M/S. GLOBAL STAR REALTORS PRIVATE LIMITED ,UDUPI vs. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, MANGALURU

Per Laxmi Prasad Sahu, Accountant Member

2. The crux of the grounds raised by the assessee are as follows:

2.1 The ld. Lower authorities erred in framing the assessment u/s 147 of the Act instead of exercising jurisdiction u/s 153C/153A of the Act in view of the non-obstante clauses beginning with section 153A & 153C of the Act with the material used for reopening assessment u/s 147 r.w.s. 148 of the Act found during the course of search action u/s 132 of the Act in the case of M.N. Rajendra Kumar & Others on 1.2.2017 and also on merit of various addition made by A.O and sustained by CIT(A) in these assessment years.

2.2 The grounds raised by the assessee in all these appeals are tabulated below for brevity: Years Reassessment Unexplained cash Interest on receipts (u/s 69B advances to Om r.w.s. 115BBE of the Sai Act) 2013

14. Initiation of reassessment Rs.1,41,90,000/- proceedings based on material already on record is bad in law 2014

15. Initiation of reassessment Rs.5,52,05,000/- Rs.36,00,000/- proceedings based on material already on record is bad in law 2015

16. Initiation of reassessment Rs.6,94,63,330/- proceedings based on material already on record is bad in law 2016

17. Initiation of reassessment Rs.5,40,00,000/- proceedings based on material already on record is bad in law 2017

18. Initiation of reassessment Rs.56,66,666/- proceedings based on material already on record is bad in law

“The learned Assessing Officer is right in making the assessment u/s 147 instead of invoking the jurisdiction u/s 153C/153A in the instant case in view of non-obstinate cases, beginning in section 153A and 153C.”

5. First, we will take up the additional ground with regard to framing of assessment u/s 147 of the Income Tax Act, 1961 (in short “The Act”) instead of invoking provisions u/s 153A/153C of the Act as the material used for reopening is collected during the course of search action u/s 132 of the Act.

5.1 The assessee filed a petition for admission of additional ground explaining the reasons for not raising this ground on earlier occasion. We find that there is a good and sufficient reason for not raising the additional ground on earlier occasion. In our opinion, all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of adjudication of above ground. Accordingly, being the legal ground by placing reliance on the judgement of Hon’ble Supreme Court in the case of NTPC Vs. CIT 229 ITR 383 (SC) we are inclined to admit the additional ground for the purpose of adjudication and admit the same. 5.2 We are of the opinion that this common additional ground is infructuous in view of our findings on merit of the additions decided by us in subsequent para.

7.1 The assessee is a Private Limited Company and carries on the business as builders and real estate development, which belongs to Mr. M.N. Rajendra Kumar Group of cases.

7.2 The assessee filed the return of income on 24.9.2013, declaring therein total income of Rs.8,49,560 for the assessment year under question. The return of income was originally selected for scrutiny and assessment under section 143(3) was completed on 31.12.2015 by assessing the income at Rs. 12, 16,711.

7.3 A search and seizure operation under section 132 was conducted on 1.2.2017 at the residential premises of Mr. M.N. Rajendra Kumar, one of the Directors of the Assessee, at Flat No.9, Chandra Nivas, Andheri, Kurla Road, Marol Church Road, Andheri East, Mumbai and at 1-276, PO 721, Pulikeri, Karkala, Udupi — 574 101, which was conducted on 3.2.2017. A Survey under section 133A of the Income tax Act, 1961 was also conducted at the headquarter of the South Canara District Credit Co-operative Bank Limited (in short SCDCC Bank) on 27.12.2016, wherein Mr. M.N. Rajendra Kumar is the Chairman and he has made a sworn statement.

7.4 Consequent to the search and seizure operation on Mr. M.N. Rajendra Kumar, and survey under section 133A on SCDCC Bank, wherein certain documents were found and seized. Based on the said documents, it was detected that the Assessee has received a cash component on sale of its Projects viz., Micasa, Ventura, Primero and Padavu, which has escaped the assessment. Accordingly, the case was reopened under section 147 and notice under section 148 was issued for the assessment year under question. In response to the notice, the assessee filed a return of income. The Assessee raised an objection for reopening the assessment, which was rejected by the Assessing Officer. Subsequently, the assessment was taken up for scrutiny and was completed under section 143(3) read with Section 147 on 17.3.2022. In the order of assessment, Assessing Officer has brought to tax a sum of Rs. 1,49,90,000/- as undisclosed cash receipts under section 69B by applying the provisions of Section 115BBE of the Act and thereby raised tax demand of Rs.97,94,930.

7.5 As per the MoU between PIPL & the assessee company for the Premero Project, the supplementary deed dated 26.10.2015 in respect of the Premero project was for Rs.4.00 crores and the assessee had accounted for Rs.4.00 crores in the P&L account. However, as per the impounded documents in A/S/SCDCC/16- 17/1 pages 4-11, the total payments made by PIPL is Rs.10,80,00,000/- inclusive of the cash receipts of Rs.50,83,668/-. Further, page 92 of the impounded material in A/S/SCDCC/16- 17/1 reflected the agreement value as Rs.4,00,00,000/- and Rs.6,80,00,000/- as cash receipts. From the above it is seen that Rs.6,80,00,000/- is the unaccounted receipts from Premero Project. Out of Rs.6,80,00,000/-, Rs.2,83,33,330/- represents unaccounted cash receipts of FY 2014-15 relevant to the current assessment year 2015-16 & Rs.56,66,666/- for the FY 2016-17 as detected from the impounded material in A/SCDCC/16-17/1 page 92. Accordingly, Rs.56,66,666/- being the unaccounted cash receipts from the Premero Project has escaped assessment for AY 2017-18 resulting in the income being understated for AY 2017-18.

For clarity we narrate the facts relating to each assessment year as follows:

A.Y. 2013-14

1. Addition: Rs. 1,41,90,000/-

2. Reason of Addition:

i) There was a search at Mr. Rajendra Kumar group u/s 132 on 01-02-2017. Prior to search there was a survey conducted at Headquarters at South Canara District Co-Operative limited on 27-12-2016. ii) During the course of search and survey following investment made by the assessee was detected: a) Micasa Land: Joint property purchased on 05-09-2012 for consideration of Rs. 6,62,20,000/- and a copy of same was impounded and marked as “A/PIPL/4” and the share of the same extends to Rs. 3,31,10,000/- to Mr. Rajendra Kumar. b) Ventura Land: Jointly purchased with the assessee’s share at Rs. 1,75,00,000/- c) Premero Land: Jointly purchased with the assessee’s share at Rs. 1,80,00,000/- d) Padavu Land: Jointly purchased with the assessee’s share at Rs. 87,00,000/- e) Dairy Land: Individually purchased non-agriculture land at Rs. 1,60,00,000/- iii) During the course of survey at head office of SDCC Bank documents and books were impounded the document impounded A/S/SCDCC/16-17 revealed that there was an addition over and above the registered sale price a total of Rs. 4,86,90,000/- was paid in cash for above land for its project by M/s Global Star Realtors Pvt. Ltd. iv) Further, the managing director Rajender Kumar was confronted with the same during the course of search, he accepted that the cash component was involved in most of the deals however the AO had made addition of same in hand of individual hand in to 2264/Bang/2019 which was deleted by ITAT.

AY 2014-15

1. Addition: Rs. 36,00,000/- As per the balance sheet of the assessee company as on 31/3/1014 an amount of Rs. 3,15,000/- is shown as advances to Om Sai Riddhi Siddhi Developers. During the course of assessment proceeding under section 153A in the case of Mr. M N Rajendra Kumar and assessment u/s 153C in the case of Om Sai Riddhi Siddhi Developers a firm in which Mr. M N Rajendra Kumar is a partner, it is seen that the advances are credited to the capital account of Mr. Rajendra Kumar in the books of Om Sai Riddhi siddhi developers and not reflected in the balance sheet of Om Sai Riddhi Siddhi Developers under outstanding loan of the firm. Since the advance of 3.15 crores are made from OD accounts of the company the interest on OD account need to be disallowed since OD funds are utilized for the personnel interest of the M.D, hence without prejudice payment are mostly in cash by the company and advances amount to 7% of the total loan availed by the company from SCDCC bank hence proportionately the interest of 3600000 (7% of 5.07 crores) is disallowed.

Assessee submission Mr. Rajender Kumar is also the partner of the firm and both the firm and the company are in the business of real estate, in case of business exigency the loan was given for the purchase of land and same was shown as advances hence interest will not attract.

The details of the total consideration over and above the registered agreement value as per pg. No 1-3 in A/S/SCDCC/16-17/1 are as follows:

SI.NO. Project Agreement Cash Over and Value (Rs) above the TOTAL agreement value that need to be paid Rohan Rs 1. Micasa 4,40,00,000 3,40,00,000 7,80,00,000 Ventura 3,93,00,000 4,79,00,000 8,72,00,000 2. 3. Primero 8,00,00,000 2,80,00,000 10,80,00,000 Total 16,33,00,000 10,99,00,000 27,32,00,000

These documents are computerized printouts extracted from the Office premises where the access is limited to the managing director alone. From the above agreement documents found, the total consideration over and above the agreement value is found to be Rs. 10,99,00,000/- in respect of the three projects. During the course of search & survey, it was found that as per the agreement the above payments need to be regularly paid by Mr. Rohan to Mr. Rajendra Kumar on Monthly Basis.

The details of the payments made by Rohan at different time periods are recorded in Pg no 9-11 of the A/S/SCDCC/16-17/1). During the course of search, it was also found that Mr. Rohan in lieu of the agreed cash amount to be paid to Mr. Rajendra Kumar, did not pay part of the amount and in lieu of this cash payment, a land belonging to Rohan in Kadri was given to Mr. Rajendra Kumar and the balance cash receivable amount was adjusted against the cash portion of the land. The evidences against this were collected and kept in the page number 4-8 of the impounded folder A/S/SCDCC/16-17/1. Thus, MNR has received the cash and Mr. Rohan has adjusted the land with the cash he needed to pay to Mr. Rajendra Kumar. As per the impounded material, the total share to be received by Mr. M.N. Rajendra Kumar from Mr. Rohan Monteiro was Rs. 27,32,00,000/- in which Rs. 16,72,83,668/- was already received. Out of the balance of Rs. 10,59,16,332/-, an amount of Rs. 5,80,00,000/- was adjusted against cash component in the Kadri Land and the balance was paid subsequently. The above- mentioned arrangement and receipt of cash was confronted to Mr. M N Rajendra Kumar, the MD of the company during the course of search and Mr. M N Rajendra Kumar vide statement recorded on 16/02/2017 agreed that a part of the sale consideration of flats was made in cash.

In view of the above findings, the cash components being unaccounted sales receipts needs to be taxed in the hands of the company since the MOU was entered by the company for the relevant years. The breakup of the such unaccounted receipts project wise for various years as detected is as under:

Project A.Y 2014-15 A.Y 2015-16 A.Y2016-17 Total Micasa 1,27,35,000 1,69,80,000 42,85,000 3,40,00,000 80,50,000 2,41,50,000 1,57,15,000 4,79,15,000 Ventura Total 2,07,85,000 4,11,30,000 2,00,00,000 8,19,15,000 AY 2015-16 During the course of survey in SCDCC bank on 27/12/2016 the impounded document A/S/SCDCC/16-17/1 reveals that consideration over and above agreement was paid by PIPL.

These documents were computerized print out. From this agreement the total consideration over and above the agreement was Rs. 10,99,00,000/- in respect of three projects. Further, Mr. Rohan had adjusted the Land with the cash which he needed to pay to Mr. Rajendra Kumar. This above arrangement was confronted to Mr. Rajendra Kumar the MD of the Co. to which he agreed that part of the Sale Consideration was paid in cash and based on this statement the addition was made in his individual case in to 2264/Bang/2019 which was further deleted by ITAT. The addition is Rs. 4,11,30,000/- AY 2016-17 During the course of survey in SCDCC bank on 27/12/2016 the impounded document A/S/SCDCC/16-17/1 reveals that consideration over and above agreement was paid by PIPL.

These documents were computerized print out. From this agreement the total consideration over and above the agreement was Rs. 10,99,00,000/- in respect of three projects. Further, Mr. Rohan had adjusted the Land with the cash which he needed to pay to Mr. Rajendra Kumar. This above arrangement was confronted to Mr. Rajendra Kumar the MD of the Co. to which he agreed that part of the Sale Consideration was paid in cash and based on this statement the addition was made in his individual case in to 2264/Bang/2019 which was further deleted by ITAT. The addition is Rs. 2,00,00,000/- AY 2017-18 During the course of survey in SCDCC bank on 27/12/2016 the impounded document A/S/SCDCC/16-17/1 reveals that consideration over and above agreement was paid by PIPL.

These documents were computerized print out. From this agreement the total consideration over and above the agreement was Rs. 10,99,00,000/- in respect of three projects. Further, Mr. Rohan had adjusted the Land with the cash which he needed to pay to Mr. Rajendra Kumar. This above arrangement was confronted to Mr. Rajendra Kumar the MD of the Co. to which he agreed that part of the Sale Consideration was paid in cash and based on this statement the addition was made in his individual case in to 2264/Bang/2019 which was further deleted by ITAT. The addition is Rs. 56,66,666/- 7.6 Against this assessee went in appeal before ld. CIT(A), who has confirmed the addition. Against this assessee once again in appeal before us in all these assessment years.

Rajendra Kumar and others. In these assessment years, these additions were deleted by the Tribunal in to 2264/Bang/2019 vide their order dated 24.8.2020. She drew our attention to the relevant para of that order explaining the deletion made by the Tribunal.

8.1 For the AY 2013-14 the MOU in the three projects were entered between the two companies incorporated under the Companies Act 1956, where its books of accounts were audited under the Companies Act as well as under the Income Tax Act. The Audited Financials are prepared in accordance with the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India. The Revenue is recognized based on the above AS as well as uniform accounting policy consistently adopted by both the companies who have entered into the MOU. The Assessee officer had completely failed to bring even iota of evidence on record to prove any generation of unaccounted money and also transfer of such money to the Assessee. The unaccounted cash receipts/payments as alleged by the Assessing Officer, who has failed to substantiate inflow/outflow of the on money. Further, the above addition was made purely on assumptions and presumptions, based on some loose sheets/ rough sheets. Moreover, the Additions made in the case of Mr. M.N Rajendra Kumar, in appeal, was deleted by the ITAT. Further addition was made on the basis of statements as no cogent material with regard to unexplained cash receipt. It was submitted by the assessee that a similar issue was arising in the case of MN Rajendra Kumar and group matter in the Income tax Appellate Tribunal, Bangalore Bench in to 2264/Bang/2019, dated 24.8.2020, copy was also enclosed in the paper book, in which Assessment was completed u/s 153A/153C of the Act. However Hon’ble Tribunal has deleted the addition in the hand of director by stating that there was no cogent material on record to show that such cash payment was made by the director out of his own fund. And further it has also held that the addition cannot be made in the hand of the company for the AY 2013-14, because more than 6 years has been lapsed from the relevant year 2013-14.

Cash Component Receipts of Rs.1,41,90,000/- on the project of the assessee (Micasa, Ventura, Primero, and Padavu)

9.1 In the order of assessment the Assessing Officer on pages 2 of 12 to 4 of 12 has stated that Mr. M.N. Rajendra Kumar, the Managing Director of the Assessee Company was confronted with the same during the search, he accepted the cash component was involved in most of the deals. An extract of his confession video statement recorded on 16.2.2017 is disclosed at page 4 of 12 of the assessment order. In this connection, Assessee submitted as under. • First of all, the MOU in the above three projects was entered into between two Companies incorporated under the Companies Act, 1956. • Its books of account were audited under the Companies Act as well as under the Income tax Act. • Audited Financials are prepared in accordance with the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India. • Revenue is recognized based on the above AS as well as uniform accounting policy consistently adopted by the both the Companies who have entered into the MOU. • Assessing officer had completely failed to bring even iota of evidence on record to prove any generation of unaccounted money and also transfer of such money to the Assessee. • The unaccounted cash receipts/payments as alleged by the Assessing Officer, who has failed to substantiate inflow/outflow of the on money. 9.2 Further, the above addition was made purely on assumptions and presumptions, based on some loose sheets/rough sheets, which was on a plain paper, which was updated or unsigned, which was unearthed during a survey conducted under section 133A on 27.12.2016. In fact, no other materials were found at the time of the Survey conducted on the Assessee.

The ld. A.R. further stated that the above additions of 9.3 Rs.1,41,90,000 has also been made additions in the hand of Mr. M. Rajendra Kumar, Director of Assessee, this amounts to double taxation. Additions made in the case of Mr. M.N. Rajendra Kumar, in appeal, the said additions were deleted by the Commissioner of Income tax (Appeals), Panaji-2, Goa vide his order dated 06.9.2019 in Panaji2/10240/2018-19.

Further, in letter dated 28.7.2018 the Managing 9.4 Director of the Assessee has retracted the statement recorded under Section 132(4) on 3.2.2017, 4.2.2017, 16.2.2017 and 1.4.2017, wherein at page 1 1 in para 11 the Assessee has withdrawn the above declaration, wherein he has made the following statements.

• Assessee clearly mentioned that the alleged cash payments were made by the Company Global Star Realtors Private Limited and not by the assessee personally. • Assessee has not been actively involved in the regular operation of the Company. • The addition was made based on some loose sheets/rough sheets, which was on a plain paper, which was undated/unsigned having some figures. • The Assessee has requested the Department to call for the said information from the said vendors under section 131 for cross verification. Same is not done by the Department for the best reasons known to them.

9.5 Further, the above addition was made purely on assumptions and presumptions, based on some loose sheets/rough sheets, which was on a plain paper, which was undated/unsigned, which was unearthed during survey conducted under section 133A on 27.12.2016. In fact, no other materials were found at the time of Search. In this regard, the ld. A.R. relied on the following decisions, which are squarely applicable to the Assessee's case.

9.6 The ld. A.R. for the Assessee relied on the decision of the ITAT, Visakhapatnam in an identical issue in the case of Dy. CIT Vs. Bhumala Uma Rani (2019) 168 TR (A) 488 (2019) Taxpub(DT) 2432, wherein it is held that,

"No other evidence was found to establish that the consideration was passed on over and above the registered sale consideration. The learned Commissioner (Appeals) considered the issue in detail and allowed the appeal of the assessee placing reliance on the decision of this Tribunal in the case of Shri Venkatarama Sai Developers cited supra. Since the material was found in the premises of Siddhartha Academy, presumption is available to the department in the case of Siddhartha Academy, but not in the case of the assessee. The learned AR relied on the decision of this Tribunal in the case Of Smt. Maganti Annapurna of this Tribunal in & 477/Viz/2017, dt. 26-9-2018 : 2018 -TaxPub(DT) 6555 (Visakhapatnam-Trib), wherein, the coordinate bench of ITAT held that unless there is a specific evidence with regard to the receipt of cash over and above the registered sale deed, it cannot be presumed that the assessee has made the unaccounted payments towards the purchase of land. Similarly, the learned AR relied on the decision of Shri P. Koteswara Rao in & 252/Viz/2012. On similar facts, ITAT held is not correct in coming to the conclusion that on- money was exchanged between the parties on the basis of material found in the premises of a third party and on the statement given by third parties. In the instant case, both the parties, searched party as well as the assessee have denied having exchanged the on money for sale of land. Even after the assessee's case is covered under search operations under section 132, the department did not unearth any evidence regarding exchange of cash in sale transaction. Therefore, since the facts are identical and department could not place any other material to controvert the finding given by the learned Commissioner (Appeals) and no other decision of any High Court or Apex Court was brought on record controvert the decisions relied upon by the assessee, we do not find any reason to interfere with the order of the learned Commissioner (Appeals) and the same is upheld. "

9.7 She also relied on the following decisions, which are squarely applicable to the assessee's case. a) Principal CIT, Central 111 Vs. Krutika Land (P) Ltd. 103 taxmann.com 9 (SC), held that, “Where Seized documents were not in the name of the assessee, no action could be undertaken in case of assessee under sec. 153C and further the entire decision being based on huge amounts revealed from seized documents, not being supported by actual cash passing hands, additions under sec. 69C was not sustainable.” b) CIT, Mumbai Vs. Lavanya Land Private Limited (2017) 83 taxmann.com 161 (Bombay), held that, “Para 21………. Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view, there being no evidence to support the Revenue 's case that a huge figure, whatever be its quantum, over and above the figure booked in the records and accounts changed hands Para 21. Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view, there being no evidence to support the Revenue 's case that a huge figure, whatever be its quantum, over and above the figure booked in the records and accounts changed hands between the parties, no addition could therefore be made u/s.69C of the Act to the income of the assessee.” c) CIT, Bangalore vs. IBC Knowledge Part (P) Ltd. (2016) 69 taxmann.com 108 (Karnataka) d) Common Cause (A Registered Society) Vs. Union of India [2017] (77 Taxmann.com 245) (SC) - Supreme Court has held that, “Department had no evidence to prove that entries in these loose papers, computer prints, hard disk, pendrive etc., were kept regularly during the course of business of the concerned business house, had no evidentiary values and they could not have been relied on for the direct registration of FIR.. Such materials and electronic data were not only irrelevant but were also legally inadmissible under section 34 of the Evidence Act.” e) In CIT v. P.V. Kalyansundaram [2006] 282 ITR 259 (Mad.)/155 Taxman 454 (Mad.), “The assessee had shown purchase of land for Rs.4.10 lakhs, which amount was depicted in cash flow statement. A statement was recorded of the seller on the date of search, which revealed that he received Rs.34.85 lakhs for the sale. Later, the seller filed an affidavit that the amount received was only Rs.4.10 lacs. In a further sworn statement, the seller again stated that he received the amount of Rs.34.85 lacs. Accordingly, an addition ofRs.30, 75,005 was made as undisclosed income representing the difference of purchase consideration disclosed by the assessee and amount stated to have been received by the seller. The Commissioner (Appeals) deleted the addition made on conflicting statements. The Tribunal dismissed the appeal of the revenue and affirming the decision of the tribunal, the high court observed that the burden of proving the actual consideration in such a transaction was that of the revenue which it did not discharge.”

In further appeal, the Supreme Court vide its order dated 149.2007 (CIT Vs. P. V. Kalyanasundaram (164 Taxman 78) has upheld the above decisions of the High Court.

9.8 For making additions based on the loose sheet found/seized and treatment of Loose Papers/ Loose Sheets, assessee refer to the following decision:- a) Common Cause (A Registered Society) Vs. Union of India [2017] (77 Taxmann.com 245) (SC) - Supreme Court has held that, department had no evidence to prove that entries in these loose papers, computer prints, hard disk, pendrive etc., were kept regularly during course of business of concerned business house, has no evidentiary values and they could not have been relied to the direct registration of FIR Such materials and electronic data were not only irrelevant but were also legally inadmissible under section 34 of the Evidence Act, b) The Punjab and Haryana High Court in CIT v. Atam Valves (P.) Ltd. [2009] 184 Taxman 6 (P&H) held that “loose sheets by itself may not be enough to justify addition on estimated basis even though the explanation of the assessee is found unbelievable and circumstances may be pointing otherwise. The stand of the assessee in this case was that the loose slips recording wage payment did not represent payment of wages during the year in question, but were for the earlier year. The Assessing Officer did not accept the explanation and made an addition without bringing any other material on record and this precisely worked against the revenue.” c) Asstt. CIT v. Ravi Agricultural Industries [20091117 ITD 338 (Agra) (TM), the premises of the assessee was subjected to a survey under section 133A during the course of which the revenue authorities found certain loose papers in which some numerical entries were recorded. At the time of survey, one of the partners of the firm agreed to surrender the amount mentioned in loose papers -as- an unexplained investment. Subsequently, the said partner retracted from the statement made. The Assessing Officer made addition to the assessee's income on the basis of loose papers without any other supportive evidence. The Commissioner (Appeals) deleted the addition. The Tribunal held that when partner had retracted from his statement, the impugned addition made by the Assessing Officer should have been supported by enough material in the possession of the Department.

Since loose papers did not conclusively establish that they pertained to business transactions of the assessee- firm, the Tribunal held that the Commissioner (Appeals) was justified in deleting the addition. Thus, the Tribunal upheld the order of the Commissioner (Appeals) and the decision was rendered in favour of the assessee. d) State v. Ganeswara AIR 1963 SC 1850, wherein the Hon'ble Supreme Court has held that, absence of corresponding entry in the account of the opposite party precludes the alleged transaction. It is not the case of the AO that there is corresponding entry in the assessee's account supplying corroboration. According to the law declared by the Supreme Court any presumption of transaction on some vague, tenuous and dubious entries in a sheet of paper is not rational and hence not legal unless there is corroboration by corresponding entry in regular accounts of both the parties to the transaction. Furthermore, the Supreme Court has also held that the loose sheets cannot be accounts books of a party. Mahasay v. Narendra AIR 1953 SC 431. Even if it is e) taken as an informal accounting it is not the record of the assessee. The settled position of law in rt is that if the subject matter of controversy is founded on material like a Igos sheet or loose sheets of stray entries it is invalid being based on inadmissible evidence. They have no probative value in the absence of some corroborative primary evidence of the reality of such a transaction shown in the nothing in such loose sheets of paper. f) In CBI v. V.C. Shukla (1998) AIR SC 410 loose sheets have been ruled out as of any evidentiary value. As a matter of fact as held by the Supreme Court in umpteen number of cases entries in the loose sheets are of no evidence value. Even assuming such entries as correct and authentic they cannot without independent evidence fix a liability upon a person. In that connection the court also referred to Section 9 of the Evidence Act and observed that even if such entries are admissible under the said provisions to support an inference about correctness of the entries still such entries would not suffice without supportive independent evidence. In the said case of CB1 v. V.C. Shukla (1998) AIR SC 410 loose sheets have been ruled out as of any evidentiary value. Their Lordships went the length of saying that even correct and authenticated entries in the books of account of one party cannot without independent evidence of their truth fix a liability upon another person. g) In the Third Member case of Amar Jeet Singh Bhashi (HUF) v. ACIT (2003) 263 ITR (AT) 75 (Del), it was held that any noting in the loose sheet is no evidence by itself. There has to be something more. h) In following cases the Tribunal Benches have held that merely on the basis of entries in loose sheets there cannot be an addition — 1. S.K.Gupta v. Dy. CIT [1999] 63 TT.J 532 (Del), 2. Shri Ram Bhagwandas Raheja v. Asstt. CIT [ITA (S&S) No. 118/Mum/1996, Bench, Order dated 23rd September, 1998], 3. Ashwani Kumar v. ITO [1992] 42 TTJ (Del.) 644 : [1991] 39 ITD 183 (Del), 4. KishenchandSh0bhrajma1 v. Asst. CIT [1992] 42 TTJ (Jp) 423 : [1992] 41 ITD 97 (Jp), D. A. Patel v. Dy. CIT [2001] 70 TTJ (Mumbai) 969 : [2000] 72 ITD 340 Mumbai.

i) Further, Mumbai Bench of the ITAT in the case of D.A. Patel v. Dy. CIT [2001] 70 TTJ (Mum.) 969 : [2000] 72 ITD 340 (Mum.) held that in case of discovery of sheets of papers disclosing loan given by an assessee and interest due thereon, during search, the assessee could not be saddled with tax liability. j) In Smt. BommanaSwarnaRekha v. Asstt. CIT [2005/ 147 Taxman 59 (Visakhapatnam) (Mag.), on search in the premises of the husband of the assessee, a piece of paper was seized which was without any name, date or signature. The Assessing Officer treated part of the transaction mentioned in the loose paper as relating to the assessee and made certain additions in her hands as unexplained expenditure. It was held that the onus was on the Assessing Officer to prove that transaction as stated in the said loose paper. Since the Assessing Officer did not bring any cogent evidence or material on record which might prove that the part of transaction stated in paper, representing transactions was entered by the assessee during the period of block assessment, the addition was deleted. k) In CIT v. Kailash Chand Sharma [20051 146 Taxman 376 (Raj.), the Assessing Officer made addition on the basis of some loose papers found during search. The assessee contended that the same belonged to his maternal aunt in connection with sale of agricultural land. Although the lady did not appear before the A.O. for cross-examination, yet the person who authored the document appeared and confirmed the contents of the transaction. It was held the A.O. failed to discharge the onus of making further enquiry and the Tribunal deleted the addition as the facts showed that the transaction did not relate to the assessee. l) In CIT v. C.L. Khatri [2006] 282 ITR 9742005/ 147 Taxman 652 (MP), on the basis of loose slip not bearing any date and also not stating as to which period they related, no estimate of household expenses on such loose slip could be made for a particular year. In the absence of any other evidence, the estimate of household expenses in a particular year with reference to income of later year or future year was arbitrary and illogical. The Tribunal was held to be justified in deleting the additions. m) In CIT v. P. V. Kalyanasundaram [2006/ 282 ITR 259 (Mad.)/155 Taxman 454 (Mad.), the assessee had shown purchase of land for Rs. 4.10 lakhs, which amount was depicted in cash flow statement. A statement was recorded of the seller on the date of search, which revealed that he received Rs. 34.85 lakhs for the sale. Later, the seller filed an affidavit that the amount received was only Rs 4.10 lacs. In a further sworn statement, the seller again stated that he received the amount of Rs. 34.85 lacs. Accordingly, an addition ofRs.30,75,005 was made as undisclosed income representing the difference of purchase consideration disclosed by the assessee and amount stated to have been received by the seller. The Commissioner (Appeals) deleted the addition made on conflicting statements. The Tribunal dismissed the appeal of the revenue and affirming the decision of the Tribunal, the High Court observed that the burden of proving the actual consideration in such a transaction was that of the revenue which it did not discharge. m) In further appeal, the Supreme Court vide it order dated 14.9.2007 (CIT Vs. P. V. Kalyansundaram (164 Taxman 78) has upheld the above decisions of the High Court. n) In S.P. Goya1 v. Dy. CIT [2002] 82 (Mum) (TM), the Tribunal has held that “. . . loose papers cannot be termed as books of an assessee maintained for any previous year. be termed as books of an assessee out of a diary could not be construed as books for the purpose of section 68. Addition could not be made simply on the basis of certain notings on loose sheets of a diary without any corroborative evidence in the form of extra cash, jewellery or investment outside the books. The loose papers appear to be part of a 1992 diary. However, these loose papers consist of pages torn out from March, April, November and December. There are no closing balances or opening balances and there is no reconciliation of these entries. Therefore, it cannot be termed as books maintained by the assessee during the previous year. The loose paper in itself has got no intrinsic value, It does not represent negotiable instruments that can be exchanged for a sum of Rs. 60 lakhs. When it is a mere entry on a loose sheet of paper and if the assessee claims that it was only a planning, not supported by actual cash, then there has to be circumstantial evidence to support that this entry really represents cash ofRs.60 lakhs. There is no such evidence found by the Revenue in the form of extra cash, jewellery or investment outside the books."

9.9 She also relied on the following decisions, which are squarely applicable to the Assessee's case. a. CIT vs. S.M. Aggarwa1 (293 ITR 43) (Delhi). In the said decisions, the Hon'ble High Court has held that, "In the present case as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of Commissioner of Income Tax (Appeals) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration. " b. Sheth Akshay Pushpavadan v Dy. CIT [2010] 130 TTJ 42 (ITAT Ahmedabad), wherein the Hon'ble Tribunal has held that, "There is no incriminating evidence available against the assessee on record. In the absence of any reliable or cogent evidence on record, we do not find any jurisdiction to uphold the findings of authorities below. " c. DCIT, New Delhi vs. Sh.Jaswant Singh Chawla (ITA Nos.3285 & 3286/De1/2013) (ITATDe1hi Bench 'D'), dated 20.3.2015. “. . . Ld. CIT(A) has rightly concluded that the attempt of the AO to connect seized paper with assessee has failed and finding given in the assessment order is erroneous on facts and is perverse and whimsical and stands vitiated and any additions based thereon deserves to be deleted In the background of the aforesaid detailed discussions and precedents, we find that, Ld. CIT(Ä) has rightly deleted the additions of Rs. 1, 00, 00, 000/-. Therefore, we do not see any reason to inference with the well reasoned order of the Ld CIT(A), accordingly, we uphold the same and decide the issue against the Revenue by rejecting the ground of appeal filed by the Revenue. d. Shri Vinit Ranawat, Mumbai vs. A CIT, Central Circle - l(l), Pune (ITA Nos.1105 and 1106/PN/2013) ITAT Pune Bench 'B'), dated 12.6.2015, wherein the Hon'ble Tribunal has held that, "5.5 Since in the instant case the assessee from the very beginning has denied to have received any such payment from M/s. DhariwaI group through Mr. Sohan Raj Mehta and since no incriminating material was found from the residence of the assessee during the course of search and since the assessee is not dealing with M/s. Dhariwal group in his individual capacity, therefore, respectfully following the decisions cited above and in view of our reasonings given earlier, we are of the considered opinion no addition in the hands of the assessee can be made. Since it is held that the assessee has not received any amount, therefore, the question of taxing the same u/s.56(2)(vi) as held by the Additional CIT vs. Lata Mangeshkar (Miss) (97 ITR 696) (Bom). "After all the entries in the day book or the ledger would be a corroborative piece of evidence and once the direct evidence of the person who is said to have made payment in "black" to the assessee is disbelieved, we do not think that, any value could be attached to the entries in the ledger or to the entries in the day book even ifone had been produced. In our view the Tribunal was justified in refusing to refer those questions to this Court because in its view the additions were wrongly made " e. The Presumption is discretionary and not mandatory or conclusive: The presumption u/s 132(4A) can be rebutted. Before raising the presumption u/s 132(4A), the A.O. is bound to consider whether after considering the surrounding facts and circumstances of the case the above presumption validly arises. f. Presumption u/s 132(4A) requires independent corroborative evidence: In Atul Kumar Jain v. Dy. CIT [1999/

64. TTJ (Delhi) 786, the Tribunal held that the seized paper being not corroborated by any independent evidence cannot be considered as a document in proof of investment in house property, and, accordingly, this paper is liable to be ignored. g. In Devi1a1 Gheri1a1 Shah v. Dy. CIT/1995/

52. TTJ (Aha'.) 618, the Tribunal held that no date or name is mentioned on the seized paper. In such a case, it is very difficult to say that the assessee purchased gold ornaments and, therefore, he should be assessed in respect of the amount mentioned therein as unexplained investment made by him. In the absence of cogent evidence on record, the addition could not be sustained. h. In the case of J.R.C. Bhandari v. Ass". CIT [2003/ 133 Taxman

44. (Jd.), it was observed that in the absence of any iota of evidence on record to fasten the liability on the assessee in respect of receipt of the amounts mentioned in the entry noted on a loose sheet which was found in the possession of a third person whose statement was also not on record, addition in the hands O of the assessee on the basis of said loose sheets was not legally sustainable.

9.10 This view is also supported by the decision in the case of Niranjan Kumar Agarwal [IT Appeal No. 658/C/98/Kol.]. In absence of any cogent evidence or corroboration in support of the entries in loose sheets, no adverse conclusion can be drawn against the assessee on mere guess and pure suspicion.

9.11 Finally, ld. A.R. for the stated that, the Hon'ble Commissioner of Income tax (Appeals), Panaji-2, Goa in 132, 133, 134, 130, 135/CIT- 2/PNJ/2018-19, dated 06.9.2019 as well as the Income tax Appellate Tribunal, Bangalore Bench in to 2264/Bang/2019, dated 24.8.2020 in the case of Sri M.N. Rajendra Kumar, for the assessment years 2013- 2014 to 2017-2018 has deleted the addition made based on the oath statement as well as loose sheets found during the course of search and allowed the appeals in Assessee 's favour.

9.12 Hence, she submitted that the Assessing Officer is not justified in law in making total additions purely on assumptions and presumptions by relying on digital evidence and also the other loose sheets found at the time of survey u/s. 133A in the case of SCDCC Bank, wherein Mr. M.N. Rajendra Kumar is the President. Therefore, she humbly prayed to kindly consider the above facts and give relief as prayed for in the grounds of appeal.

10. Contrary to this, the ld. D.R. submitted that there was impounded material, which correlate the payment to the various purchases and its unaccounted cash payments being on money. Same has been brought to tax by reopening the assessment u/s 147 of the Act is confirmed. A search and seizure operation u/s 132 of the Act was conducted at in the case of Mr.M.N Rajendra Kumar and from the survey of premises of SCDCBL. Several investments made by assessee company were detected. This included investment in Micasa Land, Ventura Land, Padavu Land and Diary Land. The AO quantified these investments at Rs. 1,41,90,000/- and 3,45,00,000/- for the AYs 2013-14 and for A.Y 2014-15 respectively.

10.1 He submitted that according to the AO, the seized documents contain the unaccounted cash payments made by assessee towards purchase of various land. The seized materials were confronted with Sri M.N. Rajendra Kumar. In the sworn statement recorded on oath u/s 132 of the Act. Mr. M. N. Rajendra Kumar in his statement recorded on oath disposed that those seized materials represent unaccounted cash payments made by present assessee towards purchase of various land in these assessment years. However, he has denied any such transaction. However, AO passed the assessment order for these assessment years making additions towards unaccounted cash payments as per seized materials and the same to be sustained.

11.1 The materials impounded during survey proceedings under Section 133A of the Act at SCDCC Bank marked as A/S/SCDCC/16-17/1, the AO is of the view that, certain documentary evidences, which reveals that, consideration over and above the agreement value of the above three projects was paid by the assessee company. The details of such total consideration over and above the registered agreement value as per page No. 1- 3 in A/S/SCDCC/16-17/1 is reproduced by the AO at page 3 of 19 of the assessment order. The AO also produced in the assessment order at pages No. 4 of 19 to 16 of 19 in the form of Annexure, such as scanned copies of incriminating evidences along with some of the answers to questions in the oath statement administered during the survey.

11.2 Further the AO stated that, as per the impounded material, the total share be received by Mr. M.N.Rajendra Kumar from Mr. Rohan Monteiro was Rs.27,32,00,000/- in which Rs.16,33,00,000/- was already received. The AO reproduced the complete details of the same at page 4 of 19 and 5 of 19. The AO further stated that, the above mentioned arrangement and receipt of cash when confronted during the search proceedings was admitted by Mr. M.N. Rajendra Kumar in his oath statement in answer to question No. 17 recorded on 02.02.2017 and answer to question No.8 recorded on 16.02.2017.

11.3 Also, in para 7.7 of the assessment order the AO pointed out that the sum and substance of this impounded document and the statement of M.N. Rajendra is that the undisclosed cash component in the sale of Kadri property of Rs.5,80,00,000/- payable by Global Star Realtors India Private Limited (GSRL) in respect of the three projects MICASA, VENTURA and PRIMERO. Further in para 8 the AO pointed out the evidence detected during the course of search, clearly indicating unaccounted consideration exchanging hands which have not been recorded in the books of assessee company PIPL. In view of this, assessment was reopened and in response to the notice assessee filed return of income declared the same income as declared in the original return filed.

11.4 The AO issued letter dated 24.10.2019 and 25.10.2019 to the assessee requesting them to show cause why the cash received in the above three projects, which was not admitted in the return income in response to notice under Section 148 of the Act, should not be brought to tax in view of the evidences found. In response thereto, assessee vide its letter dated 07.11.2019 has filed its objections to the proposed additions. The contents of the AO's letter dated 24.10.2019 and 25.10.2019 and assessee's objections dated 07.11.2019 have been reproduced in the assessment order at pages 11 of 19 to 14 of 19. The AO himself considered the fact that the additions made for the A.Y. 2016-17 has been concluded and dealt with by the CIT(A).

11.5 The AO came to the conclusion that the decision of the CIT(A) for the A.Y. 2016-2017 in its own case relied upon by the assessee has not been accepted since further appeal has been preferred before the ITAT.

11.6 The AR has argued that the AO grossly ignored the audited financials filed through the e-filing portal. The assessee is a Company incorporated under the Companies Act and its books of account were audited under the provisions of Companies Act as well as under the provisions of the Income tax Act. Further, the books of account were prepared in accordance with the Accounting Standards issued by the Institute of Chartered Accountants of India and also, the Revenue is recognised based on the said Accounting Standard and uniform accounting policy consistently adopted by the assessee.

11.7 The ld. AR of the assessee argued that AO erred in alleging that additional income over and above the consideration was made in cash by the director of the Assessee, Mr. Rohan to the Mr. Rajendra Kumar, Director of M/S. GSRL, purely on assumptions and presumptions, purely on materials found during the course of survey under Section 133A of the Act conducted at SCDCC Bank on 27.12.2016. The AO erred in alleging that Mr. Rohan has undertaken the responsibility to sell the flats and pay back the proceeds of the sale to Mr. Rajendra Kumar and in this regard agreements were entered into by Mr. Rohan and Mr. Rajendra Kumar. In fact, there is no such agreement between Mr. Rohan and Mr. Rajendra Kumar.

11.8 The AR of the assessee averred that the AO has completely failed to bring even iota of evidence on record to prove any generation of unaccounted money and also transfer of such money to the assessee. Also, such unaccounted cash receipts/payments as alleged by AO, who has failed to substantiate /outflow of the money.

11.9 The AR of the assessee has also produced copies of the audited financials for the assessment year under consideration.

11.10 Another contention OF the AR of the assessee is that the AO made addition merely on the basis of loose papers found in the premises of a third party and the statement of the third party. The statement recorded under Section 132(4) of the Act was also retracted later by Mr. Rajendra Kumar. The AR averred that the loose sheets found in the premises of the third party were not even signed by the assessee or any of its staff. The AR also argued that the loose sheets found in the premises of the third party were not corroborated by the AO with any further evidence or investigation and hence, the addition made by the AO was without any basis.

11.11 The assessee relied on the decision of the Hon'ble Apex Court in the case of Common Cause (A Registered Society) VS Union of India [TS-5012SC-2017-01, (2017) 245 Taxman 214 (SC), (2017) 394 ITR 220 (SC) wherein it was held that:

“Loose paper-sheets "irrelevant, inadmissible" evidence; Rejects investigation plea in Sahara/Birla case - SC dismisses petition filed by Shanti Bhushan & Prashant Bhushan, seeking constitution of Special Investigation Team, directing investigation of the allegedly incriminating material seized in CBI/tax department raids conducted on Birla & Sahara group of companies; Mr. Bhushan argued that during the raids, e-mails and excel sheets were found that showed payment of cash to several important public figures; Apex Court cites ratio in V.C. Shukla/Jain Hawala diaries case, wherein the court held that entries in loose papers/sheets are irrelevant and not admissible under Sec. 34 of Evidence Act and only where entries are in books of accounts/regularly kept, those are admissible; Further cites V.C. Shukla ratio to drive home the point that entries in books of account alone shall not constitute sufficient evidence to implicate a person since the same is only "corroborative" evidence; SC observes that the judiciary ought to be cautious while ordering investigation against any important constitutional functionary/officers in the absence of "prima facie reliable/legally cognizable material" which are not supported by 'other circumstances'; Holds that “In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or ess house that too not kept in regular books of accounts but on random papers at any given point of time.”; As for Sahara raids, SC refers to Settlement Commission order dated November 11, 2016 wherein the Commission recorded a finding that transactions noted in the documents were not genuine and did not attach any evidentiary value to the pen drive, hard disk, computer loose papers, computer printouts; SC concludes" it would not be legally justified, safe, just and proper to direct investigation, keeping in view principles laid down in the cases of Bhajan Lal and V. C. Shukla."

11.12 The assessee also placed reliance on the decision of the Hon'ble Apex Court in the case of Principal CIT, Central Ill Vs. Krutika Land (P) Ltd. 103 taxmann.com 9 (SC) wherein it was held that:

“Where seized documents were not in the name of the assessee, no action could be undertaken in case of assessee under sec. 153C and further entire decision being based on huge amounts revealed from seized documents, not being supported by actual cash passing hands, additions under sec.69C were not sustainable.”

11.13 The assessee also placed reliance on the following decisions and argued that, these decisions are squarely applicable to assessee's case:

11.14. These seized materials relied by the ld. AO for recording the satisfaction for reopening the assessment in these A.Ys which do not contain the following details:-

 Any heading to describe the nature of transaction that depicts.  There were no dates to suggest that these transactions and which assessment year these transactions relate to.  It does not indicate as to who prepared the documents. It does not indicate whether the figures mentioned therein was in Rupees or in any other currency.  Even if it is assumed as rupees, whether they are in hundreds, thousands or lakhs or crores.

 No signature of the person who prepared it or there was no authentication of these documents.

The contention of the ld. A.R. is that these documents are not speaking documents and on that basis addition cannot be made in the assessment orders.

11.15 Further, the loose sheets was interpreted by the ld. AO that these are unaccounted cash payments made by present assessee. But no amount or date has been mentioned in it. At this point it is appropriate to consider few judgements on this count. a) CIT Vs.K.V. Laxmi Savitri Devi Vs. ACIT 60 DTR 148, wherein held that no addition can be made on the basis of loose papers which does not contain the name and date of payment. The department is precluded in drawing inference on the basis of suspicion, conjectures and surmises and no addition can be made on the basis of such document or loose slips. b) In the case of K.V. Laxmi Savitri Devi Vs. ACIT 60 DTR 148 it was held by the ITAT Hyderabad Bench that "No addition can be made on the basis of a loose paper which does not contain the name and the date of payment. The department is precluded in drawing inferences on the basis of suspicion, conjecture and surmises and no addition can be made on the basis of such dump document or loose sheets.

11.16 On further appeal before the Hon'ble AP High Court, the court vide its order in ITTA No.563 of 2011 upheld the decision of the Tribunal. While upholding the decision of the Hon'ble ITAT, the court held as following:

" 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 how that the respondent had paid Rs.1.oo 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 or 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."

11.17 No undisclosed Income can be computed by invoking the presumption U/s 132(4A) when the documents are seized from the premises of a third party. This was held in the case of [2005] 147 Taxman 59 (Visakhapatnam) (Mag.) In the ITAT Visakhapatnam Bench Smt. Bommana Swarna Rekha v. Assistant Commissioner of Income-tax. A presumption can be raised on the basis of possession of a document found during the course of search only against a searched person and, thus, no adverse inference could be drawn against the assessee on the basis of the possession of the diary with the third party. This was held in the case of SMC Share Brokers Ltd Vs DCIT [2008] 22 SOT 7 by Hon'ble ITAT Delhi.

“Where Assessing Officer made addition to assessee's income on basis of a document seized in course of search, in view of fact that document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of Assessing Officer, impugned order of Tribunal deleting addition was to be confirmed. Where Assessing Officer in course of block assessment proceedings made addition in respect of unexplained investment relating to purchase of property, in absence of any incriminating evidence with respect to payment over and above reported amount, addition so made deserved to be deleted.”

11.18 The High Court of Delhi in the case of Commissioner of Income-tax-XIV v. Vivek Aggarwal [2015] 56 taxmann.com 7 (Delhi), the Assessing Officer has resorted to make the addition on mere loose paper without corroborative evidence. The document which does not describe and express any meaning cannot be relied upon by the Assessing Officer.

11.19 It was held by Hon'ble Delhi High court in the case of CIT Vs Sant Lal vide [2020] 118 Taxmann.com 432 that "13. In view of the aforesaid facts and the concurrent findings given by the CIT (A) and ITAT, it is evident that the Revenue has not been able to produce any cogent material which could fasten the liability on the respondent. The CIT(A) has also examined the assessment record and has observed that the AO did not make any further inquiry/investigation on the information passed on by the DCIT, Central Circle-19, New Delhi. No attempt or effort was made to gather or corroborate evidence in this relation.

14. In these facts and circumstances, we are not inclined to entertain the present appeal as no substantial question of law arises for our consideration. Accordingly, the present appeal is dismissed".

11.20 The seized material relied by the ld. AO for framing the assessment, wherein we do not find the name of the present assessee and also without mentioning of any amount or date referring to the PBT. Thus, in our opinion, placing reliance on the seized material for framing assessment u/s 153C of the Act wherein there was no name of PBT found place in the incriminating material used for the purpose of issuing notice u/s 153C of the Act by recording the satisfaction. Even otherwise, there was no mentioning of the assessee's name and figure of loan alleged to be lent by the assessee in the loose slips. The seized material considered for assessment is lacking the following material particulars:

• Name of the person making the payment • The date of payment • Details of amount paid • The purpose for which it was paid • Details of the recipient of money • Signature of the recipient • Payer of the money • Any authentication by any competent person.

11.21 All the seized materials relied by the ld. AO for framing assessment conspicuously silent on all the above said counts and in the light of above said information, nothing can be inferred holding that the same is cash payments by assessee and these seized materials cannot be used as evidence or incriminating material for the purpose of determining the undisclosed income of the assessee. The alleged incriminating evidence found at the premise of Sri M.N Rajendra Kumar and on questioning him, he confirmed the payments. However, later he retracted the same. In our opinion, this seized material having no concrete details of the transaction between the assessee and with third parties and based on such inchoate non-speaking documents, no liability can be fastened on a third party like present assessee before us since ld. AO had failed to corroborate such non-speaking document with any other document found during the course of search. Hence, it is not possible to come to conclusion that such a huge amount of advance in crores has been made by present assessee without any proper documents. The search u/s 132 of the Act has not found any corroborative materials to support the contention of the department that assessee has made such huge advances. It is pertinent to mention herein that there was survey in the case of assessee's premises also, there was also no iota of evidence or piece of paper found in support of these transactions carried on by assessee with those parties.

11.22 Before us, ld. D.R. made a contention that Sri M.N. Rajendra Kumar had admitted these transactions in his statement recorded u/s 132(4) of the Act and that could be the base for addition in the hands of present assessee and it is not necessary to give any cross examination of the parties involved herein. In our opinion, admission of the third party could not be enforceable against the other party. Further, the ld. AO pressed the assistance of Mr. R. Sendhil's statements recorded u/s 131 of the Act on 21.09.2017 to support his action without providing an opportunity of examining/cross-examining him, which is mandatory requirement under the Evidence Act. The ld. AO also pressed the service of section 292C of the Act. In our view, the section 292C of the Act only be invoked against such person in whose premises/possession, the said incriminating material was found during the course of search action u/s 132 of the Act.

11.23 The word "such person" used in section 292C of the Act is only referrable to the person in whose premises the things or materials were found in possession or control at the time of search. Admittedly, the assessee before us was not person in whose premises, the things were found in possession or control at the time of search action. Therefore, provisions of section 292C of the Act cannot be invoked to assist the department, which is without any basis and contrary to law. In our opinion, if any document is found in the premises/possession/control of such person which belongs to the other person then the said documents can be used for making the addition, however, it is necessary to prove that the said document is incriminating in nature and belongs to other person. The presumption u/s 292C of the Act can only be invoked against such/searched person and not against another person like person before us. The above said proposition is based and relatable to the Evidence Act which casts data of a person in whose possession, a thing or article was found to discharge the burden that it does not belong to him.

11.24 In the present case, no corroborative evidence was brought on record to confirm that the entries in seized material actually reflects the loan transaction in the form of cash payment between the assessee and third parties as presumed by the lower authorities and there was no entry regarding the payment of cash between these parties. Even the reply given by Shri M.N. Rajendra Kumar has been retracted and the basis of addition is held invalid in the case of the person who made the statement i.e. in the case of M.N. Rajendra Kumar as held by Tribunal in & 2264/Bang/2019 dated 24.8.2020. The department is relying on only the third-party statement recorded on oath to suggest these transactions and the addition made in the hands of the third party who made the statement has been deleted in his hand, as such no corresponding addition could be made in the present assessee also. In our opinion, the addition made by the ld. AO only on the basis of conjectures and surmises and presumption and no payment could be presumed on the basis of such un-corroborative loose slips. Hence, there was no reason for making such addition. In our opinion, the conclusion drawn by ld. AO is only imagination and based on conjectures and surmises.

11.25 Further, we take support from the following judgements:

1. In the case of Dreamcity Buildwell (P.) Ltd. reported in [2019] 110 taxmann.com 28 (Delhi), in the identical facts, Hon'ble High Court of Delhi had deleted the additions with the following reasoning:-

"15. It can straightaway be noticed that the crucial change is the substitution of the words 'books of account or documents, seized or requisitioned belongs to or belong to a person other than the person referred to in Section 153A' by to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore two clauses i.e. a and b, where clause b is in the alternative and provides that 'such books of account or documents, seized or requisitioned' could 'pertain' to or contain information that 'relates to' a person other than a person referred to in Section 153A of the Act. • The trigger for the above change was a series of decisions under Section 153C, as it stood prior to the amendment, which categorically held that unless the documents or material seized 'belonged' to the Assessee, the assumption of jurisdiction under Section 153C of the Act qua such Assessee would be impermissible. The legal position in this regard was explained in Pepsi Foods (P.) Ltd. v. Asstt. CIT [2014] 367 ITR 112 (Del)where in para 6 it was held as under: '6. On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or reassess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is -after such satisfaction is arrived at - that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section132 (4A)

(i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C (1) (i). 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. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction'. • In the present case the search took place on 5th January 2009. Notice to the Assessee was issued under Section 153 C on 19th November 2010. This was long prior to 1st June, 2015 and, therefore, Section 153C of the Act as it stood at the relevant time applied. In other words, the change brought about prospectively with effect from 1st June, 2015 by the amended Section 153C (1) of the Act did not apply to the search in the instant case. Therefore, the onus was on the Revenue to show that the incriminating material/documents recovered at the time of search 'belongs' to the Assessee. In other words, it is not enough for the Revenue to show that the documents either 'pertain' to the Assessee or contains information that 'relates to' the Assessee. • In the present case, the Revenue is seeking to rely on three documents to justify the assumption of jurisdiction under Section 153 C of the Act against the Assessee. Two of them, viz., the licence issued to the Assessee by the DTCP and the letter issued by the DTCP permitting it to transfer such licence, have no relevance for the purposes of determining escapement of income of the Assessee for the AYs in question. Consequently, even if those two documents can be said to 'belong' to the Assessee they are not documents on the basis of which jurisdiction can be assumed by the AO under Section 153C of the Act. • As far as the third document, being Annexure A to the statement of Mr. D. N. Taneja, is concerned that was not a document that 'belonged' to the Assessee. Admittedly, this was a statement made by Mr. Taneja during the course of the search and survey proceedings. While it contained information that 'related' to the Assessee, by no stretch of imagination could it be said to a document that 'belonged' to the Assessee. Therefore, the jurisdictional requirement of Section 153C of the Act, as it stood at the relevant time, was not met in the present case.

• For the aforementioned reasons, this Court concludes that the ITAT committed no legal error in holding that the AO had wrongly assumed jurisdiction under Section 153C qua the Assessee. The ITAT, rightly, therefore, set aside the order of the CIT (A), which had held the contrary."

11.26 Moreover, in the decision of the Hon'ble Supreme Court in the case of CIT Vs. Singhad Technical Education Society reported in [2017] 84 taxmann.com 290 (SC) it was categorically held that the incriminating material should belong to the assessee and for the assessment year under consideration in the following manner:

"15. At the outset, it needs to be highlighted that the assessment order passed by the AO on August 7, 2008 covered eight Assessment Years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07. As noted above, insofar as Assessment Year 1999-2000 is concerned, same was covered under Section 147 of the Act which means in respect of that year, there were re-assessment proceedings. Insofar as Assessment Year 2006-07 is concerned, it was fresh assessment under Section 143(3) of the Act. Thus, insofar as assessment under Section 153C read with Section 143(3) of the Act is concerned, it was in respect of Assessment Years 2000-01 to 2005-06. Out of that, present appeals relate to four Assessment Years, namely, 2000-01 to 2003-04 covered by notice under Section 153C of the Act. There is a specific purpose in taking note of this aspect which would be stated by us in the concluding paragraphs of the judgment. • In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal and the Tribunal permitted the assessee to raise this additional ground and while dealing with the same on merits, accepted the contention of the assessee. • First objection of the learned Solicitor General was that it was improper on the part of the ITAT to allow this ground to be raised, when the assessee had not objected to the jurisdiction under Section 153C of the Act before the AO. Therefore, in the first instance, it needs to be determined as to whether ITAT was right in permitting the assessee to raise this ground for the first time before it, as an additional ground.

• The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co- relation, documentwise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. • We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy."

11.27 Further, the findings of the ld. AO are mostly based on the admission made by Shri M.N. Rajendra Kumar. In our opinion, the statement has been retracted by Shri M.N. Rajendra Kumar himself and addition made in his hand also deleted by the Tribunal and hence no credence could be given to his statement while framing the assessment of the present assessee. In the light of above, no addition can be made in the hands of the assessee only on the basis of conjectures, surmises and presumptions. As there was no cogent incriminating material or admissible evidence pertaining to these assessment years under consideration as it belongs to the assessee, the addition cannot be made.

11.28 Further, the ld. AO has not brought on record any evidences as to utility of such amount nor any other corroborative evidence to support the findings. Such evidences (Messages) without any supporting/corroborative along with admission of third person cannot be, basis for AO to come to conclusion and make addition in the assessment order. The law on the issue is laid down by the jurisdictional High Court, and followed by ITAT consistently in the following cases.

• K. V. Lakshmi Savitri Devi Vs ACT 148 ITJ 517 (Hyd). • K. V. Lakshmi Savitri Devi Vs ACIT ITTA 563 of 2017 (AP)(HC) • Jawahar Bhai Atmaram Hathiwala Vs ITO 128 ITJ 36 (Ahd) • DCIT Vs B. Vijaya Kumar & 931 of 2009 (Hyd). • CIT Vs R. Nalini Devi ITTA 232 of 2013 (A. P) • CIT Vs P. V Kalyana Sundaran (2007) 294 ITR 49 • Venkata Rama Sai Developers Vs DCIT ITA 453/Vizag/2012. • P. Venkateshwar Rao Vs DCIT ITA 25/825/Vizag/2012.

11.29 Further, Hon'ble Supreme Court in the case of Common Cause (A registered Society) Vs. Union of India in Writ Petition (Civil) No.505 of 2015 dated 2.7.2018 [2017] 394 ITR 220 (SC) wherein it observed that “the entries in the loose papers/sheets are not "books of accounts" and has no evidentiary value u/s 34 of the Indian Evidence Act. The Hon'ble Supreme Court dismissing the writ petition filed by Common Cause, a registered society, refused to give nod to investigate against the Sahara and Birla Groups in the alleged payoff scandal. The factual setting of the case are that, a search was conducted by the CBI in the premises of Birla Groups, as a result of which, certain incriminating materials and an amount of Rs.25 crores were recovered. CBI referred the matter to Income Tax Department. In another search, the IT department recovered certain incriminating materials and unaccounted money of Rs.135 crores from Sahara Group of Companies. Allegedly the department recovered certain print out of excel sheets showing that Rs.115 crores were paid to several public figures. The settlement commission granted immunity to the Sahara Group of Companies on ground that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives, etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disks and pen drives, etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence. The Income Tax Settlement Commission has also observed that department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. The petitioner, Common Cause, impugned the orders before the Hon'ble Supreme Court which dismissed the petition. Supreme Court clarified that the evidence that had surfaced was not credible and cogent. The Attorney General contended that documents which have been filed by the Birla as well as Sahara Group are not in the form of Account books maintained in the regular course of business. They are random sheets and loose papers and their correctness and authenticity even for the purpose of income mentioned therein have been found to be unreliable having no evidentiary value, by the concerned authorities of Income Tax. Analysing the veracity of the evidences procured from the companies, the Supreme Court, relied upon the ratio laid in V.C. Shukla case and observed that the entries in loose sheets of papers are not in the form of "Books of Accounts" and has held that such entries in loose papers/sheets are irrelevant and not admissible u/s 34 of Indian Evidence Act, and that only where the entries are in the Books of Accounts regularly kept depending on the nature of the occupation, those are admissible. Being so, the addition towards the unaccounted cash payment is not based on any positive materials, hence the addition is deleted in all these assessment years. Accordingly, addition made in these AYs towards earning of alleged unaccounted cash payments on alleged is deleted.”

11.30 Accordingly, in view of the above discussion, we delete the addition made in all these assessment years towards cash payments based on the uncorroborated loose slips. This ground of appeal of the assessee is allowed.

12. For assessment year 2014-15, there is one more addition of Rs.36 lakhs towards interest on advances receivable from Om Sai Riddhi Siddhi Developers (OSRSD) on advance of Rs.5,88,85,000/-. During the course of assessment proceedings, Mr. M.N. Rajendra Kumar and in the case of assessment of OSRSD case, a firm in which Shri M.N. Rajendra Kumar is a partner, it was observed that an amount of advance of Rs.3.15 Crores was credited to the capital account of Shri M.N. Rajendra Kumar in the books of accounts of OSRSD and not reflected in the balance sheet of M/s OSRSD. Since the amount of Rs.3.15 Crores was made from the OD account of the company, the interest on OD account was disallowed at 7% working out at Rs.36 lakhs.

13. The contention of the ld. A.R. is that this amount has been advanced in ordinary course of business to promote the business interest of the assessee and there cannot be any disallowance on this count.

“Interest on borrowed funds cannot be disallowed if the assessee has advanced interest free loan to a sister concern as a measure of commercial expediency; what is to be seen is “business purpose” and what sister concern did with the money advanced.”

14.1 In the present case also the money advanced to sister concern Om Sai Riddhi Siddhi Developers towards their business purpose who is in similar business of the assessee. Had the money not advanced to that assessee, it has to borrow money from outside and that leads to incurring of additional expenditure and suffering loss, which falls on the head of the present assessee. So, to avoid that loss, the assessee advanced the money from its kitty and saved from incurring loss. Accordingly, in our opinion, no notional interest could be disallowed on this count. This ground of assessee is allowed in AY 2014-15.

Pronounced in the open court on this 24th day of March, 2025 as per Rule 34 of ITAT Rules.