AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 52
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....on 139 it has disclosed NIL income. The ld.AO has passed assessment order on 31.1.2014 and assessed the total income at Rs. 99,49,500/-. He made an addition of Rs. 49,500/-. It is pertinent to observe that during the search, statement of Shri Shankarlal Chowdhary was recorded under section 132(4) on 19.11.2011. In his statement, he has admitted an additional income of Rs. 50 crores and bifurcation of such details has been noted by the AO at page no.3 of the assessment order, which read as under: "(1) During the various financial years, the following companies had raised share capital: Assessment Year in which the amount is disclosed Sr. No. Name of the Company 2006-07 2007-08 2008-09 2009-10 Total (Rs.) 1 Shreepal Starch Products Pvt. Ltd. - - 9000000 - 9000000 2 Siwana- Agri Marketing Pvt. Ltd. - 13000000 3500000 - 16500000 3 Vicas Vehicles Pvt. Ltd. - 9500000 8500000 500000 18500000 4 Creelotex Bngg. Put. Ltd. - 9900000 8500000 - 18400000 5 Marg Biotech Pvt. Ltd. 16500000 13200000 7000000 - 36700000 6 Safari Biotech....
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....submissions. In the present set of appeals, the controversy revolves around imposition of penalty broadly on four counts as summarized below: (i) Whether when no incriminating document or material was found during the course of search, Explanation 5A to Section 271(1)(c) of the Act is applicable in the light of standalone 'oral evidence' in the form of statement under s.132(4) of the Act? (ii) Whether when there was no addition over and above income declared by the assessee in the return of income filed under s.153A of the Act, penalty under s. 271(1)(c) of the Act is to be imposed? (iii) Whether there is no furnishing of inaccurate particulars of income as the additional income disclosed in the return of income filed under s.153A of the Act has been accepted and assessed without demur? (iv) Whether when the AO has failed to specify as to for which limb of default under Section 271(1)(c) of the Act, penalty proceedings are initiated, was the AO justified in imposing penalty and whether the penalty can be levied when the charge against the assessee in itself is allegedly vague and non-descript and the action of AO suffers from alleged non-application of mind. ....
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....e must be certain assets (money or bullion) unearthed in the possession of the assessee during the search and/or entries are recorded in the any books/documents and the assessee must claim that such assets/entries represent unaccounted income. Ostensibly, Explanation 5A would come into play only when unaccounted assets of the nature as mentioned in the said Explanation are found during the search or income based on entries in the books of accounts is claimed by the assessee to be his income falling in any previous year. 8.3 In the instant case, the facts are quite distinct and peculiar. While no incriminating documents were recorded to have been found to support the undisclosed income except an elaborate and conditional statement of one of the key person of the group, the deponent of the statement has never claimed the entries in dispute to be 'income' of the assessee per se. A bare reading of the aforesaid statement (supra) reveals several peculiar features; (i) the assessee merely agrees to pay tax on the share capital without admitting the same to be beset with ingenuity of any sort; (ii) In contrast, the assessee asserts before the authorized officer that the ....
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....ut a pertinent question would arise also as to whether a statement recorded under s.132(4) of the Act can be treated as evidence found in the course of search per se. As noted, except for an oral evidence under s.132(4) of the Act of abstract nature with distinguishing features, no incriminating material has been found to support the assertions made therein. To reiterate, the assertions made are highly qualified and without any admissions of undisclosed income per se. The Hon'ble Delhi High Court in the case of CIT vs. Harjeev Agrawal [2016] 229 DLT 33 order dated 10/03/2016 has ruled that oral statements on a 'standalone basis' without reference to any other material discovered during search would not empower the AO to make additions in a block assessment (which is peri materia with the present scheme of search assessment under s.153A of the Act). The Hon'ble Delhi High Court in CIT vs. Rajpal Bhatia (2011) 333 ITR 315 (Del) has also echoed that an oral evidence is neither 'books of accounts etc.' or 'assets'. It was a document which came to be created owing to search and not found in the course of search. In the circumstances, where a judicial view has been taken that addition it....
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....e of search, then, notwithstanding such income is declared by him in any return of income furnished on or after the date of search, he shall for the purpose of imposition of penalty under clause (c) of sub-section (1) of this Section be deemed to have been concealed particulars of income or furnished inaccurate particulars. The moot question for attracting this explanation is that in the course of search money, bullion, jewellery or income based on any entry in the books of accounts or other documents ought to have been found. In a given situation, no money or bullion or jewellery or income might have found from the assessees for the assessment years which were not part of "specified previous year" contemplated in section 271AAA or immunity available to the assessees under sub-clause (a) and (b) of Explanation 5A, then also, if in response to the notice under section 153A, the assessee disclosed some additional income voluntarily, would he be deemed to have concealed the income for visiting him with penalty under section 271(1)(c) of the Act ? The ld.Revenue authorities had drawn inference that since the assessee has not disclosed additional income in the original returns, meaning ....
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....portion of additional income would have remained concealed eternally. If in a regular case, on detection of concealment, penalty u/s. 271(1)(c) is leviable, how much more penalty becomes true and potent in a case where the concealment has been detected on account of proactive search action initiated by the department. In the case of the assessee, the assessee has not recorded details of his income and the same was worked out only during search and that too on the basis of the seized materials. In fact, it is an established judicial decision that 'documents seized during the search cannot be said the books of accounts maintained for any source of income, for the purposes of Explanation 5 (CIT Vs Glamour Restaurant (2003) 80 TTJ (Mum) 763. Diaries found and seized during course of search cannot be considered as books of account maintained by the assessee for the purpose of immunity to be granted to him under the provisions of Explanation 5 to section 271(1)(c) - Dr T P Kulkarni Vs CIT (2003) 86 ITD 696 (Mum). It has also been held that Only books of account maintained in the regular course can make the assessee eligible for grant of immunity from penalty and not just any of such ....
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....hey are not conclusive, and a party is always at liberty to withdraw the admission by demonstrating that they are either mistaken or untrue. In law, the retracted confession even may form the legal basis of admission, if the AO is satisfied that it was true and was voluntarily made. But the basing the addition on a retracted declaration solely would not be safe. It is not a strict rule of law, but only rule of prudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The board is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. 15. An issue whether addition solely on the basis of statement u/s.132(4) can be made was considered by the Hon'ble Jurisdictional High Court in the case of Kialashben Manharlal Chokshi Vs. CIT, 220 CTR....
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....n of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee. 27. In the above view of the matter, addition of Rs. 1 lakh made on account of unaccounted cash is confirmed and the addition of Rs. 6 lakhs is hereby deleted." 16. This decision has been followed by the Hon'ble High Court in the case of CIT Vs. Chandrakumar Jethmal Kochar, 55 taxmann.com 292 (Guj). The Hon'ble High Court has reproduced the discussion made by the Tribunal, and thereafter, concurred with the conclusions of the Tribunal by observing as under: "6. In view of the above discussion and considering the principal laid down in the case of Kailashben Manharlal Chokshi (supra),we are of the considered opinion that the view taken by the Tribunal is just and proper. We are not convinced with the submissions made by Mr. Mehta, learned advocate for the appellant that the Tribunal has not given cogent reasons. Therefore, the answer to the first question would be against the Revenue and in favour of the assessee. The second question will also enure for th....