TaxTMI 
TaxTMI 
2020 (11) TMI 38
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....ontained incriminating transaction and also erred in stating that the appellant divided these transactions in the name of family members during assessment proceedings. 2. The learned AO has erred in not giving assessee an opportunity of being heard in respect of rejecting the retraction affidavit filed by assessee. Learned CIT (Appeals) confirmed the addition without considering the above ground. 3. The Learned AO has erred in rejecting the retraction affidavit on the ground that there is no misrepresentation by survey party and that there is considerable delay in filing of retraction statement. The learned AO has not considered all the contents of affidavit, related circumstances of case and has disregarded the fact that copy of statements of assessee were provided to him on 11/05/2017. 4. The calculation of undisclosed income of Rs. 1274700 is totally incorrect. Expenses incurred by female members for earning their income have been assumed as undisclosed income of assessee. Even expense incurred to earn his own income has been included in amount of alleged undisclosed income of Rs. 1274700. The learned CIT (Appeals) neither considered it nor opined on i....
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....ome on 30/06/2017 for the year under consideration declaring total income of Rs. 2,31,580/-. Finally, the A.O. completed the assessment U/s 143(3) r.w.s. 153A of the Act vide order dated 10/12/2018 at a total income of Rs. 15,06,280/-. 4. Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering both the parties, had dismissed the appeal filed by the assessee by upholding the order of the A.O. Against which, the assessee is in further appeal before the ITAT. 5. Grounds No. 1 to 5 of the appeal are interlinked and interrelated and against challenging the order of the ld. CIT(A) for upholding the order of the A.O. in making addition of Rs. 12,74,700/-, therefore, we thought it is fit to dispose off these grounds by passing a consolidated order. 6. The ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and have also relied upon the written submissions filed before the Bench. The contents of the written submissions are reproduced below: 1. ITRs filed by family members has been wrongly considered as incriminating material: The ITRs filed by female ....
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....stated that Q.No. 43 was not asked from him. Rather he had been shown the ITRs of female members and was asked whether the ITRs were correct, to which he replied that work of filing of ITR was done by his nepdhew Manoj and the ITR must be correct. Female members of the family are engaged in dairy farming and earn income from sale of Milk and manure. Each female member owned 3-4 cows/buffaloes and sold milk to individuals, sweet shops and other dairies. The cows and buffalows were there in the courtyard when search was conducted at the premises of assessee but without mentioning this fact, the officials have proceeded to consider the income as undeclared income which is totally unjustified. In their ITRs female members have shown gross receipts from sale of milk and cow dung and have claimed expenses on account of cattlefeed, medical exp., labour etc and declared net profit u/s 44AD. The assessee also submits that he belongs to Yadav community who are traditionally engaged in dairy farming and they do not consider it as a business and rather it is a part of their agriculture activities and thus he said that . Although as per Income Tax law income from dairy farming....
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.... to be total receipts of all female members. 2.3 No corroborative evidence/ material brought on record by AO: The learned AO has not brought on record any material or corroborative evidence to prove that assessee had any other source of income other than that declared by him and that assessee earned more than what he had declared in his return of income. The learned AO has not made any findings and has mechanically added the amount while she ought to have supported the addition by findings on the basis of seized material. It is a settled principal of law that no addition can be made only on the basis of statements particularly when there is no material available with department to prove that the surrender made was correct. In the present case the department does not have any material on record to prove that surrender by assessee was correct. The assessee has placed reliance on the following judgements in support of his submission: (i) Pullangode Rubber Produce Co. Ltd. vs State of Kerela [1973]19 ITR 18 (SC) (ii) CIT Vs. Bhanwar Lal Murwatiya [2008] 215 CTR 489 (RAJ.), (iii) CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.), ....
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....al Vs ACIT [2015]63 taxmann.com 199(Jaipur Trib) 4. Arbitrary and Illogical calculation of undisclosed income Without prejudice to the illegality of addition made by learned AO, as submitted above, the calculation of undisclosed income is arbitrary and illogical and lacks any legal basis. The chart prepared by Income tax official to calculate the undisclosed income is as follows: The calculation has been done in respect of assessee and 6 female members of assessee's family. It can be seen in above table that difference of gross receipts and declared profit has been treated as undisclosed income of assessee i.e the expenses incurred to earn gross receipts has been considered to be undisclosed income . In the present case there is no denial to the fact that females are engaged in Dairy business and there is no objection on the profits being shown by them and that profit is accepted to be assessed in the hands of females only. It is only the expenses they have claimed which is considered to be undisclosed income of assessee. This contention is highly illogical and is contradictory to the very basic principal that to earn a....
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....de any addition on this ground (Copy of assessment order is at PB Page No. 12-14). Thus while AO has accepted the submission in one case but has rejected the submission on same issue in the case of assessee which is not tenable. Moreover looking to the approach of AO in assessment proceedings, the assessee filed affidavits of female members in appellate proceedings before learned CIT(A) wherein female members have stated that they have been earning income from animal husbandry/ dairy and that the income declared in their ITRs is their own and is not related to any other person. The copy of Affidavits are attached at PB Page No. 15-20. 6. Furthermore the contention made in affidavits should be accepted unless rebutted. These affidavits have not been rebutted by lower authorities till date. It is settled law that in case where affidavit has been filed yet the contents thereof have not been rebutted by AO/authority, the facts mentioned therein have to be read as the facts binding upon the income tax authorities. Reliance is placed on the following cases: Mehta Parikh & Co. 30 ITR 181(SC); ITO Vs Dr. Tejgopal Bhatnagar 20 TW 368 (JP); Paras Cotton Company Vs ....
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....ed from him and replies said to be made by him were completely identical to the questions and answers recorded in case of statements of his brother Gopal Lal Yadav, while the time of statements recorded was different and the persons recording statements were different in both cases. This fact concludes that the statements were not recorded properly. The assessee has also referred to various question numbering 34, 35, 36, 43 & 47 which have either not been asked at all or have been asked in different manner but the reply has been recorded as per the wish of the person recording the statement. The assessee had also mentioned about mental harassment during recording of statements on 19.11.2016 in the retraction affidavit. The contention of learned AO that the statements were recorded in presence of 2 witnesses is also of no relevance as the witnesses were only for sign purpose and they neither listened to what the assessee said during recording of statements nor did they read his statements before signing as witness. The assessee had submitted this fact in his retraction statement and had requested the AO that if required he may call for affidavits from witnesses but....
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....se circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration 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 Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders". It may be noted above that even CBDT in its own directions has stated that retraction affidavits are filed while filing return of income, then how can the assessee's retraction, filed well before filing of ITR, be considered to be late and rejected on this premise. Further It is a well settled principal that the directions of CBDT are binding on ....
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.... 8. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From the facts of the present case, we noticed that the addition of Rs. 12,74,700/- was made in the hands of the assessee by considering the same as 'undisclosed income'. The ld AR, although, forcibly argued before us that no incriminating material was found during the course of search, therefore, the entire proceedings initiated U/s 153A of the Act against the assessee are liable to be quashed. In this respect, we noticed that during the course of search on 19/11/2016 in the case of Kedia & Yadav Group to which assessee belongs, the income tax return filed by the female members of the family of the assessee as well as his brother Shri Gopal Lal Yadav for the year under consideration were found during the course of search and the documents which were found and seized during the course of search have already been annexed by the assessee in his paper book at page No. 24 to 49. We have p....
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....he assessee earned more than what he had declared in his return of income. The A.O. had not recorded any finding and had mechanically added the amount while the A.O. ought to have supported the addition by recording findings on the basis of seized material. It is a settled law that no addition can be made only on the basis of statements particularly when there is no material available with the department to prove that the surrender made was correct. In the present case, the department has not placed on record any material to prove that the surrender made by the assessee was correct. In this respect, we rely on the following judicial pronouncements: i) Pullangode Rubber Produce Co. Ltd. vs State of Kerela [1973]19 ITR 18 (SC) Wherein the Supreme Court has held that 'An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect'. ii) CIT Vs. Bhanwar Lal Murwatiya [2008] 215 CTR 489 (RAJ.), The jurisdictional High Court has confirmed the view of tribunal that (a) A retracted statement of any person cannot be made the sole basis for ad....
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.... that an Assessing Officer does not have any power, right or jurisdiction to tell, much less to decide, upon the nature of withdrawal or retraction. His duty ends where the statement is recorded. If the statements are retracted, the fate thereof must be decided by law meaning thereby, a superior forum and not by the very authority, who is alleged to have exerted force. 13. It is not as if the retraction from a statement by an assessee would put an end to the procedure that ensued on account of survey or search. The Assessing Officer can very well support his findings on the basis of other material. If he did not have any other material, in a way, it reflects upon the very perfunctory nature of the survey. We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support from the Circular dated March 10, 2003, issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted....
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....sdiction and assessment under section 153A has been discussed. iv. Pr.CIT, Delhi-2 Vs Best Infrastructure (India) Pvt Ltd. (and others) ITA Nos. 11 to 22 of 2017-01.08.2017 (Delhi) v. Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia 2017 (295) CTR 466 (Del). vi. Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bom) vii. Ratan Kumar Sharma vs. DCIT ITA 797& 798 /Jaipur/2014; Vikram Goyal vs. DCIT ITA 174/Jaipur/2017; Jadau Jewellers & Manufacturer PL Vs. ACIT (686/ Jaipur/2014); Prateek Kothari Vs. ACIT (312/Jaipur/2015); Basant Bansal Vs ACIT [2015]63 taxmann.com 199(Jaipur Trib) 9. Apart from these, another glaring fact has also been brought before us, which shows that no addition was made on the same grounds in the case of assessee's brother Shri Gopal Lal Yadav. We have also noticed that the similar question regarding income of female members and alleged surrender of undisclosed income in that respect was done in the statements recorded U/s 132(4) of the Act in the case of assessee's brother Shri Gopal Lal Yadav and the said Shri Gopal Lal Yadav had als....
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....A) in confirming the addition of Rs. 2,92,867/- as unexplained expenditure. Both these grounds of appeal are interlinked and interrelated, therefore, the same are being disposed of by passing a consolidated order. 14. We have heard the rival contentions and found from the record that in this appeal, the A.O. has made addition of Rs. 2,92,867/- on the basis of document seized during the course of search. The said document has already been placed on record in the paper book at page 5 to 13 as exhibit 6. From the said papers, it is clearly seen that these are bills and challans of TMT Bars issued in the name of 'Mehta Kirana Store' with name of Gopal Lal Yadav also written on it. The said document speaks volumes in itself as it clearly shows that these documents do not relate to the assessee. In this respect, the assessee had also given specific reply wherein it was pleaded that the said bill relates to 'Mehta Kirana & General Store' which is owned by his nephew Manoj Kumar Yadav and do not relate to the assessee and even the name of the assessee is no where mentioned on the said bill. It is also important to note that the similar show cause notice was issued in the case of his bro....
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....it to the discretion of the Court to make the presumption according to the circumstances of the case. "Shall presume" leaves no option with the Court not to make the presumption. The Court is bound to take the fact as proved until evidence is given to disprove it. In this sense such presumption is also rebuttable. "Conclusive proof" gives an artificial probative effect by the law to certain facts. No evidence is allowed to be produced with a view to combating that effect. In this sense, this is irrebuttable presumption. The words in sub-section (4) are "may be presumed". The presumption under sub-section (4A) therefore, is a rebuttable presumption. The finding recorded by the High Court in the impugned judgment that the presumption under sub-section (4A) is a irrebuttable presumption in so far as it relates to the passing of an order under sub-section (5) of Section 132 and rebuttable presumption for the purpose of framing a regular assessment is not correct. There is nothing either in Section 132 or any other provisions of the Act which could warrant such an inference or finding." b. Principal Commissioner of Income-tax, Central-1, Kol. Vs. Ajanta Footcare (India....
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.... transactions of construction of shop for Rs. 2,92,867/-. We noticed that these pages are not simple hand written pages, but these are printed bills issued by 'M/s Mohit Steels' in name of 'Mehta Kirana Store'. These bills are in respect of TMT Bars sold to 'Mehta Kirana Store' who has purchased it for reselling. There is no detail of construction of any kind and even no other documents have been found during search which could indicate about any construction activities being carried out by the assessee in the year under consideration. Therefore, in these circumstances, the AO could not have concluded that the said bills were in relation to construction of shop. In para 6.1 of the order of assessment, although, the AO has tried to relate it to the documents relating to boundary wall expenses but we noted that among all the seized documents, there is only one document at Page no. 1 of Exhibit No. 7 which is relating to construction of boundary wall at Village Bhikhawas but these expenses relate to AY 2017-18. Therefore, it is clear that these boundary wall expenses are not related in any way in respect of any construction in AY 2015-16 i.e. year under consideration. Therefore, we ar....