2021 (7) TMI 834

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....y recording incorrect facts and findings and without considering the submissions of the assessee and without observing the principles of natural justice. 3. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making the impugned addition of Rs. 7,98,880/- by treating it as alleged undisclosed income is bad in law and against the facts and circumstances of the case. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in giving direction to take action in the case of M/s Inspiration Enterprises (P) Ltd., more so when this case was not before him and that too without giving opportunity of hearing. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest u/s 234A, 234B and 234C of Income Tax Act, 1961. 2. Briefly stated facts of the case are that a search and seizure action under section 132 of the Income-tax Act, 1961 (in short 'the Act') was carried out on 13/02/2013 at the premises of the assessee along with other cases of "Panchsheel Gro....

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....en submission, remand report and rejoinder. It may be seen from the assessment order that the AO has made addition of Rs. 7,98,880/- because the appellant has made surrender of Rs. 1 Crore during course of search and seizure action. While he has disclosed only Rs. 92,01,120/- in his return of income filed in response to the notice u/s 153A the Act. The Ld. A.R. contended that he has shown all of the undisclosed income either in individual edacity or in hands of company M/s. Inspiration Enterprises (P) Ltd. The Ld. A.R. has also submitted that since no incriminating material was in support of AO to make addition of Rs. 7,98,880/-. Therefore, in his opinion, addition is not justified. The Ld. A.R. has also relied upon various case laws which have already been reproduced above. I do not agree with the contention of the appellant that the no addition should be made only on the basis of statement recorded from the remand report of the AO, it is very much clear that there are several documents seized which indicate for undisclosed income of the appellant and that of the company i.e. M/s. Inspiration Enterprises (P) Ltd. Moreover, in the case of Dayavanti Vs. CIT (75 Tax....

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....ning balance of Rs. 12,580/- and remaining amount has been declared as unexplained in the hands of the assessee. According to her, it is not mandatory to declare the surrendered amount irrespective of the undisclosed income appearing in seized documents. She submitted that whatever amount was appearing in the seized documents has already been declared and therefore making addition of the amount of Rs. 7,98,880/- in the hands of the assessee is not justified, when no adverse comment has been made either by the Assessing Officer or learned CIT(A) in respect of undisclosed income the assessee. She further submitted that case of the Dayawanti- (supra) relied upon by the Learned CIT(A) is distinguishable on the facts, as in that case, the assessee was found to be a habitual offender in the seized material, which was never explained in a reasonable manner. To support the contention that "though the admission is an extremely important piece of evidence but it cannot be said to be conclusive and it is open to the person who made the admission to show that it is incorrect, she relied on the decision of the Hon'ble Supreme Court in the case of Pullangode Rubber & Produce Co Ltd (1973) 91 ITR....

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....4) of the Act, then it is within the rights of the assessee to rectify the error and it cannot be said either retraction or dishonouring of the statement. The Assessing Officer cannot treat the balance 1 (one) as undisclosed income of the assessee. Any such action of the Assessing Officer is not justified. In the case of Bhagirath Aggrwal (supra) also the Hon'ble Delhi high court has held that, if the admission is incorrect, same would not be binding. The relevant paragraph of the said decision is reproduced as under: "11. Before us the learned counsel for the appellant contended that the statement made by an assess could always be subsequently retracted. He further submitted that it was open to the person who made an admission to show that the admission was incorrect. For this proposition he placed reliance on a Division Bench decision of this Court titled Ester Industries Ltd. Vs. Commissioner of Incometax: (2009) 316 ITR 0260. However, that case was not one of search and seizure u/s 132 of the said Act. Furthermore, in the present case no material has been produced by the appellant/assessee to show that the admission made by him was incorrect in any way. On the other ha....

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....ht of above decisions, we are of the opinion that the assessee computed the undisclosed income appearing in seized documents, which has been accepted by the Assessing Officer. The assessee has successfully demonstrated the error in statement and the Assessing Officer in the case of M/s Inspiration also accepted the computation of undisclosed income by the assessee. In the present case, the addition has been made for the difference of surrendered amount during the statement u/s 132(4) and amount declared in the returned income, just because the assessee surrendered said amount under section 132(4). This addition has been made in complete disregard to the error pointed out by the assessee in surrendered amount. 6.4 We also note that the seized documents are not related to the assessee. The direction given by the Learned CIT(A) to take remedial action in the case of M/s Inspiration also goes to prove that, if any higher amount was to be assessed looking to the surrender, then it would have to be done in the case of M/s inspiration and not in the case of the assessee. 6.5 In view of the above facts and circumstances, we set aside the order of the lower authorities on the issue....