DCIT,CENTRAL CIRCLE-2.4, CHENNAI vs. SHRI VIVEK PAPISETTY, CHENNAI

आयकर अपीलीय अिधकरण “बी” �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHENNAI माननीय �ी वी. दुगा� राव, �ाियक सद! एवं माननीय �ी मनोज कुमार अ&वाल ,लेखा सद! के सम)। BEFORE HON’BLE SHRI V. DURGA RAO, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM 1. आयकरअपील सं./ ITA No.212/Chny/2023 (िनधा�रण वष� / Assessment Year: 2017-18) DCIT Shri Vivek Papisetty बनाम Central Circle-2(4) No.17/184, Y Block, First Street, 6th Main Road, Anna Nagar, Chennai. / Vs. Chennai-600 040. �थायीलेखासं./जीआइआरसं./PAN/GIR No. BRCPP-6180-N (अपीलाथ�/Appellant) : (!"थ� / Respondent) & 2. Cross Objection No.9/Chny/2023 (In ITA No.212/Chny/2023) (िनधा�रण वष� / Assessment Year: 2017-18) बनाम/ Shri Vivek Papisetty DCIT No.17/184, Y Block, First Street, Vs. Central Circle-1(4) 6th Main Road, Anna Nagar, Chennai. Chennai-600 040. �थायीलेखासं./जीआइआरसं./PAN/GIR No. BRCPP-6180-N (अपीलाथ�/Cross Objector) : (!"थ� / Respondent) अपीलाथ�कीओरसे/ Revenue by : Shri V. Nandakumar (CIT)- Ld. DR !"थ�कीओरसे/ Assessee by : Shri Y. Sridhar (FCA)-Ld. AR सुनवाईकीतारीख/Date of Hearing : 10-01-2024 घोषणाकीतारीख /Date of Pronouncement : 02-04-2024 आदेश / O R D E R Per Bench 1.1 Aforesaid appeal by revenue for Assessment Year (AY) 2017-18 arises out of an order passed by learned Commissioner of Income Tax

(Appeals)-19, Chennai [CIT(A)] on 19-12-2022 in the matter of an assessment framed by Ld. AO u/s 143(3) r.w.s. 153C of the Act on 03- 02-2020. 1.2 The Registry has noted delay of 3 days in assessee’s cross- objection, the condonation of which has been sought by Ld. AR. Though Ld. CIT-DR has opposed condonation of delay, however, considering the period of delay, we condone the delay and admit the cross-objection for adjudication on merits. 1.3 The grounds taken by the revenue 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.6,00,00,000/- for AY 2016-17 made towards payment received from M/s.S.R.S.Mining and associates based on the incriminating materials seized from the premises of SRS Mining and sworn statements recorded from Shri. K. Srinivasulu and the assessee. 2.1. The Ld.CIT(A) erred in observing that that there is no mention anywhere in the seized materials that the assessee was recipient of unaccounted incidental charges from M/s.S.R.S.Mining. 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 expenses to various persons. In response to Q.No.5 put up to him with reference to entries in Page No.340 of ANN/KGAR/MPKSSR,'B&D/S-4 (Black colour Calendar Diary), in which payments mentioned under "Temple Son" he has stated that these refer to payments made to Mr. Vivek, S/o.Shri Ram Mohan Rao residing near Ayyappan Temple. 2.2. The Ld.CIT erred in observing that there was no acknowledgement in the seized material by the assessee of receiving the said payments by way of appending his signature/initial against the said payments. As far as question of not writing the name in full but in abbreviated form and not recording acknowledgement for the payments made, the Ld.CIT(A) ought to have appreciated that maintaining clear, unambiguous and formal records of transaction of such nature would not be done for obvious reasons. 2.3. The Ld.CIT(A) erred in holding that such seized material is liable to be treated as dumb document which does not have any evidentiary value in respect of entries found therein without any corroborative evidence, without appreciating that the entries found in the seized materials were in the form maintained systematically on daily basis mentioning the amount and the author of seized material Shri Srinivasulu admitted the nature of payments and reference of code names. 2.4. The Ld.CIT(A) failed to appreciate that the assessing officer has correctly arrived presumption u/s.132(4A) and 292C of the Act in respect of the materials seized during the course of search, which was further strengthened by sworn statement recorded from Shri Srinivasulu and the same has also been admitted by the assessee in his sworn statement dated 21/12/2016.

2.5. The Ld.CIT(A) erred in observing that there was no corroborative evidence in respect of such seized materials with regard to the receipt of incidental charges by the assessee from M/s.SRS Mining. The primary evidence found during the course of search were notebooks maintained by Shri. K. Srinivasulu during the ordinary course of business carried on by the firm, M/s.SRS mining and the statements recorded from Shri. K. Srinivasulu in which he explained the nature of entries and from the assessee in which he accepted the receipt of incidental charges are corroborative evidences. 2.6. The Ld.CIT(A) failed to appreciate that the assessee at the first instance in his sworn statement dated 21/12/2016 recorded u/s.132(4) admitted that he had received facilitation charges of 10 Crores during FYs 2015-16 and 2016-17, which is matching with the statement given by Shri. K. Srinivasulu that "Temple son" mentioned in the seized material refers to the assessee. 2.7. The Ld.CIT(A) has sought to cast doubts on the veracity of entries made in the note book seized from the possession of Shri Srinivasulu. The Ld.CIT(A) failed to appreciate that several of the 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. 2.8. The Ld.CIT(A) has stated that Shri.K.Srinivaulu has no firsthand 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. 2.9. The Ld.CIT(A) failed to appreciate that the addition has been made on the basis of sworn statement recorded u/s.132(4) on 10.12.2016 which has evidentiary value. Shri. Srinivasulu retracted his sworn statement after a gap of 106 days, which is only an afterthought. It is held in various decisions that once the statements have been recorded on oath, duly signed, it has a great evidentiary value and it is normally presumed that whatever stated at the time of recording the statements under section 132(4) are true and correct and brings out the correct picture, as by that time the assessee is influenced by external agencies. Hence, the retraction of statement by Shri. Shrinivasulu, after a gap of 106 days was not relied upon by the assessing officer. 2.10. The Ld CIT(A) erred in observing that the evidentiary value of statement recorded from the assessee and Shri. Srinivasulu has been eroded on their retraction, without appreciating that the retraction of statements by both Shri. Shrinivasulu and Vivek Papisetty holds no value as they have done so by citing absurd and unfounded reasons like they were subjected to harassment and mental pressure by IT Authorities. They have not brought any evidence to show that they were harassed during search operation through any means. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of appeal proceedings, the order of Learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored.

1.4 The grounds of assessee’s cross-objection read as under: 1.The order of the learned Commissioner of lncome-tax(Appeals)-19, Chennai dated: 19.12.2022 in so far as it is prejudicial to the interest of the Respondent is opposed to law, facts and circumstances of the case.

2.The learned CIT(Appeals) erred in holding that the conclusion of assessment by the learned Deputy Commissioner of Income tax, Central Circle 2(4) (Appellant Assessing Officer for short) pursuant to notice u/s 153C is valid, although the Assessing Officer had initiated the regular assessment proceedings u/s 143(3) by issue of notice u/s 143(2) on 13.6.2018 and the same was kept open. 3.The learned CIT(Appeals) ought to have noticed that the search was conducted in the residential premises of the Respondent-Assessee on 22.12.2016 which falls within the previous year relevant for the assessment year 2017-18 and, therefore, only a regular assessment u/s 143(3) ought to be completed. 4.The learned CIT(Appeals) erred in not appreciating that the Appellant-Assessing Officer was carrying on two parallel proceedings - one under section 143(3) and the other under section 153C, which is impermissible in law. 5.The learned CIT(Appeals) erred in holding that 143(3) proceedings abated on the date of recording of satisfaction by the Assessing Officer. 6.The learned CIT(Appeals) misinterpreted the first proviso to section 153C, without appreciating that only the assessment or reassessment proceedings pending as on the date of initiation of search shall abate, as the proceedings under section 132 was undeniably initiated in the case of the Respondent assessee also on 21.12.2016. 7.The learned CIT(Appeals) failed to appreciate that the Assessing Officer -Appellant has ultimately completed the assessment u/s "143(3) r.w.s 153C" as is apparent in the column "Section and sub-section under which the assessment is made" in the face sheet of the assessment order, which clearly indicates that the assessment initiated u/s 143(3) did not abate even according to the Appellant-Assessing Officer. 8.The learned CIT(Appeals) failed to notice that the Appellant-Assessing Officer himself has mentioned in the assessment order at para 4 as under: "As evidenced from the Warrant of Authorisation issued in this case, it falls under the provisions of section 153A of the Income tax Act, 1961. A. Y. 2017-18 happens to be the year of search, this case comes under the purview of compulsory scrutiny.” 9.The learned CIT(Appeals) ought to have quashed the order of assessment as illegal as the completion of assessment under irrelevant section is bad in law. 10.The learned CIT(Appeals) erred in holding that the service of notice u/s 143(2) is not mandatory, after the filing of return of income by the Respondent-assessee in respect of assessment proceedings u/s 153C. 11.The learned CIT(Appeals) ought to have quashed the order of assessment as the Appellant-Assessing Officer failed to serve the notice u/s 143(2) after filing of a letter by the Respondent assessee on 13.12.2018. 1.5 As is evident, the sole issue that arises for our consideration is additions made by revenue based on search findings. The assessee is challenging the jurisdiction of Ld. AO on various legal grounds. 1.6 Aforesaid matters were heard along with revenue’s appeal as well as assessee’s cross-objection for AY 2016-17. It was admitted position that the facts as well as issues in this year are pari-materia to the issues

in AY 2016-17 and our adjudication therein would have an equal application in AY 2017-18. In the above background, we proceed with disposal of these appeals. Assessment Proceedings 2.1 The present assessment was so framed pursuant to search and seizure action by the department u/s 132 in the case of M/s SRS mining, Shri K. Srinivasulu, Shri M. Prem Kumar & ors. at various places on 08- 12-2016. During search proceedings in the case of M/s SRS mining, certain incriminating material was seized which was marked as ANN/KGAR/MPKSSR/LS/B&D/S-1 to S-4, ANN/MPK/NS/B&D/S-19&20, ANN/KGA/SRS/B&D/S-1, ANN/MPK/NS/B&D/S-3 and ANN/KGAR/MPKSSR/LS/S-1 from the premises of M/s SRS mining. The said material, inter-alia, allegedly contained incidental charges paid to assessee’s father Shri P. Mohan Rao in the capacity of then Chief Secretary of Tamil Nadu and certain payment to the assessee as well. In the seized note books, Shri P. Mohan Rao was vaguely described as “Temple” and “S-2” and his son was described as “Temple Son”. These codes were deciphered by Ld. AO by relying on the statement made by one Shri K. Srinivasulu u/s 132(4) in whose possession those incriminating books and documents were found. Shri K. Srinivasulu is stated to be a trusted aide of Shri J. Sekar Reddy (Managing partner of SRS mining). Shri K. Srinivasulu maintained diaries / note-books on the instructions of partners of M/s SRS mining. During the course of search, his statement was recorded u/s 132(4). In the statement, he stated that code “Temple” was used to refer to Shri P. Mohan Rao as his residence was near the temple of Lord Ayyappan at Anna Nagar, Chennai. He also

mentioned that sometimes the code “S2” was used to refer to him since he functioned as Secretary-2 at the office of Chief Minister. The relevant part of the statement has been extracted on Page No. 1 & 2 of the assessment order. On the basis of the same, Ld. AO held an opinion that the assessee and his father were the beneficiaries of cash payment made by M/s SRS mining. 2.2 Subsequently, the case was centralized vide order dated 17-07- 2017. Since warrant was issued in the name of the assessee and the assessee was separately searched on 21-12-2016, a notice u/s 153A was issued to the assessee. The assessee filed return of income on 12- 02-2018 declaring income of Rs.72.03 Lacs. Since the material seized during search operation on a third-party i.e., M/s SRS Mining was to be used against the assessee and the same had bearing on determination of total income of the assessee, the provisions of Sec.153C were invoked. Accordingly, another notice u/s 153C was issued to the assessee. During the course of assessment proceedings, notices u/s 143(2) and 142(1) were issued to the assessee calling for certain details. 2.3 The assessee, vide letter dated 01-04-2019, objected to issuance of notice u/s 153C since the proceeding u/s 153A were already open in his case. However, Ld. AO rejected the same on the ground that assessing officer of M/s SRS mining and the assessee happen to be the same person. The time limit for completing the search assessment was also same and there was no bar in invoking the provisions of Sec.153C while the proceedings u/s 153A was already open and therefore, issuance of notice u/s 153C was a valid one. Once notice u/s 153C was issued, already existing scrutiny assessment proceedings get abated

and there is no question of any two parallel proceedings as claimed by the assessee. Therefore, assessee’s objection was overruled. 2.4 Proceeding further, considering the seized material vide Page No.340 of Annexure ANN/KGAR/MPKSSR/B&D/S-4 as seized from business premises of M/s SRS mining at T. Nagar, Ld. AO alleged that the assessee received sum of Rs.600 Lacs during AY 2017-18 as unaccounted incidental expenses / facilitation charges from M/s SRS Mining. The same was on the basis of statement of Shri K. Srinivasulu in whose custody those books were seized and Shri K. Shrinivasulu was questioned about the notings in the seized note book. The relevant part of statement has been extracted on page no.5 of the assessment order. When these evidences were confronted, the assessee also admitted to have received such payment in sworn statement recorded on 21-12- 2016. The assessee offered to disclose unaccounted income of Rs.1729.45 Lacs for FYs 2013-14 to 2016-17 as tabulated on Page No.7 of the assessment order. 2.5 However, the assessee did not declare the said unaccounted income in the return of income. The assessee drew attention to his retraction as made on 23-12-2016. The same was not accepted by Ld. AO considering the provisions of Sec. 132(4A) and 292C of the Act. The Ld. AO held that the statement was a valid one whereas the retraction was without any valid reason. The statement was corroborated with seized material along with sworn statement of Shri K. Srinivasulu. The retraction made by Shri K. Srinivasulu was also not accepted by Ld. AO. 2.6 The assessee claimed that no other evidence was seized from his residence in support of the receipt of facilitation charges from M/s SRS

Mining. To counter the same, Ld. AO relied on the statement recorded from his father Shri P. Rama Mohan Rao u/s 132(4). Based on the contents of an electronic device, (a Samsung mobile) seized vide Annexure ANN/MS/PRMR/ED/S from this residence, his father was questioned about a deleted whatsapp message during the course of the search in his house on 21-12-2016. As per his statement, “S4” in the message would mean Secretary-4 to CM. Drawing analogy from the same, Ld. AO concluded that the assessee was in receipt of facilitation charges in cash from M/s SRS mining and accordingly, the amount of Rs.600 Lacs was added to the income of the assessee u/s 68 of the Act as unaccounted cash credit. 2.7 In the concluding part of the assessment order, Ld. AO noted that the assessee’s application before Income Tax Settlement Commission was rejected. Finally, the assessment was concluded without making any other addition. Aggrieved, the assessee assailed the action of Ld. AO before first appellate authority on legal grounds as well as on merits. Appellate Proceedings 3.1 The first legal ground of the assessee was that continuation of parallel proceedings would make the assessment bad-in-law. However, Ld. CIT(A) held that Ld. AO had initially issued notice u/s 153A but subsequently initiated proceedings u/s 153C since the material seized from a third party had bearing on determination of total income of the assessee. As per second proviso to Sec.153A, the assessment or reassessment proceedings pending on the date of search shall abate. The first proviso to Sec.153C provides that the second proviso to Sec.153A would apply with the modification that the reference to the

‘date of initiation of search’ therein shall be treated as ‘date of receiving the seized material by the AO of the person other than the searched person’. In the present case AO of searched person and AO of assessee being the same, there was no occasion for handing over of seized material to the AO of other person. In such case, date of recording of satisfaction by AO of other person is required to be considered as the date of receiving the seized material by the AO of the other person for the purpose of first proviso to Sec.153C. In the said view of the matter, the assessment or reassessment pending as on the date of recording of satisfaction by the AO of the other person shall abate as per first proviso to Sec.153C read with second proviso to Sec.153A. The satisfaction note was recorded by jurisdictional AO on 03-12-2018 on which date the proceedings initiated by issue of notice u/s 153A dated 13-06-2018 was pending. Therefore, the said proceedings got abated on the recording of satisfaction and upon issue of notice u/s 153C. Therefore, there was no parallel proceeding as contended by the assessee. Finally, this legal ground was rejected. 3.2 The second legal ground was that the assessment should have been completed u/s 143(3) and not u/s 153C. However, Ld. CIT(A) held that prior to amendment to Sec.153C(1) by the Finance Act, 2017 w.e.f. 01-04-2017, there was no specific mention therein regarding the manner of ascertaining the period of six assessment years which were required to be assessed / reassessed under the provisions of Sec.153C. The amendment made it explicit that the period of six assessment years for the purpose of Sec.153C shall be reckoned with reference to the assessment year relevant to the previous year in which the search was

conducted and that the same will be six assessment years immediately preceding such assessment years. The said amended provisions were applicable for searches conducted on or after 01-04-2017. Since the search on M/s SRS Mining was conducted prior to that date, the said amended provisions would not apply but the pre-amended law would be applicable. This issue was decided by Hon'ble Delhi High Court in the case of CIT Vs.RRJ Securities Ltd [2015] 62 Taxmann.com 391 (Delhi) wherein it was held by Hon'ble Court that in terms of first proviso to Sec. 153C, a reference to the date of the search under the second proviso to section 153A has to be construed as the date of handing over of assets / documents belonging to the assessee (being the person other than the one searched) to the Assessing Officer having jurisdiction to assess the said assessee and where the AO of the searched person and the person other than the searched person is the same, the date of search under the second proviso section 153A has to be construed as the date of recording the satisfaction by the AO of the other person. The Hon'ble High Court held that it would follow from the same that the six assessment years for which assessments/reassessments could be made under section 153C would also have to be construed with reference to the date of handing over of assets / documents to the Assessing Officer of the assessee or the date of recording of satisfaction by the AO as the case may be. In a subsequent decision in the case of PCIT Vs. Sarwar Agency (P) Lid [2017] 85 Taxmann.com 269 (Delhi), the Hon'ble Delhi High Court observed that its decision in the case of RRJ Securities Ltd (supra) has not been challenged by the revenue in the Hon'ble Supreme Court and held that the amendment made to Section 153C(1) of the Act

by the Finance Act, 2017 has stated for the first time that the period of re-assessment would be six assessment years preceding the year of search for both the searched person and the other person. The Hon'ble High Court also held that the said amendment would be prospective. There are no contrary decisions of other High Courts on this issue. In the case of present assessee, the AO of the searched person and the AO of the assessee were one and the same. Therefore, the date of initiation of search as referred to in the second proviso to section 153A(1) is required to be construed as the date of recording of satisfaction by the AO of the other person, by following the above mentioned decisions of the Hon'ble Delhi High Court. It was noticed from the records that the satisfaction note was recorded by the AO of the assessee on 03-12-2018. Hence, the six assessment years have to be reckoned as the assessment years immediately preceding the AY 2019-20 relevant to the previous year in which the satisfaction has been recorded by the AO. The six assessment years which are required to be assessed u/s 153C would therefore be AYs 2013-14 to 2018-19. Therefore, the assessment framed u/s 153C for AY 2017-18 was in order. 3.3 The assessee also raised the legal issue of non-recording of satisfaction u/s 153C. However, upon perusal of assessment records, Ld. CIT(A) held that due satisfaction was recorded in the order sheet on 04-12-2018. The contents of the same were duly communicated to the assessee along with notice issued u/s 153C on 04-12-2018. The Ld. AO had duly recorded the satisfaction that the material seized from M/s SRS Mining revealed certain payment to the assessee which was admitted by the assessee in sworn statement u/s 132(4). These documents related to

the assessee and the same had bearing on determination of total income of the assessee. The case of the assessee would fall u/s 153C. Therefore, the ground urged by the assessee, in this regard, was not tenable. The mandatory condition to assume jurisdiction u/s 153C was duly fulfilled. Pertinently, the AO of the searched person and the assessee happened to the same. As held by Hon’ble Supreme Court in the case of Super Malls Private Ltd. (423 ITR 281), in such case, there could be one satisfaction note prepared by AO qua the searched person and qua the other person. The satisfaction note recorded by AO of the assessee on 04-12-2018 represents such satisfaction note qua the searched person as well as the other person. The AO had recorded his satisfaction that the relevant material seized in the case of M/s SRS mining and others pertained to and the information contained therein related to the assessee. The said satisfaction represents the satisfaction of AO qua the searched person. Therefore, the ground was held to be untenable. 3.4 The assessee also raised the issue that no notice u/s 143(2) was served on the assessee in relation to assessment proceedings u/s 153C. The Ld. CIT(A) noted that Ld. AO issued notice u/s 153C on 04-12-2018. In response, the assessee furnished a letter dated 10-12-2018 to the AO on 13-12-2018 requesting that the return of income originally filed on 12- 02-2018 may be treated as return of income filed in response to notice issued u/s 153C. The assessee contended that no notice u/s 143(2) was issued after 13-12-2018 and the earlier notice issued on 13-06-2018 was not relevant for assessment proceedings subsequently initiated u/s 153C. The Ld. CIT(A) noted that initially a notice u/s 143(2) was issued

to the assessee on 13-06-2018 against return of income filed u/s 139 on 12-02-2018. The proceedings u/s 153C were initiated on 04-12-2018 which was responded to by the assessee vide its letter dated 13-12- 2018. However, in proceedings u/s 153C, no such notice is mandatory as per the decision of Hon’ble High Court of Madras in the case B. Kubendran vs. DCIT (WP Nos.3023 & ors. of 2020 dated 09.04.2021) wherein it was held that there was no requirement for issue of notice u/s 143(2) for completion of assessment u/s 153A. This decision relied on the decision of Hon’ble Delhi High Court in the case of Ashok Chaddha vs. ITO (337 ITR 399) and various other decisions. Therefore, this legal ground was also rejected. 3.5 The assessee also raised the issue of violation of principle of natural justice. However, Ld. CIT(A) noted that the assessee was afforded adequate opportunities to furnish written submissions / explanation along with necessary supporting evidences during the course of the assessment proceedings and the assessee made use of the said opportunities. Therefore, there was no violation as alleged by the assessee. 3.6 The findings of Ld. CIT(A), on merits favoring assessee, are contained in paras 52 to 71 of the impugned order. It was held by Ld. CIT(A) that the material seized in case of a third-party which is not in the handwriting of the assessee would not constitute adequate evidence to draw adverse inference against the assessee particularly in the absence of any other corroborative evidence. Further, the presumption raised u/s 132(4A) and 292C could not be invoked against the assessee since the material was not found from the control and possession of the assessee.

The information as contained in the seized material was bereft of critical and essential details. There was no acknowledgment by the assessee in seized material. Also, the statement of Shri K. Srinivasulu could not serve as corroborative evidence in respect of entries in the seized material. The said statement would serve a very limited purpose of ascertaining the identity of the person who made the entries and nothing more. The statement was a retracted statement. Further, Shri K. Srinivasulu, upon cross-examination, denied having paid any money to the assessee. So far as the assessee’s own admission was concerned, that statement was retracted within two days and due credence was to be given to the retraction. Lastly, no incriminating material or evidence of unaccounted investment was found during the course of search on assessee. Finally, the impugned addition was deleted. 3.7 The Ld. CIT(A) also concurred with assessee’s legal submission on invocation of Sec.68. It was held that the provisions of Sec.68 were not applicable since there was no finding by Ld. AO that the assessee had maintained books of accounts and had credited the impugned amount in the books of accounts. 3.8 Aggrieved as aforesaid, the revenue is in further appeal before us whereas the assessee has filed cross-objections. Our findings and Adjudication 4. As stated earlier, similar issue has been adjudicated by us in ITA No. 211/Chny/2023 & Co No.8/Chny/2023 for AY 2016-17 as under: - Our findings and Adjudication 6. From the detailed facts and discussions as enumerated by us in the preceding paragraphs, it emerges that the impugned additions have been made by Ld. AO in the hands of the assessee pursuant to the search and seizure action by the department u/s 132 in group cases of M/s SRS mining and its partners on 08-12-2016. During the course of search action, certain incriminating material was found from the premises of M/s SRS

Mining which was used against the assessee to make the impugned addition. The seized material, inter-alia, allegedly contained details of incidental charges paid by that group to the assessee. In the seized note books, the assessee was vaguely described as “Temple Son”. This code was deciphered by Ld. AO by relying on the statement made by one Shri K. Srinivasulu u/s 132(4) in whose possession those incriminating books and documents were found. Shri K. Srinivasulu is stated to be a trusted aide of Shri J. Sekar Reddy (Managing partner of SRS mining). Shri K. Srinivasulu maintained diaries / note-books on the instructions of partners of M/s SRS mining. During the course of search, his statement was recorded u/s 132(4). On the basis of the same, Ld. AO held an opinion that the assessee was the beneficiary of cash payment made by M/s SRS mining. 7. The assessee was also subjected to separate search u/s on 21-12-2016. However, no addition has been made on that basis since no incriminating material was found from the assessee for this year. However, a statement was recorded from the assessee wherein he confirmed having received sum of Rs.10 Crores from M/s SRS Mining towards facilitation charges. This statement, however, was retracted within two days and the assessee denied having received any such payment. The Ld. AO held that the retraction was not valid and the same was not acceptable. 8. Initially, a notice u/s 153A was issued to the assessee on 21-08-2017. However, since the material found in the course of a search operation on M/s SRS Mining was to be used against the assessee and the same had bearing on determination of total income of the assessee, provisions of Sec.153C were invoked and another notice u/s 153C was issued on 04-12-2018. In response, the assessee offered same return of income as offered earlier on 29-09-2018. Rejecting assessee’s explanations and relying on the seized material coupled with sworn statement of Shri K. Srinivasulu, Ld. AO made impugned addition u/s 68 of the Act. 9. It is a fact on record that the statement made by Shri K. Srinivasulu was retracted by vide letters dated 21-03-2017 and 23-03-2017 addressed to the DDIT(inv.) which were submitted by him through the Jail Superintendent when he was lodged in the jail. It was claimed by him that the earlier statement was given by him under coercion and duress and that he was under a state of mental shock, depression and physical exhaustion at the relevant point of time due to the continuance of search action continuously for more than 3 days without a break and he not being allowed to sleep or take rest. Thus the witness turned hostile and non-cooperative. As the statement of third person was being used against the assessee, the assessee sought his cross-examination vide letter dated 01-04- 2019. At the same time, the assessee preferred Writ Petition before Hon’ble High Court of Madras praying for issue of directions to the AO to permit him to cross-examine the witness being relied upon by Ld. AO. While dismissing the Writ Petition, the Hon’ble Court directed Ld. AO to afford cross-examination prior to finalization of the assessment proceedings. Pursuant to the same, Ld. AO afforded opportunity of cross-examination of Shri K. Srinivasulu on 20-09-2019 by issuing summon u/s 131. A statement u/s 131 was recorded from Shri K. Srinivasulu on 20-09-2019 and the authorized representative of the assessee was allowed to cross-examine the said witness. In the cross-examination, Shri K. Srinivasulu answered in the negative to the questions posed by the counsel of the assessee whether he knew the assessee and whether he met the assessee at any time. Shri K. Srinivasulu also denied having paid any money to the assessee. On being questioned as to why he stated in the course of his statement on 10-12-2016 that some monies were paid to “Temple Son”, he stated that this statement was already retracted vide letters dated 21-03-2017 and 23-03-2017 which were sent through the Jail Authorities wherein the circumstances for the retractions had been explained. Under such

circumstances, no credence could be placed on such statement as rightly held by Ld.CIT(A). This statement had lost its evidentiary value and that statement could not be considered as reliable and unimpeachable evidence unless it was supported by any other corroborative evidences. We concur with such findings of Ld. CIT(A). 10. So far as the assessee’s own statement is concerned, we find that this statement was recorded u/s 132(4) on 21-12-2016 during the course of search at his residence. However, this statement stood retracted by him within two days on 23-12-2016. The circumstances under which the statement was given by him has also been enumerated in detail in preceding para 5.14. The Ld. CIT(A) held that the mental stress and anxiety suffered by the assessee on account of hospitalization of his wife was required to be taken in to cognizance in evaluating the genuineness of the retraction made by him. In our considered opinion, Ld. CIT(A) has correctly accepted the retraction considering the fact that no evidence was brought on record by Ld. AO during the course of his assessment proceedings with regard to the purchase of properties at Ennore by him by way of utilization of his unaccounted receipts from M/s SRS mining as stated by him in the statement u/s 132(4) dated 21-12-2016, in order to discredit the subsequent retraction of the said statement. Therefore, such a statement would not constitute corroborative evidence to conclude that the assessee was in receipt of alleged unaccounted incidental charges. We confirm the findings given by ld. CIT(A) as enumerated in para 5.14 of this order. 11. Proceeding further, we also concur with the findings of Ld. CIT(A) that the name of the assessee did not appear in any of the entries as considered by Ld. AO to be pertaining to the assessee. All the entries contained only code name like “Temple Son” The only material to decode the same was the sworn statement of Shri K. Srinivasulu wherein he stated that such code would refer to the assessee. However, the statement of Shri K. Srinivasulu, as held earlier was a retracted statements and therefore, no credence could be placed on the same. The fact of retraction stood reinforced during his cross-examination by assessee’s counsel on 29-09-2019. 12. We find that the addition has been made merely on the basis of certain vague entries as found in the material seized from a third-party premises. 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. Therefore, such material, unless backed by corroborative evidence, would not constitute adequate evidence to draw any adverse inference against the assessee as held by Hon'ble Delhi High Court in the case of CIT Vs Sant Lal [2020] 118 Taxmann.com 432 (Del). The Hon’ble Court, in similar situation, held no addition could be made merely on the basis of such entries. The ratio of the said decision was squarely applicable to the case of the assessee as the Ld. AO has 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. The other decisions including the decision of Jabalpur Bench of Tribunal in the case of ACIT vs Satyapal Wassan [TS-5104-ITAT-2007 (Jabalpur)-O] further supports this proposition. We concur with these findings of Ld. CIT(A). We also concur with the findings of Ld. CIT(A) that the seized material did not contain complete information to facilitate drawing of such an adverse inference against the assessee. The information merely contained the date, amount and the code name and nothing more. In such a situation, it could not be inferred with a reasonable degree of certainty that the payments were made to a person whose name (or code name) appears therein and that the said amounts represent the income of the said person. As rightly held by Ld. CIT(A), 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

name appears therein, in the absence of corroborative evidence. If a third-party unilaterally makes entries in a diary / note book showing payments to a person to suit his convenience, the payments could not be inferred to have been made to the said person unless there is corroborative evidence to establish the actual making of payments to the said person. We, therefore, endorse the findings of Ld. CIT(A) as contained in preceding paras 5.8 to 5.11 of this order. 13. Another fact borne out of case records is that the assessee was also subjected to search action wherein no incriminating material was found to show that the assessee had received any unaccounted cash either from the said parties or from any other source. Further, no incriminating material was found during the search to show that the assessee had made any unaccounted investments or unaccounted expenditure from undisclosed sources of income. When this crucial fact is taken into consideration in the background of incompleteness of the entries in the seized material to establish any nexus between the payments mentioned therein with the assessee and lack of proper corroborative evidence in respect of such seized materials, the only conclusion that could reasonably be drawn was that there was no adequate and reliable material to infer that the assessee was in receipt of alleged unaccounted cash by way of incidental charges from M/s SRS mining which was sought to be taxed in his hands. We concur with these findings of Ld. CIT(A). 14. The last aspect of the matter is that impugned addition has been made by invoking the provisions of Sec.68. As rightly held by Ld. CIT(A), Sec.68 has no application to any sum which is not found credited in the books of accounts as maintained by the assessee. There is no finding by Ld. AO that the assessee had maintained books of account and had credited the impugned amounts. Therefore, the adjudication in the impugned order, to that extent, also finds our concurrence. 15. Finally, considering the entirety of facts and circumstances of the case, we endorse the adjudication of Ld. CIT(A) that there was no adequate and reliable material to infer that the assessee was in receipt of alleged unaccounted cash by way of incidental charges from M/s SRS mining which was sought to be taxed in his hands. Accordingly, the impugned additions have rightly been held to be unsustainable. The appeal of the revenue stands dismissed. Assessee’s Cross-Objections 16. Ground No.1 is general in nature. In ground Nos.2 to 7, the assessee assails the issue of notice u/s 153C when the proceedings u/s 153A was already initiated. In Ground Nos.8 & 9, the assessee contest issue and service of notice u/s 143(2). We do not find any substance in the same and concur with the adjudication of Ld. CIT(A) which is contained in preceding para 5.1 of the order. All the grounds stand dismissed. The cross-objections stand dismissed.

Facts being pari-materia the same in this year, our aforesaid adjudication would equally apply to this year also. In the result, the appeal of the revenue stand dismissed. The corresponding grounds raised by the assessee in its cross-objection stand dismissed on similar lines. In one of the grounds, the assessee has urged that the assessment should

have been competed in regular assessment u/s 143(3). However, we concur with the findings of Ld. CIT(A), in this regard. The legal issues as adjudicated by Ld. CIT(A) do not require any interference on our part. The cross-objection also stand rejected. Conclusion 5. The appeal as well as cross-objection stand dismissed in terms of our above order.

Order pronounced on 2nd April,2024 Sd/- Sd/- (V. DURGA RAO) (MANOJ KUMAR AGGARWAL) �ाियक सद!/JUDICIAL MEMBER लेखासद! / ACCOUNTANT MEMBER चे8ई Chennai; िदनांक Dated : 02-04-2024 DS आदेशकी_ितिलिपअ&ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. !"थ�/Respondent 3. आयकरआयुA/CIT 4. िवभागीय!ितिनिध/DR 5. गाडFफाईल/GF