TaxTMI 
TaxTMI 
2020 (10) TMI 655
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....he ld.CIT(A) was below Rs. 50 lakhs. Along with these appeals, COs. of the assessees were also dismissed. Thereafter, they had filed MA, and the Tribunal has recalled its order dated 20.1.2020 to that extent and restored these COs. to its original numbers for fresh adjudication. 2. Registry has pointed out that the appeals of the assessees i.e. IT(SS)A.No.180 and 181/Ahd/2019 are time barred by 163 days. In order to explain the delay, the ld.counsel for the assessee, Shri P.F.Jain and Shri Ajaykrishna Sharma have filed their affidavits stating as to how delay has occurred. Copy of this affidavit is filed in paper book as well as in the original file. It reads as under: "We, the undersigned, who are authorised to conduct the appeal proceedings hereby respectfully explain the unintended delay which has occurred in filing appeal in the case of Shri Maheshbhai Ramanbhai Prajapati and Shri Nareshbhai Ramanbhai Prajapati for Asstt. Year 2013-14 before the Hon'ble I.T.A.T., Ahmedabad as set out below:- 1. That in the case of above two appellants, alongwith their three uncles search proceedings were conducted on 06/11/2012 pursuant to which their cases were centrali....
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....s. 10,000/- each which were paid on 05/04/2019. 8. That for unintended delay of 162 days which has ensued on account of bona-fide and valid reasons as mentioned above, the Affidavit is filed explaining the delay and praying for condonation of the same." 3. The ld.counsel for the assessee submitted that in the group of cases of the assessees consisting of five assessees, the ld.CIT(A) passed separate orders and partly allowed the claims of the assessees. Thereafter, present two assessees presumed that the department would appeal against orders of the ld.CIT(A) against all five appeals, and if necessary, the assessee would only file cross objection. However, thereafter, it came to know that the department has only filed appeals against Shri Vithalbhai G. Prajapati, Shri Ravjibhai G. Prajpati and Sureshbhai G. Prajapati and not against the present assessees. It immediately filed the present two appeals before the Tribunal, and the delay occurred due to this bona fide and genuine reasons, which deserve to be condoned. On the other hand, the ld.DR opposed condonation of the delay. 4. We have duly considered rival contentions and gone through the record. Sub-section 5 of S....
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....cement of Hon'ble Supreme Court in the case of N.Balakrishnan Vs. M. Krishnamurthy (supra). It reads as under: "Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finis litium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. ....
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....de mistake. Therefore, we allow application for condonation of delay and proceed to decide the appeals of the assessees along with COs.. 8. All these assessees have taken large number of grounds, but in brief their common grievance is, whether addition made on account of disclosure made during the course of search in the statement recorded under section 132(4) of the Act deserves to be upheld in the cases of the appellants. 9. Brief facts of the case are that a search under section 132 of the Income Tax Act, 1916 was conducted in the cases of Vitthalbuai Prajapati Group on 6.11.2012, and on subsequent date, warrant of authorization under section 132 of the Act was issued in the cases of all these assessees. In order to give logical end to the proceedings, these assessees were called for filing their returns of income. They have filed their regular returns, and their cases were selected for scrutiny assessment. Notice under section 143(2) was issued on 24.12.2014 in the cases of Nareshbhai Ramanbhai Prajpati and similar notices were issued to others. Thereafter, notice under section 142(1) was issued on 24.12.2014. In the cases of Nareshbhai ramanbhai Prajpati assessment order....
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....IT FOR RETARCTION OF WRONG DECLARATION OF INCOME IN THE STATEMENTS RECORDED U/S 132(4) DURING SEARCH OPERAIONS IN THE CASE OF SHRI VITTHALBHAI PRAJAPAI AND OTHERS We, all family members of Vitthalbhai Prajapati Group as stated hereunder, make this joint affidavit as the subject matter of affidavit and the contents thereof are common and having similar implications on all of us. a) I, Vitthalbhai Gordhanbhai Prajapati, son of Gordhanbhai Prajapati,aged 55 years, by nationality Indian, residing at Prajapati Vas, Post Thaltej Gam, Thaltej Shilaj Road, Thaltej, Ahmedabad - 380 059, b) I, Ravjilbhai Gordhanbhai Prajapati, son of Gordhanbhai Prajapati,aged 49 years, by nationality Indian, residing at 308/43, Prajapati Vas, Post Thaltej Gam, Thaltej Shilaj Road, Thaltej, Ahmedabad - 380 059, c) I, Sureshbhai Gordhanbhai Prajapati, son of Gordhanbhai Prajapati,aged 43 years, by nationality Indian, residing at 308/4, Prajapati Vas, Post Thaltej Gam, Thaltej Shilaj Road, Thaltej, Ahmedabad - 380 059, d) I, Maheshbhai Ramanbhai Prajapati, son of Ramanbhai Prajapati,aged 32 years, by nationality Indian, residing at Prajapati Vas, Kumbhar Vas, Post T....
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....referred sequence of events and also to the fact that our whole family is less literate in comprehending the niceties of the IT laws.If we are not making this affidavit now, the real truth will never be known to anybody and in the absence of this affidavit, the truth will remain buried and invisible. Making this affidavit even after two years does not under any circumstances undermine the power of the truth, because the truth will remain as it is, even if it is declared sooner or later. In the absence of such affidavitfor bringing the truth on the surface,the artificial, wrong and self-generated factswill look like correct even after generations. So as to make the things correct, the undersigned through this affidavit and with full zeal and determinationwants to bring the truth on the surface and bury the wrongs. The whole contents of this affidavit are embedded with the spirit of truth and remove the evil of falsehood. We again solemnly declare that the contents hereinafter are TRUTH AND ONLY TRUTH. 3) That cash of Rs. 1.49 crores was found from lockers of our family which was duly seized by IT Dept. on 06/11/2012 along with other documents related to purchase / ....
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....000 25/8/2012 1,10,00,000 13/9/2012 65,00,000 28/9/2012 1,15,00,000 25/10/2012 7,15,00,000 Total 25/10/2012 Page no. 9 of 'Bhakti Pocket Diary" 7,15,00,000 Total 25/10/2012 1,00,00,000 29/10/2012 90,00,000 4/11/2012 These details were totally wrong and non-existence and Shri Vitthalbhai Prajapati was forced to make these entries only with a sole purpose of ruining us and our family and collecting wrongful income-tax thereon for the purpose of meeting the unknown goals of DDIT and his team. These payments were totally non-existence and we were forced and wrong story was fed into our mouth to make these wrong statements that these alleged payments were made for purchase of land at Rancharda. This is proven by the fact that for the period starting from 08/06/2012 to 4/11/2012, i.e during this period of 5 months there is no any known source of income generating this magnitude of amount of Rs. 9.05 crores. Even the search party has not found any indiscriminating supporting documents pertaining to generation of this quantum of money. The DDIT team has not come across any corroborative details about such payments viz. banak....
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....and his team and that the question of receiving back Rs. 80 Lacs from non-existence advance given of Rs. 9.05 crores does not arise at all. 9) It is very surprising that the whole team of DDIT did not bother to further investigate the false payments for the purchase of land at Rancharda by inquiring about the recipients, their names, addresses & identity, the details of land, copies of 7/12 documents, etc. though the magnitude of such payment was to the extent of Rs. 9.05 crores, because they knew in their conscience about the fact that this is a cooked up and coloured declaration on the basis of their own fabricated story. Had they inquired about this content, they would have come to know that there is nobody or blank in existence on the other side of the transaction who have received these payments, but that was not to be because the team of DDIT knew about the falsehood of all the payments in their conscience. The correct situation proactively would have prompted the DDIT team to also approach with search warrant on so-called recipients of advance for land but DDIT would have certainly failed as there is no existence of any recipient, any land, any advance under this sk....
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....y with a sole purpose and intention to bring out the truth from the mountain of false and wrongful facts. The phrase that "TO BE LATE IS BETTER THAN NEVER"is the spirit behind this declaration and without which the truth would never have come out and we would have been buried under the burden of lies at the later stage along with ourselves. The argument that late affidavit undermines the power of content of the affidavit is totally unfounded and cannot be considered as applicable here in this case because TRUTH REMAINS TRUTH AND THAT TOO ALWAYS.Had we declared these very contents at early stage will also have similar values and strength as that is prevailing now. 14) That the original statements were recorded on 06/11/2012 at 1.30 AM and one is not supposed to be in normal and physical mental condition at such wee hours of night. In the statement recorded on 31/12/2012 the DDIT and his team had mischievously answered the question at point No. 9 so as to make the false look like truth and forcefully and wrongfully corroborated the facts to look as if linked to declaration of wrongful amount of Rs. 9.05 crores. 15) The declaration is fabricated one is proven by anot....
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.... to reaffirm the cooked up story by linking the receipt of Rs. 80 Lakhs and signature of only Shri Vitthalbhai Prajapati was obtained. All the above referred facts and sequence of events proves that the advances given for Rancharda land of Rs. 9.05 crore is nothing but a fabricated, false, cooked story made with a sole motive of achieving DDIT teams overzealous goals with intention of ruining less literate farmers like us. DDIT and his team have in the melee of fabricating and weaving the lies, forgotten to take signatures of all brothers of our group and have faltered in their own game of lies. That, we strongly reiterate that there is no deliberate intention in ourmind to evade income-tax, and that too on the foundation of wrong and false income forced upon us through DDIT and his team. We are of strong opinion that the exchequer cannot make unjust enrichment on wrongful declaration of income through coercion and more so when the income does not exist at all, rather income does not exist factually but it is reflected only on paper.This joint affidavit is made for bringing the truth in light from the darkness hitherto prevailing. 16) That we are....
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....lar language, i.e. Gujarati, and in turn the same are also explained and translated to us in our vernacular language, i.e. Gujarati. These statements are given by all of us without any coercion, force, etc. and are given with stable mind without any effect of drug, medicine, alcohol, etc. DEPONENTS Solemnly affirmed at Ahmedabad This day of December 2014 ____________________________ (Vitthalbhai Gordhanbhai Prajapati) ____________________________ (Ravjibhai Gordhanbhai Prajapati) ____________________________ (Sureshbhai Gordhanbhai Prajapati) ____________________________ (Mahesbhai Ramanbhai Prajapati) ____________________________ (Naresbhai Ramanbhai Prajapati) 11. There were two independent witnesses, who were called as panchas at the time of search viz. Kanubhai Prajapati, and Gautam Prajapati. This fact has been mentioned in panchanama available at page no.43 of the paper book at serial No.E. Name and complete address of these panchas have been written under this head. Both these persons have also filed their affidavits, and these affidavits have been reproduced by the CIT(A) on page no.23 to 25. They have taken side with....
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....ovember 2012, with a sole and only intention to bring the truth to the light of this universe. It is pertinent to point out that there is unintended delay in making this retraction-cum-affidavit on account of fact that the copies of statements recorded of whole family were not initially granted to them though requested to DDIT. Ultimately an application was made by them during last week of February 2014 to their A.O. Their authorized representative Shri Aseem L. Thakkar gave copy of statement approximately during first week of March, 2014.They were provided during 3rd week of November, 2014, the copies of all the statements recorded during search operations, in which both of us have signed on each page as witness and to be specific on statements recorded on 06/011/2012 and 07/11/2012. The delay in making this affidavit is on account of above referred sequence of events. If we are not making this affidavit now, the real truth will never be known to anybody and in the absence of this affidavit, the truth will not be visible to anybody. Making this affidavit even after two years does not under any circumstances undermine the power of the truth, because the truth will....
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....vance for purchase of land and date of payment and that too not for any small amount but for exorbitant and enormous amount of Rs. 9.05 crores. 8) Before writing of page No. 7, 8 & 9 in the Bhakti Pocket Diary by Shri Vitthalbhai Prajapati, Dy. Director of Income-tax (Inv.), Mr. Sumit Kumar (hereinafter referred to as "DDIT") wrote by his own handwriting the fabricated contents on a separate piece of paper the details of advances given for purchase of land at Rancharada with fabricated dates in total amounting to Rs. 9.05 crores and then asked and forced Shri Vitthalbhai Prajapati to write these same contents by Shri Vitthalbhai Prajapati's hand-writing. These details were totally non-existent hitherto i.e. before forcefully and writing under coercion by Shri Vitthalbhai Prajapati. In other words, the contents in Bhakti Pocket Dairy are nothing but only fabricated and artificial and hereto non-existent creativity at the behest of mind of DDIT, Shri Sumit Kumar and his team. We, both were witness to all above referred modus operandi of fabricated actions of DDIT and his team and also witness to writing of these fabricated facts in Bhakti Pocket Dairy of Shri Vitthalbhai Pra....
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....ntents stated hereinabove are declared solemnly and jointly with a sole purpose and intention to bring out the truth from the mountain of false and wrongful facts.The spirit behind this declaration is that truth must be told in its original form and without which the truth would never come out. The argument that late affidavit undermines the power of content of the affidavit is totally unfounded and cannot be considered as applicable here in this case because truth has got its same value intact at every moment. 14) All the above referred facts and sequence of events proves that the advances given for Rancharda land of Rs. 9.05 crore is nothing but a fabricated, false, cooked story made with a sole motive of achieving DDIT teams overzealous goals with intention of ruining less literate farmers like us. DDIT and his team have in the melee of fabricating and weaving the lies, forgotten to take signatures of all brothers of our group and have faltered in their own game of lies. 15) We both have witnessed all the above referred facts and actions on 06/11/2012 and 07/11/2012 and therefore decided to bring the truth out so that it can see the light of the day. 1....
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....A), but the appeals to the CIT(A) did not bring any relief to the assessee. The ld.CIT(A) has confirmed orders of the AO by recording the following findings (in the cases of Nareshbhai Prajapati): "5.2 Facts of the case, submission of the appellant and assessment order has been carefully considered. Ground No.2 is against the addition of Rs. 1,13,12,500/-. A search was conducted upon the appellant on 6.11.2012 and subsequent days. During the course of search at the premise of Shri Vitthalbhai G. Prajapati & his two brothers namely Ravjibhai G. Prajapati & Shri Sureshbhai G. Prajapati and nephew Shri Mahesh Prajapati & Naresh Prajapati, one pocket diary was found & seized. One loose paper file containing 12 pages were also found & seized, which have been annexurised as Annexure 1 & 2. The matter is pertaining to material in the form of "Bhakti Pocket Diary" found during the search operation in the form of diary which was hand written by the appellant himself. Further when confronted at the time statement u/s. 132(4) recording on 06.11.2012 and 07.11.2012, the appellant had accepted the facts about giving of advance for land. As per contents noted in the diary and explained ....
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....xclusive knowledge of the assessee and the same could not have been fed by the DDIT. Thus the contention of the assessee is peculiar wherein one part of the statement is still taken to be correct but another part is being said to have been recorded under duress. Further he was also advised by professional tax advisor and Chartered Accountant. It is also pertinent to note the following judgements: 1. Commissioner of Income Tax V/s 0. Abdul Razak (2012) 20 TAXMANIM.COM 48 (Kerala):- A self-serving retraction, without anything more cannot dispel statement made under oath under section 132(4) 2. Ravindra Kumar Verma V/s Commissioner of Income Tax (2013) 30 TAXMANN.COM 367 (Allahabad) :- Where assessee at time of search had surrendered certain cash amount as undisclosed income and later on after four years retracted confessional statement stating that aforesaid amount was cash-in-hand as reflected from books of account, retraction made was an afterthought and said amount represented undisclosed income 3. Bhagirath Aggarwal V/s Commissioner of Income Tax (2013) 31 TAXMANN.COM 274 (Delhi):- An addition in assessee's income relying on statem....
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....al amount in the statement of Shri Vittalbhai Prajapati. His main emphasis was that without identifying vendor, who alleged to have sold land to the assessee, without identifying the land, how it can be alleged that an advance was being given by the assessee, and that of Rs. 9.05 crores. It is highly improbable. While taking us through judgment of Hon'ble Gujarat High Court in the case of K.P.Nair Vs. ACIT, in tax appeal no.1152 of 2007 dated 3.8.2016. he contended that Hon'ble Court has made reference to circular no.286/2/2003 dated 10.3.2003 and observed that vide this circular department has directed its employees not to take confession rather focus on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the income-tax department. He also emphasizes that though disclosure made under section 132(4) of the Act binds an assessee, but in various authoritative announcements, it has been propounded that such disclosure should have been corroborated with some material. For example, if unexplained investment in purchase of jwellery is being alleged, then it should have corroborated with recovery of jewellery. ....
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....ssessee drew our attention towards page nos.52 to 56 of the paper book, wherein certain entries of the land purchased by the assessee have been compiled by the search party and available on the record. The land transaction was made in the year 2006-07 and not during the accounting year relevant to this assessment year. The ld.counsel for the assessee further pointed out that neither the Department is able to lay its hand on any details qua this alleged transaction nor transaction alleged to have been taken place either in the name of the assessees or in the names of their family members. The Department failed to produce any details of vendors from whom the assessees have purchased or alleged to have been purchased the land with the amount of on-money of this magnitude. 16. In the light of the above background, we have been appraised ourselves about the scope of section 132(4) of the Income Tax Act, 1961, and whether only on the basis of the disclosure by an assessee, an addition can be made on account of undisclosed investment in the hands of the assessee ? We deem it appropriate to take note of relevant part of this section of the Act. It reads as under: "The author....
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.... 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. 19. 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 (Guj) 138. In this case, search was conducted upon the assessee under section 132 of the Income Tax Act on 4.11.1988. The statement of the assessee was recorded under section 132(4) of the Act. He made disclosure of Rs. 7 lakhs. Later on, in January, 1989, the assessee retracted from the disclosure and stated the disclosure of Rs. 50,000/- was acceptable to him. The ld.AO made an addition of Rs. 7 lakhs on the basis of his statement and observed that the retraction was made after a lapse of 2 months. The assessee did not have any reason for retracting from the disclosure. The ld.First Appellate Authority concurred with the AO and confirmed the addition of Rs. 7 la....
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....ade by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. 20. Apart from the above, at the time of hearing, the ld.counsel for the assessee drew our attention towards judgment of Hon'ble Gujarat High Court in the case of KPM Nair, Tax Appeal No.1152 of 2007 dated 3.8.2016. Copy of this judgement is placed on paper book. In this judgment also, Hon'ble Court has considered the scope of section 132(4) as well as took cognizance of the circular of the Board issued in 2003. The discussion made by the Hon'ble High Court reads as under: "5.Having heard learned advocates for both the sides and having gone through the materials on record, it is borne out that the authorities proceeded on the basis of the statement made by the assessee's wife that she was paying salary to the assessee every month. This statement had been denied by the assessee but the same was not retracted by the assessee's wife. However, what remains to be seen here is that the revenue has not been in a position to bring any evidence on record so as to strengthen its case. Other than the stateme....
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....ficers should rely upon the evidences/ materials gathered during the course of search/survey operations or thereafter while framing the relevant 5.3 In view of the above, we are of the opinion that the Assessing Officer has erred in proceeding with the calculation of undisclosed income without there being any cogent and corroborating evidence to the statement made u/s 132(4)." 21. Thus, overall analysis of the above would indicate that an addition on the basis of disclosure made under section 132(4) of the Act is to be made on the basis of other corroborative evidence exhibiting unexplained investment or unexplained asset possessed by an assessee. In order to buttress this contention, the Revenue has relied on bhakti pocket diary and entries therein, because the search party is aware that mere disclosure will not withstand the kind of judicial scrutiny required for establishing the case, and therefore, they have recovered annexure-A more so pages 7 to 9 and sought to make addition. 22. Let us make an analysis of the evidence collected during the course of search. All the assessees have alleged that no diary was found rather it was prepared during the course of search....
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....the land could not have been purchased simply by making huge cash payment, and no person would like to pay this much huge amount in cash without entering into any documentation viz. Agreement to purchase, MOU etc. showing the details of account payee cheques etc. apart from the above cash. Thus, neither the department is able to lay its hand on the details of prospective vendors, nor lay its hand on any of the details of land which alleged to have been purchased by the assessee. The department even is not able to lay its hand on the mode of payment, as to account payee cheques, bank details etc. If these aspects are being examined in the light of the allegations levelled by the assessee in the affidavit vis-a-vis corroboration of the affidavits of independent witnesses, then it would reveal that the department has failed to get any information showing unexplained investment in the land by these assessees. Evidence collected by the Revenue is superficial and not sufficient to arrive at conclusion that the assessees have made unexplained investment in the land. A perusal of the impugned order would indicate that the ld.AO as well as CIT(A) has devoted much energy about safeguarding t....