DCIT, CENTRAL CIRCLE-2(1), CHENNAI vs. SHRI RAJAGOPAL KAMARAJ, THIRUVARUR

Per Bench:

1.1 Aforesaid appeals by revenue for Assessment Years (AY) 2017-18 to 2019-20 arise out of the common order passed by learned Commissioner of Income Tax (Appeals)-19, Chennai on 27-12-2022 in the matter of separate assessments framed by Ld. Assessing Officer (AO) u/s 153C of the Act on 30-09-2021 for AYs 2017-18 & 2018-19 and u/s 143(3) of the Act on same date for AY 2019-20. In all these appeals, single substantive issue of addition of undisclosed income is involved. The assessee has raised cross-objections on jurisdictional issue that there was no proper satisfaction recorded u/s.153C and the approval u/s.153D was given in a mechanical manner. 1.2 For the purpose of adjudication, appeal for AY 2017-18 has been taken to be the lead year. The ground raised by the revenue for this year read as under: - 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld.CIT(A) erred in deleting the addition of Rs. 49,40,94,150/- for AY 2017- 18 made on the basis of the incriminating materials seized from a Swift Dezire Car during the course of search in the case of Shri.T.S. Kumarasamy and subsequent sworn statement of Shri D. Raghunathan who was travelling in the car and of Mr.Vignesh from whom the said materials were collected by D. Raghunathan.

2.1. The Ld.CIT(A) erred in deleting the addition made on the basis of material seized from Swift Dezire Car though Shri. D. Raghunathan, General Secretary, TNCSC Quality Control Staff Association admitted in sworn statement that Shri. Pitchaikannu, President of the said association was asked to collect the bag from Mr.Vignesh. Mr.Vignesh also admitted in sworn statement that he was instructed by Mr.Pitchaikannu to collect note books and loose sheets from the table of Mr.Pitchaikannu at the residence of assessee. 2.2. The Ld CIT(A) erred in appreciating that that Shri Vignesh has partly retracted his earlier statement in subsequent reexamination and such retraction holds no value as it has been done so by citing absurd and unfounded reasons like he was subjected to harassment and mental pressure by IT Authorities. He has not brought any evidence to show that he was harassed during search operation through any means. 2.3. The Ld. CIT(A) erred in failing to appreciate that the amount of unaccounted expenditure has been quantified in the case of T.S.Kumarasamy, Prop: M/s. Christy Fried grams on the basis of electronic devices seized in which an unaccounted parallel cash book (Erandam Dhall) was found. Further Shri.T.S.Kumarasamy also confirmed the unaccounted cash expenditure of Rs.2056,76,20,876/- as quantified in his response to Q.No.24 of the statement recorded u/s.132(4) of the Income tax Act 1961 on 08.07.2018. The date and amount mentioned on certain dates with description "Christy" in the loose sheets relied on in the assessee's case are exactly matching with "Erandam Dhall" seized in the case of T.S. Kumarasamy. The same has been clearly brought out in the assessment order. The assessee was the state Minister of Food & Civil supplies during 2016-2021. The CIT(A) failed to appreciate that the assessing officer has rightly arrived that the receipts mentioned in the seized note book as received by the assessee on the basis of above findings. 2.4. The Ld.CIT(A) erred in accepting the assessee's explanation for disowning the seized material even though among the loose sheets seized, there were some documents like "list of pending invoices pertaining to the travel of Minister of Food" which proved that those documents were actually collected from the residence of the assessee. 3.The Ld.CIT(A) erred in deleting the addition of Rs. 75,00,000/- for AY 2017-18 made on the basis of the incriminating materials seized from M/s. S.R.S. Mining and associates and sworn statement recorded from Shri. K. Srinivasulu. 3.1 The Ld.CIT(A) erred in not appreciating Shri.K. Srinivasulu admitted in his sworn statement dated 10.12.2016 that those note books were maintained by him as per the instructions of partners of M/s.S.R.S. Mining and the entries found were incidental charges paid to various persons. Several entries in the note book denoting expenses and bank deposits have been verified during post search proceedings. This was maintained by the searched firm to arrive at the profits earned from unaccounted business of sand mining carried out by it. The AO has rightly assessed amount mentioned in the name "Kamaraj" in the said seized materials. 3.2. The Ld.CIT(A) has stated that Shri.K. Srinivasulu has no first-hand knowledge of information as the entries were made by him as per the instructions of partners of M/s.SRS Mining and the partners of the firm should also have been examined to prove the veracity of the entries. It is to state that the partners also agreed with the explanation of Shri Srinivasulu regarding the entries made although they have also withdrawn their statement subsequently.

1.3 The grounds raised by the assessee, in the cross-objection, read as under: - 1. The Appeal filed by the Revenue is not maintainable and is liable to be dismissed in limine. 2. The Ld. CIT(A) ought to have annulled the Assessment Order as it was passed without following the principles of Natural justice and the provisions of Income Tax Act, 1961. 3. The Ld. CIT(A) erred in upholding validity of the assessment order even though principles of natural justice were grossly violated by the Assessing Officer (AO) while passing assessment order. 4.1 The Ld. CIT(A) failed to note that while passing assessment order, the basic principles of natural justice viz. providing reasonable opportunity of being heard, providing opportunity to cross-examine the witnesses on being requested by the assessee and implementing the cross-examination statement, were not followed by the Assessing Officer (AO). 4.2 The Ld. CIT(A) ought to have quashed the assessment order considering that the AO did not provide an opportunity of cross examination in violation of principles of natural justice even though he relied upon the statements of Shri. Pichaikannu recorded in the case of M/s. Christy group and Shri K. Srinivasulu in the case of M/s. SRS Mining and used them in the assessment orders in violation of the order of Hon'ble Supreme Court in the case of Andaman Timber Industries v. CCE [2015] 62 taxmann.com 352 GST 355 (SC). 4.3 The Ld. CIT(A) erred in upholding the assessment order even though the AO did not give effect to the cross-examination statement of Sri R. Vignesh recorded by the AO on 22.09.2021 on the unlawful plea that the witnesses would state truth only in original statements and not in cross-examination statements making the whole jurisprudence on the issue of cross-examination and law established by the Hon'ble Supreme Court otiose. 5. The Ld. CIT(A) erred in upholding validity of the assessment order even though the AO violated law in invoking provisions of section 153C of the Act. 6.1 The Ld. CIT(A) erred in upholding the proceedings-initiated u/s 153C of the Act on the basis of search in the case of SRS Mining on 08-12-2016 even though notice under the said section was issued on 07.01.2021 over 4 years after the searches, much beyond the reasonable time and after the proceedings got barred by limitation as held by various High Courts in this regard. 6.2 The Ld. CIT(A) erred in ignoring the fact that even though there was more than reasonable time available to the AO from the date of searches in the cases of M/s SRS Mining on 08-12-2016 and M/s. Christy Group on 05-07-2018, proceedings u/s 153C of the Act were initiated mechanically without due application of mind and without even making an attempt to conduct any enquiry under any of the provisions of the Act and the Respondent came to know about the alleged transactions only after receipt of notices u/s 153C on 07-012021 and as such ought to have annulled the proceedings u/s 153C of the Act. 6.3 The Ld. CIT(A) erred in ignoring the fact that the AO of the searched party did not record his satisfaction in the case of Christy group as contemplated u/s 153C of the Act but only forwarded information and not the satisfaction in violation of the provisions of section

153C of the Act and proceedings initiated on the basis of such information without recording satisfaction by the AO are ab initio invalid. 6.4 The Ld. CIT(A) erred in upholding the proceedings-initiated u/s 153C of the Act on the basis of searches conducted in the case of Christy group on 05.07.2018 and SRS Mining on 08.12.2016 even though name of the assessee was not found anywhere in the seized material relied upon to record satisfaction, if any and copy of such satisfaction, if recorded in the case of Christy group was not supplied in spite of repeated requests made by the Respondent. 6.5 The Ld. CIT(A) ought to have quashed the proceedings-initiated u/s 153C of the Act considering that the material seized in the case of. SRS Mining relied upon to initiate proceedings u/s 153C of the Act per se did not indicate that the contents of such material pertained to the respondent and such inference was drawn only on the basis of statement recorded from Sri K. Srinivasulu on 08.12.2016/10.12.2016 which was retracted by him repeatedly much earlier to the date of initiating the proceedings. 6.6 The Ld. CIT(A) erred in not appreciating that the proceedings u/s 153C of the Act in respect of material seized in the cases of SRS Mining and Christy group were initiated on the basis of satisfaction, if any recorded by the AO was not on their own but was based on the directions/suggestions given in the appraisal report without due application of mind as such it was nothing but a borrowed satisfaction and not that of the respective AOs. 7.The Ld. CIT(A) erred in ignoring and not adjudicating on the ground of appeal raised before him regarding violation of provisions of section 153D of the Act. 8.1 The Ld. CIT(A) erred in holding that the Appellant did not press and pursue the ground regarding violation of provisions of section 153D of the Act by the AO and Addl. CIT in spite of a ground raised and detailed submissions made before him in support of such ground. 8.2 The Ld. CIT(A) erred in not considering and appreciating the deficiency regarding approval granted u/s.153D of the Act by simply making an observation that the Respondent has not made any submission upon the approval granted u/s.153D of the Act ignoring the detailed submissions made on the issue. 9.The Ld. CIT(A) ought to have also deleted the inflated computation of income on merits also as the Respondent made a detailed submission about the amounts computed by the AO and the possible addition that could have been made based on the amounts found in seized material.

of statement. The Ld. AR, on the other hand, supported the findings rendered in the impugned order and submitted that the conclusions drawn by Ld. AO were without any corroborative material. The Ld. AR also argued on jurisdictional issues. The case was put up for clarification which was responded to by both the sides. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Assessment Proceedings 3.1 From the facts, it emerges that the impugned assessment was made as a result of two different searches carried out by the department on two different assessees. First search was in the case of M/s. Christy Friedgram industry group (CFI) on 05-07-2018. In that search, a Swift Desire Car having Registration No.TN06H 6768 was intercepted on 05- 07-2018 near Light House, Marina, Chennai and certain material was seized from the car. On the basis of seized material, Ld. AO framed assessment u/s 153C and alleged that the assessee received undisclosed income. 3.2 Another search was conducted in the case of M/s SRS mining on 08.12.2016 wherein certain material was seized and similar allegations of undisclosed receipts were made by Ld. AO on the basis of seized material. Accordingly, a satisfaction was drawn and notice u/s 153C was issued to the assessee on 07-01-2021 which was followed by notices u/s 142(1) wherein the assessee was directed to substantiate its case. The assessee filed certain details and sought copies of seized material and sworn statement being relied upon. The same were furnished to the assessee.

3.3 The assessee, vide letter dated 24.06.2021, denied having received any such payments as alleged by Ld. AO and maintained that no material was seized from the assessee. The assessee also submitted that there was no mention of his name anywhere in the seized material. The assessee, all along, denied having received any such payment as alleged by Ld. AO. The assessee sought cross-examination of all the persons as relied upon by Ld. AO. 4. Addition of Undisclosed receipts as per the material seized from a car on 05-07-2018 4.1 During the course of search on M/s Christy Friedgram Industry (CFI) group of cases, a swift desire car was searched and certain material was found which was marked as ANN/DSG/DR/B&D/S-1 (one pink and red color long size account book register page numbers 1 to 172), ANN/DSG/DR/B&D/S-2 (one black color ‘Word One – Smart Book’ spiral note books pages numbered from 1 to 98) and ANN/DSG/DR/LS/S (one yellow color folder containing loose sheets pages numbered from 1 to 150). One Shri D. Raghunathan was travelling in the said car. He was a retired manager of Tamil Nadu Civil Supplies Corporation (TNCSC). He confirmed that the vehicle belonged to his son. In sworn statement dated 05-07-2018, he stated that he was General Secretary of TNCSC Quality Control Staff Association and one Shri Pichaikannu was the president of said association. He further stated that Shri Pichaikannu telephonically asked him to collect a bag which would be handed over to him at Light house by one Shri Vignesh. He also stated that Shri Vignesh was working as personal assistant to the assessee, State Minister for Food and Civil Supplies, Government of

Tamilnadu. Shri Vignesh was stated to be working at the residence of the assessee and Shri Pichaikannu was stated to be working as personal assistant of the assessee. Shri Vignesh, in sworn statement dated 05-07-2018, stated that on the instruction of Shri Pichaikannu, he collected the notebooks and loose sheets from the table of Shri Pichaikannu at the official residence of the assessee, which he was attempting to hand over to Shri D. Raghunathan. 4.2 In black color notebook “World one – Smart Book’ seized as ANN/DSG/DR/B&D/S-2, at the front page under “Name”, it was written as R. Pichaikannu. In the sheets numbered 90 to 94, amounts were noted from 15-08-2017 to 30-07-2018 with the name Lilith, who is stated to be cook at the residence of the assessee. The same would establish the connection between the residence of the assessee, Shri Pichaikannu and the seized material. Similar link was sought to be established by Ld. AO with respect to other material as seized. The loose sheets seized vide ANN/DSG/DR/LS/S contained particulars relating to tenders, date wise-notings of payment etc. The long-sized notebook seized as ANN/DSG/DR/B&D/S-1 contained date-wise amounts against various persons pertaining to AYs 2017-18 to 2019-20. The same in the appraisal report was totaled to Rs.167.99 Crores. A sample of such entry has been extracted by Ld. AO in the assessment order. 4.3 The Ld. AO then referred to a search conducted at the residence of Shri Karthikeyan on 05-07-2018 wherein certain loose sheets were seized besides electronic devices. He was stated to be finance assistant at the Christy Group and under the instructions of Shri Harihara Krishna AGM (Finance), details of amounts paid to various persons were

maintained by Shri Karthikeyan in excel sheet called “Erandam Thall”. Upon comparison of long size note book seized vide ANN/DSG/DR/B&D/S from the car and the entries in the Erandam Thall, it was noted that the notings in the long-seized note book were suggestive of receipts of amount from Christy group presumably for oil tender / sugar tender etc. On sample basis, Ld. AO has compared the entries in seized material in para 6.7 of the order and found that the same were matching. Therefore, a conclusion was made that the entries in the seized material were relatable to the assessee. 4.4 During the course of search operations / post search operations, summons u/s 131 were issued to Shri Pichaikannu to appear and explain the transaction. However, he failed to appear and no verification could be carried out with him. The Ld. AO also noted that no verification was carried out with the assessee during search / post search verification. 4.5 During assessment proceedings, summons were again issued to Shri Pichaikannu on 22.09.2021 who appeared and stated that he was working as a freelance consultant to various suppliers and the loose sheets and the long size register seized were maintained by him. He denied having acted as a personal assistant of the assessee and his meetings with the assessee were on account of his role as on office bearer of the state association of employees of TNCSC where he was employed as general manager prior to his retirement. This material was stated to be kept at his residence at Santhome and was sent for safe custody apprehending that he could be searched. He denied having any knowledge of the small black color note book. He stated that he did not know anything about small black color world one smart book and how it

came to the possession of Shri D. Raghunathan. He also stated that he did not know who Lalith was and whether he was working in the then Minister’s residence or outside and did not now the entries in the said book including the name written on it. The relevant portion of statement has been extracted in pages 6 to 12 of the assessment order. 4.6 As per request of the assessee, Shri R. Vignesh was cross- examined on 22.09.2021. He stated that he was staying at the official residence of the assessee during the years 2016 to 2018 receiving visitors. He also stated that Shri R. Pichaikannu never worked as personal assistance of the assessee and one Shri Shrafuddin was his personal assistance. He also stated that the material handed over by him to Shri D. Raghunathan who was waiting at the case, was taken from the residence of Shri Pichaikannu at Santhome and not from the official residence of the assessee who was then a Minister in the state government. The relevant portion of his statement is also extracted on page nos.14 to 17 of the assessment order. In effect, the earlier statement made by Shri Vignesh stood retracted by him. 4.7 The assessee refuted the allegations of receipt of money from anyone as inferred from the material seized from the car. He also stated that Shri Pichaikannu never worked as his personal assistance and the interactions were only on account of Shri Pichaikannu’s role as a representative of the employees union he was representing. The assessee also stated that the register was not a proper book of account to be relied upon as evidence. The assessee stated that the nature of entries indicated expenditure pertaining to hulling business and were of the nature of internal affairs / business activities of various suppliers and

there was no connection of the same with him. Further, the seized material did not belong or connected to him and it had no bearing on computation of his total income. He further stated that there was no mention of his name in any of the seized material. The assessee also stated that there was no verification at his premises either during the search or post-search investigations prior to initiation of proceedings u/s 153C of the Act. The assessee stated no undisclosed cash / investment / expenditure was found in this case. Further, certain entries bearing the name ‘Kamaraj’ were of the nature of salary paid and could not pertain to him. The relevant portion of assessee’s reply has been extracted on page nos. 18 to 38 of the assessment order. The assessee pleaded for quashing of proceedings on the ground that there was no proper satisfaction in his case. The satisfaction was merely on the basis of presumption, surmises, incorrect and incomplete information. There were glaring factual errors and contradictions in the statements of Shri R. Vignesh and Shri D. Raghunathan. The seized registers and folder containing looses papers did not belong to / pertained to / connected to the assessee and the entries in such registers had no bearing on determination of his income. In the entire seized material, the name of the assessee did not appear even once. It was further submitted that the Annexure ANN/DSG/DR/B&D/S was a rough register containing some nothings without revealing any details and therefore the same could not be considered as Books of Accounts u/s 2(12A). These papers did not have any semblance of account book as commonly understood. The assessee also assailed proposed addition based on search made in the case of M/s SRS Mining. Reliance was placed on the decision of Hon’ble

Supreme Court in the case of CBI vs. VC Shukla & Others (3 SCC 410), Common Cause vs. UOI (77 Taxmann.com 245) and also on the decision in Dhakeshwari Cotton Mills Ltd. Vs. CIT (26 ITR 775) in support of various submissions. 4.8 However, Ld. AO held that Shri Pichaikannu had admitted that certain loose sheets and the entries in the long size note book were in his handwriting, in his role as a freelance consultant. He had stated that on the date of search he was out of station and these materials were sent from his residence. During the course of search Shri R. Vignesh had stated that he collected these seized materials from the table of Shri. Pichaikannu at the official residence of the assessee. However, during the course of cross-examination by the representative of the assessee, Shri Vignesh stated that he collected it from the residence of Shri Pichaikannu at Santhome. Shri Vignesh attributed his change in the statement, to the process of recording of the statement during the course of search. Shri Pichaikannu on being examined for the first time stated that certain part of the loose sheets and a long size note book were maintained at his residence and sent from there for safe custody. Due to paucity of time, veracity of these statements could not be established beyond doubt. However, the statement given by Shri Vignesh during the course of cross-examination and the subsequent re-examination, differed from the sworn statement given during the course of search operations, with respect to the place from where the seized materials were picked up / originated. This is considered part retraction of his earlier sworn statement and would not be acceptable considering the decision of Hon'ble Supreme Court in the case of Surjeet Singh

Chhabra Vs Union of India 1 SCC 508 holding that the confession, though retracted, is an admission and binds the petitioner unless it is proved that such admission, confession or oath statement was involuntary or was tendered under coercion or duress. The statements which are recorded under oath are presumed to be true as under law and false statement will attract penalties. The Hon’ble High Court of Madras in the case of B. Kishore Kumar vs DCIT (TCA Nos. 738 to 744 of 2014) held that the clear admission voluntarily made, by the assessee would constitute a good piece of evidence for the Revenue. Similar was the ratio of decision of Hon'ble Supreme Court in the case of Basant Singh v. Janki Singh (AIR 1967 SC 341) as well as in Kishori Lal v. Mt. Chaltibai (1959 AIR 504). 4.9 It was thus held by Ld. AO that the retraction was without any basis and not backed by any evidences of hardship during the course of recording of the sworn statement. Sworn statement given during the course of search only will give the correct picture, as the deponent is free to depose the actual facts known to him, without being under the compulsive influence of his masters. Subsequently, the deponents come under the influence of the concerned persons, which leads to the retraction of the statements given during the course of search. Hence, the part retraction was held to be mere after-thought and therefore, not acceptable. 4.10 Proceeding further, whether all the entries in the long size note book could be treated as receipts by the assessee from various suppliers, the following inferences could be made: -

(i) The records were shifted from the official residence of the assessee, as deposed by Shri. Vignesh during the course of search and they were relatable to the assessee. (ii) The claim that there was no deposition by anyone claiming to have made payments to the assessee or received on his behalf is not relevant, as in such transactions open admissions would not be forthcoming. Further, in such kind of transactions, proper, unambiguous maintenance of books of accounts are not expected. They are bound to be katcha in nature with the name of the recipient either mentioned in coded words or in some other form. (iii) Since the seized materials long-size register, notebook and loose sheets were moved from the official residence of the assessee and going by the nature of documents, like 'list of pending invoices pertaining to the travel of 'MINISTER OF FOOD' by M/s. Vassi Wings Tours and Travels, copy of a letter dated 28.08.2017 by Resident Audit Officer / Secretariat, originals of the letters addressed by the assessee in his official letter head, it is established that these seized materials were kept and maintained at the official residence of the assessee. (iv) Further, the entries in the long size note book apart from descriptions like 'minister' refer to various parties / suppliers pertaining to the department(s) coming under the ministry for which the assessee was a minister then. Hence, these entries have direct relevance to the assessee. (v) The claim that these entries of the nature of business transactions of certain parties could not be accepted since, such entries will be

maintained only by the respective parties in their books of accounts at their place of business and not at the residence of the assessee. (vi) Whether Pichaikannu was the personal assistant of the assessee or not is immaterial. Given the nature of documents maintained by him it is clear that Shri Pichaikannu was closely associated with the assessee. Further, Shri Pichaikannu's claim of providing consultancy to various suppliers is not matching with the nature of entries in the long size note book maintained by him. (vii) The entries of inflows thus show the receipts by the assessee and the entries of outflows only indicate expenses of the nature attributable to the assessee. The Ld. AO thus held that inflow entries in the long size register indicate the receipts by the assessee from various parties. The entries of the nature of outflows were marked with title 'expenditure details' and were out of inflows. The judicial decisions relied upon by the assessee were held to be distinguishable as these records were not maintained in the normal course of business and maintenance of formal, clear and unambiguous books of accounts or evidences could not be expected in such cases. Further, the provisions of the Evidences Act are not applicable to the assessment proceedings, as these proceedings are essentially revenue proceedings. The Hon'ble Supreme Court, in the case of Indian and Eastern Newspaper Society Vs CIT reported in 119 ITR 996, had held that the proceedings before the assessing officer are of quasi-judicial in nature. In light of this decision, the Income Tax authorities are not bound by the technical rules of evidence. Rules of Evidence and Indian Evidence Act would apply only to judicial

proceedings before the Hon'ble Courts. Also, in Chuharmal Vs CIT (172 ITR 250) it was held that the rigor of the rules of evidence contained in the Evidence Act are not applicable, but that does not mean that when the taxing authorities are desirous of invoking the principles of the Act in the proceedings before them they are prevented from doing so. All that is required is that if they want to use any material collected by them which is adverse to the assessee, then the assessee must be given a chance to make his submissions thereon. The principles of natural justice are violated if an adverse order is made on an assessee on the basis of the material not brought to his notice. 4.11 The Ld. AO summarized the entries found in the seized material, for all the three years, as under: - AY Total of all the Sum of Entries Sum of Entries entries (in Rs.) of inflows of Expenses 2017-18 55,33,64,000 49,40,94,150 5,92,69,850 2018-19 94,80,57,600 56,70,14,080 38,10,43,520 2019-20 40,65,25,100 40,65,25,100 - Total 190,79,46,700 146,76,33,030 44,03,13,370

The inflow entries for this year for Rs.49.40 Crores was finally brought to tax as assessee's undisclosed income from undisclosed sources. 5. Undisclosed receipts from M/s. SRS Mining 5.1 During the course of search action in the case of M/s.SRS Mining on 08.12.2016, certain incriminating materials were seized from 47-49, VBC Soliltaire, 3rd Floor, Bazullah Road, T. Nagar, Chennai vide annexures ANN/KGAR/MPKSSR/B&D/S-1 to 3. Two long note books were also seized at New No.26, Old No.14, Yogambal Street, T. Nagar Chennai - 600017, vide annexures ANN/MPK/NS/B&D/S-19 & 20. The above seized materials contained date-wise noting of various amounts

paid to various persons. In these above referred seized materials, there was narration of payments made to the assessee along with dates which was quantified as under: - No AY Amount Paid 1 2016-17 56,00,000 2 2017-18 75,00,000 3 2015-16 8,00,000 Total 1,39,00,000 5.2 During the course of search proceedings, sworn statement was recorded u/s 132(4) of the Act from one Shri Srinivasulu (the key person in M/s. SRS Mining who had control of the said seized materials). Similarly, sworn statements were also recorded from the three partners of M/s. SRS Mining i.e., Shri. Rathinam, Shri. Ramachandran, Shri. J. Sekhar. All the above persons, during the course of the sworn statements, confirmed that the payments were made in order to facilitate the sand mining business of M/s. SRS Mining. Accordingly, the assessee was show caused. The assessee sought cross-examination of all these persons and filed a reply on 24.09.2021 stating that the entries 'Kamaraj' found in the seized materials are not 'R. Kamaraj' and sought to drop the proceedings u/s 153C of the Act. 5.3 However, Ld. AO held that in view of the influential position of the assessee and the possibility of a different person with the same name not being established, the submission could not be accepted. Further, there was no retraction of the sworn statements. Finally, the aforesaid entries were considered as the assessee's undisclosed receipts from undisclosed sources and accordingly added to the total income in the respective years.

5.4 The assessment for AYs 2018-19 & 2019-20 has been framed on similar lines by making addition of undisclosed receipts as per the material seized during the course of search in CFI group of cases on 05- 07-2018. 5.5 The assessments so framed by Ld. AO were subjected to assessee’s further appeal before first appellate authority wherein the appeals were partly allowed against which the revenue is in further appeal before us whereas the assessee has preferred cross-objections. Appellate Proceedings 6.1 The assessee assailed the assumption of jurisdiction on legal grounds as well as quantum addition on merits by way of elaborate written submissions which has been extracted on page nos. 28 to 46 of the impugned order. Addition of undisclosed receipts pursuant to search on CFI group 6.2 Regrading addition made on the basis of CFI search, the assessee drew attention to satisfaction note drawn by Ld. AO and inter-alia, submitted that the material was seized from a third-party and not seized from the assessee. This material did not belong to the assessee. The entire seized material did not contain name or make any reference of assessee even once. The Ld. AO did not record any nexus between the contents of the seized material and the assessee. The assessee also rebutted each of the reasoning of Ld. AO. 6.3 Regarding addition made on the basis of M/s SRS mining search, the assessee submitted that copy of satisfaction note of searched party was never supplied to the assessee. In seized material, some payments were recorded in the name of ‘Kamaraj’ and not ‘R. Kamaraj’. There

were not specific questions and answers in the statements of persons concerned from M/s SRS mining about the payment made to ‘Kamaraj’ or his identity. All the concerned persons retracted their statement immediately after search and much before satisfaction was recorded by Ld. AO on 18-02-2021. The assessee also submitted that no satisfaction note was drawn of AO of searched person i.e., M/s SRS mining and therefore the proceedings would be void-ab-initio. The Ld. CIT(A) proceeded to adjudicate the appeal from para-20 onwards of the impugned order. 6.4 Regarding validity of satisfaction u/s 153C, the first contention of the assessee was that the statement of Shri Pichaikannu (author of seized material) was recorded much after the recording of this satisfaction and since there was no admission of alleged payment to the assessee by any competent person of the searched person, no reasonable person would have arrived at the satisfaction that the information contained in the seized book related to the assessee. The Ld. CIT(A) noted that in the present case, AO of searched person (CFI) as well as the assessee was one and the same and therefore, only one satisfaction note was required by Ld. AO in both the capacities. This satisfaction would be in the nature of prima-facie satisfaction only and there was no requirement for such satisfaction to be based on conclusive establishment of the fact that the seized material pertains to or contains information relating to the assessee and it has a bearing on determination of total income of the assessee. Conclusive establishment of the said fact would be required only for making assessment of income based on the seized material but only prima-facie satisfaction would be

required for assumption of jurisdiction u/s 153C. As long as the inferences drawn by Ld. AO in the satisfaction note regarding the fulfilment of conditions laid down in Sec.153C flows from the contents of the seized material on a prima-facie basis, it could not be considered that the same was found on mere presumption or surmise or conjecture. In the present case, Ld. AO had drawn this satisfaction from the contents of seized material and the statement of Shri Vignesh and Shri Raghunathan with regard to the origin of the said seized material which were available with Ld. AO at the relevant point of time. After considering the entire sequence of facts and after considering the contents of the seized material, Ld. AO inferred that the material seized from the car were sent by Shri Pichaikannu, the personal assistant of the assessee, from the residence of the assessee through Shri Vignesh who was working at the residence of the assessee. Further, AO inferred that the seized material contained recording of transaction with the parties dealt with by TNCSC, which comes under the Ministry held by the assessee. The AO accordingly inferred that the said transaction recorded in the seized material represent the amount received bY the assessee. The Ld. AO therefore arrived at the satisfaction that the seized material had bearing on determination of total income of the assessee for AYs 2017- 18 to 2019-20. The Ld. AO had brought out proper reasons for arriving at prima-facie satisfaction with regard to fulfilment of all the mandatory conditions of Sec.153C for assuming jurisdiction under the said section. This satisfaction was arrived at based on notings of amount against the name ‘Christy’ found in some pages of the long sized seized note books and the seized loose sheet bundles and the matching of the same with

the corresponding notings found in the ‘Erandam Thall’ seized from the residence of the finance assistant of the Christy group containing details of amount paid to various persons, having regard to the fact that the Christy group of concerns were engaged in supply of items being dealt with by the ministry headed by the assessee. Further, this satisfaction was arrived at having regard to the transactions founds recorded in the long-sized note books with various parties dealt with by TNSCS coming under the ministry of the assessee. Therefore, the legal submissions as raised by the assessee were rejected. 6.5 On merits of addition, the primary aspect relied on by Ld. AO was the depositions of Shri Raghunathan and Shri Vignesh recorded u/s 132(4) on 05-07-2018 during the course of search. In the said statements, it was stated by both the persons that the material was being handed over to Shri Raghunathan by Shri Vignesh as per the instructions of Shri Pichaikannu who was working as personal assistance to the assessee. Shri Vignesh submitted that the relevant material was collected by him from the table of Shri Pichaikannu at the official residence of the assessee. However, during cross-examination of Shri Vignesh in the course of assessment proceedings, he stated that Shri Pichaikannu never worked as personal assistant of the assessee and the said person used to visit the camp office in the official residence of the assessee as a member of TNCSC staff association along with other members of the association. He also stated that he collected the seized note books from the residence of Shri Pichaikannu at Santhome. He further stated that he signed earlier statement under pressure without knowing the contents of the statement.

6.6 The statement of Shri Pichaikannu was first recorded u/s 131 during assessment proceedings on 22.09.2021. He confirmed that he did not work as personal assistant to the assessee and Shri Vignesh had collected the long-size note book and bunch of loose sheets from his residence at Santhome. He also stated that he was the President of the TNCSC Quality Control Staff Association and he used to meet the assessee along with other executive members for representing various issues relating to the staff of TNCSC. He denied having knowledge of the black color seized notebook and some of the loose sheets. As regard the contents of the long size note books, he explained that he was working as a freelance consultant after his retirement from TNCSC and that he used to provide advice / consultation to the staff of various suppliers regarding the availability of stocks of various commodities as informed to him by the staff of suppliers in the long size note book. 6.7 The assessee contended that the material seized from the car was not maintained at his official residence and that there was absolutely no nexus or connection between him and the seized material. The Ld. AO did not accept the same on the ground that retraction was without any basis and backed by evidence of any hardship during the course of recording of sworn statement. However, Ld. CIT(A) held that retraction could not be brushed aside since it was evident from the Panchama that the search of the Maruti Car commenced on the evening on 05-07-2018 and was concluded on the late evening of 06-07-2018 after more than 24 hours. Given the fact that the car was intercepted on the road and the proceedings continued for more than 24 hours, it would not be reasonable to consider that Shri Vignesh was exhausted and was in

state of shock and fear and he was not in proper frame of mind to depose voluntarily. 6.8 It would also be important to consider the fact the averments made by Shri Vignesh in the retraction have completely been validated by the contents of the statement of Shri Pichaikannu which was recorded for the first time during the course of assessment proceedings. The Ld. AO could not point out any inconsistency or infirmity in the statement of Shri Pichaikannu which could discredit the said statement and render it as unreliable. In fact, Ld. AO himself admitted in the assessment order that the veracity of statement of Shri Pichaikannu and the cross-examination and re-examination of Shri Vignesh could not be established beyond doubt due to paucity of time. However, having recorded the statement of Shri Pichaikannu after lapse of more than 3 years from the date of search and towards the fag-end of assessment proceedings, the said observation of Ld. AO could not be given any weightage to the detriment of the assessee. The case laws being relied upon by Ld. AO on retraction were in respect of admission made by the assessee in their own case and the same were distinguishable and not applicable to the statements of third-parties which are sought to be used against the assessee by treating them as statements of witnesses of the revenue. Therefore, these case laws would not support the stand of Ld. AO. 6.9 The Ld. AO also relied on list of pending invoices pertaining to the travel of ‘Minister of Food’ issued by M/s Vaasi Wings Tours and Travels and a copy of letter dated 28-08-2017 by Resident Audit Officer / Secretaries in the seized loose sheets bundles to draw the inference that the seized material was kept and maintained at the official residence of

the assessee. However, upon perusal of page nos. 140,142,144,146 and 148 of ANN/DSG/DR/LS/S, it was observed by Ld. CIT(A) that the same contain list of pending bills of ‘Ministry of Food’ and not ‘Minister of Food’ as stated by Ld. AO. Further, the list includes the details of travel bills of some other persons also in the said ministry apart from the assessee. The page nos.149 and 150 contain the letter of Resident Audit Officer / Secretariat dated 28-08-2017 addressed to the Pay & Accounts officer regarding non-availability of boarding passes in support of TA bills of various ministers along with the Annexure containing the list of 8 such ministers. Therefore, the loose sheet bundle contain correspondence with regard to travel bills of 8 other ministers apart from the assessee and travel bills of some other persons in the Ministry of Food apart from the assessee. The said information in the seized material did not pertain exclusively to the assessee but to other ministers also and therefore, it was to be held that the same do not provide necessary strength for drawing the inference that the said material was maintained at the official residence of the assessee. 6.10 Proceeding, further, Ld. CIT(A), in para 42 of the impugned order, noted that it was the contention of the assessee that there was no mention of the name of the assessee either directly or on coded form anywhere in the long size notebooks based on the contents of which Ld. AO inferred the receipt of undisclosed income by the assessee from various persons. This said claim was not disputed by Ld. AO and he did not refer to any notings in the seized material containing the name of the assessee. This contention of the assessee was found to be correct by Ld. CIT(A) upon perusal of seized material. Therefore, it was held that

the conclusion of Ld. AO was not sustainable unless some other corroborative material / evidence was brought on record by Ld. AO to establish nexus between the assessee and the transactions as found recorded in the seized material. The entries in the long size note book was bland entries which did not contain any essential details to enable drawing of proper conclusion regarding the nature of transactions recorded therein. The notings merely contained date, name of the person and the amount. The names of the persons were written in short form and their identity could not be ascertained with certainty. There was no mention regarding the nature and the transactions and purpose of making / receiving the payments which were found noted in the seized notebook. The Ld. CIT also noted the observation of Ld. AO that certain entries in the long size seized note book appearing with the name ‘Christy’ matched with the corresponding entries found in the ‘Erandam Thall’ as seized from the residence of Shri Karthikeyan, finance assistant of CFI group. Upon perusal of details of these four transactions which were stated to be matching with each other as listed by Ld. AO in the assessment order, it was noted that though there was matching of the dates and the amount, the description of the transaction was found to be at a variance between the long size note books and ‘Erandam Thall’. While the name ‘Christy’ was mentioned against the relevant transactions in the long size notebook, the expression ‘To cash Boss Thr. RRM’ appears against the relevant transactions in ‘Erandam Thall’. When the name of the payer, which is most crucial aspect has differed in the entries found in two different seized material, the same could not be said to be matching and therefore, inference drawn by Ld. AO in this

regard was untenable. There was no other material on record in support of conclusion of Ld. AO that the amount found recorded in the long size note book represent the payments received by the assessee from various suppliers. 6.11 The observation of Ld. AO that the persons against whose name the amounts were found recorded in the long size note books were suppliers dealing with TNCSC was without any basis. The Ld. AO nowhere explained the reasons for treating these persons as suppliers dealing with TNCSC. There was ambiguity in the seized material with regards to full / actual names of the persons against whom the amounts were noted. No evidence was brought on record by d. AO regarding the complete name and identity of the persons / concerns whose names were found noted in the long size seized note books. No information had been gathered from TNCSC regarding names of the parties which dealt with it and the nature of transactions they had with TNCSC during the relevant period. Without gathering such information and evidences, it could not be inferred that the persons named in the seized material were suppliers who dealt with TNCSC. The same was on mere presumptions of Ld. AO. No exercise was attempted by Ld. AO to support the inferences drawn in the assessment order. 6.12 The Ld. CIT(A) also noted that entries in the long size seized note book was in the handwriting of Shri Pichaikannu and the same was maintained by him in the course of his freelance consultancy services provided by him to the staff of the suppliers. The Ld. AO has made a bland observation rejecting the same without citing supporting reasons. The statement of Shri Pichaikannu could not be disregarded lightly.

6.13 The Ld. CIT(A) further noted that the impugned additions were made on the basis of material seized from the premises of third-party. The said material was neither seized from the premises of the assessee nor was the same found to be in the handwriting of the assessee and therefore, the same would not constitute adequate evidence to draw any adverse inference against the assessee, in the absence of any other corroborative evidence. This proposition was laid down by Hon'ble Delhi High Court in the case of CIT vs. Sant Lal (118 Taxmann.com 432) wherein it was held that when a diary is seized in search of the premises of a third-patty allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from the premises of assessee nor was it in the handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. The ratio of the said decision was squarely applicable to the case of the assessee since Ld. AO had not referred to any cogent material to corroborate the entries made in the material seized from a third-party which are purportedly the transactions made by the said third- party with the assessee. 6.14 The Ld. CIT(A) also referred to the decision of Jabalpur Bench of Tribunal in the case of ACIT vs Satyapal Wassan [TS-5104-ITAT-2007 (Jabalpur)-O] and also various other decisions which have been enumerated in paras 56 and 57 of the impugned order. Further, Mumbai Tribunal in the case of Riveria Properties Pvt. Ltd. Vs ITO (ITA No.250/Mum/2013) held that AO was required to bring further evidence on record to show that the money was actually exchanged between the

parties in case where there was no other evidence on record to prove that on-money was paid except the loose sheets found in the premise of third-party and admission made by the third-party. Also, Hon’ble Supreme Court in the case of Dhakeswari Cotton Mills Ltd. vs. CIT (26 ITR 775) held as under: - As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-Tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear the in making the assessment under sub-section (3) of Section 23 of the Act, the Income-Tax officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh (supra). In the light of above decisions, it was true that though the provisions of Evidence Act do not apply with the same rigor to Income Tax proceedings, however, Ld. AO would not be entitled to make pure guess and make an assessment without reference to any evidence / material. It would follow therefrom that addition could not be made unless there is corroborative evidence to validate the entries found in the material seized from a third-party. 6.15 The Ld. CIT(A), in para. 62, referred to the decision of Hon’ble Supreme Court in the case of CBI vs. V.C. Shukla (AIR SC 410) holding that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon’ble Supreme Court is that independent corroborative evidence would be required in respect of entries in regular books of accounts and the same would apply in the present case.

6.16 Further, the seized material did not contain complete information to facilitate drawing of conclusion of receipt of undisclosed income by the assessee. The information merely contained date, amount and name of the persons in short form. There was no specific mention in the seized material regarding the nature of the said transactions, the purpose of such payments and the precise identity of the payer. In the absence of such essential and critical information, it could not be inferred with a reasonable degree of certainty that the payments were made to the assessee whose name did not even appear either in full or in coded / abbreviated form and that the said amount represent the income of the assessee. An entry made in a diary or notebook by a third person with scant details cannot be used to fasten tax liability on the person whose name does not appear at all or only an abbreviated name appears in the seized material, in the absence of any corroborative evidence to attribute the entries to such a person. Such seized material is liable to be treated as a dumb document, which would not have any evidentiary value in respect of the entries found therein, unless corroborative evidence is available which can provide necessary reliable basis for deciphering the nature and character of the said entries. 6.17 Considering all these facts, impugned additions were deleted by Ld. CIT(A) as under: - “64. Having regards to the detailed discussion made in the preceding paragraphs, it is held that the addition made by the AO towards undisclosed income of the appellant based on the entries of transactions found recorded in the long size note book seized from a third party (ANN/DSG/DR/B&D/S-1) during the course of search in the case of Sr. T.S.Kumarasamy which do not bear the name of the appellant and without bringing any independent evidence on record to establish that the said transactions represent the receipts of the appellant is unsustainable……..”

Consequently, adjudication of the computational errors as brought on record by the assessee was held to be academic in nature. 7. Addition of undisclosed receipts from M/s SRS Mining 7.1 This addition was made for AY 2017-18. The assessee assailed the assumption of jurisdiction of Ld. AO and also assailed the quantum additions on merits. The written submissions of the assessee have been extracted in the impugned order. 7.2 The assessee submitted that Ld. AO erred in assuming jurisdiction u/s 153C as the formation of his satisfaction that the seized material pertains to the appellant or information contained therein relates to the appellant, was based purely on presumption, conjectures and surmises. The aforesaid satisfaction was merely based on retracted statement of Shri Srinivasulu and therefore, the same would be null and void. The assessee also submitted that the copy of satisfaction note was not provided to the assessee despite request made to Ld. AO. The assessee also submitted that in the absence of a satisfaction note recorded by the AO of the searched person would render initiation of proceedings u/s 153C void ab-initio. The Ld. CIT(A) directed Ld. AO to provide copy of satisfaction note. The Ld. AO furnished a copy of the satisfaction note dated 17.02.2021 of the AO of the searched person i.e. ACIT, Central Circle-2(4), Chennai. The same was confronted to the assessee. 7.3 The assessee, vide letter dated 30.11.2022, submitted that in the remand report, Ld. AO enclosed only first page of letter dated 17.02.2021 "forwarding of information u/s 153C of the IT Act" received from the AO of SRS Mining i.e., DCIT, Central Circle 2(4). The subject matter of the letter would indicate that it was only communication of

information about certain entries found in the name of one "Kamaraj" and it was not in the nature of "satisfaction" as contemplated u/s 153C of the Act. The provision of Sec.153C mandates AO of the searched party to arrive at a satisfaction based on cogent reasons having nexus with the material seized in the case of searched party and the reasons flowing from such material to the effect that it was a fit case to invoke provisions of the said section. The provision could not be invoked merely on the basis of "information forwarded u/s 153C of the IT Act" by the AO of the searched party. As such, the provision was wrongly invoked by AO and the action of the AO was not in accordance with the law. Accordingly, the assessee requested for quashing of assessment proceedings. 7.4 However, upon perusal of letter dated 17.02.2021 of the AO of the searched person addressed to the AO of the appellant, Ld. CIT(A) noted that the said AO had analyzed the contents of certain material seized in the case of M/s SRS Mining and recorded his finding therein that the said seized books of accounts and documents pertain to and information contained therein was related to the appellant. The contents of the letter leave no doubt that the same represents the satisfaction note of the AO of the searched person. Therefore, it would not be correct to state that the said letter does not represent satisfaction note of the AO of the searched person merely on account of use of the expression "forwarding of information u/s 153C of the IT Act" in the subject of the letter. Having regard to the contents of the said letter which fulfil the mandatory requirements of a satisfaction note of the AO of the searched person, it was held that the same was required to be construed as the satisfaction note of the AO of the searched person and consequently, there was no

legal infirmity in initiation of proceedings u/s 153C on account of the said issue. 7.5 The assessee also contended that the formation of satisfaction was purely based on presumption, conjectures and surmises since the seized material merely contain the name of the recipient as "Kamaraj" and not as "R. Kamaraj" and there was no other material to confirm the identity of the recipient as "R. Kamaraj" i.e., the appellant. The assessee accordingly contended that the assumption of jurisdiction u/s 153C is bad-in-law and not sustainable. However, Ld. CIT(A) rejected the same by observing that the satisfaction required to be drawn by the AO for the purpose of assuming jurisdiction u/s. 153C was in the nature of prima- facie satisfaction only and there was no requirement for such satisfaction to be based on conclusive establishment of the fact that the seized material pertains to or contains information relating to the appellant and that it has a bearing on the determination of total income of the appellant. Conclusive establishment of the said facts is sine-qua-non for making assessment of income based on the seized material and only a prima-facie satisfaction is required at the stage of recording the satisfaction note for assumption of jurisdiction u/s 153C. As long as the inferences drawn by the AO in the satisfaction note regarding the fulfilment of the conditions laid down in section 153C flows from the contents of the seized material on a prima-facie basis, it could not be considered that the same was founded on mere presumption or surmise or conjecture. In the present case, the inferences drawn by Ld. AO in the satisfaction note prima-facie arise from the contents of the seized material and the statement of Shri. K. Srinivasulu with regard to the

same. In the satisfaction note, the AO stated on perusal of the material seized in the case of M/s SRS Mining vide ANN/KGAR/MPKSSR/B&D/S- 1 to 3 and ANN/MPK/NS/B&D/S-19 and 20 that the said materials contained date wise notings of various amounts paid to public servants and government officials. The AO observed that Shri. Srinivasulu, who was found to be in control of the said seized material, has confirmed in his statement that the payments were made to public servants and government officials in order to facilitate the sand mining business of M/s SRS Mining. Further, on perusal of the seized material, the AO observed in the satisfaction note that the seized material contain narration of date wise details of payments made to Shri R. Kamaraj (the appellant), which aggregated to Rs.8 lacs for AY 2015-16, Rs. 56 lacs for AY 2016-17 and Rs. 75 lacs for AY 2017-18. Based on the said observations, Ld. AO arrived at the satisfaction that the transactions recorded in the seized material represent the amounts received by the appellant and that the seized material had a bearing on the determination of total income of the appellant for AYs 2015-16 to 2017-18. The Ld. AO has brought out proper reasons for arriving at a prima-facie satisfaction with regard to fulfilment of all the mandatory conditions specified in Section 153C for assuming jurisdiction under the said section. This satisfaction has been arrived at based on the analysis that the seized material which contains the date-wise notings of various amounts paid to public servants and government officials and supported by the statement of Shri K. Srinivasulu and the appearance of some payments with the name "Kamaraj". Thus, there was prima-facie satisfaction and accordingly, the legal argument urged by the assessee was held to be not tenable.

7.6 The findings on merits of quantum addition have been rendered in para 81 onwards in the impugned order. These findings are more or less on same lines and on same principles as applied by Ld. CIT(A) to adjudicate the impugned additions based on search in the case of CFI group. The Ld. CIT(A) noted that the additions were made based on the entries found in the note books seized from the office premises of M/s SRS mining during the course of search conducted in the cases of Sri. M. Premkumar, Sri. K. Srinivasulu, Sri. J. Sekhar Reddy and M/s SRS Mining on 08.12.2016 wherein a statement was recorded from Shri K. Srinivasulu u/s 132(4) dated 10.12.2016. The assessee contended that the seized material did not specifically refer to the identity of the appellant as the recipient of the payments noted therein with the name "Kamaraj". The assessee contended that the name 'Kamaraj' is a widely used name and there are a number of persons with the said name even among the public servants and Government officials and the payments shown in the seized material with the said name could not be attributed to the assessee without any basis. The appellant also contended that the statement of Shri K. Srinivasulu and the statements of three partners of M/s SRS Mining have nowhere mentioned that the assessee was the beneficiary of the payments mentioned in the seized material with the said name. The assessee also drew attention to the fact that the said persons subsequently retracted their statements and therefore, the reliance placed by the AO on such retracted statements would be untenable. Another contention was that the seized material was a dumb document which did not speak for itself regarding the nature of payments and the identity of the recipients and the same could not be relied upon

unless there was corroborative material which could bring out the said details. It was therefore, contended that the inference drawn by AO that the assessee was the beneficiary of the payments found recorded with the name "Kamaraj" in the seized material, was without any basis and not supported by any evidence. 7.7 The Ld. CIT(A), upon perusal of relevant entries in the seized material, concurred that the name of the assessee i.e., "R. Kamaraj" did not figure in any of the relevant entries in the seized material. There was no other prefix or suffix to the said name mentioned in the seized material which could assist in ascertaining the precise identity of the person referred to by the said name. As rightly pointed out by the assessee, the name 'Kamaraj' was a common name in the State of Tamilnadu and there could be no exception to the same among the public servants and Government officials too. Further, there was no mention anywhere in the statement of Sri. K. Srinivasulu u/s 132(4) that the assessee was the recipient of the payments shown in the seized material with the name 'Kamaraj'. The same was true of the statements of the partners of M/s SRS Mining i.e., Sri. Rathinam, Sri. Ramachandran and Shri J. Sekar Reddy. The entries found against a name which is a common name in the state and which is partly similar to the assessee’s name in the material seized from a third-party could not be used draw an adverse inference against the assessee without there being anything more on record to conclusively establish that the same pertain to the assessee alone. The Ld. AO held that the name 'Kamaraj' as found in the seized material could only mean the assessee 'R. Kamaraj' in the given circumstances in view of the influential position of

the assessee. However, the name was common and there was no justification of inference as drawn by Ld. AO without there being any corroborative evidences. 7.8 The observation of Ld. AO that the payments were made in order to facilitate land mining business of M/s SRS mining was factually incorrect. There was no such averment by any of the said persons in their statements recorded u/s 132(4). Moreover, the AO did not refer to any material or evidence as available on record which would establish that the assessee had facilitated the sand mining business of M/s SRS Mining so as to arrive at a reasonable inference that the name 'Kamaraj' in the seized material refers to the assessee only. In fact, it was quite apparent that there was no common ground between the business of M/s SRS Mining and the ministerial portfolio held by the assessee. 7.9 It was further held by Ld. CIT(A) that the seized material as relied upon by the AO did not contain complete information to facilitate drawing of such inference of payment to the assessee. The information merely contained the date, amount and the abbreviated name of the recipients. There was absolutely no mention in the seized material regarding the nature of the said transactions of cash payments, the purpose of such payments and the precise identity of the recipients. There was no mention whether the payment was made to a particular person in his own right or it was paid to him on behalf of another person. In the absence of such essential and critical information, it cannot be inferred with a reasonable degree of certainty that the payments were made to a person whose abbreviated name appear therein and that the said amounts represent the income of the said person. An entry made in a

diary or notebook by a third person with scant details could not be used to fasten tax liability on the person whose abbreviated name appears therein, in the absence of any corroborative evidence. Such seized material is liable to be treated as a dumb document which does not have any evidentiary value in respect of the entries found therein, unless there is corroborative evidence which could provide necessary reliable basis for deciphering the nature and character of the said entries. 7.10 The material so relied upon by Ld. AO was seized in the premises of a third-party during the course of search conducted in the case of the said third-party. The said material was neither seized from the premises of the assessee nor was the same found to be in the handwriting of the assessee. Such a material would not constitute adequate evidence to draw any adverse inference against the appellant in the absence of any other corroborative evidence. This proposition was laid down by Hon'ble Delhi High Court in the case of CIT vs. Sant Lal (118 Taxmann.com 432) wherein it was held that when a diary is seized in search of the premises of a third patty allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from the premises of assessee nor was it in handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. The ratio of the said decision was squarely applicable to the case of the assessee since Ld. AO had not referred to any cogent material to corroborate the entries made in the material seized from a third-party which are purportedly the transactions made by the said third-party with the assessee.

7.11 The Ld. CIT(A) also referred to the decision of Jabalpur Bench of Tribunal in the case of ACIT vs Satyapal Wassan [TS-5104-ITAT-2007 (Jabalpur)-O] and also various other decisions which have been enumerated in paras 91 and 92 of the impugned order. Further, Mumbai Tribunal in the case of Riveria Properties Pvt. Ltd. Vs ITO (ITA No.250/Mum/2013) held that AO was required to bring further evidence on record to show that the money was actually exchanged between the parties in case where there was no other evidence on record to prove that on-money was paid except the loose sheets found in the premise of third-party and admission made by the third-party. Also, Hon’ble Supreme Court in the case of Common Cause vs. UOI (supra) held as under: - We are constrained to observe that the Court has to be on guard while ordering investigation against any important constitutional functionary, officers or any person in the absence of some cogent legally cognizable material. When the material on the basis of which investigation is sought is itself irrelevant to constitute evidence and not admissible in evidence, we have apprehension whether it would be safe to even initiate investigation. In case we do so, the investigation can be ordered as against any person whosoever high in integrity on the basis of irrelevant or inadmissible entry falsely made, by any unscrupulous person or business house that too not kept in regular books of account but on random papers at any given point of time. 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.

The aforesaid decision of Hon’ble Supreme Court stresses the need for exercising caution and for bringing on record relevant, reliable and cogent evidence to corroborate the entries found in loose sheets and

note books regarding the payments allegedly made to important constitutional functionaries so that the process of law is not abused by unscrupulous persons in order to achieve ulterior goals. Therefore, it was important that the corroborative evidence was available on record in support of the entries in the seized material found in the premises of third-party. 7.12 Another critical aspect was that there was no acknowledgement in the seized material by the assessee of having received impugned payments by way of appending his signature / initial against the said payments. If a third-party unilaterally makes entries in a diary / notebook showing payments to a person to suit his convenience, the same could not us used against the assessee unless there was corroborative evidence to establish the actual making of payments to the said person. However, there was no such reference of corroborative evidence in the assessment order. 7.13 The Ld. CIT(A) also concurred that the statement of Shri K. Srinivasulu u/s 132(4) would not serve as corroborative evidence in respect of entries in the seized material. That person gave a general statement that the entries represent incidental expenses paid to various persons. When there were numerous pages and entries in the seized material, such a general statement would not inspire confidence for drawing any conclusion in respect of specific entries appearing therein allegedly with the abbreviated name of the assessee to conclude that the entries represent payment made to the assessee only. There was nothing in the statement even to remotely suggest that the entries appearing with the abbreviated name actually represent payment made

to the assessee. The statement merely stated that the entries were maintained on the instructions of the partners of M/s SRS mining. It was very clear that Shri K. Srinivasulu had no first-hand knowledge of the payments noted in the seized material and had merely noted whatever was told to him by the partners. In such a situation, the statement would serve a very limited purpose of ascertaining the identity of the person who made the entries and nothing more. Since the entries were made on the instructions of the partners, it is the partners who were required to explain the exact identity of the recipients, the nature of payments, the purpose of payments and the identity of the person who made the payments etc. However, there was no material on record which would show that any of the partners was examined with regard to relevant entries in the seized material. There was no reference to any such statement of the partners in the assessment order. Therefore, the statement of Shri K. Srinivasulu could barely be considered as corroborative evidence against the assessee with regard to the entries in the seized material. This was further fortified by the fact that the said statement was retracted vide letters dated 21-03-2017 and 23-03-2017 addressed to DDIT (Inv.) which was submitted by Shri K. Srinivasulu through the Jail Superintendent when he was lodged in the Jail. In the retraction letters, it was claimed that the earlier statement was given under coercion and duress and in a state of mental shock, depression and physical exhaustion at the relevant point of time due to continuance of search action continuously for more than 3 days without a break and he not being allowed to sleep or to take rest. He further stated that he was not allowed to read the typed statement and his signature was

obtained by force. He stated that he never paid any money to various persons as recorded in the typed assessment. He also stated that he signed the statement to end the prolonged ordeal of intimidation, harassment and mental torture. The Ld. AO could not have disregarded such retraction which was available with the AO of M/s SRS Mining from whom AO had received satisfaction note and seized material. 7.14 In the assessment order, while stating that the name ‘Kamaraj’ appearing in the seized material could only mean the assessee ‘R. Kamaraj’ in view of the influential position held by the assessee, AO had observed that the possibility of a different person with the same name has not been established by the assessee. However, the assessee could not be expected to discharge a reverse burden as per legal principles laid down by Hon’ble Supreme Court in the case of K.P. Varghese vs. ITO (131 ITR 597) holding that onus of establishing that the conditions of taxability are fulfilled would be on revenue and throwing this burden on the assessee would be to cast an almost impossible burden upon him to establish the negative. Therefore, Ld. AO was not correct in stating that the assessee failed to furnish any evidence to that he did not have any financial transactions with M/s SRS Mining or its associates. The burden was on revenue to establish that the assessee was in receipt of payments as noted in the seized material. This burden was not discharged by revenue in the present case. 7.15 The Ld. CIT(A), in para 100, referred to the decision of Hon’ble Supreme Court in the case of Dakeswari Cotton Mills Ltd. vs. CIT (26 ITR 775) wherein it was held as under: - As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-Tax Officer is not fettered by

technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear the in making the assessment under sub-section (3) of Section 23 of the Act, the Income-Tax officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3). The rule of law on this subject has, in our opinion, been fairly and rightly stated by the Lahore High Court in the case of Seth Gurmukh Singh (supra). In the light of above decisions, it could be said that though the provisions of Evidence Act do not apply with the same rigor to Income Tax proceedings, however, Ld. AO is not entitled to make pure guess and make an assessment without reference to any evidence / material. It would follow therefrom that addition could not be made unless there is corroborative evidence to validate the entries found in the material seized from a third party. 7.16 The Ld. CIT(A), in para. 102, referred to the decision of Hon’ble Supreme Court in the case of CBI vs. V.C. Shukla (AIR SC 410) holding that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon’ble Supreme Court is that independent corroborative evidence would be required in respect of entries in regular books of accounts and the same would apply in the present case. 7.17 It was finally held by Ld. CIT(A) that the seized material was in the nature of a dumb document which does not contain complete and unambiguous information to arrive at any conclusion based solely on the said material that the assessee was in receipt of the payments found noted therein against the name "Kamaraj". There was was no corroborative evidence to support and supplement the details in the

seized material to conclusively establish that the name "Kamaraj" found in the seized material refers to the assessee only. There was no corroborative evidence to prove that the payments noted in the seized material have actually materialized and transfer of money has actually taken place. In view of these reasons, it was to be held that Ld. AO had not discharged the onus to prove that the assessee was actually in receipt of the payments reflected in the seized material with reliable and cogent independent evidences to corroborate the entries in the seized material. 7.18 Considering all the above factors, the impugned addition was deleted for AY 2017-18 against which the revenue is in further appeal before us. Our findings and Adjudication 8. From the facts, it emerges that impugned additions have been made in AYs 2017-18 to 2019-20 pursuant to search action in the case of CFI group of entities on 05-08-2018. Another addition of undisclosed receipts has been made in AY 2017-18 which is based on search in the case of M/s SRS Mining on 08.12.2016. Both the additions have separately been dealt with by Ld. AO in the assessment order as well as in the appellate order. Our adjudication to the same would be as under. Addition of undisclosed receipts pursuant to search on CFI Group 9. In the case of search on CFI group, a Swift Desire Car was intercepted near Light House, Marina, Chennai and certain material was seized from the car, which has already been detailed by us in earlier paragraphs. It could be seen that during search on this group, the seized material is in the shape of ANN/DSG/DR/B&D/S-1 (one pink and red

color long size account book register page numbers 1 to 172), ANN/DSG/DR/B&D/S-2 (one black color ‘Word One – Smart Book’ spiral note books pages numbered from 1 to 98) and ANN/DSG/DR/LS/S (one yellow color folder containing loose sheets pages numbered from 1 to 150). One Shri D. Raghunathan, who was travelling in the said car, stated that he was General Secretary of TNCSC Quality Control Staff Association and one Shri Pichaikannu was the president of said association. He further stated that Shri Pichaikannu telephonically asked him to collect a bag which would be handed over to him at Light house by one Shri Vignesh. Shri Vignesh stated that on the instruction of Shri Pichaikannu, he collected the notebooks and loose sheets from the table of Shri Pichaikannu at the official residence of the assessee, which he was attempting to hand over to Shri D. Raghunathan. However, during cross-examination, the said statement has been retracted in the sense that he subsequently stated that the bag was collected from the residence of Shri Pichaikannu at Santhome. This fact was confirmed by Shri Pichaikannu also whose statement was recorded for the first time during the course of assessment proceedings. Considering the sworn statement of Shri Vignesh at the time of search as well as after considering some of the contents of seized material, Ld. AO alleged that the said material had nexus with the assessee. The Ld. AO then referred to a search conducted at the residence of one Shri Karthikeyan on 05- 07-2018 wherein certain loose sheets were seized besides electronic devices. He was stated to be finance assistant at the Christy Group and under the instructions of Shri Harihara Krishna AGM (Finance), details of amounts paid to various persons were maintained by Shri Karthikeyan in

excel sheet called “Erandam Thall”. A comparison of long size note book seized vide ANN/DSG/DR/B&D/S and entries in ‘Erandam Thall’ was made and Ld. AO held that the notings in the long-size note books were suggestive of receipts of amount by the assessee from Christy group presumably for tenders. 10. Shri Pichaikannu appeared for the first time during assessment proceedings and he submitted that he was working as a freelance consultant to various suppliers and the loose sheets and the long size register seized were maintained by him. He denied having acted as personal assistant for the assessee and he also stated that his meetings with the assessee were on account of his role as on office bearer of the state association of employees of TNCSC where he was employed as general manager prior to his retirement. This material was stated to be kept at his residence at Santhome. The same corroborated the statement made by Shri R. Vignesh during cross-examination on 22.09.2021 that the material was taken from the residence of Shri Pichaikannu at Santhome and not from the official residence of the assessee who was then a Minister in the state government. 11. It could thus be seen that the retraction of Shri Vignesh is backed by independent statement of Shri Pichaikannu which could not be controverted by Ld. AO. Shri Vignesh has also explained the circumstances under which the statement was given during search and therefore, the prime basis of allegation of Ld. AO stood refuted and the onus was on Ld. AO to establish the link of seized material with the assessee by corroborative evidences and not merely by relying upon the sworn statements. It was the burden of Ld. AO that the said material as

seized from the car was maintained at the official residence of the assessee and the same had nexus with the assessee. However, except for relying the on the statement of Shri Vignesh, there is no material before Ld. AO to link the seized material with the assessee. Pertinently, there is no verification from the assessee in this regard either during search or post-search investigations to corroborate the same. As rightly held by ld. CIT(A), the retraction stood confirmed by another independent statement of Shri Pichaikannu and therefore, rejection of retraction by Ld. AO could not be upheld. The case laws as referred to by Ld. AO, in this regard, are distinguishable on facts since in those cases the retraction was made by the assessee himself which is not the case here. 12. Proceeding further, so far as the contents of the seized material is concerned, it could be seen that Ld. CIT(A), upon perusal of page nos. 140,142,144,146 and 148 of ANN/DSG/DR/LS/S, observed that the same contained list of pending bills of ‘Ministry of Food’ and not ‘Minister of Food’ as stated by Ld. AO. Further, the list includes the details of travel bills of some other persons also in the said ministry apart from the assessee. The page nos.149 and 150 contain the letter of Resident Audit Officer / Secretariat dated 28-08-2017 addressed to the Pay & Accounts officer regarding non-availability of boarding passes in support of TA bills of various ministers along with the Annexure containing the list of eight such ministers. Therefore, the loose sheet bundles contain correspondence with regard to travel bills of not only the assessee but of various other ministers in the Ministry of Food. These factual findings could not be controverted before us. It could, therefore, be concluded

that the information in the said seized material did not pertain exclusively to the assessee but to other ministers also and therefore, it was to be held that the same do not provide necessary strength to arrive at a conclusion that the said material was maintained at the official residence of the assessee. 13. It is another fact that there is no mention of the name of the assessee either directly or on coded form anywhere in the long size notebooks based on the contents of which Ld. AO inferred the receipt of undisclosed income by the assessee from various persons. This fact is undisputed and Ld. AO has not referred to any notings in the seized material containing the name of the assessee. Therefore, in the absence of any corroborative material, the conclusion of Ld. AO could not be held to be sustainable. There is nothing on record to establish the nexus between the assessee and the transactions as found recorded in the seized material. The entries in the long size note books are bland entries which do not contain any essential details to enable drawing of proper conclusion regarding the nature of transactions recorded therein. The notings merely contained date, name of the person and the amount. The names of the persons have been written in short form and their identity could not be ascertained with certainty. There was no mention regarding the nature and the transactions and purpose of making / receiving the payments which were found noted in the seized notebook. The Ld. CIT has also noted that though there was matching of the dates and the amount with the ‘Erandam Thall’, however, the description of the transaction was at variance. Therefore, the inference drawn by Ld. AO

could not be held to be tenable. We concur with these observations of Ld. CIT(A) in the impugned order. 14. We also concur with the findings of Ld. CIT(A) that the persons against whose name the amounts were found recorded in the long size note books were suppliers dealing with TNCSC, was without any basis. The Ld. AO nowhere explained the reasons for treating these persons as suppliers dealing with TNCSC. There was ambiguity in the seized material with regards to full / actual names of the persons against whom the amounts were noted. No evidence was brought on record by Ld. AO regarding the complete name and identity of the persons / concerns whose names were found noted in the long size seized not books. No information had been gathered from TNCSC regarding names of the parties which dealt with it and the nature of transactions they had with TNCSC during the relevant period. Without gathering such an information and evidences, it could not be inferred that the persons named in the seized material were suppliers who dealt with TNCSC. The same was on mere presumptions of Ld. AO. No exercise was attempted by Ld. AO to support the inferences drawn in the assessment order. 15. The Ld. CIT(A), in our considered opinion, rightly held that the whole basis of impugned addition is on the basis of material seized from the premises of third-party. The said material was neither seized from the premises of the assessee nor was the same found to be in the handwriting of the assessee and therefore, the same would not constitute adequate evidence to draw any adverse inference against the assessee, in the absence of any other corroborative evidence. This proposition is in consonance with the ratio laid down by Hon'ble Delhi

High Court in the case of CIT vs. Sant Lal (118 Taxmann.com 432) wherein it was held that when a diary is seized in search of the premises of a third-patty allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from the premises of assessee nor was it in the handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. The other decisions as enumerated by us in para 6.14 also supports the case of the assessee. The Hon’ble Supreme Court in the case of CBI vs. V.C. Shukla (AIR SC 410) held that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon’ble Supreme Court is that independent corroborative evidence would be required in respect of entries in regular books of accounts and the same would apply in the present case also. 16. The Ld. CIT(A) has also noted that the seized material did not contain complete information to facilitate drawing of conclusion of receipt of undisclosed income by the assessee. The information merely contained date, amount and name of the persons in short form. There was no specific mention in the seized material regarding the nature of the said transactions, the purpose of such payments and the precise identity of the payer. In the absence of such essential and critical information, it could not be inferred with a reasonable degree of certainty that the payments were made to the assessee whose name did not even appear either in full or in coded / abbreviated form and that the said

amount represent the income of the assessee. An entry made in a diary or notebook by a third person with scant details cannot be used to fasten tax liability on the person whose name does not appear at all or only an abbreviated name appears in the seized material, in the absence of any corroborative evidence to attribute the entries to such a person. Such seized material is liable to be treated as a dumb document, which would not have any evidentiary value in respect of the entries found therein, unless corroborative evidence is available which can provide necessary reliable basis for deciphering the nature and character of the said entries. 17. Therefore, considering the facts and circumstances of the case, no fault could be found in the adjudication of Ld. CIT(A), on this issue. By confirming the same, we dismiss the corresponding grounds raised by the revenue in all the three years. 18. So far as the legal issue viz. validity of satisfaction recorded by Ld. AO of the assessee is concerned, we find that in the present case, AO of the assessee as well as searched person are one and the same. The copy of the satisfaction note has been placed on record. We concur with the adjudication of Ld. CIT(A) that at the stage of recording satisfaction, only prima-facie opinion is required to initiate the proceedings u/s 153C. It is not a requirement that such a satisfaction should be arrived on conclusive establishment of the fact that the seized material pertains to or the information contained there related to the assessee and the same had bearing on determination of total income of the assessee. This requirement would arise only during assessment proceedings for drawing adverse inference against the assessee. We find that Ld. AO

has inferred that the material seized was being transferred from the residence of the assessee through Shri Vignesh who was working at the residence of the assessee. Further, this material contained recording of transaction with the parties dealt with by TNCSC, which comes under the Ministry held by the assessee. The AO accordingly inferred that the said transaction recorded in the seized material represent the amount received by the assessee. Such a satisfaction could not be said to be without merit. We concur with the adjudication of Ld. CIT(A), in that respect. As rightly held in the impugned order, this satisfaction was arrived at based on notings of amount against the name ‘Christy’ found in some pages of the long sized seized note books and the seized loose sheet bundles and the matching of the same with the corresponding notings found in the ‘Erandam Thall’ seized from the residence of the finance assistant of the Christy group containing details of amount paid to various persons, having regard to the fact that the Christy group of concerns were engaged in supply of items dealt with by the ministry headed by the assessee. Further, this satisfaction was arrived at having regard to the transactions founds recorded in the long-sized note books with various parties dealt with by TNSCS coming under the ministry of the assessee. Therefore, the legal submissions of the assessee have rightly been rejected by Ld. CIT(A). The corresponding grounds raised by the assessee, in its cross-objections stands dismissed. The assessee has also questioned the validity of approval u/s 153D. However, no infirmity could be established before us to prove any defect in the approval granted by appropriate authority. Therefore, this plea of the assessee stand rejected.

Addition of undisclosed receipts pursuant to search on M/s SRS Mining 19. This addition arises in AY 2017-18 only. The same is based on search action in the case of M/s.SRS Mining on 08.12.2016 wherein certain incriminating materials were seized. The said material contained date-wise noting of various amounts paid to various persons including the assessee. In the said material, the assessee was allegedly referred to as ‘Kamaraj’. The Ld. AO deciphered the same by relying upon sworn statement recorded u/s 132(4) from one Shri Srinivasulu (the key person in M/s. SRS Mining who had control of the said seized materials). However, this statement stood retracted subsequently, 20. Upon further appeal, Ld. CIT(A) adjudicated the issue on more or less similar lines. The Ld. CIT(A), upon perusal of relevant entries in the seized material, concurred that the name of the assessee i.e., "R. Kamaraj" did not figure in any of the relevant entries in the seized material. There was no other prefix or suffix to the said name mentioned in the seized material which could assist in ascertaining the precise identity of the person referred to by the said name. The name 'Kamaraj' was a common name in the State of Tamilnadu and there could be no exception to the same among the public servants and Government officials too. Further, there was no mention anywhere in the statement of Sri. K. Srinivasulu u/s 132(4) that the assessee was the recipient of the payments shown in the seized material with the name 'Kamaraj'. The same was true of the statements of the partners of M/s SRS Mining. Therefore, the entries found against a name which is a common name in the state and which is partly similar to the assessee’s name in the

material seized from a third-party could not be used to draw an adverse inference against the assessee without there being anything more on record to conclusively establish that the same pertain to the assessee alone. It was also observed that Ld. AO did not refer to any material or evidence which would establish that the assessee had facilitated the sand mining business of M/s SRS Mining so as to arrive at a reasonable inference that the name 'Kamaraj' in the seized material refers to the assessee only. The seized material as relied upon by the AO did not contain complete information to facilitate drawing of such inference of payment to the assessee. The information merely contained the date, amount and the abbreviated name of the recipients. There was absolutely no mention in the seized material regarding the nature of the said transactions of cash payments, the purpose of such payments and the precise identity of the recipients. There was no mention whether the payment was made to a particular person in his own right or it was paid to him on behalf of another person. In the absence of such essential and critical information, it cannot be inferred with a reasonable degree of certainty that the payments were made to a person whose abbreviated name appear therein and that the said amounts represent the income of the said person. An entry made in a diary or notebook by a third person with scant details could not be used to fasten tax liability on the person whose abbreviated name appears therein, in the absence of any corroborative evidence. Such seized material is liable to be treated as a dumb document which does not have any evidentiary value in respect of the entries found therein, unless there is corroborative evidence which

could provide necessary reliable basis for deciphering the nature and character of the said entries. 21. The Ld. CIT(A) further held that the said material was seized from the third-party during the course of search conducted in the case of the said third-party. The said material was neither seized from the premises of the assessee nor was the same found to be in the handwriting of the assessee. Such a material would not constitute adequate evidence to draw any adverse inference against the appellant in the absence of any other corroborative evidence. This proposition was laid down by Hon'ble Delhi High Court in the case of CIT vs. Sant Lal (118 Taxmann.com 432) wherein it was held that when a diary is seized in search of the premises of a third patty allegedly containing entries of hundi transactions on behalf of various parties including the assessee, no addition could be made based on the said entries since the diary was neither found from the premises of assessee nor was it in handwriting of assessee and revenue failed to produce any other cogent material to link the assessee to the diary. The ratio of the said decision was held to be squarely applicable to the case of the assessee since Ld. AO had not referred to any cogent material to corroborate the entries made in the material seized from a third-party which are purportedly the transactions made by the said third-party with the assessee. Similar analogous ration as laid down in various other decisions which have been enumerated in preceding paras 7.11 of this order. We concur with the same. 22. The Ld. CIT(A) further noted that there was no acknowledgement in the seized material by the assessee of having received impugned payments by way of appending his signature / initial against the said

payments. If a third-party unilaterally makes entries in a diary / notebook showing payments to a person to suit his convenience, the same could not be used against the assessee unless there was corroborative evidence to establish the actual making of payments to the said person. However, there was no such reference of corroborative evidence in the assessment order. 23. So far as the statement of Shri K. Srinivasulu u/s 132(4) was concerned, the same would not serve as corroborative evidence in respect of entries in the seized material. That person gave a general statement that the entries represent incidental expenses paid to various persons. When there were numerous pages and entries in the seized material, such a general statement would not inspire confidence for drawing any conclusion in respect of specific entries appearing therein allegedly with the abbreviated name of the assessee to conclude that the entries represent payment made to the assessee only. There was nothing in the statement even to remotely suggest that the entries appearing with the abbreviated name actually represent payment made to the assessee. The statement merely stated that the entries were maintained on the instructions of the partners of M/s SRS mining. It was very clear that Shri K. Srinivasulu had no first-hand knowledge of the payments noted in the seized material and had merely noted whatever was told to him by the partners. In such a situation, the statement would serve a very limited purpose of ascertaining the identity of the person who made the entries and nothing more. Since the entries were made on the instructions of the partners, it is the partners who were required to explain the exact identity of the recipients, the nature of payments, the

purpose of payments and the identity of the person who made the payments etc. However, there was no material on record which would show that any of the partners was examined with regard to relevant entries in the seized material. There was no reference to any such statement of the partners in the assessment order. Therefore, it has rightly been held by Ld. CIT(A) that the statement of Shri K. Srinivasulu could barely be considered as corroborative evidence against the assessee with regard to the entries in the seized material. 24. It could also be noted that the said statement was retracted vide letters dated 21-03-2017 and 23-03-2017 addressed to DDIT (Inv.) which was submitted by Shri K. Srinivasulu through the Jail Superintendent when he was lodged in the Jail. In the retraction letters, it was claimed that the earlier statement was given under coercion and duress and in a state of mental shock, depression and physical exhaustion at the relevant point of time due to continuance of search action continuously for more than 3 days without a break and he not being allowed to sleep or to take rest. He further stated that he was not allowed to read the typed statement and his signature was obtained by force. He stated that he never paid any money to various persons as recorded in the typed assessment. He also stated that he signed the statement to end the prolonged ordeal of intimidation, harassment and mental torture. As rightly held by Ld. CIT(A), the said retraction could not have been rejected by Ld. AO particularly when it was very much available with the AO of M/s SRS Mining from whom AO had received satisfaction note and seized material.

person had analyzed the contents of certain material seized in the case of M/s SRS Mining and recorded his finding therein that the said seized books of accounts and documents pertain to and information contained therein was related to the appellant. The contents of the letter leave no doubt that the same represents the satisfaction note of the AO of the searched person. Therefore, it would not be correct to state that the said letter does not represent satisfaction note of the AO of the searched person merely on account of use of the expression "forwarding of information u/s 153C of the IT Act" in the subject of the letter. Having regard to the contents of the said letter which fulfill the mandatory requirements of a satisfaction note of the AO of the searched person, it was held that the same was required to be construed as the satisfaction note of the AO of the searched person and consequently, there was no legal infirmity in initiation of proceedings u/s 153C on account of the said issue. It was further held by Ld. CIT(A) that the satisfaction required to be drawn by the AO for the purpose of assuming jurisdiction u/s. 153C was in the nature of prima-facie satisfaction only and there was no requirement for such satisfaction to be based on conclusive establishment of the fact that the seized material pertains to or contains information relating to the appellant and that it has a bearing on the determination of total income of the appellant. Conclusive establishment of the said facts is sine-qua-non for making assessment of income based on the seized material and only a prima-facie satisfaction is required at the stage of recording the satisfaction note for assumption of jurisdiction u/s 153C. As long as the inferences drawn by the AO in the satisfaction note regarding the fulfillment of the conditions laid down in section 153C

flows from the contents of the seized material on a prima-facie basis, it could not be considered that the same was founded on mere presumption or surmise or conjecture. In the present case, the inferences drawn by Ld. AO in the satisfaction note prima-facie arise from the contents of the seized material and the statement of Shri. K. Srinivasulu with regard to the same. In the satisfaction note, the AO stated on perusal of the material seized in the case of M/s SRS Mining vide ANN/KGAR/MPKSSR/B&D/S-1 to 3 and ANN/MPK/NS/B&D/S-19 and 20 that the said materials contained date wise notings of various amounts paid to public servants and government officials. The AO observed that Shri. Srinivasulu, who was found to be in control of the said seized material, has confirmed in his statement that the payments were made to public servants and government officials in order to facilitate the sand mining business of M/s SRS Mining. Further, on perusal of the seized material, the AO observed in the satisfaction note that the seized material contain narration of date wise details of payments made to Shri R. Kamaraj (the appellant), which aggregated to Rs.8 Lacs for AY 2015-16, Rs. 56 Lacs for AY 2016-17 and Rs. 75 Lacs for AY 2017-18. Based on the said observations, Ld. AO arrived at the satisfaction that the transactions recorded in the seized material represent the amounts received by the appellant and that the seized material had a bearing on the determination of total income of the appellant for AYs 2015-16 to 2017-18. The Ld. AO has brought out proper reasons for arriving at a prima-facie satisfaction with regard to fulfillment of all the mandatory conditions specified in Section 153C for assuming jurisdiction under the said section. This satisfaction has been

arrived at based on the analysis that the seized material which contains the date-wise notings of various amounts paid to public servants and government officials and supported by the statement of Shri K. Srinivasulu and the appearance of some payments with the name "Kamaraj". Thus, there was prima-facie satisfaction and accordingly, the legal argument urged by the assessee was held to be not tenable. We are of the opinion that legal grounds have perfectly been addressed by Ld. CIT(A) and we found ourselves in full agreement with the same. Therefore, we reject this legal ground as urged by the assessee. Conclusion 29. Finally, the appeals of the revenue as well as cross-objections filed by the assessee stand dismissed in terms of our above order. Order pronounced on 10th April, 2024 Sd/- Sd/- (V. DURGA RAO) (MANOJ KUMAR AGGARWAL) �ाियक सद!/JUDICIAL MEMBER लेखासद! / ACCOUNTANT MEMBER

चे5ई Chennai; िदनांक Dated : 10-04-2024 DS आदेशकी\ितिलिपअ%ेिषत/Copy of the Order forwarded to : 1.Assessee 2. Revenue 3. आयकरआयु@/CIT 4. िवभागीय!ितिनिध/DR 5. गाडEफाईल/GF