JUDGMENT : K.S. Jhaveri, J. 1. By way of this appeal, the appellant - Department has challenged the order dated 27/04/2016 passed by the ITAT in IT (SS) NO.37/RJT/2005 whereby the appeal of the Department came to be dismissed. 2. The short facts of the case are that a search operation under Section 132 of the Income Tax Act was carried out on 24/09/2002 at the residential and business premises of the assessee as well as at the business premises of Ajanta Group. During the search proceedings, it was found that the respondent had received a sum in various names of family members on retirement from various firms of Ajanta Group. The respondent was confronted and based on the statement given, the documentary evidence seized during the search and the statement of the other family members, the AO worked out the unaccounted interest received by the Vallamji Group and the proportionate share of respondent was worked out, which was treated as unaccounted income for the Assessment year 2003-2004. The matter was carried before the CIT(A) which had upheld findings of the AO and dismissed the appeal of the assessee. Thereafter, the matter was carried before the ITAT by assessee and the Tribunal deleted the addition holding that the claim of the respondent has been denied by other group as neither being paid nor received by the respondent relying upon the case of the another assessee, which has given rise to this appeal. 3. While admitting this appeal, following question was framed for consideration of this Court: "Whether on facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in deleting the addition made on the proportionate share of interest and treated by it as undisclosed income of the respondent for the block period?" 4. Learned Counsel for the appellant has submitted that the Tribunal has overlooked the fact that the addition made by the AO based on the documentary evidence seized during the search at the residence of the assessee and after confirmatory statement of the family members and this piece of evidence clearly indicates the unaccounted income earned by the respondent over the block period and this has not been considered by the Tribunal while deleting the same. He has further contended that the Tribunal has considered irrelevant material and thereby committed serious error of law. 5. He has further contended that the Tribunal has considered irrelevant material and thereby committed serious error of law. 5. Having heard the learned Counsel for the appellant and having gone through the order passed by the Tribunal more particularly paragraph No. 11 wherein the Tribunal has while considering various pronouncement rendered by it has reached to the conclusion, which reads thus: "11. We have heard the rival contentions of both the parties. Perused the materials on record and carefully gone through the decisions relied on by the learned AR of the assessee. During the course of search at the residence of the assessee a loose paper file, Annexure -A 4 was seized. This file was pertaining to NUS. Ajanta Industries in which the assessee is a partner. All pages 73 to 84 of the said file accounts of M/s. Ajanta Industries as on 30.9.99 were found. From these papers the teamed A0 has come to the conclusion that the assessee had introduced unaccounted capital in M/s. Ajanta Industries and therefore, made the impugned addition to the total income of the assessee as undisclosed income. The learned AC has alleged that there are two sets of accounts, one is named as "as per account" and the other is named "as per OM"; The learned AC has alleged that amount shown against the name of your appellant in the set of account "as per OM" is the unexplained capital of [he assessee. The learned CIT(A) has dealt with this issue in great detail it) his order, the relevant paragraphs of which have been quoted earlier in this order. In paragraph 4.8 of the said order, the CIT(A) has recorded the finding as follows: "4.8....It is seen that major disputes were going on amongst various group of Ajanta. There were various groups involved in various business/firms of Ajanta Group. The appellant represents one of such group. Ajanta group was running various business entities. Ajanta Industries was one such business entity. Ajanta Industry was doing business of Roofing Tiles. As a result of disputes, some groups were interested in taking over some business entities whereas, some groups were interested in being separated from business, provided they were paid handsome amount. Thus all the groups had different interests and way of looking. With these different individual objects in mind every group made calculations that suited them most. As a result of disputes, some groups were interested in taking over some business entities whereas, some groups were interested in being separated from business, provided they were paid handsome amount. Thus all the groups had different interests and way of looking. With these different individual objects in mind every group made calculations that suited them most. On the basis of such individual objects, they made offers to take over the business or to forego their interest. It is obvious that when there are contradictory objects, everybody is bound to make an offer that suits his interest most. Accordingly groups interested in taking over the business made offers estimating a very low value of business showing huge losses or lower profitability. Groups willing to leave the business estimated a very high value of business, goodwill etc. Groups with common interest joined hands and made offers that suited their groups." The findings so recorded by the CIT(A) are not in dispute by the Revenue. It is on this basis, the assessee's contention is that the transactions or accounts note down in these seized material represents projected one and not real. It merely project the interest of the group in Ajanta Industries, for the purpose of valuing the net worth and value of interest of the partners in the business in a manner that suited most to a group of partners. Whatever is written under the head "Om" are hypothetical figures. On the above backdrop the CIT(A) has also examined in detail the notings on various pages of seized document as already quoted earlier and came to the conclusion that the Assessing Officer has ascertained undisclosed income on the basis of the above said loose papers only. There are no corresponding assets found in the course of ' search. It is more rational and appropriate to determine the income on the basis of assets/expenditure theory which is duly approved in accountancy. Estimation of income only on the basis of loose papers is not less than wild guess. We find that there is no dispute of the fact that the loose paper title Annexure-A-4 was pertaining to Mr's. Ajanta Industries. It is more rational and appropriate to determine the income on the basis of assets/expenditure theory which is duly approved in accountancy. Estimation of income only on the basis of loose papers is not less than wild guess. We find that there is no dispute of the fact that the loose paper title Annexure-A-4 was pertaining to Mr's. Ajanta Industries. The Assessing Officer has himself observed in his order -"Therefore, there is no iota of doubt that whatever 1'" written as per M are unaccounted affairs of M/s. Ajanta Industries", and still he never thought it fit to enquiry into the affairs of Ajanta Industries. The Assessing Officer should have issued notice u/s.158BD of the Act to Ajanta Industries when he himself alleges that GM account of Ajanta Industries reflects unaccounted transactions of the said firm. In the case of Prarthma Construction Pvt. Ltd. v. 0677', ITAT Ahmedabad 70 772 122, the ITAT, Ahmedabad "C" Bench, applying the decision in the case of CBI v. V.C. Shukla & Ors, (1998) 3 SCC 410 and Chuharmal v CIT, 70 CTR 88 (SC)/172 ITR 250 (SC) has observed- "It is a settled proposition, as held by various judicial authorities; that rigors of the rule of evidence contained in the Evidence Act are not applicable to income-tax proceedings. However, the principles contained in the Evidence Act, incorporated from rules of natural justice forming part of the common law would naturally be applicable to income-tax proceedings. It is amply clear that the loose papers and documents cannot possibly be construed as books of accounts regularly kept in the course of business. Such evidence would, therefore, be outside the purview of s. 34 of the Evidence Act, 1872. Therefore, the Revenue would not be justified in resting its case on the loose paper and documents found from the residence of a third party even if such documents contain narrations of transactions with the assessee-Company." In the case of S.K. Gupta v. DCIT, 63 TTJ (Del) 532], addition was made on the basis of loose sheet and torn papers found during raid. No corroborating evidence has been brought on record to show that purchase and sale of properties had actually taken place. No corroborating evidence has been brought on record to show that purchase and sale of properties had actually taken place. The ITAT, Delhi Bench as held addition on the basis of seized loose sheets and torn papers was not justified as the entire found thereon were mere estimates and no corroborating evidence has been brought on record to show that purchases and sales of properties had actually taken place and hence, there is no question of any undisclosed income." Similar view has also been taken in the case of Mustag Ahmed v. ACIT (66 TTJ 305). The ITAT, Ahmedabad in the case of Kishore Mohanlal Telwala v. ACIT, 64 TTJ 543 the Tribunal has held that "the assessing officer has not brought on record any unaccounted investment or assets other than those declared by the assessee. In the present case, the impugned addition was made by the Assessing Officer merely basing on the notings in seized loose paper file." The Assessing Officer has never brought any material on record to disprove the claim of the assessee that whatever is written under the head "Om" are hypothetical figure is false or untrue. Rather considering the facts and circumstances of the case as discussed in detail by the CIT(A) in his order, we find sufficient force in the contention of the assessee that whatever is written under the head "Om" are hypothetical figure, which appears us to be more plausible. Further we find that the said loose papers were found from the residential premises of Shir Vallamjibhai Pate. Simply because some amount is mentioned in the name of assessee, it cannot be presumed/inferred that the said amount is his undisclosed capital unless there is sufficient material with the department to hold so. Therefore, considering the facts and circumstances in its entirety, we entirely agree with the findings of the CIT(A) and also the conclusion drawn by him. Therefore, we do not find any infirmity in the order of the CIT(A) in deleting the impugned addition. The Revenue's appeal thus fails." 6. Therefore, considering the facts and circumstances in its entirety, we entirely agree with the findings of the CIT(A) and also the conclusion drawn by him. Therefore, we do not find any infirmity in the order of the CIT(A) in deleting the impugned addition. The Revenue's appeal thus fails." 6. It is further required to be noted that the Tribunal has placed reliance upon the decision in case of Prarthana Constructions Pvt. Ltd. v. DCIT, ITAT, Ahmedabad 70 TTJ 122 and the ITAT, Ahmedabad Bench 'C' Bench after applying the decision in case of CBI v. V.C. Shukla & Ors, (1998) 3 SCC 410 Chuharmal v. CIT, 70 CTR 88 (SC)/172 ITR 250 (SC) and has observed that the Revenue would not be justified in resting its case on the loose paper and documents found from the residence of a third party even if such documents contain narrations of transactions with the assessee-Company. 7. The matter was thereafter carried by the Department before this High Court by way of filing Tax Appeal No. 79 of 2000 and the said Tax Appeal came to be dismissed by oral judgment dated 25/03/2011. The relevant observations made by this Court reads as under: "9. From the facts noted hereinabove, it appears that the submission advanced by the learned advocate for the respondent that the raid had not been conducted on the premises of the respondent assessee is correct. In the circumstances, the question formulated earlier is modified as follows: "Whether on the facts disclosed pursuant to the raid conducted on the premises of M/s. Gokul Corporation and its partner Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta, the Appellate Tribunal was right in law in deleting the additions of Rs. 20 lakhs as well as Rs. 25 lakhs made on the basis of statements of Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta for the reasons recorded in Para 12 and 13 of the order of the Tribunal?" 10. Mr. K.M. Parikh, learned Standing Counsel appearing on behalf of the appellant, drew the attention of the court to the impugned order of the Tribunal, to submit that there was sufficient evidence to indicate that the payment of Rs. 20 lakhs and Rs. 25 lakhs in respect of the aforesaid two deals had been made by the assessee. Mr. K.M. Parikh, learned Standing Counsel appearing on behalf of the appellant, drew the attention of the court to the impugned order of the Tribunal, to submit that there was sufficient evidence to indicate that the payment of Rs. 20 lakhs and Rs. 25 lakhs in respect of the aforesaid two deals had been made by the assessee. It was submitted that documentary evidence had been recovered during the course of search proceedings which were supported by the statements of Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta and it was based upon such documentary evidence as corroborated by the statements of the aforesaid persons that the Assessing Officer had made the additions in question, and as such, the Tribunal was not justified in deleting the additions made by the Assessing Officer. 11. On the other hand, Mr. S.N. Divetia, learned advocate appearing on behalf of the respondent assessee has submitted that the documents in question have been found from the premises of a third party. The loose papers cannot be stated to be books of account in the light of the decision of the Supreme Court in the case of Central Bureau of Investigation v. V.C. Shukla and others, (1998) 3 SCC 410 as observed by the Tribunal. It was further submitted that the Tribunal has based its conclusions on findings of fact recorded by it upon appreciation of the evidence on record. It is not the case of the revenue that the findings recorded by the Tribunal are in any manner perverse and contrary to the evidence on record. The Tribunal has examined the facts and circumstances of the case, and has come to the conclusion that the revenue has not been able to establish its case against the assessee and as such, the order of the Tribunal being based upon findings of fact recorded by it, does not give rise to any question of law. It was further submitted that the entire case of the revenue is based upon documents recovered during the course of search from the premises of third parties and the statements of the third parties. It was submitted that the assessee has not been granted an opportunity of cross-examining Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta and as such, the statements of the said persons have no evidentiary value. 12. It was submitted that the assessee has not been granted an opportunity of cross-examining Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta and as such, the statements of the said persons have no evidentiary value. 12. Inviting attention to the provisions of section 132(4A) of the Act, it was submitted that the presumption under the said provision would be in the case of a person from whom the documents have been recovered and as such, the Tribunal was justified in placing reliance upon the said provision in holding that there can be no presumption against the assessee under section 132(4A) of the Act in the facts of the present case. In support of his submission, the learned advocate has placed reliance upon the decision of the Supreme Court in the case of Kishinchand Chellaram v. Commissioner of Income Tax, Bombay City-II, (1980) 125 ITR 713 . In the said case the sole question which arose for determination was whether there was any material evidence to justify the findings of the Tribunal that the amount of Rs. 1,07,350 said to have been remitted by one Tilokchand from Madras represented the undisclosed income of the assessee. The only evidence on which the Tribunal could rely for the purpose of arriving at this finding was the letter dated February 18, 1955 said to have been addressed by the Manager of the Punjab National Bank Limited to the Income-tax Officer. The Supreme Court, inter alia, held that it is true that proceedings under the income-tax law are not governed by the strict rules of evidence and therefore it might be said that even without calling the manager of the bank in evidence to prove the said letter, it could be taken into account in evidence. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. But before the income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross-examine the manager of the bank with reference to the statements made by him. It was submitted that the facts of the present case are similar to the facts of the said case inasmuch as, in the present case also, the documents recovered from the premises of third party as well as the statements of the said parties have been relied upon for the purpose of making the impugned additions in the case of the assessee without granting any opportunity to the assessee to cross-examine the said persons. 13. Reliance was also placed upon a decision of the Rajasthan High Court in the case of Commissioner of Income Tax v. S.C. Sethi, (2007) 295 ITR 351 (Raj.) wherein, the Court held that in the absence of any opportunity having been given to the assessee to cross-examine the person from whose possession loose papers were recovered, the same could not be relied upon. It was, accordingly, submitted that the impugned order of the Tribunal is just, legal and proper and does not warrant any interference by this Court. 14. A perusal of the impugned order of the Tribunal indicates that the Tribunal, upon appreciation of the evidence on record, has recorded the following findings: The basis of the department's case for making the additions of Rs. 45 lakhs was the document appearing at serial No. 22 of Annexure A-1 of the panchnama found from the residence of Sureshbhai A. Patel who is a partner of Gokul Corporation, as well as other documents found during the search on 21.9.95. If the evidentiary value of the said loose papers and documents is considered the same cannot possibly construed as books of account regularly kept in the course of business. Such evidence would, therefore, be outside the purview of section 34 of the Evidence Act, 1872 in the light of the ratio of the decision of the Supreme Court in the case of Central Bureau of Investigation v. V.C. Shukla & Others, (1998) 3 SCC 410 . Such evidence would, therefore, be outside the purview of section 34 of the Evidence Act, 1872 in the light of the ratio of the decision of the Supreme Court in the case of Central Bureau of Investigation v. V.C. Shukla & Others, (1998) 3 SCC 410 . The revenue would not be justified in resting its case on the loose papers and documents found from the residence of a third party even if such documents contain narration of transactions with the assessee. The presumption under section 132 (4A) of the Act would not be applicable to a third party from whose possession such papers and documents had not been found by the revenue. The statements recorded at the back of the assessee would not conclude the case against the assessee particularly when the makers of the statements have not been allowed to be interrogated by the assessee. Shri Suresh Patel and Shri Deepak Patel are brokers and the transactions involving the receipt of on money have been, according to the revenue, arranged through these persons. Mere testimony of these brokers tendered at the back of the assessee would not be sufficient to establish that on money has been received by the assessee. The document appearing at page 22 of Annexure A-1 shows the payment of Rs. 20 lakhs on 20.9.1994 on the cancellation of the Silver Arc Scheme with Gautam Adani. Apparently it is a cancellation of the deal and the amount has been returned to the assessee by Shri Adani. There is nothing on record as to when the money was originally paid. As per the books of account of the assessee a sum of Rs. 25 lakhs has been paid by cheque on 8.5.1995 to Govind C. Patel in respect of Silver Arc Deal. If that be so, the return of Rs. 20 lakhs in cash on 20.9.94 does not fit in with the sequence of events. There appears to be confusion regarding the identity of the parties with whom the Silver Arc deal had been entered into by the assessee. According to Shri Deepakbhai Mehta, the Silver Arc deal was entered into by the assessee company with Shri Adani whereas return of Rs. 20 lakhs in cash on 20.9.94 appears to have been made by Shri Govind Patel to the assessee. According to Shri Deepakbhai Mehta, the Silver Arc deal was entered into by the assessee company with Shri Adani whereas return of Rs. 20 lakhs in cash on 20.9.94 appears to have been made by Shri Govind Patel to the assessee. The statements of Shri Sureshbhai and Deepakbhai do not bring out full facts with regard to the transactions relating to Silver Arc as well as Kundan Nagar involving the assessee. In the case of Silver Arc, addition has been made on substantive basis in the case of Shri Manoj Vadodaria and protective basis in the case of Gautam Adani Management & Consulting Services Ltd. The statement of Shri Manoj Vadodaria which was recorded at the back of the assessee, would not in any manner lend any support to the impugned additions made in the assessee's case. 15. On the basis of the aforesaid findings of fact recorded by it, the Tribunal deleted the addition of Rs. 45 lakhs with the observation that the Assessing Officer had failed to adduce evidence in support thereof. 16. Thus, it is apparent that the conclusions arrived at by the Tribunal are based upon the aforesaid findings of fact recorded by it upon appreciation of the evidence on record. On behalf of the revenue nothing is pointed out to show that the findings recorded by the Tribunal are in any manner perverse, nor is it the case of the revenue that the Tribunal has taken into consideration any irrelevant material or that any relevant material has been ignored. The conclusion arrived at by the Tribunal on the basis of the findings of fact recorded by it cannot in any manner be said to be unreasonable. In the aforesaid premises, the impugned order of the Tribunal being based upon findings of fact recorded by it upon appreciation of the evidence on record, which findings have not been dislodged by the revenue by pointing out any evidence to the contrary, therefore, does not warrant any interference. 17. The question is accordingly answered in the affirmative. On the facts disclosed pursuant to the raid conducted on the premises of M/s. Gokul Corporation and its partner Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta, the Appellate Tribunal was right in law in deleting the additions of Rs. 20 lakhs as well as Rs. 17. The question is accordingly answered in the affirmative. On the facts disclosed pursuant to the raid conducted on the premises of M/s. Gokul Corporation and its partner Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta, the Appellate Tribunal was right in law in deleting the additions of Rs. 20 lakhs as well as Rs. 25 lakhs made on the basis of statements of Shri Sureshbhai A. Patel and Shri Deepakbhai Mehta for the reasons recorded in Para 12 and 13 of the order of the Tribunal. The appeal is, accordingly, dismissed with no order as to costs." 8. Thus, in light of the aforesaid factual position when the decision relied upon by the tribunal has been confirmed by this Court, without giving any further reasons and while adopting the said view, the issue raised in this appeal also requires to be answered in favour of the assessee. Accordingly, the appeal is dismissed. The issue is answered in favour of the assessee and against the Department.