SRI PRAKASH BHAJANDAS TALREJA,BENGALURU vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(3), BENGALURU

O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER:

2. First, we will take up ITA Nos.1061, 1062, 1063, 1065 & 1066/Bang/2023 for adjudication. The common ground in all these appeals except change in figures, which reads as under: to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.

4. The learned CIT[A] is not justified in upholding the addition made unexplained investment U/s 69 of the Act for the alleged cash loan advanced by the appellant to M/s. Shivan & Co., relying upon certain loose sheets found in the premises of a third party under the facts and in the circumstances of the appellant's case.

4.1 The learned CIT[A] failed to appreciate that the appellant had consistently denied making any cash advance to M/s. Shivan & Co., in course of the search action conducted in the residence of the appellant as well as in course of the assessment proceedings taken up u/s. 153C of the Act and that no reliance ought to have been placed on certain loose sheets found in the premises of a third party in the absence of any corroborative evidence to support the said notings made in the loose sheets especially considering that the seized documents relied upon were not speaking documents and therefore, the impugned addition made was contrary to law and facts of the appellant's case.

4.2 The learned CIT[A] further failed to appreciate that reliance placed on the statement of one Sri K.M. Deekshith is misplaced and that his statement relied upon without providing cross-examination in course of the assessment proceedings rendered the addition made in violation of the principles of natural justice and the mere opportunity granted in course of the appellate proceedings to cross-examine Sri K.M.Deekshith after the use of his statement to conclude the assessment cannot cure the illegality and therefore, the impugned addition made deserves to be deleted. 4.3 Without prejudice to the above, the learned CIT[A] ought to have appreciated that the mere offering of income by some third party in respect of the said loose sheet for reasons best known to them cannot be the reason for making any addition in the hands of the appellant under the facts and in the circumstances of the appellant's case. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 4.4 The learned CIT[A] ought to have appreciated that the impugned addition made was purely on suspicion and surmise, assumptions and presumptions and consequently, the same requires to be deleted.

3. Ground No.1 is general in nature, which do not require any adjudication.

4. First, we will take up the common ground Nos.2 & 3 in 1062, 1063 & 1065/Bang/2023 with regard to the fact that the condition precedent to invoke the provisions of section 153C of the Act is not satisfied. 5. In ITA Nos.1061, 1062, 1063 & 1065/Bang/2023 except in ITA No.1066/Bang/2023 for the assessment 2018-19, there was legal ground questioning the assessment order framed u/s 153C of the Act as much as the condition precedent to invoke the provisions of section 153C of the Act has not been satisfied. 6. Facts of the issue are that the assessee, Shri Prakash Bhajandas Talreja is an individual and has been carrying on the business of money lending. A search was conducted u/s 132 of the Act on 21.09.2017 at his premises by strength of warrant in case of M/s Coffee Day Global Ltd. During the course of search proceedings certain incriminating documents were found and seized. A notice was issued u/s 153C of the Act to file the return of income. In response to such notice, a return was duly filed u/s 153C of the Act declaring an income of Rs.69,98.790/- being income from House Property and Other Sources. Such income was the same as that which was declared in the original return of income filed u/s 139 of the Act on 13.09.2014 and revised return of income filed on 26.09.2016. During the course of search proceedings at the residence of Shri K M Deekshith at the office of M/s Coffee Day Global Limited certain to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore evidences of receipt and payment of cash was found. On perusal of such documents, it was found that there were certain cash receipts by Shri V.G. Siddhartha. These receipts of cash were confronted with Mr. K.M Deekshith in the sworn statement recorded on oath u/s 132(4) of the Act. Mr. K.M Deekshith in his statement recorded on that he has received cash loans of Rs. 12.75 Crores from the Assessee Shri. Prakash Bhajandas Talreja. Further, he also confirmed that interest payments of Rs. 3 crores in cash were made to Mr. Prakash Talreja during the FYs 2014-15 to 2016-17 and Rs. 10 lakhs in the F.Y 2017-18. On being confronted with the evidence and statement of Mr. K.M Deekshith, Shri. Prakash has denied any such transactions. The ld. AO passed the assessment order considering the principal advance on the basis of the loose slips supported by the statement recorded u/s 132(4) of the Act from Mr. K.M. Deekshith, statement recorded u/s 131 of the Act from Mr. R. Sendhil at Rs.12.75 crores and interest thereon at Rs.3 crores for each assessment year from 2015-16 to 2017-18 and Rs.10 lakhs in assessment year 2018-19 and determined the income of the assessee as follows: SI No AY Income Unexplained Income assessed by declared in money u/s AO response to 69 Notice u/s 153C 1 2014-15 6,99,83,790 12,75,00,000 19,74,83,790 2 2015-16 6,39,23,520 3,00,00,000 9,39,23,520 3 2016-17 7,49,76,910 3,00,00,000 10,49,76,910 4 2017-18 3,90,92,790 3,00,00,000 6,90,92,790 5 2018-19 *5,58,99,840 10,00,000 5,68,99,840 (u/s 139)

*NOTE: In respect of AY 2018-19, being the year of search notice u/s 153C was not issued and order was passed u/s 143(3) r.w.s 153D of the Act. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 6.1 Against this assessee went in appeal before ld. CIT(A), challenging the assessment order both on validity of framing assessment u/s 153C of the Act and addition made towards unexplained investment u/s 69 of the Act. The ld. CIT(A) has confirmed the order of the ld. AO. Now the contention of the assessee is that the ld. AO has recorded the satisfaction on the basis of following documents: Sl.No. Description of the Seized Annexure/Sl.No./Pg.No.etc. document 1. Pink folder marked as Annexure Annexure : A/KMD/01 A/KMD/01 containing loose Page No. 38 and 43 sheets serially numbered from 1 to 83 found and seized from the Residence of Shri K.M. Deekshith at No.19, PMR Residency, Vysya Bank Layout, 34th Main, 4th Cross, JP Nagar, Bangalore 2. Brown folder marked as Annexure : A/CCDGLT8/1 Annexure A/CCDGLT8/1 Page No. 108, 109, 129, containing loose sheets serially 131 numbered from 1 to 134 found and seized from the office of M/s. Coffee Day Global Ltd. At No.23/2, Coffee Day Square, Vittal Mallya Road, Bangalore 6.2 Considering the above documents for recording satisfaction u/s 153C of the Act, he recorded satisfaction as below: “A statement u/s 132(4) of the I.T. Act was recorded from Shri Prakash Talreja on 21.09.2017 wherein he denied any cash transactions with Café Coffee Day Group. He further denied his association with Mr. Sendhil, son of late Ramakrishna by stating that he does not even know who Mr. Sendhil is. However, Shri K.M. Deekshith who is one of the main persons handling cash transactions in Coffee Day Group has deposed that he used to collect cash from Shri Prakash Talreja and others on instructions from Shri V.G. Sddartha. From the analysis of seized materials, financials and statements of the persons involved in these transactions, it can be noted that although Shri Prakash Talreja has stopped his finance business as on the date of search on CCD group, he is earning interest on the earlier finances. As deposed by Shri K.M. Deekshith, Shri Talreja has given an amount of Rs.12.75 crores in cash as loan at interest rate of 1.95% per month. Shri Sendhil R. who has actually handled the cash also has deposed that he has handled the cash transactions between Shri Prakash Talreja and CCD group. Hence, Prakash Talreja’s denial of any cash lending to CCD group is not satisfactory and it is clear from K.M. Deekshith’s statement that the assessee has lent money both in cash and cheque. The statement of K.M. Deekshith is to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore subsequent to statement of Shri Talreja and the statement has been recorded in the backdrop of seized materials. In view of the above, I am satisfied that the seized materials have a bearing on the determination of the total income of Shri Prakash Talreja for relevant assessment years referred to in section 153A(1) of the I.T. Act, 1961. Hence assessment proceedings u/s 153C of the I.T. Act, 1961 are hereby initiated in the case of Shri Prakash Talreja for the AYs 2012- 13 to 2018-19.” 6.3 However, the ld. AO has framed the assessment by relying on the notings in the documents marked A/KMD/01 at page nos. 65, 68, 70 & 107, which are not the material considered for recording the satisfaction. 6.4 According to ld. A.R., there was no live link between the material considered for recording satisfaction u/s 153C of the Act and framing of assessment u/s 153C of the Act. As such satisfaction recorded qua assessment order have no link between each other. Hence, the assessment orders to be quashed.

13. Coming to the case laws relied upon by the assessee. The assessee relied upon the decision of coordinate bench of Visakhapatnam ITAT in the case of Sri Venkata Rama Sai Developers Vs. DCIT in dated 6.11.2015. The coordinate bench of this Tribunal, under similar circumstances held as under: “24. Considering the total facts and circumstances of the case and also applying the ratios of the judgements cited above, we are of the opinion that the A.O. is not correct in coming to the conclusion that the on money is exchanged between the parties based on a loose sheet found in the premises of a third person and also admission by a third person. To sustain the addition, the A.O. should have conducted an independent enquiry about the value of the property and ascertain whether any under valuation is done, if so what is the correct value of the property. Further, the A.O. did not brought on record any evidence to support his contention to say that there is on money exchanged between the parties. In the absence of proper enquiry and sufficient evidences, we find no reason to confirm the addition made by the A.O. Therefore, we reverse the CIT(A) order and direct the Assessing Officer to delete the addition.”

14. The assessee relied upon the decision of ITAT Hyderabad ‘A’ Bench, in the case of K.V. Lakshmi Savitri Devi Vs. ACIT (2012) 148 TTJ 157. The coordinate bench of this Tribunal, under similar circumstances held as under: “Admittedly there was no search action in the case of the assessee. It is a loose slip containing certain entries recording the payment which was found at the premises of CRK. It does not contain either date of payment or name of the person who has made the payment. According to the Department, CRK denotes C. Radha Krishna Kumar and KRK denotes K. Rajani Kumari. However, no name of the assessee was found in the louse sheet. The property was purchased from P w/c CRK for a disclosed consideration of Ps. 65 lakhs by the assessee. The property has been registered and the sale deed was executed for a consideration of Ps. 65 lakhs on 21st Aug., 2006 which consideration has been accepted by the State registration authorities. Further nothing was brought on record to show that there was any invoking of s. 50C while completing the assessment in the case of the seller. There is no evidence other than the seized material marked as 'A/CRK104' where relevant entries are made at Rs. 1,65,00,000. The seized material was not found at the premises o the assessee and there is no corroborative material to suggest that the assessee Page 13 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore has actually paid Rs. 1.65 çrores towards purchase consideration of the property. The assessee and her brother categorically denied the payment of any money over and above Rs. 65 lakhs. The AO placed hi reliance on the statement of 5, who is a third party. The evidence brought on record by the Department is not enough to fasten additional tax liability on the assessee. As seen from the above document this is just a handwritten loose document and the handwriting is also not of the assessee and the loose document was found at the premises of a third party. The burden is on the Department to prove conclusively that the loose document belongs to the assessee. There is no presumption in law that the assessee has actually paid Rs. 165 lakhs towards purchase of the property. The undisclosed income in this case is to be computed by the AO on the basis of the available material on record. It should not be based on conjectures and surmises. As of now, the material considered by the AO for making the addition of Ps. 1 crore is seized material marked a 'A/CRK104' and the statement of S. This loose sheet found at the premises of CRK is not enough material to sustain this addition. The seized material found during the course of search and the statement recorded are some piece of evidence to make the addition. The AO has to establish the link between the seized material and other books of account to the assessee. The seized material and statement of CRK cannot be conclusive evidence to make this addition. The entire case herein is depending upon the rule of evidence. There is no conclusive presumption to say that actual consideration passed on between the parties is actually Rs. 165 lakhs. The assessee as well as her brother stated in their respective statements that the consideration passed between the parties is only Rs. 65 lakhs. In spite of this the AO proceeded to conclude that the seized material is conclusively reflecting the payment of consideration at Rs. 165 lakhs. The Department herein i required to establish the nexus of the seized material to the assessee. As stated earlier there is no date and name of the assessee. The allegation of the Department is that the seized material denotes the payment made by the assessee to the purchaser for purchase of the property. However, no such narration or name of the assessee was found in the seized material. The Department is not able to unearth any document or material or any corroborative material to show that the assessee herein actually paid Ps. 165 lakhs for purchase of the property. The Department has not brought on record the date on which the payment was made and the source from which ii is paid and/or any details of bank account from where the cash was withdrawn. Without any of these details, the Department has taken a view that the assessee has paid Ps. 165 lakhs for purchase of the property. The Department cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong cannot take place of material in support of the finding from the AO. The AO should act in a judicial manner, proceed with judicial spirit and come to a judicial conclusion. The AO is required to act fairly as a reasonable person and not arbitrarily and capriciously. The assessment made should have enough material and it should stand on its own legs. The basis for addition cannot be only the loose sheet or a third party statement. In the absence of corroborative material, and/or circumstantial evidence, the addition cannot be sustained. Thus, no addition can be made on a dumb document and noting on loose sheet. It should be supported by the evidence to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore on record and the evidence on record is not sufficient to support the Revenue's action. In a block assessment undisclosed income has to be determined or the .basis of the material and evidence detected in the course of the search action. The circumstances surrounding the case are not strong enough to justify the addition made by the Department. The burden of proving the actual consideration in the purchase of property is on the Revenue. Considering the entire facts of the case, the Revenue has failed to discharge its duty, instead made up a case on surmises and conjectures which cannot be allowed. Under these circumstances, there is no reason to confirm the addition of Rs. 100 lakhs towards on-money payment. Accordingly, the addition of Rs. 100 lakhs is deleted.— CIT vs. P.V. Kalyanasundaram (2006) 203 CTR (Mad) 449: (2006) 282 ITR 259 (Mad) relied on”

8.3 Thus, it was the submission of ld. A.R. that in this case there was totally non-speaking documents without any corroborative material, evidence on record from search and seizure perspective and such a non- speaking document are referred for initiation of proceedings u/s 153C of the Act. At this stage, it is appropriate to refer to the judgement of Hon’ble Supreme Court in the case of Shri K.P. Verghese Vs. ITP (131 ITR 597), wherein held that fictional receipt cannot be deemed to be a receipt in the absence of cogent material to support the factum of actual receipt. Further, Hon’ble Delhi High Court in the case of CIT Vs. D.K. Gupta 174 Taxman 476, wherein held that adhoc/dumb documents without any corroborative evidence finding that the alleged documents have materialized into transaction cannot be deemed to be income of the assessee. 8.4 In our opinion, similar issue came for consideration before Hon’ble Supreme Court in the case of Supermalls Pvt. Ltd. Vs. PCIT (423 ITR 281), wherein held as follows: “Before issuing notice under Section 153C Assessing Officer of the searched person must be "satisfied" that, inter alia, any document seized or requisitioned "belongs to" a person other than the searched person. That thereafter, AO may transmit the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore records/documents/things/papers etc. to the Assessing Officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of such other documents relating to such other person, the jurisdictional Assessing Officer may proceed to issue a notice for the purpose of completion of the assessment under Section 158BD and the other provisions of Chapter XIV-B shall apply. (para 6) It cannot be disputed that the aforesaid requirements are held to be mandatorily complied with. There can be two eventualities. It may so happen that the Assessing Officer of the searched person is different from the Assessing Officer of the other person and in the second eventuality, the Assessing Officer of the searched person and the other person is the same. Where the Assessing Officer of the searched person is different from the Assessing Officer of the other person, there shall be a satisfaction note by the Assessing Officer of the searched person and as observed hereinabove that thereafter the Assessing Officer of the searched person is required to transmit the documents so seized to the Assessing Officer of the other person. The Assessing Officer of the searched person simultaneously while transmitting the documents shall forward his satisfaction note to the Assessing Officer of the other person and is also required to make a note in the file of a searched person that he has done so. Failure by the Assessing Officer of the searched person, after preparing and dispatching the satisfaction note and the documents to the Assessing Officer of the other person, to make a note in the file of a searched person, will not vitiate the entire proceedings under Section 153C against the other person. At the same time, the satisfaction note by the Assessing Officer of the searched person that the documents etc. so seized during the search and seizure from the searched person belonged to the other person and transmitting such material to the Assessing Officer of the other person is mandatory. However, in the case where the Assessing Officer of the searched person and the other person is the same, it is sufficient by the Assessing Officer to note in the satisfaction note that the documents seized from the searched person belonged to the other person. Once the note says so, then the requirement of Section 153C is fulfilled. In case, where the Assessing Officer of the searched person and the other person is the same, there can be one satisfaction note prepared by the Assessing Officer, as he himself is the Assessing Officer of the searched person and also the Assessing Officer of the other. person. However, as observed hereinabove, he must be conscious and satisfied that the documents seized/recovered from the searched person belonged to the other person. In such a situation, the satisfaction note would be qua the other person. The second requirement of transmitting the documents so seized from the searched person would not be there as he himself will be the Assessing Officer of the searched person and the other person and therefore there is no question of transmitting such seized documents to himself. (para 6.1) From the aforesaid satisfaction note, it emerges that the Assessing Officer is satisfied that the documents containing the details of the cash receipts on sale of shop/offices belonged to the other person - assessee. He is also satisfied that the documents/pen drive are seized from the searched person. He is also satisfied that the documents so seized from the residence of the searched person belonged to the assessee-other person. Therefore, the Assessing Officer was satisfied and it is specifically mentioned that the documents so seized belonged to the assessee - the other person. Therefore, it cannot be said that the mandatory requirements of Section 153C, in the facts and circumstances of the case, have not been complied with. The satisfaction note by the Assessing Officer clearly states that the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore documents so seized belonged to the other person - the assessee and not the searched person. Thus, the High Court is justified in observing that the requirement of Section 153C has been fulfilled. On facts, we are in complete agreement with the view taken by the High Court on the requirement of Section 153C being fulfilled by the Assessing Officer before initiating the proceedings under Section 153C. (para 6.2) Conclusion: In case where Assessing Officer of searched person and other person is the same, it is sufficient by Assessing Officer to note in satisfaction note that documents seized from searched person belonged to other person. Once note says so, then requirement of Section 153C is fulfilled. In favour of: Revenue 8.5 As seen from the above u/s 153C of the Act, ld. AO of the searched person must be “satisfied” that the, inter-alia, any document seized or requisitioned, “belong to”, “pertain to” or “relate to” a person other than the searched person, the said ld. AO has to transmit the records, documents, notes, papers, etc. to the ld. AO having jurisdiction over such other person. After receipt of the aforesaid satisfaction along with seized documents and upon examination of such other documents relating to such other person, the jurisdictional ld. AO may proceed to issue notice for the completion of the assessment u/s 153C of the Act. In the present case, ld. AO of searched person has forwarded the seized documents being incriminating material, ld. AO of the assessee who is having jurisdiction over the assessee and ld. AO of the assessee recorded satisfaction note as seen from the above and consequently issue notice u/s 153C of the Act. Once the ld. AO of the assessee recorded the note u/s 153C of the Act, the requirement of this section has been fulfilled at the time of recording satisfaction, there need not be conclusive proof that there was undisclosed income in the hands of present assessee and only the prima facie of satisfaction is required to be established. The sufficiency of the seized material to make an addition to be tested at the time of framing the assessment and it is not at the time of recording satisfaction u/s 153C of the Act. From the satisfaction note prepared by the ld. AO of the assessee, it emerges that the present AO of the assessee is satisfied that seized documents containing the details of certain Page 18 of 121 ITA Nos.1061 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore transaction and these documents prima facie suggests that there was unaccounted transaction between the assessee and the M/s. Coffee Day Global Ltd. and belongs to the assessee being other person. Therefore, the ld. AO was satisfied that it is specifically belong to the assessee being the other person. Therefore, it cannot be said that the mandatory requirement of section 153C of the Act have not been complied with. Being so, at the stage of recording satisfaction, we make it clear that there is no conclusive proof is required that there existed undisclosed income in the hands of assessee. On the other hand, there is prima facie satisfaction at the end of ld. AO of the present assessee is to be reached that to suggest that there is undisclosed income in the hands of present assessee. Hence, we do not find any merit in this ground of the appeals of the assessee and the same is dismissed in all these appeals.

9. Next common grounds in Ground No.4, 4.1, 4.3 & 4.4 in all these appeals in 1062, 1063 & 1065/Bang/2023 except in ITA No.1066/Bang/2023 with regard to alleged addition made u/s 69 of the Act as unexplained money towards alleged advance made by assessee in cash to M/s. Shivan & Co. is without any valid seized material. 9.1 The ld. A.R. for the assessee submitted that the AO has relied upon loose sheets, unsigned entries in note books to hold that the assessee has advanced loan in cash which is unaccounted. The loose sheets, scribbled note books cannot be treated as incriminating material unless they are corroborated with cogent evidences. The loose sheets, note pads, etc., relied upon by the assessing officer are not speaking ones. They are dumb documents. They cannot be relied upon to frame the assessment orders. The observation of AO would mean that the AO has acknowledged that the seized material are dumb documents. He relied on the decision of the Hon'ble Supreme Court in Common Cause (A Registered Society) v. UOI [2017] 394 ITR 220 (SC) for the proposition that unsigned loose slips cannot be acted upon so as to sustain addition. He further submitted that the Tribunal in the case of Atul Kumar Jain v. DCIT [19991 64 TTJ (Delhi) 786 construed the meaning of the expression "document" in the context of section 132 of the Act as under:- Page 19 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore "6.4 The Assessing Officer has made oat the case for making such addition based exclusively on the said piece of paper found and seized during the course of search in the case of Mr. Deekshith. It is, therefore, to be examined whether the said paper found and seized is a document having evidentiary value to prove the fact of the transaction. The word "document" has been defined in section 32 of the Indian Evidence Act to mean any matter expressed or described upon any substance by means of letters figures, or marks or by more than one of those means, intended to be used or which may be used for the purpose of recording that matter. The word "document" has also been similarly defined in the General Clauses Act. The meaning Of the word "describes N used in the definition as given in the New Shorter Oxford English Dictionary is "portray in words, recite the characteristics of, in a detailed or graphic account of'. The meaning of the word "express" used in the definition as per the New Shorter English Dictionary is "A graphic representation as image; an act of expressing or representing by words, signs or actions, expressions, a mode of speech, of phrase; an utterance". According to the Hon'ble Supreme Court in the case of Ramji Dayawala & Sons (P.) Ltd. v. Invert Import AIR 1981 SC 2085, mere proof of the handwriting of a document would not tantamount to a proof of all the contents or the facts stated in the documents, if the truth of the facts stated in a document is in issue, mere proof of the handwriting and execution of the document would not furnish evidence of the truth of the fact or contents of the document. me truth or otherwise of the fact or contents so stated would have to be proved by admissible evidence i.e., by the evidence of those persons who can vouch safe for the truth of the facts in issue. "

9.2 Further, he submitted that the Hon'ble Supreme Court in the case of Mohd. Yusuf & Anr. v. D. & Anr- AIR 1968 Bom. 112 has observed that the evidence of the contents contained in document is hearsay evidence unless the writer thereof is examined before the Court. The Hon'ble Court, therefore, held that the attempt to prove the contents of the document by proving the signatures of the handwriting of the author thereof is to set at nought, the well-recognised rule that hearsay evidence cannot be admitted.

9.3 He submitted that the Tribunal in ACIT v. Layers Exports P. Ltd [20171 53 ITR (Trib) 416 (Mumbai) held as under: - "33. In entirety of the matter, we are of the view that an addition in assessments carried out pursuant to search action u/s 132 of the Act has to be related to cogent and positive materials found during search which prove conclusively that the assessee has either earned an income or made an investment which has not been recorded in his regular books of account or that his case is covered under any of the deeming provisions contained in sections 68, 69, 69A to 69D of the Act. However, additions cannot be sustained merely on the basis of rough noting made on few loose sheets of Papers unless the AO brings on record some independent and corroborative materials to Prove irrefutably that the said noting reveal either unaccounted income or Unaccounted investment or unaccounted expenditure of the assessee. As discussed above, in the instant case, assessments for the impugned years have been completed u/s 7,53A of the Act which relates to assessment in case of search or requisition. The Prerequisite condition for application of Sec. 153A of the Act is a search conducted Under section 132 of to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore the Act or any requisition made under section 132A of the Act to Unearth hidden income or property. Thus, the wry purpose/ essence of search Conduced u/s 132 of the Act is to unearth hidden income or property or get hold of books Of account or documents which has not been or will not be otherwise produced by the assessee in regular course on issue of summons or notice. In the assessee’s case, as stated above, the purported search action did not lead to discovery of any unaccounted money, bullion, jewellery or other valuable article or thing. Further books of account revealing any undisclosed transactions of the a.33e33ee were Luu during the course of search. The entire assessment order revolves around scribbling in loose sheets of papers seized from premises of another person in course action on such other person. It is a fact that the said rough loose Sheets of papers scribbled by some anonymous person and seized in course of search of another person cannot be termed as 'documents' having any evidentiary value within the meaning of section 132 or section 132A of the Act. Thus, the entire assessment u/s 153A of the Act in case of the assessee rests on shaky and incorrect foundation and thus deserves to be quashed.” “……….In light of the aforesaid judgment, we are of the view that the impugned loose sheets of papers cannot come within the ambit of definition of the word "document-to be used as evidence and the same cannot form the basis for assessing the undisclosed income of the assessee. Admittedly, the said loose papers are not in the form of pro-notes or duly executed documents or books of account or certificates or money receipt which can prove conclusively the factum of any undisclosed income earned by the assessee or any unaccounted investments or made by him Additions be made simply on the basis of rough scribbling made by some unidentified person on few loose sheets of papers. "

9.4 In view of the aforesaid, the ld. A.R. submitted that since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are in the nature of dumb documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When dumb documents like the present loose sheets of papers are recovered and the AO wants to make use of it, the onus rests on the AO to collect cogent evidence to corroborate the noting therein. The AO has failed to corroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized papers reveal the unaccounted money payments of the assessee. Further, no circumstantial evidence in the form of any unaccounted cash, jewellery or investments outside the books of account was found in course of search in the case of assessee. Thus, the impugned addition was made by the AO on grossly inadequate material or rather no material at and as such, deserves to be deleted. Hence, an assessment carried out in pursuance of search, no addition can be made simply on of uncorroborated noting in loose papers found during search Page 21 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore because the addition on account of alleged advance made simply on the basis of uncorroborated noting and scribbling on loose sheets of papers found during the course of other person and having no evidentiary value, is unsustainable and bad-in-law. 9.5 The above would show that the rough notings which were under consideration in that case are similar to those notings which the assessing officer has alleged to be present in the loose sheets seized in the present case. Despite that the Tribunal held in Layer Exports case that rough loose sheets of papers scribbled could not be termed as 'documents' having any evidentiary value within meaning of section 132. The Tribunal in the case of Sri Y. Siddaiah Naidu, Tirupathi vs. Asst. Commissioner Of Income-Tax 2015 (2) TMI 403 - ITAT Hyderabad took similar view. Reliance was placed on CIT v. M/S Rhosla Ice & General Mills 2013 (1) TMI 451 - Punjab & Haryana High Court. 9.6 He submitted that the Tribunal in the above cases it was noted that the documents relied upon by the AO did not give any clear picture about the nature and ownership of entries therein and, therefore, any addition in the hands of the assessee on the basis thereof would not be tenable.

9.7 He submitted that the AO himself stated in his order that the documents are loose sheets. Therefore, it is to be considered as dumb documents having no evidential value. It is to be noted that the AO has failed to note these are dumb documents. He has also failed to notice all the factors judicially discussed by various courts and Tribunals. It is not so as is evident from the various decisions discussed in this regard. Even otherwise, the material in the present case is not backed by any corroborative evidence. The inferences drawn by the AO from the documents are also not supported by any explanation. Therefore, the material, in the present case can be termed as “dumb" even as per the narrow definition adopted by the AO. The assessee strongly objected with the finding of the AO that assessee has advanced any unaccounted money to Late Shri V G Siddhartha or M/s. Coffee Day Global Limited.

ITA Nos.1061 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.8 He submitted that the notings in the loose sheets, note pads have been prejudicially and erroneously interpreted by the AO. The loose sheets do not evidence any concluded transactions. The inferences drawn by the AO is based on surmises and conjectures. The inferences are outcome of a prejudicial or speculative reading of the material not supported by any independent, cogent and reliable evidences. The AO sought to rely on undated, unsigned dumb loose sheets which are not reliable material at all held in the decision quoted above. 9.9 He submitted that the presumption under section 292C is with reference to books of accounts, other documents, money, bullion, jewellery or another valuable article or thing. The loose sheets, scribbled note-pads do not qualify as books of accounts and other documents. That being the case, the presumption contained in section 292C of the Act cannot be applied by the AO merely because the loose sheets, note-pads are seized from the premises of the assessee. Therefore, the burden is cast upon the AO to prove that the loose sheets or note pads belong to the assessee. There is nothing in the loose sheets, note pads to hold that they belong to the assessee. The loose sheets / note pads do not contain name of the assessee or seal of the assessee. Neither the authorised officer nor the assessing officer have discharged the burden cast upon them to prove that the loose sheets / note pads belong to the assessee. It is to be noted that the expression used in section 292C is "may be presumed". Therefore, it is a rebuttable presumption. The assessee has contended that the seized material does not belong to it. The entries contained therein are not made at the behest of the executive committee of the assessee. 9.10 In fact, the AO has not even invoked the presumption under section 292C to hold that the seized material belongs to the assessee nor has he established that the said material belongs to the assessee. The AO in assessment order has discussed the quality of evidence. He has not established as to how the seized material belongs to assessee. Merely because certain entries without any narrations accepted by the Mr. Deekshith cannot lead to conclusion that it is related to this assessee though there was no name of the assessee mentioned therein. As stated earlier, the Page 23 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore material does not contain either the name of the assessee nor the seal of the assessee. Merely because the other party stated the name of the assessee it cannot be presumed that the same belongs to the assessee. The presumption under section 292C does not apply.

9.11 He submitted that the said seized material does not qualify even as books of accounts or other documents. Therefore, the presumption under section 292C cannot be raised in respect of the seized material. That is presumably the reason why even the assessing officer has not averred that the presumption under section 292C can be invoked in respect of the seized material.

9.12 He submitted that assuming but without admitting that section 292C applies even with reference to loose sheets, note pads containing unsigned entries a perusal of section 292C would show that the presumption is only with regard to books of account, other documents, money, bullion, jewellery or other valuable article or thing found during the course of search under section 132. Moreover, it is a search induced assessment. Section 132(4A) also contains similar presumption. Section, 132(4A) should be read harmoniously with reference to sub-section (1) of section 132. The books of account or other documents referred to in section 132(4A) are those referred to in section 132(1)(iii) read with section 132(1)(a)/(b). The assessee has established that the authorising officer could not have formed a reasonable belief that eventualities stated in section 132(1)(a)/(b) exist. Therefore, section 132(4A) cannot come into play. Consequently, section 292C does not apply. 9.13 Without prejudice to the above, he submitted that assessment u/s 153C have been made in the case of the assessee relying upon the very same material. Under such circumstances, the presumption under section 292C gets automatically rebutted. Section 153C(1) stat.es that where the Assessing Officer of the searched person is satisfied that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or any books of account or documents, seized or requisitioned, pertains or pertain to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A. Therefore, if the material seized belongs to or pertains to or relates to a person other than the searched person, only then section 153C comes into play. Hence, it is axiomatic to state that if the seized belongs to or pertains to or relates to some other person, it does belong to or pertain to or relate to the searched person. Under such circumstances, one cannot invoke the presumption under section 292C that the material seized belongs to the searched person as the assessing officer by own action of making assessment under section 153C in the case of trustees relying upon the very same seized material. He placed reliance on the decision of the Delhi Tribunal in Vijay Kumar Aggarwal v. ACIT 2017 (5) TMI 1354 - ITAT Delhi. 9.14 Without prejudice to the submissions that loose sheets / note Pads are neither books of accounts nor documents, he submitted that unless the burden of proving that the materials and cash belong to the assessee is discharged those materials can neither be seized under section 132 nor relied upon to make assessment under section 153C. Therefore, the seizure of such material is illegal. The AO cannot rely upon such material whose seizure is illegal and the hence, assessment is void ab initio. He drawn our attention to the assessee’s letter dated 11.11.2019 in reply to notice dated 04.11.2019 issued under sec 142(1) of the Act, wherein the assessee had taken objection to assessment in the absence of seized material. The AO has not rebutted the assertions made by the assessee. He merely made a bald assertion that the assessment has been made based on incriminating materials found during the course of search in case of M/s Coffee Day Global Limited. He submitted that while the jurisdictional Tribunal and High Court have consistently held that assessment u/s 153C cannot be made in the absence of incriminating material, the AO cannot get away by making bald assertion by stating that the assessments have been made based on Page 25 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore incriminating material. In fact, the assertion of the AO is contrary to his own reliance upon material belonging to a period other than the period for which assessment is made. By relying upon material belonging to some other assessee, which have no mention of date of advance, the AO has impliedly acknowledged that there is no material seized leave alone incriminating material. The findings of AO are not supported by any corroborative seized materials and the AO has made assessment in an arbitrary and capricious manner.

9.15 He submitted that the AO while rebutting the contentions of the assessee that assessment cannot be made under sec 153C in the absence of incriminating material has stated that material evidence found, have been discussed at length in the various paragraphs relating to advance made by assessee. He submitted that the discussion which the AO refers to in the above-mentioned counter is also general in nature. He has only made bald assertions that the assessment has been made based on incriminating material found during the course of search. It is not enough to state that the material seized is incriminating. It should be demonstrated that it is so. It can be demonstrated only if a reasonable person would be able to state categorically without mincing any that the material represents undisclosed income or an undisclosed asset. 9.16 He submitted that as stated earlier, it is stated that the AO made additions in an arbitrary manner in which he has extrapolated the income though the seized material doesn't show the quantum of advance or date of advance or AY in which it was advanced or the name or address of assessee. These submissions would show that the AO has expressly in some cases and impliedly in certain other, cases has conceded the fact that there is no incriminating material found based on which alleged undisclosed income could be assessed. The capricious manner in which the assessment is done is manifest in the manner in which the undisclosed income is quantified. Therefore, all said and done, the AO himself could not evaluate the material seized to the level of incriminating material. This is evident from the remarks in the assessment order wherein the AO has computed the alleged to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore unaccounted cash advance by adding 6 digits to the 2 digits which are already there which is obnoxious. The seized material relied upon by the assessing officer to make the aforementioned computation is nothing but dumb documents which have no legs to stand or doesn't speak for itself or along with any corroborative material. A perusal of the assessment orders would show the desperation in which the learned assessing officer has attempted to justify the assessment. The computation is fraught with high degree of subjectivity and arbitrariness. Whatever discussion of the material which the AO has made at various places in the assessment orders are general and no objective conclusion can be drawn from the same which is evident from the assessing officer's own decision not to rely upon that discussion while making the actual computation. If the AO could really base his computation on specific portion of seized material, he would have made specific references to the same while making computation and would have also drawn references to the discussions made in the previous Paragraphs of the assessment order. But he chose to make reference to specific pages of the seized material in few cases and no such reference in few other cases. Even so far as the years in respect of which he has drawn attention to specific pages of the seized material, the computation cannot be correlated to the data in such seized material. Therefore, there is an element of estimation in all cases. 9.17 He submitted that the AO has stated in the assessment order that it is brought on record here, that various incriminating evidences to prove that advance money being in all years subject to assessment that have been seized and also discussed in detail as a part of this order. For the purpose of quantification, it is necessary to look for those material which give maximum possible detail with respect to quantum of advance money being made and that "It is again reiterated that the only purpose of considering certain evidences for the purpose of quantification is to deliver most reasonable possible estimation and the one close to reality." In the assessment order, the assessing officer has stated that "The estimation is both scientific and reasonably accurate. Had the truth been brought to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore forward by the assessee, it would have been more accurate to the decimal values. 9.18 Further, he submitted that the AO is merely trying to justify his estimation of unaccounted cash advances. He has conceded that he has not found "directly incriminating evidence." If he has not found any directly incriminating evidence, he cannot make any addition in section 153C assessment. The whole principle of an assessment which is preceded by search is that an officer specified in section 132(1) has reason to believe in consequence of information in his possession that any of the eventualities stated in section 132(1)(a) to (c) exist. So, there are two stages: one stage, where the authorizing officer has information in his possession prior to the search and second stage, where the authorized officer finds during the course of search by exercising any of the powers stipulated in section 132(1)(i) to (v) for which he is authorized. Therefore, assessment under section 153C r.w.s. 132 of the Act is a unique kind of assessment where the focus is on assessing income on incriminating material and such material should be representative of concealed income. The AO cannot merely say that it is difficult to find directly incriminating evidence and hence, he wants to resort to estimation. Presence of incriminating material alone confers jurisdiction to make assessment under section 153C. He submitted that in the specific submissions on grounds pertaining to extrapolation of income and these submissions, it is established that the seized materials do not as incriminating material at all. The method of quantification of undisclosed cash payments is not at all scientific. The AO makes assumption for one year say Yl and quantifies the undisclosed advances for that year. He takes the quantification made for Yl [which is already based on estimation] to compute the undisclosed advances for another year say Y2. This manner of computation would go on increasing the element of assumption. If the degree of assumption goes on increasing, how can such quantification be close to reality? Therefore, the entire assessment should fall based on the concession of the AO that he did not find directly incriminating material. This shows that the AO has not been able to ascertain the undisclosed income from the material. If he could ascertain Page 28 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore the undisclosed income from seized material, then there was no need to make estimation. The AO is making a lame attempt to justify the irrational manner in which he made the assessment. The very fact that the AO was left with no choice but to estimate the unaccounted cash generated would show that the material is not incriminating. On the one hand, the AO states that incriminating material is available for each assessment year and on the other hand, he hastens to add that "it was necessary to look for those material which give maximum possible detail respect to quantum of cash advance being made". He submitted that the assessment should be made for each of the years separately. The AO has completely missed the fundamental concept pertaining to assessment. 9.19 He submitted that the seized material has not been analysed by the AO financial year-wise. He has made a consolidated analysis and has considered the same for all years. As a result, there is discord between the discussion made in respect of seized material and the table wherein the alleged unaccounted cash generated has been tabulated year- wise. He submitted that the analysis of the seized material should be made year-wise considering the true spirit of the provisions pertaining to search and seizure. If a consolidated analysis is made for all the 5 years involved, it would be end-up being a subjective analysis rather than an objective analysis. An objective an analysis alone would help in determining whether the seized material would qualify as incriminating material warranting an addition in the assessment Under section 153C for a particular year. Otherwise, one would end-up be making addition for one assessment year based upon the analysis for another assessment year. This is against the letter and spirit of the provisions dealing with search, seizure and consequent assessment.

9.20 He submitted that as can be seen from the decision in Singhad Technical Education Society's case [2015] 378 ITR 84 (Bom.), the Court has reiterated the principle that no addition can be made in the absence of Incriminating material in a search-based assessment. The above decision has been held in the context of section 153C as held by Hon'ble Karnataka to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Court in IBC Knowledge Park (P) Ltd.'s case (385 ITR 346 (Karn.). It has been categorically held that the seized material should be correlated to each year. If any incriminating material is found for any year in the block of 5 years, addition can be made only for that year. An overall approach of analysing the seized material should be refrained. 9.21 He submitted that the department has not discharged the burden of proof cast on it to establish that Mr. K M Deekshith was actively involved in collecting cash etc. The entire edifice of the case is built on the statement given by Mr. K M Deekshith. The assessee denies that he was involved in any manner in providing cash loans to M/S Coffee Day Global Limited. The assessee denies any such advance. There is no proof that Mr. Deekshith was authorized for collection of cash nor was he authorized for the alleged payments to various persons as alleged in the notice and assessment order.

9.22 He submitted that various statements relied upon by the assessing officer is not valid and reliable. The AO sought to rely upon statement of Mr. K M Deekshith. The assessee vide its letter dated 11.11.2019 had requested the AO to furnish the copies of the statements of Mr. K M Deekshith and also afford him an opportunity to cross-examine. He submitted that under such circumstances, the AO cannot rely upon the statements of Mr. Deekshith which have been recorded behind the back of the assessee. When statements of persons are recorded behind the back of the assessee and neither the copies of the same have been furnished to the assessee nor the assessee is permitted to cross-examine them, such statements cannot be relied upon. The assessee relies on the following decisions:

 The Hon'ble Supreme Court in Andaman Timber Industries v. CCE 2015 (10) TMI 442 - SUPREME COURT / 2015 (324) E.L.T. 641 (SC)  Kirloskar Investments & Finance Ltd. v. Assistant Commissioner of Income tax [19981 67 ITD 504 (BANG.) to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.23 Therefore, mere furnishing the copy of statements recorded is not sufficient. The assessee against whom the statements are to be used should be provided an opportunity to cross-examine the person who has given statement. Reliance is placed on the Hon'ble Delhi High Court in Principal Commissioner of Income-tax, Delhi-2 v. Best Infrastructure (India) (P.) Ltd' [2017] 84 taxmann.com 287 (Delhi) / [2017] 397 ITR 82 (Delhi). 9.24 The Hon'ble Tribunal in M/S Fateh Chand Charitable Trust CIT (Exemptions) Lucknow 2016 (4) TMI 1119 - ITAT Lucknow / (20161 49 ITR Trib) 276 held that it is settled position of law that any evidence collected at the back of the assessee cannot be used adversely unless and until it is confronted to the assessee and the assessee is allowed to cross-examine the witness, if any. It was similarly held in M/S Obulapuram Mining Company Pvt. Ltd. v. DCIT 2016 (7) 'PMI 1435 - ITAT Bangalore. 9.25 He submitted that in the next judgment of the Hon'ble Delhi High Court rendered in the case of CIT Vs Pradeep Kumar Gupta also, it was held by the Hon'ble Delhi High Court that it was mandatory for the revenue to produce A for cross examination by the assessee on the specific demand in this regard and thereafter, it was held that the violation of the revenue to produce A for cross examination by the assessee assumes fatal consequences. Hence, as per these two judgments, for this reason alone that the AO has not made available these persons for cross examination of the assessee despite such request by the assessee before the AO, these statements cannot be used against the assessee. 9.26 He submitted that a perusal of section 131 (1A) would show that an authorized officer referred to in section 132(1) can make enquiry or investigation by exercising the powers under section 131 (1). But such power is to be exercised prior to taking action under clauses (i) to (v) of section 132(1). In the present case, the action under clauses (i) to (v) of section 132(1) was taken on 21.09.2017. Therefore, the jurisdiction of the authorized officer ceased on 21.09.2017. The statement of assessee recorded under section 131 on 18.12.2017 by the authorized officer are invalid. Such statements cannot be relied upon as the statements have been recorded without any power by the authorized officer. Page 31 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.27 He submitted that the assessee's letter vide its dated 11.11.2019 requested the assessing officer to furnish the copy of the statements of Mr. Deekshith and to give opportunity of cross examination of Mr. K M Deekshith as well as Late Shri V G Siddhartha whose statements were relied upon to make an addition. He submitted that the AO has not given copies of the statements of those parties Whose statements are relied upon or given an opportunity of cross examination of these parties. one of the reasons given is that key person Shri V G Siddhartha is deceased. It is unfortunate to state herein that Late shri V G Siddhartha has committed suicide because of the attitude of the Department which is evident from the suicide note and same is available in public domain. Anyhow the AO ought have given the opportunity of cross examination of Mr. K M Deekshith who is a living witness and in absence not giving cross examination of living person whose statement is relied upon by the AO, the such assessment orders framed by AO is bad in law and to be quashed as held by Supreme Court judgement in case of Andaman Timber Industries v Commissioner of Central Excise, 281 CTR 241 (SC) wherein held that opportunity of cross examination not given leads to nullity and such assessment orders to be quashed. Further bench of tribunal in case of ACIT vs Vireet Investments (P) Ltd 165 ITD 27 (Delhi - Trib.) (SB) wherein it was held that two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted, which is in line with the supreme court judgement in the case of CIT vs Vegetable Products, 88 ITR (SC). This is a well-accepted construction recognised by various courts. 9.28 He submitted that the Assessee neither had the occasion to look into those statements nor an opportunity to cross-examine those persons. In short, “no one shall be condemned unheard". The principles of natural justice are a jural postulate and has been enshrined in the maxin 'Audi alteram partem'. It is the second long arm of natural justice, which protects the little man from the arbitrary actions of the administrative authorities. There must be fairness on the part of the deciding authority. According to this principle, reasonable opportunity must be given to a Page 32 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore person before taking any action against him. He should be disclosed the evidence to be utilised against him and should be given an opportunity to rebut the evidence produced by the other party unless he waived that right. The Court normally requests that an objection be taken as soon as the prejudiced party has knowledge of the bias. If an objection is not raised and proceedings are allowed to continue without disapproval it will be held that the party has waived its right to do so. In the present case, the assessee has specifically requested the AO vide his letter dated 11-11-2019 categorically brought to the notice of the assessing officer that he has not made any unaccounted advance to M/S Coffee Day Global Limited and whatever advance was made was through banking channel which was duly recorded in books of accounts. There was no seized material found in search in case of assessee when assessee residence was searched on 27-01-2016 without any warrant of authorization issued u/s 132 of the Act mentioning the premise of assessee. Further the assessee requested for to allow cross examination of Mr. R M Deekshith to establish that no unaccounted advances has been made to them. Therefore, it means that they do not form evidence at all for the allegations made against the assessee.

9.29 Therefore, it means that the assessing officer apart from the statements of Mr. R M Deekshith, he has not relied on statement of any other person. The assessing officer has categorically stated that whatever material he sought to rely upon has been furnished to the assessee. He submitted that statements obtained under section 131 or 132(4) cannot be termed as information relating to investigation which the assessing officer has no obligation to share. Copies of statements obtained under sections 131 or 132(4) should necessarily be furnished to the assessee. If the same have not been furnished it means that the same have not been relied upon. The Hon'ble Apex Court in the case of Kishin Chand Chellaram vs. CIT, 125 ITR 713 has held that evidence to be used against the assessee must be provided to the assessee and an opportunity to confront should be given to the assessee else it cannot be used and no adverse inference can be drawn on such material. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.30 He placed reliance on the judgement of the Hon'ble Supreme Court in the case of C. Vasantlal and Company v. CIT 1962 (2) TMI 7 - SUPREME COURT / [1962] 45 ITR 206 (SC} held as under: - "The Income-tax Office* is not bound by any technical rules of the law of evidence. It is open to him to collect materials to facilitate assessment even by private enquiry. But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it The statements made by Achaldas and Poonamchand before the Income-tax Officer were material on which the income-tax authorities could act provided that the material was disclosed and the assessees had opportunity to render their explanation in that behalf."

9.31 By not furnishing the copy of statements Mr. Deekshith referred to in Assessment orders, it is implied that the assessing officer has not relied upon any other statement. Even in the assessment orders, assessing officer has made reference only to these two statements. Therefore, though the assessing officer mentioned in assessment order these only 2 statements appear to have been relied upon. The statements obtained from this person is invalid as they have been recorded without authority. Even the assessing has not obtained any statement from any other person from the assessee side. He relied solely upon the statements recorded by the authorized officer. This means that it is as good as not having obtained statement from any other person. He submitted as stated that in the earlier submissions, the assessee has also established that these statements cannot be relied upon even on merits. 9.32 Moreover, the statements of Mr. K M Deekshith has been recorded post search. They do not have any evidentiary value. Reliance is placed on the decision of the Hon'ble Bombay High Court in Commissioner of Income-tax v. Shankarlal Bhagwatiprasad Jalan [20171 84 taxmann.com 275 (Bombay) wherein it was held as under: - "A bare reading of Section 132(4) of the Act indicates that an authorized officer is entitled to examine a person on oath during the course of search and any statement made during such examination by the such person (the person being examined on oath) would have evidentiary value under Section 132(4) of the Act. The Karnataka High Court in Chief CIT v. Pampapathi [20081 175 Taxman 318/ [20091 310 ITR 64 in the context of facts before it viz. the search on the Assessee therein was completed to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore on 13th December, 1994. On 25th January, 1995, a letter was written by the Assessee therein making certain self-incriminating statement which the Revenue sought to rely upon as being a statement made under Section 132(4) of the Act. The Revenue's contention was negatived. This by inter-alia holding that the letter dated 25th January, 1995 is not recorded on oath by the authorized officer during the course of search. Therefore, it cannot be of an evidentiary value in terms of Section 132(4) of the Act. The facts in the present case are identical."

9.33 Therefore, the statements recorded post-search do not have any evidentiary value. The same do not have any value unless there is any other tangible evidence to corroborate what is stated therein. The assessing officer relied upon these statements to corroborate what is found in the seized material. When these statements itself do not have any evidentiary value, they cannot be relied upon to corroborate what is stated in the seized material. This is without prejudice to the contention that the statements recorded during the course of search are rebuttable. 9.34 He submitted that the observation of the AO that the contents of the statements are corroborated by material found and seized during search is not true. How can loose sheets / notepads which themselves do not qualify as reliable material corroborate any other material. In the submissions made by the assessee vide letter dated 11.11.2019, it is nowhere acknowledged the correctness of the statement of Mr. Deekshith. These submissions do not imply even remotely that the assessee is acknowledging that statements made by Mr. R M Deekshith are true. 9.35. He submitted that certain statements have been obtained by the authorised officer after the completion of search. These statements cannot be relied upon as they are invalid as submitted earlier. The reliability of the statements obtained from Mr. K M Deekshith have been mentioned at various places in these submissions. The AO has relied on the statement of Mr. K M Deekshith in the assessment order to the effect where in spite of the assessee denying the contents of the notebooks and assessee also vide letter dated 11.11.2019 has denied all entries from the seized material and from the same it can be concluded that such notebooks are not admissible as evidence. He submitted that the assessee has not admitted any entry in the seized material. The assessee reiterated the submissions made earlier. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.36 Mr. K M Deekshith's admission is not an admission by the assessee. He has made the statement in his personal capacity. It is submitted that mere admission of the entry in the notebooks do not make them evidence. It does not justify reliance on Statements of Mr. K M Deekshith to hold that the assessee has advanced any cash. The AO further observed that the contents of statement of Mr. K M Deekshith match with the assessee's name as the initials used are same. These findings of the AO are incorrect. The statement of Mr. K M Deekshith does not concur in any manner with these findings. The assessee has categorically stated in his statement that no payment in cash is advanced by him and stands by his statement throughout the proceedings.

9.37 He further submitted that the AO has discussed regarding reliability of statements of Mr. K M Deekshith. The AO has not demonstrated as to how the statement of Mr. K M Deekshith is reliable evidence. Just because he is a close confidant of Late Shri V G Siddhartha, it would not mean that whatever he states are to be accepted at face value without looking out for corroborating evidence to support what he has said. The AO throughout the order sought to rely upon the statement of Mr. K M Deekshith. He did not make any further enquiries or collect any evidence to verify the veracity of the said statement. He submitted that reliance on statement obtained without corroborating evidence is not tenable. As the AO has relied solely upon the statement of Mr. K M Deekshith and made assessment relying upon such statement, the entire assessment should fall. 9.38 In a nutshell, the statements cannot be relied upon for the following reasons:- • No opportunity to cross-examine the persons whose statements have been relied upon is afforded. • Some of the statements have been recorded under section 131 by the authorized officer subsequent to completion of search.

• There is no documentary evidence either to support the statements of Mr. K M Deekshith. Page 36 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.39 Without prejudice to the above, he submitted that no additions can be made solely based on the statements of third parties. Reliance is placed on following decisions:

• The Hon'ble Delhi High Court in Commissioner of Income-tax v. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi) held as under: "21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession Of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such Examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income Of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/ material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/ material found during search in order to for an assessment to be based on the statement recorded." • In Dr. E.G. Memorial Trust v. CIT (Exemption), Kolkata2017 (11) TMI 1586 • ITAT Kolkata, the Tribunal held as under: - "6. We have carefully considered the entire gamut of facts, rival contentions raised by the parties before us and also the material referred to during the course of hearing. In the instant case originally Id. CIT(Bx) cancelled the registration certificate u/s. 12A of the Act vide order dated 22-2-2016. Against the order of Ld, CIT(Ex) assessee preferred an appeal who directed the Revenue to provide an opportunity of cross-examination to assessee. Accordingly, appeal was allowed for statistical purpose." 9.40 He also relied on the case CIT Vs. S. Khader Khan Son reported in 352 ITR 480 (SC) where the Hon'ble Supreme Court has held that: - "Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition." Page 37 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.41 He also relied on the decision of the Hon'ble Tribunal in the case of Kamla Devi S. Doshi v. Income-tax Officer [2017] 88 taxmann.com 773 (Mumbai - Trib.) / [2017] 57 ITR(T) 1 (Mumbai - Trib.) held as under: - "We however are unable to persuade ourselves to subscribe to the view that such information arrived at on the basis of the stand-alone statement of the aforesaid person, viz. Sh. Mukesh Chokshi (supra), falling short of any corroborative evidence would however justify drawing of adverse inferences as regards the genuineness of the share transactions in the hands of the assessee. We though are also not oblivious of the settled position of law, as per which a very heavy onus is cast upon the assessee to substantiate the LTCG on sale of shares, as projected by her in the return of income for the year under consideration. Thus, to be brief and explicit, though the reopening of the case of the assessee in the backdrop of the aforesaid factual matrix cannot be faulted with, however such stand-alone information, i.e., the statement of Sh, Mukesh Chokshi (supra), cannot be allowed to form the sole basis for dislodging the claim of the assessee in respect of the LTCG reflected by her in the return of income for the year under consideration. We would not hesitate to observe that the lower authorities which have rushed through the facts to arrive at a conclusion on the basis of principle of preponderance of human probability, had however absolutely failed to appreciate that the said principle could have been validly applied only on the basis of a considerate view as regards the facts of the case in totality, and not merely on the basis of the standalone statement of the aforesaid third party, viz. Sh. Mukesh Choksi."

9.42 He relied on the judgement of the Hon'ble Gujarat High Court in the case of Kailashben Manharlal Chokshi v. Commissioner of Income-tax [2008] 174 Taxman 466 (Gujarat) held as under:"- "26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee." "16.4 We have duly considered the contention of the assessee and also perused the documentary evidences produced by the assessee. On perusing the facts, it is apparent that the addition is made based on the general practice of cash payments Page 38 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore made outside the books of accounts in the case of immovable property transactions. The AO was of the opinion that there are ample instances that cash payments are made outside the books of accounts in effecting money lending transactions and therefore, the statement made by Mr, K M Deekshith can be relied and the addition sustainable. However, we do not subscribe to this view of the AO. In order to establish that the assessee had paid amount outside the books of accounts for effecting money lending transactions substantial evidence has to be placed on record which is absent in this case. It would be unjust if an addition is made on the assessee based on a statement made by third party without further making inquiries and collecting evidence. Therefore, we hereby request to delete the additions made by the Ld. AO in the concerned AY's. This entire question is based on facts and therefore, no interference is necessary."

9.43. He submitted that based on the above analysis, the AO has made assessments in the case of the above-mentioned assessee under section 153C of the Act. The AO stated that the payments evidenced by the seized material are not verifiable and on the other hand, he makes addition on the ground that the seized material evidencing payments are adequate to make additions in the hands of the assessee. The very fact that the AO has made these assessments would show that the assessing officer has no incriminating material to prove that any funds of the assessee have been advanced to M/s Coffee Day Global Limited. This would lead only to two possibilities; one, unaccounted cash has not been paid by the assessee at all and the other possibility is that the unaccounted cash was never available with the assessee as claimed by the AO. Reason is if the funds have neither been advanced by the assessee, then cash should have been lying with him. During the course of search no cash was seized. Where did the cash go? If the AO had reason to believe that the funds are advanced based on the seized material, he would have made a substantive addition staring the documents like Loan Agreements, Pro Notes, Acknowledgement of debt and security documents like Mortgage or Title Deed of Property, Cheques for guarantee, Bank A/c Details, KYC. Details, etc. 9.44 He submitted that the jurisdiction under section 153C(1) can be assumed if the assessing officer of the searched person has reason to believe that the seized material pertains to or relates to a person other than the person referred to in section 153A, then such seized material is to be handed over to the assessing officer of the other person to initiate assessment or Page 39 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore reassessment proceedings in case of such other person. The expression used is "belongs to or.......pertains to or.........relates to the other person." Therefore, the mandate is it should belong to or pertain to or relate only to the "other person" and not to the "searched person". Having not reached this conclusion, the AO chose to make protective assessment. Two inferences can be drawn from this action of the AO: - (i) the seized material is not conclusive proof to make assessment under section 153A in case of assessee and hence, he chose either to invoke section 153C himself [where he has jurisdiction over the assessee] or hand over the material to the assessing officer having jurisdiction over the assessee in order to enable them to invoke section 153C in case of assessee. (ii) The seized material is not conclusive proof that it belongs to the assessee. Hence, though section 153C is invoked, only protective assessment has been sought to be made in the case of trustees. Therefore, he submitted that the seized material is not incriminating at all.

9.45 Without prejudice to the above, he submitted that the AO by making protective assessment in the hands of assessee based on which very material he has denied on the ground that the funds have never been advanced, would show that the material cannot be transcended to qualify as incriminating material so as to form conclusive proof for making assessment under Section 153C. It can, at the most, arouse a suspicion which cannot be substituted for legal evidence. 9.46 The AO has held that the Loans & Advances contained in the seized material are not verifiable. It means that there is no incriminating material to support his analysis which he has used to make allegations regarding advance of funds for the personal benefit of assessee. Therefore, when there is no evidence to prove these allegations, the only fall out would be that no unaccounted cash was ever there in the first place. But the assessing officer has not accepted the contention that the alleged advancing of money could never be possible considering there is no physical existence of the same. By applying the theory of elimination, the only possibility is that advancing of such money never took place. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.47 At the cost of repetition, he submitted that the AO erred in relying upon materials maintained by others even though the assessee had not advanced any cash. The said material does not belong to the-assessee. He submitted therein that the seized materials constitute only loose sheets and scribblings containing unsigned entries are dumb documents and cannot be treated as incriminating material to make any addition. The assessee reiterates the submissions made in respect of the above-mentioned grounds.

9.48 He submitted that the above allegations of the AO are not tenable. The assessee denied the allegation that it has advanced any cash loan to M/s Coffee Day Global Limited. The evidence brought on record by the department is sketchy and cannot be relied upon to show that the assessee has advanced any cash loan. At the cost of repetition, he submitted that the entries in documents are made by private persons and the assessee has nothing to do with it. Any such conclusions are tenuous and are not legally tenable. He further submitted that the entire assessment is made based on the statement of Mr. K M Deekshith and the assessee vide its letter dated 11.11.2019 had requested the AO to afford him an opportunity to cross- examine the above person. The AO did not afford opportunity to the assessee to cross-examine them. He submitted that under such circumstances, the statements cannot be relied upon to make assessment. The assessment made based on such statements is liable to be quashed.

9.49. As the assessee did not get the opportunity for cross-examination, their statements cannot be relied upon as the assessee could not cross-examine them. The fact that he wasn't provided with this opportunity it shows that the credibility of Mr. K M Deekshith's statements is highly doubtful. When the assessee has neither been given copy of the statement nor has got the opportunity to cross-examine the person giving statement, such statements cannot be relied upon.

9.50 He submitted that the assessee was not afforded any opportunity to cross- examine any of the persons including Late Shri V G to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Siddhartha whose statements were relied upon for the purpose of making assessment. Such statements cannot be relied upon.

9.51 Further referring to the judgment of the Hon'ble Karnataka High Court in Kothari Metals Ltd 377 ITR 581 about statements of a third party. The AO noted in the instant case that Mr. K M Deekshith who was employee of M/s Coffee Day Global Limited. The employee has also not given any sweeping statements and general talk. He has simply responded to the specific questions asked in relation to the work being undertaken by him as assigned to him by his higher ups. Also, the statements recorded from him were done when he was holding a certain position in the company during the course of search proceedings. Therefore: his statement is being considered as that of a person who is part and parcel of the organization and not that of a third party. If there was anything that the assessee wanted to bring on record, the assessee would have done the needful for the same. Also, it is not clear as to why the assessee's request for cross- examination of Mr. K M Deekshith alone was denied. 9.52 He submitted that the above observations of the AO are not legally tenable. The right to cross-examine is not dependent upon the assessee's relationship with the third party. The right to cross- examine is dependent upon the fact that the statement of a party is used to the prejudice of the assessee. Therefore, mere fact that the statement sought to be relied upon by the assessing officer is that of a third party would not deprive the assessee of his right to cross-examine. Therefore, the ratio of the decisions relied upon by the assessee squarely apply. Moreover, it is assessee's prerogative to decide whom he wants to cross- examine. For the proposition that the right to cross-examine is not restricted only to those cases where the deponent / witness is a third party, reliance is placed on the decision of Smt. Madhu Gupta v. DCIT 2006 (2) TMI 496 - ITAT MUMBAI / [2006] 8 SOT 691 (Mum.) and Gargi Din Jwala Prasad v. CIT [1974] 96 ITR 97 (All). 9.53 He submitted that in Sunrise Tooling Systems Pvt.Ltd v. ITO 2012 (11) TMI 1081 - ITAT Delhi, the Tribunal held as under: - to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore "The opportunity of cross-examining, Sh. Nitin Aggarwal, a partner of Shree Laxmi Industrial Corporation has also been denied to the assessee on wrong basis by the authorities below that an opportunity of cross examines needs to be given only when third party is involved or a party not known to the assessee or a hostile witness is involved and further that the onus for cross examination does not lie with the department but lies with the assessee who allegedly made purchases in his books of accounts from the said concerns." 9.54 The AO relied on certain scribblings and loose sheets to issue the assessment order. The assessing officer did not provide an opportunity to the assessee to rebut these observations. The assessee has not been provided copy of the materials relied upon to make the said analysis. A perusal of the seized material which is extracted in the assessment order and the reply to the queries from the statement of Mr. K M Deekshith which is relied upon would show that they are not conclusive evidence to hold that the assessee has advanced any cash loan. The conclusions drawn by the AO cannot be inferred from the seized material. He submitted that the conclusion drawn by the AO cannot be deduced either from the seized material or from the statement of Mr. K M Deekshith. The seized material does not mention anything about the alleged cash advanced by the assessee nor the details of when such alleged advance was made. There is no date or period mentioned in those sheets. It is not known to which period it belongs to. They are mere loose sheets and cannot be treated as incriminating material. There is nothing in the sheet to evidence advancement of cash loan by the assessee.

9.55 The AO extracted pages 4 to 6 of the seized material no. A/CCDGL/T8 and also confronted the same to Mr. K M Deekshith. The reply of Mr. K M Deekshith is reproduced at page 6 of the assessment order. These two pages cannot be treated as evidence. It is not known to which period these two sheets belong to, neither are any dates mentioned in these sheets. It contains only names of certain persons with some figures. The initials PBT cannot be presumed to be the assessee. These are dumb sheets which have no relevance and its authenticity is not be taken on face value. Such loose sheets and scribblings cannot be the primary evidence to base the assessment upon. These sheets also cannot be relied upon to hold that the assessee has advanced cash loan to M/s Coffee Day Global Limited. In to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore the assessment order, the AO has extracted page 6 of A/CCDGL/T8 and observed as under: "The above exhibit is an image of seized material A/CCDGL/T8, Page no. 6 which has information tabulated about the "Various scribblings and numbers and names of different people for year 2017".

9.56 In reading the above, it can easily be inferred that the initials PBT cannot be construed as the assessee and it's not in good faith to presume it to be the name of the assessee. From this sheet of seized material, it can also be seen there are various names mentioned except for the assessee and in such scenario it would not be prudent to assume as per the whims and fancy of the AO that the said initial is that of the assessee and make additions basing the decision on such loose sheets that are dumb and not to be taken while considering the assessment as they are not preliminary evidence to prove that any cash loan was advanced by the assessee.

9.57 The said page 6 does not contain any details about the unsecured cash loan made by the assessee nor proof of such alleged advancement. The AO merely presumed that the entire amount shown under demand column is advanced in cash by the assess. There is no information regarding details of such loan advancement. How can any unaccounted cash be computed based on such document. The AO's conclusion does not emerge from the perusal of the said sheet.60. It is submitted that the observations of the AO are perverse. There is nothing in these pages which would enable a person to arrive at the aforesaid conclusion. A perusal of the said pages would show that there are some rough notings. They contain certain names and some figures. Nothing can be made out as to what, those entries are all about. These pages do not even contain the dates or period. This material cannot be treated as evidence to support the contention of the AO that cash loan was advanced by the assessee. This is a mere case of guess work as there is no concrete evidence to-prove such cash loan advancement. The AO has hastily presumed the initials to be that of the assessee and made addition as per his discretion and arrived at an to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore imaginary amount by adding certain zero's. This addition has no legs to stand alone as such it was requested the same may be quashed.

9.58 He submitted that the ld. AO has merely relied upon the loose papers, obscure notings made in certain note books, statement of Mr. K M Deekshith and has come to the above conclusion. The conclusions drawn by him are not forthcoming from the documents and statements. The AO has made his own analysis below each extract of the seized material. The analysis is not supported by any corroborative evidence.

9.59 In the submissions made with respect to ground on extrapolation of income, the assessee has demonstrated with reference to specific instance that seized material which the AO has sought to rely upon to compute the unaccounted cash loan transactions is not supported by cogent evidence. 9.60. Without prejudice to the contention that the replies given to various queries are not tenable in law as they are not supported by any material evidence, it is submitted that the inferences drawn by the AO do not directly emerge from the statement of Mr. K M Deekshith. The only base for the analysis of the loose sheets, note books containing obscure notings and the scribblings in the statement of Mr. K M Deekshith. The inferences reflect more of the zeal of the AO to tax rather than an objective analysis. The seized material does not contain any reliable evidence. 9.61 He submitted that in the assessment order, the AO relied upon reply to query from the statement under section 132(4) of Mr. KM Deekshith recorded on 27.11.2017 which is as under: - "In the sworn statement u/s 132(4) of the Income-tax Act, 1961 recorded from Mr. K M Deekshith during the course of search operation u/s 132 dt: 27.11.2017 he was asked about his role and responsibilities in M/s Coffee Day Global Limited.

From the above statement of Mr. K M Deekshith it cannot be inferred that the assessee has advance loan in cash. The fact that Mr. K M Deekshith has stated that he was in charge of collecting unsecured cash loans^ on the direction of Late Shri V G Siddhartha has no merit because it is just hearsay which has no evidence or proof to back his statement. Therefore, without proof of evidence, the assessee cannot be held liable for such obnoxious statements which have no merit when considered or taken into account in isolation." Page 45 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.62 He submitted that merely because Mr. K M Deekshith has made a statement that unsecured cash loan was advanced by the assessee, it is not sufficient. It is necessary to corroborate with external evidence. The perusal of the entire assessment order would show that the AO merely relied upon statement of Mr. K M Deekshith. He did not make any further enquiry and collect evidence to verify the veracity of the same.

9.63 He submitted that, Mr. K M Deekshith manages all the cash inflows and outflows directly under the instruction of Late Shri V G Siddhartha but this has not been confirmed and there is no substantial evidence to prove the same.

9.64 He submitted that mere appearance of the names of the various persons appearing in the seized material obtained by AO from the office of M/s Coffee Day Global Limited and the residence of Mr. K M Deekshith is not sufficient to prove that there is an advancement of unsecured cash loan by the assessee. There should be documentary evidence to prove that the alleged cash loan has been advanced by the assessee.

9.65 He submitted that the observations of the AO are perverse. The AO has not brought on record any material to demonstrate that the assessee has advanced unsecured loan in cash to M/s Coffee Day Global Limited. The AO is not permitted to make such sweeping statements without bringing evidence on record. 9.66 He submitted that the above doesn't show that the payment has been made by the assessee. In fact, there is nothing to show that Mr. K M Deekshith acted on the orders of Late Shri V G Siddhartha with respect to receiving cash loans and repayment of interest on the same. The statement of Mr. K M Deekshith has not been corroborated with any material evidence nor has it been confirmed by Late Shri V G Siddhartha. These are just statements made in thin air by Mr. K M Deekshith, which have no substantial evidence and, in such instance, a third party's statement should not be the -base for the assessment considering the fact that the assessee has not been permitted to cross-examine him with regard to his statement. A Page 46 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore perusal of cross examination Mr. K M Deekshith would show that there is nothing in the said statement which would establish no payment has been made in cash at all. It is submitted that these findings are perverse. Mr. K M Deekshith did not state where the cash was collected from the assessee nor did he give any further details regarding the alleged transaction. There is no evidence found to demonstrate that such huge sum of cash was being held by the assessee. Mere fact that the seized material contains initials of PBT does not mean that the entries therein have been made at the behest of the assessee. The AO cannot blow hot and cold.

9.67 He submitted that as far as the documents referred to in various seized material, the assessee has already stated that he has nothing to do with them and they cannot be relied on to make any allegations against him. Further, he submitted that there are lot of loose ends and contradictions in the theory advanced by the AO to support his allegation that assessee has advanced cash loan. The AO stated in his order based on third party statement that the assessee advanced cash loan for a return of 1.95% per month which is not been proved. Therefore, the theory advanced by the AO regarding alleged advancement of cash do not have legs to stand and hence, all allegations based on such pillars should naturally fall. In view of the above, he submitted that the allegations of the AO that the assessee has advanced cash loan are perverse being not based upon any evidence are liable to be quashed.

9.68 Now, to rebut the allegations regarding payment of interest made to assessee for one year Mr. K M Deekshith has made vague statements stating "I am not able to remember the purpose for which the investments are used as they are old accounts." Such allegations without documentary evidence are not to be considered while making the assessment.

9.69 He submitted that there is nothing in the aforementioned entries which would show that the assessee has made any advancement of cash loan. The AO has merely relied upon the statement of Mr. K M Deekshith. The AO did not make any attempt to collect any evidences to corroborate the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore statement given by Mr. K M Deekshith. He submitted that this remark has been made purely on the basis of the statement of Mr. K M Deekshith.

9.70 In view of the aforesaid judgments, since the impugned seized papers are undated, have no acceptable narration and do not bear the signature of the assessee or any other party, they are not in the nature of self-speaking documents having no evidentiary value and cannot be taken as a sole basis for determination of undisclosed income of the assessee. When documents like the present loose sheets of papers are recovered and the AO wants to make use of it, the onus rests on the AO to collect cogent evidence to corroborate the noting therein. The AO has failed to corroborate the noting by bringing some cogent material on record to prove conclusively that the noting in the seized papers reveal the unaccounted cash advance of the assessee. Further, no circumstantial evidence in the form of any unaccounted cash, jewellery or investments outside the books of account was found in course of search in the case of assessee. Thus, the impugned addition was made by the AO on grossly inadequate material or rather no sufficient material at all and as such, deserves to be deleted. Hence, the assessment carried out in pursuance of search, no addition can be made simply on the basis of uncorroborated noting in loose papers found during search because the. addition on account of alleged payments made simply on the basis of uncorroborated noting and scribbling on loose sheets of papers made by some unidentified person and having no evidentiary value, is unsustainable and bad-in-law.

9.71 The Tribunal in the case of Sri Y. Siddaiah Naidu, Tirupathi vs. Asst. Commissioner of Income-Tax 2015 {2} TMI 403 - ITAT HYDERABAD held that it is very much clear that from such notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular transaction. In these circumstances, no addition can be made on the basis of such document.

9.72 He submitted that in the case of CIT v. M/S Khosla Ice & General Mills 2013 (1) TMI 451 - Punjab & Haryana High Court, the Hon'ble Court to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore held that assessee rightly contended that the impugned document was a non-speaking document in as much as it does not contain any intelligible narration in support of the inference drawn by the Assessing Officer that it reflected cash advance carried out by the assessee outside the regular books of account. When a dumb document, is to be made the basis to fasten tax liability on the assessee, the burden is on the AO to establish with corroborative evidence that the nature of entries contained therein reflect income and also that such income was in the control of the assessee. Thus, AO has to establish, with necessary corroborative evidence, that various entries contained in the seized document reflect cash advance effected by the assessee. Considering the entirety of circumstances, in the absence of any material to support the nature and ownership of the entries found in the seized document, no addition is permissible in the hands of the assessee as undisclosed income by merely arithmetically totaling various figures jotted down on such document.

9.73 The seized material which is placed on record shows certain receipt entries and it is very strange to believe that the assessee has authorised any person to write it as it does not contain any attestation from the assessee side being not having any name or seal of the assessee. Being so no credence to be given to this document.

9.74 He submitted that the Bangalore Tribunal in the case of Kirloskar Investments 85 Finance Ltd. v. Assistant Commissioner of Income- tax [1998] 67 ITD 504 (Bang.) held that the provision of the copy of the statement or letters is not sufficient opportunity. Oral evidence of persons concerned with the transaction are important piece of evidence and before it could replace the written evidence, the party against whom such oral evidence is being used must be allowed the opportunity of examining the person because, both the types of evidences need to weighed properly before rejecting one for the other.

9.75 He submitted that the seized material shows vague figures presumed by the AO to be cash advance. These are unsigned documents and to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore not supported by any corroborative material. Further the beneficiaries are not examined or cross-examined. At this point, it is appropriate to rely on the judgment of the Mumbai Bench in the case of ACIT v. Layers Exports P. Ltd [2017] 53 ITR (Trib) 416 (Mumbai), wherein it was held that no addition could be simply made on the basis of uncorroborated notings in the loose papers found during the search because addition on account of alleged payment made simply on the basis of uncorroborated noting and scribbling on loose sheets made by some person have no evidentiary value and is unsustainable and bad in law.

9.76 The Hon'ble Supreme Court in Common Cause (A Registered Society) v. UOI [2017] 394 ITR 220 (SC) observed with regard to evidentiary value that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore, enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with facts. It is apparent from the aforesaid discussion that loose sheets of papers are wholly irrelevant as evidence being not admissible under Section 34 of Evidence Act so as to constitute evidence with respect to the transactions to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by the Court. There has to be some relevant and admissible evidence and some cogent reason, which is prima facie reliable and that too, supported by some other circumstances pointing out that the particular third person against whom the allegations have been levelled was in fact involved in the matter or he has done some act during that period, which may have co-relations with the random entries. In case we do not insist for all these, the process of law can be abused against all and sundry very easily to achieve ulterior goals and then no democracy can survive in case investigations are lightly set in motion against important constitutional functionaries on the basis of fictitious entries, in absence of cogent and admissible material on record, lest liberty of an individual be compromised unnecessarily. In view of the above, reliance on Seized material for making addition cannot be sustained.

9.77 He submitted that Assessment u/s. 153C has been made in the case of the assessee relying upon the very same material. Under such circumstances, the presumption under section 292C gets automatically rebutted. Section 153C(1) states that where the Assessing Officer of the searched person is satisfied that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or any books 'of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned, shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person arid issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A. Therefore, if the material seized belongs to or pertains to or relates to a person other than the searched person, only then section 153C comes into play. Hence, it is axiomatic to state that if the material seized belongs to or pertains to or relates to some other person, it does belong to or pertain to or relate Lo the searched person. Under such circumstances, one cannot invoke the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore presumption under section 292C that the material seized belongs to the searched person as the assessing officer by his own action of making assessment under section 153C in the case of trustees relying upon the very same seized material.

9.78 He submitted that the Delhi Tribunal in Vijay Kumar Aggarwal v. ACIT 2Q17 (5) TMI 1354 held that it is clear that the presumption of facts u/s 292C of the Act is rot a mandatory or compulsory presumption but a discretionary presumption. Since, the word used in the said Section is "may be" and not "shall". Secondly, such a presumption is rebuttable presumption and not a conclusive presumption because it is a presumption of fact not a presumption of law. In the present case, the assessee from the very beginning stated that the documents found during the course of search did not belong to him. 9.79 Therefore, the addition made by the AO is only on the basis of surmises and conjecture without bringing any cogent material on record to substantiate that the assessee was engaged in the business of gold and jewellery and the AO had not brought any material on record to substantiate that the denial of the assessee was false. Unless the burden of proving that the materials and cash belong to the assessee, is discharged those materials can neither be seized under section 132 nor relied upon to make assessment under section 153A. Therefore, the seizure of such material is illegal. The AO cannot rely upon such material whose seizure is illegal and the hence, assessment is void ab initio. Therefore, addition made on account of such seized material is not sustainable, 9.80 He submitted that the Hon'ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) held as follows: - "Not allowing the assessee to cross-examine the witness by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore has specifically mentioned that such an opportunity u>as sought by the assessee. However, no xuch opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. (Para 6). Assessee had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross- examination. That apart, the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price-list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above, (para 7) If the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice, (para 8)"

9.81 He submitted that the Delhi Tribunal in the case of Veena Gupta v. ACIT in dated 27.11.2018 relying on the above judgment of Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded. 9.82 He submitted that the Hon’ble Supreme Court in the case of Mehta Parikh & Co. v. CIT, 30 ITR 181 held as under: - "In the instant case a mere calculation of the nature indulged in by the TTO or the AAC was not enough, without any further scrutiny, tto dislodge the position taken up by the assessee, supported as it was, by the entries in the cash book and the affidavits put in by the assessee before the AAC. The Tribunal also fell into the same error. It could not negative the possibility of the assessee being in possession of a substantial number of these high denomination currency notes. It, however, considered that it was impossible for the assessee to have had 61 such notes in the cash balance in their hands on 12-1- 1946, and then it applied a rule of the thumb treating 31 out of such 61 notes as within the bounds of possibility, excluding 30 such notes as not covered by the explanation of the assessee. This was pure surmise and had no basis in the evidence, which was on the record of the proceedings. Facts proved or admitted may provide to support further conclusions to be deduced from them, which conclusions may themselves be conclusions of fact and such inferences from facts proved or admitted could be matters of law. The court would be entitled to intervene if it appears that the fact-finding authority has acted without any evidence or upon a view of the facts, which could not reasonably be entertained or the facts found are such that no person acting judicially and properly instructed as to the relevant law would have come to the determination in question. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore The High Court treated this finding of the Tribunal as a mere finding of fact and recognised this position in effect but went wrong in applying the true principles of interference with such findings of fact to the present case. Really speaking the Tribunal had not indicated upon what material it held that Rs. 30,000 should be treated as secret profit or profits from undisclosed sources and the order passed by it was bad. The assessee had furnished a reasonable explanation for the possession of the high denomination notes of the face value of Rs. 61,000 and there was no justification for having accepted it in part and discarded it in relation to a sum of Rs. 30,000. The High Court ought to have held that there were no materials to justify the assessment of Rs. 30,000 from out of the sum of Rs.61,000 for income-tax and excess profits tax and business profits tax purposes, representing the value of the high denomination notes which were encashed." 9.83 Further, he submitted that the Hon'ble Supreme Court in the case of CIT v. Odeon Builders (P.) Ltd., 418 ITR 315 (SC) head-note is as follows: "Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to assessee, thus, denying opportunity of cross examination to assessee, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by assessee was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual findings - Whether no substantial question of law arose from impugned order of Tribunal - Held, yes [Para 4] [In favour of assessee]"

9.84. He submitted that the Hon'ble High Court of Karnataka in Kothari Metals v. ITO, 377 ITR 581 (Karn) held as under: - "Held, allowing the appeal, that the non-furnishing the reasons for re-opening an already concluded assessment goes to the very root of the matter. Since such reasons had not been furnished to the assessee, even though a request for them had been made, proceedings for the re-assessment could not have been taken further on this ground alone. Besides this, the statement of some other person which was recorded was the basis of reassessment and the assessee was asked to explain it but the statement was itself not furnished to the assessee. As such, besides non-furnishing of the reasons for re-opening there was also a gross violation of the principles of natural justice. The reassessment was not valid." 9.85. He submitted that the Hon'ble Calcutta High Court in the case of CIT v. Eastern Commercial Enterprises, 210 ITR 103 (Cal) held as follows: - to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore "8. We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double-speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is the accounts, vouchers, challans, bank accounts, etc. But we would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine a witness adverse to the assessee is an indispensable right and the opportunity of such cross- examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re- examination, if necessary.

10. In any case, we have nothing to rely upon to come to a decision this way or the other. The first thing is that which of the statements of Shri Sukla is correct, is anybody's guess. Therefore, it is necessary to delve out the truth from him and for that matter a cross- examination is necessary. Secondly, if the statement of Shri Sukla as a witness against the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore adverse party, the assessee, is relied upon as truthful, still remains the question of estimation of the profit. The assessee no doubt has given a comparative instance of gross profit rate but it is also necessary for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Assessing Officer to counter the comparative statement cited by the assessee before he can have the option to estimate the gross profit. Again, it is the comparative instance that alone can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result, we decline to answer the question." 9.86. He submitted that as held by the Hon'ble Calcutta High Court in the above judgment, in the present case, Mr. Nagaraj cannot be considered as a reliable witness. More so, when the assessee was not given any opportunity to cross-examine him. In this regard, he also placed reliance on the decision of the Hon'ble Supreme Court in the case of Kishinchand Chellaram v. CIT, 125 ITR 713 (SC) wherein it was held that evidence collected from witness cannot be considered without giving opportunity of cross-examination to the assessee. 9.87. He submitted that in this case also, the addition made by the AO is based on unsubstantiated loose sheets and jottings without proper cross-examination of the person who has admitted the contents therein. Being so, it cannot be stated as full-proof of material evidence to substantiate the addition. The seized documents do not support the AO's contention that assessee has advanced cash loan to M/s Coffee Day Global Limited. Going through the entire facts of the case it creates only a suspicion in the minds of the AO that the assessee has advanced cash loan. However, the suspicion not enough to hold that the assessee has advanced cash in absence of concrete evidence bought on record by the authorities concerned. The suspicion cannot replace the material evidence brought on record by the authorities. 9.88 He submitted that no assets commensurate with the alleged cash advance by the AO were found. The unbounded loose sheets having jottings are not speaking either by itself or in the company of others and not to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore corroborated by enquiry, cannot be the basis of any inference that so as to sustain the addition. 9.89. He submitted that the unsubstantiated and uncorroborated seized material alone cannot be considered as conclusive evidence to frame these assessments. The words "may be presumed" in section 132(4) of the Act given an option to the AO concerned to presume these things, but it is rebuttable and it does not give a definite authority and conclusive evidence. The assessee is having every right to rebut the same. The entire case depends upon the rule of evidence. There is no conclusive presumption with regard to unsubstantiated seized material to come to the conclusion that that assessee has advanced cash loan. In the present case, the assessee categorically denied advancing of cash loan. The AO cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong, cannot take place the material in place of evidence of the AO. The AO should act in a judicial manner, proceed in a judicial spirit and come to the judicial conclusions. The AO is required to act fairly as a reasonable person, not arbitrarily and capriciously. The assessment u/s153C of the Act should have been supported by adequate material and it should stand on its own leg. This notebook or loose sheets found during the course of search is only circumstantial evidence and not full proof evidence to sustain the addition. No addition can be made in the absence of any corroborative material. If it is circumstantial evidence in the form of loose sheets and notebook, it is not sufficient to come to the conclusion that there is conclusive evidence to hold that assessee has advanced any cash loan. The notes in the diary/loose sheets are required to be supported by corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search cannot be sustained. The evidence on record is not sufficient to uphold the stand of AO that assessee has advanced unaccounted cash loans in the guise of carrying on money lending activities. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 9.90. He submitted that the contention of the AO that cross- examination of parties whose statements were relied on by the AO to frame the assessment need not be given. On the other hand, if it is required to be given, the issue may be remitted back to the AO to give such opportunity. For this purpose, we rely on the judgment of the Hon'ble Allahabad High Court in the case of Moti Lal Padampat Udyog Ltd. v. CIT, 293 ITR 565 (All) wherein it was held that: "It was not in dispute that the adverse material which was found by the Income-tax authorities during the course of search in the business premises of 'V' had been confronted to the assessee who was having regular business dealing with the said firm. Some of the entries, recorded in the rough cash book seized during the search operation, tallied with the entries recorded in the regular books of account of the assessee as also that of 'V'. The assessee was issued the copy of the rough cash book as also the statements of partners of 'V'. It had submitted its reply by letters. The explanation furnished by the assessee had been disbelieved. In one letter, the opportunity to cross-examine the partners and the employees of 'V was sought for in the event their statements had not already been recorded with a request that they might be summoned and their statements on oath be recorded in their presence. The said request was made in the event the statements had not already been recorded earlier. As the statements had already been recorded, the opportunity to cross-examine the said persons did not arise. The assessee had ample opportunity to explain the things. [Para 12] In the instant case, the copies of the rough cash books and the statements of the partners of 'V' which were recorded, had been provided to the assessee and, in fact, the assessee had also submitted its reply. In the letter an opportunity to cross-examine was asked for only in case the statements had not been recorded. As, in the instant case, the assessee had proper opportunity to controvert the material gathered by the assessing authority and used against it, there had been compliance of the principle of natural justice. [Para 14] In view of the above, the Tribunal was fully justified in the view it had taken." 9.91. He placed reliance on the order of the Tribunal in the case of Centurion Investment & International Trading Co. (P.) Ltd. v. ITO, 126 ITD 356 (Del) wherein it was held as follows: - "It was a matter of record that the assessee had not been allowed the cross-examination of the party whose statement had been used against it in making the assessment. The addition was, thus, in violation of principles of natural justice. Not allowing cross examination is a defect which is procedural in nature. It is only a procedural requirement to be complied with before making the assessment under the Act. Not following the procedural provisions like allowing cross examination will not make an assessment null and void. At most it can be an irregularity liable to be cured and in such a case, the assessment can be set aside to be redone. An addition made does not cease to be an addition merely by reason of want of cross- examination. It will be a proceeding liable to be challenged and corrected. [Para 13] The order of the Assessing Officer though was vitiated by an illegality which supervened, not at the initial stage of the proceedings but during the course of it and, therefore, assessment could neither be annulled, nor the addition could be deleted because of that illegality or irregularity. The matter was required to be set aside to be reprocessed and restart from that stage of illegality/irregularity. [Para 14] Therefore, the order of the Assessing Officer on this Page 58 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore issue was to be set aside with a direction to him that the statement of 'S' should be made available to the assessee. The assessee must be allowed cross-examination of the said person and thereafter the matter be decided afresh on the basis of the result of the cross- examination. [Para 22] From the discussion above, it was evident that merely by reason of want of cross-examination, the addition cannot be deleted. It will be an addition liable to be challenged and corrected. An omission to serve notices or any defect in the service of notices does not efface or erase the liability to pay tax where such liability is created by distinct substantive provisions (charging sections). Any such omission or defect may render the order made irregular depending upon the nature of the provisions not complied with but certainly not void or illegal. At the worst, they are defective proceedings or irregular proceedings liable to be cured. An addition made on the basis of a statement not tested by cross- examination is invalid and it is vitiated, but the invalidity is not, however, of such a nature, which goes to the root of the proceedings. It can be set aside for being re-done de novo. The Commissioner (Appeals) should not have upheld the addition on the basis of such a statement. [Para 24] The omission to allow cross-examination merely prevents the Assessing Officer from making an addition and can be corrected by allowing the cross-examination and the Assessing Officer can be directed to proceed further to examine the matter afresh on the basis of cross-examined statement. The power of setting aside the order of assessment, where it is illegal, is inherent in any Appellate Court. Its order would be perfectly legal order in directing the Assessing Officer to issue notice to the assessee before making an assessment because it was not satisfied regarding the correctness of the assessee's return. The Tribunal/ Commissioner (Appeals) has ample jurisdiction to give directions to the Assessing Officer to comply with the requirements of law. It has inherent power to set aside illegal order of assessment and direct the Assessing Officer to comply with requirements while making de novo assessment. [Para 25]" 9.92. He submitted that there are various loose sheets, scribblings and jottings having no signature or authorization from the assessee's side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, it does not show any recovery of the undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets. 9.93. Further he relied on the Supreme Court judgment in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) wherein it was held that opportunity of cross- examination not given leads to nullity and assessment order to be quashed. It is also pertinent to mention herein the decision of Special Bench of the Tribunal in ACIT v. HYPERLINK"https://indiankanoon.org/doc/105761717/"Vireet HYPERLINK "https://indiankanoon.org/doc/105761717/" Investments (P) Ltd. 165 ITD 27 (Delhi - Trib.) (SB) wherein it was held that when two reasonable constructions of a taxing provision are possible, that construction which Page 59 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore favours the assessee must be adopted, which is in line with the Supreme Court judgment in the case of CIT v. Vegetable Products, 88 ITR 192 (SC). This is a well- accepted construction recognized by various courts. 9.94. Being so, he submitted that the seized material relied by the assessing officer for sustaining addition is not speaking one in itself and also not speaking in conjunction with some other evidence which the authorities found during the course of search or post search investigation. Thus, the well settled legal position is that a non-speaking document without any corroborative material, evidence on record and finding that such document has not materialised into transactions giving rise to income of the assessee which had not been disclosed in the regular books of accounts of the assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. In these cases, moreover the documents are relied upon by the AO without confronting them for cross examination. These documents cannot bring assessee into tax net by merely pressing to service the provision of Sec 132(4A) r.w.s Sec 292C of the IT act, which creates deeming fiction on the assessee subject to search wherein it may be presumed that any such document found during the course of search from the possession and control of such document are true. What has to be noted here is that deemed presumption cannot bring such a document in the tax net and the presumption is rebuttable one and the deemed provisions have no help to the department. Therefore, in these cases addition is made by AO on arbitrary basis relying on the loose papers, containing scribbling, rough and vague noting's in the absence of any corroborative material and this material cannot be considered as transactions carried on by assessee giving rise to income which are not disclosed in the regular books of accounts by assessee. He placed reliance on the following judgements in support of our above findings: (i) CIT vs D.K.Gupta 174 Taxman 476 (Delhi) (ii) Ashwini Kumar vs ITO 39 ITD 183 (Delhi) (iii) S.P.Goyal vs DCIT (Mum) (TM) 82 ITD 85 (MUM) to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore (iv) D.A.Patel vs DCIT 72 ITD 340 (Mum) (v) Amarjeet Singh Bakshi (HUF) vs ACIT 86 ITD 13 (Delhi) (TM) (vi) Nagarjuna Construction Co Ltd vs DCIT 23 Taxman.com 239 (vii) CIT vs C.L.Khatri 174 Taxman 652 (viii) T.S.Venkatesan vs ACIT 74 ITD 298 (ix) CIT vs Atam Valves Pvt Ltd 184 Taxman 6 (P&H) 9.95. Thus, he submitted that placing reliance on the seized material is not proper and all the additions on the basis of the above should be deleted in all the assessment years since, i) no opportunity to cross-examine the persons whose statements have been relied upon is afforded; ii) some of the statements have been recorded under section131 by the authorized officer subsequent to completion of search; iii) there is no documentary evidence either to support the statements of Mr. K M Deekshith or of the parents of the students; and iv) the seized material is in the form of various loose sheets, scribblings, and jottings having no signature or authorization from the assessee's side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, search action not resulted in recovery of any undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets.

10.1 The incriminating material includes all the loose sheets in Annexure: A/KMD/O1 and Annexure: A/CCDGLT8/1. The pages mentioned in satisfaction note alone cannot be considered as incriminating material.

10.2 According to him, it is just for illustrative/reference purpose for internal affairs. Since the satisfaction note being the internal document, the reference of pages has been made in the satisfaction note is to other officer and the assessee doesn't have any right to question on that. The whole annexure has to construed as satisfaction for initiating proceedings and the whole annexure is mentioned in the satisfaction note. So, the assessee's contention that the same pages are not reproduced in Assessment Order as mentioned in the satisfaction note is not valid ground. Th Assessment Order reproduced page 107 of seized material and which is seized material and it contains the assessee's initial 10.3 The ld. D.R. submitted that the Assessing Officer in his assessment order has reproduced relevant portion of seized documents which contains loose sheets from the Annexure A/KMD/01 (At the residence of K.M. Deekshith) and he has reproduced particularly Pg. No. 65,68,70 and 107. The contention of the assessee is that the reproduced to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore document does not contain the Assessee's initial (PBT). The page 107 do contain the Assessee's initial (PBT) but it was not mentioned in the satisfaction note. So, on this basis, he is challenging the whole proceedings as void-ab-initio. 10.4 He submitted that the satisfaction note and assessment order are two different document and their nature is different. The former is internal document to communicate within the officers for initiating proceedings and the latter is external document to pass the order by the receiving officer. The satisfaction note purpose is to transmit the record from the Officer of searched person before he transmits record to other Assessing Officer who has jurisdiction over such other person under section 153C is prepared, its purpose end there. This initiates the power to assessing officer to takeover the case and decide it upon his own merits by considering all the relevant seized material. assessee is only empowered to contend if no satisfaction is recorded. The Assessee has very well contended it before the CIT(A) and this contention of the assessee have been examined and CIT(A) has reproduced the satisfaction note. 10.5 He submitted that the seized material was confronted to Shri K M Deekshith in the sworn statement u/s.132(4) at office premises of M/s. Coffee Day Global Ltd. Also, these facts and the evidences which are seized are confronted to Shri. V.G. Siddhartha in the sworn statement recorded u/s.132(4) at office premises of M/s. Coffee Day Global Ltd. Subsequently, summons u/s.131 was issued to the assessee and a sworn statement was recorded on 18.12.2017. In the sworn statement, the statement of K.M. Deekshith along with evidences confronted to the assessee. 10.6 The ld. D.R. submitted that the seized materials contain the initial of the Assessee (PBT), the officers have not reached to the conclusion on mere suspicion and surmise, assumption and presumptions. It was concluded by the statement given by the K.M. Deekshith and V G Siddartha. Also, it is pertinent to note that this initial belongs to the Assessee only and no other person with such initial is found in the records and the statements are consistent and not retracted. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 10.7 The ld. D.R. drew our attention to the Sworn statements recorded u/s 132(4) from following persons during the course of search action: K.M. Deekshith: 10.8 Statement u/s 132(4) at Mr. Deekshith's residential premise Q No. 22 I am showing you page no. 36-38 in the folder marked as A/KMD/OI containing email prints loose sheets serially numbered from 1 to 43 please confirm and explain the same. Ans: I confirm that these pages contain cash payment made to various persons o various dates.

Q.No. 38: I am showing you answer of Q No. 5,6 & 7 of the statement recorded u/s 131 of IT Act from Shri. Sendhil R on 21.09.2017 in the case of Shri. V.G. Siddhartha, M/S Coffee Day enterprises Ltd. and M/S Coffee day global. The copy o statement is attached as Annexure-I. The gist of the statement is as follows- Mr. Sendhil R has stated followings- l . You had directed him to handover cash of Rs.15,00,000/- and to Mr. Arun on 05.09.2017.

2. You had directed him to handed over cash of Rs. 4 lakhs each (total 12 lakhs in three instances to Mrs. Mamtha, Ajila residing at Sanjay Nagar.

3. You directed him to hand over cash 2-4 lakhs regularly to Mrs. Mamta Anjila since last year.

Q.No.4. Please state the names of the parties who have given unsecured loan in cash and cheque as per the seized document and data maintained by you in laptop. Ans: The names of the parties who have given unsecured loans in cash and cheque are as follows:  Prakash Talreja  Mahesh Ramchand  Chaman Lal Q.No.5. Please the amount of cash loan taken from the above mentioned parties and also state the rate of interest to be paid. Ans: Sir the amount of cash loan taken from the parties are as follows: Prakash Talreja- 12.75 crores in cash Mahesh Ramchand-6.90 crores in cash Chaman Lal-3 crores in cash These cash loans have been collected by me under the directions of Mr. V G Siddhartha who is owner of Coffee Day Group. The rate of interest for the above mentioned cash loan is 1.95% per month.

Q.No.6. Please state the amount of repayment for the above mentioned loan that h been paid in cash and also outstanding balance as on date. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Ans: Till date we have not paid the principal amount to the above mentioned parties. However, only the interest payment has been made in cash. The interest has been paid to them in cash since one year. Only in case of Mr. Chaman Lal, entire Rs.3 crores has been paid in cash along with interest. Q.No.7 Please explain what has happened to cash loan collected as explained above. Has the cash loan been accounted in books of account of the Coffee Day Group? Ans: The cash loan taken has not been accounted in the books of account of any entity under Coffee Day Group of companies. The cash loan taken has been expended for the purposes which I am not able to remember them as they are old accounts. I am unable to remember the purpose for which loan was taken and how it has been spent. However, we have been paying only interest for last one year. Q.No.20 I am showing you seized folder CCDGLT8/1. Please go through the page number 110 and 111. Please explain the transactions. Ans. These pages show the loans taken by way of cash and cheques from parties where the codes denotes as M-Mahesh Ramchand, P-Prakash Talreja and C-Chairman Lal. The amounts mentioned are the repayment schedules which are to be paid in cash and cheques. As explained above in answer to Q.No.5, these three parties have also given cash loans to us. Q.No.21. I am showing you seized folder CCDGL8/l. Please go through the pag number 108 and 109. Please explain the transactions. Ans. This is ledger extract of Talreja's adcount in Sivan and Co. This ledger contains only cheque entries and no cash components. Q.No.22. I am showing you seized folder CCDGL8/l. Please go through the number 107. Please explain the transactions by way of notings on this paper. Ans. This page contains the entries which show the loans taken by Sivan and Co by way of cheques and cash through Prakash Talreja. Q.No.24. With respect to above promissory notes, do you issue promissory notes to persons who advance loans in cash? If yes please produce them. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Ans. Yes, we issue promissory notes to parties who advance cash loans also. Irrespective of the way loan is given by the party, the promissory note is issue to them and no record of the same is maintained by us. 10.10 Statement recorded u/s 131 at Office of DDIT, unit-3(3) Q.No.3: I am showing you, your statement recorded u/s 132(4) of the Income Tax Act 1961 during search proceedings in the case of Shri VG Siddhartha, M/S Coffee Day Enterprises Ltd., M/S Coffee Day Global Ltd. on 21/09/2017. Please go through and confirm the same. Ans: Yes, I have gone through the statement and I confirm that the statement deposed by me is true and I abide by it. Q.No.4. I am showing you the folder marked as A/KMD/OI containing loose sheets serially numbered from I to 83 which is found and seized during the course of search proceedings u/s. 132 of the Income Tax Act, 1961 in the case of Shri V G Siddhartha, M/S Coffee Day Enterprises Ltd., M/S Coffee Day Global Ltd. at your residence on 21.09.2017. Please go through and confirm the same. Ans: Yes, I have gone through it and confirm that the folder marked as A/KMD/OI containing loose sheets serially numbered from I to 83 are found and seized during the course of search proceedings u/s. 132 of the income Tax Act 1961 in the case of Shri V G Siddhartha, M/S Coffee Day Enterprises Ltd. at my residence oh 21.09.2017. Q.No.5. Please go through loose sheets serially numbered from I to 83 in folder marked as A/KMD/OI and explain the contents of this said folder. Ans: I have gone through the loose sheets and this said folder contains loose sheets numbered from I to 14 contain details regarding external commercial borrowings of 20 million USD from DEG(German Development Bank). In this borrowings M/S Dua associates is the consultant an loose sheet no.14 contains the copy of the mail for asking to make payment for consultancy. Page no. 15 and from Page no.36 to.43 contains details of the payments made to the parties mentioned in these pages. In these sheets, 1st column contains the name of the persons and second column contains the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore payments made and third column contains the corporation bank account number of the respective person. In the second column these referred amount are rupees in lakhs. In these page acronym 'PBT' refers to 'Prakash B Talreja'. He is one of the financiers to Sivan & Co. and 'VGS' is 'Mr V G Siddhartha', Proprietor of Sivan & Co. In the Financial year (FY) 2013-14, Mr. Prakash B Talreja has lent Rs. 12.75,00.000/- in cash to M/S Sivan & Co. at the rate of interest of 2% per month. For the borrowed amount of Rs. 12.75 crore: he used to take Rs. 3 crore per annum, as interest for three Financial Years (FYs)i.e. FY 2014-15, FY 201516 and FY 2016-17. In the FY 2017-18. Mr. Prakash B Talreja has been paid approximately 10,00,000/- in cash as interest for the outstanding principle amount ofRs.12 75 00 000/- borrowed from him. Page no. 39, contain the details of the payments made to various person i.e. Mr. Ramchand, one of the financier, has been paid Rs.3.25 lakhs. Out of this, Rs.l.25 was paid in cash and the rest Rs.2 lakhs is paid in cheques as interest on the principle borrowed of Rs.6 crore. In the same way, Mr. Chaman Lal has also been paid Rs.2.50 lakhs as interest on the loan borrowed of Rs.3 crore.

Page no.21 contains the calculation of interest on the loan of Rs.10 crore borrowed from Mr. Avinash Amarlal by Sivan & Co. In this calculation, on the principal amount of Rs.4 crore at the rate of interest of 2% per month, the interest payable is Rs. 8 lakhs and in the same way on the remaining principle amount of Rs.6 crore the interest was paid is Rs.18 lakhs at the rate of interest of 3% per month. However, the actual; interest of Rs.10.85 lakhs was paid to M. Avinash Amarlal and the whole transaction has happened in cheques. Page no.23 contains the details of the cash withdrawn from bank to make payments to labor and other expenses pertaining to estates day to day activities. However, I am not aware about the bank from which cash is withdrawn. These all estates are elated to Mr. V G Siddhartha. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Page no.29 contains the details of the loan of Rs.10 crore taken from Mrs. Urmila Shah at the rate of 10% for 13 days. This mail is sent by Mr. Amal Vora, account handler for Mrs. Urmila Shah, asking to courier postdated cheques from Mr. V G Siddhartha. From the page no.36 to 43 contain the details of payment made to various parties as mentioned in the Page no. 46 contains the details of the payments made to various persons. However, I am not able to recall the name of parties, whom and how it was paid. In the page no.49, loan amount of Rs.4,94,00,000/- is received from Lakshmi Vilas bank on the personal guarantee of Mr. V. G. Siddhartha and the same amount was transferred to the company M/S Coffee Day Global limited on the same day. Page no. 50, the company M/S. Mysore Amalgamated Coffee Estates Limited (MACEL) has lent me a loan of Rs. 90 lakhs and the same I have lent to Ms. Bhawana Hallappa. Further, she has returned the full loan after five days and the same I have returned to the company, M/S MACEL. This whole transaction has happened on the direction if Mr. V.G. Siddhartha. As Ms. Bhawana Hallappa asked loan from Mr. V.G. Siddhartha however he has routed this loan through me. In the page no.51, loan amount of Rs. 4,90,00,000/- is received from Lakshmi Vilas Bank on the personal guarantee of Mr. V.G. Siddhartha and the same amount was transferred to the company M/S. Coffee Day Global Limited on the same day. This transaction is also happened on the instruction of Mr. V. G. Siddhartha. Q.No.6 Please provide identity and address of Mr. Prakash B. Talreja. Mr. Prakash B. Talreja is one of the financiers to M/S. Sivan & Co. His residence address is Flat No. 31, Embassy Court, High Grounds, Crescent Road, Sampangi Rama Nagar, Bangalore- 5660001. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Shri Prakash Bhajandas Talreja: 10.11 Statement recorded u/s 131 at Office of DDIT, Uunit-3(3), Bangalore: Q.N0.6 I am showing you the statement of Shri. K.M.Deekshith recorded on 27.11.201 flu/s 131 of the Income Tax Act. 1961 wherein reply to Q.No.5 he has stated that he has stated that you have given a loan of Rs. 12,75,000,00/- in the F. Y .2013-14 to M/S Shivan and co. Which is a proprietorship concern of Shri. V.G. Siddhartha in cash a t the rate of interest of 2 % per month and also the interest is paid in cash every month. Please comment and confirm the same. Ans. I have gone through the reply to Q.No.5 of the said statement of Shri. K.M. Deekshit recorded on 27.1 1.2017. I would like to state that I have not lent any amount by cash to M/S Shivan and Co. Whatever amount advanced to M/S Shivan and co. is only by way of cheques/RTGS and accounted in the books of Shri Madhusudan S. Patel my brother in law for whom I am holding the power of Attorney. I would also like to state and confirm that I have not received any amount of interest by way of cash from was Shivan and co. 10.12 Statement recorded u/s.131 at the office of Deputy Director of Income-Tax (Inv.), Unit-3(3) R Sendhil: Q.No.5 Please explain your role and responsibility in Café Coffee Day. Ans. I am working in Café Coffee Day as office boy for the last 15 years. I am reporting to Sri K.M. Dixit, Accountant. I am taking care of banking transactions like RTGS, Cheque Transfer, drawing and disbursement of petty Cash. I am also handling the cash for the company. I generally hand over the cash to the persons namely Chamanlal, Prakash Talreia, Mamta Ajila.

Q.No.7 Please provide the details of cash paid to Shri Prakash Talreja and Chamanlal. Also give the details of their address. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Ans. As per the instruction of my Boss Shri Deekshith K M, I used to hand over the cash to both the parties Shri Prakash Talreja and Chamanlal. These transactions are in the range between 10 lakhs and 50 lakhs and frequency of these cash collection was 2 to 3 times in a month. They generally used to come to our office of Coffee Café Day (CCD) at Coffee Day Square, Vittal Mallya Road Bangalore to take the cash. Many times they have received the cash at the bank after withdrawls from the bank at the same time. However, I don't know the address of the above person as most of the transaction used to happen at our CCD office or in the bank itself.

Q.No.08 How the cash used to be collected by both the parties namely Shri Prakash Talreja and Shri Chamanlal? Please provide the details. Ans. As I explained above, the transaction used to be happened in our CCD office or at the bank. On behalf of Shri Prakash Talreja. one person named Shri Srinivas (9845770667) used to call me over phone to collect the cash. Accordingly. I have to arrange the cash and the same has to hand over to him. Further, on behalf of Shri Chamanlal, two persons namely Shiva (9845291788) and Suresh (9845015709) used to call me for cash and Il have to arrange the same to hand over to them. However, I do not have the address details of these persons. 10.13 He submitted that the Mr. K M Deekshith has given statement u/s. 132(4) as-well as u/s.131 and he has not retracted his statement. In the statement of V.G. Siddhartha he has clearly stated that all the cash transactions are handled by K M Deekshith, who is the Finance Manager of the Grouip. Further, he also stated that these cash receipts are not accounted in any of the books of accounts. The person who is in-charge and handling the cash transaction is done by K M Deekshith, so his statements becomes paramount importance. The contention of the assessee that there is no incriminating material found during the search of his premises cannot be the reason to nullify the statement of other persons and seized materials containing assessee's name. The statement of Sendhil R has to be taken in account as corroborative evidence. Mr. Sendhil has clearly acknowledged that he is handing over cash to the assessee communicates Srinivas on to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore behalf of the assessee. He submitted that there are 3 statements which clearly points out that the assessee was engaged in making cash transactions. 10.14 Regarding not providing Cross-Examination opportunity of late Shri V.G. Siddartha, ld. D.R. submitted that the cross-examination of V.G. Siddhartha was not possible due to the fact, that he was deceased. So, it is not possible for cross-examining him. 10.15 The cross-examination of KM Deekshith was not allowed by the Assessing Officer because Mr. K. M. Deekshith has given his statement u/s.132(4) during the search proceedings. Again, K.M. Deekshith was summoned u/s.131 and a sworn statement way recorded on 27.11.2017. Mr. K M Deekshith has not retracted from his statement, when he was summoned. The Assessing Officer felt it was futile to call summon again the same person when the statement is very clear and specific and points out to the assessee.

10.16 The ld. D.R. submitted that the CIT(A) has duly considered the assessee's plea to provide an opportunity to cross-examine Mr. K.M. Deekshith, directed the AO u/s.250(4) to allow the assessee to cross- examine and it is pertinent to note that the Assessing Officer summoned Mr. K.M. Deekshith on 18.10.2023. In response to the summon Mr. K M Deekshith appeared before the AO for cross-examination however, the assessee did not appear. The assessee vide letter dated 19.10.2023 refused to examine and flimsy reason and the same can be seen in the Para 8.4.3 of the CIT(A) order. It is submitted that the CIT(A) has very wide power and he can exercise the AO's power and it is within his ambit. In this support, I would like to place reliance on the M/S S.D. Traders vs Commissioner of Income Tax & Anr., the relevant paragraph is reproduced below:

10.18 Further, he submitted that this is not a case where the addition is made merely on the basis of loose sheets. Also, it is not a case where the addition is made on the standalone basis of statement recorded by a third person. It is not a case were the opportunity to cross-examine was not given. The assessee has relied on few cases and which has laid down the general principles and those cases are not comparable to the facts of this case.

10.19 According to ld. D.R., in this case, the loose sheets & the statement of Sendhil R have to be considered as corroborative evidence with the statement of K M Deekshith and V G Siddhartha. The loose sheets show that there were transactions with the assessee and V G Siddhartha. The statements of two persons stands confirmed and sustained with the corroborative evidence, makes it conclusive. This case is not an identical one were made on a standalone basis as claimed by the assessee. The addition is to be upheld.

11.12 In the present case, the ld. AO noted on this as follows: to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore Hence, on the basis of the above statement of the assessee, the contention of the ld. A.R. has been rejected by the lower authorities.

11.13 As per section 153C of the Act, the assessment proceedings should be initiated for six years. However, in this case, assessment was reopened for the 4 assessment years 2014-15 to 2017-18 on the basis of loose slips found in the house of Shri K.M. Deekshith alleging that this was belonged to or relating to or pertaining to the present assessee. It is noted that the ld. AO has recorded the satisfaction for opening the assessment u/s 153C of the Act by placing reliance on the following seized materials:

Annexure/Sl.No./Pg. No. etc. Annexure: A/KMD/01 Page Nos. 38 and 43 Annexure: A/CCDGLT8/1 Page Nos. 108, 109, 129, 131 11.14 However, for framing the assessment he relied on the following seized materials:

Note: It is to be noted that there is no mention of “PBT” in this slip. Note: It is to be noted that there is no mention of “PBT” in this slip. Note: It is to be noted that there is no mention of “PBT” in this slip.

Note: The word “PBT” is mentioned at the top of this slip without any narration. to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 11.15 These are not the seized material referred in page No.A/KMD/-01 pages 38 & 43 A/CCD/GL/T8/1 pages 108, 109, 129 & 131 for recording satisfaction u/s 153C of the Act. The seized material relied by the ld. AO for framing the assessment, wherein we do not find the name of the present assessee. Further, seized material A/KMD/01, only page 107 there was mentioning of PBT without mentioning of any amount or date referring to the PBT. Thus, in our opinion, placing reliance on the seized material for framing assessment u/s 153C of the Act wherein there was no name of PBT found place in the incriminating material used for the purpose of issuing notice u/s 153C of the Act by recording the satisfaction. Even otherwise, there was no mentioning of the assessee’s name and figure of loan alleged to be lent by the assessee in the loose slips. The seized material considered for assessment is lacking the following material particulars: • Name of the person making the payment • The date of payment • Details of amount paid • The purpose for which it was paid • Details of the recipient of money • Signature of the recipient • Payer of the money • Any authentication by any competent person. 11.16 All the seized materials relied by the ld. AO for framing assessment conspicuously silent on all the above said counts and in the light of above said information, nothing can be inferred holding that the same is a making of cash advance by assessee to M/s. Coffee Day Global Ltd. or M/s. Shivan & Co. and these seized materials cannot be used as evidence or incriminating material for the purpose of determining the undisclosed income of the assessee u/s 153C of the Act. The alleged incriminating evidence found at the premise of Shri K.M. Deekshith and on questioning Shri K.M. Deekshith, he stated that the initial mentioned therein as PBT is referring to present assessee namely Shri Prakash Bhajandas Talreja, it is to be noted that Mr. K.M. Deekshith was neither the borrower nor it has not been known whether he was present at the time of Page 87 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore borrowing or he has received the amount from the assessee is not known, so as to confirm the same. On the other hand, the ld. AO clearly and categorically stated in his order that late Shri V.G. Siddartha was the borrower who has borrowed money from the assessee. It is not known how these loose slips maintained by Shri K.M. Deekshith as it was relating to the present assessee even presuming that late Shri V.G. Siddartha has borrowed money from the present assessee. In our opinion, this seized material having no concrete details of the transaction between the assessee and the borrower and also maintained by K.M. Deekshith at his own sweet will and based on such inchoate non-speaking documents, no liability can be fastened on a third party like present assessee before us since ld. AO had failed to corroborate such non-speaking document with any other document found during the course of search. Hence, it is not possible to come to conclusion that such a huge amount of advance in crores has been lent by present assessee to M/s. Coffee Day Global Ltd. Group or M/s. Shivan & Co. or late Shri V.G. Siddartha without any proper documents like loan agreement, promissory notes, cheque or security papers or any other documents. The person who has carried out search u/s 132 of the Act have not found any corroborative materials to support the contention of the department that assessee has lent such huge amount without slip of paper signed by the borrower and how he can recover such huge amount of loan without any security collected for repayment of such loan. It is pertinent to mention herein that there was search in the case of assessee’s residential premises also, there was also no iota of evidence or piece of paper found in support of these transactions carried on by assessee with M/s. Coffee Day Global Ltd. Group or late Shri V.G. Siddartha or M/s. Shivan & Co. was found. 11.17 Before us, ld. D.R. made a contention that K.M. Deekshith has admitted that these transaction in his statement recorded u/s 132(4) of the Act as well as late Shri V.G. Siddartha in his statement recorded u/s 132(4) of the Act and also they have admitted that these transactions in their return of income and that could be the base for addition in the hands of present assessee and it is not necessary to give any cross examination of the Page 88 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore parties involved herein. More so, the ld. CIT(A) has called the assessee for cross examination of Shri K.M. Deekshith which is not availed by the present assessee. In our opinion, admission of the third party could not be enforceable against the other party u/s 153C of the Act. Further, the ld. AO pressed the assistance of Mr. R. Sendhil’s statements recorded u/s 131 of the Act on 21.09.2017 to support his action without providing an opportunity of examining/cross-examining him, which is mandatory requirement under the Evidence Act. The ld. AO also pressed the service of section 292C of the Act. In our view, the section 292C of the Act only be invoked against such person in whose premises/possession, the said incriminating material was found during the course of search action u/s 132 of the Act. 11.18 The word “such person” used in section 292C of the Act is only referrable to the person in whose premises the things or materials were found in possession or control at the time of search. Admittedly, the assessee before us was not person in whose premises, the things were found in possession or control at the time of search action. Therefore, provisions of section 292C of the Act cannot be invoked to assist the department, which is without any basis and contrary to law. In our opinion, if any document is found in the premises/possession/control of such person which belongs to the other person then the said documents can be used for making the addition, however, it is necessary to prove that the said document is incriminating in nature and belong to other person. The presumption u/s 292C of the Act can only be invoked against such/searched person and not against another person like person before us. The above said proposition is based and relatable to the Evidence Act which casts data of a person in whose possession, a thing or article was found to discharge the burden that it does not belong to him. 11.19 In the present case, no corroborative evidence was brought on record to confirm that the entries in seized material marked as A/KMD/01 pages 65, 68,70, 108 were actually reflects the loan transaction in the form of cash payment between the assessee and M/s. Coffee Day Global Ltd. Group or late Shri V.G. Siddartha or M/s. Shivan & Co. In that material, Page 89 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore there was no entry regarding the payment of cash loan between these parties. Even the reply given by Shri K.M. Deekshith does not suggest the amount of loan lent, in the form of cheque and cash, date of loan, rate of interest, repayment mode, offering of security details and also there was no circumstantial evidence to suggest all these things. The department is relying on only the third-party statement recorded from the oath to suggest these transactions. In our opinion, the addition made by the ld. AO only on the basis of conjectures and surmises and presumption and money was lent by assessee in the form of cash to the other assessee i.e. M/s. Coffee Day Global Ltd. Group. The above conclusion drawn by the ld. AO is contrary to the elementary understanding of the contact between the parties. As per the trade practice, we cannot come to the conclusion that a financier will lend such huge amount without a piece of paper to support the loan transaction. Hence, there was no reason for making such addition. In our opinion, the conclusion drawn by ld. AO is only imagination and based on conjectures and surmises. 11.19.1 Further, it was also on record the reply of the assessee in letter dated 11.11.2019, wherein stated as follows:

11.19.2 The above letter itself shows that assessee had never admitted the transaction between assessee and M/s. Coffee Day Global Group. Even before us, the ld. D.R. was not able to corroborate the addition with any supportive and cogent materials to suggest the cash loan advanced by the present assessee to M/s. Coffee Day Global Ltd. Group. 11.20 In the case of Dreamcity Buildwell (P.) Ltd. reported in [2019] 110 taxmann.com 28 (Delhi), in the identical facts, Hon’ble High Court of Delhi had deleted the additions with the following reasoning:- “15. It can straightaway be noticed that the crucial change is the substitution of the words 'books of account or documents, seized or requisitioned belongs to or belong to a person other than the person referred to in Section 153A' by Page 91 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore two clauses i.e. a and b, where clause b is in the alternative and provides that 'such books of account or documents, seized or requisitioned' could 'pertain' to or contain information that 'relates to' a person other than a person referred to in Section 153A of the Act.

• The trigger for the above change was a series of decisions under Section 153C, as it stood prior to the amendment, which categorically held that unless the documents or material seized 'belonged' to the Assessee, the assumption of jurisdiction under Section 153C of the Act qua such Assessee would be impermissible. The legal position in this regard was explained in Pepsi Foods (P.) Ltd. v. Asstt. CIT [2014] 367 ITR 112 (Del)where in para 6 it was held as under: '6. On a plain reading of Section 153C, it is evident that the Assessing Officer of the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the searched person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or reassess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is -after such satisfaction is arrived at - that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section132 (4A) (i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C (1) (i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction'. • In the present case the search took place on 5th January 2009. Notice to the Assessee was issued under Section 153 C on 19th November 2010. This was long prior to 1st June, 2015 and, therefore, Section 153C of the Act as it stood at the relevant time applied. In other words, the change brought about prospectively with effect from 1st June, 2015 by the amended Section 153C (1) of the Act did not apply to the search in the instant case. Therefore, the onus was on the Revenue to show that the incriminating material/documents recovered at the time of search 'belongs' to the Assessee. In other words, it is not enough for the Revenue to show that the documents either 'pertain' to the Assessee or contains information that 'relates to' the Assessee. • In the present case, the Revenue is seeking to rely on three documents to justify the assumption of jurisdiction under Section 153 C of the Act against the Assessee. Two of them, viz., the licence issued to the Assessee by the DTCP Page 92 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore and the letter issued by the DTCP permitting it to transfer such licence, have no relevance for the purposes of determining escapement of income of the Assessee for the AYs in question. Consequently, even if those two documents can be said to 'belong' to the Assessee they are not documents on the basis of which jurisdiction can be assumed by the AO under Section 153C of the Act. • As far as the third document, being Annexure A to the statement of Mr. D. N. Taneja, is concerned that was not a document that 'belonged' to the Assessee. Admittedly, this was a statement made by Mr. Taneja during the course of the search and survey proceedings. While it contained information that 'related' to the Assessee, by no stretch of imagination could it be said to a document that 'belonged' to the Assessee. Therefore, the jurisdictional requirement of Section 153C of the Act, as it stood at the relevant time, was not met in the present case. • For the aforementioned reasons, this Court concludes that the ITAT committed no legal error in holding that the AO had wrongly assumed jurisdiction under Section 153C qua the Assessee. The ITAT, rightly, therefore, set aside the order of the CIT (A), which had held the contrary.”

11.21 Moreover, in the decision of the Hon'ble Supreme Court in the case of CIT Vs. Singhad Technical Education Society reported in [2017] 84 taxmann.com 290 (SC) it was categorically held that the incriminating material should belong to the assessee and for the assessment year under consideration in the following manner: “15. At the outset, it needs to be highlighted that the assessment order passed by the AO on August 7, 2008 covered eight Assessment Years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07. As noted above, insofar as Assessment Year 1999-2000 is concerned, same was covered under Section 147 of the Act which means in respect of that year, there were re-assessment proceedings. Insofar as Assessment Year 2006-07 is concerned, it was fresh assessment under Section 143(3) of the Act. Thus, insofar as assessment under Section 153C read with Section 143(3) of the Act is concerned, it was in respect of Assessment Years 2000-01 to 2005-06. Out of that, present appeals relate to four Assessment Years, namely, 2000-01 to 2003-04 covered by notice under Section 153C of the Act. There is a specific purpose in taking note of this aspect which would be stated by us in the concluding paragraphs of the judgment.

• In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal and the Tribunal permitted the assessee to raise this additional ground and while dealing with the same on merits, accepted the contention of the assessee. • First objection of the learned Solicitor General was that it was improper on the part of the ITAT to allow this ground to be raised, when the assessee had not objected to the jurisdiction under Section 153C of the Act Page 93 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore before the AO. Therefore, in the first instance, it needs to be determined as to whether ITAT was right in permitting the assessee to raise this ground for the first time before it, as an additional ground. • The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co- relation, documentwise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. • We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy.”

11.22 Further, the findings of the ld. AO is mostly based on the admission made by late Sh. V.G. Siddartha in his return of income filed u/s 153A of the Act as unaccounted income. In our opinion, filing of income by late Shri V.G. Siddartha and admission of unaccounted income in his return between the department and that assessee that admission made by late Shri V.G. Siddartha cannot bind the third party like the present assessee. In other words, the revenue cannot take help of the admission made by late Shri V.G. Siddartha in his return of income to fasten the liability on the present assessee. The law is fairly settled with respect to which the basis on which the addition can be made u/s 153C of the Act as neither statement of K.M. Deekshith/late Shri V.G. Siddartha or nor on the basis of return to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore filed by other assessee including late Shri V.G. Siddartha and the addition should be solely based on incriminating material corroborated with cogent evidence and the return filed by late Shri V.G. Siddartha u/s 153A of the Act could not be said to be the incriminating document or evidence for the purpose of making addition u/s 153C of the Act, those documents not belong to or pertain to or relate to the present assessee and having no bearing in determination of undisclosed income of the present assessee. 11.23 Further, there was also allegation that the assessee categorically asked the cross examination at the time of hearing before ld. AO at the time of assessment. The ld. AO recorded on this issue as follows: “The contention of assessee to cross examine relied by persons is impossible to verify as the key person late Shri V.G. Siddartha has deceased. The claim of late Shri V.G. Siddartha is well established when he accepted the said amounts as unaccounted income in the return of income filed u/s 153A of the Act. Hence, the contention of the assessee is not acceptable”. 11.24 Further, assessee has also asked for cross examination of K.M. Deekshith vide his letter dated 11.11.2019 and no opportunity of cross examination has been given to the assessee. During the first appellate proceedings, the DCIT, Central Circle 1(3) vide his letter dated 13.10.2023 asked to provide an opportunity to cross examine Mr. K.M. Deekshith and thereafter summons u/s 131 of the Act was issued to both the parties K.M. Deekshith as well as present assessee vide summons dated 18.10.2023. Shri K.M. Deekshith appeared for cross examination before DCIT Central Circle-1(3) on the scheduled day. On the other hand, the assessee on 19.10.2023 has filed a letter stating as follows:

11.25 Therefore, ld. CIT(A) came to a conclusion that assessee backed out of cross examination of Mr. K.M. Deekshith on flimsy reasons. In our opinion, the transaction was between assessee and late Shri V.G. Siddartha and it was not the allegation of the department that K.M. Deekshith was the borrower from the assessee and it was the all-time allegation of the ld. AO that assessee has lent in the form of cash to late Shri V.G. Siddartha which is unaccounted in the hands of both the assessees. In our opinion, there is no question of cross examination of K.M. Deekshith as it is noted that the loose slips found in the possession of K.M. Deekshith is unsubstantiated and no legs to stand as itself. Hence, it is highly improbable and incongruous to assume the cash loan transaction between assessee and M/s. Coffee Day Global Ltd. Group as the entries in the loose slips are not supported by any corroborative materials and it cannot determine year of taxation and liability. In our opinion, the incriminating documents relied by the ld. AO cannot be considered as relatable reliable evidence to determine the tax liability of the assessee. As the revenue has failed to produce any corroborative evidence to support these transactions between the assessee and M/s. Coffee Day Global Ltd. Group. In the light of above, no addition can be made in the hands of the assessee only on the basis of conjectures, surmises and presumptions. As there was no cogent incriminating material or admissible evidence pertaining to these assessment years under consideration as it belongs to the assessee, the addition cannot be made.

ITA Nos.1061 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore The statement recorded u/s 132(4) of the Act from Shri K.M. Deekshith or late Shri V.G. Siddartha cannot bind the present assessee as conclusive evidence unless there is corroborative evidence brought on record. The statement of maker will only bind the maker of that statement but it cannot bind others. Similarly, the admission of tax liability by the recipient would not amount to admission of liability by the payer. The admission of one would not constitute the admission of the other person. For the above said proposition, we rely on the order of Vizag Bench in the case of P. Koteswara Rao Vs. DCIT in & 252/Vizag/2012 and also the decision of ITAT Delhi Bench in the case of Vijayshree Food Products Pvt. Ltd. in ITA No.587/Del/2019. Admittedly, during the assessment proceedings, the assessee had requested the ld. AO to provide an opportunity of cross examination of the parties involved therein, however, ld. AO have not provided an opportunity for cross examination to the assessee. However, the ld. CIT(A) has given an opportunity of cross examination to the assessee to cross examine K.M. Deekshith who was no privy to the transaction between the assessee and M/s. Coffee Day Global Ltd. Group or late Shri V.G. Siddartha even if there was cash loan transaction between these parties. In our humble opinion, the findings of the ld. CIT(A) was contrary to the settled principles of law. It is needless to mention herein that it is a primary law that nobody can be condemned without giving opportunity of examination and cross examination of evidence. At the cost of repetition, we may again state that for the purpose of making addition u/s 153C of the Act, it is essential that the incriminating material should pertain to the assessment year under consideration. In the present case, neither any valid incriminating material nor there are any specific incriminating material on the basis of which addition was made in framing assessment u/s 153C of the Act. The addition of tax liability on the assessee cannot be made on deeming or presumption basis. The addition can only be made on the basis of incriminating evidence relevant to the assessment year showing the undisclosed income u/s 153C of the Act. The addition is required to be examined on stand alone basis with reference to seized material found during the course of search action at the place of search party. The ld. AO Page 97 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore or ld. CIT(A) cannot expand the scope of section 153C of the Act by availing any external aid. In other words, they can rely only upon any document used for the purpose of recording satisfaction while issuing the notice u/s 153C of the Act. As discussed earlier, in the present case, there is no valid seized document, which bears the date, or name or year or the exact amount when it was paid. In the absence of such specific information pertaining to the assessment year under consideration, it is not possible for us to uphold the order of the lower authorities. In view of the above, we are of the opinion that the addition was made by ld. AO sustained by ld. CIT(A) in these assessment years without any corroborative evidence other than the loose slips found during the course of search action at the premises of K.M. Deekshith. 11.26 At this point, we rely on the order of the Tribunal in the case of ACIT Vs. Manchukonda Shyam in ITA 87/Viz/2020 dt.23.09.2020 wherein the Tribunal at paras 6 and 6.1 has held as under : “6. We have heard both the parties, gone through the orders of the authorities below. Shri Lanka Anil Kumar is an employee of M/s Navaratna Estates Ltd. A search u/s 132 was conducted in the residence of Shri Lanka Anil Kumar and certain sums were found in whatsapp messages in digits. When asked to explain, Shri Anil Kumar stated that the amounts were written in thousands represent lakhs and the total sum of Rs.1,05,00,000/-was taken as loan from the assessee in cash for his business purposes. When confronted with the assessee, he explained that the amounts mentioned in thousands are correct and the total amount would be in the range of Rs.5,000/- and Rs.10,000/- given to Shri Anil Kumar to meet the petty cash or miscellaneous expenses from M/s Navaratna Estates during registration of properties. A search u/s 132 was conducted in the case of Shri Lanka Anil Kumar as well as the assessee and the survey u/s 133A was conducted in the case of M/s Navaratna Estates. No evidence was found by the department either in the premises of the assessee or in the premises of M/s Navaratna Estates, having given loan to Sri Anil Kumar to the extent of Rs.1,05,00,000/-. In the search proceedings in the residence of Shri Anil Kumar also, no evidence with regard to unaccounted investment or expenditure representing the loan supposed to be taken from the assessee was found. Merely on the basis of the statement given by Shri Lanka Anil Kumar, which was subsequently retracted, the AO made the addition on the presumption that the assessee had advanced the sums to Shri Lanka Anil Kumar without bringing any evidence on record. The AO has neither given opportunity to the assessee to cross examine the third party nor disproved the explanation given by the assessee. As found from the order of the AO Sri Lanka Anil Kumar is an employee of M/s Navaratna Estates and drawing the salary of Rs.25000/- per month. He explained that the sums mentioned in the whatsapp messages were to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore related to the amounts given to Sri Lanka Anil Kumar in the range of Rs.5,000/- to Rs.10,000/- to meet the petty cash and miscellaneous expenses. No evidence was found with regard to the investment made by Shri Anil Kumar in his own business out of the loans stated to have given by the assessee. In the above facts and circumstances there is no reason to disbelieve the statement given by the assessee that the payments were given for meeting petty cash or miscellaneous expenses. The Ld.CIT(A) following the decisions of Hon’ble Jurisdictional High Court as well as this Tribunal held that on the basis of notings and loose sheets found from third parties and the statement of third parties, the additions cannot be made without having corroborative / independent evidences. For the sake of clarity and convenience, we extract relevant part of the order of Ld.CIT(A) in para No.6.2 of page No.13 which reads as under : “6.2. I have considered the assessment order and submissions of the appellant. It is seen that the addition made by the AO is solely based on the social media (whatsapp) messages exchanged between the appellant and Mr. Anil Kumar, an employee of M/s Navaratna Estates. A statement u/s.132 recorded from Mr. L, Anil Kumar during the course of Search during which Mr. L. Anil Kumar was questioned and he explained the nature and 'details of messages exchanged by him with the appellant. The messages contain details of transactions in digits. Those were explained to be in lakhs of rupees and the transaction was loans advanced by the appellant to Mr.L. Anil Kumar whereas the appellant explained the same to be in thousands of rupees which were given for miscellaneous expenses. Mr.L. Anil Kumar also took similar stand in his assessment proceedings and said that the statement given during Search was under duress. The AO has not brought on record any evidences as to utility of such amount nor any other corroborative evidence to support the findings. Such evidences(Messages) without any supporting/corroborative along with admission of third person cannot be, basis for AO to come to conclusion and make addition in the assessment order. The low or the issue is laid down by the jurisdictional High Court, and followed by ITAT consistently in the following cases.

• K. V. Lakshmi Savitri Devi Vs ACT 148 ITJ 517 (Hyd). • K. V. Lakshmi Savjtri Devi Vs ACIT ITTA 563 of 2017 (AP)(HC) • iii) Jawahar Bhai Atmaram Hathiwala Vs ITO 128 ITJ 36 (Ahd) • iv) DCIT Vs B. Vijaya Kumar & 931 of 2009 (Hyd). • v) CIT Vs R. Nalini Devi ITTA 232 of 2013 (A. P) • CIT Vs P. V Kalyana Sundaran (2007) 294 ITR 49 • i. Venkata Rama Sai Developers Vs DCIT ITA 453/Vizag/2012. • P. Venkateshwar Rao Vs DCIT ITA 25/825/Vizag/2012. The ratio laid down is that solely on the basis evidences such as notings in loose sheets found with third parties and the statement of third parties, additions cannot be made without corroborative evidences and independent enquiries. Applying the above ratio to the facts of the case, it is held that the addition made is not warranted, the same is deleted.” to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 6.1. No evidence was found by the department to establish that assessee has given loans to Shri Lanka Anil Kumar during the course of search and no evidence was found regarding utilization of purported advances by Shri Lanka Anil Kumar. Shri Anil Kumar also subsequently retracted from the statement and clarified that he has not received any cash loans from the assessee. Addition was made merely on the basis of whatsapp messages and the statement recorded from section 132(4) from Shri Lanka Anil Kumar which was subsequently retracted. Therefore we are of the view that the addition made by the AO is unsustainable and the Ld.CIT(A) rightly deleted the addition. Accordingly, we do not see any reason to interfere with the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue on this ground is dismissed.”

11.27 Further, Hon’ble Supreme Court in the case of Common Cause (A registered Society) Vs. Union of India in Writ Petition (Civil) No.505 of 2015 dated 2.7.2018 [2017] 394 ITR 220 (SC) wherein considered and observed that the entries in the loose papers/sheets are not “books of accounts” and has no evidentiary value u/s 34 of the Indian Evidence Act. The Hon’ble Supreme Court dismissing the writ petition filed by Common Cause, a registered society, refused to give nod to investigate against the Sahara and Birla Groups in the alleged payoff scandal. The factual setting of the case are that, a search was conducted by the CBI in the premises of Birla Groups, as a result of which, certain incriminating materials and an amount of Rs.25 crores were recovered. CBI referred the matter to Income Tax Department. In another search, the IT department recovered certain incriminating materials and unaccounted money of Rs.135 crores from Sahara Group of Companies. Allegedly the department recovered certain print out of excel sheets showing that Rs.115 crores were paid to several public figures. The settlement commission granted immunity to the Sahara Group of Companies on ground that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives, etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disks and pen drives, etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence. The Income Tax Settlement Commission has also observed that department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. The petitioner, Common Cause, impugned Page 100 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore the orders before the Hon’ble Supreme Court. Dismissed the petition Supreme Court clarified that the evidence that had surfaced was not credible and cogent. The Attorney General contended that documents which have been filed by the Birla as well as Sahara Group are not in the form of Account books maintained in the regular course of business. They are random sheets and loose papers and their correctness and authenticity even for the purpose of income mentioned therein have been found to be unreliable having no evidentiary value, by the concerned authorities of Income Tax. Analysing the veracity of the evidences procured from the companies, the Supreme Court, relied upon the ratio laid in V.C. Shukla case and observed that the entries in loose sheets of papers are not in the form of “Books of Accounts” and has held that such entries in loose papers/sheets are irrelevant and not admissible u/s 34 of Indian Evidence Act, and that only where the entries are in the Books of Accounts regularly kept depending on the nature of the occupation, that those are admissible. Being so, the addition of Rs.12.75 crores in the assessment year 2014-15 as amount advanced by assessee to M/s. Coffee Day Global Ltd. Group as unaccounted cash loan is not based on any positive materials, hence the addition is deleted in the AY 2014-15. Since the principal alleged unaccounted advance is deleted in AY 2014-15, there cannot be earning of any interest on it in subsequent assessment years 2015-16 to 2018-19. Accordingly, addition made in these AYs towards earning of alleged unaccounted interest income on alleged cash advance is also deleted.

11.28 Accordingly, in view of the above discussion, we delete the addition made in all these assessment years towards cash loans as well as interest thereon based on the uncorroborated loose slips. This ground of appeal s of the assessee is allowed. Ground No 4.2: The Addition in the Assessment Order is relied on unsubstantiated loose sheets and jottings without providing cross- examination of party’s concerned.

12. The ld. A.R. submitted that in this case, the addition made by the AO is based on unsubstantiated loose sheets and jottings without proper cross Page 101 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore examination of the person who has admitted he contents therein. Being so, it cannot be stated as full proof of material evidence to substantiate the addition. Hence, seized documents do not support the AO’s contention that assessee has advanced any kind of unsecured loans in cash. It also does not suggest that the assessee has received any sort of interest on the alleged unsecured loan in cash. Going through the entire facts of case it only creates a suspicion in the minds of the revenue authorities but however, this suspicion is not enough to hold the assessee towards advancing of unsecured cash loan in the absence of concrete evidence bought on record by the authorities concerned. The loose sheets and jottings cannot replace any form of material evidence which is not brought on record by the authorities. 12.1 He submitted that the reliance placed by the Assessing Officer which is loose slips containing irregular noting which have no evidential value. These loose slips are not a book or a document so as to raise presumption u/s 132A of the Income Tax Act. These loose slips which is not speaking by itself or in the company of other document corroborated by any evidence cannot be basis of any inference to come to conclusion that assessee has advanced money to M/s Coffee Global Day Limited. Advancing of money by assessee cannot be presumed in the absence of cogent evidence in the matter of lending of money. The addition solely on the basis of entries in the loose slips which has been considered as lending of money by assessee and this being a serious allegation the same deserves serious verification before reaching any conclusion. The entire assessment is based on suspicion, surmises and conjectures. The noting in the loose sheets remain uncorroborated which being is not a speaking document and no supporting evidence in the form of loan document, promissory note, etc or other evidence found during course of search which cannot be basis for addition. That no quasi- judicial order can be based on suspicion or assumption. The following judgements are supporting the assessee case:

• Dhirajpal Girdhari Lal vs CIT (1954) 26 ITR 775 (SC) • Dhakeshwari Cotton Mills Ltd vs CIT (1954) 26 ITR 775 (SC) Page 102 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore • Lalchand Bhagat Ambica Ram vs CIT (1959) 37 ITR 288 (SC) • Umacharan Shaw & Bros. vs CIT (1959) 37 ITR 271 (SC) • Bansal Strips (P) Ltd vs ACIT (2006), 99 ITD 177 Delhi • CBI vs V C Shukla (1998) 3 SCC 410 • Common Cause (A registered society) and others vs Union of India in Writ Petition (Civil) No.505 of 2015 (SC) [2017] 394 ITR 220 (SC) • M/s Andaman Timber Industries vs CCE (Civil Appeal No 4228 of 2006 dates 02-09-2015) wherein held that order becomes null if based nearly on statement of witness without allowing cross examination of witnesses 12.2 Further he submitted that Mr. K M Deekshith cannot be considered as reliable person and he is very shifty person as a witness. There is no consistency in his submissions and no value could be attached to his statements and these statements are given for the reason best known to him. Therefore, the department cannot consider his statement as evidence against assessee and the assessee is placing reliance on judgement of Kolkata High Court in the case of CIT vs Eastern Commercial Enterprises (210 ITR 103). Hence, the assessee has prima facia case in his favour. 12.3. The ld. A.R. submitted that the AO passed the order in a very mechanical manner placing reliance on the unsigned loose slips which have no evidential value in the eyes of law. It does not reflect on what date the alleged transaction took place and who has advanced the money. As seen from the seized material these are just handwritten loose documents and department has not verified handwriting of seized material from the government examiner or from directorate of forensic science, Government of India. The undisclosed income of assessee computed on basis of such documents which is not direct evidence or conclusive evidence to make addition in hands of assessee u/s 69A of Income Tax Act,1961. The AO has not established the link between seized material and assessee’s books of accounts. Being so it cannot be considered as conclusive evidence. The word “may be presumed” appearing in Sec.132(4A) gives an option to the assessing officer to presume things but is rebuttable and does not give definite authority and conclusive evidence. The assessee has every right to to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore rebut the same. The entire case depends on rule of evidence. Since, there is no evidence found with assessee by search party or by post enquiry by AO with regard to advancing of money by assessee to M/s Coffee Day Global Limited, no addition to be made in hands of assessee. Nevertheless, entry in notebook found in possession of Shri K M Deekshith have no link with any documents found during the course of search in case of M/s Coffee Day Global Limited, itself. There are no unaccounted assets found with M/s Coffee Day Global reflecting the investment of this loan amount in any form of asset or any expenditure or investment. There was no evidence found with assessee or M/s Coffee Day Global Limited in form of promissory notes/signed post-dated cheque or loan document. When it is unsecured loan, it is a trade practice to collect post-dated cheques or promissory notes. In the present case the assessee categorically stated in every stage of examination whatever money is lent is by banking channel and duly accounted. The AO cannot draw inference on basis of suspicion, conjecture and surmise. Suspicion, however strong cannot take place of material in support of addition. The AO should act in judicial manner, proceed with judicial spirit and come to a judicial conclusion. He should act fair as a reasonable person and not arbitrarily and capaciously and not with intention to reach his budget target. Hence, the order framed by the AO is having no leg to stand which shall be squashed.

12.4 He submitted that unless the burden of proving that the materials and cash belong to the assessee is discharged those materials can neither be seized u/s 132 nor relied upon to make assessment order u/s 153A. Therefore, the seizure of such material is illegal. The AO cannot rely upon such materials whose seizure is illegal and hence, assessment is void- ab-initio. Therefore, addition made on account of such seized material is not sustainable. 12.5 He submitted that the Delhi Tribunal in Vijay Kumar Aggarwal Vs ACIT 2017 (5) TMI 1354 held that it is clear that the presumption of facts u/s 292C of the Act is not a mandatory or compulsory presumption but a discretionary presumption. Since, the word used in the said section is to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore “maybe” and not “shall”. Secondly, such a presumption is rebuttable presumption and not a conclusive presumption because it is a presumption of fact and not a presumption of law. In the said case, the assessee from the very beginning stated that the documents found during the course of search at the residence of Shri K M Deekshith and at his chamber in the office, evidences of receipts and payment of cash found has no relevance to the assessee. Therefore, the addition made by the AO is only on the basis of surmises and conjecture without bringing any cogent material on record to substantiate that the assessee had engaged in the business of providing unsecured cash loan and the Assessing Officer had not brought any material on record to substantiate that the denial of the assessee was false.

13.3. Further, he drew our attention to the observation of the ld. CIT(A) wherein observed that the claims made by the assessee are misplaced. He further noticed that since the facts relied upon are incorrect, the case laws relied also do not apply to the facts of the case. He observed that in the instant case, the search team, post search team and the A.O have duly analysed the incriminating documents found during the search at the residence of Mr. K M Deekshith. The documents found and seized clearly reveal receipts and payments of cash. Mr. K M Deekshith has duly deposed on oath u/s 132(4) of the Act and also under Section 131 of the Act, that he was handling these cash transactions on the instructions of Sri. V G Siddhartha who is the promoter of M/s. Coffee Day Group. It is known fact that such transactions of unaccounted cash are maintained in rough note books, scribblings, codes etc. As such, not only evidences of receipts and payments in cash were found/seized but the same are further corroborated by the statements of Sri. KM Deekshith and Sri. V G Siddhartha, recorded on oath. The claim of assessee that initial PBT cannot be presumed to be him, is misconceived, as there is no presumption in this case but there is a confirmation made by the other 2 party involved in the transactions viz. Mr. K M -Deekshith and Sri. V G Siddhartha. The assessment order is not passed in a mechanical manner but after due verification and corroboration of evidences. Page 107 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 13.4 He submitted that the claim of the assessee that the statements recorded post search have no evidentiary value is also misplaced. It is not a case that some depositions have been taken in the form of letter or any other communication. In the instant case, during the course of post search enquiries, summons u/s 131 of the Act have been issued and statements have been recorded on oath under the provisions of said section. The statements relied upon were obtained by due process of law. The statement deposed u/s 131 of the Act is only a confirmation of the deposition u/s 132(4) of the Act and nothing new has been stated in the deposition u/s 131. Therefore, the deposition u/s 131 cannot be ignored merely because it is recorded after the search. The other judgment rendered by the Bombay High Court also does not apply to the facts of the case in hand as the court in the said case has opined about the evidentiary value of statement recorded on oath u/s 132(4) of the Act. 13.5 He submitted that in the case of Emmar Alloys P Ltd vs Director General of Income Tax (Investigation); the Hon'ble Jharkhand High Court in WP (T) No. 3494/2012 dated 5th May 2015. held that, "powers under section 131(1 A) given to five specified authorities are not hindered by conduct of search, it can be invoked both before and after conduct of search ". 13.6 He further submitted that the claim of the assessee that the loose sheets do not reveal anything, the additions are made in arbitrary manner, on presumption, and merely on the basis of third parry statements is also misplaced as the additions have been made based on transactions revealed by actual evidences found and unearthed during search and corroborated with statements of Sri. K M Deekshith and Sri. V G Siddhartha. 13.7 He further submitted that in the case of Mahabir Prasad Rungta v. Commissioner of Income-tax (Appeals), Ranchi, [2014] 43 taxmann.com 328 (Jharkhand), the Hon'ble HC held that loose sheets seized during search sometimes contain valuable information and thus those are to be regarded as ' documents' there is presumption raised under section 132(4A) regarding documents seized and in light of such presumption, assessee ought to have produced other documents to disprove entries made in loose sheets. Since assessee had not adduced any rebuttal evidence to show that entries made in Page 108 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore diary/loose sheets were not income in hands of assessee, addition upheld by Commissioner (Appeals) and Tribunal were justified. The relevant para of the order of Hon'ble HC is reproduced below for reference: “Often entries ore mode by businessmen in chits/loose sheets. During search, if such chits/loose sheets are found, such chits/loose sheets may be regarded as 'documents' within the meaning of section 158B(b). The loose sheets seized during the search sometimes contain valuable information and those loose sheets are to be regarded as 'documents'. [Pora 15] Section 132 is a code in itself. The section, considered as a whole, shows that it has its own procedure for the search, seizure, determination of the point in dispute, quantum to be retained and also the quantum of the tax and interest on the undisclosed income. The object of introduction of section 132 is to prevent the evasion of tax, i.e. to unearth the hidden or undisclosed income or property, and bring it to assessment. It is not merely an information of undisclosed income but also to seize money, bullion etc. representing the undisclosed income and to retain them for the purposes of realization of taxes, penalties etc. [Para 16] Sub-section (4A) of section 132 enables an assessing authority to raise a rebuttal presumption that books of account, money, bullion, documents etc. belonged to such person; the contents of such books of account and other documents are true and that the signatures and every other part of such books of account and other documents are signed by such person or are in the hand writing of that particular person. The words in sub-section (4A) are ' may be presumed1. The presumption in sub-section (4A) is, therefore, a rebuttal presumption. [Para 18] In the fight of the presumption under section 132(4A) the assessee ought to have produced other documents to disprove the entries made in the loose sheets, but the assessee has not adduced any material for rebutting the presumption, there was thus no substantial error in the addition made towards undisclosed house [Para 21] As pointed out earlier that there is rebuttable presumption under section 132(4A) that the documents belonged to the person and the contents being true and the assessee has not adduced any rebuttal evidence to show that the entries made in the diary/loose sheets were not income in the hands of the assessee. Since the lower authorities recorded concurrent findings of fact and the Tribunal upheld the additions, there is no reason warranting interference with the order of the Tribunal. The appeal is dismissed and the substantive questions are answered against the assessee.[Para 23}”

13.8 He submitted that in the case of Commissioner of Income-tax, Chennai v. T. Rangroopchand Chordia. 2016] 69 taxmann.com 202 (Madras), the Hon’ble HC held that loose sheets seized constitutes 'documents' under section 132(4). 13.9 He submitted that in the case of M. Vivek v. Deputy Commissioner of Income Tax Central Circle-2(i/c), Trichy (432 ITR 53), the Hon’ble Madras, HC held that loose sheets picked up during search under section 132, falls within to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore definition of 'document', mentioned in section 132(4) and therefore, it has got evidentiary value. 13.10 He submitted that the Hon'ble Bengaluru Tribunal in the case of Deputy Commissioner of Income-tax. Circle 11(3), Bengaluru v. Geneva Industries Ltd. [2018] 90 taxmann.com 406 (Bengaluru - Trib.). Held that where addition was made to income of assessee on account of unexplained investments on basis of loose sheets found during search on its premises, since assessee had merely denied said investments without tendering any credible explanation, the impugned addition was justified. 13.11 He submitted that the claim of the assessee that Sri. K M Deekshith is not a reliable witness and his statement is inconsistent, is also not substantiated with any evidences. No concrete material have been put forth by the assessee to disbelieve the statements K M Deekshith. 13.12 He submitted that the claim of the assessee that he has not been provided the statement recorded on oath of Sri. K M Deekshith and his cross examination was also not allowed is found to be incorrect. His claim of violation of principles of natural justice are also not found substantiated. 13.13 He submitted that during the course of appellate proceedings reference was made to para 9 of the assessment order wherein the submission of the assessee dated 11.11.2019 is reproduced, requesting for cross examination of Mr. K.M Deekshith. The assessee has requested for cross examination of Mr, K. M. Deekshith. as the AO had proposed to make additions in the case of the assessee based on the statement given by Mr. K.M Deekshith. during the search proceedings and post search proceedings. The Assessee also stated that the AO passed the assessment order without accepting his request for cross examination and therefore, a specific ground i.e. ground of appeal no.6 was raised for the relevant assessment years on this issue. 13.14 He submitted that the ld. CIT(A) during the course of proceedings before him vide letter dated 1 3.10.2023, the ld CIT(A) directed the ld. AO u/s 250(4) of the Income Tax Act, 1961, to allow the assessee an opportunity to cross examine Mr. K M Deekshith, to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore 13.15 Thus, he submitted that the AO [DOT, CC-1(3)] in his report dated 20,10.2023 stated that opportunity to cross examine Mr. K M Deekshith was given to the assessee by way of summons u/s 131 of the Act dated 18.10.2023. In response to the summons Mr. K M Deekshith appeared before the AO for cross examination however, the assessee Sri Prakash B Talreja did not appear. It was further stated that the assessee vide letter dated 19.10.2023 refused to cross examine Mr. K M Deekshith. The relevant part of the letter (a copy which is filed before this Office) is reproduced below for reference: This is to state that my above client has received a summon with regard to attend cross examination of Sri K M Deekshith. I beg to state that at the stage of assessment itself I've asked for cross examination of Sri V G Siddhartha and Sri K M Deekshith which was not provided by concerned Assessing Officer, Now you've issued a summon to provide an opportunity to cross examine Sri K M Deekshith. It is to be noted that the primary party was Late Sri VG Siddhartha who is no more. Now the cross examination is impossible to perform and what is done cannot be undone as of now as Sri V G Siddhartha is no more. Hence in this case, it is total violation of principles of natural justice which has resulted in miscarriage of justice. In view of the-above fact, we request you to quash the Assessment order itself as the cross examination is not possible at this stage due to sudden death of Sri VG Siddhortha. Further the cross examination of Sri K M Deekshith won't serve any fruitful purpose.

13.16 The AO in his report has dated 20.10.2023, stated that the reason mentioned by the assessee for not utilizing the opportunity of cross examination is misleading, since the issue of cross examination of Mr. K M Deekshith was specifically raised during the assessment proceeding and also in the appellate proceedings. 13.17 On perusal of the report of the AO and the letter of the assessee dated 19.10.2023 the ld. CIT(A) observed that it is the fact that during the assessment proceedings the assessee had specifically asked for cross examination only of Mr. K M Deekshith since the AO vide show cause notice dated 04.11.2019 had proposed to tax unaccounted income of Rs. 12.75 crores based on the statement of Sri K M Deekshith, in whose residence the loose sheets were found. Though Late Sri V G Siddhartha confirmed the statement deposed u/s 132(4) by Sri K M Deekshith, the assessee in his submission dated II. 11.2019, had specifically requested for cross examination only of Mr. K M Deekshith and not of Late Sri V G Siddhartha, since sheets were seized from the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore residence of Mr. K M Deekshith. Further the assessee as on 11.11.2019, was well aware of the fact that only cross examination of Mr K.M. Deekshith is possible as Late Sri V G Siddhartha died on 29 July 2019.

13.18 Therefore, he submitted that the contention raised by the assessee in his letter dated 19.10.2023 is deceptive and cannot be accepted. The Assessee by making misleading claims is trying to obfuscate the facts in order to support his case. However, the very fact that the assessee has chosen not to cross examine Mr. K.M. Deekshith only strengthens the hands of the Revenue. Assessee on the issue of cross examination assessee had raised specific grounds and made lengthy submissions, however when opportunity for the same was given, he backed out giving flimsy1 reasons, which only goes to prove that the grounds raised by the assessee are superfluous and unjustified.

13.19. The ld. D.R. drew our attention to the ld. CIT(A) order, wherein observed that in the case of CIT VS Virendra Behari Agrawal, [TS-5667-HC 20l4(Allahabad)-O], [2015]229 Taxman 193 (All), it has been held that: Regarding the cross-examination, the assessee has not availed the opportunity as stated by the learned A.O. On the basis of the statement made by the donor, the burden haj shifted upon the assessee as per the ratio laid down in the case of Sumati Dayo Vs. CIT, 214ITR 801 SC 13.20 The ld. D.R. submitted that the ld. CIT(A) has observed that the concluding para of the assessment order passed by the A.O in this case also illustrates the clear picture of the case at hand. The relevant para is reproduced for reference as under: 10. The assessee's response has been analysed and is found to be not acceptable due to the reasons discussed as follows. The assessee has Stated that that he has not lent any amount by cash to M/s Shivan and Co. Whatever sums were advanced to was only through cheques / RTGS and the same was accounted in the name of Mr Sri Madhusudhan S Patel (assessee's brother in-law) for whom the Power of Attorney. The total amount lent on behalf of Sri Madhusudhan was Rs.2,06,60,000/- as on 18/12/2017, This claim of assessee is incorrect as seized material recovered from the premise of Mr K M Deekshith clearly prove that the assessee-is in the business of financing unsecured loans and significant part of the same was done in cash. Relevant seized material is reproduced above. Assessee has also argued that addition cannot be made merely on the basis of presumption, surmises and conjectures he further stated that no addition can be made on Page 112 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore the basis of presumption and based on the statement of another party. This contention of the assessee is incorrect as the addition is noton presumptions and a statement of the third party. The addition is based on tangible seized material and clearly deciphered.

11. The seized material does not contain entries pertaining to the assessee only, it has numerous entries pertaining to other entities and persons, the said transactions have been found to be correct^ Accordingly, the authenticity of the seized material is established and the assessee’s claim that the addition is based on presumption is unsustainable. The assessee further stated that there was a search proceeding at his residential premises and office premises on 27.1.2016 at which point of time also, no incriminating documents were found in his possession. This claim of the assessee at best explains or reiterates the argument of the assessee that there are no intimating seized materials. This claim does not in any manner explain or diminish the value of the seized material found in the premise of Mr K M Deekshith. Assessee also stated that the initials PBT as mentioned cannot be construed as his initials. The fact that the initials PBT indicate Shri. Prakash Bhajandas Taireja has been categorically stated by Mr K M Deekshith and Late Shri VG Siddhartha in their statements recorded under section 132(4) and the same have not been retracted. In fact. Late Shri VG Siddhartha has accepted the said amounts as unaccounted income in the RO1 filed under section 153A. The condition of the assessee to cross examine the relied upon persons is impossible to perform as the key person Shri VG Siddhartha has deceased. The claim of Late Shri VG Siddhartha is well established when he accepted the said amounts as unaccounted income in the ROI filed under section 153A. Hence, the contention of the assessee is not acceptable and the amount of Rs.12,75,00,000/- is treated as unaccounted income of the assessee in AY 2014-15 and brought to tax as unexplained investment u/s 69.” 13.21 He submitted that the ld. CIT(A) also observed that the above facts clearly reveal that the claims made by the assessee are misleading and incorrect. The facts claimed by the assessee have been clearly distinguished in the above para and hence, the case laws relied by the assessee does not help his case and are not applicable to the facts of the at hand.

13.22 He further observed that the other contention raised by the assessee that the AO had made a protective assessment in his hands is also incorrect and without any basis, as perusal of the order shows that AO did not make any protective assessment in the hands of the assessee.

13.23 Considering the above facts, the ld. D.R. submitted that the observation of the ld. CIT(A), that the additions made in this case are on account of relevant evidence unearthed during the course of search and further corroborated with statements of other persons involved in the said transactions. The assessee has been given opportunity to cross examine the to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore concerned person, which he wished to forego. The additions have been clearly brought out in the assessment order, due opportunity has been granted to the assessee before passing the assessment order and the additions made are duly reasoned as well. In view of the above facts, there do not appear to be any reasons to call for interference in respect of the additions made in the AYs under reference.

ITA No.1066/Bang/2023: 15. The ground Nos.2 to 2.4 in this appeal are akin to ground Nos.4 to 4.4 in 1062, 1063 & 1065/Bang/2023. Accordingly, these grounds are disposed of as in ITA Nos.1061, 1062, 1063 & 1065/Bang/2023. This ground of appeal of the assessee is allowed.

16. Next common ground in these appeals are with regard to levy of interest u/s 234B & 234C of the Act. This ground is only academic, consequential and mandatory in nature. As such this ground is dismissed as infructuous.

17. In the result, ITA Nos.1061, 1062, 1063, 1065 & 1066/Bang/2023 are partly allowed. ITA No.1064/Bang/2023 (AY 2016-17):

18. The ground raised in this appeal is with regard to levy of penalty u/s 271AAB of the Act.

19. Facts of the issue are that assessee is an individual and has been carrying on finance business. A search was conducted on 28.01.2016 at his residential premises and survey at the office premises. During search documents pertaining to the assessee’s financing business were impounded. On being confronted with the same the assessee gave relevant explanations for the documents found. Although no incriminating documents were found there, in order to buy peace with the department an additional income of Rs. 1 Crore was admitted as additional income for the above-mentioned assessment year. Certain documents were discovered and seized during search proceedings. When confronted with the same the assessee gave sufficient explanations for the same. Also the documents found are apart of the books of accounts of the assessee. The Ld AO observed that the assessee admitted additional income based on certain statements seized materials and discrepancies observed during search. However, the Ld AO failed to note that the return of income was not due as on the date of search for the relevant assessment year and the income declared would have been filed notwithstanding the search proceedings. The replies provided by the assessee had been rejected by the Ld AO and the penalty has been levied u/s 271AAB of the Act. The ld. A.R. Page 115 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore stated before ld. CIT(A) that the Ld AO has acted mechanically and has not objectively evaluated the case. This is clearly evident from the fact that the ld. AO failed to look into the submissions made which are in favour of the assessee. The ld. AO rejected the assessee’s plea that he had cooperated with the concerned officials and disclosed the manner in which the income was derived. Once the manner of deriving income has been explained it does not tantamount to concealment of income for levy of penalty. Against this assessee went in appeal before ld. CIT(A).

20. The ld. CIT(A) observed that the relevant part of the statement recorded during search has duly been reproduced by the AO in the assessment order. The addition is based on the admission under oath of the assessee as made at the time of search. There is nothing to show that statement made during search was under any undue pressure, threat or coercion. Verification at the end of the statement proves that the said statement was given voluntarily in a sound state of mind without any threat, coercion or undue influence. In the case of Smt. Dayawanti v CIT [201 7J390 ITR 496 (Delhi) the High Court held that the statements recorded during search operations could be relied upon to make addition to assessee's income. In the case of Hotel Kiran v ACIT [2002] 82 ITD 4S3 (Pune) the ITAT held that when statement under section 132(4) was voluntarily made and there was no coercion or threat whatsoever and contents of statement were clear and unambiguous, same would be binding on assessee even if it was subsequently retracted. In the case of ACIT Central Circle-2(3), Kolkata Vs. Vishal Agarwal reported in [2018] 100 taxmann.com 283, Kolkata - Tribunal held that the Assessing Officer initiated penalty proceedings under section 271AAB and, further, imposed penalty at rate of 30 per cent on said disclosure made by assessee under section 271 AAB(l)(c) - Whether where assessee Suo motu admitted undisclosed income and substantiated manner in which such undisclosed income was earned and had also paid tax together with interest, assessee was liable to pay penalty at rate of 10 per cent in terms of clause (a) of section 271AAB(1). The ld. CIT(A) further observed that the ld. AO in the penalty order u/s. 271AAB dated 31.05.2018, has given proper findings related to the argument of the assessee. The relevant portion of the order is reproduced below: Page 116 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore "

10. The assessee 's argument suffers from logical infirmities and if accepted leads into moral hazards. The undisputed fad of the case is that the assessee after considering the statements recorded during search; perusing the seized materials and the discrepancies found therein agreed to offer an additional sum of Rs. 1 Crores to tax in A. Y. 2016-17. It naturally follows that but for the search proceedings, the additional income of Rs. 1 Crores would have gone unnoticed and escaped assessment. 10.3. Also, as per explanation to Section 271 AAB, '"undisclosed income " means- (i) any income of the specified previous pear represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year or (B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the dare of search, or (ii) any income of the specified previous year represented, either wholly by any entry in respect of an expense recorded in the book of account documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted. " 10.4. In This connection The assessee's statement dated 20.04.2016 is found pertinent. As per Page 5 and Page 6 of his statement, "Page No. 29 indicates the derails of various deposits held by one of my customer who approached me for financing and the deal did not go through. The other- notings in small slips represent amounts due to syndicate partner M/s. Chimmanlal HUF and the adjustment with his parties, they do not pertain to me. Further, the notings in Kannada represent some expenses incurred for household purposes and the adjustment of my driver's personal advance. Further, the amount mentioned in the slips may kindly be treated as part of my declaration us 132(4) of the IT. Act, 1961 to the extent of Rs. 20,50,000 for A. Y.2016-1? (Rs. 18,50,000 and Rs. 2,00,000 cash on 30.08.2015). 10.5. It is apparent from the assessee's statement dated 20.04.2016 that there is material evidence of undisclosed income at least to the extent of Rs. 20,50,000. Therefore, the assessee submissions during penalty proceedings that his offer of additional income is without any adverse finding or seized document is a false statement. It is in this context, the assessee's admission of undisclosed income of Rs. 1,00,00,000 assumes significance. The assessee has not offered additional income without any basis. Rather the assessee admitted additional income based on certain statements, seized materials and the discrepancies observed during search. "

20.1 On perusal of penalty order, the ld. CIT(A) observed that on being confronted during search process only, the assessee has come forward for disclosure of income of Rs. 1,00,00,000/-. The penalty provisions are incorporated in the legislation as a deterrent effect on the errant assesses. Merely because, the assessee came clean during the search proceedings does not entitle the assessee to claim immunity Page 117 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore from levy of penalty. Also, mere taxation of undisclosed income without levy of penalty places the assessee at par with honest taxpayers. In view of the above, the ld. CIT(A) observed that action of the AO levying penalty of Rs. 10,00,000/- being 10% of the undisclosed income cannot be held as faulty. Hence, action of AO was upheld and the grounds of appeal were dismissed by ld. CIT(A). Against this assessee is in appeal before us.

"10.4 It is submitted in the connection the appellant's statement dated 20/04/2016 is found pertinent and at page 5 and 6 is reproduced as under :-

Page No.29 indicates the details of various deposits held by one of my customer, who approached me for financing and the deal did not go through. The other notings in small slips represent amount due to syndicate partner Mis. Chimmanlal HUF and the adjustment with his parties, they do not pertain to me. Further, the notings in Kannada represent some expenses incurred for household purposes and the adjustment of my driver's personal advance. Further the amount mentioned in the slips may kindly be treated as part of the declaration u/s.132[4] of the I.T.Act to the extent of Rs.20,50,000 for A.Y.2 016-17 [Rs.18,50,000 and Rs.2,00,000 cash on 30.08.2015] 10.5 It is apparent from the assessee's statement dated 20.04.2016 that there is material evidence of undisclosed income at least to the extent of Rs.20,50,000. Therefore, the assessee submission during penalty proceedings that his offer of additional income is without any adverse finding or seized document is a false statement. It is in this context, the assessee's admission of undisclosed income of Rs. 1,00,00,000 assumes significance. The assessee has not offered additional income without any basis. Further the assessee admitted additional income based on certain statements, seized materials and the discrepancies observed during search . 21.2 He submitted that from a plain reading of the above, it is evident that there is no incriminating material representing any undisclosed income found during the course of search of Rs. 1,00,00,000/-. In fact, even the learned A.O. has stated that there is material evidence of undisclosed income at least to the extent of Rs.20,50,000/-, thus affirming the fact that there is no incriminating material representing any undisclosed income of Rs. 1,00,00,000/-.

21.3 He submitted that coming to the observation of the learned A.O. that the statement by the assessee u/s.132[4] is a document as per Explanation to Section 271AAB and 'that the said statement contains entry in respect of certain income which does not form part of books of accounts or documents found at the Page 119 of 121 to 1066/Bang/2023 Sri Prakash Bhajandas Talreja, Bangalore time of search, it is submitted that no such entry has been pointed out by the learned A.O. and that considering the statement u/s.132[4] as a document as per Explanation to Section 271AAB is entirely erroneous and opposed to the provisions of the Act.

21.4 Thus, he submitted that in the absence of any concealed / undisclosed income or assets of the assessee that was either found or seized during search, it be cannot be considered that the additional income of Rs. 1,00,00,000/- offered by the assessee to purchase peace with the Department was in the nature of undisclosed income to warrant the levy of penalty u/s 271AAB of the Act.

21.5 In view of the above, he submitted that the penalty of Rs. 10,00,000/- imposed u/s 271AAB of the Act being 10% of Rs. 1,00,00,000/- requires to be deleted. In light of the above, he prayed that the appeal of the assessee may be allowed for the advancement of substantial cause of justice.