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TMI Blog2024 (5) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2016- 17 in ITA No. 743/Chny/2023 are reproduced 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 made towards undisclosed cash transaction from undisclosed sources amounting to Rs.8,03,12,500/- made on the* basis of entries pertaining to the assessee firm in the excel sheets found in the electronic devices seized during the course of search in the case of Christy group of companies. 2.1 The Ld.CIT(A) erred in observing that material seized from third party in the search conducted in the case of the said third party did not have any evidentiary value as there were no corroborative evidences to substantiate the entries in the seized materials, without appreciating that the assessee was having regular business transactions with M/s.Christy fried gram (ie) used to give broken rice and sago for conversion work and further Shri.TS Kumarasamy, Prop:Christy Fried Gram and Mr. Valleeswaran accepted that generation of unaccounted cash and unaccounted expenses were maintained by Shri.Karthikeyan of Finance department in a excel sheet called as "Erandamm Thall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f transactions between the assessee and M/s Christy group of concerns for the assessment years 2016-17 to 2018-19. The Assessing Officer of the searched person and the Assessing Officer of the assessee are one and the same and therefore, based on seized material, the Assessing Officer recorded satisfaction u/s. 153C of the Act for assessment years 2016-17 to 2018-19, in respect of material pertains to the appellant on 07.01.2021 for the purpose of assuming jurisdiction u/s. 153C of the Act. As per satisfaction note recorded by the Assessing Officer of the searched person u/s. 153C of the Act, on the basis of electronic device seized at the residence of Shri. P. Karthikeyan vide Annexure ANN/GV/PK/ED/S, the Assessing Officer recorded his satisfaction that the relevant seized material containing details of cash transactions for the appellant has a bearing on the determination of total income of the appellant for the assessment years 2016-17 to 2018-19 and accordingly, notice u/s. 153C of the Act was issued. In response to notice u/s. 153C of the Act, the assessee has filed its return of income for assessment years 2016-17, 2017-18 & 2018-19 on 16.02.2021. 4. The case was selected fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d two zeros into cash transactions appearing in seized material, i.e. excel sheet for two assessment years and worked out unaccounted cash transactions for three assessment years and made additions u/s. 69A of the Act. The relevant findings of the Assessing Officer are as under: 7. The entries in the xl sheet titled 'others.xls' with sub sheet Varal transactions for the period 09.12.2016 to 31.03.2017 (FY:2016-17) are reproduced below: Varalaximi A/c Cash A/c Transfer S.N Date Particulars Cr's Dr's Cr's Dr's 1 09.12.16 To cash 15000 2 13.12.16 To cash 5000 3 Dec-16 salary 2810 4 Chennai A/c 1500 5 Jan -17 & Feb -17 5650 6 18.01.17 Varalaximi A/c Tranf 100000 7 Varalaximi A/c Tranf 100000 8 Varalaximi A/c Tranf 100000 9 23.01.17 Varalaximi A/c Tranf 100000 10 Varalaximi A/c Tranf 100000 11 17.02.17 Varalaximi A/c Tranf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 5. 21.05.15 By Cash Varalaximi 20000 6 23.05.15 By Cash Varalaximi 45000 7 25.05.15 By Cash Varalaximi 23000 8 26.05.15 By Cash Varalaximi 27000 9 27.05.15 By Cash Varalaximi 20000 10 30.05.15 By Cash Varalaximi 20000 11 03.06.15 By Cash Varalaximi 20000 12 15.06.16 To Cash Varalaximi 30000 13 16.03.15 To Cash Varalaximi 20000 300000 50000 To Pay Christy to Varalaximi -250000 1 26.05.15 Tsk A/c RV+PKR 460 83000 2 27.05.15 Tsk A/c RV+PKR 465 83000 3 01.06.15 Tsk A/c RV+PKR 109090 4 08.06.15 Tsk A/c RV+PKR 26965 925 302055 301130 The cash transactions for the period 14.05.205 to 16.03.206 come to 3,55,000 with two zeros less and the actual amount is Rs. 3,55,00,000/- for FY 2015-16 (AY 2016-17). 7.2 As xl sheet 'varalaksmi.xls' sub sheet 'sheet 1' the entries are: Christy A/c Int A/c S. No Date Particulars Cr's Dr's 15% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t recorded in the books of accounts of the assessee, on the basis of seized excel sheets u/s. 69A of the Act. The assessee has also filed certain additional evidences including the alleged cash transactions considered by the Assessing Officer for working out unexplained money u/s. 69A of the Act for all three assessment years. During the course of appellant proceedings, the ld. CIT(A) called for remand report from the Assessing Officer as regards the manner of working out of aggregate cash transactions of the appellant as per the seized excel sheet for all three assessment years. The Assessing Officer, furnished the details of working of cash transactions in the remand report dated 07.03.2023 and explained how cash transactions has been worked out by appending two zeros to the value recorded in said excel sheets. The Assessing Officer had also filed a supplementary remand report dated 27.03.2023 by considering additional evidences filed by the assessee in order to rebut the said workings and reiterated his findings in the assessment order and also the first remand report dated 07.03.2023. During the course of appellant proceedings, the assessee has furnished detailed written submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o iota of any evidences in the seized material regarding the nature and purpose of alleged cash receipts and payments. Therefore, the CIT(A) opined that in absence of any corroborative evidence to strengthen the alleged cash transactions recorded in excel sheets, the additions cannot be made u/s. 69A of the Act. Thus, directed the Assessing Officer to delete additions made u/s 69A of the Act, towards cash transactions as per seized excel sheets. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 7. The Ld. DR, V. Nanda Kumar, CIT, supporting the order of the Assessing Officer submitted that, the ld. CIT(A) erred in deleting the additions made towards undisclosed cash transactions from undisclosed sources made on the basis of entries pertaining to the assessee firm based on excel sheets found in the electronic devices seized during the course of search in the case of M/s. Christ group of companies. The ld. DR further submitted that, the ld. CIT(A) erred in observing that there were no corroborative evidence to substantiate the entries in the seized material, even though the Assessing Officer demonstrated with evidences that the said excel sheets contains bank transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the third party which are not corroborated by independent evidences like sale bills, cash receipts etc either found in the possession of third party or in the search proceedings of the assessee, so as to make addition u/s. 69A of the Act. The Ld. Counsel for the assessee further submitted that, the so called excel sheets were found in the premises of third party, but the Assessing Officer neither verified the evidences nor confronted those evidences to the appellant for its examination. Further, the Assessing Officer not tested those evidences by recording any statement from the person from whose possession said evidences were found. Further, the evidence found during the course of search in the third party premises does not indicate any unaccounted transactions of the assessee. The Assessing Officer did not confront those evidences to the assessee and verified the veracity of said documents. In absence of any corroborative evidences to support the alleged transactions recorded in excel sheets found in the possession of third party, no addition can be made u/s. 69A of the Act. The Ld. Counsel for the assessee further submitted that as per provisions of section 132(4) and 29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. P. Karthikeyan, an employee of Christy group of companies. The three excel sheets based on which undisclosed income of the assessee has been worked out by the AO was found in the electronic devices seized from Shri. P. Karthikeyan, an employee of M/s. Christy Fried Gram Industry, during the course of search conducted in Christy group of cases. The seized material is therefore in the nature of materials seized in case of third party. Further, said material being a typed excel sheets in electronic form, the same is not in the handwriting of any partners or other employees of the assessee firm and the seized material does not contain any acknowledgement of the assessee with regard to the entries found therein, in respect of transactions allegedly made by the Christy group of concerns with assessee firm. Further, no other evidences including sale bills, cash receipts, unaccounted purchase bills etc, were found neither during the course of search of Christy group of concerns or during the course of search in the business premises of the assessee to corroborate the entries found in the excel sheets. Besides the same, it is noticed that no evidences of undisclosed asset, undisclosed ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered view, the contention of the department that merely because the notings of bank transactions in the excel sheet have matched with the bank statements it does not mean that the notings of cash transactions are also genuine. The reason is that though bank statements serves as corroborative evidence for proving transfer entries, but there are no corroborative evidence like sale bills, cash receipts and invoices etc in the cash entries in excel sheets. Notings by way of cash transactions are highly suspicious in nature because they are susceptible for embezzlement and also prone to create prejudice to the concerned parties. Therefore, in our considered view, the reasons given by the AO to make additions u/s. 69A of the Act on the basis of entries in excel sheets without any corroborative evidence is incorrect. Further, had the department proved at least some of the entries of cash transactions noted in the excel sheet with proper corroborative evidence, one can extrapolate the same to all other entries of cash transactions in the seized excel sheets. But in the present case, the AO has failed to link any cash transactions recorded in excel sheet with any other corroborative evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggarwal [2017] 83 Taxmann.com 6 (ITAT Chandigarh), S.P Goyal vs DCIT [2002] 82 ITD 85 TM ITAT, T.S. Venkatesan vs ACIT [2000] 74 ITD 298 (Cal) and Monga Metals (P) Ltd vs ACIT [2000] 67 TTJ 247 (All). 12. The ld. DR, has strongly argued in light of ground no. 2.3 of revenue that contents of excel sheets refers the name of "Appu" which clearly shows unaccounted cash transactions of the assessee with Christy group of companies. In this regard, it is pertinent to note that material seized in the form of excel sheets were found in the premises of third party. Hence, to draw presumption that the transactions were related to the assessee is not legally permissible in view of non-applicability of the provisions of section 132(4A)/292C of the Act to other than the searched person. The presumption contains in section 132(4A)/292C of the Act is applicable in a situation where documents were found in the possession of the assessee and in that case, said documents and contents recorded therein can be considered as true and correct and it is the duty of the assessee to rebut the presumption. But, in the present case, since the documents are found in the premises of third party, the presumptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar view has been taken by Hon'ble High Court of Delhi in the case of CIT vs Vivek Aggarwal [2015] 56 Taxmann.com 7, where it has been held that, no efforts were made by the department to establish the nexus of the assessee with the undated and unsigned printout found during the search and to corroborate the contents of the said printout to arrive at a definite conclusion that the assessee derives such alleged income. The Hon'ble High Court of Bombay in the case of PCIT vs Umesh Israni [2019] 108 Taxmann.com 437 held that, the entries of the loose papers which were seized were not corroborated with any other evidence on record and no enquiry or verification was made and thus, no additions can be made u/s. 69A of the Act. 13. Coming back to ground no. 2.4 and 2.5 of revenue appeal. The revenue has taken a ground in light of alleged two set of accounts maintained "Tally1 and Tally2 by the assessee group and argued that, the appellant is in the practice of replacing the invoices not checked by any Government authorities in the accounted Tally. In our considered view the ground taken by the revenue is devoid of merits, because the AO neither considered so called Tally1 and Tally 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not appropriate to arrive at a conclusion that the amounts noted in the excel sheets have to be understood by adding two zeros at the end without having further evidence apart from the statement of Shri. Harihara Krishnan. We further noted that, the AO himself has not added two zeros to the amounts found noted in two excel sheets namely "Appu revised formar.xls" sub sheet "cash received & paid" relevant to assessment year 2017-18 and Annex-3-Appu-CFL.xls" sub sheet "running account" relevant to assessment year 2018-19. Further, the ld. CIT(A) has recorded categorical findings that in the remand report the AO did not furnish any explanation regarding selective treatment only to the figures found in one excel sheet out of three excel sheets. In the rejoinder, the appellant explained that the relevant excel sheets contains an entries of payment made to appellant in cash as well as through bank. The appellant pointed out that when the payment through bank shows therein are compared with the corresponding entries found in the relevant bank account statement, it can be seen that the same are matching without the need of adding two zeros. When the bank entries is matching with the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any corroborative evidence. 15. In this view of the matter and considering facts and circumstances of this case, we are of the considered view that additions made by the AO u/s. 69A of the Act towards alleged cash transactions recorded in excel sheets found during the course of search proceedings of Christy Group in the premises of Shri. P. Karthikeyan, without there being any corroborative evidence is unsustainable in law. The ld. CIT(A), after considering relevant facts has rightly deleted additions made by the AO. Thus, we are inclined to uphold the findings of the ld. CIT(A) and dismiss appeal filed by the revenue for assessment years 2016-17, 2017-18 & 2018-19. 16. The assessee has filed cross objections in support of order of the ld. CIT(A) for all three assessment years. Since, we have upheld the findings of the ld. CIT(A) in deleting additions made u/s. 69A of the Act towards alleged cash transactions as per seized excel sheets and dismissed appeals filed by the revenue, the cross objections filed by the assessee for three assessment years become infructuous and thus, cross objections filed by the assessee for assessment years 2016-17, 2017-18 & 2018-19 are dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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