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2025 (3) TMI 703

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..... arty is not sufficient to make addition on the ground that assessee had made unexplained investments. CIT(A) has rightly relied upon the decision of Appu Direct Pvt Ltd [2024 (1) TMI 1447 - ITAT CHENNAI] for the proposition that cash transactions recorded in excel sheets found during the course of search proceedings cannot be added in the absence of corroborative evidence. Also decided in the case of Sant Lal [2020 (3) TMI 692 - DELHI HIGH COURT] wherein the Hon'ble Court has held that the assessee cannot be fasten with the liability on the basis of third-party material in the absence of any cogent material. In the case of the assessee the AO neither conducted proper enquiry to identify the actual lender nor made an effort to gather or corroborate evidence to establish that the assessee has actually advanced cash loan to Shri S.Seetharaman - Decided in favour of assessee.
Shri Aby T Varkey, Hon'ble Judicial Member And Shri S. R. Raghunatha, Hon'ble Accountant Member For the Appellant : Mr. R. Anitha, Addl. CIT For the Respondent : Mr. R. Venkataraman, CA ORDER PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: This appeal by the revenue is filed against the order of the Commissione .....

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..... /2019-20/60/IT & the same was discovered through seized material vide annexure ANN/VPPL/GARS/ED/S dated 29/11/2017, on the perverse ground that it is not corroborated. 6. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored." 3. The brief facts of the case are that the assessee is an individual filed his return of income for the AY 2017-18 on 07.11.2017 declaring a total income of Rs. 43,91,480/-. A search and seizure action u/s. 132 of the Act was conducted in the case of M/s. Milan Textiles Enterprises Private Limited on 28.11.2017. In this connection, business premises of M/s.Viswas Promoters Private Limited and the residential premises of its director Shri S. Seetharaman were also covered. 4. During the course of search at the premises of Shri S.Seetharaman, a pen drive Scandisk Cruzer Blade 16GB - SDCZ50-016G D33724 BL1605225510W was seized. The said pen drive contains an excel sheet with noting of cash loans and repayments by Shri S.Seetharaman from various parties. The excel sheet contains the na .....

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..... 2016." 7. Aggrieved by the order of the AO, the assessee carried the matter before the Ld. CIT(A). The Ld. CIT(A) allowed the appeal of the assessee on legal grounds as well as on merits of the case. The Ld. CIT(A) quashed the assessment proceedings observing that the notice ought to have been issued by the AO u/s. 153C of the Act as against u/s. 148 of the Act. According to Ld. CIT(A), the case cannot be reopened on the basis of material seized during the course of search. Thus, the Ld.CIT(A) held that the reopening of the assessment is bad in law. Upon merits, the Ld. CIT(A) deleted the addition made in the hands of the assessee observing that the AO failed to bring on record any evidence to establish that the assessee had actually advanced loan to Shri S.Seetharaman. The Ld. CIT(A) further observed that there is no corroborative evidence on record for making an addition in the hands of the assessee. The Ld. CIT(A) noticed that the AO failed to bring 'relevant records' to establish that the assessee had actually advanced loans to Shri S.Seetharaman, though the AO has referred to 'relevant records' in the assessment order. Thus, the Ld. CIT(A) held that the excel entry stating th .....

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..... Officer should have Concrete evidence like documents or material found during the search. Mere statements without corroborative evidence are not sufficient. (iii) CIT v.s. P.Jeyapragasam (2014) 225 Taxman 207 (Mad) The Hon'ble High Court ruled that the Assessing Officer cannot make additions based on mere suspicion or uncorroborated statements. The additions must be backed by credible and concrete evidence found during the search. 1. ACIT v. Dr. K. Prakasam (2012) 23 ITR (Trib) 505 (Chennai) The Hon'ble ITAT Chennai held that the AO must base any additions on credible evidence found during the search. Unsupported allegations or assumptions cannot justify the additions. 6.24 In view of the above detailed discussion and the various judicial decisions relied upon, the undersigned is of the considered view that the AO has proceeded make the addition on the basis of the statement of shri. Seetharaman without bringing on record any cogent and corroborative evidence to substantiate the advancement of loan by the appellant to Shri. Seetharaman. Thus the addition contemplated by the AO is not sustainable on merits. 6.25 In this back drop all the ground raised by the appellan .....

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..... ts of the case, when the decision is held in relation to the Survey proceedings. The Ld.DR thus submitted that the order passed by the Ld.CIT(A) is to be reversed and the addition made by the AO is to be upheld. 12. Per contra, the Ld. AR supported the order passed by the Ld. CIT(A) and submitted that the Ld. CIT(A) has passed a detailed order considering the assessment records and the same needs to be upheld. 13. The Ld. AR invited our attention to the sworn statement deposed by Shri S.Seetharaman. By referring to Page 6 of the Paper Book the Ld. AR submitted that Shri S.Seetharaman has stated that the assessee has arranged the loan through his father Shri P.Thangavelu. The Ld.AR submitted that Shri S.Seetharaman has never admitted that he had borrowed Rs. 1,00,00,000/- from the assessee. Thus, the Ld. AR submitted that the statement of Shri S.Seetharaman cannot be relied upon for making an addition in the hands of the assessee. The Ld. AR further submitted that no cross examination was provided to the assessee. The Ld. AR submitted that no enquiry was conducted with the father of the assessee. The Ld. AR argued that the AO failed to bring on record the actual lender, instead ma .....

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..... orative evidence on record to prove that the assessee has advanced cash loan to Shri S.Seetharaman. The excel sheet was neither authored by the assessee nor found from the premises of the assessee. The name of the assessee in the excel sheet found can trigger the enquiry and that itself is not sufficient to establish the ownership of investment as unexplained. The mere fact that there were certain entries found from the records of third party is not sufficient to make addition on the ground that assessee had made unexplained investments. 19. The Ld.DR has placed on record the order dated 14.12.2020 passed by the Hon'ble ITSC in the case of Shri S.Seetharaman. Upon perusal of the same, it is noted that the loans where balances were NIL were not verified. Thus, the loan of Rs. 1,00,00,000/- noted against the name of the assessee was never verified by the Assessing Officer since the same was not outstanding. In the absence of verification, the mere listing of the name of the assessee in the order passed by the Hon'ble ITSC cannot be the basis to conclude that the assessee has advanced loan. It is further noted that the Ld. CIT(A) upon examination of the order passed by the Hon'ble IT .....

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..... ns and are outside the books of accounts of the assessee. We further noted that, the AO neither during the assessment proceedings has made any reference to statements recorded u/s. 132(4) of the Act during the course of search in Christy group of cases or in the case of the assessee with reference to excel sheets found during the course of search to verify the contents recorded therein. Neither the person from whom said documents was found was examined nor the appellant or its partners was confronted with those evidences to verify the contents therein. From the above, it is clear that the AO has made 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 ade .....

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