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TMI Blog2024 (11) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be drawn against the assessee. The notings lack even the basis details i.e., date of payment, the persons to whom payments were made and the source of such payments. The notings are bald notings which do not convey much meaning. The figures as mentioned in the sheet are round figures without any more details which support the fact that these are mere estimations only. The sheet, in our considered opinion, is merely in the nature of dumb document having no evidentiary value. These sheets even lack basic details so as to form an opinion of cash payment by the assessee. The complete details of the transactions could not be deciphered from the same. Under these circumstances, not much credence could be given to this document to make impugned additions in the hands of the assessee in the absence of corroboration of entries as contained therein. Therefore, the presumption of unaccounted / unexplained expenditure in terms of Sec. 69C is arbitrary and without any corroborative evidence establishing the same. There is no direct evidence of any cash payment by the assessee. Not even a single concrete evidence has been brought on record to establish that the assessee, in fact, has incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TBA/APL/S/250/2023-24/1063746103(1) for the abovementioned Assessment Year is contrary to law, fact and in circumstances of the case. 2. The CIT (Appeals) - 20, Chennai erred in confirming the assumption of jurisdiction under Section 153A of the Act and further erred in confirming the search assessment order passed in terms of Section 153A of the Act without assigning proper reasons and justification. 3. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment completed by making the disputed addition(s) in the absence of valid incriminating seized material relatable to such addition(s) should be reckoned as nullity in raw and further ought to have appreciated that the judicial trend in this regard was completely over looked and brushed aside in passing the impugned order there by vitiating the related findings. 4. The CIT (Appeals) - 20, Chennai failed to appreciate that the search assessment order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 5. The CIT (Appeals) - 20, Chennai erred in confirming the addition of Rs. 4,24,49,502/- on the presumption of wages payable claimed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reckoned as bad in law. 12. The CIT (Appeals) - 20, Chennai erred in sustaining the addition of Rs. 85,00,000/- on the presumption of salary payable as bogus without assigning proper reasons and justification. 13. The CIT (Appeals) - 20, Chennai failed to appreciate that the provisions of Section 69 of the Act had no application to the facts of the present case and further ought to have appreciated that the pre-requisite conditions for attracting the provisions in Section 69 of the Act was not satisfied in the present case there by vitiating the disputed addition. 14. The CIT (Appeals) - 20, Chennai failed to appreciate that the seized material relied upon by the Assessing Officer had no evidentiary value and further ought to have appreciated that the addition made solely based on the statement recorded at the time of search and the loose sheet(s) in the absence of corroborative evidence should be reckoned as bad in law. 15. The CIT (Appeals) - 20, Chennai failed to appreciate that the contents of the seized material only relate to the projected figures in relation to TWAD project and further ought to have appreciated that the assessment of projected figures as unexplained invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the Revenue despite the availability of entire documents including the expenses incurred on various projects forming part of the search records and the mechanical addition made by treating the contents of the excel sheet as unaccounted expenses incurred relatable to the projects already captured in the audited financials solely relying on the statement recorded from the accountant in the absence of any corroborative evidence should be reckoned as bad in law. 23. The CIT (Appeals) - 20, Chennai failed to appreciate that the explanation offered by the Appellant was not considered in proper perspective while dealing with the grounds raised and further ought to have appreciated that the factual position was further clarified by the Partner of the Appellant firm during the post search proceedings there by vitiating the related findings in the impugned order. 24. The CIT (Appeals) - 20, Chennai failed to appreciate that in any event the assessment of such presumed unexplained expenditure in the hands of the Appellant firm there by negating the addition made in this regard. 25. The CIT (Appeals) - 20, Chennai failed to appreciate that the entire re computation of the taxable total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular Tally Data, discrepancies were found and Ld. AO concluded that the assessee booked wages payable in the last month of various financial years to suppress profits. After rejecting assessee s submissions, Ld. AO made addition of Rs. 424.49 Lacs on account of wages payable. The Ld. CIT(A) confirmed the same against which the assessee is in further appeal before us. 2.2 We find that identical issue has been decided by us in assessee s appeal for AY 2017-18, ITA No.1021/Chny/2024 as under: - Our findings and adjudication 4. Upon perusal of ledger extracts of wages payable and salaries payable as placed on record at Page Nos. 70 to 112 of the paper-book Volume-II, it could be seen that as on 01- 04-2016, the wages payable are for Rs. 62.75 Lacs which have fully been paid by the assessee by 30-04-2016. The assessee has made provision of wages payable for AY 2017-18 for Rs. 391.07 Lacs which, as per the statements made during the course of search proceedings, are booked artificially to suppress the profit of this year. The assessee has reversed / not considered this provision while filing the return of income u/s 153A and it has already offered additional income to that extent. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income filed u/s 139(1) has now been reversed in return of income filed u/s 153A, the payment made in subsequent year would be allowable as deduction in the subsequent year. If the same is not allowed, the assessee would suffer double disallowance which is wholly unjustified Therefore, considering the fact of the case, the amount of Rs. 62.75 Lacs would be allowed as deduction to the assessee during AY 2017- 18. We order so. 6. Similarly, in respect of salaries payable, it could be seen that the assessee has reversed provision of Salaries payable for Rs. 14.84 Lacs during FY 2015-16 and claimed deduction of the same on actual payment basis. Therefore, the disallowance, to that extent, could not be upheld. The balance provision of Rs. 14.69 Lacs has been made on 31-03- 2017. The aggregate provision as on 31-03-2017 was Rs. 29.53 Lacs which has fully been paid by the assessee through banking channels in the month of April and May, 2017 which is evident from ledger of salaries payable as placed on Page No.109. Therefore, the impugned disallowance of Rs. 29.53 Lacs, in toto, is not sustainable in law. We order so. The corresponding ground raised by the assessee stand allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the assessee-firm. Going by this statement, no case of impugned addition could be made out against the assessee-firm. 5. Proceeding further, Managing Partner, Shri Anandavadivel, at the time of search (Page No. 120 121 of Volume I) stated that part of the disputed amount was already accounted for in the books of accounts. However, he admitted that Rs. 8.8 Crores was unaccounted cash utilized for the civil construction project. This statement run contrary to the statement of Shri Vinoth. The partner stated that partial amount was accounted whereas partial amount was unaccounted. In such a case, no addition to the extent of accounted portion could have been made in the hands of the assessee. Nevertheless, no exercise has been carried out by Ld. AO to verify the statement of the partner and bring on record evidences to fortify the same. Further, nothing has been said by the partner on the source of investment and there is no admission with respect to the same. In any case, the statement of Shri Vinoth as well as the statement of the partner runs contrary to each other. Also, the statement made by managing partner is without any corroborative evidence. This statement also does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings before lower authorities. There is no direct evidence for borrowing money and utilization of the same for the TWAD project which has taken place in subsequent years. No enquiry has been made from Shri Vinoth post search proceedings. Under these circumstances, his statement would not hold much evidentiary value in the absence of any other evidence corroborating the same. The reference made in the projections should be construed as projections for monetizing the funding of the project and there could not be any presumption of unaccounted loans / cash being introduced unless details thereof have been brought on record. There is no evidence for actual borrowing of money by the partners. 9. Similarly, the statement of Managing Partner has contradictions. During search, he has stated that part of the amount spent was accounted for in the books of accounts. There is no such evidence brought on record by any of the lower authorities. Post search proceedings, the partner stated that the source of cash introduction was unaccounted loans refunded by the parties and interest earned from these loans and unaccounted cash generated in the firm. Thus, there is clear contradiction in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceptable narration and did not bear the signature of any party, they are in the nature of dumb documents having no evidentiary value and could not be taken to be the sole basis for determination of undisclosed income of the assessee. The onus would be on revenue to collect cogent evidences to corroborate the nothings therein. The ratio of other decisions as cited by the assessee during first appeal also supports the case of the assessee. 12. Upon cumulative consideration of aforesaid facts and reasoning, we would hold that impugned additions as made by Ld. AO, merely on the basis of loose sheets without corroboration thereof, was not adequate enough to draw adverse inference of cash flows against the assessee. Therefore, we delete the same and allow the corresponding grounds as raised by the assessee. The Ld. AO is directed to recompute the income of the assessee in terms of our adjudication. Facts being pari-materia the same in this year, taking the same view, we delete the impugned addition as made by Ld. AO. The corresponding grounds as raised by the assessee stand allowed. 4. Addition of alleged cash expenses u/s 69C for Rs. 2033 Lacs 4.1 This addition is based on an excel shee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... +ALM2+PA0.5+S0.5+C0.25 NNSS Nehru 2,42,00,000 M8+S1+C0.5 TOTAL 20,33,00,000 The whole case of Ld. AO is based on this loose sheet only. Shri Vinoth, at the time of search, stated that the same were unaccounted cash payments while executing the contract projects. The Managing Partner Shri Anandavadivel, at the time of search, confirmed the aforesaid statement. However, post search proceedings, the Managing Partner retracted the earlier statement by stating that the dispute loose sheet was not gone through thoroughly and there was no time granted for verifying the accounting in the regular books of accounts. He further stated that the amounts forming part of the disputed loose sheet denotes the expenses incurred towards purchases and wages at various sites. The assessee, thus, denied that the entries as mentioned therein represent unaccounted cash expenditure and the same was nothing but a MIS report for the purpose of discussion. The notings were approximate project expenditure of different sites of the assessee s projects. Thus, the statements have been contradicted and therefore, the same would loose its evidentiary value. Before lower authorities, the assessee has taken a stand t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxmann.com 179; 22.01.2024), rendered in the context of Sec.153C, held that a sheet of paper containing typed entries and in loose form, not shown to form part of the books of accounts regularly maintained by the assessee or his business entities, do not constitute material evidence. The Hon ble Court referred to the decision of Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) as well as another decision in Common Cause vs. UOI (supra) while arriving at such a conclusion. The Hon ble Supreme Court in the case of CBI vs. V.C. Shukla (3 SCC 410) held that every transaction as recorded in the regular books needs to be independently corroborated and proved when some liability is to be fastened in respect of such transactions. The legal principle as laid down by Hon ble Supreme Court is that independent corroborative evidence is required in respect of entries in regular books of accounts and the same would apply in the present case. Pertinently, Special Leave Petition (SLP) of revenue against this decision has been dismissed by Hon ble Supreme Court on 20-08-2024 which is reported as 165 Taxmann.com 846. We are of the opinion that aforesaid principle as laid down b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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