TaxTMI 
TaxTMI 
2022 (2) TMI 269
X X X X Extracts X X X X
X X X X Extracts X X X X
....conducted u/s 132(4) of the Act on 29.01.2014 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 circ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gnature Builders and Colonisers." In the statement, the Q.9 was asked as under: "Do you take any payment from customers in cash other 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, b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect of unsecured loans, the learned Counsel for the assessee submitted that the necessary papers to establish genuineness of the transaction were filed. The 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 expen....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s 132(4). On pg. 21, he merely stated that several incriminating documents were confronted for which the assessee was unable to explain. He however, did not 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 i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ddition made by the Ld. A.O for the amount declared by the assessee as additional income of Rs. 25,00,000/- and Rs. 3,00,00,000/- for Assessment Year 2013-14 and 2014-15 respectively 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eads. After making the additions on the basis of various papers there remains no scope for making the addition on the basis of declaration made in the statement. It could be observed that the question asked and the answer given in the statement 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....during the course of search does not pertain to the assessee. Since there was no such incriminating material relating to the assessee found during the course of search relating to the addition in question the alleged addition was made purely on the basis of the statement given u/s 132(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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of Rs. 2.25 crores was deleted by this Tribunal observing as follows:- "9. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of Rs. 2,25,00,000/- made by the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon'ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that "no addition was called for which has been made merely on the basis 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 state....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee's business premises. 19. As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender 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 conc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, 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 th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the individual had no undisclosed income. The assessee's said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of Rs. 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 6. We are of the considered opinion that 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 d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....respective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 26. In the given facts and circumstances of the case and respectfully following the judgements and decisions referred above we find that firstly the statement given by Mr. Vipin Chouhan u/s 132(4) of the Act on 02.02.2014 cannot be considered as the statement given u/s 132(4) of the Act in the instant case of the assessee firm since the search action in case of assessee was concluded on 31.1.2014 by the Authorised Officer. Secondly as regards to other 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer on account of additional income surrendered by the assessee u/s 132(4) of the I.T. Act. Thus, ground no.1 raised by the Revenue for the assessment year 2014-15 is dismissed. 7. So far as the issue with regard to alleged unexplained unsecured loans is concerned, we find that for confirmation of addition of Rs. 3,50,000/- on account of unexplained unsecured loan received from Paresh O. Kalla for the assessment year 2012- 13, the assessee is in appeal whereas for the assessment years 2013-14 & 2014-15, the Revenue is in appeals challenging the additions of Rs. 2,85,50,000/- and Rs. 55,00,000/-, 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 ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee of explaining the genuineness of the transaction stands discharged and the addition cannot be made on mere suspicion how so strong the reasons of suspicion may be. Also, the appellant has paid interest on unsecured loans and has repaid the loan. Hon'ble Gujrat High Court in the case of Ayachi Chandrashekhar Narsangji (2014) 42 Taxmann.com 251 (Guj HC) has held that "it has also come on record that the said loan amount has been repaid by the assessee to Shri Ishwar Advani in the immediate next FY and the Dept has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tworthiness of the investor is duly established. The loan was repaid on 15.07.2017. Appellant has also paid interest of Rs. 95,342/- upto 3l.03.2014. ii. Envee Developers Private Limited (Rs. 50,00,000/- ):- 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. iii. Heena Shadija (Rs. 3,50,000/-):- 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. 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 alon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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. x. Ratna Shadija (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. The loan was repaid on 20.12.2014. Appellant has also paid interest 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 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. vii. Rahul Johri (Rs. 20,00,000/-):- 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 repaid on 04.07.2017. Appellant has also paid interest of Rs. 1,15,068/- upto 31.03.2014. viii. Rajesh Kumar Shadija (Rs. 3,00,000/-):- 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 repaid on 21....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in the case of Ayachi Chandrashekhar Narsangji (2014) 42 Taxmann.com 251 (Guj HC) wherein it was held as under: "It has also come on record that the said loan amount has been repaid by the assessee to Shri Ishwar Adwani in the immediate next FY and the Deptt has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of 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 impunged order passed by ITAT". 12. Thus, we find that loan party furnished the loan confirmation, copy of bank account and proof of filing of the return. By filing the above documents the assessee established the Identity of the creditor, genuineness of the transaction and creditworthiness of the creditor. Thus, the assessee had satisfied all the three conditions required for genuineness of the transaction. Our view is 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- A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he assessee could not controvert the finding of the ld. CIT(A) by bringing any positive material on record. Therefore, we confirm the finding of the ld. CIT(A) in this regard. Thus, ground no.1 & 2 raised in the appeal of the assessee are dismissed on the present issue. Accordingly, assessee's appeal for the assessment year 2012-13 and departmental appeals for the assessment years 2013-14 & 2014- 15 are dismissed. M/s. Om Construction, Bhopal In IT(SS)A No.64/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. 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. 1,55,50,000/- made by the Assessing Officer on account of unexplained unsecured loan." 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 del....