A GOVINDARAJ, DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, MADURAI, CENTRAL RANGE, MADURAI vs. INDIAN OCEAN GARNET SANDS COMPANY PRIVATE LIMITED, TUTICORIN

आयकरअपीलीयअिधकरण, ’सी’ ायपीठ,चेई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI

ीएबीटी. वक
, ाियकसदएवं
एवं
एवं
एवं
ीजगदीश, लेखासदकेसम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER

आयकरअपीलसं./ITA Nos.199 to 203/Chny/2024
िनधारणवष/Assessment Years: 2013-14 to 2017-18
The DCIT,
Central Circle-2,
Madurai.

v.
M/s. Indian Ocean Garnet
Sands Co. Pvt. Ltd.,
No.146, Palayamkottai Road,
Tuticorin-628 003. [PAN: AAACI 4083 Q]
(अपीलाथ/Appellant)

(यथ/Respondent)

Department by :
Mr. R. Clement Ramesh-
Kumar, CIT
Assessee by :
Mr. P. Ranga Ramanujam, CA
सुनवाईकतारीख/Date of Hearing
:
21.01.2025
घोषणाकतारीख /Date of Pronouncement
:
09.04.2025

आदेश / O R D E R
PER BENCH:

These appeals have been preferred by the Revenue against the consolidated order of the Learned Commissioner of Income Tax
(Appeals)-19, Chennai (hereinafter in short ‘the Ld.CIT(A)’), dated
29.11.2023 for the Assessment Years (hereinafter in short ‘AY’) 2013-14
to 2017-18 u/s. 250 of the Income Tax Act, 1961 (hereinafter in short
‘the Act’). Since the issues involved in all these appeals are common, they were heard together and are being disposed off by this consolidated order for the sake of convenience and brevity.

of both the parties, the case of the AY 2013-14 is taken as the lea utatis mutandis to other appeals as noted, are that, the assessee is e
Garnet, Ilmenite, Rutile and Zircon.
ed out in the group concerns of ourse of the said search, severa which inter alia suggested that the of Ilmenite to M/s VV Group, whi unted sales and therefore, the pr jected to search. The Authorized O hich was marked as ANN/MP/VVT of the Finance &Accounts of M/s VV ls of unaccounted cash payments m ess concerns; and that the noting’s ained unaccounted business dealing
, another loose-sheet folder was fo d ANN/MP/VVPT/LS/S (Sl No. 3), in ntity details were found to be noted of VV Group, in his statement re itted that it contained details of c

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Revenue in ITA ad case, which well. The brief engaged in the Search u/s 132
VV Group on al incriminating e assessee had ch represented remises of the Officer found a P/B&D/S] from V Group, which made by M/s VV at Pages 112 &
gs of VV Group und and seized n which certain
, which the GM ecorded in the cash payments made to one person, assessee. In the post se premises of VV Group bearer cheques were is Jaypal, who was also analyzing these materia the statement recorded conclusion that, the V assessee across FYs 2
2017-18, towards unac incriminating material sworn statements recor u/s 153A of the Act for additions on account of AY
2013
2014
2015
2016
2017

ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::3 ::

Shri K Thambi, who was assoc earch enquiries, the e-mail back-up was analyzed in which it was foun sued in the names of many persons associated with the assessee.
als seized from the premises of the from the key persons of the VV Gro
VV Group had paid Rs. 35,95,95
012-13 to 2016-17 relevant to A ccounted sales of Ilmenite. On the seized from the premises of VV G rded in the course of search, the AO r AYs 2013-14 to 2017-18, in whic unaccounted sales made to VV Grou
Y
Amount added (Rs.)
3-14
2,24,68,240/-
4-15
4,67,69,390/-
5-16
6,35,04,240/-
6-17
17,51,81,140/-
7-18
5,16,72,336/-

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iated with the taken from the nd that several s, including Mr.
The AO, after e VV Group and oup arrived at a 5,346/- to the AYs 2013-14 to e basis of such Group and the O issued notices ch the following up were made:

above action of the AO, the asse
CIT(A), who vide his consolidated o rial seized from the premises of th ncriminating material found in the co e Ld. CIT(A) therefore held that, in being found from the premises of the ccounted sales made in the unabate
7-18 by relying upon the material se unsustainable and therefore delet r of the Ld. CIT(A), the Revenue is e of convenience, the grounds rais reproduced here-under:
the learned Commissioner of Income Tax ( ts of the case and in law.
erred in deleting the addition of Rs.2,2
unaccounted sales quantified on the ba during the course of search in the case
T(A) erred in deleting the addition ma es made to M/s. V.V.group of companies, ng director of assessee company admitted he assessee company made sales to M/s.V gh Shri.Thangaraj @ Jayapal, employee ch sales were partly accounted in the bo

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essee preferred order held that, he third parties ourse of search’
absence of any e assessee, the ed assessments eized from third ted the same.
s now in appeal sed in the lead
(Appeals) is 24,68,240/- sis of mail of M/s.V V de towards though Sri.
in his sworn
V V group of of assessee ooks of the assessee and con form of cash.
2.2 The Ld.CIT(
Ramesh was fu
Shri.Thangaraj d received uncross were returned to could not provide such.
2.3 The Ld.CIT unaccounted cash basis of mail bac basis of any inc assessee compan third party prem
Since the assesse strength of warra the AO considere of said seized ma
2.4 The Ld.CIT(A restrictive interpr presumption of c of accounts/docu not from third pa
3 For these grou grounds that m proceedings, the that of the Assess
4. Assailing the actio the Revenue argued th
ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::5 ::

nsideration for unaccounted sales was rece
A) failed to appreciate that the statem urther strengthened by the sworn sta dated 02/02/2019, in which he stated th ed cheques from M/s.VV group and cash
Managing partners of VV group. But Shri e any evidence to substantiate returning
T(A) erred in holding that the additio h sales of Ilmenite, Zircon & Rutile was m kups seized from third party premises and criminating materials found in the prem ny, without appreciating that materials s mises contain Information relating to the ee's premises was also covered during se ant of authorization issued in the name o d the addition towards unaccounted sales o terials in the order u/s.143(3) r.w.s.153A.
A) erred in failing to appreciate that there retation in the Section 132(4A) and Sec.29
orrectness are applicable only in respect o ments seized in the premises of searched rty.
unds and any other ground including am may be raised during the course of order of learned CIT(Appeals) may be se sing Officer be restored.”
on of the Ld. CIT(A), the Ld. CIT, DR hat, the Ld. CIT(A) had narrowly

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eived in the ment of Sri.
atement of hat he had h withdrawn
. Thangaraj of cash as on towards made on the d not on the ises of the seized from e assessee.
arch on the of assessee, on the basis e is no such 92C that the of the books person and endment of the appeal et aside and R appearing for interpreted the concept of incriminating the material, electron premises of the VV Gro indeed constituted incr assessments u/s 153A
According to the Ld. C material has to be fo contended that if any investigation at the prem such material ought to the course of search up there was no direct ev back-up of the electron some of the details of th addressed to one Mr. Ja reason enough to link t the assessee. Per con findings of the Ld. CIT(A 5. We have heard th us. The undisputed fact the Act was conducted
ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::6 ::

g material found in the course of se ic evidence etc., which was se oup, which was searched along with riminating material for the AO to A of the Act in the impugned un
CIT, DR, it cannot be said that th ound from the assessee’s premi y incriminating material is found mises of third parties connected wit be also treated as incriminating ma pon the assessee. He further argue vidence linking the email analysis f nic evidence with the assessee, bu he bearer cheques and email commu aypal, who was associated with the the seized material and the conten tra, the Ld. AR of the assessee
A).
he rival contentions and the materia s of the case are that, search opera both in the case of VV Group and t

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earch and that, ized from the h the assessee, o validly frame nabated years.
e incriminating ses alone. He during further h the assessee, aterial found in ed that, though found from the ut the fact that unications were e assessee, was nts therein with supported the al placed before ation u/s 132 of he assessee on 25.10.2018. In the c pertaining to the assess
The dispute in the pre whether the AO could corroborated material premises in the assessm years. It has now been in the case of PCIT vsA no addition can be mad incriminating material recorded by the Hon’ble be as follows:
“14. In view of concluded as und
(i) that in section 132A, th under section 153
(ii) all pend
(iii) in case in case of unabat juri iction to a consideration the and the other m declared in the re
ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::7 ::

ourse of search, certain incrimin see were found from the premises of esent case revolves around the iss have legally made addition on th found in the course of search fro ments framed u/s 153A of the Act fo well settled in law by the Hon’ble
Abhisar Buildwell (P) Ltd. (454 I de in unabated assessments in the found in the course of search. T e Apex Court at Para 14 of their or the above and for the reasons stated er:
case of search under section 132 or requ he AO assumes the juri iction for block
3A; ding assessments/reassessments shall stan e any incriminating material is found/unea ted/completed assessments, the AO would assess or reassess the 'total income'
e incriminating material unearthed during material available with the AO including eturns; and 99 to 203/Chny/2024
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nating material f the VV Group.
sue that, as to he basis of un om third party or the unabated
Supreme Court
ITR 212) that, absence of any The conclusion rder is noted to above, it is uisition under k assessment nd abated; arthed, even, d assume the taking into g the search the income

(iv) in case search, the AO c other material assessments. Me assessments, no incriminating mat
132 or requisitio completed/unaba exercise of pow fulfilment of the 147/148 of the Ac
6. In the facts of th impugned were not b premises of the asse material/electronic evid course of search at a t after analyzing the mat
Group, found that it wa assessee. The Ld. CIT(A searched at the same evidence which would s unaccounted sales of Rs the basis of his own su premises of VV Group.
since there was no incr
ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::8 ::

e no incriminating material is unearthed cannot assess or reassess taking into cons in respect of completed assessme eaning thereby, in respect of complet addition can be made by the AO in abs terial found during the course of search u n under section 132A of the Act, 1961. H ated assessments can be re-opened by ers under sections 147/148 of the Act e conditions as envisaged/mentioned un ct and those powers are saved.”
he present case, it is observed that ased on incriminating material fo essee, but was made on the dence seized and the statements r hird part, VV Group. We find that t terial, which was seized from the p as neither corroborative nor incrimi
A) further observed that, though the e time, the search party couldn’
suggest that the assessee was invo s.35.95 crores as was being alleged ubjective analysis of the material s
The Ld. CIT(A) is found to have iminating material found from the p

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d during the sideration the nts/unabated ted/unabated sence of any under section However, the y the AO in t, subject to nder sections t, the additions ound from the basis of the recorded in the the Ld. CIT(A), premises of VV inating qua the e assessee was ’t unearth any olved in making d by the AO on seized from the observed that, premises of the assessee, the AO could from the premises of th assessments. The releva is as follows:
“7.4.10
In light assessment orde additional ground has taken up th through the fact materials were n
The AO has com course of search the back up and that VV group ha in the name of assessment orde transaction files a files are enclosed of the bank paym
Jayapal for the p
2012-13 to 12016
are enclosed (6X undersigned durin from the AO extr order and examin
7.4.11
The un file) has observed of account , Ch undersigned spec name of the app that payments we
ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::9 ::

d not have considered the other m he third party for making addition i ant findings of the Ld. CIT(A), taken t of the various observations made by th er, the appellant raised various issues ds (supra) and the submissions upon it, the he same for adjudication upon merits.
ts of the case it is obvious that the ot seized from the business premises of t pletely relied upon the mail back up take at the business premise of VV Group. Only the bank statements, the AO arrived at th as booked expenditure by way of bearer c many persons including Shri.Jayapal. th er at page No. 12 & 13 has observed attached to the mail communications “so d (3 XL Files-name starting as A2)” . Furthe ment summaries , details regarding paym purchase of Illiminte, Zircon, Rutile fort t
6-17 were culled out and tabulated [soft co
XL files and a word file name starting ng the course of as Appellate proceedings ract of file of A2 & A3 as narrated in the ned.
ndersigned on examination of the above d that the file “A2 XL” contained details su eque No, date, Name of bank, Name o cifically observed that no where in the st pellant company appeared warranting the ere actually made to the appellant compan

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material seized n the unabated n note of by us, he AO in the by way of e undersigned
While going incriminating he appellant.
en during the by analyzing he conclusion heque issued he AO in the d about the oft copy of all er, in respect ments to shri.
the FYs form opy of all files as A3] The has called for e assessment extract ( A2
uch as, Name of party. The atement, the e AO to infer y. The AO in the assessment o following in para
“ From the b regarding paym
, Zircon & Ruti and tabulated.
7.4.12
From t are not the part o search. While goi one column “Actu that no prudent usage in any narr of the considered acceptable. Furt sought to be com placed upon the search. In the i
153A and the AO created during po situs.
7.4.13
In a se nature of incrimi when it is esta material is undis such transaction of taxation while disclosed in the r

order upon the details of A3 XL file has 23 as under bank payment summaries discussed abo ments made to Shri. Jaypal for the purchas ile for the FYs from 2012-13 to 2016-17 we
”
he observation it can be inferred that suc of the seized material but it is a preparatio ng through such A3 XL file, it can be seen ual purpose of usage”. The undersigned is business person can narrate the actua ration of transaction. In view of this the u d opinion that reliance of A3XL file by t her, more particularly, when the asse mpleted u/s 153A of the Act , more relian e incriminating material seized during th nstant case search assessments were co hasplaced reliance upon such material th ost search proceedings rather than being arch u/s 132 of the Act a document seized nating material for making assessment u/
blished that the transaction narrated in sclosed or unexplained and the income e narrated in the seized material has escap e it should have been assessed to tax ight manner.
brought on record at this juncture that e addition(s) in the order passed u/s 153A o ck up mail and bank statements rather than terials seized during the course of search ts ( bankaccounts ) maintained by the th

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observed the ove , details se of Illiminte ere culled out ch A3 XL file on made post that there is s of the view al purpose of ndersigned is he AO is not ssments are nce should be he course of ompleted u/s at have been seized at the partakes the /s 153A, only n the seized earned out of ped the scope had it been the AO has of the Act, by n based upon . The regular ird parties at any stretch of im
PCIT VsParam Dia

agination cannot be treated as “incriminati ary Ltd ITA No. 37 /2021 (Delhi HC)]
O in the assessment order passed u/s 153
he details that were created post search an e as “incriminating material” completed the Act . In addition the so called back up ma e assessment order were not seized at the mpany. Obviously, the action of the AO in ating material and making additions in the ally incorrect and legally not tenable.
pellant during the course of appellate pro otice of the undersigned about the statem a (CA) who is looking after the account wer to question No. 117 has deposed as und hether the books of accounts are maintain
VV Mineral, VV Minerals, VV Mineral 100
ments Pvt. Ltd., VV Cements etc. And also of accounts, Bogus entries like Bogus ntract bills or any other purpose. Particu contract suppliers of VV concerns.
ounts of VVM, VW EOU and VVMS was m
Accounts of Vijay Cements and VVTI was m remises. I don't have any comments about ts and VVTI, since the same was han ance manager.
EOU and VVMS, payments to Jeyapal book es was not a genuine transaction. Self cheq f cash was booked under Casual Lab l expenses, Factory Overheads, Firewoo
. Certain expenses were actually incurre
I don't have details to quantify the sa

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ng material”[
3A of the Act nd attempted e assessment il relied upon e premises of n treating the hands of the oceedings has ment recorded ts of M/s. VV der:- ned VV Group
0% EOU, VV o state under expenses in larly, do you maintained at maintained in t the books of ndled by the ked as Casual que drawn for bour Salary, od, Coir and ed and some ame. Certain payments mad accounted in th
7.4.17
Further averred the follow
Q.119 Please that was prepa
EOU maintaine the same.
Ans.119. The Charges, Envir
Wages and Fir way of cash p bank account the name of management.
accounting ent

de to group companies for their spare p he books as Spares and Maintenance.
r in answer to Q No. 119, Ms. K.Chitra wing:- go through the annexure-1 of the sworn ared based on accounts statement of VV M ed by you at VVM Head Office, Tisayanvilla expenses booked under the heads Ca ronmental and Land Reclamation, Lorry Fre rewood expenses will also contain expense payments. The source of cash being withd by issuing self cheques for Rs. 9 lacs or R the Staffs. Cash withdrawn and handed
The management in turn provide the input tries to the he above statement deposed by Ms. Chitr ng after the accounts of VV Minerals, it oup of concerns were in the habit of bo ay of issuing bearer cheques in the m ypal of the appellant Company. As rightly e AO cannot selectively use a portion of th statement recorded form other persons to arrive at a meaningful legal conclusion i
O in the assessment order has relied upon arrived at a erroneous conclusion that t ved in unaccounted sales. In this regard in the case of ACIT v. Saveeta Institute of es [2012] 25 taxmann.com 138 (Chenna n made on the basis of the sworn statem e Act cannot be sustainable and further h

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purchase was a (CA) has rn statement, inerals 100%
ai and explain asual Labour eight, Factory es booked by drawals from Rs. 25 lacs in over to the ts for making ra, Chartered is confirmed ooking bogus many persons y claimed by he statement s during the n accordance a part of the the Appellant the Hon’ble f Medical and ai -Trib) has ment recorded held that the admission made not even be treat
7.4.20
In the 30taxmann.com1
that a statement the same is not Accordingly it wa the basis of swo followed the judg
[2010] 174 Taxm
Pullangode Rubbe has held that an but it cannot be open to the pe incorrect.
7.4.21
At the up with incrimin principle laid do
Obviously, in the evidence to suppo
7.4.22
Further of Madhya Prade way to approach accused excludin the case can be necessary to take
7.4.23
Applyin that the AO has upon mail back premise and utiliz appellant compan in making additio
ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::13 ::

u/s 132(4) by the Special Officer of the C ted as a valid piece of evidence.
case of Shri. Ganesh Trading Company v
170/214 Taxmann 262 (Jharkhand), the Co made u/s 132(4) of the Act is a piece of conclusive particularly because it is self-i s concluded that no liability could be faste orn statement. In arriving at this decisio ement in the case of KailashbenManharlal mann466( Guj) . Further the Apex Court i er Produce Co Ltd v State of Kerala [1973]
admission is an extremely important piece said that it is conclusive and further obser rson who makes the admission to sho outset it can be stated that where the adm nating evidence found in the course of own by the Apex Court will no longer absence of evidence an admission can no ort any addition.
r, the Apex Court in the case of Kasmira S sh AIR 1952 SC 159, has observed tha a case of confession is to marshal evidenc g the confession altogether from consider e decided independent of confession, the e help of confession.
ng this test in the case of the Appellant, it c s primarily relied upon the statement rec extracted during the course of search a zed the same in making the addition in the ny. Further the AO has selectively used th on under the head “unaccounted sales ” .

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College could v. CIT [2013]
ourt has held evidence but ncriminating.
ned solely on on, the Court
Choski v. CIT n the case of ] ITR 18 (SC) e of evidence rved that it is ow that it is mission is tied search, the r hold good.
longer be an Singh v. State at the correct ce against the ration. Where en, it is not can be stated corded based t third party hands of the e statements

be appreciated that during the course of V Minerals, the appellant was also subjecte se of search at the appellant premise the ross any evidence to support the claim t d Ilmenite, Zircon & Rutile to the tune neral group which were not accounted i and until a cogent and corroborative the appellant company is involved in su ent of Rs. 35.95 as visualized by the AO, count can only be presumptive and such w of the above discussion it is very clear tha ons under the head “unaccounted sales”
ized at third party premise, subsequent back-up, correlating it with statement ntained by the third party, relying upon rded, more particularly in the absen d incriminating material at the premise of t addition made by the AO amounting Rs.
013-14, 2014-15, 2015-16, 2016-17, 2
es is not legally sustainable and lacks merit ht of the above discussion, the various gr t upon the issue of unaccounted sales i
AO is hereby directed to delete the follow
68,240/-,
Rs.4,67,69,390/-,
Rs.6,
/-, Rs.5,16,72,336/- for assessment y
5-16,2016-17,2017-18
respectively es.”
he above findings of the Ld. CIT(A) us, and in the absence of a single io found from the premises of asses

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search in the ed to search.
search team hat appellant of Rs. 35.95
n appellant’s evidence is uppression of the addition addition can at the AO has on the basis post search t of banking n part of the nce of any the appellant.
35.95 Crores
2017-18 as .
rounds raised s treated as wing additions
,35,04,240/-, years 2013- made as , in light of the ota of cogent or ssee, impugned additions in the facts of So, we do not see any facts and circumstance order. Hence, the order by the Revenue are dism
8. Our above decisio the Revenue for the 203/Chny/2024 and the 9. In the result, all th

Order pronounced (जगदीश)
(JAGADISH)
लेखासद/ACCOUNTANT
चेई/Chennai,
दनांक/Dated: 09th April, 20
TLN, Sr.PS
आदेशक ितिलिपअेिषत/Copy

ITA Nos.19
(AYs 2
M/s. Indian Ocean Garnet
::15 ::

f the instant case has been deleted y reason to interfere with the same of this case, we do not find any of the Ld. CIT(A) is upheld and the missed.
on would apply with equal force to AYs 2014-15 to 2017-18 in I erefore these appeals are also dismis he appeals of the Revenue stands d d on the 09th day of April, 2025, in C MEMBER
(एबी टी.
(ABY T. VA

याियकसदय/JUDICIA
025. to:
nai / Madurai / Salem / Coimbatore.

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d by Ld CIT(A).
e, since on the infirmity in his grounds raised the appeals of TA Nos. 200- ssed.
ismissed.
Chennai.
/-
वक
)
ARKEY)
AL MEMBER