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

made to one person, Shri K Thambi, who was associated with the made to one person, Shri K Thambi, who was associated with the made to one person, Shri K Thambi, who was associated with the assessee. In the post search enquiries, the e assessee. In the post search enquiries, the e-mail back-up taken from the up taken from the premises of VV Group was analyzed in which it was found that several premises of VV Group was analyzed in which it was found that several premises of VV Group was analyzed in which it was found that several bearer cheques were issued in the bearer cheques were issued in the names of many persons, including Mr. names of many persons, including Mr. Jaypal, who was also associated with the assessee. The AO, after Jaypal, who was also associated with the assessee. The AO, after Jaypal, who was also associated with the assessee. The AO, after analyzing these material analyzing these materials seized from the premises of the VV Group and seized from the premises of the VV Group and the statement recorded from the key persons of the VV Group arrived at a the statement recorded from the key persons of the VV Group arrived at a the statement recorded from the key persons of the VV Group arrived at a conclusion that, the VV Group had paid that, the VV Group had paid Rs. 35,95,95,346/ Rs. 35,95,95,346/- to the assessee across FYs 2012 assessee across FYs 2012-13 to 2016-17 relevant to AYs 2013 17 relevant to AYs 2013-14 to 2017-18, towards unaccounted sales of 18, towards unaccounted sales of Ilmenite. On the basis of such . On the basis of such incriminating material seized from the premises of VV Group and th incriminating material seized from the premises of VV Group and th incriminating material seized from the premises of VV Group and the sworn statements recorded in the course of search, the AO issued notices sworn statements recorded in the course of search, the AO issued notices sworn statements recorded in the course of search, the AO issued notices u/s 153A of the Act for AYs 2013 u/s 153A of the Act for AYs 2013-14 to 2017-18, in which the following 18, in which the following additions on account of unaccounted sales made to VV Group were made: additions on account of unaccounted sales made to VV Group were made: additions on account of unaccounted sales made to VV Group were made:

AY AY Amount added (Rs.) 2013 2013-14 2,24,68,240/- 2014 2014-15 4,67,69,390/- 2015 2015-16 6,35,04,240/- 2016 2016-17 17,51,81,140/- 2017 2017-18 5,16,72,336/- to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. ::4 ::

Aggrieved by this order of the Ld. CIT(A), the Revenue is now in appeal Aggrieved by this order of the Ld. CIT(A), the Revenue is now in appeal Aggrieved by this order of the Ld. CIT(A), the Revenue is now in appeal before us. For the sake of convenience, the grounds before us. For the sake of convenience, the grounds raised in the lead raised in the lead case for AY 2013-14 is reproduced here 14 is reproduced here-under:

“1 The order of the learned Commissioner of Income Tax (Appeals) is 1 The order of the learned Commissioner of Income Tax (Appeals) is 1 The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. erroneous on facts of the case and in law.

2 The Ld.CIT(A) erred in deleting the addition of Rs.2,24,68,240/ 2 The Ld.CIT(A) erred in deleting the addition of Rs.2,24,68,240/ 2 The Ld.CIT(A) erred in deleting the addition of Rs.2,24,68,240/- made towards unaccounted sales quantified on the basis of mail unaccounted sales quantified on the basis of mail unaccounted sales quantified on the basis of mail backups seized during the course of search in the case of M/s.V V backups seized during the course of search in the case of M/s.V V backups seized during the course of search in the case of M/s.V V group.

2.1 The Ld CIT(A) erred in deleting the addition made towards 2.1 The Ld CIT(A) erred in deleting the addition made towards 2.1 The Ld CIT(A) erred in deleting the addition made towards unaccounted Sales made to M/s. V.V.group of companies, though Sri. unaccounted Sales made to M/s. V.V.group of companies, though Sri. unaccounted Sales made to M/s. V.V.group of companies, though Sri. Ramesh, Managing director of assessee company admitted in his sworn sh, Managing director of assessee company admitted in his sworn sh, Managing director of assessee company admitted in his sworn statement that the assessee company made sales to M/s.V V group of statement that the assessee company made sales to M/s.V V group of statement that the assessee company made sales to M/s.V V group of companies through Shri.Thangaraj @ Jayapal, employee of assessee companies through Shri.Thangaraj @ Jayapal, employee of assessee companies through Shri.Thangaraj @ Jayapal, employee of assessee company and such sales were partly accounted in the books of company and such sales were partly accounted in the books of company and such sales were partly accounted in the books of the to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd.

::5 :: assessee and consideration for unaccounted sales was received in the assessee and consideration for unaccounted sales was received in the assessee and consideration for unaccounted sales was received in the form of cash.

2.2 The Ld.CIT(A) failed to appreciate that the statement of Sri. 2.2 The Ld.CIT(A) failed to appreciate that the statement of Sri. 2.2 The Ld.CIT(A) failed to appreciate that the statement of Sri. Ramesh was further strengthened by the sworn statement of Ramesh was further strengthened by the sworn statement of Ramesh was further strengthened by the sworn statement of Shri.Thangaraj dated 02/02/2019, in which he Shri.Thangaraj dated 02/02/2019, in which he stated that he had stated that he had received uncrossed cheques from M/s.VV group and cash withdrawn received uncrossed cheques from M/s.VV group and cash withdrawn received uncrossed cheques from M/s.VV group and cash withdrawn were returned to Managing partners of VV group. But Shri. Thangaraj were returned to Managing partners of VV group. But Shri. Thangaraj were returned to Managing partners of VV group. But Shri. Thangaraj could not provide any evidence to substantiate returning of cash as could not provide any evidence to substantiate returning of cash as could not provide any evidence to substantiate returning of cash as such.

2.3 The Ld.CIT(A) erred in hol 2.3 The Ld.CIT(A) erred in holding that the addition towards ding that the addition towards unaccounted cash sales of Ilmenite, Zircon & Rutile was made on the unaccounted cash sales of Ilmenite, Zircon & Rutile was made on the unaccounted cash sales of Ilmenite, Zircon & Rutile was made on the basis of mail backups seized from third party premises and not on the basis of mail backups seized from third party premises and not on the basis of mail backups seized from third party premises and not on the basis of any incriminating materials found in the premises of the basis of any incriminating materials found in the premises of the basis of any incriminating materials found in the premises of the assessee company, wit assessee company, without appreciating that materials seized from hout appreciating that materials seized from third party premises contain Information relating to the assessee. third party premises contain Information relating to the assessee. third party premises contain Information relating to the assessee. Since the assessee's premises was also covered during search on the Since the assessee's premises was also covered during search on the Since the assessee's premises was also covered during search on the strength of warrant of authorization issued in the name of assessee, strength of warrant of authorization issued in the name of assessee, strength of warrant of authorization issued in the name of assessee, the AO considered the addition towards unaccounted sales on the basis considered the addition towards unaccounted sales on the basis considered the addition towards unaccounted sales on the basis of said seized materials in the order u/s.143(3) r.w.s.153A. of said seized materials in the order u/s.143(3) r.w.s.153A.

2.4 The Ld.CIT(A) erred in failing to appreciate that there is no such 2.4 The Ld.CIT(A) erred in failing to appreciate that there is no such 2.4 The Ld.CIT(A) erred in failing to appreciate that there is no such restrictive interpretation in the Section 132(4A) and Sec.292 restrictive interpretation in the Section 132(4A) and Sec.292 restrictive interpretation in the Section 132(4A) and Sec.292C that the presumption of correctness are applicable only in respect of the books presumption of correctness are applicable only in respect of the books presumption of correctness are applicable only in respect of the books of accounts/documents seized in the premises of searched person and of accounts/documents seized in the premises of searched person and of accounts/documents seized in the premises of searched person and not from third party. not from third party.

3 For these grounds and any other ground including amendment of 3 For these grounds and any other ground including amendment of 3 For these grounds and any other ground including amendment of grounds that may be grounds that may be raised during the course of the appeal raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and proceedings, the order of learned CIT(Appeals) may be set aside and proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. that of the Assessing Officer be restored.”

According to the Ld. CIT, DR, it cannot be said that the incriminating According to the Ld. CIT, DR, it cannot be said that the incriminating According to the Ld. CIT, DR, it cannot be said that the incriminating material has to be found from the assessee’s premises alone. material has to be found from the assessee’s premises alone. material has to be found from the assessee’s premises alone. He contended that if any incriminating material is found during further contended that if any incriminating material is found during further contended that if any incriminating material is found during further investigation at the premises of third parties connected with the assessee, investigation at the premises of third parties connected with the assessee, investigation at the premises of third parties connected with the assessee, such material ought to be also treated as incriminating material found in such material ought to be also treated as incriminating material found in such material ought to be also treated as incriminating material found in the course of search upon the ass the course of search upon the assessee. He further argued that, though essee. He further argued that, though there was no direct evidence linking the email analysis found from the there was no direct evidence linking the email analysis found from the there was no direct evidence linking the email analysis found from the back-up of the electronic evidence with the assessee, but the fact that up of the electronic evidence with the assessee, but the fact that up of the electronic evidence with the assessee, but the fact that some of the details of the bearer cheques and email communications were some of the details of the bearer cheques and email communications were some of the details of the bearer cheques and email communications were addressed to one Mr. Jaypal, who was associated with the assessee, was ressed to one Mr. Jaypal, who was associated with the assessee, was ressed to one Mr. Jaypal, who was associated with the assessee, was reason enough to link the seized material and the contents therein with reason enough to link the seized material and the contents therein with reason enough to link the seized material and the contents therein with the assessee. Per contra, the Ld. AR of the assessee supported the the assessee. Per contra, the Ld. AR of the assessee supported the the assessee. Per contra, the Ld. AR of the assessee supported the findings of the Ld. CIT(A). findings of the Ld. CIT(A).

25.10.2018. In the course of search, certain incriminating m 25.10.2018. In the course of search, certain incriminating m 25.10.2018. In the course of search, certain incriminating material pertaining to the assessee were found from the premises of the VV Group. pertaining to the assessee were found from the premises of the VV Group. pertaining to the assessee were found from the premises of the VV Group.

The dispute in the present case revolves around the issue that, as to The dispute in the present case revolves around the issue that, as to The dispute in the present case revolves around the issue that, as to whether the AO could have legally made addition on the basis of whether the AO could have legally made addition on the basis of whether the AO could have legally made addition on the basis of un corroborated material found in the cou material found in the course of search from third party rse of search from third party premises in the assessments framed u/s 153A of the Act for the unabated premises in the assessments framed u/s 153A of the Act for the unabated premises in the assessments framed u/s 153A of the Act for the unabated years. It has now been well settled in law by the Hon’ble Supreme Court years. It has now been well settled in law by the Hon’ble Supreme Court years. It has now been well settled in law by the Hon’ble Supreme Court in the case of PCIT vsAbhisar Buildwell Abhisar Buildwell (P) Ltd. (454 ITR 212) (P) Ltd. (454 ITR 212) that, no addition can be made in unabated assessments in the absence of any can be made in unabated assessments in the absence of any can be made in unabated assessments in the absence of any incriminating material found in the course of search. The conclusion incriminating material found in the course of search. The conclusion incriminating material found in the course of search. The conclusion recorded by the Hon’ble Apex Court at Para 14 of their order is noted to recorded by the Hon’ble Apex Court at Para 14 of their order is noted to recorded by the Hon’ble Apex Court at Para 14 of their order is noted to be as follows:

“14. In view of the above and for the 14. In view of the above and for the reasons stated above, it is reasons stated above, it is concluded as under: concluded as under:

(i) that in case of search under section 132 or requisition under that in case of search under section 132 or requisition under that in case of search under section 132 or requisition under section 132A, the AO assumes the jurisdiction for block assessment section 132A, the AO assumes the jurisdiction for block assessment section 132A, the AO assumes the jurisdiction for block assessment under section 153A; under section 153A;

(ii) all pending assessments/reassessments shall stan all pending assessments/reassessments shall stan all pending assessments/reassessments shall stand abated;

(iii) in case any incriminating material is found/unearthed, even, in case any incriminating material is found/unearthed, even, in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the in case of unabated/completed assessments, the AO would assume the in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into jurisdiction to assess or reassess the 'total income' taking into jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unear consideration the incriminating material unearthed during the search thed during the search and the other material available with the AO including the income and the other material available with the AO including the income and the other material available with the AO including the income declared in the returns; and declared in the returns; and to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. ::8 ::

(iv) in case no incriminating material is unearthed during the in case no incriminating material is unearthed during the in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the search, the AO cannot assess or reassess taking into consideration the search, the AO cannot assess or reassess taking into consideration the other r r material material material in in in respect respect respect of of of completed completed completed assessments/unabated assessments/unabated assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments. Meaning thereby, in respect of completed/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any assessments, no addition can be made by the AO in absence of any assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section incriminating material found during the course of search under section incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the 32 or requisition under section 132A of the Act, 1961. However, the 32 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re completed/unabated assessments can be re-opened by the AO in opened by the AO in exercise of powers under sections 147/148 of the Act, subject to exercise of powers under sections 147/148 of the Act, subject to exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sect fulfilment of the conditions as envisaged/mentioned under sect fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. 147/148 of the Act and those powers are saved.”

assessee, the AO could not have considered the other material seized assessee, the AO could not have considered the other material seized assessee, the AO could not have considered the other material seized from the premises of the third party for making addition in the unabated from the premises of the third party for making addition in the unabated from the premises of the third party for making addition in the unabated assessments. The relevant findings of the Ld. CIT(A), taken note of by us, assessments. The relevant findings of the Ld. CIT(A), taken note of by us, assessments. The relevant findings of the Ld. CIT(A), taken note of by us, is as follows:

“7.4.10 In light o In light of the various observations made by the AO in the f the various observations made by the AO in the assessment order, the appellant raised various issues by way of assessment order, the appellant raised various issues by way of assessment order, the appellant raised various issues by way of additional grounds (supra) and the submissions upon it, the undersigned additional grounds (supra) and the submissions upon it, the undersigned additional grounds (supra) and the submissions upon it, the undersigned has taken up the same for adjudication upon merits. While going has taken up the same for adjudication upon merits. While going has taken up the same for adjudication upon merits. While going through the facts of the case it is obvious that the incriminating the facts of the case it is obvious that the incriminating the facts of the case it is obvious that the incriminating materials were not seized from the business premises of the appellant. materials were not seized from the business premises of the appellant. materials were not seized from the business premises of the appellant. The AO has completely relied upon the mail back up taken during the The AO has completely relied upon the mail back up taken during the The AO has completely relied upon the mail back up taken during the course of search at the business premise of VV Group. Onl course of search at the business premise of VV Group. Only by analyzing y by analyzing the back up and the bank statements, the AO arrived at the conclusion the back up and the bank statements, the AO arrived at the conclusion the back up and the bank statements, the AO arrived at the conclusion that VV group has booked expenditure by way of bearer cheque issued that VV group has booked expenditure by way of bearer cheque issued that VV group has booked expenditure by way of bearer cheque issued in the name of many persons including Shri.Jayapal. the AO in the in the name of many persons including Shri.Jayapal. the AO in the in the name of many persons including Shri.Jayapal. the AO in the assessment order at page No. 12 & 13 assessment order at page No. 12 & 13 has observed about the has observed about the transaction files attached to the mail communications “ transaction files attached to the mail communications “soft copy of all soft copy of all files are enclosed (3 XL Files files are enclosed (3 XL Files-name starting as A2)” . Further, in respect . Further, in respect of the bank payment summaries , details regarding payments to shri. of the bank payment summaries , details regarding payments to shri. of the bank payment summaries , details regarding payments to shri. Jayapal for the p Jayapal for the purchase of Illiminte, Zircon, Rutile fort the FYs form urchase of Illiminte, Zircon, Rutile fort the FYs form 2012-13 to 12016 13 to 12016-17 were culled out and tabulated [soft copy of all files 17 were culled out and tabulated [soft copy of all files are enclosed (6XL files and a word file name starting as A3] The are enclosed (6XL files and a word file name starting as A3] The are enclosed (6XL files and a word file name starting as A3] The undersigned during the course of as Appellate proceedings has undersigned during the course of as Appellate proceedings has undersigned during the course of as Appellate proceedings has called for from the AO extract of file of A2 & A3 as narrated in the assessment from the AO extract of file of A2 & A3 as narrated in the assessment from the AO extract of file of A2 & A3 as narrated in the assessment order and examined. order and examined.

7.4.11 The undersigned on examination of the above extract ( A2 The undersigned on examination of the above extract ( A2 The undersigned on examination of the above extract ( A2 file) has observed that the file “A2 XL” contained details such as, Name file) has observed that the file “A2 XL” contained details such as, Name file) has observed that the file “A2 XL” contained details such as, Name of account , Cheq of account , Cheque No, date, Name of bank, Name of party. The ue No, date, Name of bank, Name of party. The undersigned specifically observed that no where in the statement, the undersigned specifically observed that no where in the statement, the undersigned specifically observed that no where in the statement, the name of the appellant company appeared warranting the AO to infer name of the appellant company appeared warranting the AO to infer name of the appellant company appeared warranting the AO to infer that payments were actually made to the appellant company. The AO in that payments were actually made to the appellant company. The AO in that payments were actually made to the appellant company. The AO in to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd.

::10 :: the assessment order upon the details of A3 XL file has observed the assessment order upon the details of A3 XL file has observed the assessment order upon the details of A3 XL file has observed the following in para 23 as under following in para 23 as under “ From the bank payment summaries discussed above , details “ From the bank payment summaries discussed above , details “ From the bank payment summaries discussed above , details regarding payments made to Shri. Jaypal for the purchase of Illiminte regarding payments made to Shri. Jaypal for the purchase of Illiminte regarding payments made to Shri. Jaypal for the purchase of Illiminte , Zircon & Rutile for the FYs , Zircon & Rutile for the FYs from 2012-13 to 2016-17 were culled out 17 were culled out and tabulated.” and tabulated.”

7.4.12 From the observation it can be inferred that such A3 XL file From the observation it can be inferred that such A3 XL file From the observation it can be inferred that such A3 XL file are not the part of the seized material but it is a preparation made post are not the part of the seized material but it is a preparation made post are not the part of the seized material but it is a preparation made post search. While going through such A3 XL file, it can be see search. While going through such A3 XL file, it can be seen that there is n that there is one column “Actual purpose of usage”. The undersigned is of the view one column “Actual purpose of usage”. The undersigned is of the view one column “Actual purpose of usage”. The undersigned is of the view that no prudent business person can narrate the actual purpose of that no prudent business person can narrate the actual purpose of that no prudent business person can narrate the actual purpose of usage in any narration of transaction. In view of this the undersigned is usage in any narration of transaction. In view of this the undersigned is usage in any narration of transaction. In view of this the undersigned is of the considered opinion tha of the considered opinion that reliance of A3XL file by the AO is not t reliance of A3XL file by the AO is not acceptable. Further, more particularly, when the assessments are acceptable. Further, more particularly, when the assessments are acceptable. Further, more particularly, when the assessments are sought to be completed u/s 153A of the Act , more reliance should be sought to be completed u/s 153A of the Act , more reliance should be sought to be completed u/s 153A of the Act , more reliance should be placed upon the incriminating material seized during the course of placed upon the incriminating material seized during the course of placed upon the incriminating material seized during the course of search. In the instant case search assessments were completed u/s the instant case search assessments were completed u/s the instant case search assessments were completed u/s 153A and the AO hasplaced reliance upon such material that have been 153A and the AO hasplaced reliance upon such material that have been 153A and the AO hasplaced reliance upon such material that have been created during post search proceedings rather than being seized at the created during post search proceedings rather than being seized at the created during post search proceedings rather than being seized at the situs.

7.4.13 In a search u/s 132 of the Act a document In a search u/s 132 of the Act a document seized partakes the seized partakes the nature of incriminating material for making assessment u/s 153A, only nature of incriminating material for making assessment u/s 153A, only nature of incriminating material for making assessment u/s 153A, only when it is established that the transaction narrated in the seized when it is established that the transaction narrated in the seized when it is established that the transaction narrated in the seized material is undisclosed or unexplained and the income earned out of material is undisclosed or unexplained and the income earned out of material is undisclosed or unexplained and the income earned out of such transaction narrated in th such transaction narrated in the seized material has escaped the scope e seized material has escaped the scope of taxation while it should have been assessed to tax had it been of taxation while it should have been assessed to tax had it been of taxation while it should have been assessed to tax had it been disclosed in the right manner. disclosed in the right manner.

7.4.14 It is brought on record at this juncture that the AO has It is brought on record at this juncture that the AO has It is brought on record at this juncture that the AO has contemplated the addition(s) in the order passed u/s 1 contemplated the addition(s) in the order passed u/s 153A of the Act, by 53A of the Act, by analysing the back up mail and bank statements rather than based upon analysing the back up mail and bank statements rather than based upon analysing the back up mail and bank statements rather than based upon incriminating materials seized during the course of search. The regular incriminating materials seized during the course of search. The regular incriminating materials seized during the course of search. The regular books of accounts ( bankaccounts ) maintained by the third parties at books of accounts ( bankaccounts ) maintained by the third parties at books of accounts ( bankaccounts ) maintained by the third parties at to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd.

::11 :: any stretch of imaginatio any stretch of imagination cannot be treated as “incriminating material”[ n cannot be treated as “incriminating material”[ PCIT VsParam Diary Ltd /2021 (Delhi HC)] PCIT VsParam Diary Ltd /2021 (Delhi HC)]

7.4.15 The AO in the assessment order passed u/s 153A of the Act The AO in the assessment order passed u/s 153A of the Act The AO in the assessment order passed u/s 153A of the Act has relied upon the details that were created post search and attempted has relied upon the details that were created post search and attempted has relied upon the details that were created post search and attempted to treat the same to treat the same as “incriminating material” completed the assessment as “incriminating material” completed the assessment u/s 153A of the Act . In addition the so called back up mail relied upon u/s 153A of the Act . In addition the so called back up mail relied upon u/s 153A of the Act . In addition the so called back up mail relied upon by the AO in the assessment order were not seized at the premises of by the AO in the assessment order were not seized at the premises of by the AO in the assessment order were not seized at the premises of the appellant company. Obviously, the action of the AO in the appellant company. Obviously, the action of the AO in the appellant company. Obviously, the action of the AO in treating the same as incriminating material and making additions in the hands of the same as incriminating material and making additions in the hands of the same as incriminating material and making additions in the hands of the appellant is factually incorrect and legally not tenable. appellant is factually incorrect and legally not tenable.

7.4.16 The appellant during the course of appellate proceedings has The appellant during the course of appellate proceedings has The appellant during the course of appellate proceedings has brought to the notice of the undersigned abo brought to the notice of the undersigned about the statement recorded ut the statement recorded from Ms. K.Chitra (CA) who is looking after the accounts of M/s. VV from Ms. K.Chitra (CA) who is looking after the accounts of M/s. VV from Ms. K.Chitra (CA) who is looking after the accounts of M/s. VV Minerals in answer to question No. 117 has deposed as under: Minerals in answer to question No. 117 has deposed as under: Minerals in answer to question No. 117 has deposed as under:- Q.117State whether the books of accounts are maintained VV Group Q.117State whether the books of accounts are maintained VV Group Q.117State whether the books of accounts are maintained VV Group concerns like VV Mineral, VV Minerals, VV Mineral 100% EOU, VV concerns like VV Mineral, VV Minerals, VV Mineral 100% EOU, VV concerns like VV Mineral, VV Minerals, VV Mineral 100% EOU, VV Titanium Pigments Pvt. Ltd., VV Cements etc. And also state under Titanium Pigments Pvt. Ltd., VV Cements etc. And also state under Titanium Pigments Pvt. Ltd., VV Cements etc. And also state under which heads of accounts, Bogus entries like Bogus expenses in which heads of accounts, Bogus entries like Bogus expenses in which heads of accounts, Bogus entries like Bogus expenses in respect of Contract bills or any other purpose. Particularly, do you respect of Contract bills or any other purpose. Particularly, do you respect of Contract bills or any other purpose. Particularly, do you know any sub contract suppliers of VV concerns. know any sub contract suppliers of VV concerns. Ans.117: Accounts of VVM, VW EOU and VVMS was maintained at Ans.117: Accounts of VVM, VW EOU and VVMS was maintained at Ans.117: Accounts of VVM, VW EOU and VVMS was maintained at Head Office. Accounts of Vijay Cements and VVTI was maintained in Head Office. Accounts of Vijay Cements and VVTI was maintained in Head Office. Accounts of Vijay Cements and VVTI was maintained in their factory premises. I don't have any comments about the books of premises. I don't have any comments about the books of premises. I don't have any comments about the books of Vijay Cements and VVTI, since the same was handled by the Vijay Cements and VVTI, since the same was handled by the Vijay Cements and VVTI, since the same was handled by the respective finance manager. respective finance manager. Wrt VVM, VVEOU and VVMS, payments to Jeyapal booked as Casual Wrt VVM, VVEOU and VVMS, payments to Jeyapal booked as Casual Wrt VVM, VVEOU and VVMS, payments to Jeyapal booked as Casual Labour Charges was not a genuine transaction. Self c Labour Charges was not a genuine transaction. Self cheque drawn for heque drawn for withdrawal of cash was booked under Casual Labour Salary, withdrawal of cash was booked under Casual Labour Salary, withdrawal of cash was booked under Casual Labour Salary, Environmental expenses, Factory Overheads, Firewood, Coir and Environmental expenses, Factory Overheads, Firewood, Coir and Environmental expenses, Factory Overheads, Firewood, Coir and Coconut Shell. Certain expenses were actually incurred and some Coconut Shell. Certain expenses were actually incurred and some Coconut Shell. Certain expenses were actually incurred and some were booked. I don't have details to quantify the same. were booked. I don't have details to quantify the same. were booked. I don't have details to quantify the same. Certain to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd.

::12 :: payments made to group companies for their spare purchase was payments made to group companies for their spare purchase was payments made to group companies for their spare purchase was accounted in the books as Spares and Maintenance. accounted in the books as Spares and Maintenance. 7.4.17 Further in answer to Q No. 119, Further in answer to Q No. 119, Ms. K.Chitra (CA) Ms. K.Chitra (CA) has averred the following: averred the following:-

Q.119 Please go through the annexure Q.119 Please go through the annexure-1 of the sworn statement, 1 of the sworn statement, that was prepared based on accounts statement of VV Minerals 100% that was prepared based on accounts statement of VV Minerals 100% that was prepared based on accounts statement of VV Minerals 100% EOU maintained by you at VVM Head Office, Tisayanvillai and explain EOU maintained by you at VVM Head Office, Tisayanvillai and explain EOU maintained by you at VVM Head Office, Tisayanvillai and explain the same. Ans.119. The expenses booked under the heads Casu The expenses booked under the heads Casu The expenses booked under the heads Casual Labour Charges, Environmental and Land Reclamation, Lorry Freight, Factory Charges, Environmental and Land Reclamation, Lorry Freight, Factory Charges, Environmental and Land Reclamation, Lorry Freight, Factory Wages and Firewood expenses will also contain expenses booked by Wages and Firewood expenses will also contain expenses booked by Wages and Firewood expenses will also contain expenses booked by way of cash payments. The source of cash being withdrawals from way of cash payments. The source of cash being withdrawals from way of cash payments. The source of cash being withdrawals from bank account by issuing self cheques for Rs. 9 la bank account by issuing self cheques for Rs. 9 lacs or Rs. 25 lacs in cs or Rs. 25 lacs in the name of the Staffs. Cash withdrawn and handed over to the the name of the Staffs. Cash withdrawn and handed over to the the name of the Staffs. Cash withdrawn and handed over to the management. The management in turn provide the inputs for making management. The management in turn provide the inputs for making management. The management in turn provide the inputs for making accounting entries to the accounting entries to the 7.4.18 From the above statement deposed by Ms. Chitra, Chartered From the above statement deposed by Ms. Chitra, Chartered From the above statement deposed by Ms. Chitra, Chartered Accountant looking after the accounts of VV Minerals, it is confirmed ng after the accounts of VV Minerals, it is confirmed ng after the accounts of VV Minerals, it is confirmed that the VV Group of concerns were in the habit of booking bogus that the VV Group of concerns were in the habit of booking bogus that the VV Group of concerns were in the habit of booking bogus expenses by way of issuing bearer cheques in the many persons expenses by way of issuing bearer cheques in the many persons expenses by way of issuing bearer cheques in the many persons including Shri Jaypal of the appellant Company. As rightly claimed by including Shri Jaypal of the appellant Company. As rightly claimed by including Shri Jaypal of the appellant Company. As rightly claimed by the appellant the AO cannot selectively use a portion of the statement appellant the AO cannot selectively use a portion of the statement appellant the AO cannot selectively use a portion of the statement by ignoring the statement recorded form other persons during the by ignoring the statement recorded form other persons during the by ignoring the statement recorded form other persons during the course of search to arrive at a meaningful legal conclusion in accordance course of search to arrive at a meaningful legal conclusion in accordance course of search to arrive at a meaningful legal conclusion in accordance with the law.

7.4.19 The AO in the assessment orde The AO in the assessment order has relied upon a part of the r has relied upon a part of the statement and arrived at a erroneous conclusion that the Appellant statement and arrived at a erroneous conclusion that the Appellant statement and arrived at a erroneous conclusion that the Appellant company is involved in unaccounted sales. In this regard t company is involved in unaccounted sales. In this regard t company is involved in unaccounted sales. In this regard the Hon’ble Chennai Tribunal in the case of ACIT v. Saveeta Institute of Medical and Chennai Tribunal in the case of ACIT v. Saveeta Institute of Medical and Chennai Tribunal in the case of ACIT v. Saveeta Institute of Medical and Technical Sciences [2012] 25 taxmann.com 138 (Chennai nces [2012] 25 taxmann.com 138 (Chennai nces [2012] 25 taxmann.com 138 (Chennai -Trib) has held that addition made on the basis of the sworn statement recorded held that addition made on the basis of the sworn statement recorded held that addition made on the basis of the sworn statement recorded u/s 132(4) of the Act cannot be sustainable and further held that the u/s 132(4) of the Act cannot be sustainable and further held that the u/s 132(4) of the Act cannot be sustainable and further held that the to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd.

::13 :: admission made u/s 132(4) by the Special Officer of the College co admission made u/s 132(4) by the Special Officer of the College co admission made u/s 132(4) by the Special Officer of the College could not even be treated as a valid piece of evidence. not even be treated as a valid piece of evidence.

7.4.20 In the case of Shri. Ganesh Trading Company v. CIT [2013] In the case of Shri. Ganesh Trading Company v. CIT [2013] In the case of Shri. Ganesh Trading Company v. CIT [2013] 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held 30taxmann.com170/214 Taxmann 262 (Jharkhand), the Court has held that a statement made u/s 132(4) of the Act is a piece of evidence but that a statement made u/s 132(4) of the Act is a piece of evidence but that a statement made u/s 132(4) of the Act is a piece of evidence but the same is not conclusive particularly because it is self he same is not conclusive particularly because it is self-incriminating. incriminating. Accordingly it was concluded that no liability could be fastened solely on Accordingly it was concluded that no liability could be fastened solely on Accordingly it was concluded that no liability could be fastened solely on the basis of sworn statement. In arriving at this decision, the Court the basis of sworn statement. In arriving at this decision, the Court the basis of sworn statement. In arriving at this decision, the Court followed the judgement in the case of followed the judgement in the case of KailashbenManharlalChoski v. CIT KailashbenManharlalChoski v. CIT [2010] 174 Taxmann466( Guj) . Further the Apex Court in the case of [2010] 174 Taxmann466( Guj) . Further the Apex Court in the case of [2010] 174 Taxmann466( Guj) . Further the Apex Court in the case of Pullangode Rubber Produce Co Ltd v State of Kerala [1973] ITR 18 (SC) Pullangode Rubber Produce Co Ltd v State of Kerala [1973] ITR 18 (SC) Pullangode Rubber Produce Co Ltd v State of Kerala [1973] ITR 18 (SC) has held that an admission is an extremely important piece of evidence has held that an admission is an extremely important piece of evidence has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and further observed that it is t be said that it is conclusive and further observed that it is t be said that it is conclusive and further observed that it is open to the person who makes the admission to show that it is open to the person who makes the admission to show that it is open to the person who makes the admission to show that it is incorrect.

7.4.21 At the outset it can be stated that where the admission is tied At the outset it can be stated that where the admission is tied At the outset it can be stated that where the admission is tied up with incriminating evidence found in the cou up with incriminating evidence found in the course of search, the rse of search, the principle laid down by the Apex Court will no longer hold good. principle laid down by the Apex Court will no longer hold good. principle laid down by the Apex Court will no longer hold good. Obviously, in the absence of evidence an admission can no longer be an Obviously, in the absence of evidence an admission can no longer be an Obviously, in the absence of evidence an admission can no longer be an evidence to support any addition. evidence to support any addition.

7.4.22 Further, the Apex Court in the case of Kasmira Singh v. Stat Further, the Apex Court in the case of Kasmira Singh v. Stat Further, the Apex Court in the case of Kasmira Singh v. State of Madhya Pradesh AIR 1952 SC 159, has observed that the correct of Madhya Pradesh AIR 1952 SC 159, has observed that the correct of Madhya Pradesh AIR 1952 SC 159, has observed that the correct way to approach a case of confession is to marshal evidence against the way to approach a case of confession is to marshal evidence against the way to approach a case of confession is to marshal evidence against the accused excluding the confession altogether from consideration. Where accused excluding the confession altogether from consideration. Where accused excluding the confession altogether from consideration. Where the case can be decided independent of confes the case can be decided independent of confession, then, it is not sion, then, it is not necessary to take help of confession. necessary to take help of confession.

7.4.23 Applying this test in the case of the Appellant, it can be stated Applying this test in the case of the Appellant, it can be stated Applying this test in the case of the Appellant, it can be stated that the AO has primarily relied upon the statement recorded based that the AO has primarily relied upon the statement recorded based that the AO has primarily relied upon the statement recorded based upon mail back extracted during the course of search at upon mail back extracted during the course of search at upon mail back extracted during the course of search at third party premise and utilized the same in making the addition in the hands of the premise and utilized the same in making the addition in the hands of the premise and utilized the same in making the addition in the hands of the appellant company. Further the AO has selectively used the statements appellant company. Further the AO has selectively used the statements appellant company. Further the AO has selectively used the statements in making addition under the head “unaccounted sales ” . in making addition under the head “unaccounted sales ” . to 203 199 to 203/Chny/2024 (AYs 20 2013-14 to 2017-18) M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. M/s. Indian Ocean Garnet Sands Co. Pvt. Ltd. ::14 ::

7.4.24 It may be appreciated that during th It may be appreciated that during the course of search in the e course of search in the group case of VV Minerals, the appellant was also subjected to search. group case of VV Minerals, the appellant was also subjected to search. group case of VV Minerals, the appellant was also subjected to search. During the course of search at the appellant premise the search team During the course of search at the appellant premise the search team During the course of search at the appellant premise the search team has not come across any evidence to support the claim that appellant has not come across any evidence to support the claim that appellant has not come across any evidence to support the claim that appellant has actually sold Il has actually sold Ilmenite, Zircon & Rutile to the tune of Rs. 35.95 menite, Zircon & Rutile to the tune of Rs. 35.95 Crores to VV Mineral group which were not accounted in appellant’s Crores to VV Mineral group which were not accounted in appellant’s Crores to VV Mineral group which were not accounted in appellant’s books. Unless and until a cogent and corroborative evidence is books. Unless and until a cogent and corroborative evidence is books. Unless and until a cogent and corroborative evidence is established that the appellant company is involved in suppression of established that the appellant company is involved in suppression of established that the appellant company is involved in suppression of sales to the extent of Rs. 35.95 as visualized by the AO, the addition to the extent of Rs. 35.95 as visualized by the AO, the addition to the extent of Rs. 35.95 as visualized by the AO, the addition made by the account can only be presumptive and such addition can made by the account can only be presumptive and such addition can made by the account can only be presumptive and such addition can only fictitious.

7.4.25 In view of the above discussion it is very clear that the AO has In view of the above discussion it is very clear that the AO has In view of the above discussion it is very clear that the AO has made the additions under the head “ made the additions under the head “unaccounted sales” on the basis unaccounted sales” on the basis mail-back up seized at third party premise, subsequent post search back up seized at third party premise, subsequent post search back up seized at third party premise, subsequent post search analysis of mail back analysis of mail back-up, correlating it with statement of banking up, correlating it with statement of banking transactions maintained by the third party, relying upon part of the transactions maintained by the third party, relying upon part of the transactions maintained by the third party, relying upon part of the statement statement recorded, recorded, m more ore particularly particularly in in the the absence absence of of any any corroborative and incriminating material at the premise of the appellant. corroborative and incriminating material at the premise of the appellant. corroborative and incriminating material at the premise of the appellant. Accordingly, the addition made by the AO amounti Accordingly, the addition made by the AO amounting Rs. 35.95 Crores ng Rs. 35.95 Crores for the AYs 2013 2013-14, 2014-15, 2015-16, 2016-17, 2017 2017-18 as unaccounted sales is not legally sustainable and lacks merit. unaccounted sales is not legally sustainable and lacks merit. unaccounted sales is not legally sustainable and lacks merit.

7.4.26 In light of the above discussion, the various grounds raised In light of the above discussion, the various grounds raised In light of the above discussion, the various grounds raised by the appellant upon the issue of unaccounted sales is treated as by the appellant upon the issue of unaccounted sales is treated as by the appellant upon the issue of unaccounted sales is treated as allowed and the AO is hereby directed to del allowed and the AO is hereby directed to delete the following additions the following additions of Rs.2,24,68,240/ 2,24,68,240/-, Rs.4,67,69,390/-, , Rs.6,35,04,240/ Rs.6,35,04,240/-, Rs.17,51,81,140/ Rs.17,51,81,140/-, Rs.5,16,72,336/- for assessment years 2013 for assessment years 2013- 14,2014-15,2015 15,2015-16,2016-17,2017-18 18 respectively respectively made made as as unaccounted sales.” unaccounted sales.”

So, we do not see any reason to interfere with the same we do not see any reason to interfere with the same we do not see any reason to interfere with the same, since on the facts and circumstance of this case, facts and circumstance of this case, we do not find any infirmity in his do not find any infirmity in his order. Hence, the order of the Ld. CIT(A) is upheld and the grounds raised order. Hence, the order of the Ld. CIT(A) is upheld and the grounds raised order. Hence, the order of the Ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed. by the Revenue are dismissed.

Order pronounced on the 09th day of April, 2025, in Chennai. Order pronounced on the , in Chennai.