TaxTMI 
TaxTMI 
2018 (6) TMI 150
X X X X Extracts X X X X
X X X X Extracts X X X X
....act that the loose paper entry sheets containing the name of the appellant and the figures mentioned therein allegedly impounded during the course of survey at the business premises of Sh. Mohan Bajaj in which the appellant has no stake/interest of any kind is neither in his handwriting' nor the same bears any acknowledgement by him under his signatures. Thus the order confirming the said addition is bad in the eyes of law. 3. That the Ld. CIT (A) has further erred in upholding an addition of Rs. 15 lacs on the basis of loose sheet entries, and one power of attorney in the name of the appellant which do not co-relate him with any investment made by him from undisclosed sources. Hence the action of the CIT (A) in confirming the addition by invoking section 68 when the appellant was not under any legal obligation to maintain books of accounts as he had opted to file the return under section 44AD is bad in the eyes of law. Hence the order deserves to be struck down. 4. That the Ld. CIT(A) has failed to exercise his judicious acumen in not appreciating that the admission/confession statement of the appellant recorded by the ITO is not as per the spirit of law. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt case are totally different from the case referred by the CIT (A). 9. That the Ld. CIT (A) has passed the impugned order by considering the week, unreliable and untrustworthy documentary evidence of the department by ignoring the most credible version as well as the retraction made by the appellant. Hence the order of Ld. CIT (A) is unlawful & liable to be struck down. 10. That the Ld. CIT (A) has also miserably failed in not deciding the legal ground number 3 as he has failed to pass any speaking order in this regard. Hence the order is bad in the eyes of law." 3. The brief facts of the case are that a survey u/s 133A of the Act was carried out on 28.06.2007 at the business premises of M/s Mohan Lal Bajaj Group, Hadiabad, Phagwara. During the course of survey proceedings, certain incriminating documents were found which contained transactions relating to real estate business done by Assessee/Appellant herein who was summoned u/s 131 of the I.T. Act in the post survey enquiries and his statement was recorded on 06.07.2007 wherein, he allegedly admitted his unrecorded transactions relating to his real estate business done jointly with Sh. Mohan Lal Bajaj and S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....son making it, he has reason to believe that it is being made voluntarily. Further it was also submitted that Ld. CIT(A) erred in observing para. 2.3 of his order to the effect that the appellant was a business associate in real estate business of Sh. Mohan Lal Bajaj and Sh. Des Raj. In fact, the referred documents do not indicate any alleged transactions nor do the same implicate the appellant in entering any into any unexplained property transactions. The Ld. AR also relied upon the order passed by the ITAT Bench at Jabalpur wherein it was held that power of attorney is not a statement of transactions with regard to any right, title or interest in any immovable property as the power attorney is recreation of an agency whereby guarantor authorizes guarantee to do acts specified therein on behalf of the guarantor, which will be binding on the guarantor as if done by him. It was further argued that even the presumption u/s 292C can only be drawn when the material as mentioned in Sec.292C of the Act is/are found in the possession or control of an Assessee concerned in the course of a search u/s 132 but not otherwise. The assessee has also filed an application under Right to Inform....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3A has no evidentiary value and any admission made during such statement cannot be made basis of the addition. The word 'may' used in Sec.133A(3) (iii) makes it clear that the material collected and the statement recorded during the survey u/s 133A are not conclusive piece of evidence by themselves. The statement obtained u/s 133A would not automatically bind upon the assessee. 7.2 The Punjab and Haryana High Court in the case of Kishan Lal Shiv Chand that (ITR 293) , clarified that: It is an established principle of law that a party is entitled to show and prove that the admission made by him previously is in fact not correct and true. The Andhra Pradesh High Court in the case of Gajjam Chinna Yellappa and Ors. vs. ITO [2015] 370 ITR 671 (AP) held that "a retracted statement cannot constitute the sole basis of fastened liability of the assessee" . 7.3 Further, Kerala High in the case of Paul Mathews and Sons vs. CIT [2003] 263 ITR 101 (Ker) held that statement recorded under Section 133A of the IT Act is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn in statement. para ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... based on admission of Asseeee held as under :- 9. The Act empowers the Assessing Officers or other authorities to record the statements of the assessees, whenever a survey or search is conducted under the relevant provisions of law. The statements so recorded are referable to section 132 of the Act. Sub-section (4) thereof enables the authorities not only to rely upon the statement in the concerned proceedings but also in other proceedings that are pending, by the time the statement was recorded. 10. If the statement is not retracted, the same can constitute the sole basis for the authorities to pass an order of assessment. However, if it is retracted by the person from whom it was recorded, totally different considerations altogether, ensue. The situation resembles the one, which arises on retraction from the statement recorded under section 164 of the Code of Criminal Procedure. The evidentiary value of a retracted statement becomes diluted and it loses the strength, to stand on its own. Once the statement is retracted, the assessing authority has to garner some support, to the statement for passing an order of assessment. 11. In I. T. T. A. No. 112 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and survey operation - regarding Further, in respect of pending assessment proceedings also, assessing Instances have come to the notice of the Board where assessees have claimed thatthey have been forced to confess the undisclosed income during the course of thesearch & seizure and survey operations. retracted by the concerned assessees while filing returns of income. In seizure and survey operations do not serve any useful purpose. It is, Tax Departments. Similarly, while recording statement during the made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders . 7.6 From the aforesaid decisions of Apex court and High courts and circular issued by the CBDT, it emerges that the confessional statement can not form the sole basis of addition, if the same is retracted and not supported with corroborative material. Now coming to the instant case, although, the statement was re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct which is also placed in Paper Book submitted herein, seeking information qua material used against the surrendered income of Rs. 15 lacs , found during the course of survey conducted u/s 133 A of the Income Tax Act in the case of Sh. Mohan Lal Bajaj, Hadiabad, Phagwara. In pursuance to RTI application, the assessee was provided the copy of the ledger and a copy of the power attorney dated 05.09.2012. Although, the Assessing Officer as well as the Ld. CIT(A) in their orders observed that in survey, the large number of papers containing incriminating entries relating to the purchase and sale of immovable properties done jointly by Sh. Mohan Lal Bajaj and Sh. Des Raj and the appellant were found and impounded, however, from the document supplied by the Department it reveals that the Revenue Department while making the addition qua additional income of Rs. 15 lacs, used two documents only that is one loose sheet of ledger where the name of appellant depicts and the amount of Rs. 12,50,000 have been shown as credit in the balance of the appellant, however, no-where, the same is acknowledged and/or signed by the appellant herein, therefore, the same cannot be relied upon for any purpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the said diaries as to what they stand for and whom they refer to." x x x x x x x x x x x x x x x 17. From a plain reading of the Section it is manifest that to make there under it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which are concerned, fulfill the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. "Book" ordinarily means a collection of sheets of pape....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Income Tax Settlement Commission. The order has been placed on record along with I.A. No.4. The Settlement Commission has observed that the scrutiny of entries on loose papers, computer prints, hard disk, pen drives etc. have revealed that the transactions noted on documents were not genuine and have no evidentiary value and that details in these loose papers, computer print outs, hard disk and pen drive etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence. It further observed that the department has no evidence to prove that entries in these loose papers and electronic data were kept regularly during the course of business of the concerned business house and the fact that these entries were fabricated, nongenuine was proved. It held as well that the PCIT/DR have not been able to show and substantiate, the nature and source of receipts as well as nature and reason of payments and have failed to prove evidentiary value of loose papers and electronic documents within the legal parameters. The Commission has also observed that Department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....u/s 133A has no evidentiary value and any admission made during such statement cannot be made basis of the addition. The word 'may' used in Sec.133A(3) (iii) makes it clear that the material collected and the statement recorded during the survey u/s 133A are not conclusive piece of evidence by themselves. The statement obtained u/s 133A would not automatically bind upon the assessee. As in the instant case, Revenue Department mainly relied upon statement/admission of the appellant and there is no substantive corroborative material on the basis of which it can be inferred that the addition is based upon corroborative material in addition to the admission/confession. 7.11 Even CBDT vide its circular dated 10.03.2003 (Supra) clarified that confessions during the course of search and seizure do not serve any useful purpose, if the same are not based upon the credible evidence and rather later retracted by the concerned assessees, while filing returns of income. The said instruction further states that it is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by the Ld. CIT(A) is not sustainable and is liable to be deleted, ordered accordingly. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open Court on 29 .05.2018. Sd/- (N.K.CHOUDHRY) JUDICIAL MEMBER Dated:29.05.2018 1. I have perused the order proposed by my ld. brother, JM in the instant appeal. Though in agreement with him in result, my reasons for the same being different, I propose my separate, assent order. 2. This is a case of an individual assessee, filing his returns of income with the Revenue declaring income from house property, work contract and interest. A survey u/s. 133A of the Income Tax Act, 1961 ('the Act' hereinafter) at the premises of one, Sh. Mohan Lal Bajaj, Prop. M/s. Super Fine Cement & Iron Store, Hadiabad, Phagwara, and a firm, M/s. M/s. Fine Traders, on June 28, 2007, led to the discovery of several documents indicating dealings in real estate. In relation to the assessee specifically, the two documents found were, a ledger account (PB pgs. 22) and a General Power of Attorney (dated 05/9/2002) in respect of a property in favour of the assessee (PB pgs. 23-27). The ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the deposition, if any, that is to be taken into account to come to a positive inference as to income in a particular sum having arisen to or received by the assessee, so that where not returned, it could be assessed as income for the relevant year. Of course, the rules of evidence embodied in the Act, viz. sections 68, 69, 69A to 69D, 292B, 292C, etc., would stand to be applied to appraise the facts as well as to, where applicable, invoked, to arrive at such an inference. The question therefore that arises in the instant case is if an inference could be drawn in the facts and circumstances of the case, given the material on record. Strict rules of evidence are not applicable to the proceedings under the Act, and the preponderance of probabilities can be applied to determine as well as to arrive at findings of fact. 3.2 That the assessee was dealing in purchase and sale of land, is not only admitted, but also evidenced by the GPOA found during survey. The same, however, pertains to the year 2002. There is nothing to show that the assessee returned any income from property dealing for the relevant year/s, so that both the amount invested (in the said business) as well as the i....