TaxTMI 
TaxTMI 
2020 (5) TMI 201
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....the search party. The post search assessment was conducted by the AO and whereby income was assessed at impugned total income of Rs. 134,47,871/ vide assessment order dated 28.12.2018. The assessee challenged the impugned assessment order dated 28.12.2018 before the Ld. CIT(A). The ld. CIT(A) given partial relief with regard to nature of income and upheld the addition of Rs. 4,75,000/- by treating the same as income from undisclosed sources. Against the order of the Ld. CIT(A), there is no appeal filed by the department, however, against the impugned appellate order of Ld. CIT(A), the assessee is in present appeal before us on the various grounds covering following issues/additions: a. Upholding the addition of Rs. 4,75,000/- in respect of income from property transaction duly declared and covered by the returned income of Rs. 118,11,569/ allegedly confirming the action of the AO treating the same as income from undisclosed source. b. Upholding the impugned addition of Rs. 1 Crore in respect of alleged unexplained investment in construction. c. Rejecting the alternative contention of the assessee for levying tax u/s 115BBE while interpreting the same t....
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....ance sheet and profit & loss account, itself, therefore, question of any income from any undisclosed source does not arise. Accordingly, we direct the A.O. to treat the income of Rs. 4.75 lacs as income from business. 7. With regard to addition of Rs. 1,00,00,000/- U/s 69 of the Act It was argued by the ld. AR of the assessee that the provisions of Section 69 are attracted when the investments made are not recorded in the Books of Accounts and there is no explanation about the nature and source of investments. Thus, this section presupposes the fallacy or non- reliability of Books of Account. Therefore, the provisions of S. 142A are applicable when the assessing officer concludes and satisfies himself about fallacy or non-reliability of Books of Accounts. If he is satisfied with the correctness of the Books of Accounts, there is no reason to apply the provisions of S. 69 as AO as well as ld. CIT(A) has not rejected the books of accounts and details of expenses incurred towards construction produced before them, therefore section 69 is not applicable. For this purpose, reliance was placed on the following judicial pronouncements: (i) Pirani vs. ACIT 250 ITR 467, ....
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....urt in the case of M. Narayanan & Bros, vs. ACIT, Salem (2011) 13 taxmann.com 49 (Mad.) Held in this case, in the course of assessment proceedings, assessee retracted the statement made on day of search AO rejected the said plea and made assessment on the basis of confessional statements given by the assessee. It was held that though the statement rendered at the time of search may be used as evidence in any proceedings, but that by itself cannot become the sole material to rest the assessment, more so when the assessee sought to withdraw the same by producing material evidence in support of such retraction. It is always open to the person who has made the admission to show that the statement to offer income is incorrect. That apart, the case of the assessee also stands supported by Circular No. F. No. 286/2/2003-IT (Inv.), dated 10-3-2003 wherein CBDT has given categorical directions to the Departmental Officers that undue emphasis should not be placed on the recorded statements. 11. Similarly, in the case of ACIT vs. Jorawar Singh M.Rathod 148 taxman 35 (Ahd.) it has been held by ITAT, Ahmadabad 'B' Bench that "addition made by the Assessing Officer merely on ....
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....of natural justice and fair play demands that the surrounding circumstances and other relevant factors have to be considered before making an addition solely on basis of admission. If the assessee has stated something in his statement either out of ignorance of certain vital facts or negligence, which is contrary to the established facts of the case, he cannot be assessed to tax merely on the basis of such erroneous statement. Similarly, if the assessee produces evidences, which prove his admission to be incorrect or contrary to the facts, and such evidences remain uncontroverted, addition made in such case merely on the basis of admission of the assessee cannot be sustained. Therefore, an assessment cannot be made merely on the basis of statement u/s.132 (4), particularly by brushing aside certain uncontroverted facts. The facts of the case of the appellant are squarely covered by the aforesaid decision of the jurisdictional High Court [C.I.T. v. Bhanwarlal 225 ITR 870 (Raj)], thus addition is legally not sustainable. Arun Kumar Bhansali Vs DCIT (2006) 10 SOT 46 (Bang) (URO) "It is settled law that there cannot be any concession against the prov....
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.... on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle. The ld. AR further argued that it is evident from the facts/documents available on the record, that there had been no piece of evidence found during the course of search relating to any undisclosed activity or source of income. The declaration made in the statement has not been proved correct by the AO by putting forth any corroborative evidence. Thus, the said declaration of alleged undisclosed income by the assessee without any credible evidence found during the course of search cannot be relied upon and making additions merely on the basis of the same is legally and factually incorrect. 15. Facts of the case of the assessee are squarely covered by the judgment of the Hon'ble ITAT Jaipur delivered on 12.04.2018 in case of Satish Chandra Agarwal by Appeal ITA No. 311/JP/2015. Relevant Para 7 is reproduced as under: "7. The Bench have heard both the sides on these issues. We have also gone through the case....
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....er recorded his statement but he has not asked any question with regard to amount of advance of Rs. 10.00 lacs for which the addition has been made only on the basis of a piece of paper, which was not signed by Shri Pawan Kumar. Similarly in the case of debtors, once the assessee has retracted then it was the duty of the Assessing Officer to examine these debtors to establish the truthfulness of the debt. The ld DR has relied on the decision of Hon'ble Bombay High Court in the case of Dr. Dinesh Jain Vs. ITO (Supra) and decisions of Hon'ble RajasthanHigh Court in the case of Rameshwar Lal Mali Vs CIT (supra), we have considered the facts and law involved in these cases and we find that the facts are at variation from these cases, therefore, the ratio laid down in these cases are not applicable to the assessee's case. Considering all these aspects, we find no merit in sustaining the addition only based on the statement recorded during the course of survey. Hence grounds No. 1 to 5 of the appeal are allowed. 16. The ld. AR further placed reliance on the judgment of Hon'ble this bench in the following cases to support the contentions raised herein above : R.K. Syn....
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....attention was invited to the following documentary evidences submitted during the course of assessment proceedings, which negates the allegation of the AO: a. Letter dated 06.08.2018 from assessee to ld. AO duly receipted /submitted on 23.08.2018, copy enclosed PB at 75. b. Further Annexure 8 PB page 80 forming part of Letter dated 06.08.2018 includes copy of statement of all bank accounts duly reconciled with books of accounts alongwith nature and source of each credit entries. The assessee has also produced all relevant books of accounts/ documents before the AO and the AO has not pointed out any discrepancies therein. c. Letter dated 21.11.2018 from assessee to AO and relevant para therein as at S. No. 5 to 10 enclosed at PB ---. The appellant has sought mutual set off or telescoping of estimated addition of undisclosed income and value of unexplained assets out of income offered as per seized documents. d. Letter dated 22.11.2018 from assessee also submitted before the AO in relation to Cash short found enclosed at PB 156-165. The appellant has also produced all relevant books of accounts/ documents alongwith the letter before the AO and t....
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.... provided by the assessee. 21. Adverting to the allegat ion of ld. CIT(A) in his appellate order, it was content ion of the ld AR that the Ld. CIT(A) has alleged that since the assessee has not filed any valuation report, therefore, building account submitted is not reliable. In this respect, it is humbly submitted that the said allegation of the Ld. CIT(A) is merely on the basis of doubts and suspicion only, no pin pointed defects or otherwise had been pointed in the documentary evidences submitted by the assessee neither by AO nor by Ld. CIT(A). Therefore, this allegation for sustaining the addition deserves to be negated. Furthermore, as stated above, the burden to prove undisclosed investment is on the department, therefore, question of making reference to valuation is duty of the department and assessee cannot be blamed for the same. Rather this basis of the Ld. CIT(A) is contrary to facts available on record as no attempt made by AO to prove any undisclosed investment by the assessee. 22. The ld AR has further argued that no adverse observations pointed out in relation to the reconciliation, rather accepted all entries, despite this, addition has been sustained by the l....
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....uncements referred by lower authorit ies in their respect ive orders as well as cited by the ld. AR as well as the ld DR during the course of hearing before us in context of factual matrix of the case. From the record, we found that during the search proceedings on 17.09.2016, cash of Rs. 23,30,150/- was found from the premises of the assessee. The cash balances Rs. 1,25,93,421/- was derived from incomplete cash books of various assessee's of the Group. Details of cash balances derived from incomplete cash books of various assessee's of the Group are reproduced (CIT(A) Order Page 25) as below: S. No. Assessee Cash in Hand as per data taken by search team Amount Rs. 1 Choudhary Property Dealers P Ltd 326490 2 Bhagwanti Devi 112160 3 Bhawana Choudhary 604156 4 Choudhary Avasavam Vitta P Ltd 1563441 5 Ganga Devi 416810 6 Lokesh Choudhary 1486626 7 Om Prakash 2813482 8 Sanjay Choudhary 813083 9 Santosh Choudhary 572693 10 Satya Narayan Choudhary 3071397 11 Suresh Choudhary 813083 Total 1,25,93,421/ Thus, on the basis of cash balance in incomplete books as compa....
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....established with corroborating evidences that there was any investment of Rs. 1 Crore by the assessee in construction activities as per the case attempted to be made by them on the basis of wrong inference from the statement of the assessee recorded during search. The first point of inquiry for making impugned addition by the AO is only wrong inference from the statement recorded during search, which stands retracted while filing return of income on account of the fact that there was no such investment and neither there was no such evidences found during search. 28. We also found that during the course of search proceedings, no incriminating material was found by the respective income tax authorities for impugned addition. The search operations did not result in discovery of any incriminating material which is evident from the fact that the AO in the entire assessment order has not relied on any material but only on the statement recorded by the assessee. The edifice of addition is only disclosure which was extracted out from the assessee. Reliance has been totally placed on the statements recorded under section 132(4) of the Act of the assessee, which is misconceived, misinterp....
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....ned addition of Rs. 1 Crore alleging them to be investment in construction activities by the assessee. There is no basis for amount determined Rs. 1,00,00,000/ alleged to be used for construction activities by the assessee. It is pertinent to note that there is no addition in the impugned assessment order on account of short cash found rather during assessment proceedings, the AO took entirely different stand of making impugned addition of Rs. 1 Crore for alleged investment of Rs. 1 crore by taking incorrect inference from the statement of the assessee recorded during search. 31. We further observe that no document/paper were found by the department in relation to alleged amount of Rs. 1 Crore used in construction activities which is unexplained. Furthermore the assessee has never admitted that he has incurred construction expenses out of books as alleged in the assessment order. It is also clear from the order of the A.O. and the ld. CIT(A) that they have never asked for any valuation report. Even otherwise, once there are no adverse findings in relation to the details of cost incurred in relation to construction provided, there is no necessity of valuation. Thus, very basis of....
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....assessee in comparison to other Group assessee's for cash shortage noticed due to incomplete data entries. 34. The Hon'ble Supreme Court in the case of CIT Vs. S. Khader Khan Son cited (supra) has held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. The assessee clearly stated while recording statement during the course of search that that the books of account do not correctly disclose the correct state of facts due to incomplete entry of transactions etc. In this case, the assessee made statement during the search and surrendered Rs. 100,00,000/ which is without any basis due to incomplete records, mistaken facts and believes. The department has not found any single evidence in relation to amount spent more than amount declared in construction activities before the A.O. and produced books of accounts before the AO, therefore, no adverse inference can be drawn in this regard. In view of the above discussion, we direct the A.O. to delete the addition of Rs. 1,00,00,000/- so made. 35. In the result, appeal of the assessee is allowed. ....
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.... of the above facts and circumstances, we modify the orders of the lower authorit ies and direct the A.O. to restrict addition only to the extent of dif ference between the interest income offered and the interest expenses claimed. We direct accordingly. 40. In the result, appeal of the assessee is allowed in part. Order pronounced in the open Court on 19th March, 2020. ============= Document 1 4 उपरारा है à¤à¤° परवार पà¥à¤°à¤¶à¥à¤¨ (3) आपके यहाठघर पर बकाशी के दौरान कà¥à¤² 23,30,150/- रà¥à¤ªà¤¯à¥‡ पाये गये है। कृपया यह किससे समà¥à¤¬à¤¨à¥à¤§à¤¿à¤¤ है तथा इसका कà¥à¤¯à¤¾ source है । बतायें। उतà¥à¤¤à¤°- तलाà....