TaxTMI 
TaxTMI 
2019 (6) TMI 426
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....3. Firstly we take assessee's appeal being ITA No. 128/JP/2019 and Revenue's appeal being ITA No. 285/JP/2019 (A.Y. 2015-16). In these cross appeals, the assessee and the revenue have taken following grounds of appeal: Grounds of assessee's appeal: "1. On the facts and in the circumstances of the case and in law the ld. CIT (A) erred in confirming the addition of Rs. 6,29,260/- on a/c of brokerage @ 4% alleged to be earned on sales of plots noted on page No. 1 to 6 of exhibit 9 of Annexure AS seized from Shop No. 8,9,10, Ganesh Nagar-VIA, Murlipura, Jaipur without establishing the fact that such brokerage was actually received or receivable to the assessee. It is contended that Id AO made the addition more so when the plots mentioned in the seized documents do not pertain to the assessee as the assessee is neither buyer nor seller of such plots. 2. The appellant prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal." Grounds of revenue's appeal: "1. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition o....
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....d as dumb document. Further I am also not inclined to admit the inference of AO that entire cash component is to be taxed in the hand of appellant for the following reasons: 1. That in the statement itself Shri Nirmal kedia has indicated that appellant is not the buyer or seller in these documents. Infect there are buyers and seller who are well identifiable. The mere presence of sale deed does not conclude that these are plot which are owned by appellant. Fact of ownership as per sale deed and the persons who have purchased is established by appellant by filing the allotment letters and also the necessary affidavit of the seller to whom the plot were sold. 2. That the name of each plot owner and buyer of such plot is mentioned at page 1-3 (APB 70-72). On the main page the sale price of each plot is mentioned. Perusal of these papers reveals all the plot were sold at similar rate irrespective to the fact whether the plot is sold in cash or cheque. On page 1-3(refer APB page 70-72) the word remitted (bank)' and remitted (cash) and total remitted has been mentioned which implies whatever amount is received it has been given to the seller of plot ....
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....AO made the addition of both the amount treating as separate transaction. 8. By the impugned order, the ld. CIT(A) has deleted the addition of Rs. 85,32,240/- and upheld the addition of Rs. 6,29,260/- in this regard we observe that during the course of assessment proceedings the assessee in letter dated 05.03.2018 submitted to the AO as under: - "4. Explanation regarding page No. 1 to 3 of Annexure 9 found and seized from Shop No. 8 to 11, Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur The detail explanation on this account has been submitted in the case of brother of assessee Shri Nirmal Kumar Kedia and the same may kindly be considered here also. For the sake of convenience the submission given on this issue in the case of Shri Nirmal Kumar Kedia is reproduced as under: - "The explanation and documents in this regard has already been submitted along with our submission dated 07.02.2018 and 28.02.2018. As explained in such submission this is an excel sheet send by Sub-broker in mail id of assessee group. The sheet consists the details of plot sold of various persons in the scheme naming "Ganesh Vihar Vistar" through Shri Nirm....
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.... Sikar Road, Jaipur. Further the copies of registered sales deeds of such plots, which are readily available with the assessee group, to prove that in dealing of such plots the assessee group was neither buyer nor seller were also submitted along with our submission dated 28.02.2018." Proof of ownership of the plots filed before ld AO:- During the course of the assessment proceedings the assessee submitted the copies of allotment letter of the plots by the society to the actual plot owner mentioned in the list and the copies of registered sales deeds of such plots sold by the actual plot owner, (to the extent which were available with the assessee), to prove that such plots were not belonging/owned by the assessee. From perusal of these documents, it is apparent that the assessee is neither buyer nor seller of these plots. Such evidences and detail are summarized in the table as below: - Plot No. Name of plot owner as per impounded document Name of allotee i.e. buyer as per impounded document Documents submitted during assessment proceedings 1 Suryaprakash Saini Sarashree Suvhadarshini • Copy of allotment letter of plot o....
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....kesh Kumar Meena Ritu Chhabra • Documents of this plot were not available with assessee so the same did not submitted. 33 Pratap Singh Rathore Kundan Lal • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 212-214) • Copy of registered sales deed dated 04.04.14 between owner and buyer (Copy at PB Page 215-222) 34 Krishan Kumar Kundan Lal • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 223-225) • Copy of registered sales deed dated 04.04.14 between owner and buyer (Copy at PB Page 226-233) 35 Mukesh Kumar Sharma Vimlesh Kumar • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 234-235) • Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 236-242) 36 Hanuman Sharma Rajendra Singh • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 243-244) • Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 245-253) 37 Ankur Patni ....
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.... • Copy of registered sales deed dated 04.04.14 between owner and buyer (Copy at PB Page 343-350) 1A Goverdhan Vijay Kumar Choudhary • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 351-353) • Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 354-361) 3 Rakesh Kumar Manish Kumar(Meena Ji) • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 362-363) • Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 364-371) 7 Pankaj Saini Savita Biji • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 372-375) • Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 376-383) 8 Jitendra Kumar Meena Savita Biji • Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 384-387) • Copy of registered sales deed dated 19.1014 between owner and buyer (Copy at PB Page 388-395) 10 Pratap Singh Narendra Kumar Aggarwa....
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.... of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 475-482) 9. We have gone through the seized material and found that the seized page No. 1 to 5 are prepared in relation to transactions of sales of plots in the scheme named "Ganesh Vihar Vistar". The owner of these plots is not assessee but these were owned by various other persons. The name of each plot owner and buyer of such plot is mentioned at Page No. 1 to 3. On the same paper the sales price of each plot is mentioned. From verification of these papers your honour will find that all the plots were sold at similar rate irrespective of fact that whether sales consideration realized in cash or through cheque. 10. We further observe with respect to page 1 to 3 the word "remitted (bank)" and "remitted (cash)" and "Total remitted" has been mentioned against each plot which means that whatever amount has been received against sales of plots was remitted to the owner of the plots. The assessee group is neither buyer of the plots nor the sellers. The assessee have no connection with the plots mentioned in the seized documents and the interest of the assessee was limited to acting as a broker in....
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....d document we find that there are several parties in the list which were owing more than one plot. In such cases the payment of one or more plot was received entirely through cheque and for the remaining plots the consideration was either received partly or entirely in cash. In such cases how it can be presumed that such party was not having the knowledge about the market value of his plot and one plot is sold by him at higher rate and another at lower rate. Further as stated earlier where the entire sales consideration is received in cash how it can be presumed that the party did not take sales consideration of his plot from the assessee. 15. There was no material before the A.O. to presume that the cash component for the sale transaction was kept by the assessee and was not passed to the owner of the plots more so when it is proved that the owner of these plots are other third persons. 16. Page 1 to 3 and 4-5 of Exhibit -9 are in relation to same transaction but the AO made addition treating the same as separate transaction. However, the facts remain that the figure written at Page No. 4 to 5 are not in respect of separate transaction but the same is summary of transactions....
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....presuming that the brokerage @ 4% was received to the assessee on the transaction recorded on the document. 20. It was argued by the ld AR of the assessee that for sustaining the addition on account of brokerage the ld. CIT (A) did not give any cogent reason or did not refer any evidence/material/document to prove that the assessee actually received any brokerage in these dealing or any brokerage was receivable to the assessee. It is admitted position of law that the assessments made in consequence to search are specific assessments and the addition in such assessment can only be made on the basis of documents/evidence found as a result of such or any evidence gathered during the course of assessment. In the case of assessee in support of addition so sustained neither there is any evidence/material/document was found as a result of search which show that any brokerage was received/receivable to the assessee on these transactions nor during the course of assessment proceeding this fact could be proved. The complete detail of buyers/sellers was available with the AO and in case of any doubt the direct inquiries could be made from the respective parties in this regard but the same ....
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..... is directed to restrict the addition to the extent of 2% of the brokerage on the alleged transaction of sale of plots. We direct accordingly. 25. In the result, appeal of the revenue is dismissed whereas appeal of the assessee is allowed in part. 26. Now we take assessee's appeal being ITA No. 127/JP/2019 and Revenue's appeal being ITA No.289/JP/2019 (A.Y. 2017-18) In these cross appeals, the assessee and the revenue have taken following grounds of appeal: Grounds of assessee's appeal: "1. On the facts and in the circumstances of the case and in law the Id. C1T(A) erred in determining unaccounted receipts of Rs. 1,03,52,000/- against sales and confirming the addition of Rs. 32,09,120/- by applying the GP rate of 31% of total amount of Rs. 1,03,52,000/- noted on Page No. 18 & 19 of AS-9 seized from 1, Gayatri Nagar, Main Tonk Road, Sanganer Flyover, Jaipur by holding the same as undisclosed business transaction of the assessee. The Id. CIT (A) further erred in rejecting the submission of the assessee that the seized document is a deaf and dump paper and no addition can be made on the basis of these paper. 2. The appellant prays for leave to add,....
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....er made in the search/survey. However, even at this stage, the assessee could not give personwise/yearwise bifurcation of undisclosed income. The assessee made several requests to provide the copy of statement. However, the assessee could get the copy of statement on 19/01/2018 (Friday). The assessee and his brother Shri Nitin Kedia retracted from the admission of undisclosed income in the statements recorded during the course of survey/search by filing an affidavit before AO on 22/01/2018. Thereafter, the AO recorded the statement of assessee on 23/02/2018 on the retraction of admission made by the assessee and his brother. 28. In compliance to notice issued U/s 153A of the Act, the assessee filed return of income declaring income of Rs. 1,54,61,050/- which was assessed by the A.O. at Rs. 6,96,57,170/-. While framing the assessment U/s 143(3) read with Section 153A of the Act, the A.O. made addition of Rs. 5.00 crores on account of alleged undisclosed income for making payment for purchase of agricultural land to Shri Jai Singh Yadav. The A.O. has made addition of Rs. 2,81,506/- on account of alleged income as per page No. 1 of AS-5 seized from 1, Gayatri Nagar, Main Tonk Road,....
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.... This attitude of search party is against CHARTER OF RIGHTS AND DUTIES OF PERSONS SEARCHED AS REPORTED IN (1994) 208 ITR 5 (ST), which provides that the assessee has right to have facility of having meals etc at normal time. Shri Nitin Kedia was not allowed for break for dinner, sleep, breakfast, rest etc. Shri Nitin Kedia was kept whole night in office situated at Evershine Tower Vaisali Nagar, Jaipur where there is no facility of bed in office to sleep. Therefore, Shri Nitin Kedia was kept awaken whole night. All these were noting but torture to assessee with a motive to get the desired surrender and get the signature over the statement whatever recorded by the search party. (b) One person cannot be at two different places at same time. As per the copy of statement provided to assessee, Shri Nitin Kedia confirmed the surrendered the income made by Shri Nirmal Kedia in statement recorded on 20-11-2016 which started at 9 AM from question no. 4 (APB page 66). In last question no. 15 Shri Nitin Kedia was asked to submit the explanation over the confession statement made by his brother Shri Nirmal Kumar Kedia. (APB page 74). If we see the statement of ....
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....19-11-2016 and 10 AM to conclusion of statement on 20-11-2016. Question and answer for Q.No. 18-19 was in between 6.30 PM to 11PM. But if we see the copy of statement Shri Nitin Kedia recorded at F-110 Evershine Tower, Vaisali Nagar, Jaipur (APB 57-64), we find that here the statements were commenced at 5.30 PM on 19/11/2016, which remained continue upto 21-11-2016 except a small break for rest on 20-11-2016 (APB 61). Therefore, Shri Nitin Kedia could not be present at two places at same time on 19/11/2016. The statement at Ganesh Nagar shows that Shri Nitin Kedia was present at Ganesh Nagar in between 6.30 PM to 11 PM on 19/11/2016 where the statement at Evershine Tower in Vaisali Nagar shows that Shri Nitin Kedia was present at Vasali Nagar office during 5.30 PM on 19/11/2016 to 21-11-2016. How it can be possible to record the statement of Shri Nitin Kedia at Ganesh Nagar in between 6.30 PM to 11.00 PM on 19/11/2016. This shows that the statements were prewritten and the search/survey team got the signature of Shri Nitin Kedia under duress, coercion and under inhumanity. This was the reason for not providing the copy of statements in spite of r....
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....n spite of repeated requests: - The survey/search party after recording of statement of assessee did not provide copy of statements to the assessee group. The assessee made the repeated request by following letters (copy at PB page 791-800/Vol IV in APB for AY 2015-16):- S.No Date of letter Addressed to Copy of letter given to 1 Dated 21/11/2016 ADIT-3 Jaipur 1. Principal Director of Income Tax, Investigation, Jaipur 2. Additional Director of Income Tax, Investigation, Jaipur. 2 Dated 08/03/2017 DCIT Central Circle-3, Jaipur 1. Principal Commissioner of Income Tax, Central, Jaipur 2. Principal Director of Income Tax, Investigation, Jaipur 3. Additional Director of Income Tax, Investigation, Jaipur. 4. Joint Commissioner of Income Tax, Central, Jaipur 5. Asstt. Director of Income Tax, Investigation-III, Jaipur 3 Dated 17/04/2017 DCIT Central Circle-3, Jaipur 4 Dated 18/05/2017 DCIT Central Circle-3, Jaipur Joint Commissioner of Income Tax, Central, Jaipur. 5 Dated 08/01/2018 DCIT Central Circle-3, Jaipur (i) The Principle Commissioner of Income Tax, Central, Jaipur (ii) Joint Co....
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....s a result of search/survey and its contents could not be verified, therefore under misconception/misrepresentation by search/survey party, and under fear and mental tension this wrong surrender was made. iii) In the reply to the Q. No. 4 of my statement it was accepted that the undisclosed income of Rs. 20 Crore was expended/invested in making payment of Rs. 5 Crore for purchases of 3 Bigha 18 Biswa land, Rs. 1.02 Caror for investment in Jewellery, part amount for purchases of some plots by way of agreements in my name and balance amount by way of advance & other heads in difference projects of LLP. Actually no such unaccounted investment/expenditure was made for any purposes by me or our business concerns or my family members. The clarification regarding admission of payment of Rs. 5 Crore has been given in forgoing para. The excess Jewellery found as a result of search pertains to our grandparents which was found in search held in the year 1996. No evidence regarding other unaccounted investment/expenses was found to the search party. Thereafter during the course of assessment proceedings, the ld. AO recorded the statement of assessee on 23.02....
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.... always be explained. (iii) Hon'ble Rajasthan High Court in the case of Mantri Share Brokers PL (96 taxmann.com 279) have held as under: Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Burden of proof) - Whether where except statement of director of assessee-company offering additional income during survey in his premises, there was no other material either in form of cash, bullion, jewellery or document or in any other form to conclude that statement made was supported by some documentary evidence, said sum could not be added in hands of assessee as undisclosed investments - Held, yes [Paras 10-11] [In favour of assessee] Para 10 & 11 of the order is as under : 10. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. 11. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullio....
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....minating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded...." Though the above principle is laid down in relation to assessment of block period u/s 158 BC of the Act, the same was also applied in respect of assessment u/s 153A by Delhi High Court in case of Best Infrastructure (84 Taxmann.com 287) when it was held thus: 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (supra). Some of the more decisions laying down ratio that mere statement is not enough to make addition are as under: Hon'ble Madras High Court in the case of Smt. S. Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras) "...While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whether there is any corroborative material evidence. If the....
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....dence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement.." Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made in the hands of the assessee merely on the basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above-mentioned case relied on its earlier order in the case of Kailashben Manharlal Chokshi [2008] 174 Taxman 466 (Guj.), wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 72 taxmann.com 355 (Gujarat), Hon'ble Gujarat High Court held that "....It is required to be borne in mind that the revenue ought to have collected enough evidence during the search in support of the disclosure statement. It is a settled position of law that if an assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities are required to assist him and ensure that only legitimate t....
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....urse of search to make the above additions. The Tribunal in the first round of proceedings has already directed to examine the case on the basis of material seized, material available on record and books of account. In the absence of any specific findings as per the direction of the Tribunal dt. 31st May, 2005 and as per law for the block assessment noted above, before making the addition on the above issue the AO and the learned CIT(A) should have specified as to what material was found during the course of search to make the above additions. In the absence of any proper explanation and finding in the above grounds, we set aside the orders of the authorities below and restore these two grounds of appeal to the file of the AO with direction to re-decide both the grounds afresh on the basis of material seized, material available on record and the books of accounts as is directed by the Tribunal earlier vide order dated 31st May, 2005 and in accordance with law for the block assessment as noted above. The law relating to retraction is well-settled by Supreme Court in Sri Krishna V. Kurukshetra University, AIR 1976 SC 376, wherein it is held that if the original statement suf....
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....d be video recorded. This will indeed add to the confidence of the taxpayer in the impartiality of the system.'' 2.38 The Finance Minister in the budget speech for the year 2003 stated that no confession shall be obtained during search and seizure operation. The instructions were followed by CBDT by issue of a circular on the lines desired by the Finance Minister. There can be an estoppel on the issue of the facts but there cannot be estoppel on the principle of law. It is not the case of the revenue that the assessee was not disclosing the amount received as a result of retirement from the firm. The assessee obtained the legal advice and was of the opinion that such revaluation is capital receipt which is not liable to tax. Hence, we feel that income cannot be added simply on the basis of surrender. The statement recorded u/s 132(4) can be rebutted by the assessee and the case of the assessee is that the amount is not liable to tax." The search party took the similar type surrender in the case of M/s Suresh Medical Agency ITA No 443/JP/2012 dated 21.08.2013, Shri Radhey Shyam Mittal ITA No 420/JP/2012 dated 26.08.2013, Shri Suresh Kumar Mittal ITA No 947/JP/2013 ....
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....ence. Assessee was, therefore, entitled to assume that the income tax authorities were satisfied with the affidavit as sufficient on this point. The Hon'ble Allahabad High Court in the case of Sohan Lal Gupta vs. CIT (1958) 33 ITR 786 (All.), as also put to the parties during the course of argument, has made elaborate discussion on the evidentiary value of the affidavit. The relevant passage from the aforesaid judgment at page 791 of the report is reproduced as under :- " The most important points on which the Tribunal relied, is that mentioned at No. 2, viz., that, according to the Tribunal, the assessee had not satisfactorily established that the shares had to be sold as the purchaser of the Jaswant Sugar Mills was not willing to purchase that mill unless the shares in the Straw Board Mills Ltd. held by the family were also transferred to him at the same time. On this point, the only material available on the record is the affidavit which was filed by the assessee before the Income-tax Officer. The assessee in his affidavit, had definitely stated that the purchaser wanted to purchase both the going concerns, the Jaswant Sugar Mills and the Straw Board Mills ....
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....lid and also deleted the addition. We, therefore, find no factual or legal justification in sustenance of addition by Ld. CIT (A) in this regard. As a result, the addition sustained by Ld. CIT (A) is deleted and ground no. 1 raised in appeal is allowed." Hon'ble ITAT Jaipur Bench in the case of Ashok Kumar Lakhyani vs DCIT ITA No 30/JP/2018 order dated 24/07/2018 held that "We have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. The assessee is engaged in the business of trading of Fertilizers and pesticides. A survey under section 133A of the I.T. Act was carried out at the business premises of the assessee on 19th December, 2012. During the course of survey action, an agreement to sale dated 1st March, 2012 executed between Shri Harish Kumar, the son of the assessee and one Shri Daya Kishan was found from the premises of the assessee. As per the said agreement Shri Harish Kumar agreed to purchase the plot of land from Shri Daya Kishan for a consideration of Rs. 6,75,000/- and a sum of Rs. 1,00,000/- was paid as an advance on the date of agreement and balance of Rs. 5,75,000/- was to be paid by 10th May, 2012. Accordingly,....
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....cts, cannot be a basis of addition. Accordingly, in the facts and circumstances of the case, the addition made by the AO is not sustainable in law and the same is deleted." The following decisions of Hon'ble Rajasthan High Court is distinguishable on facts. Therefore the addition cannot be sustained on the basis of the following decisions:- a) 2018 (11) TMI 953 - Rajasthan High Court Pr. Commissioner Of Income Tax (Central), Jaipur Versus Shri Roshan Lal Sancheti, Prateek-13 In this case in the search, on the basis of seven loose papers were seized on which the assessee had written various amounts showing undisclosed investment in construction, purchase and advances the assessee agreed to surrender amount of Rs. 2,28,44,545/-. Thereafter, the statement of the assessee on these seven papers was recorded on 27.09.2012 where surrender of the aforesaid amount was made by the assessee. But in the case of the assessee, the surrender is not relatable to any material. Further, the surrender was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statemen....
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....der was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statement, the recording of statement is against the principle of natural justice vitiated in law and no cognizance of these statements should be taken. In view of above submission this is to submit that the addition made by ld. AO is not justifiable and CIT (A) rightly deleted to such addition. 32. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the addition of Rs. 5.00 crores were made on account of alleged undisclosed income alleged to be used for making undisclosed payment for purchases of agriculture land purchased from Shri Jai Singh Yadav. The addition was made solely on the basis of search statement of Shri Nirmal Kedia partner of the assessee, which were retracted later-on, without having any corroborative evidence/document to prove the same to be correct. 31. By the impugned order, the ld. CIT(A) has deleted the addition after observing as under: "8. Basic facts relating to Ground 1 is about addition ....
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....] Para 10 & 11 of the order is as under : 10. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. 11. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supreme Court also. Further, Hon'ble Delhi High court in case of Harjeev Agarwal (70 Taxmann.com 95) held thus: Harjeev Agganval [2016] 70 taxmann.com 95 (Delhi) "...A plain reading of Section 132 (4) of the Act indicates that....
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....not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (supra). Some of the more decisions laying down ratio that mere statement is not enough to make addition are as under: Smt. S.Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras) "...While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred...." "....
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....008] 174 Taxman 466 (Guj.),wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 72 taxmann.com 355 (Gujarat), Hon'ble Gujarat High Court held that "....It is required to be borne in mind that the revenue ought to have collected enough evidence during the search in support of the disclosure statement. Tt is a settled position of law that if an assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the-Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the search..." It is clear from order of AO in para 5 of the order by the AO there is no other material other than stateme....
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.... 22-01-2018. They said that they admitted the undisclosed income under mental tension & fear. 37. Thereafter, Statement u/s 131 by the AO subsequent to retraction affidavit filed by the assessee. Subsequent to the retraction affidavit filed by the assessee and his brother Shri Nitin Kedia the AO recorded the statement u/s 131 of the Act. 38. From the assessment order, documents submitted during the course of assessment proceedings and submission given to the AO following facts emerges: - i) During the course of survey/search proceedings carried out over the assessee group no documents/evidence were found to prove that the assessee group made some unaccounted payment to Shri Jai Singh Yadav for purchases of agriculture land. No such documents/evidence was also found from the possession of assessee as well as from the possession of Shri Jai Singh Yadav during the search/survey carried out over this person. ii) The entire additions was made solely on the basis of statement of Shri Nirmal Kumar Kedia recorded during the course of search/survey. iii) As soon as the copy of statements of partners of assessee Shri Nirmal Kumar Kedia and Shri Nitin Kedia re....
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....O recorded the statement of the partner of assessee u/s 131 of Income Tax Act, 1961 on 23.02.2018 wherein in reply to Q. No. 4 of the statement asked regarding to this transaction the partner of assessee replied as under: - 41. If we see the copy of statement Shri Nitin Kedia recorded at F-110 Evershine Tower, Vaisali Nagar, Jaipur, we will find that here the statements were commenced at 5.30 PM on 19/11/2016, which continued up to 21-11-2016 except a small break for rest on 20-11-2016. 42. It is clear that Shri Nitin Kedia was not allowed for break for dinner, sleep, breakfast, rest etc. as the statement at Evershine Tower started at 5.30 PM on 19/11/2016 which remained continuous up to 21-11-2016 except a small break for rest on 20-11-2016. 43. In this regard, the ld AR placed before us CHARTER OF RIGHTS AND DUTIES OF PERSONS SEARCHED AS REPORTED IN (1994) 208 ITR 5 (ST), which provides that the assessee has right to have facility of having meals etc. at normal time. Shri Nitin Kedia was not allowed for break for dinner, sleep, breakfast, rest etc. Shri Nitin Kedia was kept whole night in office situated at Evershine Tower Vaisali Nagar, Jaipur where there is no facility....
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....tement were postponed for physical verification. The time marked for postponing the statement is 2.00 PM (APB page 49) i.e. commencement of the statement and postponing the statement at same time which shows no time consumed in question, answer and in writing of 7 question answer on paper. c.ii) Shri Nitin Kedia could not be present at two places at same time also on 19/11/2016. After postponing the statement at 2.00 PM, the statement were resumed at 6.30PM on 19-11-2016 (APB page 49) at shop at Ganesh Nagar. This statement was again postponed at night 11.00 PM on 19-11-2016 (APB page 50). These statements were resumed at 10.00AM Morning on 20-11-2016 (APB page 51) and concluded on 20-11-2016 after recording answer to question no. 11 to 23. As per the copy of statement given, the assessee should be at Premise situated at Ganesh Nagar from 6.30PM to 11PM on 19-11-2016 and 10 AM to conclusion of statement on 20-11-2016. Question and answer for Q.No. 18-19 was in between 6.30 PM to 11PM. But if we see the copy of statement Shri Nitin Kedia recorded at F-110 Evershine Tower, Vaisali Nagar, Jaipur (APB page 57-64), we find that here the statements were commenc....
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....all surrender Rs. 20 Crore without any corroborative material or incriminating documents. The assessee made surrender under inhumanity conditions created by search/ survey party. The search/survey party kept the assessee and his brother Shri Nitin Kedia whole night without sleep and without meal, and they created an atmosphere of fear where the assessee made the surrender. 48. From the record we also found that the survey/search party after recording of statement of assessee did not provide copy of statements to the assessee group. The assessee made the repeated request by following letters (copy at APB page 240-249/Vol II) :- S.No Date of letter Addressed to Copy of letter given to 1 Dated 21/11/2016 ADIT-3 Jaipur 1. Principal Director of Income Tax, Investigation, Jaipur 2. Additional Director of Income Tax, Investigation, Jaipur. 2 Dated 08/03/2017 DCIT Central Circle-3, Jaipur 1. Principal Commissioner of Income Tax, Central, Jaipur 2. Principal Director of Income Tax, Investigation, Jaipur 3. Additional Director of Income Tax, Investigation, Jaipur. 4. Joint Commissioner of Income Tax, Central, Jaipur 5. Asstt. Director ....
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....hases of land from this person is duly recorded in regular books of accounts. During the course of survey it was said to me by the survey party that some documents has been found from the possession of Shri Jaisingh Yadav which proves that the undisclosed payment of Rs. 5 Crore has been made against land purchase from this person, therefore under this misrepresentation of fact by survey party and under fear and mental tension, I admitted the undisclosed payment of Rs. 5 Crore to Shri Jaisingh Yadav for purchases of agriculture land. Actually no undisclosed payment was made to Jaisingh Yadav against purchase of land from him and as a result of search /survey no evidence in this regard was found to the search party/survey party. b) Regarding my statements recorded on 19.11.2016 and 20.11.2016 at our office at 1, Gayatri Nagar-Ist, Sanganer Flyover, Tonk Road, Jaipur i) In reply of the Q. No. 18 and 19 of my statement recorded I accepted the undisclosed payment of Rs. 5 Crore made to Shri Jainsingh Yadav for purchases of agriculture land. Actually, no such undisclosed payment was made by me or our business concerns or my family members and whatever payment was made a....
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....total cost of the land as per books of accounts is Rs. 3,31,85,000/- and if the alleged undisclosed payment of Rs. 5 Crore is added in this amount, the cost of the land becomes Rs. 8,31,85,000/- i.e. 2.13 crore per bigha which is impossible in this area. The comparison of market rate in the main highway i.e. main Jaipur Express High Way, Ajmer Road, Tonk Road, Sikar Road, Agra Road is as under: - Location Market Rate per Bigha Basis of the rate Main Jaipur Express Highway 38,05,587 Circle Rate Main Ajmer Road National High way 67,50,000 Circle Rate Main Tonk Road National High way 63,00,000 Circle Rate Main Sikar Road National High way 52,83,360 Circle Rate Main Agra Road National High way 67,24,569 Circle Rate Main Kalwar Road 81,40,500 Circle Rate The above chart shows that on main national Highway nearby to Jaipur the land of Agricultural land is much below to the so-called rate arrived after adding the alleged undisclosed payment to the cost of the land disclosed in the books of account of the assessee. Therefore, nobody could have purchased the agricultural land situated at 400 mts. inside from road and about 2 ....
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....jewellery or document or in any other form to conclude that statement made was supported by some documentary evidence, said sum could not be added in hands of assessee as undisclosed investments - Held, yes [Paras 10-11] [In favour of assessee] Para 10 & 11 of the order is as under : 10. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. 11. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supre....
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....hi High Court in case of Best Infrastructure (84 Taxmann.com 287) when it was held thus: 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (supra). Some of the more decisions laying down ratio that mere statement is not enough to make addition are as under: Hon'ble Madras High Court in the case of Smt. S. Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras) "...While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessm....
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.... basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above-mentioned case relied on its earlier order in the case of Kailashben Manharlal Chokshi [2008] 174 Taxman 466 (Guj.), wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 72 taxmann.com 355 (Gujarat), Hon'ble Gujarat High Court held that "....It is required to be borne in mind that the revenue ought to have collected enough evidence during the search in support of the disclosure statement. It is a settled position of law that if an assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable ar....
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....d CIT(A) should have specified as to what material was found during the course of search to make the above additions. In the absence of any proper explanation and finding in the above grounds, we set aside the orders of the authorities below and restore these two grounds of appeal to the file of the AO with direction to re-decide both the grounds afresh on the basis of material seized, material available on record and the books of accounts as is directed by the Tribunal earlier vide order dt. 31st May, 2005 and in accordance with law for the block assessment as noted above. The law relating to retraction is well-settled by Supreme Court in Sri Krishna V. Kurukshetra University, AIR 1976 SC 376, wherein it is held that if the original statement suffers from any defects, the person is entitled to go back on the statement already made by making correct statement. The Supreme Court have laid down the ratio, after considering S. 18 of the Evidence Act, 1872 that any admission made in the ignorance of the legal rights or under duress, cannot bind the maker of the admission. This right has been tested under Income-tax Act and the same has been upheld by Punjab & Haryana High Cour....
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....annot be estoppel on the principle of law. It is not the case of the revenue that the assessee was not disclosing the amount received as a result of retirement from the firm. The assessee obtained the legal advice and was of the opinion that such revaluation is capital receipt which is not liable to tax. Hence, we feel that income cannot be added simply on the basis of surrender. The statement recorded u/s 132(4) can be rebutted by the assessee and the case of the assessee is that the amount is not liable to tax." The search party took the similar type surrender in the case of M/s Suresh Medical Agency ITA No 443/JP/2012 dated 21.08.2013, Shri Radhey Shyam Mittal ITA No 420/JP/2012 dated 26.08.2013, Shri Suresh Kumar Mittal ITA No 947/JP/2013 dated 24.09.2015 and Shri Madan lal Mittal ITA No 948/JP/2013 dated 24.09.2015. In these cases without having any corroborative material, the AO made the addition in these cases merely on the basis of search statement. In these cases the copy of statements were given at much later stage and the assessee retracted from the statement after receipt the copy of statement. Hon'ble ITAT has deleted the addition in all these cases. The findings....
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....ge 791 of the report is reproduced as under :- " The most important points on which the Tribunal relied, is that mentioned at No. 2, viz., that, according to the Tribunal, the assessee had not satisfactorily established that the shares had to be sold as the purchaser of the Jaswant Sugar Mills was not willing to purchase that mill unless the shares in the Straw Board Mills Ltd. held by the family were also transferred to him at the same time. On this point, the only material available on the record is the affidavit which was filed by the assessee before the Income-tax Officer. The assessee in his affidavit, had definitely stated that the purchaser wanted to purchase both the going concerns, the Jaswant Sugar Mills and the Straw Board Mills Ltd., together and one of his conditions of purchase was that all the shares of Lala Jaswant Rai, his sons and other relatives had to be transferred to the purchaser. The Income-tax Appellate Tribunal rejected this affidavit of the assessee on the mere ground that there was no documentary evidence in corroboration in the form of any correspondence of otherwise on this point. Shri G.S. Pathak contended rightly before us that the Tribunal ....
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.... considered the relevant material on record. The assessee is engaged in the business of trading of Fertilizers and pesticides. A survey under section 133A of the I.T. Act was carried out at the business premises of the assessee on 19th December, 2012. During the course of survey action, an agreement to sale dated 1st March, 2012 executed between Shri Harish Kumar, the son of the assessee and one Shri Daya Kishan was found from the premises of the assessee. As per the said agreement Shri Harish Kumar agreed to purchase the plot of land from Shri Daya Kishan for a consideration of Rs. 6,75,000/- and a sum of Rs. 1,00,000/- was paid as an advance on the date of agreement and balance of Rs. 5,75,000/- was to be paid by 10th May, 2012. Accordingly, the assessee who is the father of Shri Harish Kumar in his statement recorded under section 133A surrendered the undisclosed income including the income of Rs. 5,75,000/- on account of investment in plot. After the survey, the assessee vide letter dated 16.01.2013 informed the AO that the agreement found during the survey was cancelled by his son though the assessee was not aware about this fact and, therefore, the surrender of Rs. 5....
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....), Jaipur Versus Shri Roshan Lal Sancheti, Prateek-13 In this case in the search, on the basis of seven loose papers were seized on which the assessee had written various amounts showing undisclosed investment in construction, purchase and advances the assessee agreed to surrender amount of Rs. 2,28,44,545/-. Thereafter, the statement of the assessee on these seven papers was recorded on 27.09.2012 where surrender of the aforesaid amount was made by the assessee. But in the case of the assessee, the surrender is not relatable to any material. In the case of assessee no any agreement, receipt, material was found to corroborate the surrender made in survey. Neither such material was found from the possession of assessee group nor from the possession of Shri Jai Singh Yadav group where the search was taken place on the same day. Further, the surrender was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statement, the recording of statement is against the principle of natural justice vitiated in law and no cognizance of these statements should be taken. ....
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....rrender was backed by cash found during the search. But in the case of the assessee, the surrender is not relatable to any material. In the case of assessee no any agreement, receipt, material was found to corroborate the surrender made in survey. Neither such material was found from the possession of assessee group nor from the possession of Shri Jai Singh Yadav group where the search was taken place on the same day. Further, the surrender was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statement, the recording of statement is against the principle of natural justice vitiated in law and no cognizance of these statements should be taken. 54. Furthermore, the detailed finding recorded by the ld. CIT(A) in this regard, has not been controverted by the ld. DR by brining any positive material on record. Considering the judicial pronouncements relied on by the ld CIT(A) vis a vis quoted by the ld AR and ld DR during the course of hearing before us in the context of factual matrix of the case, we do not find any reason to interfere in the finding so recorded by the ld CIT(A....
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....n of Rs. 1,03,52,000/- as unexplained income being the on money received by the appellant, I am not in agreement with the contention of Ld. A/R that it is a dumb document for the g reasons (a) That this documents was found from the premises of appellant where in a word 'total collection' is written in the top. (b) That the appellant in the statement recorded u/s 131 of the Act on 23.2.2018 has confirmed that details on this pages is prepared by sales team and who has collected what amount is mentioned on these papers. Entire answer of Nirmal kedia, in Hindi, is scanned below: It is clear from the answer above that sum mentioned on these 2 pages is cash collection by sales team. Thus, noting on these 2 pages coupled with statement of Sh. Nirmal Kedia does NOT make it a dumb document. Hence AO is right in treating this as cash collection which is not reflected in the books of accounts. However, AO action in treating entire on money as taxable is not correct as it is only the embedded gross profit which can be taxed. The contention and reliance of the Ld. A/R on judgment including those of Hon'ble ITAT Jaipur is tenable argument. 22.5 Consequently the GP....
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....herefore, there is no reason to presume that collection noted by the sales team on this paper will only be part of unaccounted receipt only. It is further admitted fact that this noting would be made by the sales team to report the collection made by them on a particular date to the management, therefore the entire collection made by them either though cheque or cash would be mentioned by them on this paper and there is no reason to presume the same is only for unaccounted receipts. The ld. CIT (A) for treating the noting of the seized documents as unaccounted receipt referred the statement of Shri Nirmal Kumar Kedia recorded on 23.02.2018 and held that it is clear from the answer that sum mentioned on these pages is cash collection by sales team and thus noting on these 2 pages coupled with statement of Shri Nirmal Kumar Kedia does not make it a dumb document. In this regard we will like to draw your kind attention towards the statements of Shri Nirmal Kumar Kedia dated 23.02.2018 wherein in reply to answer of Q. No. 14 (Copy at PB Page 97-98) and on perusal of answer to this question it reveals that there is no admission that the amount mentioned in these documents are cash colle....
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....ce is placed on the following decisions:- i) Commissioner of Income Tax Vs. S.M. Aggarwal High Court of Delhi (2007) 293 ITR 43 (Del) In this case the department seized documents "Annexure A-28 p. 15, - gives the details of certain handwritten monetary transactions which shows that the assessee had given a loan of Rs. 22.5 lacs on interest and earned interest income of Rs. 3.55 lacs on it. The Tribunal hold this document as dumb document. The relevant findings of the Tribunal as mentioned in the above order is as under:- "We have ourselves examined the contents of the document and are unable to draw any clear and positive conclusion on the basis of figures noted on it. The letters 'H.S.', 'T.2' and 'D-Shop' cannot be explained and no material has been collected to explain the same. Likewise, the figures too are totally unexplained and on the basis of notings and jottings, it cannot be said that these are the transactions carried out by the assessee for advancing money or for taking money. Thus, in our opinion, this is a dumb document." Hon'ble High Court confirmed the findings of the Tribunal and relevant findings was as under:- ....
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....ny way different from other figures/amounts. No attempt whatsoever was made to link any of the entry in the seized book with any transaction carried by the assessee in his capacity as Director or by his wife or M/s I.G. Builders and Promoters Ltd. to show the amount in figure as assessable undisclosed income. No proper use of seized material was made to establish that entries in the seized document relates to undisclosed income of Rs. 48 lakhs. Seized document has rightly been held to be a dump-document. It was for the Revenue to put life into it by collecting other relevant and connected material. This has not been done to establish the case as per requirement of the statute." Hon'ble High Court confirmed the findings of the Tribunal and relevant findings was as under:- "13. Similarly, the document Annex. A-37 recovered during the course of search in the present case is a dumb document and lead us nowhere. Thus, the Tribunal rightly deleted the addition of Rs. 48 lakhs made by the AO on account of undisclosed income on the basis of seized material." iii) JAYANTI LAL PATEL vs. ASSISTANT COMMISSIONER OF INCOME TAX & ORS. HIGH COURT OF RAJ....
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....was also an affidavit filed by widow of 'D' according to which the document belonged to her husband-Even if the affidavits are ignored as fresh evidence wrongly admitted by CIT(A), what is left behind is the dumb document bereft of any details without there being any enquiry by the AO to correlate the same with other documents seized, regular books of accounts, records kept by outside agencies or statements of concerned parties-The four essential components of s. 4, viz., the taxable event, the person chargeable, the assessment year in which charge is leviable and the total income are absent in the case. vi) RAKESH GOYAL vs. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, DELHI 'B' BENCH (2004) 87 TTJ (Del) 151 The findings of Hon'ble Tribunal was as under:- "20.1 After perusing the findings of the CIT(A) and the submissions of both the parties, we do not find any infirmity in these findings. Firstly the finding of the CIT(A) has not been controverted by the learned Departmental Representative by filing any positive evidence. The copies of the pages found from the possession of the assessee are placed in the paper book and after going through these papers, we....
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....s that the document should be found in possession or control of the assessee. In this case the Revenue has been saying that the document was found inside the shop of the assessee. However, there is nothing in the orders of the authorities below to show that the slip was in possession and control of the assessee. Everything physically present inside the shop of a person may not be in that person's control and possession. For proving possession it is necessary to show that the person concerned had the intentio possessendi. In this case nothing of that sort is pointed out by the authorities below. Then, for presuming that the contents of the books of account or document are true, the document must be speaking one. In this case the slip said to have been recovered by the Revenue, does not contain any narration in respect of the various figures noted therein. The slip does not indicate whether the figures referred to quantities of money or to quantities of goods and whether one side, and if so, which side represents receipts which side represented outgoings. Thus, is, thus, a dumb document and as the orders of the authorities below would show they have merely added the tota....
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....appeared there is no indication that this account relates to the assessee or to the sister-concern. The employee was recording transactions relating to both of them. For the financial year 2000-01, there are four parties, against which name, rate, amount, payment received and balance are duly recorded. And for the subsequent year, apart from these four, one KSI appeared. On perusal of these transactions one has to agree with the Authorised Representative that these were working sheets maintained by the employee and those transactions maturing, have been duly recorded in the books of account. The CIT(A) has taken a clear-cut view that the AO did not verify these so-called balances with the parties whose names were found mentioned. Therefore, he deleted the additions. Further the transactions appeared in the diary marked 'PKC-60' do not reveal that they are party wise account as there is no mention of any bill having been raised against the said transactions. The amounts mentioned therein appeared to be a consolidated figure but date on which these amounts are shown as outstanding is not mentioned. In both the years there are only one instance of payment received appears but the date....
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....ue-However, it has evidentiary value because of statement of assessee under s. 131 admitting money-lending activities and explaining the various amount noted in coded figures-This statement has to be considered and accepted as a whole if the AO wants to use it in evidence-Assessee has produced confirmations from all creditors-No material brought on record to prove that these confirmations were false- Same cannot be rejected-If the statement of the assessee is to be rejected in toto no addition can be made since in that case those papers would be dumb papers-If the statement is accepted in toto, then the borrowings mentioned in the papers have to be accepted as genuine-In either case no addition can be made. xii) M.M. FINANCIERS (P) LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX ITAT, CHENNAI 'B' BENCH (2007) 107 TTJ (Chennai) 200 Held that no addition could be made in the hands of assessee on the basis of the dumb loose slips seized from his residence, in the absence of any corroborative material to show payment of any undisclosed consideration by the assessee towards purchase of land. xiii) Hissaria Bros Vs ACIT (ITA No. 179/JDPR/1998) 22 Taxworld 684 ITAT J....
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....namely, Shri Hemchand Joshi and Shri Kamlesh Sharma who are the employees. They made the statement to the search party. In their statements they stated that the sale price of the plots were shown in the books of account at 1/3rd of the actual sale proceeds and remaining 2/3rd were not accounted for. But, later on these statements were rebutted by them on 25th Feb., 2002. On the basis of the statement and seized material, the AO opined that assessee was engaged in purchasing of agricultural land, developing the same and selling them to different persons under the garb of society. The profit was earned by these two persons, namely, Shri Iqbal Ali Khan, secretary and Shri Bhanwari Lal Vijay, president, hereinafter known as Shri Khan and Shri Vijay. In the absence of proper books of account, the AO estimated the concealed income @ 10% of gross receipts and made the addition of Rs. 72,07,770/-. Hon'ble ITAT sustained the addition of Rs. 60.00 lakhs as against Rs. 72,07,770/- which gives estimation of profit @ 8.32%. The findings of Hon'ble ITAT was as under:- 25. In the light of above discussion and by considering the totality of facts and circumstances of the case, we are of t....
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.... 7885664 -2055154 Total 248027831 13454593 Weighted Rate 5.42% In view of the above and considering the totality of facts and circumstances of the case, we modify the order of the ld. CIT(A) and direct for applying profit rate of 6% in place of profit estimated by the ld. CIT(A) at 31%. We direct accordingly. 60. Under Ground No 3, 4, 5, 6 and 7 the department has challenged the deletion of the following additions by ld CIT(A) by holding that these documents are dumb documents Ground No Seized Material APB Page No Addition deleted by CIT(A) Discussion of page of AO order G-3 Exh-A-5/page 1 Page 67 2,81,506 Pg 7 & 8 (Para 6.3) G-4 AS-1/P 26 70 6,99,000 Pg 11 (Para 8.3) G-5 AS-6 /P 28, 29 AS-8 /P 7 71, 72 & 73 8,03,001 Pg 12 & 13 (Para 9.3) G-6 Exh 1/10-12 74,75 & 76 42,07,083 Pg 14 (Para 10.3) G-7 Exh -10 Ann-A/p 54 to 56 77 to 80 33,14,580 Pg 16 (Para 11.3) 61. While deleting the addition, the precise finding given by the ld CIT(A) was as under: "22. Ground No. 3 to 8 is adjudicated together for the sake of convenience as they are based on seize....
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....) In respect of income chargeable under Sub-section (1), income- tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act From a reading of above section, we find following components which enter into the concept of taxation. The first is the taxable event which attracts the levy, the second is the person on whom the levy is imposed and who is obliged to pay the tax. The third is the assessment year in which charge of income-tax is levied. The fourth is the total income of the previous year and the fifth is the rate or rates at which tax is to be imposed. The rates are prescribed in the annual Finance Act. Therefore, this component has no value in determining total income on the basis of seized document. Our view in this regard is supported by the decision of Hon'ble Supreme Court in Govind Saran Ganga Saran v. CST wherein it was held that for the purpose of charging to tax, there should be four components to be satisfied. The Hon'ble ITAT Jabalpur has gone to the extent of explain what constitute a dumb document. In the word of Hon'ble ITAT Jaipur same is as under: "A charge ....
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....s. 8,03,001/-, Rs. 42,07,083/- & Rs. 33,14,580/-." 62. We have considered the rival contentions and carefully gone through the orders of the authorities below. From the record we found that the documents so relied by the A.O. as stated above are not speaking documents as the name of the assessee group or its schemes is not mentioned on this paper. The noting made on the impounded page made by some broker of the assessee group because in scribbling of plot No. S-39 the "brokerage" is also written and if the noting on this paper would be pertaining to transaction relating to the assessee than there is no chance of receiving any amount against brokerage from the party. This proves that this paper pertaining someone else who were acting as an agent in these transactions and the cash payment was received by him at his own which was not received/receivable to the assessee group. However, if the same is presumed to be belonging to the scheme of the assessee naming "Kediaz Kingdome" than whatever payment received/receivable to the assessee group against sales of plot No. mentioned in this paper is duly recorded in books of accounts of the assessee. Along with written submission....
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....h no conclusion can be drawn and no addition can be made. 66. With regard to addition of Rs. 8,03,001/- in respect of AS-6, on examination of documents, we observe that no name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee or regarding to sales made by the assessee. No any plot No. or name of the scheme has been written over this paper by which it can be conclude that these papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. 67. In this regard, it is relevant to observe that during the course of day to day workings, several clients and prospective buyers visit the office of the assessee group and the discussion is held by them with the sale team of the assessee group regarding purchases of plots. During such discussion rough notings were made by the sales team. Had this paper would be having any relation with the actual business transaction of the assessee group than there should have been some noting/narration such as plot No., name of buyer, date etc. but the same is missing in the seized document, therefore the noting on this pap....
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....ived 40 (164.21 sq. mts) Kediaz Kingdome Anjana Sharma 6,88,550 Cheque 127 (115.52 sq. mts) Kediaz Kingdome Sagar Mal 5,25,000 Cheque 122 (135.35 sq. mts) Kediaz Kingdome Munni lal Gupta 5,15,000 Cheque 123 Kediaz Kingdome Plot No. does not exists in the scheme The ledger a/c of above parties in books of accounts of assessee is at PB page 213 to 215. The cheque payment noted in the seized paper has no nexus with the cheque amount recorded by assessee in its books of account. Further the area of the plots written in the seized documents is also different from actual area of the plot. The plot no. 123 is not existing on the scheme of the assessee. These all facts shows that the noting made on this paper is not in relation of plots sold by the assessee.Further during the course of assessment proceedings the assessee submitted the affidavit of buyers of plot No. 40 and 122 wherein they confirmed the payments made to assessee against purchases of these plots and the same is similar to receipts records in books of accounts of assessee. Further the assessee was not having any plot No. 123 in its scheme "Kediaz Kingdome" which is evi....
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....ld that no addition can be made in the hands of assessee firm for the papers found at the residence of partner. vi) Jayantilal Patel Vs. ACIT and others/ Dr Balbir Singh Vs ACIT & others (Rajasthan High Court) 233 ITR 588. / 244 ITR 500 (Departmental appeal in DB)/ Hon'ble Rajasthan High Court observed that addition on the basis of noting on a piece of paper cannot be sustained when it is not in assessee's own hand-writing. 71. As per the ld AR this seized paper shows cheque amount Rs. 21,95,068/- & Rs. 61560/-which has no nexus with the books of account/bank statement of the assessee. Had these transactions pertain to the assessee than the amount of cheque noted on these papers would have been found recorded in the books of account or bank statement of the assessee. Factually, the amount noted against cheque amount is neither reflected in books of account of the assessee or bank statement this clearly establish beyond doubt that the alleged sales were not affected by the assessee. 72. Our attention was also invited to the affidavits of various buyers of the plots filed, some of them examined by the AO. As per the ld AR during the course of assessment proceedings the....
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....k was actually did not carried out. In view of above submission this is to submit that no addition can be made on the basis of these paper and the addition made by AO is wrong and the CIT (A) rightly deleted the addition. 74. In view of the above facts and circumstances, we do not find any infirmity in the order of the ld. CIT(A) in deleting the impugned additions. 75. In assessee's appeal, the assessee is aggrieved by the action of the ld. CIT(A) for estimating G.P. at 31% with respect to transaction of sale of Rs. 1,03,52,000/- as noted on Page No. 18 & 19 of AS-9 seized from 1, Gayatri Nagar, Main Tonk Road, Sanganer Flyover, Jaipur by holding that the same as undisclosed business transaction of the assessee. 76. In this regard, we observe that we had already discussed the issue at para 52 to 57 hereinabove. Following the same reasoning, we direct the A.O. to apply profit rate of 6.5% on the alleged transaction. 77. In the result, appeals of the revenue are dismissed whereas appeals of the assessee are allowed in part. Order pronounced in the open court on 03rd June, 2019. ============= Document 1 पà¥à¤°à¤¶à¥à¤¨- 4 जैसà¤....
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....†à¤ªà¤¨à¥‡ बताया था कि 5 करोड़ की राशि के समरà¥à¤ªà¤£ के बारे में आपने आपके सी.à¤. शà¥à¤°à¥€ विजय गोयल से à¤à¥€ मशवरा कर लिया है। अतः हलफनामें में आपके दà¥à¤µà¤¾à¤°à¤¾ यह कहना कि सरà¥à¤µà¥‡ कारà¥à¤¯à¤µà¤¾à¤¹à¥€ के दौरान किया गया 5 करोड़ रूपये का समरà¥à¤ªà¤£ बिना किसी आधार के सरà¥à¤µà¥‡ टी....
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....‚ह यादव के यहां से जबà¥à¤¤ हà¥à¤ है तो पेनलà¥à¤Ÿà¥€ बचाने के उदà¥à¤¦à¥‡à¤¶à¥à¤¯ से समरà¥à¤ªà¤£ करना उचित होगा । Document 2 पà¥à¤°à¤¶à¥à¤¨-4 उतà¥à¤¤à¤°-4 जैसा कि आपने दिनांक 22.01.2018 को इस कारà¥à¤¯à¤¾à¤²à¤¯ में दाखिल हलफनामें में बताया है कि सरà¥à¤µà¥‡ कारà¥à¤¯à¤µà¤¾à¤¹à¥€ के दौरान आपने 5 करोड़ की राशि का समरà¥à....
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....ं आपके दà¥à¤µà¤¾à¤°à¤¾ यह कहना कि सरà¥à¤µà¥‡ कारà¥à¤¯à¤µà¤¾à¤¹à¥€ के दौरान किया गया 5 करोड़ रूपये का समरà¥à¤ªà¤£ बिना किसी आधार के सरà¥à¤µà¥‡ टीम के कहने पर किया था, गलत है। इस बारे में आपका कà¥à¤¯à¤¾ कहना है ? Post dated cheque की बात मैंने सरà¥à¤š पारà¥à¤Ÿà¥€ के कहने पर कही थी। सरà¥à¤µà¥‡ के दौरान à....
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....¨ 1, गायतà¥à¤°à¥€ नगर मैंन टोंक रोड़, सांगानेर फà¥à¤²à¤¾à¤ˆà¤“वर, जयपà¥à¤° से ज़बà¥à¤¤ दसà¥à¤¤à¤¾à¤µà¥‡à¤œ "Back side of Page No. 18 & 19" जिन पर “Today's Collections" à¤à¤µà¤‚ वà¥à¤¯à¤•à¥à¤¤à¤¿à¤¯à¥‹à¤‚ के नाम व राशि लिखे हà¥à¤ हैं। ये दसà¥à¤¤à¤¾à¤µà¥‡à¤œ आपके अवलोकनारà¥à¤¥ पà¥à¤°à¤¸à¥à¤¤à¥à¤¤ हैं । Page No. 18 पर कà¥à¤² 10 नाम लिखे हैं जिनके आगे अंकित राशि का योà....