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2022 (2) TMI 269
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....14 and the issues raised in various grounds and facts involved are mostly common, all these appeals may be disposed of by a common order for the sake of convenience and brevity. Om Builders, Bhopal In IT(SS)A No.18/Ind/2020 for the assessment year 2012-13, the assessee has raised the following grounds of appeal: "1. On the facts and in circumstances of the case, ld. CIT(A) has erred in confirming the additions in the years when no proceedings were pending for assessment as on the date of search. 2. On the facts and in circumstances of the case, ld. CIT(A) has erred in confirming the addition of Rs. 3,50,000/- on account of unexplained unsecured loan." In IT(SS)A No.62/Ind/2020 for the assessment year 2013-14, the Revenue has raised the following grounds of appeal: "1. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of Rs. 2,85,50,000/- made by the Assessing Officer on account of unexplained unsecured loan." In IT(SS)A No.63/Ind/2020 for the assessment year 2014-15, the Revenue has raised the following grounds of appeal: "1. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of Rs. 2,7....
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....ther than the sale price mentioned in the registry and additional charges recovered?" The assessee gave a reply as under: "No. No additional payment is taken in cash in addition to above." Subsequently statement of Mr. Rajkumar Khilwani, one of the partners, was recorded on 02.02.2014 in which he surrendered the income of Rs. 1100 Lakh on account of cash receipt outside the books of account jointly in the case of the assessee and in case of the firms M/s. Om Construction & M/s. Sainath Infrastructure P. Ltd. However, the same was not offered as income in the return filed. Thus, the statement of Shri Rajkumar Khilwani was recorded after the completion of the search and seizure at the premises of the assessee. However, while filing the returns, the assessee retracted from the said surrender and filed the returns on the basis of the accounts which are duly audited. In the course of the assessment proceedings, all the information as required by the AO from time to time was furnished. The assessee is in the business of real estate, builders and developers. The assessee during the relevant period was developing a residential complex in the name of Sapphire Green, Raipur. The expense ....
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.... assessee has proved beyond doubt the identity of the lender, credit worthiness and the genuineness. The ld. CIT(A) relied on various case laws and after considering the submissions of the assessee deleted the additions. In the remand report, the ld. A.O. has accepted the factual position and only in 2 cases has raised doubts about the genuineness of the transaction because of non-repayment. Thus, learned Counsel for the assessee submitted that since the assessees have established the genuineness of the transactions from all the sides, the ld. CIT(A) was right in deleting the additions. 5. We have considered the rival submissions of both the parties and gone through the material available on the file. We find that in the course of the assessment proceedings all the information as required by the AO from time to time was furnished. The assessee is in the business of real estate, builders and developers. The assessee during the relevant period was developing a residential complex in the name of Sapphire Green, Raipur. The expense incurred on the purchase of land and construction expenses on the project were the business expenses of the assessee. The assessee had maintained regular b....
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....point out any incriminating loose paper. On the sole ground of the declaration in the statement the additions were made. We further find that the ld. CIT(A) deleted these additions relying on the decision of the various High Courts and the decision of ITAT Indore Bench in the case of Ultimate Builders in ITA 134/IND/2019. The Ld. CIT(A) observed that the additions were made merely on the basis of the statement recorded without specific reference to any incriminating material found during the course of the search suggesting any earning of unaccounted income. Thus, we are of the view that no addition was warranted as the surrender was not made with reference to any loose paper seized during the course of search and was accordingly not in accordance with the provisions of section 132(4) as the Ld. AO failed to bring on record any specific instance of the assessee having earned any undisclosed income or having made any unexplained investment which could justify the addition under reference. The sole basis for making the addition is the statement made by one of the partners. The Ld. A.O. did not make any addition for the documents found. He simply made addition in various years in respe....
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....y in the statement given during the course of search u/s 132(4) of the Act. 18. Brief facts relating to this common issue as culled out from the records and as narrated by the Ld. Counsel for the assessee are that a search was conducted at the premises of the Signature Group on 29.01.2014 and also at the premises of the assessee firm. In the case of the assessee the search commenced on 29.01.2014 at 08.45 A.M and was concluded at 08.00 AM on 02.02.2014. The proceedings continued for 4 days (96 hours) without any break. The statement of Mr. Raj Kumar Khilwani commenced on 01/02/2014 and was concluded on 02/02/2014. During the course of the statement, the assessee declared the additional income of Rs. 25,00,000/- for the A.Y. 2013-14 and Rs. 3 crores for the A.Y. 2014-15 (Pg.222-240 of PB at page 239). In the statement Q.27 was asked as "during the course of search at Bhopal and Raipur many loose papers have been found for which no satisfactory answer and explanations have been given. In relation to these papers, an opportunity is given for explanation after consulting the other partners/ directors. The assessee gave a reply as I have seen the loose papers of Raipur office and cons....
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.... recorded were both vague and general in nature and were not with reference to any specific document or asset found during the course of search which would indicate the acceptance of the assessee of earning of any unrecorded income. Rather the assessee has made a categorical unambiguous statement that the assessee has not earned any unrecorded income. Reference in this regards may be made to the statement of Mr. Rajkumar Khilwani recorded on 01-02/02.2014 Q-9: Do you take any payment from customers in cash other than the sale price mentioned in the registree and additional charges recovered. A-9: No. No additional payment is taken in cash in addition to above 23. It is further submitted that no addition can be made without finding any incriminating material merely on the basis of the declaration. In this connection the attention is drawn to the direct judgment of the Hon'ble Indore Tribunal in the case of Shri Sudip Maheshwari in ITA 524/IND/2013 pronounced on 13/02/2019 and in the case of M/s Ultimate Builders in ITA 134/2019 pronounced on 09/08/2019. The Hon'ble Tribunal has relied on the various judgments of the various High Courts specially the decision of the Hon. Jharkh....
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....4) of the Act. 27. We also observe that in the assessment order as well as order of the first appellate authority there is no mention of any incriminating material having its nexus with the alleged income declared u/s 132(4) of the Act. The Ld. A.O has failed to prove on record any specific instance with support of incriminating material found during the course of search which could show that the assessee has earned the alleged undisclosed income. It is not in dispute that various other additions have been made by the Ld. A.O for the undisclosed investment u/s 69B, undisclosed investment in projects of land and unexplained unsecured loan as well as unexplained cash u/s 69A of the Act. However specifically with regard to the addition of Rs. 25,00,000/- and Rs. 3,00,00,000/- made for the Assessment Years 2013-14 and 2014-15 the same is purely based on the statement given on oath u/s 132(4) of the Act by the authorised representative on behalf of the assessee which was collectively surrendered as additional income on behalf of various group concerns. But without the support of any incriminating material on which the revenue authorities were able to lay their hands, this addition tot....
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....Ld. A.O on account of undisclosed income surrendered during the course of search by the partner of the assessee firm. 10. At the cost of repetition we would like to recite and recapitulate the facts once more. The assessee is a partnership firm engaged in real estate business. It is the part of Signature Group. Search action was initiated in the Signature Group and its associates on 29.1.2014. The assessee's association with the Signature group is on account of the common partners in various concerns. Assessee is separately assessed to tax. Search u/s 132(4) of the Act was initiated in the case of the assessee on 29.1.2014 and was concluded on 31.1.2014. This fact is proved on the basis of "panchanama" prepared by the officer of the search team which is placed at page 62-64. No surrender was made in the statements taken by the search team during the course of search from 29.1.2014 to 31.1.2014. There is no mention of any incriminating material referred by the Ld. A.O on the basis of which additions have been made. 11. The search action in the case of Signature Group continued ever after 31.1.2014. On 02.02.2014, Mr. Vipin Chouhan who is the partner of the assessee firm gave a s....
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.... of the statement without correlating the disclosure made in the statement with the incriminating material gathered during the course of search". 13. So the contention of the Ld. Counsel for the assessee can be summarised that the addition cannot be made merely on the basis of statement which too was taken after conclusion of the search and no correlation has been made with the incriminating material found during the course of search. 14. On the other hand Departmental Representative gave reference to various judgements referred above. She mainly placed emphasis on the judgment of Hon'ble High Court of Madras in the case of Kishore Kumar V/s DCIT (supra) holding that "when there was a clear admission of undisclosed income in the statement sworn in u/s 132(4) of the Act there is no necessity to scrutinise the documents". 15. Now so far as the first contention of the assessee that the statement relied on by the revenue authorities cannot be construed as a statement given u/s 132(4) of the Act, we will like to first reproduce the provisions of Section 132(4) of the Act; "(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who ....
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....nder for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014. 20. We therefore are of the considered view that the alleged statement given by Mr. Vipin Chouhan on 02.02.2014 may be construed as the Section 132(4) of the Act for all the other concerns named above except for the assessee i.e. M/s. Ultimate Builders. Therefore the statement referred to by the Ld. A.O on the basis of which the addition have been made in the hands of the assessee in our view cannot be construed as the statement u/s 132(4) of the Act. 21. Coming to the issue of addition made by the Ld. A.O on the basis of the statement but no reference been given to the incriminating material, we find that in the assessment order Ld. A.O has referred to various seized documents but ....
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....idences, the admission is merely a hollow statement. We have given our thoughtful consideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before the A.O., which supported the contents of the statement. In the absence of such material, coupled with the fact that it is recorded by the Ld. CIT(A) that the assessee himself had surrendered a sum of Rs. 69,59,000/- and Rs. 75,00,000/- in A.Y. 2008-09 and 2009-10 respectively. The A.O. failed to co-relate the disclosures made in the statement with the incriminating material gathered during the search. Therefore, no inference is called for in the finding of the Ld. CIT(A) and is hereby affirmed. Ground raised by the revenue is dismissed." 23. Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.), held that merely on the basis....
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....statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the un....
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....business concerns referred by Mr. Vipin Chouhan in his statement given on 02.02.2014 and in case of such business concern wherein search action u/s 132 of the Act was continuing the said statement dated 02.02.2014 will be considered as the statement u/s 132(4) of the Act. Thirdly, no reference has been given by the Revenue Authorities to any incriminating material found during the course of search at the business premises of the assessee, which could be correlated to the alleged surrendered income earned by the assessee from undisclosed sources. 27. We therefore are of the considered view that the finding of Ld. CIT(A) needs to be set aside and the addition of Rs. 2,25,00,000/- deserves to be deleted since it has been made on the basis of a statement not given u/s 132(4) of the Act and without referring to any incriminating material found during the course of search. Addition for undisclosed income of Rs. 2,25,00,000/- is deleted. Accordingly Ground No.1 raised in the appeal by the assessee is allowed." 31. From perusal of the above finding of this Tribunal in the case of M/s Ultimate Builders (supra), we find that the common issue raised in Ground No.3 of M/s Signature Builder....
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....000/-, respectively. Facts, in brief, are that it was submitted before the ld. A.O. that the above loans are duly recorded in the regular books of accounts and have been received through the banking channel. The assessee submitted the confirmation and the assessee's bank account establishing the fact that all the transactions were routed through banking channel. The assessee could not submit the other required evidences such as the bank statements of the respective parties and the IT Returns of the creditors as they were not available at the time of the assessment. The Ld. A.O. made the additions on the ground that in absence of the bank statement and the income tax returns, the genuineness and the credit worthiness of the parties are not established. 8. Being aggrieved, the assessee approached the ld. CIT(A) and before the ld. CIT(A), the assessee filed all details like the bank statements, income tax returns etc. with an application under rule 46A. The Ld. CIT(A) sent all the papers to the Ld. A.O. for his comment and the remand report. The ld. A.O. submitted the remand report (pg.41-43 of the PB) challenging the admittance of the additional evidence stating that adequate opport....
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.... the case, when the Tribunal has held that the matter is not required to be remanded as no other view would be possible we see no reason to interfere with the impugned order passed by ITAT" From the record available, the ld. CIT(A) noted that the loan party furnished the loan confirmation, copy of bank account and proof of filing of the return and by filing the above documents, the assessee was able to establish the identity of the creditors as the creditors are income tax payer and filed the loan confirmations, to establish the genuineness of the transaction as the assessee took the loans through banking channel and to establish the creditworthiness of the creditors as the creditors are income tax payer and filing the income tax return. These persons not only gave loan to the assessee but also to other parties. 9. Considering the above, the ld. CIT(A) was of the view that it is clear that the assessee has satisfied all the three conditions required for the genuineness of the transaction and accordingly, deleted the additions for assessment years 2013-14 & 2014-15. However, the ld. CIT(A) confirmed the addition of Rs. 3,50,000/- on account of unexplained unsecured loan received b....
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....with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. The loan was repaid on 13.06.2014. Appellant has also paid interest of Rs. 66,740/- upto 31.03.2014. iv. Maa Vaishno Devi Constructions (Rs. 47,00,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of copy of balance sheet under the head 'Sundry Debtors and Loans and Advances', outstanding balance of Om Construction shows a balance of Rs. 1,33,00,000/-. However, the appellant has explained that loan amount only to the tune of Rs. 86,00,000 pertains to Om Constructions and balance pertains to Om Builders (Rs. 47,00,000/-) which has wrongly been reported by the party in the name of Om Construction. Therefore, it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. v. Madhu Agrawal (Rs. 5,00,000/-):- The app....
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....of Rs. 1,14,214/- upto 31.03.2014. xi. Vijay Mulchandani (Rs. 6,00,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. Unsecured loans for AY 2014-15 i. Chitra Hariramani (Rs. 1,00,000/): The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. Appellant has also paid interest of Rs. 690/- upto 31.03.2014. ii. Deepak Shadija HUF (Rs. 5,00,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and iden....
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....ng with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. The loan was repaid on 21.08.2017. Appellant has also paid interest ofRs. 19,923/':' upto 31.03.2014. ix. S. K. Lahori HUF (Rs. 2,50,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. Appellant has also paid interest of Rs. 6,493/- upto 31.03.2014. x. Sur Sangam Mobiles (Rs. 10,00,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. The loan was ....
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.... supported by the ratio laid down in the following judicial pronouncements: a. Umesh Electricals vis Asst. CIT(2011) 18 IT] 635 (Trib.Agra): (2011) 131 ITD 127: (2011) 141 TTJ Establishment of identity and credit-worthiness proved- Assessee produced the bank account of creditor in his bank account on the same day on which loan was given- Assessee furnished the cash flow statement of creditor- Based on inquiry, AO noted that creditor was engaged in providing accommodation entries-HELD- In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entries-Further, mere deposit of money by the creditor on the same day, does not establish that the loan is not genuine-Assessee has proved the source of credit and also the source of Source -Addition cannot be made. b. Aseem Singh v/s Asst. CIT (2012) 19 ITJ 52 (Trib.- Indore) Identity and credit-worthiness proved-Assessee took loan of Rs.l, 00, 000/- confirmation of creditor was filed-Lower authorities made addition u1s 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan _ HELD- Assessee has established the identity....
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....." In IT(SS)A No.65/Ind/2020 for the assessment year 2014-15, the Revenue has raised the following grounds of appeal: "1. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of Rs. 7,50,00,000/- made by the Assessing Officer on account of admission of additional income u/s 132(4) of the I.T. Act. 2. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of Rs. 1,83,50,000/- made by the Assessing Officer on account of unexplained unsecured loan." 11. From perusal of the abovementioned grounds, only two issues with regard to surrender of additional income u/s 132(4) and unexplained unsecured loan are involved in both the departmental appeals. Both the parties submitted that the facts and issues are identical to the case of Om Builders (above), therefore, the arguments advanced in the case of Om Builders may be considered in the case of Om Construction too. We find that the facts and issues are identical to the case of Om Builders, therefore, our order passed in the case of Om Builders shall prevail in the case of Om Construction too. Thus, by following the same discussion and reasoning thereof record....