DCIT Vs Sujai Anand Reddy (ITAT Chennai)
For addition u/s 69, AO must conclusively establish that assessee made an investment that remains unexplained – Third-Party Loose Sheets& Retracted Statement Can’t Sustain Section 69
Chennai ITAT has dismissed the Revenue’s appeal & upheld the order of CIT(A) deleting an addition of Rs 1 crore made u/s 69 . Assessee, an individual, was subjected to search proceedings u/s 132 in connection with the case of South India Bottling Company. During the course of search, no incriminating material was found from his premises to suggest that he had advanced cash loans. However, AO relied on loose sheets titled “VFF Payment Details” seized from the residence of Shri Kirthivasan, a director in another company & on statements recorded during search to conclude that Assessee had advanced Rs 1 crore in cash to M/s Vishal Film Factory on 17.10.2018, which was allegedly repaid in cash on 17.12.2018. On this basis, addition u/s 69 was made in the assessment order.
In appeal, CIT(A) observed that Assessee was neither the author nor custodian of the seized loose sheets & no corroborative evidence was found at his premises. The alleged admission made by Assessee during search was subsequently retracted on the ground of mental stress & duress. Relying on CIT v. P.V. Kalyanasundaram & Pullangode Rubber Produce Co. Ltd. v. State of Kerala (SC), CIT(A) held that third-party loose sheets or uncorroborated statements cannot form the sole basis for an addition & directed deletion of the Rs 1 crore addition.
