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Seized material reference Page Contents of the seized loose sheets No. ANN/KGAR/MPKSSR/LS/S-I 34-41 Constituency wise details of amounts distributed aggregating to Rs.155,82,47,250/-

ANN/KGAR/MPKSSR/LS/S-1 42 This page contains scribblings which shows that there is receipt of Rs.155,80,00,000/- against total expenditure of Rs.155,82,47,250/- by way of distribution to various constituencies. This page also contains page-wise breakup (in respect of page nos. 34 to 41) of total expenditure of Rs.155,82,47,250/-. The initials "HM" are found scribbled at the top of the page ANN/KGAR/MPKSSR/LS/S-1 44 List of 18 constituencies and distribution of amounts ranging from Rs.10 lakhs to Rs.50 lakhs to the said constituencies ANN/KGAR/MPKSSR/LS/S-1 45- This page contain lists of various constituencies along with 52 the constituency number and name of the candidate for the respective constituencies ANN/KGAR/MPKSSR/LS/S-1 53 This page shows constituency wise break-up of gross expenditure of Rs.75,70,00,000/- by way of distribution to various constituencies and receipt of Rs.7,00,00,000/- from Sri. S.P.Velumani and Rs.4.25.49,500/- from another person for meeting said expenditure. The initials "HM" are found scribbled at the top of the page ANN/VK/TS/LS/S-1 77 List of 46 constituencies to which amounts ranging from Rs.25 lakhs to Rs.1 crore were distributed ANN/VK/TS/LS/S-2 98- Acknowledgements given by candidates of some of 113 constituencies regarding receipt of money.

6.2 The Ld. CIT(A) noted that the conclusion of Ld. AO was based on entries made in above loose sheets. The AO inferred that the amount of Rs.227.24 Crores found noted as receipts at page No.42 of the seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-I (Rs.155.80 Crores) and page No.53 of the same seized material (Rs.71.44 Crores) represents the amount received by M/s. SRS Mining from the assessee. Further, AO inferred that the expenditure by way of various constituencies as noted found noted on page nos. 34 to 42 and at page nos. 44 to 53 of seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-1 represents expenditure out of the said receipts of Rs.227.24 Crores. However, upon perusal of the contents of the aforesaid seized material, it could be noted that the name of the assessee did not appear in any of the relevant loose sheets taken into consideration by the AO while drawing such an inference. It was noticed that the name 'HM' appears as scribbling at the top of the loose sheets at page nos. 42 and 53 of seized material vide ANN/KGARIMPKSSR/LS/S-1, which contains notings regarding the receipt of amounts aggregating to Rs.227.24 Crores for meeting the expenditure by way of distribution to various constituencies. However, the abbreviated name 'HM' do not appear in any of the remaining seized loose sheets as referred to by Ld. AO. Though the name of the assessee was not found noted in any of the relevant seized loose sheets and the abbreviated name of 'HM' was found noted in two loose sheets only, Ld. AO held that the entries in the said seized material reflected the transactions of the assessee merely by relying on the statement of Shri K. Srinivasulu recorded u/s 132(4) on 08-12-2016 and 10-12-2016 in support of the inference that the notings in the seized material found noted with abbreviated name of 'HM' represent the transactions of the assessee.

6.3 The Ld. AO further noted that Shri K. Srinivasulu was a trusted aide of Shri. J. Sekar Reddy (partner of M/s. SRS Mining). In his reply to Q.No.12 of the statement dated 08.12.2016, Shri. K. Srinivasulu stated that page Nos.34 to 58 of the seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-1 contain details of total amount of Rs.227.24 Crores as received from the Housing Minister, Shri Vaithilingam and that the said amount was distributed to various constituencies. However, the name of the assessee was not found noted anywhere in the relevant pages of the seized material and the abbreviated name of 'HM' was found scribbled at the top of page nos. 42 and 53 only of the said seized material which contain bland notings with regard to the receipts of Rs.227.24 Crores. It could be noted that the remaining pages in the seized material as referred to by Ld. AO did not contain either the name of the assessee or the abbreviated name 'HM'.

21. So far as the statement of Shri. K. Srinivasulu recorded u/s 132(4) is concerned, he merely stated that 'HM' found in the seized notebook denotes 'Housing Minister'. However, Shri K. Srinivasulu did not explain or elaborate in the said statement regarding what the acronym 'HM' stands for. Further, this statement was a retracted statement. Considering the observation of Hon'ble High Court of Madras in Writ Petition of Shri P. Rama Mohan Rao, his statement, on standalone basis, would have no evidentiary value. The Hon'ble Curt held that if Ld. AO was to rely on this statement, he was to let in other reliable evidence to corroborate the same. Similar were the directions of Hon'ble Court in the case of M/s SRS mining Vs UOI (141 Taxmann.com 272). Therefore, the statement of Shri K. Srinivasulu could not be used against the assessee unless some other evidence to corroborate the same was made available on record. In the present case, AO relied on reply of Shri K. Srinivasulu to Q.No.12 wherein he stated that page Nos.34 to 58 of the seized loose sheets vide ANN/KGAR/MPKSSR/LS/S-1 contain details of total amount of Rs.227.24 Crores as received from the Housing Minister Shri Vaithilingam and that the said amount was distributed to various constituencies. However, the name of the assessee was not found noted anywhere in the relevant pages of the seized material and the abbreviated name of 'HM' was found scribbled at the top of page nos. 42 and 53 of the said seized material which contains bland notings with regard to the receipts of Rs.227.24 Crores. It could be noted that the remaining pages in the seized material do not contain either the name of the assessee or the abbreviated name such as 'HM'. In the light of all these crucial facts, the statement of Shri K. Srinivasulu lacks any credibility and the same remains unsubstantiated. The said deponent did not at all explained as to how the details of receipt of money and its distribution found in page Nos. 42 to 53 have been attributed by him to the assessee when there was absolutely no mention of assessee's name in the said loose sheets and the acronym 'HM" found noted as scribbling at the top could be ascribed to the assessee without there being any material in the seized loose sheets to substantiate the same. Therefore, as rightly concluded by Ld. CIT(A), the statement of Shri. K. Srinivasulu was to be held to be opposed to the facts which was evident from the seized material and the same could not be considered to be reliable for drawing any adverse inference against the assessee, in the absence of any other independent corroborative evidence.