TaxTMI 
TaxTMI 
2015 (4) TMI 54
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.... a ground that the Commissioner of Income-tax (Appeals) erred in admitting additional evidence by way of receipt from Shri Shirdi Sansthan without affording opportunity to the Assessing Officer. 4. There is one more ground by the Revenue that the Commissioner of Income-tax (Appeals) erred in not appreciating the fact that the source of source was nothing but diversion of funds in the guise of subcontract to Sri N. Srinivasa Rao. 5. The assessee raised ground in the cross-objection with regard to sustaining addition towards donation of gold valued at Rs. 9,82,80,246. 6. The assessee also raised a ground with regard to sustaining of addition under section 68 of the Income-tax Act, 1961 at Rs. 13 lakhs received as advance against sale of agricultural produce from M/s. Lordven Enterprises and also Rs. 6 lakhs towards receipt from Mr. Veerendra Kumar. 7. The brief facts of the case are that there is a search action under section 132 of the Act in the group cases of M/s. AMR Constructions Ltd., on December 16, 2008. As part of this search action, the assessee was also covered under section 132 of the Act. Consequent to the search action notice under section 153A was issued. T....
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....lance gold from the friends and relatives and details of the receipts issued to the donors. During the post search proceedings around 60 donors were examined by the Revenue authorities on June 4, 2009, June 5, 2009, and June 6, 2009. These random 60 donors though stated that they have made donations, they failed to produce any recorded evidence to prove the genuineness of the donation. In fact, none of them filed return of income and basically they are agriculturists. From the above, the Assessing Officer drew the inference that the balance gold said to have been collected from various friends and relatives from Nellore district from where the assessee hails, as non genuine. Accordingly, the assessee was asked to file confirmation letters in support of receipt of gold as donation from various parties by the assessee. The assessee in reply to these filed a letter dated April 26, 2010 stating as follows : "A detailed note was called for asking why an amount of Rs. 11,88,00,000 should not be brought to tax as unexplained income on account of donation of 108 kgs of gold simhasana to Shirdi Saibaba Sanstha....
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....the Department and just to purchase peace with the Department we have accepted to offer the difference amount as additional income of me and my family members. However, in order to avoid protracted litigations, to buy peace and in order to put a quietus to the whole issue, we have accepted to offer the difference amount as additional income of me and my family members. We have taken up the issue regarding the balance contributions, we accept to make an additional declaration of Rs. 7,67,74,956. This additional declaration made is adopted as income only for the purpose of computing tax and is otherwise is not an income. It is also prayed before your goodself that the penalty proceedings be kindly dropped by your goodself in view of the fact, elaborately explained above, that the disclosure was made voluntarily by us without the discovery of any material, pointing to the same, during the course of search. All the disclosures were made in good faith in order to buy peace and with the honest belief and conviction that no penalty proceedings would be initiated on the assessees. Hence it is also herewith requested not to initiate any penal proceedings." 10. Thus, the assessee made ....
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....rity of the donors by recording the statements from them with regard to the donations made by them. As the income-tax authorities already contacted the donors and as the donors were already made to appear before the authorities, we are of the view that such an admission is not required. Therefore, I humbly submit that the earlier letter offering the amount of Rs. 7,67,74,956 in addition to what was declared during the course of search and seizure operations may please be treated as withdrawn. Therefore, what remains is the admission made at the time of search. Further I humbly submit that in so far as the donors of the gold for 'golden simhasanam' are concerned, they donated the gold ; the list of such donors along with their addresses and the amount of donation was already provided to the Department. Some of the donors were considered by the Department and all of them accepted to have donated the gold or amount equal to the gold. Therefore, no addition on account of the donation to Shri Shiridi Saibaba Baba may be made." 12. The Assessing Officer rejected this letter stating that this was filed on December 28, 2010 just before completion of the assessment, i.e., on D....
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....question No. 20 has categorically stated that the entire contribution of gold was not made by the assessee's family members alone. But the assessee's friends and relatives who are closely related to the assessee and who have joined for the purpose of a noble cause initiated by the assessee and it was the collective effort of many like-minded people. He submitted that this fact was continuously reiterated by the assessee before the lower authorities on various occasions. However, to buy peace the assessee in his letter dated April 26, 2010 admitted to disclose additional income in the name of the assessee, A. Mahesh Reddy and A. Girish Reddy. Accordingly the Assessing Officer drafted the assessment order making such addition in respective hands as offered by the assessee in the draft assessment order and sent for approval of the Additional Commissioner of Income-tax in the month of May, 2010 and same were approved under section 153D of the Act. He submitted that the copies of same were furnished before the Commissioner of Income-tax (Appeals). According to the authorised representative instead of finalising the assessment order in accordance with the offer of the assessee to....
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.... Act who are poor and innocent agriculturists having no knowledge of the income-tax Act and given a firsthand information that they donated gold according to their capacity for the noble cause. In spite of confirmation from those innocent agriculturists having no knowledge of the income-tax, the Department is not ready to believe the true statements of the true donors on the reason that no evidence was found during the search regarding their donations. Further he submitted that even after offer of additional income at Rs. 7,67,74,956 by the assessee, the Department started enquiry and when the enquiry report was found favourable to the assessee, the Department is not ready to accept the same. He submitted that there is a categorical statement from the donors in favour of the assessee. The Department without bringing the evidence against the assessee simply brushed aside the same. He submitted that the fact of contribution by various friends and relatives of the assessee is not disputed much less disproved by the Department. According to the authorised representative when the assessee produced the evidence in support of the assessee's claim it cannot be brushed aside without bri....
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.... disregarded the contents therein as per which the Department cannot cause further enquiry and the Department cannot pick and choose to its convenience. He relied on the following judgments : A. Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC) ; B. T. S. Kumarasamy v. Asst. CIT [1998] 65 ITD 188 (Mad) ; and C. Hotel Kiran v. Asst. CIT [2002] 82 ITD 453 (Pune). 18. Further he submitted that the offer letter made by the assessee is not under section 132 of the Act. The offer was made subsequent to the post search enquiry. The offer is also conditional. Being so, the argument of the Department is not proper to state that the offer made by the assessee under section 132(4) is binding on the assessee. According to the authorised representative the offer was made on conditional basis and the condition on which the offer was made ceased to exist. As such the assessee cannot be forced to comply with the offer letter. Once the offer is not acted upon in accordance with the offer conditions, it cannot be said to have survived. He relied on the judgment in the case of Vinod Solanki v. Union of India [2009] 233 ELT 157 (SC) wherein it was held that eviden....
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....usion of enquiries and examination. So nothing to provoke by way of pressure or a noble impulse to protect other "donors". There were no enquiries by the Assessing Officer at all because this issue was considered as closed till the assessee retracted at 11th hour. Thus, the Department was very much prevented by this feint and last minute withdrawal. The register was not found at the time of search at all. It was produced later. As regards the averments that from the beginning it was being told that it was not the "assessee" alone, it is submitted that of course, any person will tell that rather than own up entire thing at first outing but is saying enough ? What matters is conduct and evidences. 20. The Departmental representative further submitted that there is no mention of register in the statement. He could have easily told that it came from many whose names are recorded and details are maintained, especially since he is the lynchpin who co-ordinated the entire thing. Instead he just says ANR-family and others. The assessee offers income towards this item to protect others and who was it protecting ? Enquiries were over and dusted with in June 2009. He submitted that the Dep....
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....90 per cent. of gold. Accordingly, he submitted that the addition made by the Assessing Officer and as modified by the Commissioner of Income-tax (Appeals) may be upheld. Further he relied on the assessment order. 23. We have heard both parties and perused the material on record. We have carefully perused the receipts received from Shirdi Saibaba Sansthan placed on record at pages 1027, 1028, 1029, 1030, 1031 of the paper book. As per these receipts the gold donation was received from Sri Audinarayana Reddy family and associates. Accordingly the assessee taken a plea before the lower authorities that he donated gold worth Rs. 25 lakhs and the balance was collected from various friends and relatives from his native village. However, in order to avoid protracted litigation, the assessee made an offer vide his offer letter dated April 26, 2010 at Rs. 7.67 crores in the name of three persons, i.e., A. Mahesh Reddy, A. Girish Reddy and Audinarayana Reddy. Name Financial year 2007-08 (Rs.) Financial year 2008-09 (Rs.) Total (Rs.) A. Mahesh Reddy 1,63,38,890 28,54,850 1,91,93,740 A. Girish Reddy 1,63,38,890 28,54,850 1,91,93,740 A. Audinaray....
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....erefore, I humbly submit that the earlier letter offering the amount of Rs. 7,67,74,956 in addition to what was declared during the course of search and seizure operations may please be treated as withdrawn. Therefore, what remains is the admission made at the time of search. Further I humbly submit that in so far as the donors of the gold for 'golden simhasanam' are concerned, they donated the gold ; the list of such donors along with their addresses and the amount of donation was already provided to the Department. Some of the donors were considered by the Department and all of them accepted to have donated the gold or amount equal to the gold. Therefore, no addition on account of the donation to Shri Shiridi Saibaba may be made." 25. The Department is not ready to accept the retraction statement. The plea of the assessee before us is that the offer made by the assessee is conditional stating that the Department shall not cause any enquiry. The contents of the offer letter are as follows : "To The Deputy Commissioner of Income-tax Central Circle-3 Hyderabad Dated 28.12.2010 Sir, Sub : Income-tax assessment-Assessment years 2008-09 and 2009-10-A ....
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....ught it would be proper to purchase peace by paying tax and offered the said amount. However, we understood that the income-tax authorities have already conducted verification with many/ majority of the donors by recording the statements from them with regard to the donations made by them. As the income-tax authorities already contacted the donors and as the donors were already made to appear before the authorities, we are of the view that such an admission is not required. Therefore, I humbly submit that the earlier letter offering the amount of Rs. 7,67,74,956 in addition to what was declared during the course of search and seizure operations may please be treated as withdrawn. Therefore, what remains is the admission made at the time of search. Further I humbly submit that in so far as the donors of the gold for 'golden simhasanam' is concerned, they donated the gold; the list of such donors along with their addresses and the amount of donation was already provided to the Department. Some of the donors were contacted by the Department and all of them accepted to have donated the gold or amount equal to the gold. Therefore, no addition on account of the donation made b....
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....m. It is also on record that about 70 donors appeared before the Department and confirmed the donations. When this was going on the assessee filed a letter dated December 28, 2010 retracting the earlier letter dated April 26, 2010 where the assessee offered additional income on the reason that many of the devotees/associates were already summoned and examined by the Department. The assessee stated the reason for retraction that the Department had not kept its promise as the offer made by the assessee is conditional that the Department shall not cause further enquiry and should not cause undue hardship to the devotees. As the basic condition and purpose for which the declaration was made ceased to be exist, the assessee went out of his earlier offer. 29. Now the question before us is whether the offer made by the assessee is to be considered or not. In our opinion, this is a case of search under section 132 of the Act. The Department framed the assessment under section 153A of the Act after the search. As per the provisions of section 153A the Assessing Officer is required to determine the income on the basis of material available on record consequent to search action under secti....
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....dmission in the statement under section 132(4) in the absence of any evidence indicating that the statement under section 132(4) was obtained under coercion, threat, duress or undue influence or that the assessee was in absolutely disturbed state of mind. 30. Further it was held in the case of CIT v. V. Mr. P. Firm, Muar [1965] 56 ITR 67 (SC) as follows (headnote) : "The doctrine of 'approbate and reprobate' is only a species of estoppels it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not. If it is not, the Income-tax Officer has no power to impose tax on the said income." 31. An assessee cannot be tied down to a wrong concession made in the return. In the case of Alapati Venkataramiah v. CIT [1965] 57 ITR 185 (SC), the hon'ble Supreme Court, ....
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....l provision that no tax can be levied without the authority of law. This also accords with the principles enunciated by the courts. 35. If the assessee out of ignorance included income as taxable in the return and it approached the court to direct the Assessing Officer to exclude said amount from assessable income then an appropriate decision is to be taken. The plea of the Revenue was that the Department could not be faulted for accepting returns filed by the assessee where he himself had offered the donations for tax. The plea of the Department cannot be accepted in view of the judgment in the case of S. D. S. Mongia v. CBDT [2007] 160 Taxman (Delhi) 101 wherein it was held that the Revenue is not entitled to tax the income which was offered by the assessee himself though it is not taxable and it should tax only that amount which is chargeable under section 4 of the Income-tax Act, 1961. 36. In the case of Narayan Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak Gosavi, AIR 1960 SC 235, the hon'ble Supreme Court held that an admission in the return is not conclusive and it would be decisive only if not subsequently withdrawn or proved to be erroneous. It is well establish....
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....s. 18 lakhs in the name of Sri N. Srinivasa Rao under section 68 of the Act. The brief facts of the issue are that it has been explained by the assessee that the sources for the advances of Rs. 18,00,000 given to the assessee, are out of the withdrawals made from Reliant Metropolitan Developers P. Ltd and M/s. Live-in Shelters P. Ltd., who were shown to have executed some contract works for M/s. AMRCL and the same were shown to have been reflected in the income-tax returns filed for the assessment year 2008-09 onwards. The assessee has made a detailed submission replying to the queries as raised by the Assessing Officer, regarding the creditworthiness of Mr. Srinivasa Rao Nukala. It was further contended by the assessee that while coming to a conclusion that sub-contract carried by Mr. Srinivasa Rao Nukala was not genuine, the Assessing Officer did not even verify the works given on contract by M/s. AMRCL and no enquiries were carried out as to whether the receipt on account on such contract work was accounted for or whether any expenditure of the same nature in respect of the same work was separately claimed by the company, etc., and as such this observations of the Assessing Offi....
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....nexplained credits for want of more information/evidence on the issue of creditworthiness. This conclusion do not constitute the correct decision based on the ratio that have emanated from the decisions of the Supreme Court in the case of CIT v. Gujarat Heavy Chemicals Ltd. [2002] 256 ITR 795 (SC), wherein the hon'ble Supreme Court expressed its opinion that in case where the share applicants were to be considered genuine, the right course for the Assessing Officer is to identify the real person to whom the money belong and assess him to tax instead of assessing the company and as such there was no justification for assessing the company. Further, the ratio of the decision of the Bombay High Court in the case of CIT v. Tania Investments P. Ltd. [2010] 322 ITR 394 (Bom) is squarely applicable in this case, wherein the creditors were examined by the Assessing Officer, during the assessment proceedings, who maintained the books of account, which could not have been brushed aside. 43. Further, it may be relevant to note that the contract works awarded by M/s. AMRCL was disbelieved and the additions were made in the hands of M/s. AMRCL on the said account. Further, the amount of ....
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....d as such the addition made on this count is confirmed. 45. The next ground in cross-objection is with regard to sustaining of Rs. 6 lakhs in the name of Sri Veerendra Kumar. The brief facts of the issue are that an advance of Rs. 6,00,000 shown to have been received from Shri Veerendra Kumar towards the advance of property and the amount was returned in the same year since the transaction did not materialise. However, it has been observed that the amounts were received and repaid in cash and no confirmation in this regard was furnished either before the lower authorities. There was no indication as regard to the details of the transaction with which such amount was received and repaid. In absence of the needed explanation with evidences as regard to the genuineness of the transaction and creditworthiness of the creditor, it is held that provisions of section 68 are applicable. The provisions of section 68 put the onus on the assessee or assessee to explain the transactions with reference to the identity and creditworthiness of the creditor, apart from the genuineness of the transaction and we are of the opinion that the assessee had failed on this count. Hence, the amount of Rs....
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....rore Ninety Nine Lakh Fifty Five Thousand Seventy Five Only PURITY CERTIFIED BY: M/s K.M.NAGANE SHINDI M/s.KHAROTE JEWELLERS MANMAD The within mentioned Hem has been oftéres to Shri Saibaba in fulfilment of My vow. Kindly credit the sale proceedy of my offeringe to Trust Corpus. A-1 1.Ann Duvoleo's Signature Mumbal Office alle Jadi 104-0, Dr. Ambpdidar Rond, Dadar, Mumbai 100014, Ph:01.22-24166556 Waballe: http://www.ahtia bebasanathan.org. Email: caibaba ansancharnet.in With Blessings of Shri Sathapa Document 2 (3) SHRI SAIBABA SANSTHAN TRUST, SHIRDI (PT.A. No E Dial, Ahmednagar (M.6.)PH1612423-288300. Fax: 01-2423-268770 Cont. Ne 0068d89 -Rapt. No.! 291 Tims Date: 31-Mar-2008 Received From: A.N. REDDY FAMILY AND ASSOCIATES Address: HYDERABAD City: HYDERABAD GOLD Pin: State: ANDHRAPRADESH SON DESCRIPTION 1 DEEPAN 2 PEACOK 3. NAILS 23 2 22 1 22 1 152.216 2642.3731038.00 27160.00 751.768 1028.00 772818.00 1028.00 156478.00 (as per certificate from india govt mint, mumbai) { price quoted by donors. 29.25.856.31) Total: 3546.357 ....