DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRLCE -3, COIMBATORE, COIMBATORE vs. P.P. CONSTRUCTIONS, KARUR

2. In the cases of PP Financiers (Karur), PP Enterprises (Bengaluru), PP Enterprises (Oddanchatram), PP Constructions, Shri P. Raghupathy, and Shri Sellamuthu Kabilan, the respective appeals have been filed with a delay of 61 days / 92 days, as pointed out by the Registry. The assessees have filed affidavits seeking condonation of delay, explaining that the delay occurred on account of their awaiting receipt of the remaining appellate orders in order to file all appeals collectively, and further due to the freezing of their bank accounts, which necessitated arrangements for payment of the prescribed appeal fees. 2.1 The Learned Departmental Representative (hereinafter referred to as “the ld.DR”) did not raise any serious objection to the prayer for condonation of delay. At this juncture, it is pertinent to note that & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan the Hon’ble Supreme Court, in the case of Collector, Land Acquisition v. MST Katiji [(1987) 167 ITR 471 (SC)], has enunciated six guiding principles for determining whether delay in filing an appeal deserves to be condoned which are as under: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties

3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.

4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.

5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.

6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

2.2 A perusal of the aforesaid decision clearly demonstrates that the expression “sufficient cause” is required to be construed liberally, & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan and that where substantial justice and technical considerations are placed in opposition, the cause of substantial justice must prevail, as the opposite party cannot claim any vested right in the perpetuation of injustice occasioned by an inadvertent or non- deliberate delay. 2.3 In view of the above, we are satisfied that sufficient cause exists for the delay in filing the appeals, and it is evident that the assessees could not have gained any advantage by instituting the appeals belatedly. Accordingly, the delay is hereby condoned. In respect of the remaining assessees, there is no delay in filing the appeals, and proof of receipt of the orders of the ld. CIT(A) has been duly enclosed with Form No.

36. Further, since all the 61 appeals arise out of the same search proceedings, and the issues involved therein are common, identical, and interconnected, the appeals are being disposed of by way of a consolidated/common order, in the interest of convenience and judicial economy.

4. Aggrieved by the assessment orders, the assessees preferred appeals before the Learned Commissioner of Income Tax (Appeals). By orders dated 31.07.2024, except in the case of PP Enterprises (Oddanchatram) wherein the appellate order was passed on 05.08.2024, the ld. CIT(A) upheld the substantive additions in all cases, while deleting the protective additions in the cases of PP Enterprises (Bengaluru) for Assessment Years 2016-17 to 2018-19 and PP Constructions for Assessment Year 2018-19.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 9 ::

4.1 Consequently, the Revenue has preferred four appeals challenging the deletion of the protective additions in the aforesaid cases, whereas the remaining 57 appeals have been filed by the 11 assessees assailing the confirmation of the substantive additions.

5. During the course of hearing, the Learned Authorised Representative (hereinafter referred to as “the ld.AR”) for the assessees sought directions from the Tribunal for production of the sanctions, statutory approvals, and seized materials pertaining to all the assessees. The said direction was duly issued by us, pursuant to which the Learned Departmental Representative (hereinafter referred to as “the ld.DR”) complied and produced the requisite records. Both the ld.AR for the assessees and the ld.DR have placed detailed written submissions on record and have also filed various paper books in support of their respective contentions. The issues arising in the present appeals are dealt with assessee-wise in the succeeding paragraphs of this order.

6. In respect of the assessees whose assessments have been framed u/s.153C of the Act, the ld.AR has raised preliminary legal objections seeking annulment of the assessments on the grounds that: (i) the notices issued u/s.153C are based on a combined satisfaction, which is contrary to law and evidences non-application of mind; & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 10 ::

(ii) the approval granted u/s.153D is invalid, being a composite approval and vitiated by lack of due application of mind; and (iii) the Document Identification Number (DIN) has not been mentioned in the approvals granted u/s.153D in all cases, and further, in the case of PP Enterprises (Oddanchatram), even the assessment order does not bear a DIN. 6.1 We propose to first adjudicate the appeals involving the aforesaid legal issues, before proceeding to the merits of the additions.

7. During the course of hearing, the ld.AR of the assessees submitted modified grounds as well as additional grounds of appeal

. Upon examination, it is evident that the additional ground relating to the validity of approval u/s.153D raises a pure question of law and goes to the very root of the matter. Accordingly, the modified and additional grounds raised by the assessees are admitted, in view of the law laid down by the Hon’ble Supreme Court in NTPC Ltd. v. CIT [(1998) 229 ITR 383 (SC)]. I. P.Palanisamy – AYs 2010-11 to 2018

19. A.Y.

209 / Chny / 2025 2011-12 210 / Chny / 2025 2012-13 211 / Chny / 2025 2013-14 212 / Chny / 2025 2014-15 213 / Chny /

2. Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 11 ::

2015-16 1119 / CHNY / 2025 2016-17 214 / CHNY / 2025 2017-18 1120 / CHNY / 2025 2018-19 1121 / CHNY / 2025

8. In the modified grounds of appeal, Ground No.3 pertains to the contention that the mandatory satisfaction contemplated u/s.153C of the Act has not been validly recorded, which issue is now taken up for adjudication. The ld.AR submitted that the notice issued u/s.153C in the present cases, a copy of which was furnished to the assessees by the ld.DR pursuant to the directions of the Tribunal during the course of hearing, is invalid in law. It was contended by the ld.AR that the satisfaction recorded is a composite/combined satisfaction, not specific to each assessment year, and further, it does not specify as to which seized material pertains to which assessment year. 8.1 In support, reliance was placed on the decision of the Delhi Tribunal in Pushpanjali Constructions (P.) Ltd. v. DCIT [128 ITR (Trib) 201 (Del)], with specific reference to paragraph 23, wherein it was held that a satisfaction note which is general, vague, and casual, without recording particulars of escapement of income, quantification thereof, or linkage to a specific assessment year, reflects lack of proper application of mind and is therefore bad in law, rendering the consequent assessment proceedings invalid.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 12 ::

9. The ld.AR further submitted that a proforma for recording satisfaction u/s.153C has been placed on record by the ld.DR. It was pointed out that the said proforma merely states that the seized documents pertain to the concerned assessee and does not disclose how such satisfaction was arrived at, nor does it indicate how the seized material has a bearing on the determination of total income, much less that it represents undisclosed income. 9.1 It was further submitted that the examination note, also placed on record by the ld.DR and stated to constitute the satisfaction u/s.153C, is undated, and therefore cannot be regarded as having been recorded prior to the issuance of notice u/s.153C. According to the ld.AR, the said examination note is at best a communication seeking approval from the Joint Commissioner, and cannot be equated with a legally valid satisfaction note as contemplated under the statute.

10. The ld.AR also placed reliance on the judgment of the Hon’ble Karnataka High Court in DCIT v. Sunil Kumar Sharma [259 taxmann.com 179 (Kar)], wherein it has been held that a consolidated satisfaction note vitiates the entire assessment proceedings. It was further submitted that the Special Leave Petition filed by the Revenue against the said judgment has been dismissed by the Hon’ble Supreme Court in DCIT v. Sunil Kumar Sharma [2024] 165 taxmann.com 546 (SC).

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 13 ::

10.1 On the issue of combined satisfaction being contrary to law, further reliance was placed on the decisions of the Pune Bench of the Tribunal in ACIT v. Subash Jivraj Jain [2025 (7) TMI 1496 – ITAT Pune] and Rameshbhai Harilal Patel v. ACIT [TS-1229-ITAT- 2025 (Pun)].

11. The ld.AR further relied upon the judgment of the Hon’ble Delhi High Court in Kishore Kumar Sharma v. ACIT [178 taxmann.com 315 (Del)], wherein it was held that failure on the part of the jurisdictional Assessing Officer to record reasons demonstrating how the seized material has a bearing on the determination of total income of the other person would invalidate the notice issued u/s.153C and all consequential proceedings. It was also submitted that the SLP filed by the Department against the said judgment was dismissed by the Hon’ble Supreme Court in ACIT v. Kishore Kumar Sharma [178 taxmann.com 661 (SC)].

12. Per contra, the ld.DR, through tabulated details filed along with written submissions, furnished assessee-wise particulars of seized material referred to in the satisfaction note and correlated the same with the relevant assessment years. It was submitted that the tabulation and analysis demonstrate that, even though the satisfaction note is consolidated, the Assessing Officer has, in substance, referred to incriminating material pertaining to each assessment year, thereby fulfilling the requirements of section 153C of the Act.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 14 ::

12.1 The ld.DR placed strong reliance on the decision of the Hon’ble Delhi High Court in Indian National Congress v. DCIT [2024] 160 taxmann.com 606 (Del), particularly paragraphs 22 to 24, to contend that while returns pursuant to section 153C of the Act must be filed year-wise, the satisfaction note itself need not be recorded separately for each year, and that a composite satisfaction would suffice. 12.2 Reliance was also placed on the judgment of the Hon’ble Supreme Court in CIT v. Calcutta Knitwears [2014] 43 taxmann.com 446 (SC), to submit that the statute merely mandates that satisfaction be recorded, without prescribing the manner or format thereof, and that courts should not add to or subtract from the language of the statute. Reference was made to paragraphs 23, 26, and 34 of the said judgment to emphasize the principles of literal and harmonious interpretation.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 15 ::

13.1 On the aforesaid basis, it was argued that the decision in Indian National Congress v. DCIT (supra), being a later and more direct pronouncement on the issue of combined satisfaction, should prevail, and therefore the notices issued u/s.153C of the Act in the present cases are valid.

14. In rejoinder, the ld.AR controverted the submissions of the ld.DR and submitted that the Revenue is impermissibly attempting to supplement or improve the satisfaction note by providing fresh correlations and explanations through written submissions. It was pointed out that the assessee-wise tables mapping seized material to assessment years, as contained in Annexure-I to the written submissions of the ld.DR, were never part of the original satisfaction note. 14.1 It was emphatically submitted that such post-facto justification is not permissible in law, reliance being placed on several judicial precedents including Prashant Joshi v. ITO [2010] 1 taxmann.com 90 (Bom), East Coast Commercial Co. Ltd. v. ITO [1981] 128 ITR 326 (Cal), Hindustan Lever Ltd. v. R.B. Wadkar [268 ITR 332 (Bom)], ACIT v. Nirmal Bang Securities (P.) Ltd. [67 taxmann.com 57 (Bom)] and Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd. v. ACIT [146 taxmann.com 569 (Del)], affirmed by grant of SLP in [2024] 159 taxmann.com 389 (SC), for the proposition that reasons cannot be supplemented by subsequent explanations or affidavits.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 16 ::

15. With respect to the reliance placed by the ld.DR on Indian National Congress v. DCIT (supra), the ld.AR submitted that the said decision is factually distinguishable, as the satisfaction note reproduced in paragraph 18 of that judgement clearly demonstrates year-wise reference to incriminating material, including amounts and dates, which is conspicuously absent in the present cases. It was therefore submitted that the said decision does not advance the case of the Revenue. 15.1 Without prejudice, it was contended that where two views are possible, the view favourable to the assessee must be adopted, in light of the decisions of the Hon’ble Supreme Court in CIT v. Vegetable Products Ltd. [88 ITR 192 (SC)] and CIT v. Kulu Valley Transport Co. (P.) Ltd. [77 ITR 518 (SC)].

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 17 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 18 ::

September 2019, i.e., nearly two years after the search operation, which commenced on 10.08.2017 and concluded on 26.09.2017. The corresponding assessments were completed between 27.12.2019 and 31.12.2019, within a period of three to four months thereafter. If a detailed analysis, as contended by the ld.DR, could be undertaken within such a short span prior to completion of assessments, we find no justification for the failure to carry out a proper examination of seized material and to record a legally sustainable, year-wise satisfaction during the intervening period of nearly two years. 20.3 The reliance placed by the ld.DR on the Investigation Manual bearing F. No. 286/161/2006-IT (Inv. II), to contend that there is no requirement for recording separate satisfaction for each year, does not advance the case of the Revenue. Even the said Manual, in paragraph 1.8, mandates that a “proper satisfaction” must be recorded prior to issuance of notice u/s.153C of the Act. For the reasons discussed hereinabove namely, that the satisfaction recorded is consolidated, not relatable to individual assessment years, and does not correlate the seized material with the respective assessment years, we hold that the satisfaction recorded in the present cases is not a proper satisfaction in the eyes of law, and does not even conform to the standards prescribed under the said Investigation Manual.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 22 ::

20.4 Further, the decision in Indian National Congress v. DCIT (supra) does not support the stand of the Revenue, as it clearly stipulates that the satisfaction note must encapsulate incriminating material pertaining to the assessment years concerned, a condition which remains unmet in the present cases. Consequently, we hold that the satisfaction notes recorded u/s.153C of the Act in the cases of the assessees do not satisfy the requirements of law and, therefore, vitiate the entire assessment proceedings.

21. Turning to the issue of consolidated satisfaction, we note that while the decision in Indian National Congress v. DCIT (supra) may be cited against the assessees, the Hon’ble Karnataka High Court in DCIT v. Sunil Kumar Sharma [2024] 259 taxmann.com 179 (Kar) has taken a view favourable to the assessee, and has observed as follows: “53. Further, satisfaction note is required to be recorded u/s.153C of the IT Act for each Assessment Year and in the impugned proceedings, a consolidated satisfaction note has been recorded for different Assessment Years, which also vitiates the entire assessment proceedings. In view of all these findings, it is said that the appeals do not have any substance for seeking intervention as sought for by the assessee/Revenue.”

21.1 The Special Leave Petition (SLP) filed against the judgment of the Hon’ble Karnataka High Court in DCIT v. Sunil Kumar Sharma was dismissed by the Hon’ble Supreme Court in DCIT v. Sunil Kumar Sharma [2024] 165 taxmann.com 546 (SC).

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 23 ::

22. We further note that in ACIT v. Subash Jivraj Jain [2025 (7) TMI 1496 – ITAT Pune], the Pune Bench of the Tribunal observed that, notwithstanding the existence of conflicting judicial opinions, the view favourable to the assessee should be adopted, in conformity with the law laid down by the Hon’ble Supreme Court in CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 (SC) and A.P. Electrical Equipment Corporation v. The Tahsildar & Ors. (Civil Appeal Nos. 4526–4527 of 2024). The relevant passages of the decision are reproduced below: “21. We find when the Revenue challenged the above order of the Hon’ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma (supra), the Hon’ble Supreme Court in SLP (Civil) Diary No.21526of 2024 vide order dated 20th August, 2024 dismissed the SLP filed by the Revenue.

22. We find following the above decision, the Co-ordinate Bench of the Tribunal in the case of Shri Rajendra Rameshlal Gugale vs. PCIT vide for assessment year 2017-18, order dated 30.12.2024 has quashed the assessment proceedings by observing as under:

8.7. Since in the instant case a consolidated satisfaction note has been prepared for assessment years 2012-2013 to 2018-2019, therefore, the consolidation satisfaction note being not in accordance with law, therefore, the entire assessment proceedings is liable to be quashed. We hold accordingly and quash the assessment.

If a provision of a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee, has got to be accepted. This is a well-accepted view of law.

24. Further, the Hon'ble Supreme Court recently in the case of M/s. A.P. Electrical Equipment Corporation vs. The Tahsildar & Ors. (supra) has held that if two decisions of this Court appear inconsistent with each other, the High Courts are not to follow one and overlook the other, but should try to reconcile and follow that decision whose facts appear more in accord with those of the case at hand. Following the above principle and considering the fact that the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue in the case of DCIT vs. Sunil Kumar Sharma (supra), therefore, we follow the decision of the Hon’ble Karnataka High Court in the case of DCIT vs. Sunil Kumar Sharma (supra) and hold that the satisfaction note is required to be recorded u/s 153C for each assessment year and a consolidated satisfaction note recorded for different assessment years would vitiate the entire assessment proceedings. Since in the instant case a consolidated satisfaction note has been prepared for assessment years 2012-13 to 2018-19, therefore, such consolidated satisfaction note being not in accordance with law, the entire assessment proceedings are liable to be quashed. We hold and direct accordingly.” 23. Accordingly, it is evident that the Pune Bench of the Tribunal in ACIT v. Subash Jivraj Jain (supra) has followed the decision of the Hon’ble Karnataka High Court in DCIT v. Sunil Kumar Sharma (supra), and has held that a separate satisfaction note is required to be recorded u/s.153C for each assessment year. It was further held & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan that a consolidated satisfaction note, covering multiple assessment years, would vitiate the entire assessment proceedings.

28. Since in the instant case also the Assessing Officer has passed a combined satisfaction note for assessment years 2012-13 to 2018- 19, therefore, respectfully following the decision of the Co-ordinate Bench of the Tribunal in the case of Chitra Narendra Parmar vs. ACIT (supra) (to which both of us are parties), we hold that the assessment proceedings initiated u/s 153C of the Act on account of combined satisfaction are not valid in law and accordingly the same are quashed. Since the assessee succeeds on this legal ground, the grounds challenging the addition on merit are not being adjudicated being academic in nature. The appeal of the assessee is accordingly allowed.” 25. In a similar vein, the Jodhpur Bench of the Tribunal, in Anjana Constructions v. ACIT [2025] 128 ITR (Trib) 148 (Jodhpur), has also held as follows:

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 26 ::

The Hon’ble Supreme Court in case of Sunil Kumar Sharma (supra) upheld the order of the Hon’ble Karnataka High Court in DCIT VS Sunil Kumar Sharma (2024) 469 ITR 197 (Kar). We respectfully follow the order of Hon’ble Karnataka High Court which was duly affirmed by the Hon’ble Supreme Court accordingly, the initiation notice u/s 153C is quashed. Accordingly, the assessment for A.Ys 2014-15 & 2015-16 u/s 153C r.w.s. 143(3), date of order 26/12/2018 are quashed.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 27 ::

2) The approvals also refer to the details provided by the assessees while it is the case of the Ld.DR that the assessees did not cooperate in the assessment and did not submit any details during the course of assessment, which also reflects non-application of mind on part of the JCIT.

3) It can also be seen that in the table that is drawn up in the approval, there are arithmetical discrepancies i.e., numbers in the table of additions provided does not add up and the undisclosed income is mentioned as “00” in some of the years, which go on to reflect that the approval has been granted without application of mind 4) It can further be seen that all the approvals are granted on a single day and that the draft assessment orders are also dated on the same day, i.e., 27.12.2019. It can be seen that in all there are 61 orders and that it is impossible to grant approval for 61 cases after reading such voluminous draft assessment orders, the appraisal report submitted by the Investigation Unit and analyzing the seized material within such a short span.

It may particularly be noted that the assessment order reproduces substantial portions in Tamil and that it is highly unlikely that the JCIT without translation would have been able to comprehend the same. Also, the seized material are entirely in Tamil which also goes against the probability of application of mind.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 30 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 32 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 33 ::

33.1. The ld.AR further relied upon the decision of the Hon’ble Allahabad High Court in PCIT v. Sapna Gupta [2023] 147 taxmann.com 288 (All), wherein it was held that it is humanly impossible for an approving authority to examine records of 85 cases in one day and apply independent mind to each case. The Court concluded that the approval was granted mechanically, without application of mind. In this context, the ld.AR submitted that in the present case, approvals have been granted in respect of 61 cases in the P. Palanisamy group, and it is not known how many other approvals may have been granted by the JCIT on the same date, which further supports the inference of non-application of mind.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 34 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 35 ::

ACIT (supra), PCIT v. Shivgori Builders (P.) Ltd. [2025] 180 taxmann.com 180 (Delhi), and ACIT v. Splendor Landbase Ltd. & Anr. [2025] 126 ITR (S.N.) 85.

“6 That, the Offices of the Assessing Officer and Range Head were in the same Office Building in Coimbatore and for the effective monitoring and to receive first hand information regarding the progress of the cases, regular discussion and briefing were conducted with the Assessing Officer.

7. That the Authorized Representative of the assessee Shri Haja Ali has appeared before me periodically and the relevant issues and seized documents were discussed in presence of the Assessing Officer G Karthikeyan. That, the Authorised Representative has also discussed regarding working of undisclosed income to apply before the Hon. Income Tax Settlement Commissioner (ITSC), however the assessee didn’t proceed with the application before ITSC.

8. That, I have constantly supervised the proceedings as Range Head and discussed issues from time to time with the Assessing Officer and therefore at the time of submitting the draft assessment order, I was well acquainted with the facts, issues and findings of the cases.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 37 ::

Therefore, after due diligence, I used to approve those draft orders, after necessary corrections and modification, if required.

9. That, the approval has been accorded after due diligence and complete understanding of the facts and issues with prior application of mind and as per the Search and Seizure manual of CBDT dated 22.12.2006.”

Accountant Member is that approval u/s.153D of the Act by the Additional CIT is merely administrative in nature to safeguard internal checks and balances without affecting the quasi-judicial powers of the Assessing Officer and creating any prejudice to the assessee. It was further noted by the learned AM that while granting approval u/s.153D of the Act, the Additional CIT does not act as a reviewing/appellate authority to allow or disallow the additions proposed by the Assessing Officer.

considers relevant. Hon'ble Supreme Court held that, if the Assessing Officer fails to follow any judgment of the High Court or of the Supreme Court, the assessee has adequate statutory remedies by way of an appeal and revision against the assessment order but, the Court should not try to control the mode and manner in which an assessment should be made. Hence, the higher authority including the Additional CIT/JCIT or CIT or CCIT, being administrative controlling authorities ofthe Assessing Officer, are not entitled to interfere in the judicial process of the Assessing Officer while framing assessment. In view of the above, I am of the view that, while making an assessment, the Assessing Officer is solely to be guided by the provisions of law and he cannot avail of any instructions or directions given by his higher authority including CBDT in making a particular assessment in a particular way. While passing assessment orders, he is only bound by what, if any, has been directed u/s. 144A of the Act by his Additional CIT/JCIT or the instructions issued by the CBDT u/s. 119 of the Act or what has been decided by the appellate authorities as mentioned in the Act. He has also to follow the precedence established by Hon'ble High Courts or the Supreme Court. The proceeding u/s.153D for granting approval is entirely different from the process of making assessment. Once draft assessment is prepared, the process of approval starts u/s.153D of the Act. Then the authority prescribed u/s.153D i.e., the Additional CIT/JCIT has to apply his mind for grant of approval after verifying the assessment records, seized records, etc.

Additional CIT/Joint CIT, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer and the approval must reflect the application of mind to the facts of the case. The CBDT itself recognized the importance of this provision and the above laid down principle and hence issued Manual of Office Procedure in February, 2023 in exercise of powers u/s. 119 of the Act. Vide Para 9 of Chapter 3 of Volume-II (Technical), a clear procedure is devised i.e., how an approval is to be granted for draft assessment for passing of assessment order in search cases. According to the Manual, the Assessing Officer should submit the draft assessment order for such approval well in time along with docketed in the order sheet, a copy of the draft assessment order, covering letter filed in the relevant miscellaneous records folder. Even, it is noted that due opportunity of being heard should be given to the assessee by the supervisory officer giving approval to the proposed block assessment, at least one month before the time barring date. It is further noted that once such approval is granted, it must be in writing and filed in the relevant folder indicating above after making due entry in the order sheet. This is the mandate provided in the office manual of the Department. In view of above, I am of the view that the 'approval', as mandated u/s 153D of the Act, signifies a product of human thoughts based on the given set of facts and interpretation of the applicable law. It provides equality in treatment and thus prevents bias, prejudice and arbitrariness. It also prevents and avoids inconsistent and divergent views. The power of approval to the specified authority i.e., Superior authority has been envisaged with the objectives that no illegality or biasness, to either of the sides i.e., the assessee or the Revenue, remains.”

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 42 ::

Case Law relied The substance of CLs Overruled by decision of on by DR relied on by DR Third Member Kailash Gahlot Para 22: The association, Dheeraj Chaudrary v ACIT v DCIT formally or informally, of [2025] taxmann.com the Range Head / Addl. (Delhi-Trib) (TM)-Enclosed Del / 2023 u/s.153D are from the in S.No.7 of Case Law Book beginning and after – 3 receipt of the Appraisal Report as inbuilt in the Para 20 (Page 86 of CL Book SOPs and mere absence – 3) - the order of the of its recitals in the order Hon’ble Third Member takes u/s.153D cannot be note of the procedure noted inferred as non- by the Hon’ble Accountant application of mind. Member that that Range Basically the AO and Head and AO work as team Range Head work as a members and goes on to team during assessment hold in Paras 21 & 22 (Page and it is not as if 87 of CL Book – 3) that assessment records clear procedure is devised change hands for the first by CBDT vide Manual of time at the time of Office Procedure issued in approval. February 2023 vide Para 9 of Chapter 3 of Volume-II Para 25: The AR has not (Technical) on how an brought on record any approval is to be granted for material before us to passing assessment orders & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan demonstrate that the SOP in search cases. Hon’ble was substantively not Third Member in Para 23 followed. (Page 88 of CL Book-3) holds that in the present case, procedure is not at all followed which means that the approval granted is mechanical in manner and without application of mind of the approving authority.

The Hon’ble Third Member in this case has observed that expect in terms of section 144A of the Income Tax Act, no direction can be given by the JCIT / ACIT under any other provisions of the Act. The process of approval u/s.153D cannot Kailash Gahlot be said to be similar with v DCIT assessment and starts only / after the draft assessment Del / 2023 order is forwarded to the Para 25: Section 153D JCIT / ACIT does not state approvals has to be through separate letters for each Paras 8 & 9 (Pages 82 and A.Y. The word each is not 83 of CL Book-3) of the to be read qua approval order of the Hon’ble Third but it is qua assessment Member – “In the present order for each relevant case before me also, as A.Y. evident from the copy of approval, as reproduced & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan above, granted by the Additional CIT, is for all the six assessment years vide one approval. Hence, on this count also, the approval granted by the Additional CIT is bad in law and consequent assessment order passed in all these six assessment years is bad in law.” Ramji Vaish & Para 44: Assessee has It is evident from approval Ors v DCIT & not been able to prove itself, which has been issued Ors that the JCIT gave the for individual assesses by / approvals mechanically, referring to “firm” and Alld / 2023 while the department has based on the other placed both guidelines discrepancies pointed out and the uncontroverted i.e,, • Numbers in the table affidavit of the approving authority. Therefore we of additions provided are not able to hold the does not add up. • Undisclosed income is view that the approvals have been rendered mentioned as “00” in mechanically, without some of the years. reference to the materials that the approval has been on record issued blatantly without Para 50: Approval to be application of mind. granted for each Dheeraj Chaudrary v ACIT assessment year and [2025] taxmann.com 360 therefore set aside to (Delhi-Trib) 9TM) -Enclosed obtain approvals in in S.No.7 of Case Law Book accordance with law. – Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 45 ::

Paras 8 & 9 (Pages 82 and 83 of CL Book-3) of the order of the Hon’ble Third Member – “In the present case before me also, as evident from the copy of approval, as reproduced above, granted by the Additional CIT, is for all the six assessment years vide one approval. Hence, on this count also, the approval granted by the Additional CIT is bad in law and consequent assessment order passed in all these six assessment years is bad in law.”

by the assessee are not required to be adjudicated and are accordingly left open.

45. We note that although the ld.AR raised several grounds on merits, no substantive submissions were made regarding the cash seized from the assessee’s premises. In the circumstances, we hold that the seized cash belongs to the assessee from whose premises it was recovered, and this ground of the assessee is therefore dismissed. However, the addition cannot be sustained in view of our conclusion that the assessment itself is invalid for the reasons stated above.

46. The ld.AR has also contended that the provisions of section 115BBE of the Act, which provide for higher rates of tax, cannot be invoked for assessment years prior to AY 2018-19. Although this & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan issue is rendered academic in the present proceedings, we note that the Hon’ble Madras High Court in S.M.I.L.E. Microfinance Limited v. ACIT (VACIT 2024 SCC OnLine Mad 8416) has held as under: “16. The next contention raised by the Learned Senior Counsel is that the u/s. 115BBE the rate of tax imposed is increased from 30% to 60% and the same is applicable with effect from 01.04.2017 onwards as per the amendment. Therefore, the same is applicable to any transaction from 01.04.2017 onwards and nor prior to any transactions prior to 01.04.2017. Since in the present case all alleged transactions are for the period from 08.11.2016 to 30.12.2016, hence the erstwhile rate of tax 30% only is applicable. But the contention of the revenue is that the amendment was with effect from 01.04.2017 and hence the same is applicable for the financial year 2016-2017 and the assessment year 2017-2018. Further the amendment to section 115BBE is directly related to demonetization which would be evident from objects and reasons for such amendment. In order to consider the same, the objects and reasons of Taxation Laws (Second Amendment) Bill 2016 is extracted hereunder: …….. 17. in the aforesaid objects and reasons nowhere it is stated that due to "demonetization" the unaccounted money ought to be charged 60% rate of tax. It only states that step had been taken to curb black money by withdrawing Specified Bank Notes of denomination of Rs.500 and Rs. 1000. And also states the people may find illegal ways of converting their black money into black again, hence as per experts advice heavy penalty ought to be levied. From the language of the object "that instead of allowing people to find illegal ways of converting their black money into black again", it is evident that the government is intended to impose the same for future transactions. Especially the use of word "again" in the object would clearly indicate it is for future transactions i.e. from 01.04.2017. Therefore this Court is of the considered opinion that the revenue is empowered to impose 60% rate of tax for the transactions from 01.04.2017 onwards and not prior to the said cut-off date. And for prior transaction the revenue is empowered to impose only 30% rate of tax."

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 48 ::

19 are hereby quashed on the grounds that the satisfaction u/s.153C are consolidated in nature, thereby contravening the statutory provisions and having been issued without application of mind. 50. Since the assessments are quashed on the basis of Grounds No.3, the remaining grounds raised by the assessee need not be adjudicated and are accordingly left open.

51. It is noted that although the ld.AR raised several substantive grounds, no meaningful submissions were advanced regarding the jewellery seized from the assessee’s premises. With respect to the addition made on account of the jewellery, the Central Board of Direct Taxes, by Instruction No. 1916 dated 11.05.1994, has provided that gold jewellery and ornaments up to 500 grams per married woman, 250 grams per unmarried woman and 100 grams per male of the family need not be seized during a search operation. The Hon’ble Allahabad High Court in Ghanshyamdas Johari (41 Taxmann.com 295) has held that once jewellery falls within the ambit of Instruction No. 1916, no addition can be made in respect of the same. Similar conclusions have been reached in CIT v. Ratanlal Vyaparilal Jain [2011] 339 ITR 351 (Guj), CIT v. Satya Narain Patni [2014] 366 ITR 325 (Rajasthan) and CIT v. Ghanshyam Das Johri [2014] 41 Taxmann.com 295 (Allahabad). Accordingly, we hold that the value of the gold belongs to the assessee from whose premises it was seized and therefore this ground of the assessee is dismissed.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 50 ::

However, the addition cannot be sustained, as the jewellery is covered by Instruction No.1916, and in any event the assessment itself is invalid for the reasons stated earlier.

55. We note that although the ld.AR raised various substantive grounds, no meaningful submissions were advanced regarding the cash seized from the assessee’s premises. Accordingly, we hold that the seized cash belongs to the assessee from whose premises it was recovered, and this ground of the assessee is dismissed. However, the addition cannot be sustained, as the assessment itself is invalid for the reasons stated above.

56. With respect to the addition on account of jewellery, the Central Board of Direct Taxes, by Instruction No.1916 dated 11.05.1994, has provided that gold jewellery and ornaments up to 500 grams per married woman, 250 grams per unmarried woman and 100 grams per male of the family need not be seized during a search operation. The Hon’ble Allahabad High Court in Ghanshyamdas Johari (41 Taxmann.com 295) has held that once jewellery is covered by Instruction No. 1916, no addition can be made in & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan respect thereof. Similar conclusions have been reached in CIT v. Ratanlal Vyaparilal Jain [2011] 339 ITR 351 (Guj), CIT v. Satya Narain Patni [2014] 366 ITR 325 (Rajasthan) and CIT v. Ghanshyam Das Johri [2014] 41 Taxmann.com 295 (Allahabad). Accordingly, we hold that the value of the gold belongs to the assessee from whose premises it was seized and therefore this ground of the assessee is dismissed. However, the addition cannot be sustained since the jewellery is covered by Instruction No. 1916 and, in any event, the assessment is invalid for the reasons stated above.

by the assessee are not required to be adjudicated and are accordingly left open.

60. The ld.AR has also contended that the enhanced rate of tax u/s.115BBE cannot be invoked for assessment years prior to AY 2018-19. Although this issue is academic in the present proceedings, following the decision of the Hon’ble Madras High Court in S.M.I.L.E. Microfinance Limited v. ACIT (SCC OnLine Mad 8416), we have held in the case of P. Palanisamy that the enhanced rate of 60% u/s.115BBE is not applicable to transactions occurring before 01.04.2017. The ratio of that decision shall apply mutatis mutandis to the present case.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 54 ::

V. P.Kuppuchamy – AY 2014-15 to 2018-19 A.Y. 223 / Chny / 2025 2015-16 215 / Chny / 2025 2016-17 216 / Chny / 2025 2017-18 217 / Chny / 2025 2018-19 218 / Chny / 2025

by the assessee need not be examined and are accordingly left open.

63. We note that the ld.AR has raised several grounds on merits but has not made any substantial submissions with regard to the cash seized from the assessee’s premises. Accordingly, we hold that the cash belongs to the assessee from whose premises it was & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan recovered, and this ground of the assessee is dismissed. However, the addition cannot be sustained, as the assessment proceedings have been held to be void for the reasons stated above.

A.Y. Undisclosed Undisclosed Unexplained investment business income money u/s.69 u/s.28 u/s.69A Outstanding loan Interest income Cash seized as per Ready Run and chit Baki Book commission as per seized material 2010-11 3,75,82,000 52,25,677 - 2011-12 2,14,35,000 1,22,21,964 - 2012-13 6,93,10,000 2,18,32,467 - 2013-14 1,58,67,000 3,61,51,172 - 2014-15 5,33,000 3,87,64,907 - 2015-16 1,63,10,665 4,03,71,296 - 2016-17 1,78,44,300 4,61,36,950 - 2017-18 - 4,27,25,426 - 2018-19 - 4,68,07,051 79,56,500 Total 17,88,81,965 29,02,36,910 79,56,500

1. The seized pages referred to by the Assessing Officer do not contain any reference to the firm’s name, business details, address, PAN, or any other identifying particulars. The mere presence of the word “Partners” or initials does not ipso facto establish that the material belongs to the assessee firm. In absence of exclusive identification, mere mentioning of & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan individuals who are partners in multiple entities cannot be used to attribute ownership of the documents to a particular firm.

2. The Assessing Officer has attempted to establish ownership on the footing that some seized documents bear signatures purportedly belonging to one of the partners i.e, Shri.P.Palanisamy. However, the signatures appearing across different pages are inconsistent and do not match each other, nor do they correspond to the signatures appearing in the partnership deed. When the alleged signatures are visibly different and unverified, no legal inference of ownership can be drawn merely based on the same.

3. One page of the seized material makes a stray reference to a bank account and contains only a Swastik mark without any corresponding entries, accounting narration, or identifiable linkage. Such random notings, devoid of context, accounting relevance, or corroborative entries, cannot form the basis for presuming ownership or maintenance of books by the assessee firm.

4. The Assessing Officer’s reliance on minutes of the meeting to state that the seized material belongs to the firm is not tenable. The minutes contain signatures of multiple persons who are not partners of the assessee firm. Only a few correspond to partners of the firm. This shows that the document relates to a wider group or unconnected entities and not to the assessee firm. The presence of signatories who are not partners goes blatantly against the inference of the Assessing Officer that the seized books pertain to the assessee firm and consequently the seized books cannot be used to determine the income of the assessee firm. This coupled with point no.2 elaborated above clearly proves that the seized material does not belong to the assessee firm.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 59 ::

5. The individuals mentioned in the seized documents are partners in several entities and not exclusively in the assessee firm. Merely their names appearing in seized material does not conclusively prove that the books belong to the assessee firm.

6. The Ld.DR in the course of submissions stated that in a few instances, statements were recorded from the purported borrowers who confirmed that they had borrowed monies and repaid to the assessee firm. However, it may be noted that intentionally the Department has chosen not to take any action against such person for violation of sections 269SS & 269ST, which clearly shows that the statements have not even been relied on completely by the Department and that the Department is only trying to use a pick and choose to attack the assessee firm and let go of the persons who gave the statements. This can also be understood as some kind of an inducement given to the persons who gave the statement by not using it against them. Further these statements recorded in terms of section 131 lack evidentiary value.

7. The Ld.DR in the course of his submissions explained the modus operandi by stating that Shri.P.Palanisamy was the controlling person and that the books belong to the firm and these are regular books and not mere loose sheets. In this connection, it is most humbly submitted that these are not regular books maintained by the firm as alleged by the Ld.DR and it cannot be taken as belonging to the firm, particularly in the light of demonstrable evidence to show that the books do not belong to the firm in the preceding paras and the tables annexed to this submission. Though the Ld.DR in the course of his submissions urged that the books found in the firm’s premises must be taken as belonging to the firm, it is humbly submitted that no evidence was produced to show which books were belonging to which firm. At any rate, section 292C is only a presumption which is rebuttable and in the light of the overwhelming evidence to show that the books do not belong to the firm, the presumption u/s.292C cannot be & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan pressed into service to treat the books as belonging to the firm.

Without prejudice to the above, even if it is presumed that the seized material belong to the assessee, the addition cannot be made in the hands of the firm since the amounts brought in as capital / contribution, which form the basis of addition, is not unexplained as the seized material clearly refers to the names of the contributors which the Assessing Officer himself states in various places in the assessment order.

8. The Assessing Officer has alleged that unexplained capital was introduced “under the guise of depositors.” However, a bare perusal of the seized material reference made by the Assessing Officer shows capital introduced as “PP” and “Partners”. There is nothing whatsoever in the seized material to suggest that the monies were introduced in the guise of depositors. The allegation is purely based on assumption and surmise, not on any concrete evidence. When the documents explicitly record partner contributions, attributing those amounts to fictitious depositors is beyond the contents of the seized material and legally untenable.

9. The Assessing Officer has referred to a statement recorded u/s.132(4), wherein it was affirmed that capital was introduced only by partners and unsecured loans were taken by partners from their own friends and relatives. This admission establishes that the funds, if at all, are traceable to the partners (even where it is not known how much belongs to each partner) and not to the firm. When the source and nature of funds are clearly stated to be personal contributions, such amounts cannot be added as unexplained income in the hands of the assessee firm, even where it is not known how much belongs to each partner.

10. Without prejudice to the above contentions, even if the presumption u/s.292C is invoked and it is presumed that the seized papers reflect true contents then any addition based on such presumption, cannot be made in the hands of the & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan assessee firm as the amounts appearing in the seized material only belong to the partners (even where it is not known how much belongs to each partner) appearing in the seized material, and not the firm as a whole. The firm cannot be taxed for contributions made by others. When the material itself identifies the contributors, there is neither scope nor justification for adding the amounts as unexplained income in the firm’s hands.

11. Copy of seized material named as “THITTAM DOC1 DDGL to THITTAM DOC5 DDGL” in the Pen Drive given by the Department is kept in S.No.2 of Paper Book 3 (Pages 2 to 50 of Paper Book 3). It is not known whether these documents belong to PP Financiers, Oddanchatram or PP Enterprises, Oddanchatram. It is unclear as to how the Assessing Officer has arrived at the quantum of addition based on the above documents is unclear.

12. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon’ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 – 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon’ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in Ahd 2024 Ahmedabad ITAT (Pages 260 – 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A.Ys.2010-11 to 2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19.

The reference to relevant page numbers in the assessment orders for assessment years 2010-11 to 2018-19 in connection with the above points are enclosed in a table format along with explanation as annexures 1 to 9 to this submissions.”

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 62 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 63 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 64 ::

Modus operandi and control of the businesses by P Palanisamy. [The paper book - I need to be read along with this part.] Shri P Palanisamy is the managing partner and major shareholder who established the money lending business across south Indian States of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh. Apart from these, the assessee runs line business in many States/Cities. The assessee established the money lending business and chit business in these States. The assessee has established the following firms apart from his line investments & proprietary concerns. M/s.PP Financiers, Oddanchatram M/s.PP Enterprises, Oddanchatrrm M/s.PP Financiers, Karur M/s.PP Financiers, Chennai M/s.PP Construction, Bangalore M/s.PP Enterprises, Bangalore Shri P.Palanisamy has established firms to run the businesses in different places. Shri Palanisamy has been the major shareholder in all these firms and takes along others as partners who are the local persons as well as the family members / friends of the managing partner. A local partner -would be the working partner in these firms & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan who handles the day-to-day operations. The assessee has established a robust accounting system to maintain every firm’s books of accounts and the separate registers are maintained for each domain of the accounting like loan register, loan repayment etc etc. The books maintained are daily, weekly and monthly basis for receipts and payments and the monthly books are named as thittam books. This modus of accounting system is followed in all the firms of the group in different places. This is very evident from the fact that the two-digit system of suppression is established by the assessee in all the business firms and the same modus of the two-digit suppression system the assessee has followed in his personal accounts as well. This is very evident from the facts narrated in the assessment order that the expenditures of mobile recharge, petrol charge etc are in single digits with two-digit suppression in the personal accounts of P Palanisamy. The receipts, expenditure and the loan accounts, capital contribution etc are all entered with two-digit suppression mode which was confirmed by the partners/ employees who were present during the search in different firms and the statements were recorded u/s. 132(4) of the Income Tax Act 1961. In the sworn statement recorded u/s 132(4) from N Sundaramoorthy, partner of PP Enterprises Oddanchatram dated 11.08.2017 in Q No. 18, the partner has confirmed the two-digit suppression system with example. The same was confirmed by Shri Palanisamy in the statement recorded u/s. 132(4) as well. The same was corroborated by the debtors who were present at the premises of the two firms and whose statements were recorded by the search parties u/s.132(4) also proved the loan amounts were entered in the loan accounts in the books of the firms with two-digit suppression.

Shri Palianisamy established total control of the businesses of various firms that were established at different places by making sure that every month the books of accounts were sent to Bangalore, the place of residence of Shri Palanisamy to get the accounts verified and approved. After the verification of the accounts, Shri Palanisamy put his initials “PP” in the monthly thittam books. This ensures that every month the books are getting examined and approved by him and ensures that no siphoning of the money or any other malpractice is happening in various firms in which he has the major stake. This is money lending business and a defect in oversight will cost dearly to the partners and the major partner Shri P Palanisamy. From the sworn statements recorded and the books and documents seized it is seen that all the business premises like M/s. P.P. Financiers, M/s. P.P.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 66 ::

Enterprises and M/s. P.P. Construction etc had Mr. P. Palanisamy as the Primary partner and at the end, all the final decisions were made by Mr. P. Palanisamy. Apart from being a partner in all the firms, Mr. P. Palanisamy runs finance business under his individual capacity too. V- PPF and O- PPF are money lending in the proprietorship concerns and similar types of nomenclature is being followed by the assessee like PPF- 1, PPF- 2, PPF- 3 in the firms also. Apart from the business through the firms, he has major stakes in line business and the assessee runs/invested approximately 120 / 170 line businesses in various cities of India. The assessee P. Palanisamy is the owner of P.P. Complex where he receives rental income and he further runs two business units viz., M/s. P. P. Financiers Karur and M/s. P.P. enterprises karur in the said P.P.Complex.

The assessee Shri Palanisamy has regular signature and the initials, where he Initals as “PP”. The same has been extracted by the CIT(A) in the appellate order. The signature in partnership deed is long signature whereas Mr. P. Palanisamy had signed his initial “PP” on the pages of seized thittam notes. The extract of the same is attached herewith, wherein the Ld.AR compared the signature of Mr.P.Palanisamy with in the thittam books with that of his signature in Sale deed, the same is extracted herewith for clarification.

A bare look at the signatures clarifies the initials and the regular signature.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 67 ::

The assessee’s claim of existence of a different entity Apart from-the detailed discussion of the above paragraphs of establishment, management and total control of the entire entities of the Group by Shri P Palanisamy, the modus operandi and why and how the books of accounts seized from the respective firm’s premises belong to the respective business firms/entities are also explained pointwise in the CIT(A) order in the case of Palanisamy in the paragraphs 7.2.4 to 7.2.6. This is apart from the plethora of the documents, evidences and books off accounts that were seized during the search find brought out by the Assessing Officer during the assessment proceedings of which the sample documents were scanned and made part of the assessment order, along with the Sworn statements recorded from the partners, employees and debtors in each of the firms. It is to be noted that in every statement recorded during the search u/s.132(4) of the Act from the employees, these partners and employees were asked questions about the respective firms and the partners and employees answered about the respective firms with absolute clarity. The documents/books seized were put to the partners and employees and asked various questions about the documents/books and the partners and employees answered the questions describing the various entries in the seized books of accounts. The partners and employees and P Palanisamy and the debtors all unanimously referred / discussed and answered the respective firm’s business, and answered various questions that were asked about the seized books of accounts of the respective firms and proprietary concerns. Nowhere the partners, the employees, the debtors or Shri Palanisamy referred about any other entity that exists in any of the places or premises of the firms/prop.concerns.

During the assessment proceedings, the assessee was provided all the seized documents, satisfaction notes and the sworn statements. The Notices, various questionnaires and show cause notices were issued periodically. Sufficient opportunities were provided to the assessee which is evident and recorded in the assessment orders. The assessee has made submissions disowning the books of accounts that were seized from the premises of various firms and the proprietary concerns stating that there belong to another entity namely “People Public Fund”. The same was made its way first time in the submissions during the assessment proceedings and the Assessing Officer has rebutted this afterthought with very sound reasoning. The CIT(A) has also dealt with the submission and discussed and rebutted the said submission in the appellate order with absolute clarity. Combining the entire detailed discussion on the establishment, management and control of the firms & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan along with the det ailed discussion under the heading of assessee’s new claim of the a fictional entity fictional entity, conclusively establish that the claim of namely fictional entity “People Public Fund” is a complete afterthought.

Apart from the cumulative evidences, the presumption u/s. 292C is invoked by the Assessing Officer and the same is absolutely applicable in the case of the assessee firms and individuals.

4. Submission on the maintenance of accounting system of assessee group - As example PP Financiers, Karur: The Accounting Systems /Modus operandi maintained in the Group Entities:

M/s.P.P.Financiers Karur (AY 2018-19): The accounting system and the modus operandi that are followed in all the entities are same and therefore one entity is detailed here discussion, PP Financiers, Karur.

It is to be submitted that the Ld.AR during the hearings had raised doubts about the scanned sample copies of seized documents in overall context in few instances. In this connection, it is submitted that the scanned copies are sample pages of the seized books of accounts which are daily, weekly, monthly books and thittam books which are running ledgers for many years. Incriminating material namely “Thittam Books” which were seized, are nothing but monthly ledger accounts of the business. The entire books of accounts were scanned and provided to the assessee Counsel as per the directions of the Tribunal. These documents are running ledgers in each of the firms and businesses and the scanned copies in the assessment order reflects the crux of the unaccounted accounts of the assessee firms and prop, concerns. Therefore, during the hearings, the accounting system maintained by the assessee was elaborated using the firm PP Financiers, Karur and it is submitted that the same system has been followed by all the entities of the Group. Since all the firms are operating in similar modus and system for clarification the modus operandi of one firm is discussed below.

It is to be noted that the proper books of accounts and registers are kept by the entities for correct maintenance of the receipts, expenditures, loans given, loans interest charged, loan repayment, capital introduced etc. The entities followed proper accounting and & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan distinct Profit and Loss account and Balance sheets are maintained in the form of the monthly books along with other daily, weekly books. The Assessing officer has incorporated scanned copies of sample pages of the different pages of the seized books / seized Profit and Loss account and Balance Sheets in the assessment orders.

The firm PP Financiers Karur has 3 money lending lines PPF I, PFF II and PPF III. In the PP Financiers Karur, the Table in page No.5 of the assessment order reflects the receipts side of the business which has interest income and the chit commission income which are the cumulative amount that is available in the thittam books of the assessee. This is backed by the daily books and the weekly books and as submitted, the running ledgers for the years since the establishment of the businesses. The same table in page No.5 represents expenditure that is available in the books of the assessee. The details of expenditures and the two-digit suppression of the entries is elaborated by the Assessing Officer in the page No.9 of the assessment order and the consolidated expenditure in each line of the business (PPF I, PPFII and PPF III) are taken and stated in the order.

In page no 11, B-6 represents the balance sheet figures of the business. It has the consolidated figures of loan, outstanding loan, loan repayment details etc which are month wise entries and again reflects the precise and correct format in which the assessee has established the accounting system and meticulously and perfectly maintained in each of the business concerns. The table in page No. 11 reflects the cash balance and loan balance in teach of the lines PPF I, PPF II and PPF III.

In page No17, the working partner Shri DS Palanisamy in the sworn statement u/s 132(4) of the Act admitted the seized books of accounts and the total outstanding loan of the assessee firm. The Table in page 19 represents the debtors whose statements were recorded and whose loan amounts are reflected in the assessee’s books of accounts with the two-digit suppression system. The assessee firm has the modus of last two digits in the paisa column to suppress the income/ profits and other entries in the accounts. This was also confirmed by one of the managing Partner of the firm Mr. D.S Palanisamy. This practice of suppression of two- digits did not just stop with the firm alone this it was the similar practice happening all across the firms as the system established by P Palanisamy. Further, the page No.27 the order reflects the total loan outstanding in the 3 business lines of the firm and & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan consolidated monthly books of the three money lending businesses. The pages 28 and 29 reflects the breakup and the outstanding debtors and the scanned copies of the seized books of the accounts. Also, the entire loan register is available and the same is referred in the assessment order in page No.30.

In the last part of the assessment order, the Assessing Officer has given the seized documents used, statements recorded and the opportunities given to the assessee during the course of the assessment proceedings.

It is to be noted that the assessee has maintained a solid accounting system in the form of daily registers, weekly registers and monthly consolidated books with Profit and Loss account and Balance sheet. The same is maintained in proper books format and the consolidated figures are readily available. It is to be noted that the assessee has established an accounting system which reflects the meticulous and proper nature of accounting in all the firms and individual businesses. It also reflects that the main Partner Shri P Palanisamy ensures that by examining and approving these accounts on monthly basis, complete control of the business is with him and no single paisa is siphoned off by the employees or any of the partners. This robust system of the accounts which are unaccounted, were seized by the Department during the search and seizure operations in each of the firm’s/prop.Concerns/entities premises. The modus of accounting maintained in each of the firms and the individual business is same and proper accounting is maintained in all the firm’s places and other business premises/proprietary concerns of the Group.

5. The assessee submission before the AO and CIT(A) Assessee submission during the Assessment Proceedings and the findings of the Assessing Officer - on various legal matters:

The Assessing Officer has issued summons to the partners assessment proceedings to examine them under the oath. However, none of the partners appeared before the Assessing Officer and the same is detailed in the assessment order. The assessee’s submission and the findings of the Assessing Officer, the discussion about the fictional entity, the retraction of the statements after two years, and the invoking of the presumption u/s.292C along with, various case laws are detailed in each assessment order by the Assessing Officer. In the case of PP Financiers Karur (AY 2018-19), under the heading C, from page number & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 71 ::

37 to page number 44 the discussion is available. The detailed discussion conclusively brings about the concrete nature of the evidences, the lack of value in the present submissions of the assessee, why and how the retraction is not valid and the solid presumption u/s. 292C of the Income Tax Act. The Assessing Officer has invoked the presumption u/s.292C of the Act with elaborate reasoning in the assessment orders.

Detailed Discussions made by the Ld. CIT(A)

The legal issues and the grounds pertaining to the fictional entity, presumption u/s 292C etc was discussed in very detail by the Ld. CIT(A) in the appellate order. The detailed discussion is included in the paragraphs starting from 7.2.1 to 7.2.40 (PP Financiers Karur AY 2018- 19) of the appellate order. The Ld CIT(A) has considered all the submissions made by the assessee and made detailed findings on all the issues that are raised by the assessee. The CIT(A) has discussed about the retraction that was made after two years,' the fictional entity that was brought as afterthought by the assessee, the presumption u/s.292C of the Act etc and with detailed discussion dismissed the grounds.”

In the Swastik page which was scanned and made part of the assessment order, there is a bank account number, which was verified by the Assessing Officer. The bank account is the official bank account of the firm M/s PP Financials Oddanchatram in the Return of Income and the relevant page of ROI where this bank account is entered/ appeared also scanned and attached in the assessment order. Such & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan conclusive and corroborative evidences are scanned and made part of the order by the Assessing Officer.”

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 75 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 76 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 77 ::

"22. A presumption is an inference of fact drawn from other known or proved facts. It is a rule of law under which courts are authorized to draw a particular inference from a particular fact. It is of three types, (i) "may presume", (ii) "shall presume" and (iii) "conclusive proof". "May presume" leaves it to the discretion of the Court to make the presumption according to the circumstances of the case. "Shall presume" leaves no option with the Court not to make the presumption. The Court is bound to take the fact as proved until evidence is given to disprove it. In this sense such presumption is also rebuttable. "Conclusive proof gives an artificial probative effect by the law to certain facts. No evidence is allowed to be produced with a view to combating that effect. In this sense, this is irrebuttable presumption" Relying on the above decision of the Hon’ble Supreme Court, we find that the presumption u/s.292C by usage of the word “may” gives discretionary powers to adopt the presumption and also makes the presumption rebuttable.

2014-15 - 36,90,225 - 2015-16 - 1,62,93,605 - 2016-17 6,40,88,000 3,15,64,230 15,750 2017-18 15,65,82,300 5,23,40,904 7,90,835 2018-19 2,18,12,000 6,18,47,746 87,59,025 Total 24,24,82,300 16,57,36,710 95,65,610

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 82 ::

2. The Assessing Officer has attempted to establish ownership on the footing that some seized documents bear signatures purportedly belonging to one of the partners i.e, Shri.P.Palanisamy. However, the signatures appearing across different pages are inconsistent and do not match each other, nor do they correspond to the signatures appearing in the partnership deed. When the alleged signatures are visibly different and unverified, no legal inference of ownership can be drawn merely based on the same.

3. The AO has alleged that the seized material reflects attendance of partners in meetings, signatures, and payment of sitting fees, which allegedly proves that the books belong to the firm. However the partnership deed (Page 2 of the Paper Book) shows that the assessee firm has only 19 partners. In contrast, the seized documents record participation of 32, 28, and 29 individuals, including several persons who are not partners of the assessee firm, as established by comparing Page 23 (list of partners) with Pages 112, 113, and 114 (pages containing alleged meeting attendance records).

This inconsistency clearly demonstrates that the seized book does not belong to the assessee firm.

The presence of signatures of persons who are not partners of the assessee firm in the "meeting of partners" further goes against the presumption that these records pertain to the assessee firm.

4. The seized material shows that profits are being equally divided among 18 individuals under the notation "Messiar’s Drawing." As against this, the partnership deed expressly sets out specific profit-sharing ratios among partners, which are unequal and distinct, thus establishing that the seized material does not belong to the assessee firm.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 83 ::

5. The individuals mentioned in the seized documents are partners in several entities and not exclusively in the assessee firm. Merely their names appearing in seized material does not conclusively prove that the books belong to the assessee firm.

6. The AO further relies on certain promissory notes (pronotes) found along with seized material to hold that the books belong to the assessee firm. It is most humbly submitted that at best, any addition based on such pronotes can be sustained only to the extent of pronotes found.

8. The Ld.DR in the course of his submissions explained the modus operandi by stating that Shri.P.Palanisamy was the controlling person and that the books belong to the firm and these are regular books and not mere loose sheets. In this connection, it is most humbly submitted that these are not regular books maintained by the firm as alleged by the Ld.DR and it cannot be taken as belonging to the firm, particularly in the light of demonstrable evidence to show that the books do not belong to the firm in the preceding paras and the tables annexed to this submission. Though the Ld.DR in the course of his submissions urged that the books found in the firm’s premises must be taken as belonging to the firm, it is humbly submitted that no evidence was produced to show which books were belonging to which firm. At any rate, section 292C is only a presumption which is rebuttable and in the light of the overwhelming evidence to show that the books do not belong to the firm, the presumption u/s.292C cannot be pressed into service to treat the books as belonging to the firm.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 84 ::

Without prejudice to the above, even if it is presumed that the seized material belong to the assessee, the addition cannot be made in the hands of the firm since the amounts brought in as capital / contribution, which form the basis of addition, is not unexplained as the seized material clearly refers to the names of the contributors which the Assessing Officer himself states in various places in the assessment order.

9. The Assessing Officer has alleged that unexplained capital was introduced “under the guise of depositors.” However, there is nothing whatsoever in the seized material to suggest that the monies were introduced in the guise of depositors. The allegation is purely based on assumption and surmise, not on any concrete evidence. When the documents explicitly record partner contributions, attributing those amounts to fictitious depositors is beyond the contents of the seized material and legally untenable.

10. Without any loan outstanding, interest alone has been computed for A.Ys.2014-15 and 2015-16, which clearly shows that the addition based on alleged seized material is without any logic or reasoning.

11. Without prejudice to the above contentions, even if the presumption u/s.292C is invoked and it is presumed that the seized papers reflect true contents then any addition based on such presumption, cannot be made in the hands of the assessee firm as the amounts appearing in the seized material only belong to the partners (even where it is not known how much belongs to each partner) appearing in the seized material, and not the firm as a whole. The firm cannot be taxed for contributions made by others. When the material itself identifies the contributors, there is neither scope nor justification for adding the amounts as unexplained income in the firm’s hands.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 85 ::

13. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon’ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 – 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon’ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in Ahd 2024 Ahmedabad ITAT (Pages 260 – 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A.Ys.2014-15 to 2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19.

The reference to relevant page numbers in the assessment orders for assessment years 2014-15 to 2018-19 in connection with the above points are enclosed in a table format along with explanation as annexures 1 to 5 to this submissions.”

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 89 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 90 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 91 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 92 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 93 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 94 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 95 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 96 ::

A.Y.2018-19. Accordingly, we hold that the cash belongs to the assessee from whose premises it was recovered, and therefore this ground of the assessee is dismissed.

VIII. PP Financiers (Chennai) – AYs 2015-16 to 2018-19 A.Y. 219 / Chny /2025 2016-17 200 / Chny /2025 2017-18 221 / Chny /2025 2018-19 222 / Chny /2025 95. Since we have refrained from adjudicating the legal issue of approval u/s.153D of the Act for the reason that the issue is kept open as held in the case of P.Palanisamy in para 42 and 43(supra), we proceed to adjudicate the appeal on merits of the case. The year-wise additions made by the Assessing Officer are tabulated as follows:

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 99 ::

A.Y. Undisclosed Undisclosed Unexplained money investment u/s.69 business income u/s.69A u/s.28 Outstanding loan as Interest income Cash seized per Ready Run Baki as per seized Book and Nippu Baki material Book 2015-16 1,15,47,219 49,97,408 - 2016-17 16,84,756 1,26,12,474 - 2017-18 18,02,995 1,10,64,554 - 2018-19 3,97,480 46,34,647 6,18,560 Total 1,54,32,450 3,33,09,083 6,18,560

 Similarly, in another instance, the AO again asserts that Shri G.Periasamy confirmed the books are maintained by the assessee firm, but even in that reproduced statement, there is no reference to the assessee firm's involvement in maintaining or owning such material. The statements do not identify the seized loose sheets as belonging to the firm, nor do they reflect that such records form part of the firm's books of accounts. Therefore, the AO’s conclusion is contrary to the record and lacks factual and legal foundation.

 The seized material comprises unsigned, unauthenticated sheets, some of which merely have initials without date or identification, and the initials do not even belong to any partner or authorized person of the assessee-firm. In certain pages, a signature appears, but it is undated, unverified, and not that of any person connected with the assessee. None of these seized material bear the firm’s name, PAN, letterhead, or any indication linking them to the assessee. The AO has not discharged the burden of proving that the documents belong to, or were maintained by, the assessee firm nor has the AO been able to prove the justification for addition with corroborative evidence. Therefore, it is most humbly submitted that the addition is not warranted in the facts and circumstances of the case.  Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon’ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 – 259 of Case Law Book 1) has & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon’ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in Ahd 2024 Ahmedabad ITAT (Pages 260 – 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A.Ys.2015-16 to 2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19.

The reference to relevant page numbers in the assessment orders for assessment years 2015-16 to 2018-19 in connection with the above points are enclosed in a table format along with explanation as annexure 1 to 4 to this submissions.”

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 104 ::

Relying on the above decision of the Hon’ble Supreme Court, we find that the presumption u/s.292C by usage of the word “may” gives discretionary powers to adopt the presumption and also makes the presumption rebuttable.

 “The copy of the seized material marked as “A-A3PP-1”, as referred to in the assessment order and supplied in the Pen Drive by the Department, has been placed at Serial No. 5 of Paper Book 3 (Page 23 of Paper Book 1). This material comprises a bunch of loose, unsigned sheets, and the entry relied upon by the Assessing Officer to make the substantive addition is extracted only from one of these unverified, unauthenticated loose papers. The seized sheet does not bear any signature. Loose sheets, being merely “dumb documents”, have no evidentiary value unless supported by corroborative material. In absence of any linkage between this loose sheet and the assessee firm, no substantive addition can legally be sustained merely on such loose, unsigned, uncorroborated document.

Reliance is placed on the following cases where it has been held that addition cannot be made based on loose sheets, in S.No.1 to 5 of Case Law Book - 1: Particulars Page No. Para No. DCIT v Sunil Kumar Sharma [2024] 165 3 - taxmann.com 846 (SC) DCIT v Sunil Kumar Sharma [2024] 159 19 26 taxmann.com 179 (Karnataka) Common Cause (A Registered Society) v UOI 49 to 52 16 to 21 [2017] 77 taxmann.com 245 (SC) CBI v V.C.Shukla and Others (1998) 3 SCC 410 85, 86 37, 38, 39 Shri Rajeshbhai Jivraj Desai v DCIT in ITA 103, 105, 7, 10.5 No.2291 / AHD / 2017 – Ahmedabad ITAT Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan  It is further submitted that the addition cannot be made in the hands of the firm since the amounts mentioned in the loose sheet clearly refers to the names of the contributors. It is submitted that, even if the presumption u/s.292C is invoked and it is presumed that the seized papers reflect true contents then any addition based on such presumption, cannot be made in the hands of the assessee firm as the amounts appearing in the seized material only belong to the other persons appearing in the seized material, and not the firm. The firm cannot be taxed for contributions made by others. When the material itself identifies the contributors, there is neither scope nor justification for adding the amounts as unexplained income in the firm’s hands.  With reference to the seized material provided by the Department during the course of hearing before the Hon’ble Income Tax Appellate Tribunal, the assessee wishes to submit that copy of seized material in “A-A3PP-1” as named in the Pen Drive given by the Department and referred in the Assessment Order of P.P.Enterprises, Bangalore is kept in S.No.5 of Paper Book 3 (Page 23 of Paper Book 1). The seized material in “A- A3PP-1” is a bunch of loose sheets and the material based on which the addition is made is a part of these random loose sheet. It is unsigned and refers to an odd period 01.04.2016 to 05.02.2017.

Protective Addition  The protective addition made by the Assessing Officer is based solely on entries allegedly found in the books of PP Enterprises, which is the proprietary concern of Shri.P.Palanisamy, and is an entirely separate legal entity distinct from the assessee-firm, PP Enterprises, Bangalore having different address. It fact the Assessing Officer himself notes that the address of PP Enterprises, Bangalore (assessee firm) and that of PP Enterprises (Proprietary concern) are different in many places and also notes that the impugned addition is made based on documents found in the premises of PP Enterprises (Proprietary concern). It is most humbly & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan submitted that the assessee firm cannot be taxed for entries appearing in the books of an independent proprietary concern of an individual and therefore the CIT(A) has rightly deleted the additions.  With reference to the seized material provided by the Department during the course of hearing before the Hon’ble Income Tax Appellate Tribunal, the assessee wishes to submit that the addition based on books of PP Enterprises (Proprietorship concern of Shri.P.Palanisamy) cannot be made in the hands of the assessee firm i.e., PP Enterprises, Bangalore. Further seized material referred in the assessment order being ANN/PPE/14, ANN/PPE/15 & ANN/PPE/18 has not been available and therefore it is not known how the Department has arrived at the assessed income.

Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon’ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 – 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon’ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in Ahd 2024 Ahmedabad ITAT (Pages 260 – 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A.Ys.2016-17 to 2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19.

The reference to relevant page numbers in the assessment orders for assessment years 2016-17 to 2018-19 in connection with the above points are enclosed in a table format along with explanation as annexure 1 to this submissions.”

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 110 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 112 ::

Relying on the above decision of the Hon’ble Supreme Court, we find that the presumption u/s.292C by usage of the word “may” gives discretionary powers to adopt the presumption and also makes the presumption rebuttable. The surrounding circumstances, including the absence of exclusive identification of the assessee firm and the admitted existence of multiple entities where Shri P.Palanisamy is a partner, render the attribution of the seized material to the assessee firm speculative at beat. Therefore, in the instant case, there is no evidence to show that the seized material belongs to or pertains to the appellant. More importantly, the seized material itself records the names of persons who introduced funds as capital contributions. Where the documents identify the contributors, the foundational premise of treating the funds as “unexplained” in the hands of the firm becomes unsustainable. Consequently, any addition if warranted and if at all permissible on the basis of such entries, can only be examined in the hands of the respective contributors and not in the hands of the assessee firm. For the foregoing reasons, we hold that the addition based on the seized material cannot be sustained in the hands of the assessee. Accordingly, the assessee’s appeal is allowed on Ground Nos.5 and 9 of the modified grounds on merits, and the remaining grounds on merits are not adjudicated and are left open.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 113 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 114 ::

X. PP Enterprises (Oddanchatram) – AYs 2017-18 & 2018-19:

3365 / Chny / 2024 2018-19 3366 / Chny / 2024

A.Y. Undisclosed Undisclosed Unexplained investment u/s.69 business income money u/s.69A u/s.28 Description Outstanding loan Interest income Expenses claimed as per Ready Run as per seized in ROI disallowed Baki Book material for not providing bills and vouchers & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 116 ::

2017-18 6,06,66,210 39,78,455 - 2018-19 1,52,09,540 2,05,09,714 35,68,039 Total 7,58,75,750 2,44,88,169 35,68,039

In this connection, reliance is placed on the following cases where it has been held that addition cannot be made solely based on statement recorded during search, in S.No.6 to 11 of Case Law Book - 1:

Particulars Page No. Para No. - CBDT’s Instruction F.NO. 286/2/2003-IT (INV. 109 II), dated 10.3.2003 - CBDT Letter in F.No.286/98/2013 – IT(Inv.II) 110 dated 18.12.2014 13.50, Ramachandra Setty & Sons [2024] 163 179 13.51 taxmann.com 666 (Bangalore - Trib.) 26 Kailashben Mangarlal Chokshi Vs. CIT [2008] 174 205 Taxman 466 (Guj.) 46, 47 Shree Chand Soni v DCIT [2006] 101 TTJ (JD) 215 1028 2.26, 2.27 Basant Bansal v ACIT [2015] 63 Taxmann.com 240, 241 199 (Jaipur - trib.)

5. The AO relies on a “consortium of lenders” list, which contains names of 38 persons. This fundamentally disproves that the books relate to the assessee firm, because as per the partnership deed, the assessee firm has only 18 partners. None of the firms in the assessee group has 38 partners. Therefore, the seized records do not pertain to the assessee firm or any firm within the group. This is conclusive proof that the seized records are not the books of the assessee firm

6. The AO has categorically stated that the firm “failed to explain source of capital introduced through Partners and through Depositors found in Thittam Notes,” thereby acknowledging that the source of the entries is partners. The seized entries do not represent transactions of the firm.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 118 ::

7. The individuals mentioned in the seized documents are partners in several entities and not exclusively in the assessee firm. Merely their names appearing in seized material does not conclusively prove that the books belong to the assessee firm.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 119 ::

Without prejudice to the above, even if it is presumed that the seized material belong to the assessee, the addition cannot be made in the hands of the firm since the amounts brought in as capital / contribution, which form the basis of addition, is not unexplained as the seized material clearly refers to the names of the contributors which the Assessing Officer himself states in various places in the assessment order.

12. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon’ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 – 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon’ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in Ahd 2024 Ahmedabad ITAT (Pages 260 – 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A.Y.2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19.

The reference to relevant page numbers in the assessment orders for assessment years 2017-18 to 2018-19 in connection with the above points are enclosed in a table format along with explanation as annexures 1 & 2 to this submissions.”

The loan borrower’s sworn statements were also recorded during the search wherein the loan is found to be part of the seized books of accounts of the firm. The statement recorded from one Mr. A. Murugasen confirmed that he had deposited a sum of Rs. & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 122 ::

3,70,000/- whereas the same was recorded in the books of accounts as Rs. 3,700/- against his name. This statement recorded from the debtor was just confirmation and corroborative evidence.

firm was formed only on 19.12.2016. Therefore, we find that the statement of Shri.N.Sundaramoorthy does not hold credence as it is factually incorrect and seized material cannot be taken to belonging to appellant based on the statement of Shri.N.Sundaramoorthy alone. Further the Ld. DR relied upon a document referring to the same as “Consortium of lenders” and stated that the name of Shri P.Palanisamy and other partners are forming part of it thereby making it clear that the seized material belonged to the assessee. We find that the “Consortium of lenders” mentioned by AO in Page 42 of the Paper Book contains names of 38 persons. As against this, the appellant firm has only 18 partners as we can see from page 2 of the Paper Book. In fact none of the firms of assessee group has 38 partners. Therefore, it we were to take the seized material as belonging to the firm because the “consortium of lenders” has the name of Shri P.Palanisamy, then extending the same logic it must belong to the Shri P.Palanisamy and the 37 others mentioned in the documents. Therefore, going by this logic as well we not able to persuade ourselves to come to a conclusion that the seized material belongs to or pertains to the appellant. Some of the loan borrowers have given statements which purportedly supports that their loans are part of seized material. But when there is no identification directly linking the seized material to the appellant while to the contrary, there are facts to suggest it does not belong to the & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan appellant, the loan borrowers’ statement with reference to the seized material becomes irrelevant.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 125 ::

Relying on the above decision of the Hon’ble Supreme Court, we find that the presumption u/s.292C by usage of the word “may” gives discretionary powers to adopt the presumption and also makes the presumption rebuttable.

XI. PP Constructions – AYs 2015-16 to 2018-19:

A.Y. ITA NO. (Assessee) ITA NO. (Department) 2015-16 3384 / Chny / 2024 - 2016-17 3385 / Chny / 2024 - 2017-18 3386 / Chny / 2024 - 2018-19 3387 / Chny / 2024 2531 / Chny / 2024

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 127 ::

A.Y. Undisclosed Unexplained investment u/s.69 investment u/s.69 (substantive (Protective addition) addition) Description Day Book PP Cash Advance Construction reveal aggregating to credit entries from Rs.10,12,50,000/- Partners for purchase of property to various persons 2015-16 2,30,20,000 2016-17 3,32,50,000 2017-18 3,66,00,000 2018-19 1,27,50,000 10,12,50,000 Total 10,56,20,000 10,12,50,000

1. On the substantive addition, it is most humbly submitted that the seized day book extracted by the Assessing Officer itself bears the heading “Amount credited as partners’ investment”, clearly demonstrating that the entries represent capital contributions made by individual partners, and not investments made by the assessee-firm. In absence of any nexus or evidence demonstrating that the firm has actually invested in Karur Apartment construction, the addition u/s. 69 in the hands of the firm is not sustainable.

3. Without prejudice to the above contentions, even if the presumption u/s.292C is invoked and it is presumed that the seized papers reflect true contents then any addition based on & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan such presumption, cannot be made in the hands of the assessee firm as the amounts appearing in the seized material only belong to the partners (even where it is not known how much belongs to each partner) appearing in the seized material, and not the firm as a whole. The firm cannot be taxed for contributions made by others. When the material itself identifies the contributors, there is neither scope nor justification for adding the amounts as unexplained income in the firm’s hands.

4. With respect to the protective addition of Rs.10,12,50,000 allegedly advanced towards purchase of land, the entire addition is based solely on loose sheets, which are unsigned, unverified, unauthenticated, and not correlated to the assessee firm. Loose papers do not constitute books of account and cannot by themselves form the basis of an addition without independent corroboration. There is no evidence of any such lands and being purchased, registered, or even of any agreement having been executed and therefore it is beyond preponderance of probabilities to assume the assessee has paid huge advance without any having executed any document in this regard. When no transaction has materialized, there is no “investment” capable of being taxed u/s. 69.

Reliance is placed on the following cases where it has been held that addition cannot be made based on loose sheets, in S.No.1 to 5 of Case Law Book - 1:

Particulars Page No. Para No. DCIT v Sunil Kumar Sharma [2024] 165 3 - taxmann.com 846 (SC) DCIT v Sunil Kumar Sharma [2024] 159 19 26 taxmann.com 179 (Karnataka) Common Cause (A Registered Society) v UOI 49 to 52 16 to 21 [2017] 77 taxmann.com 245 (SC) CBI v V.C.Shukla and Others (1998) 3 SCC 410 85, 86 37, 38, Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 130 ::

Shri Rajeshbhai Jivraj Desai v DCIT in ITA 103, 105, 7, 10.5 No.2291 / AHD / 2017 – Ahmedabad ITAT 106

Reliance is placed on the following cases where it has been held that sworn statements recordd during survey cannot be a basis for making addition, in S.No.14 to 16 of Case Law Book - 1:

Particulars Page No. Para No. CIT v S.Khader Khan Son [2012] 25 271 - taxmann.com 413 (SC) CIT v S.Khader Khan Son [2018] 300 ITR 0157 - 278, 279 (Mad) Paul Mathews & Sons v CIT [2003] 129 Taxman 286 11 416 (Kerala)

Even otherwise, the statement was made in the capacity of Managing Partner of a different concern i.e., PP International and cannot therefore be related to assessee firm. In fact, Shri.P.Ragupathy himself clarified that the land project was undertaken by him and his friends, and that related records were kept at an address unrelated to the assessee firm, which clearly establishes that the assessee firm is in no way related to the transaction. Therefore, it is most humbly submitted that the CIT(A) has correctly deleted the protective addition in the hands of the assessee firm.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 131 ::

Without prejudice to the above, P.Raghupathy has stated that this project has been undertaken by him and his friends – in Q.No.20, 21, 22 (Pages 129, 130, 131 of Paper Book 3). P.Raghupathy refers to the details of transaction being recorded in the books of accounts available at head office at No.21, First Floor, 17th E Cross, LBS Nagar, Indira Nagar 2nd Stage (Page 131 of Paper Book 3), which is not the address of PP Constructions which is located at Karur. Further the AO has assumed that the entire consideration for the project of Rs.10,12,50,000/- has been paid in cash which is impossible Further, having chosen to let go of the persons who have received the purported moneys, the Department cannot use a pick and choose method to take action only against the assessee by assessing the same as income of the assessee.

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 132 ::

7. Without prejudice to the above, amendment in section 115BBE increasing the rate of tax to 60% is not retrospectively applicable. The Hon’ble Madras High Court in S.M.I.L.E Microfinance Limited v ACIT 2024 SCC OnLine Mad 8416 (Pages 248 – 259 of Case Law Book 1) has categorically held that the rate of 60 percent is to be imposed only for the transactions from 01.04.2017. The above order of the Hon’ble Madras High Court has been followed in Naranbhai Samatbhai Bharwad, through legal heir Devrajbhai Naranbhai Bharwad v ITO in Ahd 2024 Ahmedabad ITAT (Pages 260 – 270 of CL book). Therefore the Ld. CIT(A) erred in upholding the rate of 60 percent for the A.Ys.2015-16 to 2017-18 when the same would be applicable only for the transactions from 01.04.2017 onwards i.e., from assessment year 2018-19.

The reference to relevant page numbers in the assessment orders for assessment years 2015-16 to 2018-19 in connection with the above points are enclosed in a table format along with explanation as annexures 1 to this submissions.”

It is further stated that the seized books No. 52 is the suppressed two-digit book and book no. 53 is the actual book with the exact rate of construction material and the same may be considered as part and parcel of this written submission for better clarification and the same is discussed in order. For e.g. the price of 10 bags of cement was written as 35 rupees while actual rate of 3500 was written in the actual day book. For every amount credited in firms as Partners Capital book, equal amount was debited for construction material in the firm’s book as well. Investment in Land & ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 134 ::

The Addition was based on seized documents and admission of the same by Ragupathy. The incriminating documents are seized by the Department and the sworn statements recorded are based on the seized documents. The same is corroborative to the seized documents and has the evidentiary value. The arguments of the assessee do not have any merits as it omits the seizure of the incriminating documents. The complete details of land transactions and the cumulative corroborative evidences impounded were elaborately detailed in the page number 16 (B- l) of the Assessment order of Shri Raghupathy (AY 2018-19). The impounded documents include bank statements, details of the payments made to the concerned parties, the cash vouchers duly signed by the recipients acknowledging the cash received by the concerned persons etc. The sworn statement was recorded based on the incriminating evidences; that impounded materials and the sworn statement corroborative incriminating material are evidences as per the Act. The land consideration was added in the hands of Mr. P. Ragupathy Protectively, as he did not provide cash and bank reconciliation. All these deposits were made during the demonetization period to be transferred through bank account and all these are available record. The cumulative evidences that are part of the seized documents and assessment record conclusively establish that there is no merit in the submission of the assessee. The Addition was made based on seized documents and admission of the same u/s 132(4) by Ragupathy. He never appeared for summons to admit who are all the friends who invested in the respective areas. The onus of providing the correct information and the complete details is on the assessee who has not discharged the onus at any point of time. Therefore, the addition has been made by the Assessing Officer based on the seized incriminating documents and the same is as per the law. The case laws are distinguishable on the facts of the case and not applicable in the given facts and circumstances.”

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 135 ::

& ‘60’ Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan gives discretionary powers to adopt the presumption and also makes the presumption rebuttable.

[A] Assessee / [D] Deptt. VERDICT Appeal Number AYs

2016-17 Allowed ITA 200/CHNY/2025 [A] M/s. P.P. Financiers Allowed ITA 201/CHNY/2025 [A] P.P.Financiers 2011-12 Allowed ITA 202/CHNY/2025 [A] P.P. Financiers 2012-13 Allowed ITA 203/CHNY/2025 [A] P.P. Financiers 2013-14 Allowed ITA 204/CHNY/2025 [A] P.P. Financiers 2014-15 Allowed ITA 205/CHNY/2025 [A] M/s. P.P. Financiers 2015-16 Allowed ITA 206/CHNY/2025 [A] M/s. P.P.Financiers 2016-17 Allowed ITA 207/CHNY/2025 [A] M/s. P.P. Financiers 2017-18 Partly Allowed ITA 208/CHNY/2025 [A] M/s. P.P.Financiers 2018-19 Allowed ITA 209/CHNY/2025 [A] P. Palanisamy 2010-11 Allowed ITA 210/CHNY/2025 [A] P. Palanisamy 2011-12 Allowed ITA 211/CHNY/2025 [A] P Palanismay 2012-13 Allowed ITA 212/CHNY/2025 [A] P Palanisamy 2013-14 Allowed ITA 213/CHNY/2025 [A] P. Palanisamy 2014-15 Allowed ITA 214/CHNY/2025 [A] P Palanisamy 2016-17 Allowed ITA 215/CHNY/2025 [A] P Kuppuchamy 2015-16 Allowed ITA 216/CHNY/2025 [A] P Kuppuchamy 2016-17 Allowed ITA 217/CHNY/2025 [A] P Kuppuchamy 2017-18 Allowed ITA 1119/CHNY/2025 [A] P. Palanisamy 2015-16 Allowed ITA 1120/CHNY/2025 [A] P. Palanisamy 2017-18 Allowed ITA 1121/CHNY/2025 [A] P. Palanisamy 2018-19 Allowed ITA 218/CHNY/2025 [A] P Kuppuchamy 2018-19 Allowed ITA 219/CHNY/2025 [A] M/s. P.P. Financiers 2015-16 ITA 220/CHNY/2025 [A] P.P. Financiers 2010-11 Allowed Allowed ITA 225/CHNY/2025 [A] L Karuppusamy 2018- Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan :: 140 ::

Allowed ITA 221/CHNY/2025 [A] M/s. P.P. Financiers 2017-18 2018-19 Allowed ITA 222/CHNY/2025 [A] M/s. P.P. Financiers ITA 3365/CHNY/2024 [A] M/s. P.P. Enterprises 2017-18 Allowed ITA 3366/CHNY/2024 [A] M/s. P.P. Enterprises 2018-19 Allowed Allowed ITA 3367/CHNY/2024 [A] Palanisamy Raghupathy 2011-12 Allowed ITA 3368/CHNY/2024 [A] Palanisamy Raghupathy 2012-13 2013-14 Allowed ITA 3369/CHNY/2024 [A] Palanisamy Raghupathy 2014-15 Allowed ITA 3370/CHNY/2024 [A] Palanisamy Raghupathy 2015-16 Allowed ITA 3371/CHNY/2024 [A] Palanisamy Raghupathy 2016-17 Allowed ITA 3372/CHNY/2024 [A] Palanisamy Raghypathy 2017-18 Allowed ITA 3373/CHNY/2024 [A] Palanisamy Raghupathy 2018-19 Allowed ITA 3374/CHNY/2024 [A] Palanisamy Raghupathy 2012-13 Allowed ITA 3375/CHNY/2024 [A] Sellamuthu Kabilan 2013-14 Allowed ITA 3376/CHNY/2024 [A] Sellamuthu Kabilan 2014-15 Allowed ITA 3377/CHNY/2024 [A] Sellamuthu Kabilan 2015-16 Allowed ITA 3378/CHNY/2024 [A] Sellamuthu Kabilan 2016-17 Allowed ITA 3379/CHNY/2024 [A] Sellamuthu Kabilan 2017-18 Allowed ITA 3380/CHNY/2024 [A] Sellamuthu Kabilan 2018-19 Allowed ITA 3381/CHNY/2024 [A] Sellamuthu Kabilan 2017-18 Allowed ITA 3382/CHNY/2024 [A] P.P. Enterprises 2018-19 Allowed ITA 3383/CHNY/2024 [A] M/s. P.P. Enterprises Allowed ITA 3384/CHNY/2024 [A] M/s. P.P. Constructions 2015-16 Allowed ITA 3385/CHNY/2024 [A] M/s. P.P. Constructions 2016-17 Allowed ITA 3386/CHNY/2024 [A] M/s. P.P. Constructions 2017-18 Allowed ITA 3387/CHNY/2024 [A] M/s. P.P. Constructions 2018-19 2014-15 Allowed ITA 3388/CHNY/2024 [A] M/s. P.P. Financiers 2015-16 Allowed ITA 3389/CHNY/2024 [A] M/s. P.P. Financiers 2016-17 Allowed ITA 3390/CHNY/2024 [A] M/s. P.P. Financiers 2017-18 Allowed ITA 3391/CHNY/2024 [A] M/s. P.P. Financiers 2018-19 Allowed ITA 3392/CHNY/2024 [A] M/s. P.P. Financiers Dismissed ITA 2528/CHNY/2024 [D] P P ENTERPRISES 2016-17 Dismissed ITA 2529/CHNY/2024 [D] P P ENTERPRISES 2017-18 Dismissed ITA 2530/CHNY/2024 [D] P P ENTERPRISES 2018-19 Dismissed ITA 2531/CHNY/2024 [D] P.P. CONSTRUCTIONS 2018-19 Allowed ITA 223/CHNY/2025 [A] P Kuppuchamy 2014-15 Allowed ITA 224/CHNY/2025 [A] L Karuppusamy 2017- Others Mr. P. Palanisamy M/s. P.P. Financiers Mr. P. Kuppuchamy Mr. L. Karuppusamy M/s. P.P. Enterprises Mr. Palanisamy Raghupathy M/s. P.P. Constructions Mr. Sellamuthu Kabilan Order pronounced on the 09th day of February, 2026 in Chennai.