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Facts
The assessee's appeals relate to assessment years 2015-16 to 2018-19, arising from orders that confirmed additions to income based on a search. The additions were primarily related to alleged loans and interest income stemming from materials seized during a third-party search, not directly from the assessee's premises.
Held
The Tribunal held that additions made solely on the basis of incriminating material found during a third-party search, without corroboration or specific evidence found during the assessee's search, cannot be sustained under Section 153A. The assessment proceedings were deemed bad-in-law, and the additions were deleted.
Key Issues
Whether additions under Section 153A are valid when based on incriminating material from a third-party search without corroboration from the assessee's own search, and whether the proceedings themselves were initiated correctly under the relevant sections.
Sections Cited
143(3), 153A, 153C, 69, 40A, 132, 132A, 143(1)
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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
(िनधा(रण वष( / Assessment Year: 2018-19) Shri Krishnappa Gowder Kalyanasundaram DCIT बनाम/ 83/1, SMT Towers, Teacher’s Colony, Central Circle-3 Vs. Karamadai, Coimbatore-641104. Coimbatore. �थायीलेखासं./जीआइआरसं./PAN/TAN No. AFBPK-6901-Q (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri N. Arjun Raj (Advocate) – Ld.AR ��थ�कीओरसे/Respondent by : Shri R. Clement Ramesh Kumar (CIT) - Ld. DR सुनवाईकीतारीख/Date of Hearing : 27-02-2025 घोषणाकीतारीख /Date of Pronouncement : 21-05-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeals by assessee for Assessment Years (AY) 2015- 16 to 2018-19 arises out of separate orders of learned first appellate authority. It is admitted fact that the facts as well as issues are substantially the same in all the years. First, we take up appeal for AY 2015-16 which arises out of an order passed by learned Commissioner of Income Tax (Appeals), Chennai-20 [CIT(A)] on 25-06-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) r.w.s. 153A of the Act on 23-08-2021. The grounds raised by the assessee read as under: -
1. The order of the CIT (Appeals) - 20, Chennai dated 25.06.2024 vide DIN Order No. ITBA/APL/S/250/2024-25/1065990695(1) for the abovementioned Assessment Year is contrary to law, fact and in circumstances of the case.
2. The CIT (Appeals) - 20, Chennai erred in confirming the search assessment in terms of section 153A of the Act in contra distinction to a search assessment as per section 153C of the Act without assigning proper reasons and justification and ought to have appreciated that the order of search assessment was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law
3. The CIT (Appeals) - 20, Chennai failed to appreciate that having assessed the appellant in terms of Section 153A of the Act based on the incriminating materials seized during the search in the premises of Mr. O. Arumugasamy and others in contra distinction to the search in the premises of the appellant here in, where in no incriminating materials were seized for the purpose of making the disputed addition(s) in the search assessment order(s), the consequential search assessment order pass should be reckoned as bad in law.
4. The CIT (Appeals) - 20, Chennai failed to appreciate that having used the disputed search materials seized in the premises at Mr. O. Arumugasamy and others for making the disputed addition and further having not seized any incriminating material in support of the disputed addition in the hands of the searched person, the assessment completed by making additions not arising from the search conducted in the hands of the appellant should be reckoned as nullity in law.
5. The CIT (Appeals) - 20, Chennai failed to appreciate the law declared by the Supreme Court in the case reported in 454 ITR 212 on the scope of jurisdiction on the scope of jurisdiction under Section 153A of the Act in proper perceptive and as a consequence ought to have appreciated that the search assessment order under consideration was invalid, passed without jurisdiction and not sustainable both on facts and in law.
6. The CIT (Appeals) - 20, Chennai failed to appreciate that the finding rendered with respect to framing of assessment under Section 153A of the Act in the absence of incriminating material in contrary to judicial precedents, there by vitiating the passing of the appellate order.
7. The CIT (Appeals) - 20, Chennai failed to appreciate that the evidences gathered in the search proceedings and the sworn statements recorded at the time of search as well as in the course of the search assessment proceedings were wrongly analysed thereby vitiating the entire search assessment.
8. The CIT (Appeals) - 20, Chennai erred in sustaining the addition of Rs. 5,00,00,000/- being the sum alleged to have been given as loan to Mr. O. Arumugasamy and others as unexplained investment in terms of Section 69 of the Act in the computation of taxable total income without assigning proper reasons and justification.
The CIT (Appeals) - 20, Chennai failed to appreciate that provisions of Section 69 had no application to the present facts and in circumstances of the case, thereby vitiating the findings in relation thereto.
The CIT (Appeals) - 20, Chennai failed to appreciate that prerequisite conditions required for making an addition in terms of Section 69 of the Act were absent in the present case and in circumstances, thereby negating the findings in relation thereto.
The CIT (Appeals) - 20, Chennai erred in sustaining the addition of Rs.45,60,000/- being the sum alleged to have been received as interest income from Mr. O. Arumugasamy as income of the appellant in the computation of taxable total income without assigning proper reasons and justification.
The CIT (Appeals) - 20, Chennai failed to appreciate that the two additions made and sustained emanating from the search materials forming part of the Mr.
Arumugasamy and others were not sustainable and ought to have appreciated that the quality of evidence based on which the disputed additions were made would be highly disputable and not reliable as evidence in the eyes of law, thereby vitiating the additions.
The CIT (Appeals) - 20, Chennai failed to appreciate that the inferences drawn from the disputed seized materials for making the said addition were highly debatable and not sustainable in law thereby vitiating the additions fully.
The CIT (Appeals) - 20, Chennai failed to appreciate that the assessment of the entire sum in the hands of the appellant was wholly unjustified and further in any event ought to have appreciated that the rejection of the explanation pertaining to the sum being not being given was wholly unjustified in view of the misreading of the loose sheets / invalid evidence.
The CIT (Appeals) - 20, Chennai erred in sustaining the disallowance of Rs.65,340/- made in terms of Section 40A of the Act and consequently erred in confirming the action of the Assessing officer in adding back such sum as part of taxable total income without assigning proper reasons and justification.
The CIT (Appeals) - 20, Chennai failed to appreciate that provisions of Section 40A of the Act had no application to the present facts and in circumstances of the case thereby vitiating the findings in relation thereto.
The CIT (Appeals) - 20, Chennai failed to appreciate that the findings recorded in this regard in the impugned order was wrong, erroneous, unjustified, incorrect, invalid and not sustainable both on facts and in law.
The CIT (Appeals) - 20, Chennai failed to appreciate that having not examined the nature of transactions reflected in the invalid loose sheets, the addition made should be reckoned as bad in law in view of the wrong presumption of loan given by the appellant.
The CIT (Appeals) - 20, Chennai failed to appreciate that the entire re-computation of taxable total income including the quantification of interest charged under various sections was wrong, erroneous, unjustified, incorrect, invalid and not sustainable both on facts and in law.
The CIT (Appeals) - 20, Chennai failed to appreciate that there was no proper / reasonable opportunity given before passing of the impugned order and any order passed in violation of the principles of natura justice would be nullity in law.
As is evident, the assessee is aggrieved by confirmation of certain additions consequent to search proceedings in the case of the assessee.
The assessee has challenged the assumption of jurisdiction on legal grounds and also assailed the quantum additions on merits.
The Ld. AR, drawing attention to the documents as placed on record, assailed the assessment proceedings on the legal ground and submitted that that in the absence of any incriminating material found during the course of search, no addition could be made in the hands of the assessee as per the ratio of decision of Hon’ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell (P.) Ltd. (149 Taxmann.com 399) holding that no addition could be made for completed assessment in the absence of any incriminating material found during the course of search. The Ld. AR referred to the decision of Tribunal in the case of similarly placed assessee M/s SG Wind Farm Private Ltd. (ITA Nos.1227/Chny/2024 & ors. order dated 19-11-2024) rendered on identical facts allowing the appeals of the assessee. The copies of the orders have been placed on record. The Ld. AR also stated that no corroborative evidence was found form the premises of the assessee and entire assessment was framed on the basis of incriminating material as seized from a third-party premises. Even otherwise, these documents were to be considered as dumb documents only. The Ld. CIT-DR controverted the arguments of Ld. AR and supported the findings of lower authorities. The Ld. CIT-DR sought distinction in the facts of case laws being relied upon by Ld. AR. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 3.1 The assessee being resident individual is stated to be engaged in Chit and money lending business in name and style of M/s SMT Chits and Finance Corporation. The assessee is stated to be the key person and Managing Director of M/s Sri Masani Amman Thunnai Chit Funds Kovai Pvt. Ltd. The impugned assessment proceedings stem from search carried out by the department u/s 132 in the case of the assessee group on 06-03-2019. Consequently, notice u/s 153A was issued to the assessee on 06-05-2020 which was followed by notice u/s 142(1) calling for various details from the assessee. The assessee admitted income of Rs.16.59 Lacs which was later on revised to Rs.78 Lacs on 10-03-2021. 3.2 During search at assessee’s residence, loose sheets were seized vide Annexure ANN/SMT/NS/LS-S which allegedly contained details of cash loan lent by M/s SMT Chit and Finance Corporation for Rs.81.90 Lacs which was admitted by the assessee in sworn statement recorded u/s 132(4). However, substantial addition stem from unconnected search proceedings u/s 132 as carried out by the department in the case of Shri O. Armugasamy and M/s Senthil Group of Companies earlier on 09-11- 2017 wherein certain incriminating material was stated to be seized form the residential premises of Smt. R. Santhamani (Cashier of M/s Senthil Group of companies) as well as from the office premises of M/s Senthil Group of Companies. The same contained details of loans received in cash and in cheque from creditors and payment of interest in cash to them and repayment of loan by Shri O. Armugasamy and Shri M. Palanisamy (one of the directors of M/s Senthil Paper Boards Pvt. Ltd.). The said material was seized vide Annexure ANN/GM/RS/LS/2017-18/A- 1-39 which was seized from the residence of Smt. R. Santhamani and Annexure CBE/132/OA/17-18/A-1 to 7 which was seized from the office premises of M/s Senthil Group of Companies. On the basis of the same, it was alleged by Ld. AO that Shri O. Armugasamy, Shri M. Palanisamy and Shri A. Senthil Kumar received loans on cash from the assessee, mentioned as ‘SMT Finance Kalyanasundaram’. The same has tabulated in para B-2 of the assessment order. In this year, the loan receipts by the group from the assessee was quantified at Rs.5 Crores and interest repayment in this year was quantified as Rs.45.60 Lacs. The Ld. AO proceeded to add back the same to the income of the assessee. The relevant extracts from seized material have also been extracted in the assessment order to support the aforesaid action. The Ld. AO also referred to recorded statement during search proceedings in their respective cases admitting receipt of loan from the assessee. However, the assessee deposed in statement recorded u/s 131(1A) on 29-10-2019 that there was no financial transaction between him and the other group. The Ld. AO rejected the explanation of the assessee since during cross- examination of Shri O. Armugasamy and M. Palanisamy by the assessee, the money transactions were stated to be reconfirmed by them. 3.3 During the course of assessment proceedings, notice u/s 153A was issued to the assessee on 06-05-2020 and in response, the assessee admitted income of Rs.16.59 Lacs which was later on revised on 10-03- 2021 at Rs.78 Lacs. Going by the search findings and statements recorded therein in the case of Shri O. Armugasamy and his group entities, Ld. AO added back the amount of Rs.5 Crores as unexplained investment u/s 69 and consequential interest component of Rs.45.60 Lacs was added back as undisclosed interest income of the assessee. The assessee had made disallowance u/s 40A for Rs.0.65 Lacs in the original return of income which was made by Ld. AO while finalizing the assessment. Aggrieved, the assessee assailed the same before Ld. CIT(A).
Appellate Proceedings 4.1 The Ld. CIT(A), in para 7.2 of the impugned order, noted various contention as raised by the assessee. In these submissions, the assessee contended that no incriminating material was found from the possession of the assessee. During cross-examination, evasive replies were given by Shri O. Armugasamy and Shri M. Palaniswami and they submitted that the amount was collected and interest was repaid by one Shri M. Muthusamy on their behalf who was no longer alive to affirm their statement. The Ld. AO did not find any asset / income in addition to admitted income which would have formed source for such unaccounted loans. Further, no addition could be made merely on seized material found from third-party and onus was on Ld. AO to bring in corroborative evidence to prove such entries. 4.2 The Ld. CIT(A) considered the decision of Hon’ble Apex Court in the case of Pr. CIT vs. Abhisar Buildwell (P.) Ltd. (supra) holding that AO could make additions based on incriminating material found and could also make addition based on ‘other information’. Since the assessee admitted additional income in revised return filed u/s 153A to explain the sources of unexplained cash loans, AO was within its jurisdiction to make addition based on ‘other information’ which in the present case was material seized form a third-party Shri O. Armugasamy and Group showing unaccounted cash loans / receipt of unaccounted interest by the assessee. Therefore, the legal grounds thus raised by the assessee was rejected. On merits also, it was observed by Ld. CIT(A) that entries of cash loans were found recorded not only in daily sheets but also in registers maintained by the other group. The recording was systematic recording. The other group made admission of receipt of loan from the assessee. Evidences were found that the assessee’s group entity advanced cash loans on interest. The opportunity of cross- examination was provided to the assessee. The assessee was in the habit of running unregistered chits whose commission was not admitted. Finally, the assessment was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 5. From the facts, it emerges that the assessee was subjected to search action on 06-03-2019 and consequently, notice u/s 153A was issued to the assessee on 06-05-2020. The regular return of income as filed by the assessee had already attained finality and this was year of unabated assessment year. In response to notice u/s 153A, the assessee filed revised return of income on 10-03-2021 declaring income of Rs.78 Lacs which included some additional income to make up for the entries as found recorded in loose sheets which were seized from the assessee vide Annexure ANN/SMT/NS/LS-S. The same allegedly contained details of cash loan lent by assessee’s proprietary concern namely M/s SMT Chit and Finance Corporation to the two persons. During the course of assessment proceedings, the assessee furnished cash flow statements and established the source of these cash loans and whatever deficiencies were there, the same was offered as additional income. The Ld. AO duly accepted the same and have accepted the return of income. In other words, whatever incriminating material was found during the course of search on assessee, the same was duly accounted for by the assessee in its return of income and the same was accepted by Ld. AO. Apart from this, no other incriminating material has been found from search on assessee which would indicate that the assessee advanced impugned loans to the Shri O. Armugasamy Group and earned interest thereon. No evidence in that respect has been found from the premises of the assessee.
It could be seen that whatever addition has been made by Ld. AO, the same is solely based on material found during search on a third-party which has happened much earlier on 09-11-2017. The addition made by Ld. AO is solely based on the said material coupled with the statement recorded therein. As against this, the assessee has continued to deny having made any such cash loans to that group. On these facts, in our considered opinion, the onus was on Ld. AO to conclusively establish the fact of advancement of loans by the assessee to the other group. However, in the absence of any such evidence found from the possession of the assessee which indicate advancement of cash loans, the impugned additions could not be sustained in the hands of the assessee unless there is corroboration of the incriminating material which would contradict the stand taken by the assessee. The Ld. AO is accepting the statements made by third-parties during their respective searches but on the other hand, rejecting the similar statement made by the assessee denying advancement of loans. On the facts of the case, it was incumbent upon Ld. AO to bring positive evidences on record to establish that the assessee advanced such loans. We find that there are no such evidences on record which would corroborate the conclusion of Ld. AO. It is trite law that no addition could be made merely on the basis of suspicion, conjectures and surmises. So far as the cross-examination of Shri O. Armugasamy and M. Palanisamy by the assessee is concerned, we find that they have filed evasive replies and they stated that the amount was collected and interest was repaid by one Shri M.
Muthusamy on their behalf who was no longer alive to affirm their statement. Therefore, no adverse inference could be drawn against the assessee merely on the basis of cross-examination. Pertinently, during search on assessee, the revenue has not found any asset / income of that magnitude in addition to admitted income which would have formed sources for such unaccounted loans.
The Ld. CIT(A) has referred to the decision of Hon’ble Apex Court in the case of Pr. CIT vs. Abhisar Buildwell (P.) Ltd. (supra) holding that AO could make additions based on incriminating material found and could also make addition based on ‘other information’. Since the assessee admitted additional income in revised return filed u/s 153A to explain the sources of unexplained cash loans, AO was within its jurisdiction to make addition based on ‘other information’ which in the present case was material seized form a third-party Shri O. Armugasamy and Group showing unaccounted cash loans / receipt of unaccounted interest by the assessee. There could be no quarrel on this proposition. No doubt if any incriminating material was found from the assessee during search, Ld. AO was well within his right to utilize other information to make further additions. However, the said other information must be credible and conclusive one and not merely based on assumptions and guess work. The assessee could not be expected to prove the negative. The admission made by third-party during their respective searches could not bind the assessee in the absence of independent corroboration thereof. Except for third-party statements, there is no other material before Ld. AO to support impugned additions in the hands of the assessee. Therefore, the adjudication of this issue by Ld. CIT(A) could not be accepted.
We find that in the case of similarly placed assessee i.e., M/s SG Wind Farm Private Ltd. (ITA Nos.1227 to 1230/Chny/2024 dated 19-11- 2024), the co-ordinate bench has taken similar view and deleted the impugned additions by holding as under: - 5. Upon perusal of factual matrix as enumerated in preceding paragraphs, the undisputed position that emerges is that the impugned addition of undisclosed interest income is based on incriminating material found during an earlier separate / independent search conducted by the department on Shri O. Arumugasamy group on 09-11-2017. No incriminating material, in this regard, has been found during the search conducted on assessee group on 06-03-2019. From tabulation in para 3.9, it could be seen that the assessee had filed return of income for this year on 29-09-2014 which stood attained finality since the date of issuance of notice u/s 143(2) had already expired on 30-09-2015. In other words, the regular assessment proceedings had attained finality and this year was a case of unabated assessment year. In response to notice u/s 153A, the assessee offered same income. Quite clearly, the impugned addition of undisclosed interest income is not based on any incriminating material found during search on the assessee group but the same are based on incriminating material found in another search which has already happened much earlier before the date of search on the assessee. 6. On given set of facts, the ratio of recent decision of Hon’ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (149 Taxmann.com 399), considering all the earlier decisions holding the field, would squarely apply to the facts of the case settling the impugned issue in favor of the assessee. The adjudication of Hon’ble Court was as under: - XXXXXX XXXXXX Approving the decision of Hon’ble Delhi High Court in the case of Kabul Chawal (380 ITR 573) as well as the decision of Hon’ble Gujarat High Court in Saumya Construction (P.) Ltd. (387 ITR 529), it was held that in respect of completed assessments / unabated assessments, no addition could be made by Assessing Officer in the absence of any incriminating material found during course of search under section 132 or requisition made under section 132A. 7. Similar is the decision of Hon’ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation [2015; 374 ITR 645] which has been followed in subsequent decision in CIT V/s Gurinder Singh Bawa (79 taxmann.com 398 05/10/2015) which deals with a situation wherein the original return of income was processed u/s 143(1). The present case before us is on similar fact. It was held by Hon’ble Court that in respect of non-abated assessment, the additions are to be strictly based on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search and undisclosed income or undisclosed property discovered during search. 8. We find that similar is the view of Hon’ble Delhi High Court in Pr. CIT V/s Meeta Gutgutia (82 Taxmann.com 287) which has primarily followed the decision of Kabul Chawla (supra). We also find that Special Leave Petition (SLP) filed by the revenue against this decision has already been dismissed by Hon’ble Supreme Court on 02.07.2018 which is reported at 96 Taxmann.com 468. The decision of Hon’ble Court was as under: -
1. 1. Delay condoned.
2. We do not find any merit in this petition. The special leave petition is, accordingly, dismissed.
3. Pending application stands disposed of.
9. Similar is the decision of this Tribunal in the case of M/s Pearl Printers & Publishers Pvt. Ltd. (ITA Nos.1042/Chny/2023 dated 03-06-2024). The bench, under similar circumstances, held that the ratio of decision of Hon’ble Apex Court in Pr. CIT vs. Abhisar Buildwell Pvt. Ltd. (149 Taxmann.com 399) would squarely apply wherein it was held by Hon’ble Court that concluded assessment could not be disturbed in search proceedings u/s 153A and the additions have necessarily to be based on incriminating material found during the course of search.
10. The facts of the present case would establish that impugned addition of interest income has been made on the basis of incriminating material found during the course of search on a third-party as well as statement recorded therein. In such a case, the proceedings have to be initiated u/s 153C and not u/s 153A which has not been done by Ld. AO. To initiate proceedings u/s 153C, it is mandatory requirement of law that satisfaction should have been recorded by Ld. AO of the searched person as well as the AO of the other person before proceedings u/s 153C. The recording of satisfaction is sine qua non to assume jurisdiction u/s 153C. Without recording of this satisfaction, no addition could have been made in the hands of the assessee. In the present case, no such satisfaction has been shown to us and in fact, the assessment has been framed u/s 153A which could not be sustained in law considering the mandatory provisions of Sec.153C.
11. Our aforesaid view is duly supported by the decision of Hon’ble Delhi High Court in the case of PCIT vs. Anand Kumar Jain HUF (ITA Nos.23/2021 & ors. dated 12.02.2021). The Hon’ble Court held that additions on the basis of statement recorded in a separate search action in the case of a third-person are not permissible in Section 153A proceedings. The Hon'ble High Court observed that the statement of third person cannot be construed as an incriminating material belonging to or pertaining to the person other than the person searched. Similar is the view of Bangalore Tribunal in ACIT Vs. P. Shyamaraju & Co. India Pvt. Ltd (ITA Nos.978 to 984/Bang/2014 dated 25-04-2022) as well the decision of Kolkata Tribunal in the case of Krishan Kumar Singhania vs. DCIT (88 Taxmann.com 259).
12. Therefore, considering the aforesaid settled position of law, we would hold that the assessment, for all the years, would be bad-in-law and therefore, the impugned addition could not be sustained on this score only. We order so. In other words, the impugned addition of alleged undisclosed interest income stands deleted. The return of income as filed by the assessee stand restored.
We find that in the present case, the facts are substantially the same. This was year of unabated assessment year and whatever additions that could be made in the hands of the assessee were to be made on the basis of incriminating material as found from search on assessee. The addition based on third-party search could be made only if the same was credible and conclusive one and clearly established grant of unaccounted loans by the assessee to the third-party. This vital ingredient is missing in the present case. Therefore, the impugned additions as made by Ld. AO on account of unexplained investment and undisclosed interest income is liable to be deleted on legal grounds as well as on mertis. We order so. The Ld. AO is directed to re-compute the income of the assessee. The appeal stand allowed accordingly.
9. Assessment Years 2017-18 & 2018-19 The assessment for these two years has been framed on similar lines. In both the years, Ld. AO accepted return of income as filed by the assessee but made similar addition of unaccounted investment and undisclosed interest income alleged to be received from Shri O. Armugasamy group. The adjudication of Ld. CIT(A) is on similar lines. Facts being pari-materia the same, our adjudication as for AY 2015-16 shall mutatis mutandis apply to both these years. The fact that these are abated years would not alter our adjudication since the impugned additions are not sustainable on merits. Both the appeals stand allowed accordingly.
10. Assessment Year 2016-17 10.1 The assessment for this year is also substantially on the same lines. The Ld. AO accepted the return of income as filed by the assessee but made similar addition of unaccounted investment and undisclosed interest income alleged to be received from Shri O. Armugasamy group. The adjudication of Ld. CIT(A) is on similar lines for these issues. Facts being pari-materia the same as in AY 2015-16, our adjudication as for AY 2015-16 shall mutatis mutandis apply to these issues. The corresponding grounds as raised by the assessee stand allowed. 10.2 In this year, Ld. AO has made another addition of Rs.57.05 Lacs. The same is on account of lack of source for the cash given to Shri Anand Babu, Sudalai Aandavar Vegetables, RTM Anand-Sri Balaji Spinning Mils. During search at assessee’s residence, loose sheets were seized vide Annexure ANN/SMT/NS/LS-S which allegedly contained details of cash loan lent by M/s SMT Chit and Finance Corporation to Shri Anand Babu. The assessee furnished reply on 05-07-2021 wherein he incorporated cash loans as source from the Chit subscription collections / chits dividends in AYs 2013-14 and AY 2014-15. However, the assessee incorporated advance collection of ½ months subscription of subsequent year in the cash flow statement. This claim was not accepted and cash deficiency of Rs.57.05 Lacs was added in the hands of the assessee as unexplained investment u/s 69. Before Ld. CIT(A), the assessee contended that half month’s subscription of subsequent year was available in his hands which acted as source of loans advanced. However, Ld. CIT(A) rejected the same and confirmed this addition. Aggrieved, the assessee is in further appeal before us. 10.3 We find that complete cash flow statement has been prepared by the assessee for AYs 2013-14 to 2019-20 which has been extracted at para 7.4.2 of the impugned order. In this statement, the assessee has made estimated cash flows on the basis of chit commission as admitted by the assessee. The said cash flow is only an estimated cash flows since no proper books have been kept by the assessee. In such a scenario, exact one-to-one link of cash flows vis-à-vis loans as granted by the assessee could not be established. The chit subscribers are mostly daily traders who would be paying the chit subscriptions in advance based on daily collection. The assessee has estimated that 50% of subsequent months collections would have been paid in advance and the same would be available with the foreman. Such advances received earlier has been reduced in the subsequent year’s cash flows. On overall basis, the assessee does not have any cash deficit. Similar methodology has been adopted for all the years. This being so, it could not be said that the assessee has cash deficiency and therefore, we delete the impugned addition. The corresponding grounds stand allowed. The appeal stand allowed accordingly. Conclusion 11. All the appeals stand allowed in terms of our above order. Order pronounced on 21st May, 2025 Sd/- Sd/- (MANU KUMAR GIRI) (MANOJ KUMAR AGGARWAL) �ाियक सद" / JUDICIAL MEMBER लेखा सद" / ACCOUNTANT MEMBER चे1ई Chennai; िदनांक Dated : 21-05-2025 DS आदेशकीJितिलिपअ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Assessee 2. ��थ�/Revenue 3. आयकरआयु:/CIT Chennai/Madurai/Coimbatore 4. िवभागीय�ितिनिध/DR 5. गाड?फाईल/GF