TaxTMI 
TaxTMI 
TaxTMI 
2019 (6) TMI 467
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....e assessee is also a partner in the firm M/s Kedia Real Estate LLP., the assessee filed his original return of income on 11.1.2016 for the AY 2015-16 declaring total income at Rs. 98,16,820/-. The assessee belongs to Kedia & Yadav Group, Jaipur on whose premises, a search u/s 132 of the Act was carried out on 19.11.2016. Various assets/ books of accounts and documents were found and seized as per annexure prepared during the course of search. Pursuant to this, AO issued a notice u/s 153A of the Act to the assessee, in compliance of which, the assessee e-filed his return of income on 21.4.2017 for the AY 2015-16 declaring total income at Rs. 98,16,820/-. Finally, the AO completed the assessment u/s 143(3) r.w.s. 153A of the Act vide order dated 22.3.2018 at a total income of Rs. 4,70,12,970/- making various additions. During the course of search and seizure operations u/s 132(1) of the Act and survey u/s 133A, statement were recorded by the Income Tax department at following premises. Premises Search/survey Date of Commencement Date of concluding Kedia House, Benad Road, Jaipur Search u/s 132(4) 19-11-2016 20-11-2016 Kedia Real Estate LLP, Shop No 8, 9, 10, 11 Ganesh Na....
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....n of Rs. 1,22,26,044/- on account of alleged unaccounted business income alleged to be earned on sales of plots in Kediaz Corridor computed on the basis of noting found on Page No. 13-19 of AS-9 impounded u/s 133(6) from M/s Kedia Real Estate LLP, Shop No. 8-10, Ganesh Nagar 6-A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. 3.2 Addition of Rs. 1,74,91,981/- on account of alleged unaccounted business income alleged to be earned on sales of plots in Kediaz Corridor computed on the basis of noting found on Page No. 23-28 of AS-9 impounded u/s 133(6) from M/s Kedia Real Estate LLP, Shop No. 8-10, Ganesh Nagar 6-A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. 3.3 The A.O. also made addition of Rs. 74,06,624/- on account of alleged unaccounted business income alleged to be earned on sales of plot at Ganesh Vihar Vistar computed on the basis of noting found on Page 21-22 of Annexure-AS-9 impounded u/s 133(6) from M/s Kedia Real Estate LLP, Shop No. 8-10, Ganesh Nagar 6-A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. 3.4 Moreover, the addition of Rs. 71,500/- was made by the A.O. U/s 69C r.w.s 115BBE of the Act being alleged undisclosed expenses on the basis of Page No. 16 of anne....
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....17/- against sales and in confirming the addition of Rs. 23,10,263/- + 3,59,276 totaling to Rs. 26,69,539/- by applying the GP rate of 31% on alleged unaccounted receipts of Rs. 74,52,461/- +Rs. 11,58,956= Rs. 86,11,417/- on the basis of noting on page No. 23-28 of AS-9 Seized from Shop No. 8-10, Ganesh Nagar 6-A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. The addition was confirmed by bringing any positive material on record to prove that the assessee received some amount against the sales over and above to whatever recorded in books of accounts. 3. On the facts and in the circumstances of the case and in law the Id. CIT(A) erred in confirming the addition of Rs. 4,49,644/- on a/c of alleged brokerage income @ 4% earned on the sale of plots of Rs. 1,12,41,839/-found noted on Page No. 21-22 of exihibit-9, Annexure-AS seized from Shop No. 8,9,10, Ganesh Nagar-6-A, Nadi Ka Phatak, Murlipura, Jaipur. The addition was confirmed by bringing any positive material to prove the receipt of any brokerage income. 4. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in confirming addition of Rs. 31,81,606/- under the head income from long term capital ga....
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....t the paper was in the control on or in the possession of the assessee. ii) Chandalal Kalyanmal Vs ACIT 21 Taxworld 125 ITAT Jaipur Bench in ITA No. 385/JP/ 1992 order dated 3/2/1998. Held that on the basis of paper recovered from brother of partner, addition in the hands of firm cannot be made. iii) Mahendra Kumar Agarwal Vs ACIT 21 Taxworld 445 ITAT Jaipur Bench has held that on the basis of paper recovered from father of the assessee, addition in the hands of the assessee cannot be made. iv) CIT vs SMS Investment Corporation Private Limited 207 ITR 364 Hon'ble Rajasthan High Court has held that if any document is found in the course of a search, then by legal fiction, a presumption has to be drawn that such document belongs to the person from whose possession or control it was found and the contents of such documents are true. v) Shardha Construction Vs ACIT 76 ITD 85 ITAT Pune bench Hon'ble ITAT Pune Bench has held 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 Tomar Vs ACIT & others (Rajasthan High Court) 233 ITR 588. / 244 ITR 500 (Depa....
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....fied in making addition of Rs. 1,22,26,044/- on the basis of e-mails since the print out of e-mail does not show receipts of cash but merely shows committing for booking. As per the ld AR, the copies of impounded document No. 13 to 19 on the basis of which the addition is made by the AO are print out of e-mails, these sheets are printout taken from email accounts of the assessee group on which the sheets were sent by the sales team/staff /business associates of the assessee group. As per modus operandi, the sales team approaches the different group or person for sale of the plots. Whenever, they get commitment of booking, they report the management for intended booking of the plots. From examination of the impounded document, as per the ld AR, there is no evidence in the sheet that the amount noted in the column "cash amount" in this sheet was actually received from the plot holders. The ld AR further contended that without rebutting the explanation filed by the assessee, the A.O. jumped to the conclusion that the amount received was unaccounted sales of the assessee. He further submitted that the amount shown in the column "cash amount" in the impounded document in respect of plot....
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....ellant pleaded that the seized document were neither prepared by the assessee nor found from control of assessee and possession of the assessee and there is no evidence in the sheet that the cash amount noted in this sheet was actually received from the plot holders or if received the same was entirely only for plot sales and remitted to assessee is not acceptable because these sheets were found on the E-Mail id of the appellant and if the same would not having any bearing from the actual affairs there was no relevance of preparing such elaborate data. Further the sheets were recovered from the E-Mail id of the assessee, therefore the same cannot be said that the same was not found from the control 85 possession of the assessee. Further part of the noting of the seized document is also being verified from the books of accounts which can be sufficient to lead the logical conclusion that the noting made in the seized sheets is in relation to actual transaction. Therefore, the argument of the appellant is rejected on this count. 8.2 On being examining the seized document with the submission and details submitted by the appellant and finding of the AO following facts emerges i) In ....
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....d document but the cash amount noted in the seized document is not found recorded in books 25,14,122/- In support of the above bifurcation the appellant also submitted the documents to substantiate his claim which was examined and verified. The working and chart of above bifurcation is available in the submission of the applicant which has been reproduced herein above, therefore the same is not reproduced in the finding given in this regard. 8.4 Now I decided the matter regarding addition made with regard to each class as bifurcated and mentioned in the para 8.3 above as under: - A) Cases where booking was cancelled: -It is established from the record and documents that in some of the cases the booking in the name of parties, as mentioned in the seized document was cancelled and later on the same was sold to some other party or being held by appellant as stock. Once it is proved that the booking has been cancelled than there remains no reason that the amount so recoded against booking would not be refunded back to the respective party. This fact is also verifiable from the books of accounts on examination of which it reveals that the cases where the booking amount is recei....
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....nd there is no material available on record that the appellant received some payment from such parties over and above to whatever recorded in books of accounts. The seized document contains the noting of amount received by cash as well as cheque. The cheque amount is duly recorded is books of accounts and the same fact also admitted by the AO therefore there remain no reason to presume that the cash amount recorded in the seized document is entirely unaccounted receipt. In the light of cheque transaction noted in the sheet it can be considered that part of the amount noted in the sheet which are being verified from books of accounts are recorded transactions. Admittedly there is difference in the date noted in the seized document and date of receipt in books of accounts but as submitted the date noted on the seized record is not the date of receipt of amount from customer but the same is date of booking. This submission of the appellant is acceptable because of the reason that in the case of cheque receipts also the date is not same which proves that the date noted in the seized document is date of booking and not date of receipt. In view of above the cash receipt to the extent of ....
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....tire receipts cannot be held as taxable income. In such case, only GP should be estimated. In view of various judicial pronouncements including the case laws relied by the appellant the alternative argument of the appellant is acceptable that in case of unaccounted sales only GP on such sales should be estimated and such GP should only be added as income of the appellant. In this case the appellant himself declare the GP 30.60% in the regular books of accounts. Therefore, the AO is directed to apply the GP rate of 31% on unaccounted receipts of Rs. 25,14,122/- which comes Rs. 7,79,378/-. Thus, the addition to the extent of Rs. 7,79,378/- is confirmed and the balance addition of Rs. 17,34,744/- is deleted. In this regard it is to further added that in the case of Shri Gulam Farooq Ansari vs ACIT ITA No 776/JP/2015 Hon'ble ITAT, Jaipur bench, Jaipur after giving the finding that entire receipt cannot be added as income applied the profit rate of 8% by following the decision of DCIT Vs Pahar Ganj Grih Nirman Sahkari Samiti Ltd 86 Others IT(SS)A nos. 100,129,130 86 133/JP/2003. The GP rate estimated by me is though higher from the GP rate estimated by Hon'ble ITAT in similar case....
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....received against booking of such plots, then upon cancellation of booking, the same will have to be refunded back to the party. (-)39,37,168 Less (ii) Cash Amount mentioned in the impounded paper fully recorded in books of account (Chart at APB page 733-737) Tabulated at pg 11-15 of order of ld CIT(A) In several cases the cash amount mentioned on the sheet is completely recorded in books of accounts of the assessee as and when the same was received by the assessee, therefore the cash amount duly recorded in books of accounts against such plot cannot be treated as income of the assessee. Further there is no reason to presume that the cash amount recorded in the impounded document is over and above to cash recorded in books of accounts. (-)57,08,521 Less (iii) Cash Amount mentioned in the impounded paper partly recorded in books of account at lesser figure (Chart at APB page 739-746) Tabulated at pg 16-17 of order of ld CIT(A) (-) 66,233 Balance Balance (Chart at APB page 739-746) In some of the cases the sales was actually made to the same party as noted on the impounded document but the cash receipt shown in the sheet was either not actually received or receive....
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....e 9 found and seized from Shop No. 8 to 11, Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur and pgge No. 23 to 28 of Annexure 9 found and seized from Shop No. 8 to 11, Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur Without prejudice to our submission dated 07.02.2018 submitted on these papers we may further submit that: - a) These sheets pertain to scheme of the assessee group naming "Kedia'z Corridor" owned by Shri Nirmal Kumar Kedia and Shri Nitin Kedia. b) Part of the plots containing the cash receipt at Page No. 23 to 28 are also appearing at page No. 13 to 19. Thus while working the cash receipt on the basis of these papers the common entries are required to be eliminated. b) In some of the cases the booking was cancelled and the plot was later on sold to some other party or still lying in stock of the assessee group thus in such cases the cash receipts cannot be added as income of the assessee because upon cancellation of booking the advance amount was also required to be refunded to the customer. c) In some of the cases the cash receipt either partly or fully recorded in books of accounts of the assessee and in such cases no unr....
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....he same submission is reproduced hereunder again: - "Without prejudice to our submission dated 07.02.2018 submitted on these papers we may further submit that: - a) These sheets pertain to scheme of the assessee group naming "Kedia'z Corridor" owned by Shri Nirmal Kumar Kedia and Shri Nitin Kedia. b) Part of the plots containing the cash receipt at Page No. 23 to 28 are also appearing at page No. 13 to 19. Thus while working the cash receipt on the basis of these papers the common entries are required to be eliminated. b) In some of the cases the booking was cancelled and the plot was later on sold to some other party or still lying in stock of the assessee group thus in such cases the cash receipts cannot be added as income of the assessee because upon cancellation of booking the advance amount was also required to be refunded to the customer. c) In some of the cases the cash receipt either partly or fully recorded in books of accounts of the assessee and in such cases no unrecorded cash receipt can be added in the hands of the assessee group on the basis of these papers. To prove our contention we are enclosing herewith the following documents: - i) Working shee....
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....neither prepared by the assessee nor found from control of assessee and possession of the assessee. These sheets are printout taken from email accounts of the assessee group on which the sheets were sent by the sales team/staff /business associates of the assessee group. From examination of the seized document your honour will find that admittedly the name of the scheme of the assessee has been mentioned over the sheet but there is no evidence in the sheet that the cash amount noted in this sheet was actually received from the plot holders or if received the same was entirely only for plot sales and remitted to assessee. 3) The AO treated the unaccounted sales of Rs. 1,22,26,044/- on the basis of the impugned seized paper 13-19 of AS-9 without rebutting the explanation made by the assessee. On being reconciliation of the sheet from the books of accounts of the assessee following facts emerges: - S.No Particulars Amount (Rs) Total of figure mentioned on seized paper 13-19 of AS-9 1,22,26,044 Less (i) Booking Cancelled -either re-allotted to other party or in stock In several cases the booking mentioned in the sheet was cancelled, therefore there is no reaso....
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.... 1,48,025.00 Copy of possession letter issued in the name of actual buyer at PB Page 450. 39 186 Radesh Hegda Sachin Pathak 1,100.00 Copy of possession letter issued in the name of actual buyer at PB Page 451. 40 270 Manmohan Mehta Pravesh Goyal 1,000.00 Copy of possession letter issued in the name of actual buyer at PB Page 452. 41 271 Laxmi Sharma Pravesh Goyal 1,000.00 Copy of affidavit of actual buyer of plot at PB Page 264-265 and Copy of possession letter issued in the name of actual buyer at PB Page 471. 46 50 R. G. Soni Rajeev Jain 33,333.00 Copy of affidavit of actual buyer of plot at PB Page 268-269 and Copy of possession letter issued in the name of actual buyer at PB Page 454. 47 230 R. G. Soni Jagdish Prasad Gupta 33,334.00 Copy of possession letter issued in the name of actual buyer at PB Page 455. 50 229 Hemant Sharma Monika Dikshit 3,00,000.00 Copy of affidavit of actual buyer of plot at PB Page 272-273 and Copy of possession letter issued in the name of actual buyer at PB Page 457. 56 137 Kishan Chandnani Brijesh Kumar Gupta 5,500.00 Copy of possession letter issued in the name o....
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.....00 Copy of possession letter issued in the name of actual buyer at PB Page 483. 96 19 Sanjay Sharma Manju Singh 1,000.00 Copy of affidavit of actual buyer of plot at PB Page319-320 and Copy of possession letter issued in the name of actual buyer at PB Page 484. 97 316 Vikram Singh Saba Khan 1.75,000.00 Copy of possession letter issued in the name of actual buyer at PB Page 485. 98 317 Vikram Singh Saba Khan 1,75,000.00 Copy of possession letter issued in the name of actual buyer at PB Page 486, 101 107 Yogesh Kumar Bairwa Ravindra Kumar 5,100.00 Copy of affidavit of actual buyer of plot at PB Page321-322 and copy of possession letter issued in the name of actual buyer at PB Page 489. 109 171 Umesh Kumar Sharma Shanbhu Dayal Vijay 5,100.00 Copy of affidavit of actual buyer of plot at PB Page325-326 and copy of possession letter issued in the name of actual buyer at PB Page 491. 118 75 Rajan Shri Vastav Kamla Khandelwal 550.00 Copy of affidavit of actual buyer of plot at PB Page333-334 and Copy of possession letter issued in the name of actual buyer at PB Page 494. 136 S-14 Laxman Singh Hemlata Devi ....
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....etter issued in the name of actual buyer at PB Page 529. 182 158 Vikram Singh Sanjay Bansal 500.00 Copy of possession letter issued in the name of actual buyer at PB Page 530. 183 139 Kailash Chand Saini Rachna Goadwal 100.00 Copy of possession letter issued in the name of actual buyer at PB Page 531. 189 370 Priyanka Singh Kamlesh 500.00 Copy of affidavit of actual buyer of plot at PB Page391-392 and Copy of possession letter issued in the name of actual buyer at PB Page 533. 190 233 Suresh Kumar Yadav Beena Rathore 2,100.00 Copy of possession letter issued in the name of actual buyer at PB Page 534. 198 5-1 Sharda Sharma Ghanshyam Khandelwal 21,000.00 Copy of affidavit of actual buyer of plot at PB Page 403-404 and Copy of possession letter issued in the name of actual buyer at PB Page 541. 205 357 Ramgopal Agarwal Subhash Chnadra Agarwal 2,500.00 Copy of affidavit of actual buyer of plot at PB Page 415-416 and Copy of possession letter issued in the name of actual buyer at PB Page 543. 206 358 Ramgopal Agarwal Sandeep Bansal 2,500.00 Copy of affidavit of actual buyer of plot at PB Page 417-418 and....
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....t recorded in books of accounts at PB Page 4.40. 12 53 K.C. Sethi 1,65,275.00 3,33,330.00 Copy of affidavit of buyer of plot at PB Page 252-253 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 441. 13 54 K.C. Sethi (Sold to Pushpa Setha wife of K. C. Sethi) 1,65,275.00 3,33,330.00 Copy of affidavit of buyer of plot at P8 Page 254-255 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 442 14 52 Sandeep Sharya (Sold to Madhu Saharya wife of Sandeep) 1,63,900.00 3,77,774.00 Copy of affidavit of buyer of plot at PB Page 256-257 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 443 16 227 Shailesh Gupta 50,000.00 53,062.00 Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 444. 24 117 Jitandra Kumar Sharma 5,100.00 40,038.00 Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 447. 48 231 R.G. Soni (full name Rak Govind Soni) 33,333.00 3,90,625.00 117 and Cop....
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.... Page 475. 83 201 Om PrakashDhama (Solo to Manju Dhamor wife of Om Prakash) 2,18,736.00 4,72,192.00 Copy of affidavit of buyer of plot at PB Page 312-313 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 475. 84 202 Om Prakash Dhama 2,18,736.00 4,72,192.00 Copy of affidavit of buyer of plot at PB Page 314-315 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 475. 99 318 Vikram Singh (Sold to Priyanka Yadav family member of Vikram Singh) 1,75,000.00 3,50,000.00 Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 487. 100 319 Vikram Singh (Sold to Priyanka Yadav family member of Vikram Singh) 1,75,000.00 3,50,000.00 Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 488. 108 159 Ashok Kumar Sharma 5,100.00 2,38,476.00 Copy of ledger account of the party Showing the cash receipt recorded in books of accounts at PB Page 490. 110 389 Mohit Singh 1,000.00 26,000.00 Copy of affidavit of buyer of plot at PB Page 327....
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....B Page 361-362 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 513. 154 324 Vijander Yadav 1,76,676.00 3,55,552.00 Copy of affidavit of buyer of plot at PB Page 363-364 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 514. 155 265 Ramkaran Yadav 1,98,900.00 4,00,000.00 Copy of affidavit of buyer of plot at PB Page 365-366 and Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 515. 162 361 Dhan Singh 1,000.00 1,11,108.00 Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 521. 163 344 Nisha Gupta 1,81,800.00 3,62,550.00 Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 522. 174 345 Naresh Gaager 25,000.00 1,54,552.00 Copy of ledger account of the party showing the cash receipt recorded in books of accounts at PB Page 524. 175 346 Naresh Gaager (Sold to Priya Gaagar wife of Naresh Gaggar) 25,000.00 1,55,552.00 Copy of affidavit of buyer of plot at PB Page 3....
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....rded in books of accounts at PB Page 542. Total 57,08,521.00 1,20,10,823 19. It is clear from the above chart that in the above-mentioned cases the cash receipt recorded in the seized document is duly recorded in books of accounts of the assessee as and when such receipts were passed on to the assessee by the sales team/staff/business associates. From the record we also found that the cash receipt against such plots as recorded in books of accounts is equal to or more than the cash receipt in seized documents. There is no reason to presume that the receipt recorded in books of accounts is different from the cash as per seized document. Further the cash receipt from the parties to whom these plots were sold is verifiable from books of accounts and affidavit submitted by such parties and there is no material available on record that the assessee received some payment from such parties over and above to whatever recorded in books of accounts. 20. From the record we also found that in the following cases, cash was either not received actually or refunded by the assessee. We also found that proper documentary evidence like affidavits etc. were filed before ....
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....,500.00 - 147 343 Kavita Gupta 3,000.00 - 3,000.00 Copy of affidavit of buyer of plot at PB Page 353-354 159 268 Bhanu Ram Singh 1,100.00 - 1,100.00 Copy of affidavit of buyer of plot at PB Page 371-372 167 106 Harendra Kumar Sam 5,000.00 - 5,000.00 Copy of affidavit of buyer of plot at PB Page 373-374 172 76 Sandeep Rathi (Sold in the name of Rahul Mohata family member of Sandeep) 55,000.00 - 55,000.00 Copy of affidavit of buyer of plot at PB Page 375-376 173 101 Rajendra Kumar 1,81,100.00 17,220.00 1,63,880.00 Copy of affidavit of buyer of plot at PB Page 377-378 and ledger a/c at PB Page 550. 187 187 Madhu Bala 5,000.00 5,000.00 Copy of affidavit of buyer of plot at PB Page 387-388 188 347 Reena (Sold to Sudhir relative of Reena) 1,80,000.00 1,80,000.00 Copy of affidavit of buyer of plot at PB Page 389-390 200 335 Prabhu Dayal 16,667.00 - 16,667.00 Copy of affidavit of buyer of plot at PB Page 407-408 201 336 Prabhu Dayal 16,667.00 - 16,667.00 Copy of affidavit of buyer of plot at PB Page 409-410 202 S-38 Shazaed Hussain 55,000.00 - 55,000....
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....nd assumption. Further contra to that the assessee submitted the affidavits of several plot holders which supports the amount recorded by the assessee in books of accounts. 22. From the detail submitted before the A.O. and also from the list of parties whose affidavit is submitted to the A.O. alongwith written submission dated 07.02.2018, we found that these parties have confirmed the payments made to assessee against purchases of plots and the same is similar to receipts recorded in books of accounts by assessee. In case of any doubt the AO could have made the direct verification/inquiry from parties but the same has not been made. It is relevant to mention here that during the course of assessment proceedings the assessee submitted the affidavits of several buyers who purchased the plots in the scheme of assessee group and out of that the AO examined to some of the plots holders by issuing the summons to them. However, the AO did not issue any summon to any of these party, therefore the sworn affidavit submitted by the parties confirming the amount paid to the assessee group for purchases of plot is liable to be accepted as admissible evidence, in so far as the AO has not rebutt....
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.... Nagar-6-A, Nadi Ka Phatak, Murlipura, Jaipur and ground No. 4 confirming addition of Rs. 31,81,606/- under the head income from long term capital gain worked out on the basis of noting on page No. 21-22 of exihibit-9, Annexure-A. 25. Since common grounds have been taken both by the assessee and the Revenue with respect to above addition/deletion, we are dealing with these grounds as under: In this regard, we found that statement of Shri Nitin Kedia was recorded u/s 131 of Income Tax Act during the survey proceedings u/s 133(6) over M/s Kedia Real Estate LLP, Shop No. 8-10, Ganesh Nagar 6-A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. No specific question was raised on page 13-19 of Annexure AS-9 by the survey party. However general statement of Shri Nitin Kedia u/s 131 of I.Tax Act on Annexure AS-9 are in answer to question no 14 & 17. The A.O. made addition of Rs. 74,06,624/- on the basis of Pages 21-22 of Exhibit AS-9 which were impounded from the shop no. 8, 9, 10 Ganesh Nagar 6A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. 26. The ld. CIT(A) has dealt with this issue at para 14 to 14.8 at page 63 to 68 of his appellate order. The ld CIT(A) held that the plots mentione....
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.... assessee against sales of plot pertaining to assessee or pertaining to others to show that some of the plots belong to the assessee and other belongs to third party. The assessee has filed copy of allotment letter of JDA, copy of registered sale deed, affidavit etc. before the A.O. The rates mentioned on the sheet is entirely not for sales of plot only but the same is inclusive of cost against construction agreed to be get done through assessee group which was subsequently did not carried out hence no consideration against the construction work was received and only the amount against plot sales was received which is entirely passed on to the respective owner of the plot or in the cases where the plot was pertaining to the assessee the same is duly accounted for in books of accounts. 28. Before the A.O., the assessee has furnished following chart in support of the above explanation Plot No. in respect of which the addition was made by ld. AO Name of the buyer of plot Name of the seller/owner of plot Addition made by ld. AO in the hands of assessee regarding to plot does not belongs to assessee. Addition made by ld. AO in the hands of assessee regarding to plot belongs to....
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....ment made against sales consideration at APB page 620-621. * Copy of JDA allotment letter in the name of seller of plot at APB page 622. * Copy of registered sales deed of plot at APB page 623-631. G-13-A Jamil Khan Nirmal Kumar Kedia - 5,25,916 * Copy of affidavit of the buyer confirming the payment made against sales consideration at APB page 632-633. * Copy of registered sales deed of plot at APB page 634-641. B-93 Deal cancelled as admitted by ld AO * B-599 Deal cancelled as admitted by ld AO * A-90 Deal cancelled as admitted by ld AO * B-569 Deal cancelled as admitted by ld AO * A-99 Dinesh Kumar Yadav S/o Shiv lal Yadav Monika 4,37,641 - * Copy of affidavit of the buyer confirming the payment made against sales consideration at APB page 642-643. * Copy of JDA allotment letter in the name of seller of plot at APB page 644. * Copy of registered sales deed of plot at APB page 645-652. A-114 Rahul Ananad Sulochana 1,41,750 - * Copy of JDA allotment letter in the name of seller of plot at APB page 653. * Copy of regis....
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....; 29. It is clear from the above chart/explanation that the plots mentioned in the sheet entirely not pertaining to the assessee and no unaccounted payment was received against sales of the plots belonging to others. We also found that the AO herself admitted that transaction in respect of 15 plots out of total plot 33 has not been materialised. 30. From the record, we found that there was no evidence or material before the AO to prove that the transaction of sales of plot as stated in the impounded document was actually materialized at the rate mention on the impounded document and some undisclosed income was earned in transaction of such plots. The AO herself admitted that the deal in respect of 15 plots out of total 33 plots was not materialised, which are as under. This is part of A.Os order page 8-9. Plot No. Remarks B-145 Deal cancelled as admitted by ld AO A-102 Deal cancelled as admitted by ld AO A-70 Deal cancelled as admitted by ld AO B-93 Deal cancelled as admitted by ld AO B-599 Deal cancelled as admitted by ld AO A-90 Deal cancelled as admitted by ld AO B-569 Deal cancelled as admitted by ld AO A-115 Deal ca....
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.... as he has upheld the addition by estimating brokerage income @ 4% earned on sale of such plots. Keeping in view nature of assessee's business and prevailing market condition, we estimate the brokerage income at 1% in place of 4% estimated by the ld. CIT(A). Hence, grounds taken by the revenue is dismissed whereas ground taken by the assessee is allowed in part. 33. In ground No. 4 of the appeal, the assessee has alleged the addition of Rs. 31,81,606/- confirmed by the ld. CIT(A) under the head income from long term capital gains by working out the alleged unaccounted receipts on the basis of amount found noted on page 21-22 of Exhibit-9 (in relation to plots which pertaining to the assessee). 34. With respect to this ground, we observe that the AO herself accepted that this sheet shows the 33 plots out of which transactions for 15 plots were not materialised. This proves that the sized sheet does not show the true and fair view of the transaction. There is no material to presume that the plots were actually sold on the rates mentioned in the impounded sheet. The transaction of the sale of the plots is supported by registered sale deed and copy thereof was submitted before the ld....
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....e evidences submitted by the assessee in the form of affidavit of the parties the ld. CIT (A) did not give any cogent reason nor he referred any evidence/material/ document to prove that the assessee actually received amount against sales of plots over & above to whatever recorded in books of accounts. Accordingly, we direct the A.O. to delete the addition of Rs. 31,81,606/- under the head income from long term capital gains. 35. In ground No. 4 of the appeal, the Revenue is aggrieved for deleting the addition of Rs. 1,48,22,442/- made by the A.O. on account of undisclosed receipts from sale of plots. On this issue, the assessee has filed cross appeal wherein the assessee has challenged the determination of unaccounted receipts of Rs. 74,52,461/- + 11,58,956/- totaling to Rs. 86,11,417/- against sales and in confirming the addition of Rs. 23,10,263/- + 3,59,276 totaling to Rs. 26,69,539/- by applying the GP rate of 31% on alleged unaccounted receipts of Rs. 74,52,461/- +Rs. 11,58,956= Rs. 86,11,417/- on the basis of noting on page No. 23-28 of AS-9 Impounded from Shop No. 8-10, Ganesh Nagar 6-A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. The precise observation of the ld CIT(A....
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....arch/survey or as a result of assessment proceedings the evidences submitted by the assessee should have been accepted and in such cases the acceptability of the affidavit cannot be denied by treating the same as self-serving evidences as per my own finding given in the other instances where the unaccounted amount is apparent from seized record. Therefore, the addition made to the extent of Rs. 65,47,622/- on the basis of presumption and assumption is uncalled and the same is directed to be deleted. B) Other cases where the sales made to party noted in the seized record: - For the cases where the sale was actually made to the parties mentioned in the seized document and difference in sales rate as mentioned in seized record and as recorded in books of accounts, the appellant made a submission that such cash receipt was not received by the appellant. The appellant submitted that such cash receipts may be regarding the amount demanded by the staff/sales team/business associates of the assessee group for JDA and other expenses etc. for which the assessee was not having any concern. The submission of the appellant on this account is not acceptable because the seized document was foun....
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....unaccounted receipts of Rs. 74,52,461/- (83,18,741 - 8,66,280) which comes Rs. 23,10,263/-. Thus, the addition to the extent of Rs. 23,10,263/- is confirmed and the balance addition of Rs. 60,08,478/- is deleted. 11.10 In this regard it is to further added that in the case of Shri Gulam Farooq Ansari vs ACIT ITA No 776/JP/2015 Hon'ble ITAT, Jaipur bench, Jaipur after giving the finding that entire receipt cannot be added as income applied at the profit rate of 8% by following the decision of DCIT Vs Pahar Ganj Grih Nirman Sahkari Samiti Ltd & Others - IT(SS)A nos. 100,129,130 &.; 133/JP/2003. The GP rate estimated by me is though higher from the GP rate estimated by Hon'ble ITAT in similar cases but the same is based on the GP rate himself declared by the appellant in his books of accounts, therefore in my considered view logically the higher GP rate himself declared by the appellant in his books of accounts should be applied on unaccounted receipts. Thus out of total addition of Rs. 1,48,66,363/- made by the AO on the basis of difference in sales rate mention in seized record and as recorded in books of accounts the addition to the extent of Rs. 1,25,56,100/- (65,47,62....
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....he appellant is rejected on this count. On being examining the seized document with the submission and details submitted by the appellant and finding of the AO following facts emerges: - i) In the seized document (PB Pg 76-80) in respect of amount received from customer there are two column "Cash amount" and "Cheque amount". The cheque amount was recorded in books of appellant and this fact has not been disputed by the AO. However the AO presumed that the cash amount noted in the seized document is entirely out of books cash receipt of the appellant. The amount of cheque noted in the seized document and verifiable of the same from books of accounts leads to the conclusion that the seized document does not contain entirely the noting of unrecorded transactions. ii) In the seized document (PB Pg 76-80) the plot No. and name of respective Customer against such plot is also mentioned. From examination of the same from books of account, it reveals that in some of the cases the plot was actually not sold to the customer mentioned on the seized document but the same was actually sold to some other party. Meaning which the initially plot was booked in the name of customer mentioned i....
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.... on Page No. 13 to 19 (deal in ground No. 2 above) Rs. 3,73,100/- C) Cases where the booking cancelled and either re-allotted to other party or stock in trade Rs. 2,64,700/- D) Cases where cash amount mentioned in the seized document is recorded in books of accounts Rs. 2,08,082/- E) Cases where the sales was made to party mentioned in the seized document but the cash amount noted in the sized document is not found recorded in books Rs. 11,58,956/- In support of the above bifurcation the appellant also submitted the documents to substantiate his claim which was examined and verified. The working and chart of above bifurcation is available in the submission of the applicant, which has been reproduced herein above, therefore the same is not reproduced in the finding given in this regard. 11.4 Now I decided the matter regarding addition made with regard to each class as bifurcated and mentioned in the para 11.3 above as under: - A & B) Cases of duplicate entries on Page 13 to 19 and Page 23 to 28 of seized documents: - In the written submission the appellant gives the chart of entries which are noted on the seized document Page 13 to 19 as well as Page 23 to 28. The a....
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....d in books of accounts: - From the examination of the documents submitted by the appellant it reveals that in some of the cases the cash receipt is entirely or partly recorded in books. There is no evidence on record that the cash receipt against such plots recorded in books of accounts is different from the cash receipt as per seized document and there is no material available on record that the appellant received some payment from such parties over and above to whatever recorded in books of accounts. The seized document contains the noting of amount received by cash as well as cheque. The cheque amount is duly recorded in books of accounts and the same fact also admitted by the AO therefore there remain no reason to presume that the cash amount recorded in the seized document is entirely unaccounted receipt. In the light of cheque transactions noted in the sheet it can be considered that part of the amount noted in the sheet which are being verified from books of accounts are recorded transactions. Admittedly there is difference in the date noted in the seized document and date of receipt in books of accounts but as submitted the date noted on the seized record is not the date ....
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....party admitted the unaccounted payment made by him because the same also lead to them also in trouble. Thus the affidavit submitted by the appellant are not corroborative evidences but the same are self-serving evidence which cannot be accepted. 11.5 The appellant alternatively argued that even in case of unaccounted sales, the entire receipts cannot be held as taxable income. In such case, only GP should be estimated. In view of various judicial pronouncements including the case laws relied by the appellant the alternative argument of the appellant is acceptable that in case of unaccounted sales only GP on such sales should be estimated and such GP should only be added as income of the appellant. In this case the appellant himself declare the GP 30.60% in the regular books of accounts. Therefore, AO is directed to apply the GP rate of 31% on unaccounted receipts of Rs. 11,58,956/- which comes Rs. 3,59,276/-. Thus, the addition to the extent of Rs. 3,59,276/- is confirmed and the balance addition of Rs. 7,99,680/- is deleted. In this regard it is to further added that in the case of Shri Gulam Farooq Ansari vs ACIT ITA No 776/JP/2015 Hon'ble ITAT, Jaipur bench, Jaipur after giv....
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....order. b) Then she worked out the sale amount of this plot by extrapolating the rate of Rs. 5950/- and worked out the sale amount at Rs. 8,26,336/-. She compared this amount from the amount of Rs. 4,10,000/- recorded in books and worked out the difference of Rs. 4,16,335.85/- which she added as income of the assessee under Chart-4 at pg 11 -12 of her order c) No deduction was given for the amount already added in (a) above. 38. We further observe that while making the addition the AO grossly made the following further errors which are contrary to the documents submitted by the assessee: - i) Duplicate entries impounded page 13-19 (APB 67-73) as well as in impounded page 23 to 28 (APB 78A-80) In some of the cases the amount written in cash column of page No. 23 to 28 (APB 67-73) was also appearing at Page No. 13 to 19 (APB 78A-80) but the ld. AO made the addition of such amount on the basis of both the papers which tantamount to double addition. ii) Cash receipts already recorded in books against the same plots:- While adding the amount mentioned in cash column of page No. 23 to 28, the cash receipts already recorded in books of accounts (as and when the same was receiv....
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....rding addition of Rs. 26,25,618/-: - The reconciliation chart is as under:- Particulars Amount Total of figure mentioned on impounded paper 23-28 of AS-9 26,25,618 Less Duplicate Entries impounded page 13 to 19 of AS-9 as well as 23-28 of AS-9 (Tabulated at page 29-30 of order of CIT(A)) -6,20,880 Less Addition already made on the basis of 13-19 (Tabulated at page 31-33 of order of CIT(A)) -3,73,100 Less Booking Cancelled -either re-allotted to other party or in stock (Tabulated at page 30-31 of order of CIT(A)) -2,64,700 In several cases the booking mentioned in the sheet was cancelled, therefore there is no reason to add the amount of such plots as income of the assessee as in such cases if any amount is presumed to have been received against booking of such plots, then upon cancellation of booking, the same will have to be refunded back to the party. Less Cash Amount mentioned in the impounded paper recorded in books of account In several cases the cash amount mentioned on the sheet is completely recorded in books of accounts of the assessee as and when the same was remitted to the assessee, therefore the cash amount ....
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....s made by the assessee. It is apparent that in cases of many plots, the sales were not executed to the same persons whose name is appearing in the impounded sheets. Therefore, on the basis of booking sheet prepared by the sales team, it cannot be presumed that the transactions were actually materialised inall cases and at the same rate as mentioned in the impounded documents. This sheet was prepared for tentative booking by sales team and at the stage of final sales, the picture changed completed. The sales team projected the rates to the prospective buyers including construction of boundary wall and room and JDA charges. This is done by sales team just to avoid dispute in future as regard possession as the township scheme of assessee located in mofussil area. Later on at the stage of final sale, some of the buyers refused to purchase the plots as they found the rate quoted by sales team is much higher than the market rate. Some of buyers negotiated the rates and purchased the plots without construction and JDA charges and at the much lower rate. ii) Thus in view of above this is to submit that the amount shown under the column "Cash Amount" in the impounded document in respect o....
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....of receipt of sales consideration over & above to whatever recorded in books of accounts than in such case no addition can be made on the basis of presumption, assumption and guess work. Also the judgment of Hon'ble Apex Court in the case of CIT V/s Padamchand Ramgopal (SC) 76 ITR 719 and Allahabad High Court in CIT Vs Mahesh Chand 199 ITR 247 very clearly state that no addition in subsequent years can be made merely because some addition has been made in earlier years. Similarly in our case no adverse inference can be drawn on extrapolation, assumption, presumption and on guesswork ad infinitum especially when the department has carried out intensive search operations and as the result of this search no incriminating material or undisclosed assets/expenses were found to support the on money in such plots. The actual realization against the sale value of the plots is based on many factors such as need of money (for example if a person is in urgent need of fund, he will sale the plots at whatever available price), bargaining, location of plots, possibility of increase in trade by mouth publicity of the prospective buyers, market conditions etc. Reliance is also placed on the follo....
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....Flats were sold by the assessee to the related parties, however, in the case of above all the flats were sold by the assessee to the parties not related to the assessee. After giving detailed justification, the CIT(A) has applied the proposition laid down by ITAT Mumbai Bench in case of Neelkamal Realtors & Erectors India (P) Ltd reported In (2013) 38taxman.com 195. The facts of the case were very much similar to the assessee's case. The issues before the Tribunal in the above case was whether since assessee tendered explanation in support of charging lower price in respect of some of the flats sold by it, which AO failed to controvert, addition is sustainable. The ITAT held that addition in entirety is liable to be deleted. The operative part of the order is as follows:- "It can be observed from the chart made by the AO after page no. 2 of the assessment order that he made addition by considering the rate another flat sold by the assessee vis-a-vis the rate at which flat under view was sold. For example, first item in the table is flat no. 2501 with area of 2645 sq. feet and sale consideration at Rs. 65.24 lakh. First payment for this flat was received by the assessee on rat....
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....merit mention Section 52(2) of the IT Act, 1961 can be invoked only where the consideration for the transfer of a capital asset has been understated by the assessee or in other words the full value of the consideration in respect of the transfer in shown at a lesser figure than that actually received by the assessee and the burden of proving understatement or concealment is on the Revenue; and the sub-section has no application in the case of bona fide transaction where the consideration received by [1979] 117 ITR 371 has held that the ITO cannot fix higher sales price without any evidence. The mere to the conclusion that the assessee did charge a higher price. A survey of aforementioned judgments manifests that there is no low which obliges a trader to make the maximum profit on sales. It is trite that the onus to claim that the apparent is not real is one who so claims. Where the Revenue requires the assessee to show as to why there is a difference in the price charged from two customers and the assessee offers some plausible explanation, no addition can be made simply by holding that this explanation is fanciful. There must be something concrete to show that the version given by....
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....ition to that extent. In this regard, we found that the assessee filed the affidavit in the case of almost all the plot holders and the sale consideration received to assessee against sales of plots is duly verifiable from such affidavits. For sustaining the addition and rejecting the evidences submitted by the assessee in the form of affidavit of the parties the ld. CIT (A) did not give any cogent reason or did not referred any evidence/material/ document to prove that the assessee actually received amount against sales of plots over & above to whatever recorded in books of accounts. The addition so sustained by ld. CIT (A) is based only on the basis of presumption and assumption without considering the submission, evidences and explanation filed by the assessee in the right & judicial perspective. From examination of the assessment order as well as order of CIT (A) it will reveal that the entire addition was made on the basis of presumptions, assumption, without having any material to prove the same to be correct. The submission and documents submitted by the assessee completed ignored and rejected without any cogent reason. Accordingly, we do not find any justification for the a....
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....itive material on record. Accordingly, we do not find any reason to interfere in the order of the ld. CIT(A) in deleting the addition of Rs. 71,500/- made by the A.O. on account of purchase of mobile phone as found during the course of search. 42.3 In the result, appeal of the revenue is dismissed whereas appeal of the assessee in allowed in part in terms indicated hereinabove. 43. Now we take assessee's appeal in ITA No. 125/JP/2019 and Revenue's appeal in ITA No. 287/JP/2019 (A.Y. 2016-17). In the course of assessment U/s 153A of the Act, the A.O. made addition U/s 69C of the Act amounting to Rs. 4,90,666/- being unexplained expenses, which was deleted by the ld. CIT(A) to the extent of Rs. 82,185/-. An addition was also made by the A.O. on account of alleged unaccounted business income earned on sales of plot at Ganesh Vihar amounting to Rs. 1,27,50,000/-, which was deleted by the ld. CIT(A) after having a detailed observation at paragraphs No. 8 to 8.5 at pages 15 to 18 of his appellate order, which are as under: "8. During the course of search on 19.11.2016 on Kedia group certain loose documents were seized from the premises of Shri Harpal Singh, whose premises was covere....
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....plots the appellant was not the buyer or seller. In fact for plot 12 the original allotted to the appellant & then it was transferred in the name of Vijay Kumar vide sale deed dated 08-11-2016 which is prior to the date of search. That for plot no. 8 86 13 the Ld. A/R has filed evidences that appellant is not the owner of the plot at the very outset. Plot no. 8 86 13 were sold by Shri O.P. Khandelwal 86 Shri S.P. Agarwal respectively. Copies of allotment letter from LIDA have been placed on record. The transaction of sale and consequent capital gain is reflected in the respective return of income. 8.3 Following are the legal contention taken by the Ld. A/R in Ground 1. 1. That copies of statement are not provided to the appellant. 2. That copies of seized document are not provided to the appellant, same were only shown to the appellant during the course of assessment proceedings 3. That the opportunity of cross examination was not given in respect to the Shri Harpal Yadav & Shri Jitender Bhutia & Shri S Bhutia. 8.4 Coming to the legal contention taken in the ground my attention is drawn to section 142(3) of the Act. The same reads as under: 143(3) The assessee shall, ....
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....ns was not given to assessee. Opportunity of cross examination was also not given to assessee neither by AO nor by ld CIT(A). 47. After considering all the documents placed on the record, the ld CIT(A) held that actually plot no. 8 and 13 were sold by Shri O.P Khandelwal and Shri S.P Agarwal to Shri J. Bhutia and Shri S.P. Bhutia. The transaction of the sale and consequent capital gain is reflected in the respective return of income of Shri O.P Khandelwal and Shri S.P. Agarwal. Ld CIT(A) further held that AO has not provided the copy of material which was used against the assessee. Therefore, addition of Rs. 1,27,50,000/- in the hands of assessee cannot be sustained. He further held that the assessee's role in the transaction of sale of the 2 plots was mediator therefore, brokerage @ 4% of the total sale consideration of Rs. 1,58,00,000/- which comes to Rs. 6,32,000/- is sustained. 48. Against the above order of the ld. CIT(A), the assessee and the revenue are in further appeals before the ITAT. 49. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the AO made the addition of Rs. 1,27,50,000....
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....tunity of cross examination. Further alongwith the letter dated 23.02.2018 the assessee submitted various documents to prove that the assessee was neither the buyer of the plot and nor the seller of the plot, therefore question of receiving of any money by the assessee against sales of these plots does not arises. However, no cognizance was given by the AO on such papers also and the additions were made by AO solely relying on the statements of third parties. 51. From the record we also found that the AO had neither provided the copies of statements of such party nor granted opportunity of cross-examination of the witness. The A.O. was required to confront the assessee with any material collected at the back of the assessee and in case of statement of third Party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee failing which the said material statement etc. will be rendered unreliable and addition made on such material/statement will be illegal. In support of the above proposition, reliance can be placed on the following judicial pronouncements: i) ANDAMAN TIMBER INDUSTRIES V/S COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II 201....
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....s also admitted to have some other dealing with Shri Bhutia Ji. vi) Further except to the statements of the persons relied by ld. AO no any other evidence is in possession of ld. AO to prove her allegation that the amount found written in the documents seized from Shri Harpal Yadav was received to the assessee. vii) The assessee has submitted the copy of ITR of Shri Om Prakash Khandelwal and Shri Satyaprakash Agarwal of AY 2016-17 wherein the capital gain on sales of plot A-8 & A-13 has been reflected by them in their computation of total income. viii) The ld AO has not made any inquiry from the owner of the plots i.e. Shri Om Prakash Khandelwal and Shri Satyaprakash Agarwal. 54. We also found that both the parties also having the other income of good amount and also having their separate statement of affairs which have no any remote connection from the assessee, therefore in absence of any evidence it cannot be presumed that both these persons were Benamidar of assessee. Further both the persons have shown the long-term capital gain on sales of these plots as their own income in their ITR and whatever tax was payable on that the same was paid by them. The AO also accepted t....
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....ep Loomba vs. ACIT 26 Tax world 288 held that burden to prove Benami nature heavily lies on the department. 11. ITO vs. Suresh Chand Gupta 26 Tax World 224 held that burden to bring material evidence on records to prove a person to be benami of another heavily lies on the revenue. 12. Manju Devi Kogta vs. ITO 27 Tax World 385 held that burden to prove Benami nature heavily lies on the department. 13. Smt. Kesar Devi vs. ITO 28 Tax world 157 held that burden to prove Benami nature heavily lies on the department and what is apparent has to be treated as real in absence of any contrary material 14. Uttam Chand Nahar vs. ITO 28 Tax World 435 held that burden to prove benami nature heavily lies on the department. 15. Vijendra Kumar Mamodia vs. DCIT 29 Tax World 51 held that burden to prove Benami nature heavily lies on the department and burden to prove an investment as Benami is on the person who alleges as such. 16. Rajesh Jain vs. ITO 32 Tax World 72 held that burden to prove benami transaction lies on the person who asserts its and sharing of same business place and employees is not sufficient to hold one person as Benamidar of another. 17. Radhey Shyam Ojha vs. ACIT 3....
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....orities below and found that page No. 11 to 14 of AS-1 seized from Kedia House indicated incurring expenditure of Rs. 4,08,781/-. After recording statement U/s 131 of the Act, the A.O. made addition as per finding given at page No. 3 and 4 of the assessment order. So far as incurring of expenditure is concerned, we found, we have already upheld the addition of Rs. 3,66,000/- while dealing assessee's ground regarding commission earned by the assessee @ 2%. Such addition of income is available to the assessee for spending. Since the A.O. and the ld. CIT(A) has made addition of income as well as expenses both, the benefit of telescoping of income earned by the assessee is to be allowed against the alleged expenses so incurred by the assessee. It is admitted position of law that the income as well as expenses cannot be added and due credit of income should be given to assessee against the unaccounted expenses. There is no material with the department to show that the undisclosed income in the hands of the assessee was utilized for other purposes except to undisclosed expenses of the assessee. In absence of any evidence otherwise for utilization of undisclosed income, it can prudently b....
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....e appellant submitted that the books of accounts of the assessee group was maintaining in Tally software of accounting which was running on the laptop of accountant of the assessee group. The assessee group could not have contacted from the accountant as on the date of search; therefore cash book and other books of account were not submitted at the time of search. Further during the course of post search proceedings no explanation was called from the assessee group in this regard. 8.3 However during the course of assessment proceedings the appellant produced the cash book before the AO along with the books of accounts supported with bank statements, bills 86 vouchers and documents wherein no defects were pointed by the AO. Further the Income Tax returns of AY 2016-17 was already filed before the search and the cash balance was also available as per balance sheets of such year. It is relevant to mention the appellant group is engaged in the business activities and for the purpose of day to day requirement they have to maintain the cash balance. Further the appellant group is also making the withdrawal for household expenses. Therefore, by no stretch of imagination it cannot be pre....
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.... the AO. It is fact an admitted position of law that once no defect has been pointed out by the AO in the cash book submitted during the course of assessment proceedings no addition can be made by not accepting such cash book merely on the basis of assumptions and presumption. 63. From the record we found that the AO doubted the genuineness of the cash balance appearing on the cash book of above named parties by holding that "no explanation was filed by the assessee group with respect to cash found & seized during the post search proceedings". In this regard we observe that the books of accounts of the assessee group was maintaining in Tally software of accounting which was running on the laptop of accountant of the assessee group. The assessee group could not contacted from the accountant as on the date of search, therefore no explanation regarding the cash balance available as on the date of search could be submitted. Further during the course of post search proceedings no explanation was called from the assessee group in this regard. The post search proceedings and assessment proceedings are separate proceedings. The documents or explanation submitted during the course of asses....
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....ces, the ld. CIT(A) concluded that the cash found during the course of search were as per the books of account wherein no figure has been pointed out by the A.O.. The finding so recorded by the ld. CIT(A) are as per material on record which do not require any interference on our part. 67. In the result, ground No. 1 taken by the revenue is dismissed. 68. The A.O. has also made addition of Rs. 1,02,81,252/- on account of gold jewellery. The A.O. alleged unaccounted business income utilized in making undisclosed investment in alleged excess Gold Jewllery found at the time of search by applying the provisions of section 69A r.w.s. 115BBE of Income Tax Act, 1961. The addition was made by the A.O. after rejecting the submission & evidences submitted by the assessee. 69. By the impugned order, the ld. CIT(A) has deleted the addition after observing as under: "11. I have considered the assessment order, the submissions made by the appellant along with paper book for the year under consideration and all relevant material placed on record. 11.2 From examination of the assessment order it reveals that the addition was made by ld. AO by rejecting the documentary evidence submitted by t....
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....must be made relatable to subsequent inquiry/investigation. Otherwise also, the jewellery found from the bed room of father cannot be taxed in the hands of assessee. Thus AO was not justified in making an addition of Rs. 1,02,81,252/-solely on the basis of disclosure made in the statement u/s 132(4) of the Act. 11.4 It may be pointed out that the appellant group was also subjected to search and seizure action u/s 132(1) of the Act on15.09.1996. During that search certain amount of jewellary was found to be owned by Shri Sunder mal Media grandfather of appellant. This jewellary was added as unexplained by the AO and this issued thus travelled up to Hon'ble ITAT Jaipur. Hon'ble ITAT Jaipur in its order dated 28-04-1999 considered all the aspects and treated jewellary of 1941 gms belonging to Shri Sundermal Kedia as explained. It was contended that same jewellary was found in the bedroom 86 in possession of Shiv Kumar Kedia son of Shri Sundermal Kedia son. Following documents are annexed in support for this contention. 1. Panchnama dated 15-09-1996 at APB page-248 2. Copy of annexure J-2 dated 18-09-1996 at APB page- 249 3. Copy of assessment order dated 30-09-1997 a....
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....8.781 0.760 2,62,791 26,600 Total 12,263.269 778.280 3,62,99,234 1,67,15,270 72. With regard to above jewellery, statement of Shri Nitin Kedia was recorded U/s 132(4) of the Act, which reads as under: The search party recorded the statement of Shri Nitin Kedia on 19-11-2016 at 10 AM which was temporarily suspended at 11 AM of 19-11-2016. The statement was resumed on 20-11-2016 at 9 AM starting from question no. 4. The search party in question no. 12 asked Shri Nitin Kedia to explain the jewellery found in the search from him and from the hands of his father, his brother, and locker. Shri Nitin Kedia accepted the excess jewellery of Rs. 1,02,32,236/-, which he surrendered as income of Shri Nirmal Kumar Kedia. 73. Further Shri Nirmal Kumar Kedia confirmed this surrender in his statement recorded on 20-11-2016 at 1.00 PM u/s 132(4) of I.T. Act. 74. From the record we found that the assessee retracted the from the surrender by not disclosing the said income in his return filed on 31-10-2017. The assessee could obtain the copy of statement on 19-01-2018 (Friday). Subsequent to that the assessee and his brother Shri Nitin Kedia filed affidavit on 22-01-2018.....
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....ng with valuation report filed with the W.Tax Return is enclosed herewith at Page No. 54-98) 4258.180 219.000 3. Shri Nitin Kedia (Copy of W. tax return for AY 2006-07 to AY 2014-15 along with valuation report filed with the W.Tax Return is enclosed herewith at Page No. 99-139) 952.860 78.500 4. Smt. Monika Kedia w/o Shri Nitin Kedia (Copy of W. tax return for AY 2007-08 to AY 2014-15 along with valuation report filed with the W.Tax Return is enclosed herewith at Page No. 140-179) 2630.350 368.430 (B) Received at the time of marriage or other auspicious occasions in cases where W.Tax returns not filed 5. Shiv Kumar Kedia HUF (Ancestral) 550.00 6. Ritu Kedia W/o Shri Nirmal Kedia 500.00 7. Tanishk Kedia S/o Shri Nirmal Ji 100.00 8. Harsh Kedia S/o Shri Nirmal Ji 100.00 9. Yash Kedia S/o Shri NitinKedia 100.00 10. Shaurya Kedia S/o Shri NitinKedia 100.00 (C) Pertaining to Grandparents (Found in earlier search) 11. Jewellery pertaining to grandfather Shri Sunder Mal Kedia Ji and also found during the course of search in the year 1996. (Copy of Panchnama & inventory of Jewellery so f....
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....e time of Marriage of Shri Nirmal Kedia with Smt. Ritu Kedia 5,000 4. Received at the time of various auspicious occasions and pertaining to Shiv Kumar Kedia HUF 3,397 Total 34,249 & 34 Coins Found to search party 34,249 & 34 Coins Shortfall Nil Since all the Jewellery/articles so found are duly verifiable from the documents submitted along with our letter dated 07.02.2018, therefore the entire Jewellery found as a result of search may kindly be treated as explained. Without prejudice to above this is to submit that if still your honour wants to make any addition on this account by not accepting the submission of the assessee than the same may treated as utilization of alleged on money received on sale of plots." 77. The assessee has also filed supporting documentary evidence for the jewellery found during the previous search from the grandfather's residence and father of the assessee. From the record we found that the Jewellery found during the course of search was completely explained. However, the AO made the addition by rejecting the submission of the assessee on presumption basis. The submission of the assessee on the findings of th....
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....he father of the assessee Shri Shiv Kumar Kedia was 61 years old as on the date of search and belonging to the reputed family. Shri Shiv Kumar Kedia Ji acquired the Jewellery over the year time of time on marriage and other various auspicious occasions solemnized time to time in family. After the marriage of Shri Shiv Kumar Kedia Ji there was birth of three children in the family, marriage of two sons and birth of four grandsons of Shri Shiv Kumar Kedia Ji. As per customary of the Hindu family apart from Jewellery received at the time of marriage of Shri Shiv Kumar Kedia Ji he would receive some Jewellery on the birth of his child, marriage of his child and birth of his grandsons and the same fact cannot be ruled out. The ld. AO allow the benefit only of the 100 Gms by relying the CBDT instruction No. 1916 dated 11.05.1994. In this regard we would like to catch your kind attention towards the clause (iii) of the instruction which said that "The authorized officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments f....
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....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. 80. 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 Vaishali 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. It was also contention of the ld AR that one person cannot be at two different places at same time. As per the copy of statement provided to assessee, Shri Nitin Kedia surrendered the income against jewellery in statement recorded on 20-11-2016 which started at 9 AM from question no. 4. In question no. 12 (after recording ....
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....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. However, we see the copy of statement Shri Nitin Kedia recorded at F-110 Evershine Tower, Vaishali Nagar, Jaipur, 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. Thus, 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 Vaisali 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. 84. With regard to statement of Shri Nitin Kedia we observe that the search started on 19-11-2016 at residence situated....
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....t of Shri Shiv Kumar Kedia, otherwise the matter would be clear at the time of search itself. The grandfather of assessee Late Shri Sunder Mal Kedia was searched in 15-09-1996 and jewellery of 1971+271 grm was found from the bedroom of Shri Sunder Mal Kedia (in suitcase) (item no. 19 & 20) and further gold jewellery of 457 grm (item No 8) (copy of panchanama & inventory are at APB page 249-250). The premise which was searched in 1996 was same, i.e. Kedia House, Ganesh Nagar, Jaipur. Then AO made the addition of Rs. 7,71,750/- in the hands of Late Shri Sunder Mal Kedia at that time on account of undisclosed gold jewellery. Late Shri Sunder Mal Kedia was residing with Shri Shiv Kumar Kedia. On 06-08-2002, Shri Sunder Mal Kedia expired and his jewelry was physically lying with Shri Shiv Kumar Kedia at the time of death and the same was not taken physically by two other sons namely Shri Murlimanohar Kedia and Shri Rajendra Kedia. 86. We found from the record 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 PB page 791-800/Vol IV in APB for....
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.... 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. " 89. In view of above, it was also the contention of the ld AR that the surrender of Rs. 1,02,32,236/- made by brother of the assessee and Assessee during the course of search was not voluntarily but the same was because of mental tension, fear and under immunity conditions. 90. We also found that except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee made undisclosed investment in jewellery. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. The department has no evidence/documents which prove that surrender in statement by asse....
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.... of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB (1) read with Section 158B (b) of the Act, it is at once clear that a statement recorded under Section 132(4) o....
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.... authority conferred...." "...If the assessee makes a statement under Section 132(4) of the Act, and if there are any incriminating documents found in his possession, then the case is different. On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material, has to be given credence, than it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterized as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence should not be treated as conclusive evidence against the maker of the statement..." vi) Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh) "...it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other director....
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....has held that income cannot be assessed merely on the basis of statement. Hon'ble ITAT has observed in Para 2.37 to 2.38 as under:- "2.37 The revenue has relied upon the statement of the assessee recorded during the course of search in which the assessee surrendered the amount on account of revaluation of land as undisclosed income. Kelkar Panel studied the problem of confessions and surrenders during its studies and deliberations in para 3.27 and the same is reproduced as under: "A cross section of people cutting across 4trade and industry complained of a high handed behaviour of raiding parties particularly while recording a statement. It was pointed out that overenthusiastic aiding parties would often coerce a 'surrender'. As a result, all follow up investigations are distracted and generally brought to a stand still. Since the surrender is not backed by adequate evidence, the tax evader invariably retracts from the statement of surrender by which time it is too late for the Department to resume investigations. Similarly, where adequate evidence is indeed found, a surrender is not necessary to establish tax evasion. Therefore, the Task Force recommends that the CBDT must iss....
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....notice. The action under section 132 was carried out at assessee's premises on 27.8.2008 and in the statement assessee made surrender of income of Rs. 30,00,000/- on account of income earned from trading of items in pharmaceutical business outside the books. The appellant, however, had been approaching the authorized officer to provide copy of statement so obtained in proceedings under section 132 of the Act. When these statements were not provided, the appellant vide letter dated 3.10.2008 addressed to the authorized officer and another letter dated 18.12.2008 addressed to the assessing authority requested to provide the copy of statement in case the same were to be used against him. Till such time the copy of statement was not provided, assessee entertained a bonafide belief that in the absence of any documentary evidence or corroborative evidence having been found as a result of search, such statement would not be used against him. If such statements were to be used, the department was under legal obligation to have provided the copy thereof to the appellant. It is only on persistent efforts of the appellant, copies of statement were provided only on 13.3.2009. The appellant aft....
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....y documentary evidence. Consequently, the assessee was entitled to assume that the Income-tax authorities were satisfied with the affidavit as sufficient proof on this point. If it was not to be accepted as a sufficient proof either by the Income-tax Officer or by the Appellate Assistant Commissioner of Income-tax or by the Income-tax Appellate Tribunal, the assessee should have been called upon to produce documentary evidence, or, at least he should have been cross-examined to find out how far his assertions in the affidavit were correct." (emphasis supplied) The reliance placed by the assessee on the judgment by Hon'ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. (supra) and Hon'ble Rajasthan High Court in the case of Ashok Kumar Soni (supra) are well placed as the assessee has successfully demonstrated that the admission made during the course of search is not correct. The ingredient for retraction of statement made during the search, therefore, stand duly satisfied as the assessee is found to have made retraction within a reasonable time immediately after the copies of statement were provided to him. Furthermore, there being no material or evidence ....
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....count of the advance given for purchase of land. The AO made an addition of Rs. 5,75,000/- which was not offered by the assessee to tax in the return of income but was surrendered during the course of survey proceedings. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed. 3. Having considered the rival submissions and the relevant material on record, we note that the assessee produced a sale deed dated 18.05.2012 whereby the owner of the land Shri Daya Kishan sold the said plot of land to third party Mrs. Nirmala Devi and, therefore, once the said plot of land was sold by the owner to third party and not to the assessee or his son, then the question of investment of Rs. 5,75,000/- which was to be paid at the time of sale deed does not arise. The AO has made the addition only on the basis of surrender made by the assessee during the course of survey though there was an agreement found during the survey action. As per the said agreement only Rs. 1,00,000/- was found to be paid by the son of the assessee as an advance for purchase of the plot of land and, therefore, to that extent the addition can be made if assessee has not surrendered the amo....
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....ther sons of Shri Sunder Mal Kedia (Shri Rajendra Kedia and Shri Murli Manohar Media) have not taken their share in this jewellery and was lying with Shri Shiv Kumar Kedia in a separate box. 14.3 From examination of record its reveals that the alleged excess silver articles were found from the possession and control of father of Assessee Shri Shiv Kumar Kedia and the search party has not recorded the statement of father of appellant Shri Shiv Kumar Media regarding the Jewellery and silver articles found from his bed room. The appellant or his brother could not explain this fact to the search party as they were not aware about this fact at the time of search. The AO also made the addition solely relying the search statement and in this regard no inquiry was made from Shri Shiv Kumar Kedia Shri Rajendra Kedia and Murli Manohar Kedia, sons to Late Shri Sunder Mal Kedia more so when the assessments of Shri Rajendra Kumar Kedia and Shri Murli Manohar Kedia were completed by the same AO. In view of above I am not concur with the finding of AO regarding making addition of Rs. 6,59,818/- on a/c of alleged undisclosed investment in silver. Therefore, it is directed to delete the additio....
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.... Page No. 180-201) 16015 and 34 Coins 3. Received at the time of Marriage of Shri Nirmal Kedia with Smt. Ritu Kedia 5,000 4. Received at the time of various auspicious occasions and pertaining to Shiv Kumar Kedia HUF 3,397 Total 34,249 & 34 Coins b) Submitted vide letter dated 05.03.2018 Silver Jewellery/Articles S. No. Name of Person Net Weight of Metal (In Gms.) 1. Declared in W. Tax return of Smt. Monika Kedia w/o Shri Nitin Kedia. 9,837 2. Pertaining to grandfather Shri Sunder Mal Kedia Ji and also found during the course of search in the year 1996. 16015 and 34 Coins 3. Received at the time of Marriage of Shri Nirmal Kedia with Smt. Ritu Kedia 5,000 4. Received at the time of various auspicious occasions and pertaining to Shiv Kumar Kedia HUF 3,397 Total 34,249 & 34 Coins Found to search party 34,249 & 34 Coins Shortfall Nil Since all the Jewellery/articles so found are duly verifiable from the documents submitted along with our letter dated 07.02.2018, therefore the entire Jewellery found as a result of search may kindly be treated as explained. Without prejudice to above this is to su....
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....ngs so recorded by the ld. CIT(A) while deleting the addition made on account of excess silver jewellery found. 101. The A.O. also made addition of Rs. 4,33,350/- on a/c of alleged unaccounted business income alleged to be earned on sales of plot at Ganesh Vihar computed on the basis of noting found on Page 1 of exihibit-8, seized from 1, Gayatri Nagar, Main Tonk Road, Sanganer, Flyover, Jaipur. The addition was made by rejecting the submission & evidences submitted by the assessee and further ignoring the fact that plot mentioned in the seized documents does not pertain to the assessee and the assessee is neither buyer nor seller of this plot, therefore the income of such plots cannot be added in the hands of the assessee. Further the deal of the plot also did not materialize. 102. By the impugned order, the ld. CIT(A) deleted the same after recording finding at para 20 to 20.6 of his appellate order, which reads as under: "20. I have considered the assessment order, the submissions made by the appellant along with paper book for the year under consideration and all relevant material placed on record. From examination of seized document, it reveals that the scrabbling such a....
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.... purchased after making the payment of same consideration which the outsiders paid. Thus the society naming Sh. Ganpati Griha Nirmaan Sahkaari Samiti Ltd cannot be treated as pertaining to the appellant group and the same is the independent person in the eye of law including Income Tax Act. 20.4 The finding of the AO that the scheme as well as the plot sold, pertain to the Kedia family and the 'on money' recorded in these pages were received by the applicant through the sale of plots listed therein which were on paper sold by some other person on behalf of the applicant group is perverse and contra to the material/documents available on record. There is no material available on the record the beneficiary owner of such plots was the applicant. The AO himself did not tax the cheque and loan amount in the hands of the applicant meaning which she herself admitted the ownership of such plot in the hands of respective seller thus there remains no reason to on money of such plot in the hands of the applicant. The single transaction cannot be taxed in two hands only on presumption and assumption. 20.5 The affidavits submitted by the appellant in support of his submission cannot....
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....sion and this deal not executed and the assessee and his family members have no concern with this plot. 105. We found that the AO at page 11 of her order in para 2 has mentioned as under:- "From the perusal of the details, it is evident that in this deal M/s Kedia Real Estate LLP has taken "On Money' in cash amounting to Rs. 4,33,350/-. Shri Nirmal Kumar Kedia was asked about this transaction in his statement recorded on 23-02-2017 and the assessee was also issued a show cause in this regard." The AO has made a categorical finding that in this deal M/s Kedia Real Estate LLP has taken "On Money' in cash amounting to Rs. 4,33,350/-, then no addition can be made in the hands of assessee. The copies of seized document No. 1 on the basis of which the addition is made by the AO is at PB Page 96. During the course of assessment proceedings on these papers the assessee made the following submission to the AO: - a) Vide letter dated 07.02.2018 (Copy at PB Page 145 to 181 relevant page PB Page 150) "This is noting made by sales staff of the assessee group during discussion made with some customer regarding sale of plot No. A-120 at Ganesh Vihar Vistar deal of which could not....
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....his finding of AO is not backed with any material/document/evidence. The society naming Sh. Ganpati Griha Nirmaan Sahkaari Samiti Ltd was an independent registered society under Cooperative Laws. This society was independent person and was being run by several members and office bearers of the society. The AO herself has admitted that the plots were sold in 1995. Thus this finding of the AO is made on the basis of presumption and assumption basis without having any evidence of the same. Admittedly large number of plots in these scheme are owned by the assessee, his brother and his father but it is a fact that many outsiders have also purchased the plots in this scheme of the society. Further, the plots purchased by the assessee group from the society after making the payment of same consideration which the outsiders paid. We also observe that the AO herself accepted the payment of cheque and loan as pertaining to the plot owner while alleged unaccounted cash taxed in the hands of the assessee. It is not understandable that how a single transaction can be taxed in the hands of two different persons. To hold a person as Benami of another, one ought to have concrete evidences in contr....
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....ing in view the nature of assessee's business, we direct the A.O. to take brokerage income @ 2%. Thus, we uphold the addition of Rs. 16,767/-. 112. During the course of assessment, the A.O. has also made addition of Rs. 5,96,73,213/- made on account of alleged undisclosed business income admitted by the assessee in his statements recorded during search. The addition was made solely on the basis of income surrendered by the assessee in his statements recorded during the course of search without having any evidence/documents in support to that and further by ignoring the fact that such statements was later on retracted by the assessee by filing affidavit and further in his statement recorded during the course of assessment proceedings. 113. By the impugned order, the ld. CIT(A) has deleted the addition after observing at para 23 to 23.4 of his appellate order, which reads as under: "23. I have considered the assessment order, the submissions made by the appellant along with paper book for the year under consideration and all relevant material placed on record. Background for making this addition is as follows. The appellant disclosed a lump sum of Rs. 20 Crores vide Q 4 & 5 in ....
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....tement of the assessee was once again recorded on oath u/s 131 of the IT Act, 1961 on 23.02.2018. The relevant extract of the statement is as under: 9.3 Further, a specific show cause was also given to the assessee with respect to the retraction, wherein he was specifically asked as to why such retraction affidavit filed after more than one year of the search may not be taken as an afterthought, since, no such reason was pointed out during the course of search and post-search proceedings and that why the undisclosed income of X20 Crores admitted by the assessee during the course of search may not be added to his total income for the relevant A.Y. in view of the statement recorded u/s 132(4) and 131. In his reply, the assessee stated that, "...At the outset this is to submit that the admission of business income of Rs. 20 Crores in the statement recorded by search party/survey party was wrong, incorrect and involuntarily obtained by the department for the reasons that during the course of search/survey, the assessee was under mental tension, fear and due to misconception and misrepresentation of facts by the search/survey party and without going through & completely examining to....
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....oes not want to use these statements against assessee/assessee group and it want to make the search assessments on the basis of documents seized during the course of search. However, the AO provided the copies of the statement to our council on 19.01.2018 (Friday). Thus upto the 19.01.2018 the assessee was under bona fide belief that the statement would not be used against him or his business concerns and the real income of the group will be assessed on the basis of documents/assets found as a result of search & survey. However as soon as the copies of statements were provided to the assessee the assessee filed the affidavit on 22.01.2018 to retract from the incorrect surrender made in his statements for the reasons mentioned in forgoing paras. The retraction by way of affidavit in not an afterthought but the same is made on the basis of actual facts and record. Without having the copies of statements recorded no further clarification or explanation could be submitted in that regard. The brother of assessee Shri Nitin Kedia has also given his acceptance on the income surrendered by the assessee at saying of the assessee for the reasons explained in forgoing paras without examinin....
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....f Rs. 20 Crores surrendered by the assessee because such additions are not separate income of the assessee group but part of the overall income of Rs. 20 Crores or utilization of such income..." 9.4 The reply of the assessee has been considered but not found acceptable due to the following reasons:- * * * The assessee failed to furnish any proof of misrepresentation by the search team during the course of search and post-search proceedings; * The assessee confirmed to the undisclosed income of Z20 crores in his three different statements recorded during the search/survey and post-search proceedings. The assessee signed these statements after going through them in detail. It is not rational to claim that the assessee was unaware of the facts deposed in his statement recorded u/s 132(4) and 131; * The brother of the assessee Sh. Nitin Kedia also confirmed to the undisclosed income of Z20 crores in the hands of the assessee in his statement recorded u/s 132(4). Sh. Nitin Kedia also did not claim of any misrepresentation of facts during the search or post-search proceedings; * The offer of the undisclosed income made by the assessee was made voluntarily and in a stable ....
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.... support of the addition so made the AO has not relied upon any evidence or seized document or subsequent inquiry. Regarding surrender made in the search statement u/s 132(4) of the Act it is pertinent to mention here that the statement alone is not sufficient to make an addition more so when the same were later on retracted. In other words the statement u/s 132(4) of the act or u/s 131 of the Act must corroborate with some seized material found during the course of search. The appellant has correctly relied on various judgements in this regard in his written submission. It has been held in judgements referred that mere statement is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or statement must be made relatable to the seized material or evidences found subsequent to inquiry/investigation. Hon'ble Rajasthan High Court in the case of Mantri Share Brokers Vs. CIT ( 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 surve....
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.... Now, if the provisions of Section 132(4) of the Act are read in the context of Section 15888(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating 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 appl....
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....shmi 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...." "...If the assessee makes a statement under Section 132(4) of the Act, and if there are any incriminating documents found in his possession, then the case is different. On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material....
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....tled 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..." 23.4 In view of above, I do not concur with the finding of AO regarding making the addition of Rs. 5,96,73,21.3/- solely on the basis of statements of applicant. AO is directed to delete the addition of Rs. 5,93,76,213/-. On the facts and in the circumstances of the case, in view of above the ground No. 7 of the appeal is allowed." 114. Against the above deletion, the department is in further appeal before us. 115. It was vehemently argued by the ld CIT-DR that after conside....
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....hich 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 Shri Nitin Kedia at Evershine Tower, (APB page 85-92) he was at Evershine Tower Vaishali Nagar, Jaipur from 5.30 PM on 19-11-2016 to 21-11-2016 (up to conclusion of statement). Then how could be his availability at Kedia House on 20-11-2016 from 9.00 AM to conclusion of statement on 20/11/2016. Shri Nitin Kedia could not be present at two places at same time. The statement at Evershine Tower, Vaisali Nagar shows that Shri Nitin Kedia was present at Vaisali Nagar in between 5.30 PM on 19/11/2016 to 21-11-2016 (up to conclusion of statement) whereas the statement at Kedia House shows that Shri Nitin Kedia was present at Kedia House during 9.00 AM on 20/11/2016 to conclusion of statement. How it can be possible to record the statement of Shri Nitin Kedia at Kedia House on 20/11/2016. (c) Other discrepancies in statement Statement at Shop at Ganesh Nagar: - During the course of survey u/s 133A of the Act, statement of Shri Nitin Ked....
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....rch/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 repeated request to ADIT and AO and other higher authorities. Shri Nirmal Kumar Kedia's Statements were recorded under fear & duress and serious other discrepancies in recording of the Statement of Shri Nirmal Kumar Kedia:- Search started on 19-11-2016 at residence situated at Kedia House near Nadi ka Phatak, Murlipura, Jaipur. Statement of Shri Nirmal Kumar Kedia started at 9.00 AM at residence on 19-11-2016 and suspended at 10.00AM (APB page 39-40). The department also carried out survey at office situated at Sanganer (about 30 Km from residence) on same day. Shri Nirmal Kumar Kedia was taken there by the officers of the department and his statement was started to record at 6.40 PM on 19-11-2016 at Sanganer office which continued upto 11.50PM on 19-11-2016 (APB Page 45-50). There was no break in statement for dinner and he was without dinner in night. He was sick and tired. So, a break in statement was given at 11.50 PM on 19-11-2016. In Sanganer Office there was no bed or other basic facilities. ....
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.... (i) The Principle Commissioner of Income Tax, Central, Jaipur (ii) Joint Commissioner of Income Tax, Central, Jaipur. It was submitted vide letter dated 18/05/2017 and 08/01/2018 that despite to the repetitive request of the assessee to ADIT and AO, the copy of the statements recorded at the time of search and post search has not been provided to the assessee and from this it appears that the department does not want to use these statements against the assessee and want to make assessment on the basis of documents seized during the course of search. The assessee group was under bonafide belief that since the survey/search party has not given the copy of the statements, therefore, the same would not be used against them. 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 a copy of any statement that is used against him by the department. After the survey/search several requests were made to Investigation wing as well as AO to provide the copy of statements recorded by the survey/search party. After the continuous efforts of the assessee group,....
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....sessee on 23.02.2018 wherein, the assessee explained the factual position. (APB pg 108-118). Thus, the surrender of Rs. 20 crores made by the Assessee during the course of search was not voluntarily but the same was because of mental tension, fear and under torture and inhumanity conditions. The Board of direct taxes issued instruction to the All Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. vide letter F. No. 286/2/2003-IT (Inv) dated 10.03.2003 in regard of confiscatory statement in the course of search and seizer. The Board has again issued a Circular dated 18th December, 2014 and advised the taxing authorities to avoid obtaining admission of undisclosed income under coercion/undue influence. But in spite of clear-cut board circular the surrender of income was taken by the search/survey party without having any corroborative or incriminating material. The Addition cannot be made merely on the basis of search statement Except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee has undisclosed income. The AO herself has made addi....
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.... 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: "...A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is f....
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....lone 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...." "...If the assessee makes a statement under Section 132(4) of the Act, and if there are any incriminating documents found in his possession, then the case is different. On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material, has to be given credence, than it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterized as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence should not be treated as conclusive evidence against the maker of the statement..." Naresh Kumar Agarwal [20....
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....t 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..." CIT v/s G.Krishnan (1994) 210 ITR 707 Mad. Held, that additions cannot be made merely on the basis of statements. The Jodhpur ITAT Bench in Maheshwari Industries v. Asstt. CIT [2005] 148 Taxman 74 (Jodh) (Mag.) has held that additions should be considered on merits rather than on the basis of the fact that the amount was surrendered by the assessee. It is settled legal position that unless the provision of statute warrant or there is a necessary implication on reading of section that the principles of natural justice are excluded, the provision of section should be construed in manner incorporating principles of natural justice and quasi judicial bodies should generally read in the provision relevant section a requirement of giving a reasonable opportunity of being heard before an order is made which will have adverse civil ....
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....872 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 Court in Kisan Lal Shivchand Rai v. CIT, (88 ITR 293). Hon'ble ITAT Jaipur Bench in the case of Shri Pawan Lashkary ITA No 808/JP/2011 dated 06.01.2012has held that income cannot be assessed merely on the basis of statement. Hon'ble ITAT has observed in Para 2.37 to 2.38 as under:- "2.37 The revenue has relied upon the statement of the assessee recorded during the course of search in which the assessee surrendered the amount on account of revaluation of land as undisclosed income. Kelkar Panel studied the problem of confessions and surrenders during its studies and deliberations in para 3.27 and the same is reproduced as under: "A cross section of people cutting across 4trade and industry complained of a high handed behaviour of raiding parties particularly while recording a statement. It was pointed out that overenthusiastic aiding parties would often coerce a 'surrender'. As a result all follow up investigations are distracted and generally brought to a ....
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.... 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 of Hon'ble ITAT in the case of Shri Radhey Shyam Mittal are produced as under:- "6. We have heard parties with reference to material on record and case laws brought to our notice. The action under section 132 was carried out at assessee's premises on 27.8.2008 and in the statement assessee made surrender of income of Rs. 30,00,000/- on account of income earned from trading of items in pharmaceutical business outside the books. The appellant, however, had been approaching the authorized officer to provide copy of statement so obtained in proceedings under section 132 of the Act. When these statements were not provided, the appellant vide letter dated 3.10.2008 addressed to the authorized officer and another letter dated 18.12.2008 addressed to the assessing authority requested to provide the copy of statement in case the same were to be used against him. Till such time the copy of statement was not provided, assessee entertained a bonafide belief that in the absence of any documentary....
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....here 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 was not entitled to reject the affidavit on this point on such a ground. After the assessee had filed the affidavit, he was neither cross-examined on that point, nor was he called upon to produce any documentary evidence. Consequently, the assessee was entitled to assume that the Income-tax authorities were satisfied with the affidavit as sufficient proof on this point. If it was not to be accepted as a sufficient proof either by the Income-tax Officer or by the Appellate Assistant Commissioner of Income-tax or by the Income-tax Appellate Tribunal, the assessee should have been called upon to produce documentary evidence, or, at least he should have been cross-examined to find out how far his assertions in the affidavit were correct."(emphasis supplied) The reliance placed by the assessee on the judgment by Hon'ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. (supra) and Hon'ble Rajasthan High Court in the case of Ashok Kumar Soni (supra) are well placed as the assessee has successful....
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.... 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. 5,75,000/- on account of investment in the plot was mistakenly made during the survey. The assessee filed his return of income declaring undisclosed income of Rs. 24,50,000/- inclusive of Rs. 1,00,000/- on account of the advance given for purchase of land. The AO made an addition of Rs. 5,75,000/- which was not offered by the assessee to tax in the return of income but was surrendered during the course of survey proceedings. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed. 3. Having considered the rival submissions and the relevant material on record, we note that the assessee produced a sale deed dated 18.05.2012 whereby the owner of the land Shri Daya Kishan sold the said plot of land to third party Mrs. Nirmala Devi and, therefore, once the said plot of land was sold by the owner to third party and not to the assessee or his son, then the question of investment of Rs. 5,75,000/- which was to be paid at the time of sale deed does not arise. The AO has made the addition only on the basis o....
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....nating documents, cash, jewellery etc., in statements recorded under Section 132(4) on 9.11.1995 and later, however, it was contended by the assessee that the statements under Section 132(4) of the Act was not correct and the amounts which were taken into lakhs are in thousands and attempted to retract from the statements made at the time of search and seizure operation. 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 statement, the recording of statement is against the principle of natural justice vitiated in law and no cognizance of these statements should be taken. c) 2019 (4) TMI 1120 - Rajasthan High Court in the case of M/S Bannalal Jat Constructions Pvt. Ltd. Versus ACIT, Central Circle-2, Ajmer In this case a search was conducted at the business/residential premises of Shri Banna Lal Jat, the Director of appellant company - M/s. Bannalal Jat Constructions Private Limited, on 10.10.2014, in which he was also operating his proprietary concern in the name of M....
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....tement up to question no 14. 119. As per mater on record, post search statement was recorded on 02.12.2016 wherein the assessee confirmed his earlier statement but here also no year wise or person wise bifurcation of undisclosed income could be given or worked out by the ADIT. Here the assessee has specifically stated that he has surrendered Rs. 20 Crore for peace and self satisfaction. 120. The assessee retracted the from the surrender by not disclosing the said income in his return filed on 31-10-2017. The assessee could obtain the copy of statement on 19-01-2018 (Friday). Subsequent to that the assessee and his brother Shri Nitin Kedia filed affidavit on 22-01-2018. They said that they admitted the undisclosed income under mental tension & fear. Subsequent to the retraction affidavit filed by the assessee and his brother Shri Nitin Kedia the Ld AO recorded the statement u/s 131 of the Act. The copy of statements are at APB page 108-118. 121. Finding of the A.O. with regard to the addition at page 19-21 wherein the AO held that the assessee has surrendered Rs. 20 Crore and additions of Rs. 14,03,26,787/- has been made in the hands of Shri Nitin Kedia, M/s Kedia Real Estate LLP....
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....oted the discrepancy in the statement hereinabove. 124. From the record we found that except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee made undisclosed investment in jewellery. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. The department has no evidence/documents which prove that surrender in statement by assessee is correct, therefore the same cannot be relied upon. The Hon'ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala & Another (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is upon to the assessee to show that it is incorrect. The Hon'ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.) has held that admission in statement during search is not conclusive proof of fact and can always be explained. 125. Hon'ble Gujarat High Court, vide....