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TMI Blog2023 (8) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... f notings / jottings in relation toward transaction, without any corroborative evidence for sustaining the addition. In the case of Vinit Ranawat [2015 (6) TMI 608 - ITAT PUNE] ITAT held that no addition can be made in the hands of the assessee on the basis of papers found with the third party when there was no business connection between the assessee and that third party. Fourthly, it is a settled principle of law that no addition can be made on the basis of statement of a third party, without allowing the assessee an opportunity of cross-examining the person on the basis of whose statement the addition has been made. The Hon'ble Supreme Court in the case of Andaman Timber Industries 62 taxmann.com 3 (SC), held that when statements of witnesses are made the basis of demand, not allowing the assessee to cross-examine the witness is a serious flaw which makes order a nullity, as it amounts to violation of principles of natural justice. In the instant facts despite a specific request made by the assessee to cross-examine the person on the basis of whose statement the addition was made, such opportunity of cross-examination was not granted to the assessee. Fifthly, we also observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and in law, the ld. CIT (A) has failed to appreciate that the seized excel sheet was duly reproduced in notice u/s 142(1) of the Act dated 21/10/2019 and satisfaction note was also provided to the assessee which was completely ignored by the Ld. CIT(A). Moreover the soft copy of the same was also sent to the assessee through e-proceedings facility, however the assessee has intentionally ignored the onus to explain the purpose of payment made to NODPL along with the source of funds for making payment of Rs. 8,05,11,000/-. Thus the assessment was framed in accordance with the principles of natural justice and equity. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) ought to have upheld the order of the A.O. 6. It is, therefore, prayed that the order of the Ld. CIT (A) be set aside and that of the A.O. be restored to the above extent." 3. The brief facts of the case are that assessee filed original return of income on 15.09.2015 declaring total income at Rs. 1,60,75,880/-. A search was conducted in relation to Navratna Organisers & Developers Pvt. Ltd. (NODPL) on 23.09.2019. After recording of "satisfaction note" on 26.09.2019 a not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose statement, additions were made in the hands of the assessee. The assessee has furnished all details of payment made by him for the purchase of plots and the construction thereon alongwith documentary evidences. The Assessing Officer has failed to link the notings of excel sheet with the details provided by the assessee. Further, the Affidavit of Mr. Murlidhar M. Trivedi also clearly indicates that the said transaction belongs to NODPL and not with respect to the assessee and therefore, no addition can be made on the basis of such Affidavit. The Assessing Officer has not been able to link the cheque payments made by the assessee with the cash payments and even with respect to borrowings etc. and therefore, the additions are not justified in absence of further evidences and lack of opportunity for cross-examination being granted to the assessee. Further, even in the affidavit of Shri Mr. Murlidhar M. Trivedi, it only states that the on-money belongs to NODPL, however, it does not become clear that how the assessee is linked with such on-money payment only on the basis of such affidavit. It is a settled legal position that additions cannot be made on the basis of mere jottings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcel sheet is for the period from March 2014 to September 2014. The Digital Data claimed to includes the-following : A) Receipt of on-money in respect of units booked. B) Refund of on-money upon receipt of cheque etc.". The AO has also relied upon the submission made by the NODPL wherein it has been accepted that the seized data belongs to its transaction and contains A) Receipts of on money in respect of units booked B) refund of on-money upon receipt of cheque C) Payment of material D) Payment of labour/liasoning expenses E) Borrowing / Advances given etc. However, the facts remains that the AO has not provided any of the above materials / documents relied upon by him to the appellant for his rebuttal though, the appellant has categorically requested the AO to provide such materials / documents / statements etc. if any, for his rebuttal before drawing any adverse inference against him. On the contrary, the appellant has furnished all the details of payment made by him for the purchase of plots and the construction thereon along with the documentary evidences i.e. copies of the Booking Agreements, supplementary agreements and Conveyance Deeds. The AO has failed to link the notings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition even for cash payment is not justified in absence of further evidences and cross examination as the appellant has categorically denied having paid any amount. 5.8 Thus, the action of the AO is in sheer violation of principle of natural justice and against the ratio laid down by the Hon'ble Supreme Court and other course of law referred and relied upon by the appellant in this regard as reproduced herein above. Hon'ble Supreme Court in case of Andaman Timber Industries Vs. CCE (Supreme Court) (2015) 62 Taxmann.com 3, has held that "According to us, not allowing the assessee to cross examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order. It is a settled legal proposition that additions cannot be made on mere notings and jottings and some corroborative evidence has to be brought on record to support the allegation. In the case of Gyankumar Agarwal v ACIT (2012) 146 TTJ 334 (Hyd.) it was held that " material considered by the Assessing Officer for making the addition was only the seized material which was a note book containing the details of day-to-day ledger accounts of various persons to whom the money was advanced. The Assessing Officer had to establish the link between the seized material and other books of account of the assessee. It could not be considered alone as conclusive evidence. The assessee as well as the assessee's son and also assessee's brother categorically stated at every stage of examination and statement recorded under section 132(1) or 132 that the seized material did not at all belong to them. In spite of this, the Assessing Officer proceeded to conclude that these seized materials conclusively belonged to the assessee. Leave alone the issue relating to authorship of the document seized, the department should find out and establish the nexus of those seized materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or handwriting of assessee to corroborate above making of payment by assessee was found during course of search, addition on account of such alleged payment was not justified fin favour of assessee] In the case of ACIT V Prabhat Oil Mills (1995) 52 TTJ 533 (And.) it was held that "As stated above the impugned addition has been made by the Assessing Officer on two grounds, viz., erratic yield of oil cake compared monthwise and secondly on the basis of some notings made in the note book found at the residential premises of one of the directors of the firm Hynoup during the course of search. In our view, both these points have been very ably discussed and analysed by the Commissioner (Appeals). As regards the yield a detailed chart was filed before the Assessing Officer and the Commissioner (Appeals) and the latter went through it threadbare and arrived at a conclusion that variation in the yield of monthwise and other allied factors were not Indication of the fact that the assessee had made sales of oil to Hynoup. We have also gone through this chart and agree with the findings of the Commissioner (Appeals). In addition to this a similar chart for the accounting year relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, particularly on account of the fact that he was not a Director or an authorised person of the aforesaid company. No adverse inference can be on the basis of any statement made by any person who is a stranger to the company to which the transaction is alleged to pertain. It was also submitted that in view of this fact Shri Murlidhar Trivedi would have no locus standi to make such statement which can implicate the appellant in any manner whatsoever and the fact cannot be ignored also that no such statement has also been made by him. Even Shri Murlidhar Trivedi, the searched party, had by way of an affidavit merely stated that the transactions in question pertained to NODPL and had never stated that the same are unaccounted or unexplained since he would neither be in a position to state that nor have any authority to make such statement." 6. The Department is in appeal before us against the order passed by Ld. CIT (A) deleting the additions made by the Assessing Officer. Before us, Ld. CIT (A) primarily relied upon the observations made by the Assessing Officer in the assessment order. The Ld. D.R. submitted that in this case, it is an admitted fact that the assessee had purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of certain loose papers recovered during search, however, no enquiry was conducted or independent evidence was brought on record, being corroborative evidence to connect seized material with the assessee, there was no infirmity or illegality in the order passed by Commissioner (Appeals) in deleting the addition. In the case of Pradeep Amrutlal Runwal 47 taxmann.com 293, the ITAT held that where the Assessing Officer made additions in the case of the assessee on the basis of notings in loose papers found during the search proceedings in case of third party against the name of assessee, as there was no evidence to suggest that payments were made by the assessee additions so made were not justified. In the case of Regency Mahavir Properties 89 taxmann.com 444, the ITAT held that no addition under Section 69 can be made on the basis of documents being found from premises of third party in absence of any document evidencing the fact that assessee had paid any cash as on-money to said party for purchase of property. In the case of Vinit Ranawat 88 taxmann.com 428, the ITAT held that no addition can be made in the hands of the assessee on the basis of papers found with the third ..... X X X X Extracts X X X X X X X X Extracts X X X X
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