TaxTMI 
TaxTMI 
2018 (1) TMI 190
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsidering the difference in the account statement with M/s Nahar Filling Station as undisclosed income of the assessee. He has further erred in not directing the AO to exclude this alleged undisclosed income from the income of the next year when the same was offered for tax. 3. The ld. CIT(A) has erred on facts and in law in confirming the disallowance of Rs. 82,200/- u/s 40A(3)." 2. Regarding the first ground of appeal, briefly the facts of the case are that search and seizure operations were carried out at residential and business premises of Shri Bannalal Jat in which he was operating his proprietary concern in name of M/s Bannalal Jat Contractor and also the assessee company by name of Bannalal Jat Construction Pvt ltd. During the course of search at the residential premises of shri Bannalal Jat, cash of Rs. 1,21,43,210 was found and inventorised as per Annexure CF of Panchnama dated 11.10.2014. In his statements recorded u/s 132(4) during the course of search and even subsequent statement recorded u/s 131, Shri Bannalal Jat has admitted the same as undisclosed income of the assessee company. However, subsequently while filing the return of income for the impunged ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oncern and cash balance of company was only Rs. 421,691 on the date of survey/search. Hence, kindly accept cash so found accepted." 4. After taking into consideration the assessee company's submission, material gathered during the course of search as well as submitted during the course of assessment proceedings, the AO rejected the contention of assessee for the following reasons:- (i) During the course of post search proceedings, the books of account were examined and it was found that at several places there are instances of unaccounted incomes/profit, some of which were even surrendered by the assessee during the post search proceedings. (ii) In statement recorded on 10.10.2014, in reply to question no. 6, Shri Bannalal Jat admitted that the books of account of M/s. Bannalal Jat Construction Pvt. Ltd. has been written upto 09.10.2014 but expenses for last 3-4 months are yet to be entered. From this it is gathered that the assessee indulged in non maintenance of proper books of account and as on the date of search it was found incomplete. The assessee indulged in maintaining transaction on diaries and loose papers which is not permissible in any of the method....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee company. Hence, in the absence of any concrete circumstantial evidence and considering the silence of the assessee on this issue till the date of filing of return u/s 153A, the AO rightly ignored the make believe documents. He accordingly confirmed the addition. 6. The relevant findings of the ld CIT(A) is reproduced as under:- "4. I have considered the facts of the case, gone through the assessment order and submission of the appellant. 4.1 There is no dispute about the reliability, importance and sanctity of admission made during search and same could be refuted under compelling and plussible evidence as guided by the Supreme Court in case of Pullangode Rubber Produce Company Ltd. V. State of Kerala and Another 91 ITR 0018. It is held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is open to the assessee who made admission to show that it is incorrect and the assessee should be given proper opportunity to show the correct state of affairs. Similarly, the Hon'ble Rajasthan High Court in case of CIT vs. Ashok Kumar Soni 291 ITR 172 held that admissions are relevant & strong piece of evidenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee company and surrendered in the hands of the company. There is no concrete circumstantial evidence in the form of appellant's representation/retraction with supporting evidence before any authorities in Investigation Wing such as; ADIT/DDIT, Addl/JDIT, DIT, DGIT or Assessment Units such as Assessing Officer, Range head, M/s Bannalal Jat Construction Pvt. Ltd. ASSESSMENT YEAR 2015-16 ITA No. 594258981/16 -17 CIT/Pr. CIT, CCIT/Pr. CCIT or even the CBDT. Since the date of search to date of filing the return u/s 153A, the appellant has not given slightest signal that his statement u/s 132 (4) is incorrect and he is willing to undergo any verification/ investigation. By keeping silence over the issue during such a long spell of time denied both the revenue authorities- the Investigation Wing as well as Assessment Units and therefore such pleas at the fag end of assessment proceeding can not accepted. 4.5 I agree with the finding of the Assessing Officer and concur in making statement u/s 132(4) as basis for making the addition and has rightly ignored the make believe documents. 4.6 I also concurred for the several decisions applied by the AO to the facts of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lal Jat Contractor, a proprietary concern of Shri Bannalal Jat on 09.10.2014. In continuation to this survey, survey was also conducted at residential premises of Shri Bannalal Jat at Village Pander, Tehsil Jahajpur where the books of accounts of this concern were kept. In survey, cash of Rs. 28,92,500/- was found from the residence and Rs. 70,00,000/- in the car parked at the residence. Shri Bannalal Jat in his statement u/s 133A dated 09.10.2014 in reply to Question No. 11 explained that cash found at the residence is out of the amount withdrawn from the bank which can be verified at his main office premises at Jahajpur. Again in reply to Question Nos. 14, 15 & 16 he explained that the cash found at residence and in his car is out of the withdrawals made from his bank account between 20.09.2014 to 30.09.2014. He also stated that he had kept the amount of Rs. 70 lakhs in his car in the morning itself since he was to go to site for making payment of various expenses like labour, tractor, stone, soil etc. 8. It was submitted that the survey was converted into search on 10.10.2014. Statement of the assessee u/s 132(4) was recorded at the office premises on 10.10.2014 and also at t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o assessee company and whether the source of cash found at residence is verifiable from the books of accounts of M/s Bannalal Jat or not. The fact that cash found in search at the residence of Shri Bannalal Jat pertains to M/s Bannalal Jat is evident from the following facts:- (i) In the initial statement dated 09.10.2014, Shri Bannalal Jat in reply to Question Nos. 14, 15 & 16 has categorically stated that cash found in the car in his name which is used for his contract business is out of the withdrawals made from the bank accounts maintained with Bank of Baroda and SBBJ between 20.09.2014 to 30.09.2014. This fact is verifiable from the bank account of Shri Bannalal Jat. According to which withdrawal of Rs. 89,50,000/- is made between 23.09.2014 to 30.09.2014. It is a admitted position of law that the preliminary statement has more evidentiary value then the subsequent statement. (ii) In survey, cash book of M/s Bannalal Jat was found. Even as per this cash book M/s Bannalal Jat was having cash balance of Rs. 1,06,76,390/-. Of course this cash book was not complete but subsequently, it was completed and as per the completed cash book, cash balance on the date of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bility is in favour of the assessee. c) The Ld. CIT(A) has accepted that cash is found and seized in the name of Shri Bannalal Jat. In spite of this, he relied on the statement u/s 132(4) of Shri Bannalal Jat on the ground that he has not filed any representation/retraction with supporting evidence before filing the return. In holding so, he ignored the presumption laid down u/s 292C which provides that where any money, bullion, etc is found in possession or control of a person u/s 132 or u/s 133A, it shall be presumed that such money, bullion, etc belongs to such person. With this presumption in law, it was the onus of the Department to prove otherwise with concrete evidence. No such evidence is brought on record. As against this, assessee has brought on record evidence in form of the bank statement and the cash book of M/s Bannalal Jat to support the fact that the cash belongs to Shri Bannalal Jat. d) The Ld. CIT(A) has referred to certain decisions as to the evidentiary value of the statement u/s 132(4). In all these decisions, it has been held that though such statement has a evidentiary value but with appropriate evidence the same can be retracted. The Hon'bl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been executed on him in respect of both his concerns in respect of both his residence and office premises has not been disputed. Therefore, the contention of the ld AR regarding presumption u/s 292C that cash so found at the residence belongs to him and not to the assessee company is not correct and cannot be accepted. 15. In the statement recorded u/s 133A during the course of survey, in reply to Question No. 11, where the source of cash amounting to Rs. 28,92,500/- found at his residence was asked, Shri Bannalal Jat submitted that the same belongs to his business and the same can be verified from the books of accounts maintained at his Head Office at Jahajpur. In reply to Question No. 14, where source of Rs. 70,00,000/- found in the car, registered in the name of Shri Bannalal Jat was sought, he submitted that he uses the car for his business purposes and he has withdrawn this amount from the Bank of Baroda Branch situated at Jahajpur and SBBJ Branch situated at Jahajpur between 20.09.2014 and 30.09.2014 and the same can be verified from the records maintained at his Head Office at Jahajpur. Further in Question No. 16, further explanation of Shri Bannalal Jat was sought regar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orded at his business premises on 10.11.2014 (concluded on 11.11.2014. In question No. 8, he was asked to explain the source of cash amounting to Rs. 3,380/- found at his office and Rs. 1,21,43,210/- at his residence. In response, he submitted that regarding Rs. 1,21,43,210/- which has been found at his residence, he is unable to give any explanation. He submitted that he is in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and income so generated on account of such inflation in expenses is represented in the form of cash which has been found at his residence. This income is not represented in his books of accounts and he surrendered the said amount as his undisclosed income and willing to pay appropriate tax on the same. He also categorically stated that this undisclosed income belongs to his company M/s Bannalal Jat Construction Pvt. Ltd. In response to Question No. 11 wherein he was asked to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure de....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... hands of his proprietary concern but at the same time, has maintained the consistent stand taken earlier during the course of search, in terms of surrender of undisclosed income in the form of cash of Rs. 1,21,43,210/- found at his residence in the hands of the assessee company. 20. In view of the above discussions, it is crystal clear that Shri Bannlal Jat has been managing the affairs of both his concerns from his residence as well as his office at Jahajpur. In his statement recorded during the course of survey u/s 133A, he has stated that the cash found at his residence belongs to his business and he was not clear as to which particular business concern he was referring to. In his subsequent statement recorded on oath u/s 132(4) during the course of search, he has categorically admitted that the cash so found at his residence arises out of inflated business expenses and belongs to his business concern run in name of Bannalal Jat Construction Pvt ltd and has thus been surrendered as its undisclosed income. The said admission has been reiterated in not just one statement but two subsequent statements - one recorded u/s 132(4) and second recorded u/s 131 during post search proc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sactions are concerned, it cannot be accepted that such transactions could not be recorded well in time before the close of the financial year ended on 31 March 2015 and position regarding availability of cash in hands was not known till the time assessee company files its return of income. 23. Here, we refer to the decision of the Hon'ble Rajasthan High Court in case of Ravi Mathur & others (D.B Appeal No. 67/2002 & others) vide its order dated 13.05.2016 where Hon'ble High Court has laid down the following proposition in law in respect of retraction of statement recorded under section 132(4) of the Act: "14. Having noticed the arguments of the learned counsel for the parties, we deem it proper at the outset to take into consideration the finding of the Tribunal about retraction/resiling of the statements recorded under Section 132(4) as the Tribunal has primarily come to a finding that retraction is proper. We would also deal with the judgments relied on by the learned counsel which has a bearing on the issues and would then give our own view on questions posed by the Revenue. 15. In our view, the statements recorded under Section 132(4) have great evidentiar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....de at the time of S & S operations." Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized i.e. almost after a gap of more than an year. Such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material. 15.1 Thus, in our view, the Tribunal in a summary manner has held that retraction is proper, without going in detail and manner, time of retraction, the addition deleted, is wholly on a perverse finding. 15.2 This Court in Raj kumar Sodhani vs The CIT (D.B ITA No. 15/2015 decided on 28.4.2016) has taken this very view that retraction after a sufficient long gap loses its sanctity." 24. In light of legal proposition laid down by the Hon'ble Rajasthan High Court, there is clearly an inordinate delay in retraction and no justifiable explanation has been given by the assessee company for such delay. It is clearly an afterthought and loses its signifance. The statement recorded u/s 132(4) has great evidentiary value and there is no material which has been brought on record that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fter, the party reversed the same without intimation to the assessee resulting into difference. When this fact came to the notice of the assessee, reverse entry of the same was passed in the subsequent years where the amount of Rs. 29,860/- is offered for tax. Thus, when the amount is already offered for tax in AY 2016-17, the addition made be deleted for which reliance is placed in case of the decision of Hon'ble Supreme Court in CIT Vs. Excel Industries Ltd. 358 ITR 295 in which it was held that when the rate of tax remained the same in present A.Y. as well as in subsequent A.Y., the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect, there is no need for the Revenue to continue with the litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. In view of the above, addition confirmed by the Ld. CIT(A) be directed to be deleted. 31. We have heard the rival contentions and perused the material available on record. The ld AR has contended that the amount of Rs. 29,860/- has been reversed and offered to tax in AY 2016-17. Where the amount has been of....