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TMI Blog2024 (1) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... ny/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 made on the basis of entries pertaining to the assessee firm based on 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 the there were no corroborative evidences to substantiate the entries in the seized materials. It is to be noted that the assessee itself demonstrated during the appellate proceedings that the entries mentioned in the excel sheet as bank transactions were exactly matching with the bank statements. The Ld CIT(A) directed to recompute the undisclosed income after excluding transactions. In contrary to his stand, the CIT(A) erred in holding that there were no corroborative evidences to substantiate the entries in the excel sheet. 2.2 The Ld. CIT(A) failed to appreciate that matching of bank entries with the entries of excel sheets clearly proved beyond doubt that the seized excel sheets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and electronic devices were found and seized from the residential premises of Shri. P. Karthikeyan, an employee of M/s. Christy Fried Gram Industry. The said electronic device contains three excel sheets with notings of transactions between the assessee and M/s Christy group of concerns for the assessment years 2017-18 & 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 2017-18 & 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 2017-18 & 2018-19 and accordingly, noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h given/received from the appellant for both assessment years and made additions u/s. 69A of the Act as unexplained money. The Assessing Officer, while computing total amount of cash transactions has appended two zeros into cash transactions appearing in seized material, i.e. excel sheet for two assessment years and worked out unaccounted cash transactions for both assessment years and made additions u/s. 69A of the Act. The relevant findings of the Assessing Officer are as under: "4. Cash transactions with M/s. Christy Friedgram Industry group: References are made to the following xi sheets found in the electronic devices maintained by Shri. P. Karthikeyan and the inferences thereon:- (a) xl sheet titled 'Annex-3-Appu-CFI-Running account' contains transaction for the period 22.03.2017 to 23.06.2017. It contained both cash and account transfer transactions with M/s. Appu Direct Pvt Ltd & other group concern. As per this sheet the total cash given to M/s. Appu Direct Pvt Ltd comes to Rs. 19,93,465/- and the total cash received from M/s. Appu Direct Pvt Ltd comes to Rs. 2, 19,33,025/-. (b) xl sheet titled 'Appu revised format.xls'subsheet 'cash redc & paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for AY: 2018-19. 7.1 The cash transactions found in xi sheet titled 'Appu revised format.xls' sub sheet 'cash recd & paid' contains transfers & receipts with M/s. Appu Direct Pvt Ltd for the period 03.01.2017 to 01.03.2017. In this sheet there are certain entries are marked as "Appu". As per this sheet, the total receipts were Rs. 3,93,67,340/- and payments were Rs. 4,03,41,264/-. Thus the total cash transactions for AV: 2017-18 is Rs. 7,97,08,604/-. The assessment year wise quantum involved in respect of the cash transactions found in these excel sheets is: A.Y Amount (in Rs) 2017-18 7 ,97 ,08,604 2018-19 2,39,26,490 7.2 The cash transactions have been assessed in the hands of M/s. Christy Friedgram Industry as unexplained expenditure u/s 69C of the Act. In view of this, as the assessee has not established beyond doubt that it did not carry out any cash transactions, going by the nature and maintenance of the entries pertaining to the cash transactions, it is inferred that these are cash transactions outside the books of accounts out of undisclosed sources. Accordingly, they are added to the total income of the assessee in the respective assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porting evidence to allege such cash transactions are taken place and the same can be considered as unexplained money u/s. 69A of the Act. 6. The ld. CIT(A), after considering relevant submissions of the assessee and also taken note of certain judicial precedents, deleted additions made u/s. 69A of the Act by holding that, the excel sheets found in the possession of third party did not have evidentiary value, since they were not found in the premises of the assessee. The ld. CIT(A) further observed that, no corroborative evidence like cash receipts, unaccounted purchase bills or sale bills etc., were found which is matching the alleged cash transactions recorded in the excel sheets found in the possession of Shri. P. Karthikeyan. Further, no evidences were found during the course of search in the premises of the assessee that corroborate transactions noted in the excel sheets seized in the premises of Shri. P. Karthikeyan. Further, the Assessing Officer, did not make any reference in the assessment order to the statement recorded u/s. 132(4) of the Act, in the search proceedings of M/s. Christ group of cases to corroborate evidences contained in excel sheets. Further, neither the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isty group, it was noticed that the appellant group was maintaining two set of accounts "tally 1 and tally 2" and also in the practice of replacing the invoices not checked by any Government authorities in the accounted tally. The ld. DR further submitted that, the ld. CIT(A) failed to appreciate that the Assessing Officer based on statement of Shri. Hari Hara Krishnan, AGM, Finance of Christy group of industries stated that author of Pendrive is Shri. P. Karthikeyan and entries made as unaccounted cash book relates to cash transactions at Rs. 4 crores and the entries are made by appending two zeros in the value. The Assessing Officer on the basis of statement recorded from employees of Christy group coupled with evidences collected during the course of search clearly makes out a case of unaccounted cash transactions outside the books of accounts which needs to be assessed u/s. 69A of the Act, but the ld. CIT(A) without appreciating relevant facts simply deleted additions made by the Assessing Officer. 8. The Ld. Counsel for the assessee, Shri. M.V. Prasad, CA supporting the order of the CIT(A) submitted that, there is no basis for the Assessing Officer to make additions u/s. 69A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort the transactions recorded in excel sheet, it cannot be presumed that said transactions are cash transactions made outside the books of accounts. 9. The Ld. Counsel for the assessee, further submitted that the Assessing Officer has appended two zeros to value recorded in excel sheets on the basis of statement of one Shri. Harihara Krishnan, AGM, Finance of M/s. Christy group of cases. But, fact remains that his statement is with reference to cash book called 'Erandum Thall' found during the course of search in the case of M/s. Christy group of cases. In response to specific question, he has admitted that value has been recorded removing two zeros in the 'Erandum Thall'. Based on such admission, the Assessing Officer inferred that the assessee has removed two zeros to value of the cash transactions recorded in excel sheets, without understanding the fact that the statement of Shri. Hari Hara Krishnan and the cash book found therein is nothing to do with the business of the assessee. The ld. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer and their order should be upheld. 10. We have heard both the parties, perused materials a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade additions towards cash transactions u/s. 69A of the Act, without there being any corroborative evidence to strengthen the entries recorded in excel sheet found during the course of search on third party. Therefore, we are of the considered view that no additions can be made u/s. 69A of the Act, on the basis of evidences found in the possession of third party, without examining contents of said documents from the person from whom said documents was found and also from the assessee and its partners. The evidences relied upon by the AO in the form of excel sheets does not constitute adequate evidence to draw adverse inference against the assessee, in the absence of any other corroborative evidence. This proposition has been laid down by the Hon'ble Delhi High Court in the case of CIT vs Sant Lal [2020] 118Taxman.com 432, where it has been clearly held that the assessee cannot be put to any liability on the action of a third person where the material was not found from the premises of the assessee nor was in the handwriting of the assessee, since, the third person may write the name of any person at his sweet will and the revenue did not make any effort to gather or corroborate evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also pertinent to observe that seized material relied upon by the AO to draw adverse inference against the assessee towards cash payments and receipts did not contain complete information with regard to date, amount of cash payment/receipt and the name of recipient and payer. There is absolutely no reference in the seized material regarding the nature of the said transactions of cash payments/receipts and the purpose of said payments/receipts. Therefore, in our considered view unless the AO makes out a case that alleged cash receipts and payment pertains to transactions of assessee which constitute income or expenditure, no addition can be made on the basis of said documents. In this connection, it would be relevant to refer to the decision of ITAT Jabalpur in the case of ACIT vs Satyapal Wassan [2008] 5 DTR 0202, wherein it was held that importance of gathering corroborative evidence in support of the contents of a document, particularly when the document is bereft of necessary details and is not complete in all respects. The proposition that addition cannot be made merely on the basis of entries in loose sheets found in the premises of a third party without bringing on record i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose transactions from the person who is having control over the electronic devices and also from the searched person and these statements should be confronted to the appellant firm for getting sanctity that these transactions had actually being taken place. However, no such exercise has been carried out by the AO before making additions u/s. 69A of the Act. Further, the appellant firm has denied that there are any transactions outside the books of accounts. Therefore, once the appellant firm has denied the transaction outside the books of accounts, the AO has to prove with evidence that alleged cash transactions recorded in excel sheets were belongs to the assessee. However, no such effort was made by the investigation department and the AO. In this regard, it is necessary to refer to the decision of Hon'ble Allahabad High Court in the case of CIT vs Shadi Ram Ganga Prasad, SP Kanodia and Smt. Premlatha Kanodia [2011] 9 Taxmann.com 193 (Allahabad), where it has been held that the loose papers found from the possession of a person during the search can be used to raise a presumption against the said person only. The Hon'ble High Court further held that, contents of the said loose sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o zeros to value and arrived at aggregated cash payments/receipts as per excel sheets and made additions u/s. 69A of the Act. First of all, the AO has not assigned any valid reasons to add two zeros to value recorded in excel sheets. Further, Shri. Harihara Krishnan, AGM Finance of Christy group is nothing to do with the business activity of the assessee and his admission with reference to certain documents found during the search in the case of Christy group of cases is nowhere relates to assessee and assessee business. Further, the statement of Shri. Harihara Krishnan, cannot be relied upon to take adverse inference against the assessee, unless said statement is confronted to the assessee. Further, on careful examination of statement of Shri. Harihara Krishnan and more particularly question no. 21, it is noted that apart from explaining specific transaction of cash payment through RRM found noted at page no. 107 of loose sheet bunch, he had also furnished a general explanation with regard to the entire unaccounted cash book maintained by Christy group. But fact remains that, the excel sheet relied upon by the AO to make additions did not form part of unaccounted cash book referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, we are of the considered view that the AO is erred in appending two zeros to the cash transactions appearing in the seized excel sheets and same is untenable. 14. In so far as ground no. 2.5 of revenue appeal with regard to undisclosed cash transactions, we find that when there are undisclosed cash receipts and cash payments in the seized material, it is not appropriate to aggregate said receipts as well as payments for the purpose of determining the undisclosed income. Since, the cash payments are made out of cash receipts to the extent of the available cash receipts, aggregating the cash receipts as well as cash payments for determining the undisclosed income results in exaggerated amount of such income. It is further noted that, when the AO is not able to identify the nature of cash receipts or payments then the best is to net off the cash receipts against the cash payments to arrive at undisclosed income. Therefore, in our considered view, findings of the facts recorded by the ld. CIT(A) in Para 66 & 67 of their order with regard to the manner of computing undisclosed income appears to be reasonable and acceptable. The above findings with regard to the quantificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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