TaxTMI 
TaxTMI 
2022 (2) TMI 173
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of alleged unaccounted proceeds out of waste cotton sales u/s.69A of the Act. For this issue, the assessee has raised identically worded grounds in all six assessment years. Even the facts are exactly identical in all these years. Hence, will take up the grounds and facts from AY 2018-19 in ITA No.123/Chny/2021 and will decide the issue. The relevant grounds raised reads as under:- 1. The order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case. 2. The Learned Commissioner of Income Tax (Appeals) erred in confirming the addition u/s.69A of the Act of Rs. 42,00,000/- towards alleged unaccounted proceeds out of waste cotton sales. 3. The Learned Commissioner of Income Tax (Appeals) failed to acknowledge the fact that there was no corroborative evidence to support the AO's contention that the proceeds from sale of waste cotton were partially unaccounted. 3. Brief facts are that the assessee is a limited company and is a part of Seyadu group of companies. A search & seizure action u/s.132 of the Act was carried out on the assessee group on 28.06.2017. According to the AO, on the basis of material evidences gathered during the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The sale of comber waste, flat strips and micro dust are recorded in the books of accounts properly. Proper invoices are raised and all the remittances are received from the parties through RTGS only. As regards to the sale of "waste cotton-others", the sale bills are raised only for 50% of the total value for which payments are made by the parties through RTGS. The balance 50% of sale value is received from the parties by cash which is not accounted in the books of accounts." The AO on the basis of above statement noted that a statement u/s.132(4) of the Act cannot be retracted in the normal course and it can be used as evidence in the assessment. The assessee replied that the sale proceeds from waste cotton have duly and fully been accounted for in the books of accounts and the sale proceeds were received only through banking channel and no cash sale is effected by the assessee company. It was contented that the statement by Shri S. Thirumalai Kumar, AGM (Admin) is retracted and even the AO could not brought on record any incriminating material or seized material to make this addition of unaccounted sale of waste cotton for an amount of Rs. 42 lakhs u/s.69 of the Act. But the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he course of search not a single piece of material evidence / document to support the allegation of sale of waste cotton at 50% of sale value was supported or found. In view of these arguments, the ld.AR stated that the AO as well as the CIT(A) have erred in making and confirming addition just on the basis of suspicion, conjectures and surmises. 6. Apart from argument on merits, the ld.AR argued that the AO has made addition of unaccounted sale of cotton waste by making estimation u/s.69A of the Act. He took us through the assessment order and shown us that the addition is made as unaccounted income of the assessee u/s.69A of the Act and he read out the relevant provision of section 69A of the Act. He stated that the addition u/s.69Aof the Act can be made only in respect to the article or asset where the assessee is found to be the owner i.e., of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of accounts and further the assessee offers no explanation about the nature and source of acquisition of the same or the explanation offered by him is not in the opinion of AO satisfactory, the money ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me 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 Further, this notification was again reiterated vide letter F.No.286/98/2018-IT (INV.II) as under:- Section 132, Read with Section 133A of the Income Tax Act, 1961 - Search &Seizure - Admissions of undisclosed income under coercion/pressure during search/survey Letter [F.No.286/98/2013-IT(INV.II)], Dated 18-12-2014 Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey oper....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a has held that "the addition made by the Assessing Officer merely relying upon statement of seller that he had received higher amount as sale consideration as against disclosed in registered sale deed, without conducting any independent enquiry relating to value of property purchased by assessee is incorrect." 7.2 As noted above, the factual situation is very clear that there is no incriminating material for making any estimation of unaccounted sale of waste cotton despite search was conducted. Even no substantial assets or cash was found from the assessee to support the claim of the Revenue. It seems that the total unaccounted cash found during the course of search was only Rs. 26,36,572/-, out of which Rs. 20 lakhs belong to Shri Sadiq and it has been accepted by the Settlement Commission. The balance amount Rs. 6,36,572/- remains after the order of CIT(A). This cash cannot be equated with the quantum of addition made by the AO and confirmed by the CIT(A) at Rs. 42 lakhs in each of these six assessment years. Hence, we have no hesitation in stating that the addition made by the AO and confirmed by CIT(A) is just mere on suspicion, conjectures and surmises without any evidence....