DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), CHENNAI, CHENNAI vs. ABDUL AZEEZ NAGOOR GANI, VIRUDHACHALAM

03.2022 was found. The AO noted that the ledger account contained four (4) entries for the relevant year, which were as follows: Date Nature of Payment Amount 22-04-2021 Cash 1,34,950 22-07-2021 Bank 30,00,000 30-07-2021 Bank 30,00,000 04-08-2021 Bank 40,00,000 5. The assessee had claimed that the above amounts represented advances received from Jayapriya Group towards the project development work being carried out on their behalf. The AO however was of the view that these receipts was actually commission income of the assessee which was paid in guise of project advance and therefore show caused the assessee as to why the same was not offered for taxation in his return of income for AY 2022-23. In response to the assessee’s request, the AO provided the copy of the seized material. Thereafter the assessee vide letter dated 22.02.2024 inter alia submitted that, these amounts were received for the development of the projects of Jayapriya Company and that the assessee being their agent, had received and spent, these amounts on their behalf and it was not his commission income. The assessee submitted that, this fact was also available in the material seized during the course of search itself. The AO however is noted to have dismissed the contention of the assessee as evasive and superficial. According to him, the case being made out by the assessee was a make- believe arrangement with the connivance of the Jayapriya Group to Abdul Azeez Nagoor Gani :: 4 ::

6. Likewise, for the AY 2021-22 & 2022-23, the appellant was able to explain along with the relevant ledger / cashbook to substantiate where the AO has relied upon part of the books and conveniently neglected the other part.

7. The evidences adduced by the appellant per se will explain that the narrations contained in the seized material is having two parts, one is payment part and another is receipt part. The appellant in his submission before the AO during the course of assessment proceedings itself has explained that the narrations contained in the seized material are self- explanatory about the payment and receipt part. As brought out by the appellant in his submission, relying upon part of the document and ignoring the other part is not appropriate and against the principles of fairness. The principle of fairness mandates that AO should consider all aspects of the seized material to arrive at a fair conclusion. In the case of CIT Vs. PV Kalyanasundaram 294 ITR 49(SC), the Hon'ble Apex court has held that the AO should not cherry-pick documents from the seized material and the AO must consider all the relevant documents holistically to ensure a fair assessment. Further, as relied upon by the appellant, the Hon'ble Rajasthan High Court in the case of DCIT vs. Hotel Joshi 242 ITR 478 (MP) has held that partial reliance on seized material without considering the complete context leads to an unjust and biased assessment.

9 The AO in the assessment order has not brought into record of any statement recorded from the author of the narrations made in the seized material. Further, the investigation officer or the assessing officer has not Abdul Azeez Nagoor Gani :: 5 ::

10 From the beginning the appellant is contending that he is managing the various projects of Jayapriya Group of concerns and thereby earning commission income. The AR during the course of the appellate proceedings has made available the relevant return of income for the AYs 2019-20, 2021-22 and 2022-23 along with relevant computation, wherein the appellant has disclosed commission income of Rs.3,75,460/-, Rs.3,22,630/- and Rs.3,90,200/- for the AY 2019-20, 2021-22 and 2022- 23 respectively. The AR further claimed that these are all the commission income earned from the various projects undertaken by the M/s. Jayapriya Group and contended that the AO in the assessment order has not brought on record any findings that the commission income disclosed by the appellant in the return of income is untrue.

11 As per the discussion made supra, the undersigned is of the considered view that the AO has misunderstood the narrations contained in the seized material as a commission income of the appellant. The AO incorrectly labelled the payment as a commission income of the appellant without bringing any evidence to substantiate the same as commission income. Further, as evidence was found at third party premise, the decision rendered by the Hon'ble juri ictional ITAT in the case of DCIT Central circle 2(1) v. Appu Direct Pvt Ltd in ITA Nos. 665 & 666/Chny/2023 and CO Nos: 37 & 38/Chny/2023 dt.24.01.2024 will squarely apply to the facts of the appellant case. In this case, the it has been held that "additions made by the AO us. 69A of the Act towards alleged cash transactions recorded in excel sheets found during the course of search proceedings of ..., without there being any corroborative evidence is unsustainable in law".

12 Therefore, in the present case the additions made towards the alleged cash transaction recorded in the excel sheet found during the course of search proceedings at third party premises without there being any corroborative evidence is unsustainable in law. In view of this, the undersigned is of the view that the addition of Rs.31,50,000/-, Rs.72,13,000/- and Rs. 1,01,34,950/- made by the AO and treating the same as a commission income of the appellant is devoid of merits. Therefore, all the grounds raised by the appellant upon these issues are hereby treated as allowed and the AO is directed to delete the addition of Rs.31,50,000/-, Rs.72,13,000/- and Rs.1,01,34,950/- for the AYs 2019- 20, 2021-22 and 2022-23 respectively.” 6. Aggrieved by this order, the Revenue is now in appeal before us. Abdul Azeez Nagoor Gani :: 6 ::

We have heard the rival submissions and perused the material placed on record. It is observed that, the assessee’s ledger from the tally accounts of Jayapriya Company showed that, the latter had paid aggregate sum of Rs.1,01,34,950/- to the assessee. Having perused the extract of the ledger, which was set out at Page 31 of the assessment order, it is noted that, the entries in the ledger do not have any narrations. Hence, the only discernible aspect is that the impugned amount was paid to the assessee. However, the nature and purpose of these payments are not emanating from the said ledger. It is not in dispute that the assessee had received the same in his regular bank account, except sum of Rs.1,34,950/- which was received in cash. When enquired about the nature of the receipt, the assessee had explained that, these were project advances received towards the project development works carried out on behalf of Jayapriya Group. The assessee is noted to have adduced the day book of the Jayapriya Company which was inter alia forming part of the same seized tally data. The assessee showed that, the Jayapriya Group had recorded both the payment as well as corresponding receipt of the same sum, which in itself was self- explanatory. The Ld. AR pointed out that, the name of the project for which the impugned payment was also discernible from the nomenclature of the journal entries. He therefore claimed that, the entries in the day book itself evidenced that the payments were received by the assessee Abdul Azeez Nagoor Gani :: 7 ::