ACIT, CENTRAL CIRCLE-2, MADURAI, MADURAI vs. VIBGYOR NET CONNECTIONS, KARNATAKA

आदेश / O R D E R

PER MANJUNATHA.G, AM:

This appeal filed by the Revenue and Cross-Objection filed by the

assessee are directed against the order passed by the Commissioner of

Income Tax (Appeals)-19, Chennai, dated 31.03.2023, and pertains to

assessment year 2016-17. Since, facts are identical and issues are

common, for the sake of convenience, the appeal filed by the Revenue

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 2 ::

and Cross-Objection filed by the assessee, were heard together and are

being disposed off, by this consolidated order.

2.1 The Ld, CIT(A) observed that Shri.YelluriChandrasekara Rao, representative of M/s.PoiisettySomasundararn explained that cash was carried to purchase tobacco from farmers and dealers in Bangalore and not referred the property transaction with assessee. The CIT(A) failed to appreciate that he had not substantiated his claim with evidence like details of farmers/agents from whom tobacco was purchased, invoices and payment details etc. The credibility of the statement that such a huge amount was sent for purchasing tobacco on a single day is questionable.

2.2 The Ld.CIT(A) observed that Shri.YelluriChandrasekara Rao admitted on money payment in respect of certain property transactions in Bangalore, but not made any reference to the property sold by the assessee. The CIT(A) failed to appreciate that he did not specify the details of property transaction in Bangalore but the date of transport of cash was 31/12/2015 closest to the date of 23/12/2015 on which the property purchased from the assessee was registered and AO correctly inferred that the payment is related to property transaction between assessee and M/s.Polisettv_Somasundaram.

2.3 The Id.CIT(A) erred in observing that the incriminating material found during the course of search in the case of M/s.Polisettysundaram is a "dumb document" and cannot be relied on without corroborative evidence, without appreciating that the evidence found was indeed cash book containing date, nature of transaction and amount. Further, based on circumstantialevidences, the AO concluded that the assessee was in receipt of on money sale of property.

2.4 The Ld,CIT(A) erred in failing to appreciate that there Is no such restrictive interpretation in the Section 132(4A) that the presumption of correctness are applicable only in respect of the books of accounts/documents seized in the premises of searched person and not from third party.

2.5 The Ld.CIT(A) failed to appreciate that the AO has reasonably arrived that the assessee was in receipt of on money on sale of property, considering the circumstantial evidence in nature like the date of transaction mentioned in the seized materials, date of registration of property, non-submission of proof by the assessee in support of purchase of tobacco, nature and value of the property sold.

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 3 ::

firm, which is engaged in the business of developing and renting of

immovable properties and interior infrastructures. A search u/s.132 of

the Income Tax Act, 1961, (in short “the Act") was conducted in the case

of the assessee and its partners on 04.03.2020. The said search was

conducted consequent to search conducted in the case of M/s.Polisetty

Somasundaram on 28.01.2020. During the course of search, in the case

of M/s.Polisetty Somasundaram, incriminating evidences in the form of

cash book containing details of cash transactions were found and seized.

The transactions entered in the cash book shown that on 31.12.2015

‘Bangalore’ cash payment made Rs.51,53,55,000/- and also ‘cash

carrying charges to Bangalore’, Rs.10,75,000/-. On further enquiry, it

was found that M/s.Polisetty Somasundaram Group had purchased an

immovable property at Bangalore on 23.12.2015 for a consideration of

Rs.99 Crs. from the assessee vide registered Sale Deed dated

23.12.2015. During the course of search, u/s.132 of the Act, in the case

of M/s.Polisetty Somasundaram, a sworn statement of Shri. Yeluri

Chandrasekhar Rao, Authorized Representative of M/s.Polisetty

Somasundaram, was recorded on 05.03.2020 and confronted with the

impounded excel sheet cash book. Shri. Yeluri Chandrasekhar Rao had

given explanation to cash book entries dated 31.12.2015 and stated that

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 4 ::

the firm has sent Rs.51,53,55,000/- cash to Bangalore for purchase of

tobacco from farmers in the Mysore region. He further admitted that on-

money has been paid in connection with one property transactions at

Bangalore. However, clearly denied that entries recorded on 31.12.2015,

cash payment to Bangalore, is nothing to do with property transactions

with M/s.Vibgyor Net Connections. Further, during the course of search

proceedings in the case of the assessee on 04.03.2020, incriminating

evidences forwarded by the DDIT (Investigation) were confronted to Shri

S.Mahalingam, partner and founder of M/s.Vibgyor Net Connections, and

in response to specific question, he has denied receipt of on-money

towards sale of property to M/s.Polisetty Somasundaram on 23.12.2015.

was issued and served on the assessee. In response to notices u/s.153A

of the Act, the assessee has filed its return of income for AY 2016-17 on

25.01.2021 admitting total income of Rs.45,92,61,991/- as per the return

of income filed u/s.139(1) of the Act. The case was selected for scrutiny

and during the course of assessment proceedings, the AO called upon the

assessee to explain ‘as to why’ on-money received towards sale of

property amounting to Rs.51,53,55,000/- should not be treated as

unexplained money u/s.69A of the Act. In response, the assessee

submitted that the firm has not received any on-money towards sale of

property at Bangalore to M/s.Polisetty Somasundaram on 23.12.2015.

The assessee further stated that entire sale consideration of Rs.99 Crs. as

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 5 ::

stated in the registered Sale Deed dated 23.12.2015, has been received

through proper banking channel and that no on-money has been received

in cash. The assessee further submitted that the guideline value of the

property as per the SRO was at Rs.43,31,18,700/- and as against this,

stated sale consideration as per the Sale Deed is Rs.99 Crs. which is more

than double value of guideline value. Therefore, allegation that the

assessee has received on-money which has been transported to

Bangalore on 31.12.2015 is nothing but a suspicion and surmise without

there being any corroborative evidences to prove that on-money has been

exchanged for sale of property.

assessee and according to the AO, although, Shri Yeluri Chandrasekhar

Rao, Authorized Representative of M/s.Polisetty Somasundaram, stated

that cash was sent to Bangalore, for purchasing tobacco from Mysore

area, but he was unable to state the name of the person through whom

the cash was sent. He could not produce any further details such as

invoice or names of parties from whom the purchase of tobacco was

made. The AO further observed that he has admitted in the statement

recorded u/s.132(4) of the Act, that on-money has been paid in respect of

some property transactions made at Bangalore. However, categorically

denied that cash of Rs.51,53,55,000/- sent to Bangalore for purchase of

property with M/s.Vibgyor Net Connections, even though, the date of

payment of cash to Bangalore and purchase of property from M/s.Vibgyor

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 6 ::

Net Connections, is within a week. Therefore, the AO opined that the

assessee itself agreed that the actual sale value is much more than the

guideline value of the property, which indirectly confirms the possibility of

receiving on-money payment. Thus, rejected arguments of the assessee

and made addition of Rs.51,53,55,000/- as unexplained money u/s.69A of

the Act.

an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has

filed detailed written submissions on the issue which has been extracted

in Para No.16 on Page Nos.9-24 of the order of the Ld.CIT(A). The sum

and substances of the arguments of the assessee before the Ld.CIT(A)

are that additions made by the AO towards unexplained money u/s.69A of

the Act, is purely on the basis of ‘dumb document’ without any reference

to name of the assessee or the property sold by the assessee to

M/s.Polisetty Somasundaram is unsustainable in law. The assessee

further submitted that neither the purchaser admitted to have paid on-

money nor the assessee agreed that he has received on-money for sale of

property. The so-called cash book found in the possession of the seller

does not indicate the purpose, for which, money has been sent to

Bangalore. Further, the employee of the seller’s firm has categorically

admitted that cash has been sent to Bangalore for purchase of tobacco

and also said cash sent to Bangalore is nothing to do with property

transactions with the assessee. The consideration paid for sale of

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 7 ::

property is much higher than the guideline value of the property as per

the SRO, which indicate the stand of the assessee that the question of

receipt of on-money for sale of property does not arise. Therefore, the

assessee submitted that the AO is erred in making additions towards on-

money for purchase of property u/s 69A of the Act.

assessee and also by relying upon certain judicial precedents, deleted

additions made by the AO towards purported on-money receipt for sale of

property as unexplained money u/s.69A of the Act, by holding that cash

book in excel sheet seized in the case of M/s.Polisetty Somasundaram is a

‘dumb document’, since, it did not contain any information regarding the

purpose for which said cash was sent to Bangalore and the person to

whom the cash was subsequently paid, and thus, the AO should not have

relied upon the ‘dumb document’ to make additions towards receipt of on-

money u/s.69A of the Act. The Ld.CIT(A) further held that there is no

admission of transactions of on-money payment in the statement

recorded u/s.132(4) of the Act, either in the case of M/s.Polisetty

Somasundaram or in the case of the assessee. Further, Shri Yeluri

Chandrasekhar Rao, the Authorized Representative of M/s.Polisetty

Somasundaram had denied the payment of on-money by M/s.Polisetty

Somasundaram, in a statement dated 06.03.2020 recorded during the

course of search. Further, Shri S.Mahalingam, Managing Partner of the

assessee’s firm, had also denied receiving any on-money in cash in

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 8 ::

respect of property transactions dated 23.12.2015 in a statement

recorded during the course of search. Therefore, the Ld.CIT(A) opined

that despite absence of incriminating evidences in the seized materials or

any admission of on-money transactions in the sworn statement

u/s.132(4) of the Act, the AO arrived at a conclusion regarding payment

of on-money only on the basis of proximity of ‘9’ days between the date

of registration of property at Bangalore and the date of sending cash to

Bangalore. Therefore, the Ld.CIT(A) opined that such findings by the AO

without any other material/evidences to show that said cash was utilized

for the purpose of payment of on-money is nothing but a mere suspicion,

conjecture and surmise. The Ld.CIT(A) further held that findings of the

AO that recorded sale consideration in the registered Sale Deed, is much

more higher than the guideline value of the property has indirectly

confirmed the possibility of receiving on-money payment is irrational and

clearly in the nature of surmise. Had recorded sale consideration being

less than the SRO guideline value, there could have been suspicion that

the sales transaction has been suppressed on record and on-money

payment has been made, but there is no scope for such suspicion when

the recorded sale consideration is much higher than the SRO guideline

value. Moreover, any suspicion can only be a starting point for further

investigation to gather necessary supporting evidence and suspicion alone

cannot be the basis for any addition. Therefore, the Ld.CIT(A) opined

that the AO is erred in making additions towards purported on-money

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 9 ::

payment for sale of property on the basis of a ‘dumb document’ without

there being any corroborative evidences to prove that on-money has been

exchanged for sale of property transaction. Thus, directed the AO to

delete additions made towards unexplained money u/s.69A of the Act.

Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before

us.

erred in deleting the addition of Rs.51,53,55,000/- made u/s.69A of the

Act, towards receipt of unaccounted money on sale of property based on

materials seized in the search of M/s.Polisetty Somasundaram without

appreciating the fact that there is a close proximity between date of sale

of property by the assessee and date of transfer of cash to Bangalore.

The Ld.DR further submitted that although, Shri Yeluri Chandrasekhar

Rao admitted to have paid on-money in respect of certain property

transactions at Bangalore, but the Ld.CIT(A) summarily accepted the

arguments of the assessee that there is no admission of on-money

payment for purchase of property from the assessee, even though,

circumstantial evidences clearly shows that there is a possibility of

payment of on-money to the assessee. The Ld.DR further submitted that

the cash book found during the course of search in the case of

M/s.Polisetty Somasundaram clearly shown payment of cash at Bangalore

along with cash handling charges. Although, Shri Yeluri Chandrasekhar

Rao stated that said cash was carried for purchase of tobacco from

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 10 ::

farmers at Mysore region, but he has failed to file any evidences like

details of farmers from whom tobacco was purchased, invoices and

payment details, etc. Therefore, the Ld.CIT(A) should not have given

credibility to the statement of Shri Yeluri Chandrasekhar Rao and the

assessee while deleting additions made u/s.69A of the Act. The Ld.DR

further submitted that the Ld.CIT(A) erred in failing to appreciate that

there is no restrictive interpretation in s.132(4) or s.292C of the Act, in so

far as presumption of correctness of any document or contents therein,

because, the AO has reasonably arrived at a conclusion of receipt of on-

money on sale of property considering the circumstantial evidences in

nature like date of transaction mentioned in the seized material, date of

registration of property, non-submission of proof by the assessee in

support of purchase of tobacco, etc. Therefore, the Ld.DR submitted that

additions made by the AO towards on-money u/s.69A of the Act, should

be sustained.

the order of the Ld.CIT(A) submitted that the Ld.CIT(A) has rightly

apprised the facts in light of various reasons given by the AO to make

addition u/s.69A of the Act, when the AO has not given any valid reason

to arrive at a conclusion that the assessee has received on-money for sale

of property at Bangalore. The Ld.Counsel for the assessee referring to

statements of Shri Yeluri Chandrasekhar Rao and Shri S. Mahalingam

submitted that neither Shri Yeluri Chandrasekhar Rao, has admitted

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 11 ::

payment of on-money to the assessee nor Shri S. Mahalingam has

accepted receipt of on-money from M/s.Polisetty Somasundaram. The so-

called cash book found from the premise of M/s.Polisetty Somasundaram

does not indicate the name of the assessee firm nor the purpose of

payment of on-money at Bangalore for purchase of property. Therefore,

the Ld.CIT(A) has rightly held that the document relied upon by the AO is

a ‘dumb document’ and on that basis, no addition can be made in the

hands of the assessee. The Ld.Counsel for the assessee further referring

to various judicial precedents submitted that provisions of Sec.132(4A)

and s.292C of the Act, cannot be pressed into service in the case of the

assessee with respect to contents of seized material so as to draw a

rebuttal presumption that the transaction of carrying of cash to Bangalore

on 31.12.2015 noted therein is related to the assessee that the same is

true and correct, since said provisions operate only against the searched

person in whose position the seized material was found. Further, even if

it is considering for any reasons that the provisions of Sec.132(4A) and

s.292C of the Act, are applicable to the assessee, the same has no

bearing on the issue under consideration in absence of any reference to

the name of the assessee or concerned property at Bangalore in the

relevant entry in the seized cash book. The Ld.CIT(A) after considering

relevant facts has rightly directed the AO to delete the additions made

u/s.69A of the Act, and their orders should be upheld.

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 12 ::

record and gone through orders of the authorities below. We have also

carefully considered the purported cash book found and seized in the

premise of M/s.Polisetty Somasundaram, which has been extracted in the

assessment order. The seized excel sheet cash book contained certain

cash transactions and as per said cash book on 31.12.2015, it was

mentioned as ‘cash carrying charges to Bangalore’ Rs.10,75,000/- and

‘Bangalore’Rs.51,53,55,000/-. During the course of search, in the case of

M/s.Polisetty Somasundaram on 28.01.2020, a statement on oath

u/s.132(4) of the Act, was recorded from Shri Yeluri Chandrasekhar Rao,

Authorized Representative of M/s.Polisetty Somasundaram and confronted

with seized document. He was specifically questioned about seized cash

book and contents recorded therein and in response, he stated that on

31.12.2015, a sum of Rs.51,53,55,000/- has been sent to Bangalore for

purchase of tobacco from farmers at Mysore region. He further stated

that said cash payment at Bangalore is nothing to do with purchase of

property from M/s.Vibgyor Net Connections on 23.12.2015. Further,

impounded cash book from the search of M/s.Polisetty Somasundaram

has been confronted to Shri S. Mahalingam,Managing Partner of the

assessee’s firm during the course of search and a statement u/s.132(4) of

the Act, was recorded on 05.03.2020, in which, the Managing Partner of

the assessee’s firm has denied receipt of any on-money for sale of

property at Bangalore. The AO made additions towards purported on-

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 13 ::

money u/s.69A of the Act, in the hands of the assessee on the ground

that there is a close proximity between date of sale of property on

23.12.2015 and reference of cash payment at Bangalore in the seized

cash book on 31.12.2015. According to the AO, although, both parties

have denied exchange of on-money for sale of property, but the

circumstantial evidences clearly suggest that there is a possibility of

payment of on-money for purchase of property. Therefore, the AO opined

that the assessee has received on-money of Rs.51,53,55,000/- towards

sale of property, and thus, made addition u/s.69A of the Act.

the AO to make addition u/s.69A of the Act, in light of various averments

made by the Ld. Counsel for the assessee and we ourselves do not

subscribe to the reasons given by the Assessing Officer for simple reason

that, the cash book in excel sheet seized in the case of M/s.Polisetty

Somasundaram did not contain any reference to the name of the assessee

or concerned property at Bangalore, which merely contain notings

regarding cash of Rs.51,53,55,000/- sent to Bangalore on 31.12.2015

and the corresponding expenses incurred towards cash carrying charges.

No further incriminating material was found during the course of search in

the case of the assessee nor in the case of search of M/s.Polisetty

Somasundaram with regard to alleged payment of on-money. Moreover,

the date of transfer of property was on 23.12.2015, whereas the alleged

cash payment was purportedly made on 31.12.2015, which is one week

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 14 ::

later than the sale of property. It is a common understanding that no

prudent person will transfer the property and receive cash in subsequent

date. Therefore, we are of the considered view that the seized excel

sheet, cash book in the case of M/s.Polisetty Somasundaram is a ‘dumb

document’ which cannot be relied upon to make additions in the case of

the assessee, since it did not contain any information regarding the

purpose, for which, the said cash was sent to Bangalore and the person to

whom the cash was subsequently paid. In our considered view, although,

circumstantial evidences can lead to draw an adverse inference against

any person, but in absence of any corroborative evidences or admission of

the person from whose possession such document was found, it is difficult

to draw an adverse inference based on such document without any

reference to name of the person and purpose for which said payment was

made. In the present case, there is no admission of the transaction of

on-money payment in the statement recorded u/s.132(4) of the Act,

either in the case of M/s.Polisetty Somasundaram or in the case of the

assessee. Shri Yeluri Chandrasekhar Rao, Authorized Representative of

M/s.Polisetty Somasundaram, has denied the payment of on-money by

M/s.Polisetty Somasundaram in a statement recorded on 05.03.2020. He

further stated that cash of Rs.51,53,55,000/- has been sent to Bangalore

on 31.12.2015 for the purpose of purchase of tobacco in Mysore region

and that the said cash is not connected in any way to the immovable

property transactions dated 23.12.2015 with the assessee. Further, Shri

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 15 ::

S. Mahalingam, the Managing Partner of the assessee’s firm had also

denied receiving any on-money in cash from M/s.Polisetty Somasundaram

in respect of the property transaction dated 23.12.2015. From the above,

it is evident that the sworn statement recorded during the course of

search also do not reveal receipt of on-money of the assessee and they

do not facilitate drawing any adverse inference against the assessee.

Despite, absence of any incriminating evidences in the seized materials or

any admission of on-money in the sworn statement, the AO arrived at his

findings regarding receipt of on-money for sale of property only on the

basis of proximity of ‘9’ days between the date of registration of property

and date of sending cash to Bangalore, without any other

material/evidences to show that the said cash was utilized for the purpose

of payment of on-money. In our considered view, the findings of the AO

regarding payment of on-money based on a ‘dumb document’ is purely on

suspicion, conjecture and surmise manner, but not based on any

evidences. In this regard, it is pertinent to refer to the decision of Hon’ble

Supreme Court in the case of CIT v. Daulatram Rawatmull reported in

[1964] 53 ITR 574 (SC) where it has been clearly held that suspicion

however so strong, but suspicion cannot take the place of evidence.

Therefore, we are of the considered view that the AO is erred in making

additions towards on-money u/s.69A of the Act, without reference to any

material which suggest payment of on-money merely on the basis of

suspicion and surmise.

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 16 ::

Revenue relied upon a specific question and answer in the statement

recorded from Shri Yeluri Chandrasekhar Rao, where he has admitted that

on-money has been paid in connection with some property transactions at

Bangalore. But, fact remains that Shri Yeluri Chandrasekhar Rao

categorically admitted that reference of cash sent to Bangalore on

31.12.2015 is for the purpose of purchase of tobacco from the farmers in

Mysore region, and that said cash is not connected in any way to the

immovable property transactions dated 23.12.2015 with the assessee. In

our considered view, whether Shri Yeluri Chandrasekhar Rao has

substantiated his claim of purchase of tobacco with details of the farmers

and evidences by way of invoices, etc., does not lead to any evidences of

receipt of on-money by the assessee when there is no reference to either

the name of the assessee or the concerned property at Bangalore in the

relevant entry in the seized cash book. The entry merely shows carrying

of cash to Bangalore without revealing the purpose. If the purpose as

explained by Shri Yeluri Chandrasekhar Rao of M/s.Polisetty

Somasundaram is not substantiated by proper evidences, cannot be

viewed adversely against the assessee unless there is an evidence to

show that the cash carried to Bangalore on 31.12.2015, was paid to the

assessee. In our considered view, the contentions of the Revenue on the

basis of statement of Shri Yeluri Chandrasekhar Rao amounts to a clear

misleading or misinterpretation of the said statement going by the

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 17 ::

contents of answer given by him in response to a specific question. If, you

go by relevant part of the statement, more particularly, Question No.9

and answer given by him, it is very clear that, he was admitted to have

paid on-money over and above registered value in respect of some

property transactions made at Bangalore, but he has categorically denied

making any on-money payment to the assessee. This is further fortified

by the findings of the AO that the recorded sale consideration in the

registered document at Rs.99 Crs. is much more than the guideline value

of the property at Rs.43.31 Crs. and this position has indirectly confirmed

or indicated the stand of the assessee that there is no possibility of

receipt of on-money. In our considered view, the AO is clearly erred in

coming to the conclusion that there is a possibility of receipt of on-money

on the basis of recorded sale consideration as per sale deed and guideline

value by the SRO, even though, the facts are contrary to the observations

of the AO. Had it been the case of the AO that recorded sale consideration

was lesser than the SRO guideline value, then there could have been a

suspicion that the sale consideration has been suppressed on record and

on-money payment has been made. However, in the present case, there

is no scope for such suspicion, because, the recorded sale consideration is

almost double the amount of guideline value of the property as per the

SRO. Therefore, we are of the considered view that the contention of the

Revenue on the basis of statement of Shri Yeluri Chandrasekhar Rao that

circumstantial evidences clearly suggest payment of on-money to the

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 18 ::

assessee is totally misplaced and devoid of merits. In this regard, reliance

is placed on decision of the Hon’ble Madras High Court in the case of CIT

v. K. Bhuvanendran reported in [2008] 303 ITR 235 (Madras), wherein,

the Hon’ble Madras High Court held that additions made towards on-

money receipt in the hands of the seller based solely on the statement of

buyer recorded during the course of search is not tenable when no other

material is available to show that on-money was paid. There is no

evidence to show that there is under statement of sale consideration as

per registered document. The above judgment is clearly applicable to the

case of the assessee, since no other material is available regarding

payment of on-money and there is no evidence to show that there is no

understatement of sale consideration. Reliance is also placed on the

decision of the Hon’ble Madras High Court in the case of CIT v. Smt.

S.Jayalakshmi Ammal reported in [2016] 74 taxmann.com 35 (Madras),

wherein, it was held that no additions can be made on the basis of a mere

statement regarding payment of on-money without any corroborative

evidence. In the present case, in our considered view, there was no

evidence with the AO and further, there is admission from the buyer and

the seller regarding payment of on-money and thus, in our considered

view, the question of making additions towards on-money does not arise.

premise of M/s.Polisetty Somasundaram to make addition u/s.69A of the

Act. But, said incriminating material does not refer to either the name of

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 19 ::

the assessee or its partners nor reference to the property transaction

between the assessee and M/s.Polisetty Somasundaram. We have gone

through the purported cash book relied upon by the AO which has been

extracted in the assessment order. The relevant entry in the seized

material contained the narration Bangalore against the date 31.12.2015

and the amount of Rs.51,53,55,000/- was noted against the same. The

AO based on said entry coupled with date of transfer of property

presumed that the assessee has received on-money for sale of property.

In our considered view, the conclusion arrived at by the AO is purely on

suspicion and surmise manner, because, said document does not contain

the nature of transaction nor the purpose, for which, money has been

sent to Bangalore. Therefore, we are of the considered view that no

arbitrary addition to the income can be made by the AO based on a ‘dumb

document’ or a vague notings unless any other corroborative evidences

which shows that the entries contained in ‘dumb document’ are true and

correct. This legal position is supported by the Hon’ble Delhi High Court

in the case of CIT v. D.K.Gupta reported in [2008] 174 taxman 476

(Delhi), wherein, it was held that a ‘dumb document’ without any

corroborative evidence or finding that the alleged document have

materialized into transaction giving rise to income cannot be used as

evidence for making addition to the income. This legal position is further

fortified by the decision of the Hon’ble Bombay High Court in the case of

CIT v. Umesh Ishrani reported in [2019] 108 taxmann.com 437

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 20 ::

(Bombay). A similar view has been taken by the co-ordinate Bench of

ITAT Chennai, in the case of DCIT v.Mr. A. Johnkumar, in ITA

No.3028/Chny/2019. Therefore, we are of the considered view that

additions made by the AO u/s.69A of the Act, on the basis of ‘dumb

document’ cannot be sustained.

of the Act, cannot be given restrictive interpretation so as to consider

applicable only to the searched person and not to other person. In our

considered view, the arguments of the Ld.DR is not legally tenable,

because, the impugned excel sheet representing cash book containing the

entry regarding carrying of cash to Bangalore was found and seized

during the course of search of a third party i.e. M/s.Polisetty

Somasundaram. Further, said incriminating material was not seized

during the course of search in the case of the assessee. Therefore,

provisions of Sec.132(4A) & s.292C of the Act, cannot be pressed into

service in the case of the assessee with respect to the contents of the said

seized material so as to draw a rebuttal presumption that the transaction

of carrying of cash noted in the impugned documents is relating to the

assessee and that the same is true and correct, since said provision

operates only against the searched person in whose position the relevant

materials were found. In this regard, it is relevant to refer to the decision

of the Hon’ble Gujarat High Court in the case of PCIT v. Gaurangbhai

Pramodchandra Upadhyay, in R/Tax Appeal Nos.98, 100, 103 & 104 of

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 21 ::

2020, order dated 25.02.2020, wherein, the Hon’ble Gujarat High Court in

Para no.8 of the order observed that since the documents were not found

or recovered from the possession of the assessee, no presumption

u/s.132(4A) as well as s.292C of the Act, could be drawn against the

assessee in such circumstances. The Hon’ble Patna High Court in the case

of Dharmaraj Prasad Bibhuti v. ITAT, Patna, reported in [2019] 109

taxmann.com 388 (Patna) held at Para No.29 of their order that

presumption u/s.292C of the Act, can be drawn only on such person from

whose possession or control books of accounts or other documents,

money, bullion or other valuable article are commonly found during the

course of search. Even if it is considered for any reason that the

provisions of Sec.132(4A) & s.292C of the Act are applicable to the

assessee, the same has no bearing on the issue under consideration,

because, in the said document there is no reference to the name of the

assessee or the concerned property at Bangalore in the relevant entry in

the seized cash book. Therefore, we are of the considered view that

provisions of Sec.132(4A) & s.292C of the Act, at best lead to a rebuttal

presumption that carrying of cash to the said extent by M/s.Polisetty

Somasundaram is true and correct. But, the rebuttal presumption cannot

extend to the receipt of such cash by the assessee in absence of any

reference to the name of the assessee or the concerned property at

Bangalore in the relevant document. Thus, we reject the ground taken by

the Revenue.

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 22 ::

upon by the Ld.Counsel for the assessee. The Ld.Counsel for the assessee

has relied upon the decision of ITAT Chennai Bench in the case of

Mr.Nadessan Sivapragasam v. ACIT in ITA No.112 to 114/Chny/2021. The

Tribunal under identical set of facts, has held as under:

27, The Hon'ble Jurisdictional Tribunal held in the case of NadessanSivapragasam Vs. ACIT in ITA Nos. 112 to 114/ CHNY/2021 that where nothing can be discernible from the document relied upon by the AO regarding earning of income and spending for expenditure, the said document cannot be taken as evidence in the absence of any corroborative details to substantiate the entries therein. The relevant portion of the said decision is extracted as under:

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 23 ::

the case of M.M. Financiers (P) Ltd. v. DCIT reported in [2007] 107 TTJ

200 (Chennai). The co-ordinate Bench of ITAT Chennai under identical set

of facts, has held as under:

"There was force in the contention of the assessee that there was no provision of law under which the impugned addition could be made to the income declared by the assessee. It is trite law that if an income not admitted by an assessee is to be assessed in the hands of the assessee, the burden to establish that there is such income chargeable to tax is on the Assessing Officer. With a view to assist the Assessing Officer and to reduce the rigour of the burden that lay upon the Assessing Officer, provisions of sections 68, 69, 69 A to 69D have provided for certain deeming provisions, where art assumption of income is raised in the absence of satisfactory explanation from the assessee. As these are deeming provisions, the conditions precedent for invoking such provisions are required to be strictly construed. The facts and circumstances giving rise to the presumption have to be established with reasonable certainty. TheAssessing Officer cannot first make certain conjectures and surmises and thereafter apply the deeming provisions based on such conjectures and surmises. In the absence of adequate material as to the nature and ownership of the transaction, undisclosed income could not be assessed in the hands of the assessee merely by arithmetically totaling various figures jotted down in the loose documents. In other words, for the purpose of resorting to deeming provisions, dumb documents or documents with no certainty have no evidentiary value. After consideration of the matter, the contentions of the assessee had to be agreed with. The impugned addition had been made by the Assessing Officer on grossly inadequate material The same was, therefore, directed to be deleted."

Further, the loose papers found during the course of search at the premises of K. Madhava Ready are a dumb form having no evidential value. No addition can be made on the basis of noting on loose sheets in the absence of corroborative material.

circumstances of the case, we are of the considered view that the AO is

erred in making additions towards alleged on-money received by the

assessee towards transfer of property as unexplained money u/s.69A of

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 24 ::

the Act. The Ld.CIT(A) after considering relevant facts has rightly deleted

the additions made by the AO, and thus, we are inclined to uphold the

findings of the Ld.CIT(A), and dismiss the appeal filed by the Revenue.

Cross-Objection No.29/Chny/2023 for AY 2016-17:

by the Ld.CIT(A) in the order dated 31.03.2023 to delete addition made

by the AO towards purported on-money received for transfer of property

u/s.69A of the Act. Since, we have dismissed appeal filed by the Revenue

and uphold the findings of the Ld.CIT(A) in directing the AO to delete the

addition made u/s.69A of the Act, in our considered view, Cross-Objection

filed by the assessee becomes infructuous, and thus, the Cross-Objection

filed by the assessee is dismissed as infructuous.

is dismissed and Cross-Objection filed by the assessee in CO

No.29/Chny/2023 is also dismissed.

Order pronounced on the 19th day of January, 2024, in Chennai.

00Sd/- Sd/- (महावीर िसंह) (मंजूनाथा. जी) (MANJUNATHA.G) (MAHAVIR SINGH) लेखा सद�य/ACCOUNTANT MEMBER उपा��/VICE PRESIDENT

ITA No.631/Chny/2023 & CO No.29/Chny/2023 :: 25 ::

चे�ई/Chennai, �दनांक/Dated: 19th January, 2024. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 3. आयकरआयु�/CIT 5. गाड�फाईल/GF 2. ��यथ�/Respondent 4. िवभागीय�ितिनिध/DR