TaxTMI 
TaxTMI 
2021 (7) TMI 944
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....her and are being disposed of by this common order for sake of convenience and brevity. Following common grounds of appeal have been raised in ITA No.211,212,213 & 214,/Ind/2019 On the facts and circumstances of the cases, the Ld. CIT(A) erred in deleting the addition of Rs. 2,00,00,000/- made by the assessing officer on account of undisclosed income admitted in the statement made u/s 132(4) of the Income Tax Act 1961. Following Grounds of appeal have been raised in ITA No.216/Ind/2019 On the facts and circumstances of the cases, the Ld. CIT(A) erred in deleting the addition of Rs. 1,50,00,000/- made by the assessing officer on account of undisclosed income admitted in the statement made u/s 132(4) of the Income Tax Act 1961. 3. From perusal of the above grounds we observe that the common grievance of the revenue is against the finding of Ld. CIT(A) deleting the addition made by the ld. AO on account of undisclosed income admitted in the statement made u/s 132(4) of the Act. As agreed by all the parties we will adjudicate this common issue on the basis of the facts of assessee namely Ramani Infrastructure and our decision shall apply mutatis mutandis on the remaining appeals....
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.... u/s 143(2) & 142(1) of the Act for A.Y.2017-18. The instant appeal relates to A.Y.2017-18. This was the year during which search was carried out. Return was filed on 04.11.2017 declaring income of Rs. 7,23,390/-. Necessary information called was duly supplied. Ld. AO confronted the assessee with regard to the surrender of Rs. 25,00,00,000/- made for by the group for various concerns/individual and in the breakup of the surrender amount Rs. 2,00,00,000/- was stated to be surrendered in the concerns M/s. Ramani Infrastructure. In reply, it was submitted that the alleged surrender of Rs. 25,00,00,000/- was an estimated/projected figure and after analyzing the documents seized and other incriminating material, undisclosed income of Rs. 24,27,91,005/- was offered to tax in the application made before the Income Tax Settlement Commission and the same was accepted vide order dated 24.12.2018. Further it was submitted that since no incriminating material during search was found with regard to the assessee firm namely Ramani Infrastructure additional income of Rs. 2,00,00,000/- was not offered to tax. However, Ld. AO was not satisfied and he was of the view that since the key person of the....
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.... the Act, at the Head Office of RICL on 03109/2016 as well as during the course of revocation of prohibitory order at the Factory premise of RIeL on 27/10/2016 wherein the assessee has Shri Arun ram ani himself declared in his own hand writing that statement was given without fear and without coercion and he js in sound state of mind. The statement was further read, understood and accepted by key persons of the group i.e. Shri Prakash Hariramani, Shri Vijay Hariramani which proves that there was no coercion and assessee wilfully offered the voluntary disclosure. II. It is also important to mention ether that the assessee firm had time to file its objections if any, in case of voluntary disclosure of income in front of Department before the notices u/s 153A has been sent to the assessee. But the assessee failed to do so and assessee is only raising its objection in the last submission dated 17/12/18. (iii) The disclosure of additional income is based on the vanous incriminating documents found, seized and confronted to Hariramani brothers, during the course of search action from various premises. The documents / facts/incriminating material clearly indicates that the assessee ....
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.... The question of evidentiary value of a statement recorded uls.I32 (4) of the Act is no more res integra. When an assessee had made a statement of facts, he can have no grievance ifit is taxed in accordance with that statement. The reasonableness of the AO's approach may be appreciated that he had not made any enhancement or substitution in the amounts as offered/disclosed in the said statement. It was a statement pertaining to certain facts which were in the exclusive knowledge of the assessee. Those facts were disclosed to the Revenue Department. Thereupon those were accepted by the Revenue Department. Those facts were of such nature that there was no scope of existence of any other evidence. Affirmation of facts at best can only be done by the assessee in its own volition. If the assessee wanted to correct the said statement, then it was open for it to -=show the evidences to retract those facts. But no such evidence was furnished though an another chance was granted while explaining the entire issues at search proceeding stage which means that the assessee had no evidence at all in its possession. It is here to clarify that the statute prescribes the power of the Reven....
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....ities before whom such declaration was made, there was no valid reason for retraction of same after a gap of about two and a half months." The submissions made by the learned Counsel thoughtfully considered and are of the view that there is no merit in his explanation. It is well settled that admissions constitute best piece of evidence because admissions are self-harming statement made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one's own interest unless such a statement is true. Section 17 of the 1872 Act defines admission to be a statement, oral or documentary, which suggests an inference as to any fact in issue or relevant fact which has been made by a party to proceedings or its agent and others as per details given in section 19, 20, 21, 22 and 23 of the 1872 Act. If ad admission has been made by a party to proceedings under section 17 and 18 of the 1872 Act, suggesting an inference that the income was unexplained then such an admission is an admissible piece of evidence. Admissions have also been regarded as substantive evidence because it sustains their veracity from the fact that maker has said something....
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.... From the above following is evidently clear - a. Disclosure made on behalf of other family members, proprietorship concerns, companies and partnership firms comprised in the group b. Lump sum disclosure of additional income of Rs. 25 crores which is vague, bald and adhoc c. No reference to any seized document/incriminating material on the basis of which disclosure of additional income has been made d. He shall provide assessee-wise and assessment year-wise breakup for the amount disclosed as additional income for himself and on behalf of other family members, proprietorship concerns, companies and partnership firms comprised in the group e. Disclosure made does not relate to any specific assessment year f. Disclosure made was acknowledged by Shri Prakash Hariramani, Shri Harish Hariramani and Shri Kishore Hariramani on 04.09.2016 as tentative and without reference to any breakup of Rs. 25 crores as to each assessee, each year and respective head of income any of the other family members/group concerns 4. Thus, disclosure of additional income made by Shri Arun Hariramani (assessee) is vague, bald and adhoc without reference to any incriminating material/seized documen....
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....ative figures of the various assesses of the group d. Tentative figures are subject to modification/correction/revision with respect to individual assessee and the quantum of income 9. The addition made on the basis of such tentative figures and rough analysis and which was subject to modification/correction/revision has no legal sanctity and factual basis. 10. Statement of Shri Prakash Hariramani was recorded u/s 132(4) on 30.08.2016 at his residence E-1/193, Arera Colony, Bhopal. In response to question number 31 he has stated that - 11. From the above the reply of Shri Prakash Hariramani following is evidently made outa. Disclosure made on behalf of others namely RICL, Aaditya Foods, Trinity Organization, partnership firms, partners, directors, proprietors and group. b. Lump sum disclosure of additional income of Rs. 25 crores which is vague, bald and adhoc c. No reference to any seized document/incriminating material on the basis of which disclosure of additional income has been made d. He shall provide assessee-wise, head-wise and assessment yearwise breakup for the amount disclosed as additional income on behalf of other namely RICL, Aaditya Foods, Trinity Org....
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....sessee has earned income other than the reported sources of income. Neither could Ld. AO bring on record any specific instance of the assessee having earned any undisclosed income or unexplained investment. 14. While passing the impugned order, Ld. AO did not make reference to any incriminating material but the addition was made by referring to the disclosure made in the statement recorded during search operations. There is no nexus with the seized material and the declaration made in the statement recorded during the search operations. No reference has been made to any incriminating material found during the course of search which could be correlated to the alleged surrender of income earned by the assessee from undisclosed sources. 15. Reliance is placed on the following judicial precedents wherein it is held that mere admission is not conclusive piece of evidence. a. Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC): Para 4 - [CLPB 01 ] b. Satinder Kumar (HUF) v. CIT [1977] 106 ITR 64 (Hon'ble High Court of Himachal Pradesh): It was held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the a....
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.... page 3] "कृपया बताये की किया उपरोक्त के अतिरिक्त आप कुछ और कहना चाहते है?". All the questions prior to question no. 25 raised by the authorized officer relate to the documents seized during the search operations. Shri Arun Hariramani has duly explained these documents. From question no. 25, as reproduced above, it is clear that no reference to any seized document/incriminating material has been made by the authorized officer. [PB 88-101] In response to question no. 25, Shri Arun Hariramani replied (relevant extract) - [AO page 4] From the above it is clear that no reference to any incriminating material/seized document has been made on the basis of which lump sum disclosure of Rs. 25 crores has been made by Shri Arun Hariramani for himself and on behalf of other family members, partnership firms, partners, proprietorship concerns and companies comprised in the group. Thu....
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....nating material - a. Hon'ble Supreme Court in CIT v. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC) - Para 18 [CLPB ] b. Hon'ble Jurisdictional Madhya Pradesh High Court in the case of Mechmen - [2015] 60 taxmann.com 484 - order pronounced on 10.07.2015 - Para 23 [CLPB ] c. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Mohd. Atique - IT(SS)A No. 30/Ind/2016 to 36/Ind/2016 - order pronounced on 16.02.2021 - Para 19 [CLPB ] d. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Satish Neema - IT(SS)A No. 149/Ind /2016, 150/Ind/2016 and 152/Ind/2016 - order pronounced on 07.02.2020 - Para 19 [CLPB ] e. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Kamal Kishore Kotwani - IT(SS)A No. 186 to 190/Ind/2016 - order pronounced on 04.07.2018 f. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Kamta Prasad Dwivedi - IT(SS)A No. 182 to 185/Ind/2016 - order pronounced on 19.09.2018 g. Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla 380 ITR 573, the decision in the case of Pr.CIT v. Meeta Gutgutia 395 ITR 526 and various other decisions, has consistently held that in absence of any incriminating material fou....
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.... bring on record any specific instance of the assessee having earned any undisclosed income or unexplained investment. 14. Reference may please be made to the table in the assessment order at page no. 24 which is reproduced as under - "Subject to the above remarks, total income for the assessee is computed as under - A.Y. 2017-18 Income as per return of income 7,23,390/- Undisclosed income admitted during the search statement u/s 132(4) 2,00,00,000/ Total Assessed Income 2,07,23,390/ From the above table it is evidently clear that Ld. AO has made addition of Rs. 2 crore merely on the basis of the disclosure of a third party made in the statement recorded during the search operations. 15. It is well settled proposition that the strict rules of evidence are not attracted in relation to income tax proceedings and further there is nothing like res judicata or estoppel. In order to tax any income under the Income-tax Act, it is required to be shown that such income has accrued to the assessee or is deemed to have accrued. Income is not earned in air or vacuum. The income presupposes receipt or movement of funds, which are revenue in nature. It is settled law that norma....
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....dorsed/acknowledged/confirmed the disclosure as made by the above mentioned three persons. No addition can be made by using a document not actually confronted to assessee. 5. The fact that declaration of additional income has been made by one person on behalf of others is corroborated from the question number 2 raised by the authorized officer to Shri Vijay Hariramani. Relevant extract of this question is reproduced above. 6. The authorized officer in the question itself has stated that additional income was declared by Shri Arun Hariramani on behalf of other family members, partnership firms, companies and proprietorship concerns. No addition can be made on the basis of statement of third party. 7. There are no provisions under the Income-tax Act which authorize any person to accept any amount as undisclosed income on behalf of someone else. It is only under the specified provisions of the Act that a person can act as 'representative assessee' as per provisions of section 160. In the instant case, Shri Vijay Hariramani and Shri Prakash Hariramani are not representative assessees under the above mentioned provisions of the Act. 8. Disclosure made to buy mental peace. Search....
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....d will have evidentiary value, yet such statements are not always conclusive proof since the person making the statement can rebut and retract. 10.4 A retraction to have any evidentiary value must preferably be in a statement not only denying the earlier stated facts but explaining the reasons for making a statement earlier and giving substituted facts in support of retraction. In the present case of the assessee, addition has been made on the basis of statement of Shri Vijay Hariramani. Assessee retracted this disclosure by not including it in the return filed for the impugned year. [PB 01] 10.5 It would be relevant to point out that the statements which are recorded by administering oath are presumed to be carrying truth in view of the provisions of section 181 and section 193 of the Indian Penal Code which provide for imprisonment if the false statement is given. When it is so, no one would like to be punished knowingly and, hence, it is but logical to accept a sworn statement or the statement taken on oath as revealing the truth. 11. For any retraction to be successful in the eyes of law the maker has to show as to how earlier recorded statements do not state the true fac....
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....so conducted has been explained. For all the six assessment years in his individual case, returned income has been accepted as assessed by the same Ld. AO. 14.2 There was nothing incriminating found and seized during the course of search in relation to the adverse view taken by the Ld. AO on addition made as per the disclosure in the statement recorded during the search operations. The sole basis for making addition is the statement of Shri Vijay Hariramani (not the assessee) which had been retracted. 14.3 Ld. AO made the impugned addition on the foundation of bare husk of the statement of Shri Vijay Hariramani made in the course of search operation, who attributed so, 'on behalf of the assessee' without there being any incriminating material found in the course of search for its corroboration. 14.4 Ld. AO being quasi-judicial authority is not competent to draw inferences in vacuum, without the base of incriminating material relevant to the disallowance made, evidence and relevant provisions, as has been done, in the present case. Ld. AO is required to act in a judicial manner while framing assessment order under section 153A rws 143(3). 14.5 Ld. AO being quasi-judicial aut....
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....hout authority of law. The law empowers the AO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so he cannot assess an assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppel by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law. 2. Principles of estoppels will not operate against the Income-tax Act as held by Hon'ble Supreme Court in the case of CIT v. V.MR.P Firm [1965] 56 ITR 67 (SC). [CLPB 267-275 ] Hence, mere admission of additional income would not automatically entitle the assessing officer to assess the same, if the assessee disputes the same subsequently with corroborative evidences. 3. Principles of estoppels were also dealt by Hon'ble Bombay High Court in the case of Balmukund Acharya 310 ITR 310 (Bom) as held in Para 33 [CLPB 283 ] E. Application filed by the 'Ramani Group' before the Hon'ble Settlement Commission 1. An application has been filed before the Hon'ble Settlement Commission in the case of Ramani group on 24.12.2018. This applicati....
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....ar [2005] 147 taxman 26 (ITAT Amritsar) 16 Jagdish Narain Ratan Kumar [2015] 61 taxmann.com 173 (Raj HC) 17 V. Mr. P. Firm [1965] 56 ITR 67 (SC) 18 Balmukund Acharya [2009] 176 Taxman 316 (Born.) 19. CBDT Instruction F. NO. 286/2/2003- IT (INV. II) dated 10-03-2003 12. We have heard rival contentions and perused the records placed before us and carefully gone through the order of both the lower authorities, written submissions filed by the assessee and various judgments referred and relied by both the parties. Revenue's sole grievance is against the finding of Ld. CIT(A) deleting the addition of Rs. 2,00,00,000/- by the Ld. Assessing Officer on account of undisclosed income admitted in the statement made u/s 132(4) of the Act. 13. We note that search action u/s 132(4) of the Act conducted on Ramani Group on 30th August 2016. All the business concerns and individuals connected with M/s. Ramani Group were subjected to search, incriminating material was found and recorded statement of Mr. Arun Hariramani was recorded u/s 132(4) of the Act wherein lump sum disclosure of the undisclosed income of the group at Rs. 25,00,00,000/- was made which was stated to be rough analysi....
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.... during the course of search belonging to the assessee firm. Ld. Assessing Officer only asserted the fact that since the statement was given by Vijay Hariramani u/s 132(4) of the Act and the name of assessee was mentioned in the list showing surrender of Rs. 2,00,00,000/- the assessee was bound to honour this surrender. 18. We further note that ld. CIT(A) after examining the facts in detail, making references to circulars of Central Board of Direct Taxes and other judicial precedence held in favour of assessee observing as follows: Ground No 2 to 6:- Through these grounds of appeal, the appellant has challenged the addition of Rs. 2,00,00,0001- on account of undisclosed income admitted during search and taxing the income uls 115BBE of the IT Act, 1961. The appellant is having income from salary, house property, remuneration & share income from partnership firms in which he is a partner. The appellant apart from the above, having an income from bank interest etc. The total income was shown at Rs. 7,23,3901- which has been accepted by the A.O., however, the A.O. has made addition of Rs. 2 crores on the ground that the said income was surrendered u/s.132(4) and its retraction in th....
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....ak up of the disclosed income. The tentative figures of income are subject to modification/correction/revision with respect to individual assessee, quantum of income." After analyzing the various papers and the seized documents, the group has surrendered/disclosed the income in the application filed before the Settlement Commission. The Hon'ble Settlement Commission has admitted the application and passed an order u/s.245D(1) on 24.12.2018. In the settlement application the statement of Vijay Hariramani, in which, the tentative breakup was given, has also been refered and reproduced and considering the statement of Arun Hariramani, Vijay Hariramani and Prakash Hariramani the disclosure of the income of the group was made at Rs. 24,27,91,005/-. 4.2.3 The appellant never surrendered income of Rs. 2 crores in search. The addition has been made on the basis of above tentative/estimated/projected bifurcation given by Vijay Hariramani. It may be mentioned that there is no mention of any assessment year to which the adhoc surrender income relates. It is also mentioned that there is no specific asset/investment/expenditure of the assessee found unexplained to the extent of Rs. 2 ....
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....ned assessees while filing returns of income. In these eircumstances, 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 Yours faithfully, Sd/- (S. R. Mahapatra] Under Secretary (Inv. II) F.No. 286/98/2013-IT (Inv.It) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Room No. 265A, North Block New Delhi, the 18th December, 2014 1.All Principal Chief Commissioners of Income Tax 2....
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....not justified in making the addition on the basis of such retracted statement in view of the following decisions :- 4.2.5 It is submitted that the Apex Court in the case of Pullangode Rubber Produce Co Ltd Vs. State ofKerala 91 ITR 18 (SC) 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 assessee who made the admission to show that it is incorrect. " Further in case of Nagubai Ammal Vs. B. Sharma Rao AIR 1956 SC 593 held " an admission is not conclusive as to the truth of the matters stated therein . It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue ". Further in the case ofKrishanlal Shivchand Rai Vs. CIT 88 ITR 293 (P & H) held that "it is an established principle of law that the party is entitle to show and prove that the admission made by him probably is in fact not correct and true" Further in the case of Rajesh Jain Vs. DCIT ITAT Delhi Bench reported in 100 TTJ (Del) 929/935 held that "it is to be noted that it is not possible to lead direct evidence of the use of pressure ....
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....el reported in 278 ITR 454/460- para 11 (All) held that "It is a matter of common knowledge, which cannot be ignored that the search is being conducted with the complete team of the officers consisting of several officers with the police force. Usually telephone and all other connections are disconnected and all ingress and egress are blocked. During the course of search person is so tortured harassed and put to a mental agony that he loses his normal mental state of mind and at that stage it cannot be expected from a person to pre-empt the statement required to be given in law as a part of his defence Further in the case of Kailash Ben Manharlal Chouksi V s. CIT reported in 220 CTR 1381147 para 26 (Guj) held that" We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve....
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....ve evidence, should not be treated as conclusive evidence against the maker of the statement. " 4.2.6 The Jurisdictional Tribunal Indore in the case of ACIT V s. Shri Y ogesh Kumar Hotwani reported in 30 ITJ 353/380 (Ind-Trib) has held that no addition can be made merely based on statement u/s.132(4) without linking to the seized books of accounts, other documents, money, bullion, jewellery or other valuable articles or things. In para 18 of the order, at page 380, the Tribunal held as under :- "We also find that disclosure was not made by the assessee hence it is not binding on him. We also rely on the decision in the case of CIT v. Chandra Kumar Jethmal Kochar, (2015) 230 Taxman 78 (Guj), Asstt. CIT v. Kunwarjeet Finance Pvt. Limited, (2015) 61 Taxmann.com 52 (Ahm.Trib.), CIT v. Jagdish Narayan Ratan Kumar, (2015) 61 taxmann.com 173 (Raj), wherein it was held that when addition of disclosure made by the assessee in statement recorded u/s 132(4), it cannot be sustained despite retraction, when Revenue could not furnish any positive evidence in support of such addition. Therefore, we are unable to uphold the findings of the AO and inclined to agree with Ld. CIT(A). Further, t....
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.... firms. We have carefully perused the order of the ld. Settlement Commission wherein this amount of Rs. 45,977/- was also part of the undisclosed income offered by these two firms for the A.Y. 2014-15. The total undisclosed income was offered at Rs. 28,71,319/- which was divided between two firms Mis. Bihari Lal Holaram, partnership firm and Mis. Lakhi Gems. in ratio of 95% : 5%. Finally, the said amount was accepted as offer to tax by these two firms as per the order of the ld. Settlement Commission. Once this amoun of Rs. 45,977/- has already been offered for taxation in the hands of the two partnership firms as per the order of the ld. Settlement Commission dated 22-04-2019 then the addition in the hands of the assessee is not sustainable. Accordingly, the same is deleted. " Therefore, the addition made by AO amounting to Rs. 2,00,00,0001- 1S Deleted. Therefore, the appeal on these grounds is Allowed. 19. From perusal of finding of Ld. CIT(A) and the facts placed before us it is clear that firstly surrender of Rs. 25,00,00,000/- was on an estimate/tentative basis since no reference was made to specific assessment year, any undisclosed asset or unexplained expenditure or seize....
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....ourse of search which could support the impugned amount. During the course of assessment proceedings also the addition made by the Ld. A.O was purely on the basis of statement given during the course of search. Nowhere in the assessment order the Ld. A.O has brought on record any incriminating material or loose paper seized during the course of search having its nexus with the addition made on the basis of statement. We further observe that in one of the group concern M/s Ultimate Builders ITA No.134/Ind/2019 order dated 9.8.2019 similar issue came for adjudication and this Tribunal on the basis of the facts of the case as well as relying on the judicial pronouncements deleted the addition since the same were made without referring to the incriminating material found during the course of search. The finding of this Tribunal in the case of M/s Ultimate Builders has been reproduced in the preceding paras while dealing with the similar issue raised in the case of M/s Signature Builders. Since the issue and facts remains the same Ld. Departmental Representative did not controvert this fact that the impugned addition was not based on incriminating material found during the course of sea....
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....Gujarat). Similarly reliance was also placed on the judgment of Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.), wherein it was held that "merely on the basis of admission, the assessee could not have been subject to additions, unless and until some corroborative evidence is found in support of such admission". Reliance was also placed on Hon'ble Jharkhand High Court in the case of Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No.8 of 1999 order dated 03.01.2013 24. We, therefore, in the given facts and circumstances of the case and following the decision of this Tribunal in the case of Signature Builders (supra) and also respectfully following the decisions referred hereinabove find no inconsistency in the finding of Ld. CIT(A) which is based on the examination of facts, settled judicial precedence and direction given in circular issued by Central Board of Direct Taxes and thus hold that he has rightly deleted the addition made by the Ld. AO solely based on the statement given u/s 132(4) of the Act without referring or placing any nexus to the incriminating material seized during the course of searc....