DEPUTY COMMISSIONER OF INCOME TAX, NUMGAMBAKKAM vs. JAGANNATHAN SEKAT, CHENNAI

आयकर अपीलीय अिधकरण, ‘ए’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘A’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं

ी जगदीश, लेखा सद के सम

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

आयकरअपीलसं./ITA No.2220/Chny/2024
िनधारणवष/Assessment Year: 2016-17

The DCIT,
Central Circle-2(4),
Chennai.
v.
Shri Jagannathan Sekat,
No.5 Fifth Street,
Gopalapuram,
Chennai-600 086. [PAN: BCDPS 4688 G]
(अपीलाथ/Appellant)

(यथ/Respondent)

Department by :
Mr. Nilay Baran Som, CIT
Assessee by :
Mr. R. Venkata Raman, CA
सुनवाईक तारीख/Date of Hearing
:
03.12.2024
घोषणाक तारीख /Date of Pronouncement
:
28.02.2025

आदेश / O R D E R
PER ABY T. VARKEY, JM:

This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-19, Chennai, (hereinafter in short ‘the Ld. CIT(A)’), dated 24.06.2024 for the Assessment Year
(hereinafter in short ‘AY’) 2016-17. 2. The Revenue has raised the following legal grounds:
1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.

2 The Ld.CIT(A) erred i provisions of section 1
statements recorded u/
Ramamoorthy and Shri drawing up a satisfactio assessee on 25.01.2021
3. The Ld.CIT(A) erred the assessee has made the purchase of shares and completed the asse unexplained investment
143(3) r.w.s. 153C of t recorded in Page No. 26
which were seized vide had made payments fo
M/s. Jothirmayee Estate of accounts..
4. The Ld.CIT(A) erred a third party and not h not be used to draw
Section 132(4A) r.w.s contents of documents such presumption is r evidence or explanation
5. The Ld.CIT(A) erred
Javvaji Ramanjenyulu &
decision in A. J. Ram
(HC)/(2022) 139 taxma lay on the appellant to earlier at the time of su supported by a stron recorded under duress evidence to come to th compulsion for appellan
6. The Ld CIT(A)'s reli
(2011) 140 TTJ 233 (P distinguishable to the incriminating material d respect of which notice instant case, the AO ha in seized documents as of Sh Ramamoorthy imp
7. The Ld CIT(A)'s relia
No 6580 of 2021 dated
153C of the Act had material is erroneous present case as the sat specified the specific ma further corroborated as ITA No.2220/Chny/
Shr
:: 2 ::

in holding that the AO lacked juri iction to inv
53C of the Act when the AO relying upon th s 132(4) and 131(1A) of the Act from Shri Bala
Javvaji Ramanjenyulu, arrived at the satisfact on note & Notice u/s.153C of IT Act was issue
1. in not appreciating the fact that the AO conclu an investment to the tune of Rs.51.75 Crores s of R.V. Sathyanarayana in M/s.. Jothirmayee essment by treating the amount of Rs.51.75 C t u/s 69 r.w.s. 115BBE of the Act and passed o he Act on 30.09.2021 based on seized materia
67 (backside) and in Pages 276-279 of the loos e ANN/NN/JR/LS/S. which revealed that the a r purchasing shares held by Shri. R. Satyanara es, over and above the amounts disclosed in th in observing that the material found in the pre having entries in the handwriting of the assess adverse inference in the case of the assesse
292C of IT Act provides for a presumption found during the course of search are true and rebuttable, the onus is on the assessee to ns to rebut the same.
in holding that the statements were retracted
& hold no value is wrong in view of Madras Hig esh Kumar v. Dy. CIT (2022) 441 ITR 495
ann.com 190 (Mad.), where it has held that "the show that the admission made by him in the st urvey was wrong. Such retraction, however, sh g evidence stating that the earlier stateme and coercion, and this has to have certain he conclusion indicating that there was an ele nt to make such statement."
iance on Singhad Technical Education Society
Pune) is erroneous as the facts of the cited c extent that in that case, it had been found did not establish correlation with any assessmen u/s 153C of IT Act had been issued in that case as in the satisfaction note clearly referred to the well as further corroboration in the form of sta plicating the payments made for acquiring share ance on the case of PCIT v Abhisar Buildwell P L
24.4.2023 in support of his observation that o been passed without relying upon any incrim as the decision is not applicable to the facts tisfaction note drawn up by the AO in this cas aterial seized during the course of the search as per statements recorded from Sh Ramamoorthy

/2024 (AY 2016-17) ri Jagannathan Sekat voke the he sworn krishnan ion after ed to the ded that towards e Estates
Crores as order u/s l notings se sheet, assessee ayana in he books mises of ee could ee when that the d though furnish d by Shri gh Court
5 (Mad.) e burden tatement hould be ent was definite ement of y v ACIT case are that the t year in e. In the e entries atements es.
Ltd in CA order u/s minating s of the e clearly s well as y.

and any other grounds including amendment of ring the course of the appeal proceedings, the may be set aside and that of the Assessing O ase as noted are that, the assessee n a firm, M/s SRS Mining, which is heavy duty vehicles. For the relevan his return of income on 30.03.2018
970/-. In the meanwhile, search act upon M/s SRS Mining on 08.12.201
er. Pursuant to the said search, not the relevant year on 18.08.2017, ed his return of income declaring th
139 of the Act. It is noted that t r scrutiny and the assessment was de order dated 06.02.2020 at to er making an addition of Rs r, the assessee is noted to have disp our notice that, there was another s conducted in the group cases
Javvaji
Ramanjenyulu,
Shri s on 21.02.2019. In the course of ji Ramanjenyulu, loose papers were /2024 (AY 2016-17) ri Jagannathan Sekat grounds order of fficer be is an individual engaged in the t A.Y. 2016-17,
8 declaring total tion u/s 132 of 16, in which the tice u/s 153A of in response to e same sum as the case of the completed u/s otal income of .7,96,66,667/-.
puted the same search u/s 132
of Shri Danda
Balakrishnan search, at the e seized and ID

Marked ANN/NN/JR/LS/
recorded on Page No. 2
which was explained by 132(4) of the Act, to be Construction Co. and corroborate with their b he shall offer the same and his answer is noted
“ Q. No. 24
ANN/NN/JR/LS residential pre
Income Tax A Principal along and also certa same and exp
Ans. I have go regarding the Bhavya Const unable to reco has written do been made w accounts of al shall offer the if I am not abl
5. It was specifica
Ramanjenyulu from wh were found had nowher that these noting’s rela these noting’s may pert same later. In the cour
ITA No.2220/Chny/
Shr
:: 4 ::

/S. It was noted that certain notin
67 and 276 to 279 of these bunch o y Shri Javvaji Ramanjenyulu in his e discussion regarding sale of shares that, according to him, the n books of accounts and in case of an as his undisclosed income. The re to be as follows: -
I am showing you loose sheet documen
S/S in pg nos. 276 to 279 seized from emises during the course of search u/s 132
ct, 1961 containing certain amounts repre g with interest workings and also certain a ain amounts shown as paid. Kindly go thro lain the transactions.
one through the said documents carefully.
discussions regarding the sale of shares tructions company between the partners ognize the handwriting and I am not awa own the same. These are calculations tha which can be corroborated from the bo l shareholders. If the same cannot be expl amounts mentioned herein as undisclosed e to explain the same.”
lly brought to our notice that hose possession and control these re named the assessee or even remo ated to him. Rather, he had initial tain to his group and that he shall c rse of same search conducted at th

/2024 (AY 2016-17) ri Jagannathan Sekat g’s were found of loose papers, statement u/s s of M/s Bhavya noting’s would ny discrepancy, levant question nts vide m your
2 of the esenting amounts ugh the . This is of M/s s. I am are who at have ooks of ained, I income
, Shri Javvaji e loose sheets otely suggested ly averred that corroborate the he residence of Shri Balakrishnan Ram seized and the state recorded on 22.02.201
No. 26 as under:-
“Q 26. Althoug
65crores with of Rs.19 Crore
Ans. Shri J. S
Shri Sathyana
Estate) in cas has also paid cash and Rs. 5
cash in lieu of vendors in 20
crore by way channel. But w various dates.
6. The Authorized O above-mentioned loose seized from the reside above statement of S correlation between t statement u/s 131(1A)
05.07.2019. In this st have stated that, he h relating to M/s Bhavya noting’s were not in his unknown person and th said that, there are no ITA No.2220/Chny/
Shr
:: 5 ::

mamoorthy, some loose sheets w ment of Shri Balakrishnan Ram
9, wherein, he had inter alia repli gh you have agreed for the final settlemen the above parties, how did you agree for t es as per the MoU dated 22.09.2017. Sekar Reddy has given a sum of Rs. 26 c anyana to acquire 50% of share in Joyth sh and Rs.9 crores through banking chan a sum of Rs.8.5 crores to Shri Gandhi,
5 crores to Shri A.P. Nandakumar, MLA by f original contribution of Rs. 40 Lakhs paid
10 in the same way he has agreed to pay y of cash and Rs.19 Crores through b we have received only Rs. 13.10 crores b
”
Officer upon analysis of the noting’
sheets ANN/NN/JR/LS/S [Pages 26
nce of Shri Javvaji Ramanjenyulu
Shri Balakrishnan Ramamoorthy, the figures. He, therefore, agai
) of the Act from Shri Javvaji Ra atement, Shri Javvaji Ramanjenyu had mistakenly inferred the loose a Construction Co. According to hi s handwriting and may have been w herefore he could not explain its co details of payer or payee on the /2024 (AY 2016-17) ri Jagannathan Sekat ere found and amoorthy was ed to Question nt of Rs.
the sum crore to hirmaye nnel. He
MLA in y way of d to the y Rs.46
banking bank on ’s found in the 67, 276 to 279]
in light of the noted certain n recorded a manjenyulu on ulu is noted to noting’s to be m, these loose written by some ntents. He also said sheet and thus he is unable to m averred that, these no transactions. The relev under: -
“The loose sh before me onc the essential c are written by Payer or paye and finally the that is meanin the time of se statement tho as the under transactions o that my infere that was prov provided now
Further it may various mate business entit has some bu together with remotely corro can be assum members. In question rema personal trans to have any re
7. Again, it is obse
Ramanjenyulu had not that the scribblings fou details of payer or paye
08.07.2019, the Autho
Ramamoorthy regardin residence on 22.02.201
ITA No.2220/Chny/
Shr
:: 6 ::

make out the context of these notin oting’swere not related to him o ant explanation given by him, is n eets stated in the above paragraph having ce again for my comments a fresh. In this character of these loose sheets is such th y an unknown person and there are no de e and there are no details to whom it per ese does not provide any guidance or in ngful from the examination of the same. W earch the pressure under which I was giv ugh I could not recognize the hand writing line numbers I thought it could be rela f M/s. Bhavya Constructions which I now c ence is incorrect and I completely deny the ided at the time of search and the answer shall replace the same.
y be appreciated that during the course of rials have been seized pertaining to ties where I am either a partner or a dire siness interest. The review of all the m sheets mentioned in this question does n oborate to any kind of underlying transacti ed to have been undertaken by me or my other words, these loose sheets referred ain an unrelated and irrelevant to my busi sactions. Thus the sheets should not be re elevance to me.”
erved that, even in this statemen named the assessee/respondent or und on this loose sheet, which adm ee, pertained to the assessee. Late orized Officer again confronted Sh ng his deposition which was re
19 wherein he had averred that the /2024 (AY 2016-17) ri Jagannathan Sekat ng’s. He further or his business noted to be as g placed s regard hat they etails of tains to nference
While at ving the as well ating to onclude answer r that is f search various ector or material ot even ion that y family in this iness or eckoned nt, Shri Javvaji had suggested mittedly had no er on, again on ri Balakrishnan ecorded at his e assessee had made cash payments required to provide
Ramamoorthy is noted t
“With regard purpose of a reiterate that only the inves the disputed double the am the very date
Ms. JME, on t agreement on entering the s sale advance o that is M/s. JM
60 crore withi from the sanct above the inv and another i crore. This ag the final settle per the agreem for Rs 30 core was settled t
November De calculated for amounting to of this 35 cror to RV Sathyna of cheques or Shri. Ramanje
K.C. Veerama
Tamilnadu) an acquire 50% s
Sekar Reddy brokerage/com
8. It is noted that implicated the assessee but no proof or evide authorized officer while
ITA No.2220/Chny/
Shr
:: 7 ::

to Shri Sathyananyana and oth evidence in this regard.
Shri to have responded as under:
to Rs 26 crore paid to RV Satynarayana cquiring his share in M/s. JME. I once dandaBrahamandam and R.V Sathynarya stors and they do not have any intention property. All along the investor demand mount of the investment made by them. He of the sale deed dated 4.03.2014 in the n the very same day they have executed t n 14.03.2014 for Rs. 60 Crores. At the ale agreement, in my favour I have also p of Rs 10 lakhs by of cash to the partnersh
ME. As per the sale agreement I have to ret n a period of 1 year or from the date of a tion plan from the appropriate authority. As estor DandeBrahamanadam invested Rs 1
nvestor Mrs. Sathyanaryana also invested greement being the logical conclusion for ement of Rs 35 crores to RV Sathynaraya ment the investor RV Sathynarayana was e towards his investment but the final set to RV Sathyanannyana only in the mo ecember, 2015. For that interest has r the period March 2015 to December
Rs 5 crore and in all totaling to Rs.35 cro res, J. Sekar had paid Rs 26 crore by way arayana and the remining 9 crores is paid r through bank channels. I also wish to a enyulu being the political mediator for M ni (Minister for commercial taxes for the s nd through him being the mediator J.Sek share of RV Sathynarayana in M/s. JME fo has paid Rs 10 crore by way of cas mmission charges to Mr. Ramanjenyulu.”
although Shri Balakrishnan Ram e of making cash payments to Shri nce was given by him, as requis deposing him.

/2024 (AY 2016-17) ri Jagannathan Sekat hers, and also i
Balakrishnan for the e again ana are to buy ded the ence on name of the sale time of paid the hip firm turn the approval s stated
15 crore d Rs 15
arriving ana, As entitled tlement onth of s been r, 2015
ore. Out of cash by way dd that Minister state of arreddy or which h as a mamoorthy had Sathyananyana sitioned by the 9. In view of the ab was again reopened b
25.01.2021. According accompanied by the assessee did not file the observed that, the AO dated 10.02.2021 callin an adjournment and ag
It is observed that, si
25.03.2021
reiterating satisfaction-note nor t assessee is noted to ha notice u/s 153C of the for details vide notice d the copies of the seize
21.09.2021. The AO is dated 24.09.2021 prop with reference to the premises of Shri Javva figure, the AO is noted the figures found men marked ANN/NN/JR/LS/
ITA No.2220/Chny/
Shr
:: 8 ::

ove, it is observed that, the case o by issue of notice u/s 153C of to the assessee however, the said relevant satisfaction note and, e return of income in response to t
, thereafter issued notice u/s 142
g for details. The assessee is noted ain requested for the copy of the sa milar letter was again filed by th g the same request.
Although the relevant seized material was ave filed his return of income in r
Act on 01.05.2021. Thereafter, the dated 17.09.2021, and the assesse d material and satisfaction note vi noted to have issued a final show posing to make an addition of Rs.
above noting’s found on loose pa aji Ramanjenyulu. For arriving at to have undertaken permutations &
ntioned in Page 267 (backside) of /S and inferred that, the noting’s

/2024 (AY 2016-17) ri Jagannathan Sekat of the assessee the Act dated notice was not therefore, the this notice. It is 2(1) of the Act to have sought atisfaction note.
he assessee on h neither the provided, the esponse to the e AO had called ee again sought de letter dated w cause notice
41,75,00,000/- apers from the the impugned
& correlations of f document ID s on Page 279

suggested that total co
50% share in one entit which comprised of Satyanarayana compris
Rs.26.75 crores. Furthe included payments ma beneficiaries, each of w crores as advance vid thereafter, correlated t
278, where a figure of AO, tallied with the am by the assessee to Shri confirmed by Shri Dand
07.07.2019. With these have linked the scribblin to 279 and concluded
Satyanarayana was not crores was paid in cash is observed to be as foll
"From the above in page 279, the shares in M/s Jy total consideratio made to R. Saty
Jyothirmayee Es
ITA No.2220/Chny/
Shr
:: 9 ::

nsideration finalized by the assesse ty, M/s Jyothirmayee Estate was R the settlement amount agreed sing of principal of Rs.15 crores a r, the AO also inferred that this sett ade to different persons, represe whom who had invested Rs.40 lacs de sale agreement dated 18.10.2
he noting’s found on Page 279 wit
Rs.9.10 crores was mentioned, whi ount of Rs.9.10 crores paid across i R Satyanarayana, and whose ledg da Brahmanandam in his sworn st e permutations & correlations, the ngs found on backside of Page 267
d that the actual consideration t only Rs.9.10 crores but further su
. The relevant contents of the show ows:- discussion on this issue, it can be seen fro total consideration finalized by you for ac yothirmayee Estates was Rs 41,75,00,000
on of Rs 41.75 crores comprises of settl yanarayana in lieu of his 50% shares h state (Principal Rs 15,00,00,000 plus

/2024 (AY 2016-17) ri Jagannathan Sekat ee for acquiring
Rs.41.75 crores with Shri R and interest of tlement amount enting different s each for Rs.2
2010. The AO th that of Page ch according to different dates er account was tatement dated
AO is noted to with Pages 276
paid toShri R um of Rs.41.75
w cause notice, om the noting cquiring 50%
0/-. The said ement to be eld with M/s interest Rs

26,75,00,000). F comprises of the Santhosh (repre
A.P.Nandhakuma
Reddy) who had vide sale agreeme
The noting found you to R.Satya
9,10,00,000/-, Th by Shri Danda B
Q.No. 13 of the 07.07.2019 durin transaction that w
279 stands vali recorded in the b noting pertaining proved contrary b page 277 and 276
principal and inte as mentioned abo
In view of the ab to why an amo purchasing the Jyothmayee Estat ascertaining thei unexplained inves
10. The assessee is n cause, for the reason th satisfaction note or copi him. The AO according crores, as set out in h
Rs.10 crores, by way acquisition of stake in statement of Shri Balak completed the assessm
ITA No.2220/Chny/
Shr
:: 10 ::

Further the said consideration of Rs 41.75
settlement to be made to different people esenting Shri Gandhi), Shri Prasad ( r) and Shri Uttam Chand (representing invested Rs 40 Lakhs each for Rs 2 Crore ent dated 18.10.2010. d in page 278 refer to the amount paid b anarayana on different dates amoun he same is confirmed by the ledger accou
Brahmanandam vide his Annexure-6 to h sworn statement recorded from him u/s.
ng the post search investigations. Hence a was found in page no 267 (backside) and dated with respect to the actual cons books of accounts. In view of the same, t to the same subject stands validated too by you with admissible evidences. Further,
6 refers to the disbursal of the total amoun erest on various dates to R.Satyanarayan ove by the assesee.
bove, a show cause notice was issued on 2
ount of Rs. 41.75 Crore paid by asses shares of Shri R Satyanarayana hel tes and in the hands of others as discussed r respective shares, in the hands of the stment for different financial years"
noted to have not responded to th hat the AO neither provided the sei ies of the relevant statements being gly proceeded to make the additio is show cause and further added a y of cash commission paid in re n M/s Jyothirmayee Estate, by r krishnan Ramamoorthy. The AO is ment u/s 153C/143(3) of the Act vi

/2024 (AY 2016-17) ri Jagannathan Sekat
5 crores also e namely Shri
(representing g Shri Sekar s as advance by cheque by nting to Rs unt submitted is answer to . 131(1A) on a part of the in page 276- sideration as he remaining o, unless it is , the found in nt namely the a and others
3.09.2021 as ssee towards ld with Ms.
d above after assessee as he above show zed material or g relied upon by on of Rs.41.75
another sum of elation to this relying on the noted to have de order dated

ng the aforesaid addition to the tota fore, it is observed that, the basis o the statement of Shri Balakrishnan d interpreted the rough scribblings premises of Shri Javvaji Ramanjeny by the order of the AO, the assessee
. CIT(A). On appeal, the Ld. CIT(A) addition, both on merits as well a ), on merits, held that, the noting b in nature and could not be inferr d the statements of Shri Javvaji R amoorthy to be unreliable and the by holding as under:- going through the seized material relied b t, it does not contain the signature of the amount as narrated in the seized material t, mode of payment. The AO on the corded u/s 132(4) & 131 (1A) of the A enyulu and Shri
Balakrishnan
Ramam arration in the loose sheet are the allege
Appellant for the purchase of 50% sha ates. It is noted that neither the Investig any occasion to cross examine the iss point of time. No enquiry was made neith nor during the course of assessment proc ring on record that no statement of an he Appellant confronting about the mat e of search and about the contents of th
Shri Javvaji Ramanjenyulu and Shri ther by the Investigating Officer nor by t bsence of any such confrontation with the A /2024 (AY 2016-17) ri Jagannathan Sekat al income of the of the impugned
Ramamoorthy, found on loose ulu.
e had preferred was pleased to as on the legal
’s found in the red against the Ramanjenyulu &
erefore deleted by the AO, it Appellant for and also the basis of the Act from Shri moorthy has ed payments ares in M/s.
gation Officer sue with the er during the eedings. It is ny kind was terials seized he statement
Balakrishnan the Assessing
Appellant, the Appellant had no Thus the AO has materials seized search unilaterall travelled in a dire

/2024 (AY 2016-17) ri Jagannathan Sekat merely on the a third party oborate such the decisions
07) 107 TTJ
] 169 ITD 35
017] 190 TTJ xmann.com 6
TM) IΠΑΤ, T.S
Metals (P) Ltd e evidence to material found to the fact party to the . The Hon'ble te Limited Vs bring further y exchanged evidence on heet found in rd party. The found in the third party in nce on record ficer, without on money is on the loose be considered on money to bring further is exchanged
A.O. did not value of the given by the ther, there is A.O failed to e money was unaccounted
Under these e evidence on money can sources."

/2024 (AY 2016-17) ri Jagannathan Sekat m undisclosed
981) 131 ITR shing that the nue and that statement of st impossible at he did not d by him. It dduce proper terial for the receipt of the that such a case of the n the case of has held that found in third t is pertinent e Apex Court
) 26 ITR 775
re agreement the Income- evidence and which may not he agreement e assessment
Income Tax nd make an y material at on to support law on this stated by the (supra)".
he AO is not ment without t no addition validate the on by the AO, eized at third riting of the Appellant as well can only be in th any conclusion ba her spouse have property. There is noted in the seiz money has actua

as the sellers of the land, obviously such e nature of a dumb document. The AO can ased solely on the said material that the A e actually paid on-money payment for s no corroborative evidence to prove that t zed material have actually materialised an lly taken place between the concerned part
O in the assessment order has relied upon t hri. Balakrishnan Ramamoorthy to arrive at nt has paid an amount of Rs. 51.75 Crore hri. Sathynarayan in M/s. Jyothirmaya Est llant in the written submission, has agitat ased upon the statement recorded from th g any opportunity of cross examination and ecisions. It is a settled law that a stateme unilaterally utilized against the Appellant a sment. Statements of third parties with r sheets seized in the course of search of th saction of on-money without their advers cross-examination by the affected party supporting evidence cannot be made t closed income in the hands of the assessee of Prarthana Construction (P.) Ltd. v. Dy
(Ahd.-Trib.) (Mag.).
case of CIT v. Ashwani Gupta [2010] 191
was made on the basis of the stateme f the seized documents were not prov portunity of cross-examination of the adver isation of his statement. On these facts, the case of CIT v. SMC Share Brokers Ltd lhi), the High Court deleted the addition on olation of the principles of natural justice.
ase, in the course of search of the asse re seized indicating advance of money an essee stated that the papers belonged to by the daughter in her statement. Therefor s made in the assessee's hands. On these l [2007] 162 Taxman 3 (Delhi), it was h hird party (ie, daughter of the assessee) n ation cannot be considered relevant or a /2024 (AY 2016-17) ri Jagannathan Sekat loose sheets nnot arrive at Appellant and purchase of the payments nd transfer of ties.
he statement t a conclusion es to acquire tates. In this ted upon the ird party and d relied upon ent of a third s evidence to regard to the heir premises se statement y and in the the basis for e. This was so y. CIT [2001]
1 Taxman 51
nt of a third vided to the rse party was following its d. [2007] 159
n the premise essee, certain nd earning of his daughter.
re, addition of facts, in CIT held that the not subjected dmissible. In the absence of an the seized docum

ny corroboration by cross-examination, it w ment was a dumb document. The addition w case of Bangodaya Cotton Mills Ltd. v. CIT
Cal.), additions were made on the bas espondence) relating to a property transa ses of a third party. The order was set ross-examination of the connected parties case of the assessee that these documents se of Prakash Chand Nahta v. CIT [2008]
held that no addition u/s 69 could be ma f a third party without affording opportun he adverse party. In this case, the assesse ticles were purchased from 'R'. However, '
s statement recorded behind the back of t
Officer made the addition without allo
'R'. Copy of the statement of 'R' record assessee. The Assessing Officer also the assessee. He solely relied on the stat
The addition was deleted.
case of B. Ramakrishnaiah v. ITO [2010]
Assessing Officer made addition of a certa assessee based on the entry of a transactio n the books of 'B' who was a third party. No ation was afforded to the assessee with ref ed from the third party. The Tribunal h r cannot base his assessment on the st d by him to frame the assessment with ross-examination. The Tribunal did not acc ng of opportunity advanced by the departm assessee was recorded on the same issue.
case of M. Anpukutty v. State of Kerala [1
that the entries in the name of the ass t of a third party would not give juri r to frame the assessment by utilising s ss the assessee was afforded opportuni d party. The assessee can question the s

/2024 (AY 2016-17) ri Jagannathan Sekat was held that was deleted.
T [2009] 182
sis of some action seized aside as no s, particularly were forged,
170 Taxman ade based on nity of cross- ee contended
R' denied the the assessee.
owing cross- ded was not ignored the tement of 'R'
39 SOT 379
ain amount in on relating to o opportunity ference to the held that the atement and out affording cept the plea ment that the The addition
1964] 14 STC sessee in the iction to the such material ity to cross- said party to explain as to ho nexus with the as 6.3.28
The un order has merely that the Appellan shares in M/s. Jo bring it on recor
Ramanjenyulu on question no. 22 is …….
6.3.29
In this Saveeta Institut taxmann.com 13
basis of the swor sustainable and f
Special Officer of of evidence. In th the act was subs
(1a) of the Act.
6.3.30
In the 30taxmann.com1
that a statement the same is not Accordingly it wa the basis of swo followed the judg
CIT [2010] 174 T
6.3.31
Further
Rubber Produce C that an admissio cannot be said th to the person wh the outset it can incriminating evid down by the Ap absence of evide support any addit
6.3.32
In addi
State of Madhya correct way to a against the ac consideration. W confession, then,
ITA No.2220/Chny/
Shr
:: 17 ::

ow the relevant entry was made in its b ssessee.
ndersigned observes that the AO in the y relied upon the statement and arrived at nt has paid the amount by way of cash to othirmayee Estates. Further the AO, has rd the retraction statement recorded from n 05.07.2019. The relevant portion of th s reproduced as under :- regard the juri ictional tribunal in the ca te of Medical and Technical Sciences
8 (Chennai -Trib) has held that addition rn statement recorded u/s 132(4) of the A further held that the admission made u/s 1
f the College could not even be treated as he present case, the statement recorded u sequently retracted in the statement recor 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 gement in the case of Kailashben Manhar
Taxmann 466( Guj) .
r the Hon’ble Apex Court in the case o
Co Ltd v State of Kerala [1973] ITR 18 ( on is an extremely important piece of ev hat it is conclusive and further observed th ho makes the admission to show that it is n be stated that where the admission is dence found in the course of search, the ex Court will no longer hold good. Obvi ence an admission can no longer be an tion.
ition, the Apex Court in the case of Kasm
Pradesh AIR 1952 SC 159, has obser approach a case of confession is to mars ccused excluding the confession altog
Where the case can be decided ind it is not necessary to take help of confessi

/2024 (AY 2016-17) ri Jagannathan Sekat books and its e assessment a conclusion acquire 50%
also failed to m Shri Javvaji he answer to se of ACIT v.
[2012] 25
made on the Act cannot be 132(4) by the a valid piece u/s 132(4) of rded u/s 131
v. CIT [2013]
ourt has held evidence but ncriminating.
ned solely on on, the Court rlal Choski v.
of Pullangode
SC) has held idence but it hat it is open incorrect. At tied up with principle laid ously, in the evidence to mira Singh v.
rved that the shal evidence gether from ependent of on.

n the instant case of the Appellant, it can b marily relied upon the statement(s) record the loose sheets seized, during the course ise and utilized the same in making the ad ppellant without bring any cogent and rd. In view of this the addition contemplat evidences can no longer be sustainable up thereafter, held that, even the sa s defective, as the noting’s found in ertain or relate to the assessee and on u/s 153C of the Act was also hel appeal before us.
on of the Ld. CIT(A), the Ld. CIT, D
, vehemently supported the finding through the statement of Shr of the noting’s found on loose she
267, 276 to 279 seized from the p he argued that, the figures me ed with the deposition given by Sh
, one could make out from the figu
10 crores and Rs.41.75 crores wa the former was by cheque and the refore, the AO had rightly made bmitted that, the burden was on t nt given by Shri Balakrishnan Ram

/2024 (AY 2016-17) ri Jagannathan Sekat be stated that ded from the e of search at ddition in the corroborative ed by the AO on merits.”
atisfaction-note the loose sheet d therefore the ld to be invalid.
R appearing on gs recorded by i Balakrishnan eets ID marked premises of Shri ntioned in the ri Balakrishnan ures mentioned s made by the e latter in cash.
the impugned the assessee to mamoorthy was inadmissible and that opportunity cross-exam unreliable, particularly the post search enqui juri iction u/s 153C of dispute the fact that th notice u/s 153C of the could not be held as de the satisfaction note ma
ID marked ANN/NN/JR/
to the assessee, and wh
Shri Javvaji Ramanje therefore, according to issuance of notice u/s 1
14. The Ld. AR, on th
He first invited our att marked ANN/NN/JR/LS/
by the AO. He showed which did not contain a specifics, basis which a assessee. He further inv of the Act and argued
ITA No.2220/Chny/
Shr
:: 19 ::

simply because the assessee wa mine would not render his sta when he had confirmed his origina iries as well. On the validity of the Act, he submitted that, the Ld.
he satisfaction note was recorded p e Act dated 25.01.2021 and there efective. He further contended that ade it clear that, the noting’s found
/LS/S contained entries which perta hich was further corroborated by the nyulu & Shri Balakrishnan Ram him, the Ld. CIT(A) was unjustified
53C of the Act to be bad in law.
he other hand, supported the order tention to the noting’s found on lo
/S basis which the satisfaction note d us that, these notings were rou any names, details of payer or paye prudent person could suggest that i vited our attention to provisions of d that, the authorized officer was /2024 (AY 2016-17) ri Jagannathan Sekat s not afforded tement to be al statement in assumption of CIT(A) did not prior to issue of efore the same the contents of in loose sheets ained or related e statements of mamoorthy and d in holding the r of Ld. CIT(A).
oose sheets ID e was recorded ugh scribblings, ee or any other it related to the Section 132(4) empowered to question the person fro were found. He brought from the possession of by us (supra), this pers in relation to these no later statement dated pleaded ignorance of t incriminated the assess when the noting’s on t specific details and the also unable to explain th these noting’s did not p not have validly assume pointed out to us, that testimony of Shri Ba
08.07.2019, which was loose notings. He conte authorized officer ba
Ramamoorthy linking t papers ID marked ANN/
on any tangible materia were not found from ITA No.2220/Chny/
Shr
:: 20 ::

m whose possession and control th t to our notice that, these loose she
Shri Javvaji Ramanjenyulu, and as on had nowhere named or implicate ting’s. The Ld. AR emphasized tha d 05.07.2019, Shri Javvaji Ram the noting’s on these loose sheets see in any manner. According to the loose sheets itself was bald a person from whose possession it w he same, the Ld. CIT(A) had rightly pertain to the assessee and therefor ed juri iction u/s 153C of the Act.
t the entire case of the AO in fact alakrishnan Ramamoorthy dated s used by the authorized officer to ended that, the purported correlatio sed on the testimony of Shri he figures with the loose noting’s
/NN/JR/LS/S was a pure guesswork l. The Ld. AR reminded us that, thes the possession or control or pre

/2024 (AY 2016-17) ri Jagannathan Sekat hese documents eets were found s already noted ed the assessee at, even in the anjenyulu had s, and had not him therefore, nd lacking any was found, was concluded that re the AO could
He, thereafter, t rested on the 22.02.2019 &
interpret these n drawn by the i Balakrishnan found in loose k and not based se loose papers emises of Shri

Balakrishnan Ramamoo contents of these noting
15. The Ld. AR additio between the related
Ramamoorthy, which 31.12.2019. He partic passed by the Hon’ble M
30501 of 2018 & 2690
deal involving M/s Jyo examining the material
Ramamoorthy in his de that the claims made b and that he had played of trust to cause wrong between the parties an place between them.
decision of Hon’ble Mad fact that, there was d
Balakrishnan Ramamo
Ramamoorthy was a bia him, would have on pu the assessee due to the ITA No.2220/Chny/
Shr
:: 21 ::

rthy and therefore using his testimo g’s was arbitrary and so, unjustified.
onally placed before us, the details parties of the assessee and Shr began much prior to the date cularly invited our attention to th
Madras High Court in Criminal Origi of 2019 dated 18.10.2023 wherein othimaye Estate, the Hon’ble Hig including the MOU (referred by Sh epositions dated 22.02.2019 & 08.0
by Shri Balakrishnan Ramamoorthy fraud by cheating and committed gful loss and that, there was no s nd also that, no such cash transact
The Ld. AR argued that, even if dras High Court is kept aside for a dispute/litigation between the asse orthy clearly showed that, Shr ased person who has an axe to grin urpose, made false & frivolous state e animosity between them. He thus

/2024 (AY 2016-17) ri Jagannathan Sekat ony to infer the .
of the litigation ri Balakrishnan of search i.e.
e recent order nal Petition No.
n qua this same gh Court after hri Balakrishnan
07.2019) found to be frivolous criminal breach uch agreement tions had taken f the aforesaid a moment, the essee and Shri i Balakrishnan nd, according to ements against submitted that, this was a classic c mentionanyone’s name sweet will and which c fault of the latter. He a unsustainable and that t
16. We have heard bo placed before us. In Revenue has agitated t juri iction u/s 153C of of Rs.51.75 crores mad
Act on merits. We first assess the assessee u/
the action of the AO inte
Act without satisfying t
Section 153C of the Ac note before assumption
17. Section 153C of income of 'any other p department but shall be the Act, provided the AO
(a) any mo thing, seized or requi
ITA No.2220/Chny/
Shr
:: 22 ::

case where any person for tha e in relation to any loose paper /
can be used toimplicate such other accordingly urged that, the impugne the Ld. CIT(A) had rightly deleted th oth the parties and perused the mat the several grounds raised in th he Ld. CIT(A)’s action of holding th the Act to be invalid and also deleti e by way of unexplained investmen take up the legal issue of juri ictio
/s 153C of the Act. The legal challe er-alia to validly usurp juri iction u the mandatory condition precedent t i.e. the AO has not recorded a va of juri iction u/s 153C of the Act.
the Act is a special provision for person', who is a third party not se e assessed in the manner prescribe
O is satisfied that —
oney, bullion, jewellery or other valuable a sitioned, belongs to; or /2024 (AY 2016-17) ri Jagannathan Sekat at matter can diary at their r person for no ed addition was he same.
terial on record he appeal, the he invocation of ing the addition nt u/s 69 of the on of the AO to enge is against u/s. 153C of the t prescribed by alid satisfaction assessment of earched by the ed u/s. 153A of rticle or (b) any b requisitioned, pertain therein, relates to a p
153A.
18. We find that, it is non-searched person (a read with 153A of the A books of account or doc premises of searched p that it had a bearing in searched person, i.e. th should be objective an reason for it is that, se when inter alia any doc person in the course of belongs to such person asset, books of accounts which presumes that t whom the said assets/d u/s. 132 or survey u/s asset/document is found presumption is that the for the Assessing Offi conclusion or 'satisf
ITA No.2220/Chny/
Shr
:: 23 ::

books of account or documents, seiz ns or pertain to, or any information co person other than the person referred to in s now a settled position of law that assessee, in this case) can issue n
Act, only when he is satisfied, from a cuments or assets seized or requisit person (Shri Javvaji Ramanjenyulu the determination of the total inco he assessee. The satisfaction of As nd has to be based upon cogent ection 132(4A)(i) of the Act clearly ument is found in the possession or a search, it may be presumed that n (the searched person). The pres s, etc. is governed by section 292C( the same belong or belongs to th documents were found during the co s. 133A of the Act. In other words d from a person who is being search said asset/document belongs to th cer to rebut that presumption a faction'
that the asset/docum

/2024 (AY 2016-17) ri Jagannathan Sekat zed or ontained section , the AO of the notice u/s 153C a perusal of the tioned from the , in this case), me of the non- ssessing Officer t material. The stipulates that, r control of any such document sumption as to (1)(i) of the Act he person from ourse of search s, whenever an hed, the normal hat person. It is nd come to a ment in fact belongs/pertains/relates this case). There mus
Assessing Officer, which arrives at the satisfactio does not relate to the and conjecture cannot interpretation has been 19. In this context, we
Court in the case of C
(397 ITR 344), where of the Hon'ble Bombay that, unless and until th correlation between wh and - how the same is i years in question for wh for the 'other Person' - assessee qua the said the juri ictional fact re our attention in this reg
Hon'ble Supreme court
(supra), wherein their findings while confirmin
ITA No.2220/Chny/
Shr
:: 24 ::

s to somebody else (third party li st be some cogent material avai h was unearthed during search, basi on that, the contents of the seized a searched person but to somebody t take the place of 'satisfaction'
given by various courts.
e gainfully rely on the decision of th
CIT Vs Singhad Technical Educ ein the Hon'ble Supreme Court uphe
High Court reported in 378 ITR 8
he AO can establish document-wise hat has been seized from the 'Sear ncriminating in nature qua each of t hich juri iction u/s. 153C is sough then the notice issued under secti assessment year would be without equired to invoke section 153C of th gard to the following excerpts of the in Sinhgad Technical Education S r Lordships took note of the Hon'b g Tribunal's view, which is as under /2024 (AY 2016-17) ri Jagannathan Sekat ke assessee in ilable with the is which he/she asset/document y else. Surmise and the same he Hon'ble Apex cation Society eld the decision
4 by observing
(or asset wise) rched person' - the assessment t to be invoked on 153C to the t the satisfying e Act. We draw decision of the Society's case le High Court's r: --

"6. The tribunal h to be pertaining relation documen words, the tribun issue of notice co information in p circumstances tha the impugned or Officer is empow income of six ass year relevant to t therefore the sat enough, is errone stand of the reve be found in parag pertain to assess assumed, that th information are s that they were disturbed. The do unaccounted tran the four assessm found that it will overall approach all the discoveries to be taken into note was very
Assessing Officer which specific inc hidden informatio assessee. In the in the note is no cash and jewelle agricultural prope utilised to acquir
With regard to c granting admissio is absolutely noth education is impa granted to the t obtained in XIIth and cash comp sanctioned fees a there cannot be a ITA No.2220/Chny/
Shr
:: 25 ::

has found that incriminating material seize to all six assessment years did not estab nt-wise with the assessment year in quest nal concluded that the present matter indic ould be on the basis that there is specific possession of the Assessing Officer. It at the tribunal found and as indicated in pa rder that the revenue's assertion that th ered under the statute to assess or reass sessment years immediately preceding the the previous year in which such search is co tisfaction which is recorded in the satisfa eous. Therefore, the notice cannot be uph enue cannot be accepted. The reasons, th graph 9 and 10 of the impugned order. If sment year 2004-05 or thereafter then he documents seized or incriminating ma specific and to all assessment years. The t concluded assessments. They could not ocuments in question are neither incriminat nsactions of the assessee. They also did ent years. It is in these circumstances tha not be possible to uphold the stand of the in matters of concealment by the group a s of the search on Shri Navale and it conce account while forming the satisfaction. Th closely examined and the reasons assig were found to be silent about the assess criminating information or unaccounted or on was discovered or seized by the reven circumstances, the general satisfaction and ot enough. The tribunal has found that w ery, the explanation of the assessee was erties and derived agricultural income. Tha re jewellery that was belonging to him an ash and stated to be recovered from the ons, we do not find that any inquiries were hing to indicate as to in which educational arted and institution-wise. Whether the ad echnical courses merit-wise or on the ba h standard HSC exam. If any fee structure ponent is therefore collected over and are matters which ought to have been g a general or vague satisfaction as is relied u

/2024 (AY 2016-17) ri Jagannathan Sekat ed and stated blish any co- tion. In other cates that the incriminating is in these aragraph 8 of he Assessing sess the total e assessment onducted and action note is held and such herefor are to certain items it cannot be aterial giving ribunal found t have been ting ones nor not relate to t the tribunal revenue that assessee and rns, will have e satisfaction gned by the sment year in r undisclosed nue from the d as recorded with regard to that he had t income was nd his family.
students for made. There courses, the dmissions are asis of marks e is approved d above the one into and upon.

opinion that the tribunal's conclusion cann given the above-noted factual backgrou raises any substantial question of law ssed. No costs."
d finding of Hon'ble High Court has e Court by observing as under:
rmitted this additional ground by giving a r nal issue taken up on the basis of facts al efore, could be raised. In this behalf, it w as per the provisions of Section 153C aterial which was seized had to per rs in question and it is an undisputed f ch were seized did not establish any with these four
Assessment
Years.
er section 153C of the Act is essential for ision, it becomes a juri ictional fact. W logical and valid, having regard to the the Act. Para 9 of the order of the ITAT rev d through the Satisfaction Note and the m herein was culled out and it showed th sment Year 2004-05 or thereafter. After ta ara 9 of the order, the position that emerg ara 10. It was specifically recorded that th could not point out to the contrary. It is fo as also given its imprimatur to the afores
That apart, learned senior counsel appea ed that notice in respect of Assessment Ye s even time barred.
d that the ITAT rightly permitted this addi correctly dealt with the same ground on m h Court affirming this view of the Tribunal mish. Before us, it was argued by the res t of the Assessment Years 2000-01 and wever, in view of our aforementioned findi er into this controversy." (Emphasis supplie e above legal position, we now rev e. In order to test the validity of the e juri iction u/s. 153C against a t

/2024 (AY 2016-17) ri Jagannathan Sekat not be termed und. None of w. They are s been affirmed reason that it ready on the was noted by of the Act, rtain to the fact that the co-relation,
Since this r assessment
We find this provisions of veals that the material which at the same aking note of ges therefrom e counsel for or this reason said approach aring for the ears 2000-01
tional ground merits as well.
is, therefore, spondent that 2001-02 was ngs, it is not ed) ert back to the e juri iction of third party who has not been searched satisfied the condition-p
Act, for which we need t
22. It has to be kept of the satisfaction no juri iction, we have to are case laws which th validity of Satisfaction assessment u/s. 147 of for reopening the reass basis. Neither anything anything can be delet
Bombay High Court in Wadkar [2004] 137
Lordships have, inter al are required to be read or deletion is permissib inference can be allowed by him. He has to speak
" the reason recorded s assessee guessing for conclusion and the evid
ITA No.2220/Chny/
Shr
:: 27 ::

, we have to ascertain whether As precedent before issue of notice u/
to examine the contents of the satis in mind that, when the challenge is ote which, the AO has recorde o examine the satisfaction recorded hrows light in the context of exam n recorded by the AO while r f the Act. It is settled law that reaso sessment are to be examined on g can be added to the reasons so ted from the reasons so recorded n the case of Hindustan Lever
7 Taxman 479/268 ITR 332
ia, held "it is needless to mention th as they were recorded by the AO.
le. No addition can be made to tho d to be drawn on the basis of reason k through the reasons." Their Lordsh should be self-explanatory and shou reasons. Reasons provided the lin dence…..". Therefore, reasons are t

/2024 (AY 2016-17) ri Jagannathan Sekat ssessing Officer
/s. 153C of the sfaction note.
s to the validity ed to assume d as it is. There mining the legal re-opening the ons as recorded a 'stand-alone'
o recorded nor d. The Hon'ble r Ltd. v. R.B.
wherein their hat the reasons
No substitution ose reasons. No ns not recorded hips added that uld not keep the nk between the to be examined only on the basis of re decidendi of the Hon'ble prepared by the AO whe third person (assessee invoke the special prov
Act.
23. In light of the a involved in the present the satisfaction note w seized from the prem observed to have mere loose papers, and the Balakrishnan Ramamoo these loose papers pe juri iction u/s 153C of light of their statement are not forthcoming fro is not supported by any Pages 267, 276 to 2
contained rough noting’
or payee. Also, there we assessee, or that, any ITA No.2220/Chny/
Shr
:: 28 ::

easons as recorded by the AO. Thi e High court is applicable to the 'Sa en he recorded his satisfaction note in this case) against whom he/A vision and issue notice under sectio bove legal position, we now reve case. It is noted that, the foundatio was the loose papers marked as AN mises of Shri Javvaji Ramanjenyu ely relied upon the obscure noting e statements of Shri Javvaji Ram orthy to draw his conclusion that t ertained to the assessee, in ord f the Act. Having perused these lo ts, we find that, the conclusions dr om the documents and statements,a y corroborative evidence. It is obse
279 of document ID marked AN ’s of figures and that there was no d ere no sign or signature or acknowle y abbreviation etc. was mentioned

/2024 (AY 2016-17) ri Jagannathan Sekat s analogy/ratio atisfaction-Note'
e in respect of a AO proposed to on 153C of the rt to the facts onal premise of NN/NN/JR/LS/S lu. The AO is ’s made in the anjenyulu&Shri the noting’s on der to assume oose noting’s in awn by the AO andthe analysis erved that, the NN/NN/JR/LS/S details of payer edgment by the d which would suggest the noting’s t particularly, we note th whose possession and c explained these noting’
Co. and had also under accounts and that in ca tax as his own undi presumption laid down found in the course of s person, was reinforc
Ramanjenyulu, in this c
Act dated 21.02.2019. the searched person f found is reproduced her
“ Q. No. 24 I am s pg nos. 276 to 279
search u/s 132 o representing Princip also certain amoun transactions.
Ans. I have gone discussions regardi between the partne aware who has wr made which can be If the same cannot undisclosed income
24. We also note th statement recorded u/s ITA No.2220/Chny/
Shr
:: 29 ::

to be remotely relating to the a hat, the person (Shri Javvaji Rama control these loose papers were fou
’s to be relating to one M/s Bhavy rtaken to correlate the noting’s with se of any discrepancy, he would off isclosed income. We therefore n in Section 132(4A) of the Act that earch shall be presumed to belong t ced by the searched person case) in his deposition recorded u/s At the cost of repetition, the relev from whose possession these loos reunder: - showing you loose sheet documents vide ANN/
9 seized from your residential premises during of the Income Tax Act, 1961 containing ce pal along with interest workings and also certain ts shown as paid. Kindly go through the same a through the said documents carefully. This is ing the sale of shares of M/s Bhavya Construc ers. I am unable to recognize the handwriting itten down the same. These are calculations t e corroborated from the books of accounts of al t be explained, I shall offer the amounts mentio e if I am not able to explain the same.”
hat, later on, Shri Javvaji Raman s 131 of the Act dated 05.07.2019

/2024 (AY 2016-17) ri Jagannathan Sekat assessee. More njenyulu) from und had initially ya Construction h their books of fer the same to note that, the the documents to the searched
(Shri
Javvaji s 132(4) of the ant excerpts of se sheets were /NN/JR/LS/S in g the course of rtain amounts n amounts and and explain the regarding the tions company and I am not hat have been l shareholders.
oned herein as njenyulu in his
9 had although retracted his original s mistaken impression p
Construction Co., but, a the contents of these handwriting and therefo
The searched person, S rejected the ownership pertain to him or his rel by the Revenue at face again being reproduced
“The loose sheet me once again fo character of thes unknown person are no details to any guidance or the same. While giving the statem well as the und transactions of M/
inference is inco provided at the ti replace the same
Further it may be materials have be I am either a pa review of all the question does underlying tran undertaken by loose sheets re irrelevant to m sheets should n
ITA No.2220/Chny/
Shr
:: 30 ::

statement and submitted that, he resumed these noting’s to relate at the same time, he clearly pleade loose sheets since they were n ore he expressed his inability to exp
Shri Javvaji Ramanjenyulu is noted of these loose papers by stating th ated business entities, which we fin e value. The relevant portion of hi below: - s stated in the above paragraph having p or my comments a fresh. In this regard se loose sheets is such that they are w and there are no details of Payer or pay whom it pertains to and finally these does inference that is meaningful from the ex at the time of search the pressure under ment though I could not recognize the han derline numbers I thought it could be /s. Bhavya Constructions which I now conc orrect and I completely deny the answ ime of search and the answer that is provid
.
e appreciated that during the course of se een seized pertaining to various business e rtner or a director or has some business e material together with sheets menti not even remotely corroborate to a nsaction that can be assumed to me or my family members. In other w eferred in this question remain an un my business or personal transactions not be reckoned to have any relevance
(emphas

/2024 (AY 2016-17) ri Jagannathan Sekat e had under a to M/s Bhavya ed ignorance of not in his own plain the same.
to have simply hat they do not d was accepted s statement, is placed before the essential written by an ee and there s not provide xamination of r which I was nd writing as e relating to clude that my wer that was ded now shall earch various entities where interest. The oned in this any kind of have been words, these nrelated and s. Thus the to me.”
sis supplied)

narrated facts, it is therefore obse on loose sheets obscure in as much are receipt or payments, nor it can ation to any particular transaction or the searched person from whose po d was not able to explain the conten observation from the above narrate ts nor the statement of searched he assessee or was there any sugg ed or related to the assessee. On t
IT(A)’s finding that, the satisfaction sis of these loose papers and stat suffered from fundamental infirmity relation between what has been s ow was the same incriminating in ntenance the following findings of the ppellant upon receipt of the copy of satis material relied upon by the AO to initiate llant raised additional grounds agitating up faction recorded. The issue raised by the A examined. The AO in the satisfaction n proceedings u/s 153C of the Act has rel in the loose sheet seized vide ANN/JR ed from a third party premise. The said d from the residence of Shri Javvaji Rama ve any nexus with the Appellant. Further ellant in the written submission about th
Shri Javvaji Ramanjenyulu on the date o

/2024 (AY 2016-17) ri Jagannathan Sekat erved that, not as it cannot be n be concluded r, who were the ossession these nts of the same ed facts is that, person in any gestion that the these facts, we n-note recorded tement of Shri y, as there was eized from the nature qua the e Ld. CIT(A):- sfactory note e proceedings pon the issue
Appellant has ote recorded ied upon the R/LS/S dated d seized loose anjenyulu did r as brought he statement of search u/s 132(4) on 21.02
sought his ex
ANN/NN/JR/LS/S admitted as unde
“ Q. No. 2
ANN/NN/JR/
residential
Income Tax
Principal alo and also ce same and e
Ans. I have regarding t
Bhavya Con to recognize down the sa can be co shareholder amounts m to explain th
6.5.3
From t material relied u defective in natu u/s.153C, recordi of the same, the was held by the Knitwears [2014]
had at paragraph
“44. In the of the Act a by the asse other asses person.”
26. The Ld. CIT, DR b
Shri Balakrishnan Rama statement would demo the loose sheets with t
ITA No.2220/Chny/
Shr
:: 32 ::

24 I am showing you loose sheet doc
/LS/S in pg nos. 276 to 279 seized premises during the course of search u/
x Act, 1961 containing certain amounts ong with interest workings and also cert ertain amounts shown as paid. Kindly go xplain the transactions.
e gone through the said documents care the discussions regarding the sale of sh nstructions company between the partners.
e the handwriting and I am not aware who ame. These are calculations that have been orroborated from the books of acco rs. If the same cannot be explained, I sh entioned herein as undisclosed income if I he same.”
the above deposition it is very clear tha upon by the AO in recording the satisfac ure. It is a settled law that for initiating ing of satisfaction note is mandatory and in e entire proceedings would be void ab-init
Hon’ble Supreme Court in the case of CIT
] 362 ITR 673 (SC). Wherein the Hon’ble
44 of its order held that; result, we hold that for the purpose of Se satisfaction note is sine qua non and must essing officer before he transmits the re ssing officer who has juri iction over before us laid much emphasis on th amoorthy and has contended that nstrate correlation between the no the satisfaction drawn by the AO u

/2024 (AY 2016-17) ri Jagannathan Sekat orised officer seized vide categorically cuments vide d from your s 132 of the representing tain amounts through the efully. This is hares of M/s
. I am unable o has written n made which ounts of all hall offer the I am not able at the seized ction note is proceedings n the absence io. The same
T vs. Calcutta e Apex Court ection 158BD t be prepared ecords to the r such other he statement of reading of his oting’s found in u/s 153C of the Act. Accordingly, we fin the statement of Shri
08.07.2019. Before exa mind the contemporane which assumption is be the Act were not fo
Balakrishnan Ramamoo
As noted earlier, on the was searched, Shri Bala residential premises. In settlement, to which, ac and towards which he c crores. The Ld. AR has r
Balakrishnan Ramamoo him with reference to (Pages 267, 276 to 279
in his answer to Q No.
Ramamoorthy had div giving specific dates an involved therein, but he back his allegations ag note of the fact that,
ITA No.2220/Chny/
Shr
:: 33 ::

nd that, the case of the Revenue h
Balakrishnan Ramamoorthy dated amining his statement, it is relev eous fact that, these loose papers, eing sought to be assumed by the A ound from the possession or co rthy in the course of search condu e same date, on which Shri Javvaji akrishnan Ramamoorthy was also s his statement, he had made referen ccording to him, the assessee was a claimed that the assessee had paid rightly pointed out that the Q No. 26
rthy gave the foregoing answer wa the loose papers ID marked AN 9). It is also observed that, in the la
7 (already reproduced earlier), Sh vulged further details regarding t nd amounts along with names of s e was unable to produce any proof ainst the persons named by him.
even this answer was never given

/2024 (AY 2016-17) ri Jagannathan Sekat inges solely on 22.02.2019 &
ant to keep in on the basis of AO u/s 153C of ontrol of Shri cted upon him.
Ramanjenyulu searched at his nce to a certain also a party to, d cash of Rs.26
6 to which, Shri s not put up to NN/NN/JR/LS/S ater statement, ri Balakrishnan this settlement several persons or evidence to We again take n in relation to loose papers ID marke thus find ourselves in comprehensible as to h
Ramamoorthy taken a material from the posse
27. Rather we find undertaken permutatio mentioned by Shri Bala loose noting’s found fro thereafter himself inferr which we find to be f cogent basis and lackin
According to us there
Ramamoorthy did not ca found in loose sheets ID to assume juri iction u
Shri Balakrishnan Ram reasons which we have unjustified in relying presumptuous inference
ITA No.2220/Chny/
Shr
:: 34 ::

d ANN/NN/JR/LS/S (Pages 267, 27
n agreement with the Ld. AR t how were these answers given Sh as a basis to draw satisfaction q ession and control of Shri Javvaji Ram that it was the authorized off ons and combinations to correlat krishnan Ramamoorthy in his state om the premises of Shri Javvaji Ram red that, these noting’s pertained to far-fetched based on pure guessw ng any corroborative material to b efore, even the statement of Shr arry any evidentiary value to correla
D marked ANN/NN/JR/LS/S qua the u/s 153C of the Act. Moreover, the amoorthy was evidently biased &
discussed in detail (infra), and hen on such self-serving statement es qua the seized material.

/2024 (AY 2016-17) ri Jagannathan Sekat
76 to 279). We that, it is not ri Balakrishnan qua the seized manjenyulu.
ficer who had te the figures ements with the manjenyulu and o the assessee, work having no back the same.
ri Balakrishnan ate the noting’s assessee so as e statements of unreliable, for ce, the AO was to draw his

this juncture that, to assume juri quired to demonstrate that, any ‘bo or requisitioned, pertains or pert therein, relates to another person, ng regard to our above discussio he ‘loose papers’ found from the p
(searched person) did not pertain t contained therein relate to the asse oted above, had never stated so in 05.07.2019. Further, the statem rthy, who though was searched at be in possession or control of the s d even his depositions were not wi material. According to us therefor ted in law could have inferred the JR/LS/Sto relate or pertain to n of AO in the 'Satisfaction Note'
qua the assessee qua AY 2016-17
e/material, and therefore the findin satisfaction note, is held to be /2024 (AY 2016-17) ri Jagannathan Sekat iction u/s 153C ooks of account’
tain to, or any apart from the ons, we are of remises of Shri to the assessee essee. Even the his depositions ment of Shri the same time, seized material th reference to re, no prudent seized material the assessee.
that these are ,does not have g of fact by AO perverse and 29. Overall therefore pertaining or relating t during the search cond
Javvaji Ramanjenyulu, t satisfy the requirement the legal requirement recorded by the AO, the 17 is held to be bad in Court in the case of C
(supra) and, therefore quashing the order impu
30. We also find meri assessee that, the impu of ‘loose sheets’, which 'books of entry' or as 'e this, we have carefully
Court with regard to a Shukla [1998] 3 SCC judgment, it was observ
"16. To apprecia counsel for the p material provision to another when referred to in the ITA No.2220/Chny/
Shr
:: 36 ::

e, since there was no incrimin o the assessee which has been un ducted on 21.02.2019 from the pr the satisfaction note prepared by th of law as stipulated u/s. 153C of th has not been met in the "sat e very assumption of the juri ictio the eyes of law as held by the Ho
CIT v. Sinhgad Technical Educ e, we uphold the Ld. CIT(A)’s order ugned before us.
it in the alternate contention of the ugned satisfaction note was made o h does not come under the ambit evidence' under the Indian Evidence examined the law declared by the acceptance of loose sheets in the C 410, wherein at paragraphs 16
ved as under:
ate the contentions raised before us by parties it will be necessary at this stage to ns of the Act. Section 3 declares that a fa n it is connected with the other in any e provisions of the Act relating to the releva

/2024 (AY 2016-17) ri Jagannathan Sekat ating material nearthed/seized remises of Shri he AO does not e Act and since tisfaction note"
on for AY 2016- on'ble Supreme cation Society r on this aspect e Ld. AR for the out on the basis t and scope of e Act, 1872. For e Hon'ble Apex e case of V.C.
6 to 18 of the the learned o refer to the act a relevant of the ways ancy of facts; and those provis
Chapter II. Secti that evidence ma non-existence of the aforesaid sec under:- "34. Entr of account, regu whenever they re such statements person with liabili
17. From a plain entry relevant th book, that book i regularly kept in also manifest tha entry becomes a made therein sha made therein sha with liability. It speaks of the re speaks, in a nega with a liability. It whether the entr fulfil the requirem evidence and if th probative value n
18. "Book" ordin material, blank, w form a material termed as 'book dealing with the Dayaram [AIR 19
placed reliance, t collection of shee be disturbed or a which is not inten put together agai together on a pie not, in ordinary E
34 aforesaid may sheets of paper b be permanent an easier however to I have no hesit
ITA No.2220/Chny/
Shr
:: 37 ::

sions are to be found in Section 6 to 55
on 5, with which Chapter II opens, expre ay be given in any suit or proceeding of the every fact in issue and the facts declare ction, and of no others. Section 34 of the ries in books of account when relevant - En ularly kept in the course of business, efer to a matter into which the court has t shall not alone be sufficient evidence to ity."
reading of the Section it is manifest that ereunder it must be shown that it has bee s a book of account and that book of acco the course of business. From the above at even if the above requirements are fulf admissible as relevant evidence, still, th all not alone be sufficient evidence, still, t all not along be sufficient evidence to charg is thus seen that while the first part of elevancy of the entry as evidence, the ative way, of its evidentiary value for charg t will, therefore, be necessary for us to f ries in the documents, with which we ar ments of the above section so as to be a his question is answered in the affirmative need be assessed.
narily means a collection of sheets of pa written, or printed, fastened or bound toge whole. Loose sheets or scraps of pape k' for they can be easily detached and work 'book' appearing in Section 34 in Mu
914 Nagpur 44], a decision on which bot he Court observed:- " In its ordinary sense ets of paper bound together in a manner w altered except by tearing apart. The bindin nded to the moveable in the sense of being n. A collection of papers in a portfolio, or c ce of twine which is intended to be untied
English, be called a book…I think the term y properly' be taken to signify, ordinarily, a bound together with the intention that such nd the papers used collectively in one v o say what is not a book for the purposes tation in holding that unbound sheets

/2024 (AY 2016-17) ri Jagannathan Sekat appearing in ssly provides e existence or d relevant in Act reads as ntries in book are relevant to inquire but o charge any t to make an en made in a unt has been Section it is filled and the he statement he statement ge any person f the section second part ging a person first ascertain re concerned, admissible in then only its aper or other ether so as to er cannot be replaced. In ukundram vs.
th sides have e it signifies a which cannot g is of a kind g undone and clip, or strung at will, would
"book" in S.
a collection of binding shall volume. It is of S. 34, and of paper in whatever quantity a book of account
31. The aforesaid obs reasoning and we are in it must be held that the 267, 276 to 279 cannot seized in course of sea
Hon'ble Supreme Court
"278. With respe record, this Court at the stage of same is relevant has considered t containing loose s and has held that not admissible u where the entrie depending on the 279. It has furth entries in the boo sufficient evidenc relevant and adm
It has been held trustworthiness o liability.
280. This court h account book wo following extract
27, paras 14 and the High Court a documents were following words:
ITA No.2220/Chny/
Shr
:: 38 ::

y, though filled up with one continuous acc t within the purview of S.34."
servations are noted to bein accorda n full agreement with it. Applying th e loose sheets ID marked ANN/NN/
be regarded as ‘books of accounts’
rch. We also gainfully refer to the t in the case of Common Cause (
India (394 ITR 220)wherein at p
, it has been observed as under:
ect to the kind of materials which have be t in V.C. Shukla case has dealt with the m discharge when investigation had been c for the purpose of decision of this case als he entries in Jain Hawala Diaries, note b sheets of papers not in the form of "books t such entries in loose papers/sheets are ir under section 34 of the Evidence Act, a es are made in the books of accounts re e nature of occupation, that those are admi her been laid down in V.C. Shukla case a oks of account, that such statements shall ce to charge any person with liability, eve missible, and that they are only corroborat that even then independent evidence is ne of those entries which is a requirement t has further laid down in V.C. Shukla that ould be spiral note book/pad but not loose being relevant is quoted herein below: ( d 20) "14. In setting aside the order of th accepted the contention of the responde not admissible in evidence under section "70. ….an account presupposes the exis

/2024 (AY 2016-17) ri Jagannathan Sekat count, are not ance with good he above tests,
/JR/LS/S Pages
’ or ‘documents’
decision of the (A Registered paragraphs 278
een placed on matter though completed by so. This court ooks and file of accounts"
rrelevant and nd that only egularly kept, ssible.
s to value of not alone be en if they are ive evidence.
cessary as to to fasten the t meaning of e sheets. The (SCC pp.423- he trial court, ents that the n 34 with the tence of two persons such a Admittedly, the a entries arising o credits. They can person for his ow whenever the ne said diaries were of business. The payment were m
Even the names do not find a men
Only certain 'lett within the knowl they stand for a counsel for the Ja small pads are 'b strongly disputed aforesaid section nor they were re that at best it cou person for his ow
'account' means parties arising o books in questio contrary, only co persons and paym said, by any stre argued Mr. Sibal argument's sake a business still th were not regular kept' mean that t at the time the tr would show that transactions took the dictionary me
281. With respec
Court has laid do
Beni v. Bisan Day in book s of acc person with liabil make evidence fo behind the back the transaction t evidence no relief
ITA No.2220/Chny/
Shr
:: 39 ::

s a seller and a purchaser, creditor alleged diaries in the present case are not r ut of a contract. They do not contain th at the most be described as a memorandu wn benefit which will enable him to look in eed arised to do for his future purpose. Ad not being maintained on day-to day basis ere is no mention of the dates on which ade. In fact the entries there in are on m of the persons whom the alleged payment ntion in full. they have been shown in abre ters' have been written against their nam edge of only the scribe of the said diarie and whom they refer to." 20. Mr. Sibal, ains, did not dispute that the spiral note b books' within the meaning of Section 34. H d the admissibility of those books in eviden on the ground that they were neither boo egularly kept in the course of business. h uld be said that those books were memoran wn benefit. According to Mr. Sibal, in busin a formal statement of money transacti out of contractual or fiduciary relationshi on did not reflect any such relationship ontained entries of monies received from ment thereof to another set of persons it etch of imagination that they were books
. He next contended that even if it was that the above books were books of accou hey would not be admissible under sectio ly kept. It was urged by him that the wo the entries in the books were contemporan ransactions took place but a cursory glance the entries were made therein long after t k place. In support of his contentions he als eanings of the words 'account' and 'regularl ct to evidentiary value of regular accoun own in V.C. Shukla, thus: (SCC p.433, para yal [AIR 1925 Nagpur 445] it was observe count are not by themselves sufficient to lity, the reason being that a man cannot b or himself by what he chooses to write in h of the parties. There must be independen to which the entries relate an din abse f can be given to the party who relies upon /2024 (AY 2016-17) ri Jagannathan Sekat and debtor.
records of the he debts and um kept by a nto the same dmittedly the s in he course h the alleged monthly basis.
ts were made eviated form.
es which are es as to what the learned ooks and the He, however, nce under the ks of account he submitted nda kept by a ness parlance ons between p. Since the and, on the m one set of could not be s of account, assumed for nt relating to n 34 as they rds 'regularly neously made e of the books the purported so relied upon y kept'.
nt book, this a 37) "37. In ed tat entries o charge any be allowed to his own books t evidence of ence of such n such entries to support his cla
1953 Pepsu 113]
having been prov ordinary course should be consid the rule as laid do account regularly they refer to a m the salient prov evidence to charg merely to prove t business and the upon the person accordance with f
282. It is appare papers are whol section 34 so as mentioned therei based upon such this Court."
32. From the above, that a sheet of paper shown to form part of t searched assessee or h material evidence. Follo we are of the view that 153C of the Act for the 33. We now come to t
Ld. CIT(A)’s order for d above, the addition ma loose papers ID marked
ITA No.2220/Chny/
Shr
:: 40 ::

aim against another. In Hira Lal v. Ram Ra
] the High Court, while negativing a conte ved that the books of account were regular of business and that, therefore, all en ered to be relevant and to have been pro own in Section 34 of the Act that entries in y kept in the course of business re releva matter in which the court has to enquire w viso that such entries shall not alone ge any person with liability. It is not, there that the books have been regularly kept in e entries therein are correct. It is furthe relying upon those entries to prove that facts.
ent from the aforesaid discussion that loo ly irrelevant as evidence being not adm to constitute evidence with respect to the n being of no evidentiary value. The entire entries which led to the investigation was it is established in law by the Hon'
containing rough scribblings in lo the books of accounts regularly ma his business entities, cannot be sai owing the law declared by the Hon'b the notice dated 25.01.2021 issued relevant year was bad in law.
the grounds raised by the Revenue eleting the impugned addition on m de by the AO was based on the no d ANN/NN/JR/LS/S and statements

/2024 (AY 2016-17) ri Jagannathan Sekat kha [ A. I. R.
ention that it ly kept in the ntries therein ove, said that the books of ant whenever was subject to be sufficient efore, enough the course of er incumbent t the were in ose sheets of issible under e transactions e prosecution s quashed by ble Apex Court oose form, not intained by the id to constitute ble Apex Court, d by the AO u/s challenging the merits. As noted oting’s found on of Shri Javvaji

Ramanjenyulu & Shri Ba contents of the noting’s necessary to keep in m regarding the contents person and not to any present case. Reason material at third party at its face value, then name in any loose pape to implicate such other entry made in a diary cannot be used to faste therein, in the absence in the decisions of the V.C. Shukla (supra)an Union of India (supra
34. We also gainfully
High Courtin the case o
TMI 451). In the decid be non-speaking docu intelligible narration in Officer that it reflecte
ITA No.2220/Chny/
Shr
:: 41 ::

alakrishnan Ramamoorthy. Before a s, which forms basis of the impugne mind that the presumption u/s 132( of seized material is only agains y other third party, which is the a being that, if anynoting’s found premises is presumed to pertain to any person for that matter can me er / diary at their sweet will and th r person for no fault of the latter. A or notebook by a third person wit en tax liability on the person, whose of corroborative evidence. Our view
Hon’ble Supreme Court in the cas nd Common Cause (A Registere a).
refer to the decision of Hon’ble Pun of CIT v. Khosla Ice & General M ded case, the impugned loose pape ment in as much as it does no support of the inference drawn by ed unaccounted transactions carrie

/2024 (AY 2016-17) ri Jagannathan Sekat adverting to the ed addition, it is (4A) of the Act t the searched assessee in the in the seized o the assessee, ention anyone’s hat can be used
Accordingly, an th scant details e name appears w finds support se of C.B.I. v.
ed Society) Vs njab & Haryana
Mills (2013 (1) erswerefound to ot contain any y the Assessing ed out by the assessee outside the re dumb document, is to assessee, the burden evidence, that the nat
Thus, the AO has to est various entries contain transactions effected by that, in the absence of of the entries found in t undisclosed income, b jotted down on such doc
35. Useful reference i
ITAT, Hyderabad in the (2) TMI 403 -ITAT w notings, it cannot be de can be concluded wh transaction, thenin such basis of such document
36. Similar view is no the case of ACIT v. L wherein it was held that ITA No.2220/Chny/
Shr
:: 42 ::

egular books of account. It was hel be made the basis to fasten tax is on the AO to establish with ture of entries contained therein ablish, with necessary corroborative ned in the seized document reflec y the assessee. The Hon’ble High C any material to support the nature the seized document, no addition is y merely arithmetically totaling v cument.
in this regard is also made to the e case of Sri Y. Siddaiah Naidu V wherein it was held that, where f educed whether they are receipt or p hether they are in relation to h circumstances, no addition can b
.
oted to have been expressed by IT ayers Exports P. Ltd (88 taxma t no addition could be simply made

/2024 (AY 2016-17) ri Jagannathan Sekat d that, when a liability on the h corroborative reflect income.
37. Having regarding noting’s found in the s
Pages 267, 276 to 279
The seized material wh figures. It does not con any specific deal or tra seized material regard payments, the purpose transaction. We theref noting’s relate to the as from the assessee’s si assessee. No other inc search conducted upon or justify these notings the earlier search con incriminating material w acquiring stake in M/s no credence can be give
ITA No.2220/Chny/
Shr
:: 43 ::

s in the loose papers found duri count of alleged payment made simp ng and scribbling on loose sheets ary value and is unsustainable and b to this position of law, we now seized loose papers ID Marked AN from the premises of Shri Javvaji hich is placed on record shows cer tain details of any payer or payee o ansaction. There is absolutely no ing the nature of the said trans e of such payments and precise fore find it very strange to belie ssessee as it also does not contain ide, being not having any name criminating evidence was found in Shri Javvaji Ramanjenyulu which w
. The Ld. AR has rightly pointed ou nducted upon the assessee on 0
was found to suggest that it had pa
M/s Jyothirmayee Estate. Being so en to these vague loose notings. In /2024 (AY 2016-17) ri Jagannathan Sekat ng the search ply on the basis made by some bad in law.
advert to the NN/NN/JR/LS/S,
Ramanjenyulu.
rtain jottings of or particulars of mention in the saction of cash identity of the eve that these any attestation or seal of the the course of would correlate ut that, even in 08.12.2016, no aid any cash for , we hold that, absence of any corroborative evidence t i.e. the assessee. We f loose papers as dumb entries found therein. B any corroborative evid necessary reliable basis said entries.
38. Rather we find t sheerly on guess work noting’s considered on a On overall conspectus authorities were not ab and the searched perso whose possession and c dated 21.02.2019, was it may pertain to on Constructions. It is obs given by one Shri
22.02.2019) in the con assessee that, the au permutation &combinat jotted in these loose
ITA No.2220/Chny/
Shr
:: 44 ::

to attribute the entries to the non-s find that, the Ld. CIT(A) had rightly noting’s having no evidentiary valu
Before us also, the Revenue was no dence available with them which s for deciphering the nature and c hat the entire premise of the Rev k by shooting arrows in the dar a stand-alone basis are obscure and of facts, it appears that, even th le to make out any meaning out of on (Shri Javvaji Ramanjenyulu in t control these noting’s were found, in also not able to explain the same bu e of their transaction relating t served that, later on, when examin
Balakrishnan Ramamoorthy (sta text of some settlement claims inte thorized officer is noted to have ion exercise and inferred that some sheets correlated with the settle

/2024 (AY 2016-17) ri Jagannathan Sekat earched person y treated these ue in respect of ot able to show would provide haracter of the venue is based k. Clearly, the d non-speaking.
e Investigating f these noting’s this case) from n his statement ut guessed that o M/s Bhavya ing the answer atement dated er alia with the undertaken a e of the figures ement matters averred by Shri Balakr accordingly noted to h
Javvaji Ramanjenyulu) were found on 05.07.20
noting’s did not relate t he was unable to exp distanced himself from again, the authorized o on 08.07.2019 and pro matters with the asses further details giving se settlement, albeit witho again correlated these d
ANN/NN/JR/LS/S Pages aggregated to Rs.9.10
Satyanarayana for a Accordingly, he inferred books payments of Rs relation to this acquisitio
Balakrishnan Ramamoo had also paid cash co
ITA No.2220/Chny/
Shr
:: 45 ::

rishnan Ramamoorthy. The Author have again examined the searched from whose possession and control,
019, who, this time around submit o M/s Bhavya Constructions but at plain the context of these noting it by submitting that it did not relat officer examined Shri Balakrishnan odded him regarding the details of ssee and this time he is noted to everal figures and several names out any proof or evidence. The au details with the noting’s found on th
267, 276 to 279 and inferred that crores, which was paid by the asse cquiring stake in M/s
Jyothirm d that the balance noting’s related
.41.75 crores made to Shri R. Sa on. Later on, based solely on the sta orthy, the AO further assumed tha ommission of Rs.10 crores for ge

/2024 (AY 2016-17) ri Jagannathan Sekat rized Officer is d person (Shri
, these noting’s tted that, these the same time, g’s. Rather he te to him. Then n Ramamoorthy the settlement have divulged involved in the thorized officer he loose sheets certain noting’s essee to Shri R.
mayee
Estate.
d to the out of tyanarayana in atement of Shri at the assessee etting this deal facilitated, which led
[Rs.41.75 crores + Rs.1
39. Having taken not conducted by the AO to noting’s found in loose
Clearly, the seized mate be unaccounted transa supported by any corr relied by the AO for ma also not speaking in c authorities found during
Thus, the well settled without any corroborativ such document has n income of the assessee of accounts of the ass assessment to be fram support of our foregoin the Hon'ble Supreme C
(P.) Ltd. (66 ITR 69
obvious that it is not o nature of the document
ITA No.2220/Chny/
Shr
:: 46 ::

to the impugned addition of R
10 crores].
te of the above, we find that the o make the impugned addition on t sheets was based on guesswork an erial showed vague figures presume actions. These are unsigned docum roborative material.Being so, the s aking the addition is not speaking o conjunction with some other evide g the course of search or post searc legal position is that a non-spea ve material or evidence on record a ot materialized into transactions which had not been disclosed in the sessee has to be disregarded for t med pursuant to search and seiz g conclusion, we gainfully refer to Court, in the case of Motors & G
92)wherein it was observed that,"i open to the income tax authorities t from the purported intention, by go

/2024 (AY 2016-17) ri Jagannathan Sekat s.51.75 crores entire exercise the basis of the nd conjectures.
ed by the AO to ments and not seized material one in itself and ence which the h investigation.
king document and finding that giving rise to e regular books the purpose of zure action. In the decision of eneral Stores it is, therefore, to deduce the oing behind the document or to conside part and reject it in p purpose of revenue.
40. We find that the on assumptions withou settled position of law merely based on assum on irrelevant inadmissib on the following decision
(i)
Dhirajlal Girdharilal v. C
(ii)
Dhakeswari Cotton Mill
(iii)
CIT v. Maharajadhiraja
(iv) Lalchand Bhagat Ambic
(v)
Umacharan Shaw & Bro
(vi) Omar Salay Mohamed
41. We particularly fin of his above findings o the case of CIT v. Sant the Department relied u the premises of third p of hundi transactions on were written in abbrev relying on its earlier d
ITA No.2220/Chny/
Shr
:: 47 ::

er the substance of the matter or part or to rewrite the document, m conclusions reached by the AO are ut bringing corroborative material o that no addition in the assessmen mptions, suspicion, guess work and ble material. Reliance can be placed ns:
CIT [1954] 26 ITR 736 (SC) s Ltd. v. CIT [1954] 26 ITR 775 (SC)
Kameshwar Singh of Darbhanga [1933] 1
ca Ram v. CIT [1959] 37 ITR 288 (SC) os v. CIT [1959] 37 ITR 271 (SC)
Sait v. CIT [1959] 37 ITR 151 (SC) nd the reliance placed by the Ld. CI n the decision of the Hon’ble Delh t Lal (423 ITR 1) to be of relevanc upon the noting’s of hundi in the dia arty. The said noting’s allegedly co n behalf of parties including assesse viated/code words. The Hon'ble De decision in the case of CIT v. Ma

/2024 (AY 2016-17) ri Jagannathan Sekat to accept it in merely to suite e merely based on record. It is t can be made conjuncture or d in this regard
ITR 94 (PC)
T(A) in support i High Court in ce. In this case, ary seized from ontained entries e whose names elhi High Court ahabir Prasad

Gupta in ITA No. 814
held that no addition c basis of any diary seiz third party, since such and that thedepartmen gather any corroborativ assessee. The Court obs anyone’s name on his o on stand-alone basis a person cannot be used a 42. For the above rea the noting’s found in lo unilaterally used to mak onus is on the Reven corroborative evidence same, which we find the 43. Now we come to Shri Balakrishnan Ram justify the impugned a searched person (Shri J control, these noting’s
ITA No.2220/Chny/
Shr
:: 48 ::

4 of 2015 dated 20-10-2015 is can be made in the hands of anas ed during the course of search pr diary was neither found at the asse nt had failed to provide any coge veevidence to substantiate that it p served that thesearched person cou wn sweet will in his diaryand therefo along with the biased statement as a reliable evidence against the as sons, we therefore concur with the oose papers from third party prem ke addition in hands of the assesse nue to establish the veracity of t by bringing cogent material on reco e Revenue has failed to do so, in the o the statements of Shri Javvaji Ra mamoorthy which was relied upon addition. As noted earlier, the stat
Javvaji Ramanjenyulu) from whose were found, did not incriminate t

/2024 (AY 2016-17) ri Jagannathan Sekat noted to have ssessee on the roceedings of a essee’s premise ent material or pertained to the uld have written ore such noting of thesearched ssessee.
Ld. CIT(A) that mises cannot be e, and that the the same with ord, to back the e present case.
amanjenyulu &
by the AO to tements of the possession and he assessee in any manner. He had ne assessee at any point noting’s relates to his t promised to correlate a 05.07.2019, he submit erroneous and that the therefore he was unab this statement of the se be used to draw any a supports the assessee’s obscure noting’s which any evidentiary value to assessee.
44. We now proceed t which is the genesis of Ramamoorthy had mad cash payments were ma further observed that, cash transactions being but no proof or eviden
Before analyzing the co to our notice that, this ITA No.2220/Chny/
Shr
:: 49 ::

either explained the noting’s nor had of time. Rather, he initially admit ransactions in M/s Bhavya Construc and provide the details later, but su tted under oath that, his initial ese loose sheets were not drawn u le to explain its contents. We thus earched person (Shri Javvaji Ramanj adverse inference against the asses s case that these loose sheets conta were not at all comprehensible a o justify the impugned addition in th to examine the statement of Shri B f the impugned addition. It is note e certain statements as a logic for s ade by the assessee to Shri R Satya
Shri B Ramamoorthy has made se g conducted by the assessee with s nce was adduced in relation to su ontents of this statement, the Ld. A person had made the same frivolo

/2024 (AY 2016-17) ri Jagannathan Sekat d he named the tted that these ctions which he ubsequently on statement was up by him and s observe that, jenyulu) cannot ssee. Rather, it ained dumb and nd thus lacked he hands of the Ramamoorthy, ed that, Shri B suggesting that anarayana. It is everal claims of several persons uch averments.
AR has brought ous statements before the Hon’ble Mad filed relating to Cheque
We note that, the Hon complaint case vide or that, Shri B Ramamoo politicians and Governm further observed on ana had acted in a dishone which the assessee also to them and when they stopped the cheque pa case under the Negotia frivolous claims. The H held that, there was no Rs.46 crores claimed
Ramamoorthy was nev false, frivolous and bas
Hon’ble Madras High C
Ramamoorthy is false h
45. In view of our abo the statement of Shri B qua the assessee, but ITA No.2220/Chny/
Shr
:: 50 ::

dras High Court in connection with e Bounce Case, much prior to the d n’ble Madras High Court has adjud rder dated 18.10.2023 wherein it rthy has simply stated concocted ment officials, which did not have an alysis of the entire facts that, Shri B est manner to induce M/s Jyothirm o held stake, to hand over their hard y realized his fraud and breach of ayments due to which, Shri B Ram able Instruments Act against the a Hon’ble High Court is noted to hav o dealing in cash transactions and t to have been transacted in ca ver agreed to be paid and that it seless. Having regard to these obse
Court, it is clear that the stateme aving no credence.
ove findings, we thus agree with the Ramamoorthy not only suffered fro t it was also riddled with discre

/2024 (AY 2016-17) ri Jagannathan Sekat h the complaint date of search.
icated the said has been held stories naming ny basis. It was B Ramamoorthy maye Estate in d earned money trust, they had mamoorthy filed ssessee raising ve categorically that the sum of ash by Shri B twas absolutely ervations of the ents of Shri B e assessee that om serious bias epancies, fancy theories and sensation backed by any evidence misrepresented the fact prejudicing the mind o facts discussed above t was tainted with the so the above findings of t
Shri B Ramamoorthy statement was not relia
46. It is also observe had not even given the to the assessee leave the fact that his stateme back. We do not counte in the dark by not furn he should have been fa meet the allegation, if a have been discovered
Ramamoorthy. Further, assessee to cross exam statement, which was a and in accordance with ITA No.2220/Chny/
Shr
:: 51 ::

nalized claims, and that his state e or proof. Shri B Ramamoorthy is ts and had distorted the same in his of the authorized officer. It is app that the statement given by Shri B le intent to falsely implicate the ass the Hon’ble juri ictional High Cou was not a credible witness and ble.
d that the AO prior to completing t e copies of the statements of Shri B aside an opportunity of cross-exam ent was admittedly recorded behind enance this action of the AO keepin ishing the statement of Shri B Ram air enough to give an opportunity any, against the assessee, which ac d during the search conducted
, the AO should have provided an ine Shri B Ramamoorthy to test the also not done by AO. Had the AO ac principles of natural justice, the ser

/2024 (AY 2016-17) ri Jagannathan Sekat ement was not s noted to have s deposition for arent from the B Ramamoorthy sessee. Further, urt shows that, therefore his the assessment
B Ramamoorthy mination, given d the assessee's ng the assessee mamoorthy and to assessee to ccording to AO, upon Shri B opportunity to e veracity of his cted in fairness rious bias in the statement of Shri B Ram in preceding paragraph assessment itself. By n the assessee and the op view, the impugned add we rely on the ratio o
Andaman Timber Ind decided case, the add
Timber Industries) by witnesses namely Sri
Even though the asses witnesses, the AO did n action of the AO was co
Supreme Court exami providing opportunity to held that it was a se witnesses were made t the part of AO makes violation of principles o view, the impugned ad biased and unproven unjustified and invalid.
ITA No.2220/Chny/
Shr
:: 52 ::

mamoorthy, his false testimony etc
, would have come to the forefront not providing the copy of statemen pportunity of cross-examination, in dition stood vitiated in law. For this of the decision of the Hon'ble Sup dustries v. CCE (62 taxmann.co ition was made against the asses the AO by relying on the stat
Sreeram Tekriwal and Sri Laxmid ssee pleaded for cross-examination not give opportunity to the assessee onfirmed by the appellate authoriti ned the omission on the part o o assessee to cross examine of two erious flaw and since the statem the basis of the impugned order th s the order nullity inasmuch as it of natural justice. Accordingly, in ddition made by the AO on the so statement of Shri B Ramamoor

/2024 (AY 2016-17) ri Jagannathan Sekat c., as discussed t at the time of nt used against our considered finding of ours, preme Court in om 3). In the ssee (Andaman tement of two das Panchmati.
n of these two e and when the es, the Hon'ble of the AO not o witnesses and ments of those his omission on t amounted to our considered ole basis of the rthy was both

Order pronounced (जगदीश)
(JAGADISH)
लेखा सद /ACCOUNTANT
चेई/Chennai,
दनांक/Dated: 28th Februar
TLN
आदेश क ितिलिप अेिषत/Cop

ITA No.2220/Chny/
Shr
:: 53 ::

e, the purported notings on loose s
Javvaji
Ramanjenyulu
&
Shri pon by the AO to justify the impug oth on facts and in law. For the rea nd no reason to interfere with th ugned addition on its merits as well eal filed by the Revenue is dismissed d on the 28th day of February, 2025, T MEMBER
(एबी टी.
(ABY T. VA

याियक सदय/JUDI ry, 2025. py to:
nai / Madurai / Salem / Coimbatore.

/2024 (AY 2016-17) ri Jagannathan Sekat sheets and the Balakrishnan gned addition is asons discussed he order of Ld.
.
d.
in Chennai.
/-
वक
)
ARKEY)
ICIAL MEMBER