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TMI Blog2025 (4) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... rns on 23-09-2021. During the course of search operations, certain incriminating materials were found and statements were also recorded from the partner Shri Prashant Nilawar, its employees and other persons. However, the statements were retracted later and the said retractions were not accepted by the AO. Based on the materials and statements, the AO completed the assessment of the assessee for the year under consideration determining total income at Rs. 47,75,54,040/-. The Ld CIT(A) granted partial relief and hence both the parties have filed these appeals. 3. We shall first take up the appeals filed by both the parties, since certain additions confirmed by Ld CIT(A) and relief granted by him are based on the very same material. Those grounds of both the parties are adjudicated together. 4. We shall take up the appeal of the assessee as lead case. In the first ground, it is contended that the assessee should have issued notice u/s 148 of the Act for this year and hence, in the absence of said notice, the notice issued u/s 143(2) is invalid. We notice that the search has taken place on 23-09-2021 relating to AY 2022-23. The time period for completing regular assessment for AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of Shri Ashish Chhangani. It was also submitted that the above said person has retracted his statement by filing an affidavit along with letter dated 18-10-2022. 6.3. The AO did not accept the explanations so given by the assessee. He held that the image was found in the possession of employee Shri Ashish Chhangani and he has also explained it to be the unaccounted transactions. The AO also noticed that the assessee has, in the alternative, submitted that the addition, if any, should be restricted to the difference of alleged receipts and payments amounting to Rs. 11.32 lakhs. Since the assessee did not furnish any detail relating to the transactions, the AO rejected the alternative contentions of the assessee. Accordingly, the AO assessed the alleged receipt of Rs. 2.10 crores as income u/s 69A of the Act as unexplained money. The alleged payment of Rs. 1.99 crores was assessed as unexplained expenditure u/s 69C of the Act. 6.4. In the appellate proceedings, the Ld CIT(A) confirmed the addition of Rs. 2.10 crores. In respect of Rs. 1.99 crores, the first appellate authority held that the sources of payments are explained by the addition of Rs. 2.10 crores. Accordingly, he de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O did not bring any other corroborative material to support the entries found in whatsapp message. Identical view has been taken by Visakhapatnam bench of ITAT in the case of Shri Manchukonda Shyam (ITA 87 (Viz) 2020 dated 23-09-2020). The Surat bench of ITAT has also expressed identical view in the case of ACIT vs.Shankar Nebhumal Uttamchandani (ITA 321/Surat/2022). 6.9. It is well settled proposition of law that abstract documents, which could not be corroborated with any other credible evidences, should be considered as dumb documents only. In that case, the AO could not have made addition on the basis of dumb documents. In the case of Common Cause vs. UOI (2017) (77 taxmann.com 245) (SC), it was held that the entries in loose papers/sheets are irrelevant and inadmissible as evidence. It was further held that "such loose papers" are not books of account and the entries therein are not sufficient to charge a person with liability. 6.10. We noticed earlier that the AO has made the addition of Rs. 2.10 crores u/s 69A of the Act as unexplained money. We shall examine as to the provisions of sec.69A can be invoked in the facts of the present case. Section 69A of the Act reads as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sements noticed in the whatsapp image was out of the alleged receipt of Rs. 2.10 crores. Hence he held that the source of disbursements of Rs. 1.99 crores stand explained and accordingly deleted the addition. The Revenue is aggrieved. 7.1. We heard the parties on this issue. We have held in the earlier paragraphs that the AO was not justified in relying upon whatsapp image taken from the phone of Shri Ashish Chhangani for making the addition of Rs. 2.10 crores and Rs. 1.99 crores. Hence we confirm the relief granted by Ld CIT(A) on the above said reasoning. Even otherwise, as rightly held by Ld CIT(A), the sources of alleged disbursements would stand explained from the same document and hence no addition is warranted. Accordingly, this ground of revenue is rejected. 8. The next issue urged by the assessee in Ground no.4 relates to the addition of Rs. 1,40,500/- made by the as unexplained expenditure u/s 69C of the Act. 8.1. From the smart phone of Shri Ashish Chhangani, an image depicting the certain cash disbursements was found. The aggregate amount mentioned therein was Rs. 1,40,500/-. Shri Ashish Chhangani stated in his sworn statement that the same represented unaccounted ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the record. The impugned document depicting the bonus details were found in the drawer of an HR employee. According to the assessee, the bonus disbursements are made from Accounts department and not by her. Hence her statement should not be relied upon. Even though the accounts manager and the director of the assessee had confirmed the details of bonus payment, yet during the course of assessment proceedings, the assessee has stated that it was only a proposal and it was not acted upon. It was also submitted that the statements given all the three people have been retracted. The Ld A.R submitted that the statement contained the names and amount, but cash was mentioned against only few persons. Hence, it cannot be presumed that the cash disbursement, if any, was made to all employees. The Ld A.R submitted that the assessee did not pay bonus due to covid-19 pandemic. We also notice that the assessing officer did not conduct any enquiry with any of the employees in order to find out the veracity of explanation given by the assessee. Hence, the AO could not have made the addition on the basis of retracted statements and also without conducting any enquiry with the employees who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition as discussed by me above, in my considered view, the AO has failed to discharge its burden and to bring on record the cogent, convincing and relevant documentary evidences to make addition u/s 69C of the Act. Therefore I direct the AO to delete the same. It is ordered accordingly." 9.5. The facts prevailing in the instant case in identical with the case decided by the Co-ordinate Bench. Accordingly, we follow the decision rendered in the above said group case by the co-ordinate bench and direct the AO to delete this addition. The order passed by Ld CIT(A) on this issue is set aside. 10. The next issue urged by the assessee in Ground no.6 relates to the addition of Rs. 59.00 lakhs. The revenue, in ground no.2, is contesting the relief granted by the Ld CIT(A). 10.1. During the course of search operations, certain loose sheets with yellow sticky notes were found, wherein the details of receipts aggregating to Rs. 59.00 lakhs and payments aggregating to Rs. 24.00 lakhs were found. Before the AO, the assessee submitted that the AO had placed reliance on the statement given by Shri Pawan Mishra, who is only an office boy serving tea/coffee. It was also stated that the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO to delete this addition. We noticed earlier that the Ld CIT(A) has deleted the addition of Rs. 24.00 lakhs made u/s 69C of the Act on the reasoning that the sources of those expenses would stand explained. In the preceding paragraphs, we have held that the AO could not have placed reliance on the sticky notes, since they are uncorroborated and hence dumb documents. Accordingly, we confirm the relief of Rs. 24.00 lakhs granted by Ld CIT(A) for the reasons discussed above. 11. We shall now take up the appeal filed by the revenue. Ground no.1 and 2 urged by the revenue has already been adjudicated in the earlier paragraphs. In ground no.3, the revenue is aggrieved by the decision of Ld CIT(A) in granting relief of Rs. 17.00 crores. 11.1. The facts relating to this addition are stated in brief. The revenue carried out search and seizure operations in the case of Hiranandani group on 22-03-2022 and at that time, a statement u/s 132(4) of the Act was taken from Shri Prabhakar Dalvi, who was GM of a group company. In the statement taken from him, he had stated to have paid cash of Rs. 17.00 crores to the assessee and its partners in relation to some "EP" work. Based on this stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant had provided any service of "EP Work" to Hiranandani Group based on which the addition was made. On the contrary, in response to notice issued u/s 133(6) of the Act by the AO, Shri Niranjan Hiranandani and Hiranandani Construction Pvt. Ltd had denied entering into any such alleged transaction with the appellant and also denied making any such payment to the appellant. 12.7 It is also pertinent to mention that the Shri Prabhakar Dalvi had already retracted his statement. The affidavit retracting the statement of Shri Prabhakar Dalvi was filed by the appellant before the AO and also before this office. However, while passing the assessment order the AO has completely ignored this affidavit and simply relied on the uncorroborated statement given by him which was subsequently retracted. 12.8 The addition made by the A.O. suffers from serious flaws i.e. there was no evidence found by the department in support of the statement made by Shri Prabhakar Dalvi, no connection was established or any transaction was found to have been made between these two parties and the AO failed to consider the reply filed by Hiranandani Group and the affidavit retracting the statement of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was justified on the ground that Shri Ketan O. Der during the course of cross examination by the assessee has stated that 'on money' was paid by the assessee and that nowadays, in property transactions part payment in cash is a custom. 6. The learned Authorised Representative of the assessee during the course of the hearing, submitted that besides the statement of Shri Ketan O. Der partner of Ohm Developers, there was no other evidence to show that assessee had in fact paid any 'on money' for purchase of flat. He relied upon the decision of Hon'ble Bombay High Court in the case of Addl CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom) wherein it was held as under: "3. In our view, the question has been framed by the Department so as to give it a colour of a question of law, for, in our view, having regard to the manner in which the Tribunal has dealt with the said entries, it cannot be said that the Tribunal has ignored the entries in the ledger of Vasu Films relating to the so called payments made by the firm to the assessee. In fact, the Tribunal has discussed these entries appearing in the ledger of Vasu Films and has given substantial reasons as to why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which reliance was placed. Mr. Joshi tried to urge that, after all, the entries in the ledger were the entries in a book which was not meant for being disclosed to the IT authorities because it contained the entries pertaining to the payment in 'black' and the day-book for the relevant period that was available was a day-book meant for being produced before the taxing authorities as it contained entries pertaining to all legal and white payments and naturally in such day-book no corresponding entries would be found. So no importance should have been attached by the Tribunal to the absence of a day-book containing the corresponding entries. In the first place it must be pointed out that this is not the only reason for rejecting the entries but the Tribunal has given other sufficient reasons for rejecting the same. But even with regard to this reason which has been given by the Tribunal, though it may be contended that since the entries in the ledger pertained to the payments in 'black' no corresponding entries could be found in the daybook which was meant to be produced before the IT authorities, still the fact remained that the day-book from out of the other set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions as there was no guarantee that the entries were genuine Decision of the Tribunal in the case of Patel Oil Mills & Ginning Factory (ITA No. 803/Ahd/1999) followed; Addl CIT v. Miss Lata Mangeshkar [1974] 97 ITR 696 (Bom.) relied on: decision, of the Tribunal in the case of Rajdeep Sales Agency (ITA No. 1837/Ahd/1990) distinguished." 8. Hence, it was submitted that only on the basis of the statement of Shri Ketan O. Der partner of M/s Ohm Developers, no addition on account of 'on money' can be made in the hands of the assessee. 12.11 Thus it is seen that the Hon'ble Courts have clearly held that a statement of a third party cannot be relied upon to make additions in the hands of the assessee, unless such statement is corroborated by independent evidence linking such material to the assessee. In the present case it is seen that the addition of Rs. 17,00,00,000/- has been made by the AO relying on the statement of a third party, which in any case has been retracted. It is seen that while such statement could have been a reason for starting an investigation, the AO has simply relied on such third party statement to make the addition without corroborating it wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld CIT(A) has relied upon various case laws in support of the decision reached by him. Before us, no contrary decision was placed reliance by the revenue. We noticed earlier that the assessing officer has made the addition u/s 69A of the Act, but the assessee was not found to be the owner of any cash. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting the addition of Rs. 17.00 crores made u/s 69A as unexplained money. 12. The ground no.5 urged by the revenue relates to the addition of Rs. 80.00 lakhs made on the basis of statement given by Shri Shailendra Rathi. 12.1. During the course of search operations, the revenue searched the premises of Shri Shailendra Rathi in Pune. His whatsapp chat was examined and data back up was taken. In the statement, Shri Shailendra Rathi had accepted that he has received Rs. 80.00 lakhs through Angadiayas in Mumbai. Though the assessee disowned this transaction, yet the AO took the view that the above said amount was received by Shri Shailendra Rathi in the capacity of consultant to the Rucha Group. Accordingly, the AO assessed the above said amount of Rs. 80.00 lakhs as unexplained money u/s 69A of the Act. The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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