee in terms of our adjudication. 9. No material arguments have been advanced on legal grounds and no defect has been shown to us in the jurisdiction of Ld. AO. The corresponding legal grounds raised by the assessee stand dismissed. 15 10. The appeal stands partly allowed in terms of our above order. Order pronounced on 9th October, 2024 Sd/- Sd/- (ABY T. VARKEY) (MANOJ KUMAR AGGARWAL) \u000eा ियक सद\" /JUDICIAL MEMBER लेखा सद\" / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated :09-10-2024 DS आदेशकीIितिलिपअ'ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001c/Appellant 2. \u001f थ\u001c/Respondent 3. आयकरआयु=/CIT Coimbatore. 4. िवभागीय\u001fितिनिध/DR 5. गाडBफाईल/GF "