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TMI Blog2025 (4) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances involved in both the appeals are identical and therefore are taken up together by passing this consolidated order. The only issue for our consideration in these appeals pertains to deletion of addition made u/s. 69C on account of alleged cash transaction made by the assessee, relating to transfer and posting. 3. Facts as culled out from the records are that assessee Shri Ranjit Rajaram Hande filed his return of income on 08.02.2022 reporting total income at Rs. 23,16,910/-. Return of income in the case of Shri Rajendra Sawaleram Rahane was filed on 16.12.2021 reporting total income at Rs. 19,51,990/-. It is noted that a search action was undertaken u/s. 132 of the Act in the case of Rucha Group run by Shri Prashant Nilawar, GNP Group run by Shri Girish Pawar and Jairaj Group run by Shri Jairaj Shah. Ld. Assessing Officer observed that during the course of this search operation, certain incriminating material relating to cash given by these assessees for influencing their transfer and posting were found and seized. On the basis of such material and statements of various persons recorded during the said search action, subsequently, cases of the present asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the group searched, to support the allegation made against them. 3.3. Ld. Assessing Officer, vide orders dated 25.01.2024 and 24.01.2024 passed under section 143(3) r/w section 147 of the Act, disagreed with the submissions of both assessees by placing reliance on statements recorded on oath under section 132(4) of the Act and the documents found during the search. Ld. Assessing Officer concluded that, all the persons whose name is appearing in the documents are Engineers working with PWD. Further, ld. Assessing Officer held that, name of persons mentioned in the document seized during the search contains names of the assessee, and the parties whose statements were recorded during the search explained that, the names mentioned in the seized documents are PWD Engineers. Further, ld. Assessing Officer, by referring to the transfer and posting order dated 07.08.2020 passed by the Government of Maharashtra PWD, wherein both assessees were transferred as per the choice posting, held that, both clearly establishes that the name mentioned in the seized documents are the name of both the assessees. 3.4. Further, in case of assessee in ITA No. 5621/Mum/2024 by referring to statement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Shri Shailendra Rathi was retracted post search proceedings. He also took note of the fact that statement of other parties were also subsequently retracted. Further, statement of Avish Atal from whose premises, certain incriminating material were found and seized was not discussed by the ld. Assessing Officer in the impugned assessment order. Thus, ld. CIT(A) deleted the addition so made by holding that the additions are not tenable since they were made in the hands of both the assessees by relying on statement of third parties without there being any kind of independent linkage of such material with the assessees. Aggrieved, Revenue is in appeal before the Tribunal. 5. Ld. DR supported the order of ld. Assessing Officer and submitted that documents seized from the search premises is evident enough to show cash payments were made by both assessees to Ruch Group, based on which these assessees were posted with the PWD department under Government of Maharashtra. The Ld. DR also placed reliance on modus-operandi of the cash transaction received by the Rucha Group from these assessees as described in the statements recorded. He thus, vehemently supported these additions and praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the post/place which that officer wants. Then I give this list to Prashant Nilawar. I don't know what he does with this list. He then returns another list to me, which I give to the desk officer in PWD. Then this list is moved upwards and gets finalized. Sir, for getting these posts, the officers pay amounts in cash varying from Rs. 5 lakhs to Rs. 1 crores. Once the posting of the officer is confirmed in the transfer order, then the officer pays the cash amount to us. Sometimes he delivers the amount to us, sometimes we pick it up from him. The collection of these amounts is done by Sonu (Lalit) Mishra and Pawan Mishra. Then I don't know what is done with these amounts." 10. We further find that when the seized documents were confronted to Shri Shailendra Rathi, he stated on oath under section 132(4) of the Act, as follows: - "these details were received from the office of PWD ministry, However, I am not sure about the exact person. These are the details of the amounts received in cash from various officers and contractors. The list has: been summarised as Sheet A and Sheet B. Sheet A is the detail of officers and contractors who had fully paid their amount receivable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to confirm that all the names in the list have been sent through his reference. Subsequently, the references of such Engineers are discussed and possibilities of their transfers to the desired posts are explored. Thus, from the said list the final list of Engineers is prepared who can be accommodated in the Annual General Transfers list. Q.30 Please mention apart from you who is involved in Rucha Consultancy LLP in the process of Transfers and Postings. Ans. Sir, apart from me Ravi Wadepalle is involved in Rucha Consultancy LLP in the process of transfers and postings." 12. From the perusal of the aforesaid statements recorded under section 132(4) of the Act, during the search proceedings, we find that all the statements, explaining the contents of the documents seized during the search proceedings, only explain the general modus operandi adopted by the Rucha Group, wherein it was alleged that the Group in connivance with certain officials in PWD department was involved in transfer and posting of PWD Engineers. It is pertinent to note that in none of the statements relied upon by the AO, which formed the basis for making the addition against the assessee, there is any mention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Prashant P Nilawar, the partner of Rucha Consultancy LLP, through WhatsApp/FaceTime and informed about the desired postings. However, from the perusal of the assessment order, it is evident that Shri Prashant P Nilawar was neither examined nor any statement recorded during the search proceedings. At this stage, it is also pertinent to note that the Revenue has not disputed the fact that the statements recorded during the search proceedings were subsequently retracted. Therefore, in the facts and circumstances of the present case, it becomes all the more necessary for the Revenue to substantiate the addition with independent evidence, which is completely lacking in the present case. As regards the contention of the Revenue that the documents found at the premises of Shri Shailendra Rathi are corroborated with the documents found at the premises of Shri Avish Atal, it is pertinent to note that during the search Shri Ravi Wadepalle admitted that the documents pertaining to Rucha Group are also kept at the residence of Shri Avish Atal. Thus, it is evident that both documents pertain to the Rucha Group which were kept at different places and the same cannot be treated as corrobora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. For drawing the inference that she must have received income without passing receipts the Income-tax Officer relied upon the two entries which appeared on one page of that ledger of Vasu Films, which read as follows: "20-9-1962 16/8 To Lata Mangeshkar 800 W plus L.F. Rs. 700 B 102 1,500 11-6-1963 16/5 To Lata 123 2,000 B 123 2,000". In the statements recorded of one N. Vasudev Menon, the managing partner of Vasu Films, and one C.S. Kumar, the firm's Bombay manager, the entries were explained by them by stating that the letter "W" put against the figures mentioned in the entries represented payment in "white" while the letter "B" put against some items indicated payment in "black". The assessee was given an opportunity to cross-examine these persons. The Income-tax Officer accepted the entries as showing that payments had been received by the assessee for which receipts had not been passed by her and these payments were outside the books of account and he also relied upon the statements made by these two persons. The Appellate Assistant Commissioner confirmed the additions made by the Income-tax Officer. Before the Tribunal it was contended on behalf of the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponding entries were there in the day-book of the relevant period and that Vasu Films did not rely on this ledger in the course of its own assessment proceedings but for its own assessment proceedings different set of books had been relied upon as genuine set of books. As regards the evidence of the two witnesses on which reliance was placed by the department, the Tribunal has pointed out that so far as N. Vasudev Menon was concerned, he had no personal knowledge of the actual payments made to the assessee and, therefore, his evidence could not carry the case of the department any further and so far as the Bombay manager, C.S. Kumar, was concerned it came to the conclusion that though he purported to say that he had made the payments in "black" to the assessee- payments corresponding to the entries to be found in the ledger-his evidence suffered from serious infirmities, which have been pointed out by the Tribunal in its reasons. It pointed out that as the Bombay manager he used to receive amounts from Madras from out of which he used to make disbursements in Bombay but he maintained no account in respect of the same which made it difficult to rely on his evidence. The other se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arantee about the truthfulness or genuineness of the entries in the ledger. Moreover, entries in books of account-whether in day-book or in the ledger-are merely corroborative evidence and in the absence of proper corroborative evidence the primary direct evidence would alone be required to be scrutinized and that evidence in this case consisted of the testimony of C.S. Kumar and the evidence of that witness was found to be thoroughly unreliable by the Tribunal. After all, the entries in the day-book or the ledger would be a corroborative piece of evidence and once the direct evidence of the person who is said to have made payments in "black" to the assessee is disbelieved, we do not think that any value could be attached to the entries in the ledger or to the entries in the daybook even if one had been produced. In the circumstances, we feel that the questions which are sought to be referred arise out of a finding of fact recorded by the Tribunal on pure appreciation of evidence." 14. Accordingly, in view of the aforesaid findings, we find no infirmity in the findings of the learned CIT(A) in deleting the addition of Rs. 1,25,00,000 made by the AO under section 69C of the Act. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had paid cash to the group. When the statement of the key person was put to the assessee, he denied of making any payment in cash. However, the department made addition by relying on the statement of key person of the group. The Hon'ble Mumbai ITAT relying on series of judicial pronouncements held in the case of Naren Premchand Nagda v. ITO (supra) that in the absence of any evidence found against the assessee, no addition can be made on the basis of documents found from the premises of third party and the statements recorded during the course of search conducted in third party premises. In this case the transaction of purchase of property by the assessee from the builder had not been denied by the assessee. Further, the cheque payment was also reflected in the seized notings. Inspite of this, the addition made on the basis of notings in respect of cash transaction was not confirmed by the Hon'ble Mumbai ITAT. 7.3.2 In the case of Jawaharbhai Atmaram Hathiwala v. ITO [2010] 128 TTJ 36 (Ahd.), addition was made by relying on seized material and statement of a third party without bringing any other evidence on record. The Hon'ble Ahmedabad Tribunal deleted the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts are as under: We have perused the decisions of the Co-ordinate Benches of the Tribunal and found that the ratio of law laid down is that no addition can be made on the basis of messages from SMS or WhatsApp between two persons unless there is corroborative evidences on record. 7.4 Thus it is seen that the Hon'ble Courts have clearly held that documents/material found from the premises of a third party or a statement of a third party cannot be relied upon to make additions in the hands of the assessee, unless such material or statement is corroborated by independent evidence linking such material to the assessee. In the present case it is seen that the addition of Rs. 5,00,000/- u/s. 69A of the Act has been made by the AO relying on the statement of a third party, which in any case has been retracted. Moreover, in his statement, the third party had stated that the transaction could not take place. Also, the addition has been made on the basis of material found being whatsapp chat during the course of the search conducted on a third party. The Hon'ble Courts have clearly held that no addition can be made on the basis of messages from SMS or WhatsApp between two persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of seized materials found from search premises of Rucha Group, GNP Group and Jairaj Group. On perusal of the assessment order in case of both the assessees, it is noted that ld. Assessing Officer relied on the following seized materials and statements: "A. Seized Material/Images/Loose Papers / Documents i. Found and seized from the residence of Mr. Avish Atal ii. Found and seized from the mobile of Shri Shailendra Rathi. B. Statements recorded of: i. Mr. Javed Shaikh, recorded on 23-09-2021 ii. Mr. Shailendra Rathi, recorded on 25-09-2021 iii. Mr. Ravindra Wadepalle (assessee was not made aware of date of recording of statement) 8.1. Further, on perusal of the assessment order, it is noted that ld. Assessing Officer did not bring anything corroborative in order to substantiate the statements recorded of Javed Shaikh, Shailendra Rathi and Ravindra Wadepalle. Impugned addition is based on the statements alone, made in the hands of the two assessees before us. 8.2. On perusal of the assessment order, it is also noted that assessee sought for cross-examination of the witnesses which was rejected by the Ld. AO, without giving any reasons but by stating that statements ..... X X X X Extracts X X X X X X X X Extracts X X X X
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