TaxTMI 
TaxTMI 
2022 (4) TMI 149
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....ming the addition of Rs. 4,00,00,000/- as unexplained cash payments under the facts and circumstances of the case. 4. The authorities below failed to appreciate the fact that the memorandum of understanding with M/s. Shubham Ispat Pvt. Ltd. did not materialise and consequently erred in treating the sum Rs. 4,00,00,000/- as unexplained cash payments under the facts and circumstances of the case. 5. The learned CIT(A) erred in confirming the addition of Rs. 30,00,000/- as unexplained cash credits under the facts and circumstances of the case. 6. Without prejudice the addition made is wrong and requires to be made as Nil on the facts of the case. 7. Without prejudice, the authorities below ought to have worked out the peak credit before quantifying the unexplained credits under the facts and circumstances of the case. 8. The orders of the authorities below are bad in law as the mandatory conditions to invoke the jurisdiction did not exist, or having not been complied with an consequently the orders of the authorities below are bad in law for want of requisite jurisdiction. 9. The appellant denies himself liable to be assessed under....
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....dice, the interest levied under sections 234A, 234B and 234C of the Act requires to be waived off under the facts and circumstances of the case. 14. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 15. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed in the interest of justice and equity." 3. Further, the assessee has raised the following additional grounds:- "1. The authorities below are not justified in not affording an opportunity to cross examine the third parties whose statements were used against the appellant, which is against the principles of natural justice and thus the orders of the authorities below are liable to be quashed in the interest of equity & justice. 2.a) The authorities below failed to appreciate that the appellant is merely one of the parties to the agreement with M/s. Shree Shubham Ispat Pvt. Ltd. and thus the entire addition of Rs. 4,00,00,000/- as unexplained cash payment in the hands of the appellant is unjustified under the facts & circumstances of the case. b) ....
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....pect and satisfy itself that the said search was valid and legal. It is further held by the Hon'ble Court that valid search is sine qua non initiating proceedings under special chapters of assessment. It is further submitted that the learned assessing officer erred in not following the decision of the Jurisdictional High Court and hence the order passed by the assessing officer needs to be quashed on this ground alone in the interest of equity and justice. 8. The ld. AR further submitted that the AO has mentioned at page 8 of the order that the prior approval of the Additional Commissioner of Income Tax, Central Range-2, Bangalore was obtained vide letter F. No. 51(3)/Addl. CIT-CR-2/12-13 dated 30.03.2013 before passing the assessment order. The AO pointed out that the assessment order has been passed on 19.03.2013 and thus no approval could have been obtained on 30.03.2013 before passing the assessment order which is factually incorrect. The ld. AR submitted that the copy of the approval obtained from the Additional Commissioner has not been provided to the appellant which is against the settled principles of natural justice and thus the order needs to be cancelled on this ....
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.... appellant in co-operating with the department whereas the AO states that the appellant was non-cooperative. This clearly establishes that the assessment was not completed in a fair manner and the AO acted in an arbitrary manner and completed the assessment merely on suspicion and surmises rather than relying on facts and evidence and thus it is prayed that the order of assessment be set aside on the grounds of non-application of mind and also for being against principles of natural justice, reasonableness, fair-play and equity. 12. He mentioned that the Officer issued another Notice under section 142(1) of the Act on 15.03.2013 as per which the appellant had to furnish certain details by 21.03.2013. The notice was served on the appellant only on 23.03.2013 and the appellant filed the reply on 26.03.2013 i.e. within a short span of two days. It is clear from the notice dated 15.03.2013 that details had to be filed by 21.03.2013 whereas the AO passed order on 19.03.2013 which is against the settled principles of natural justice. This indicates and proves beyond doubt that the assessment was conducted in an arbitrary manner, without regard to the facts of the case, basic principle....
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....ciples of natural justice and thus the order needs to be set aside on this count alone. 17. On the other hand, the ld. DR submitted that the assessee cannot question the validity of search by issue of notice u/s. 153A and consequent framing of assessment. He relied on the decision of Delhi High Court in the case of MB Lal v. CIT, 279 ITR 298 (Del) wherein it was held that the validity of search proceedings cannot be examined in appeal filed before the Tribunal against the block assessment and the remedy lies under article 226 of the Constitution. In Paras Rice [2009] 313 ITR 182, the Punjab and Haryana High Court following the decision of the Delhi High Court in M.B. Lal's case [2005] 279 ITR 298, held that while hearing an appeal against the order of assessment, the Tribunal cannot go into the question of validity or otherwise of any administrative decision for conducting search and seizure. In the matter of Gaya Prasad [2007] 290 ITR 128 (MP), it has been held that the jurisdiction exercised by the statutory authority while hearing an appeal cannot enter into the justifiability of an action under section 132A. Whether the order passed by the Commissioner of Income-tax is w....
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....icate upon issue relating to validity of search conducted under section 132 while disposing of appeal against block assessment. 18.1. Further the Hon'ble Supreme Court in the case of N.K. Jewellers Vs. CIT, New Delhi (2017) 85 taxmann.com 361(SC) held that in view of the amendment made in section 132A by Finance Act, 2017, the reason to believe or reason to suspect as the case may be, shall not be disclosed to any person or any Authority or Appellate Tribunal as recorded by income Tax Authority u/s. 132 or section 132A. We, therefore, cannot go into that question at all. 18.2. The Hon'ble Jurisdictional High Court in the case of Prathibha Jewellery House Vs. CIT (2017) 88 taxmann.com 94 (Karnataka) dismissed the writ petitions and held that even the law has been amended by insertion of the aforesaid Explanation by Parliament in Section 132 of the Act by the Finance Act, 2017 with retrospective effect from 1.4.1962. The Court held that the Explanation also prohibits the Appellate Authorities to go into the reasons recorded by the concerned Income Tax Authority for directing Search against the assessee or tax payer. The relevant portion of order is reproduced below:- ....
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....t payee cheque by M/s. Eagle Traders. He further stated that since reliance is being placed on the third party statement, he must be given opportunity to cross examine them. The AO didn't agree with the arguments of the appellant for the following reasons:- (1) The reiteration of the fact that Rs. 1,00,00,000/- has been paid by cheque by M/s. Eagle Traders and Logistic [ETL] does not prove the source of cash payment of Rs. 4,00,00,000/-. (2) The assessee's contention that Rs. 4,00,00,000/- did not yield any income owing to the cancellation of the said MOU does not hold waters because the question here is not income arising out of the said MOU, but the source of cash of Rs. 4,00,00,000/-, considering the fact that the said Rs. 4,00,00,000/- is not reflected in the books of accounts of the assessee. However, by the above submission of the assessee, it is principally agreed by the assessee that Rs. 4,00,00,000/- has been paid in cash. (3) The request for opportunity to cross examine the third parties also does not hold water because the primary evidence in respect of cash payment of Rs. 4,00,00,000/- is the MOU dated 17.08.2009 which is duly signed b....
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....mstances of the case. 23. The ld. AR submitted that the authorities below failed to appreciate that the appellant did not make any payment in cash and added entire amount of Rs. 4 crores by holding that the appellant had confirmed the payment of Rs. 4 crores by signing the said MOU. This finding of the authorities is contrary to the facts & circumstances of the case. It is submitted that the appellant had contended before the learned CIT(A) that only a sum of Rs. 1 crore was paid through cheques and no payment in cash was ever made by the appellant to SSIPL. The CIT(A) did not take cognizance of the submissions made by the appellant. Therefore, the addition made by the AO of Rs. 4 crores as unexplained cash payment needs to be deleted under the facts & circumstances of the case. 24. Without prejudice, it is submitted that as per the MOU each of the second parties i.e. the appellant, J N Ganesh, Shaju Nair and H M Guruprakash were required to contribute 25% of the contracted amount for making payment to M/s. Shree Shubham Ispat Pvt. Ltd. and therefore the addition of entire amount of Rs. 4 crores in the hands of the appellant is unwarranted under the facts and circumstances of....
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....of principles of natural justice. Reliance is placed on the decision of the Supreme Court in the case of Andaman Timber Industries vs. CCE, reported in 127 DTR 241. 30. It is further submitted that, the AO has relied on the statements recorded from Mr. Kamal Kumar Jain. However, he officer did not provide the said statement to the appellant to rebut the evidence used against him. This action of the AO is opposed to all known canons of the settled principles of natural justice and thus it is prayed that the orders of the authorities below needs to be quashed on this count alone in the interest of equity and justice. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of Kishinchand Chellaram vs. CIT reported in 125 ITR 713. 31. On the other hand, the ld. DR relied on the orders of lower authorities. 32. We have heard both the parties and perused the material on record. In this case, there was a search action on 2.10.2010 u/s. 132 of the Act at the assessee's premises and certain incriminating documents were found. Originally notice u/s. 153A dated 14.11.2011 was served on the assessee, however, assessee did not comply with the notice. Subsequ....
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.... 34. Now the contention of the ld. AR is that the statement recorded from other parties were not confronted to assessee inspite of specific requests by assessee and also no cross-examination was provided to the assessee. As such the addition is bad in law. 35. In our opinion, there is no question of providing cross-examination of third parties because the primary evidence for addition of 4 crores is MoU dated 17.8.2009 which is duly signed by assessee himself and confirmed that assessee has paid 4 crores in cash. More so, the presumption u/s. 292C is that where any books of accounts, other documents, money, bullion, jewellery or other valuable article or thing is found in the possession or control of any person in the course of search, it may be presumed that:- i) they belong to such person; ii) the contents of such books of accounts and other documents are true; and iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person....
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....lower authorities are justified to infer that payment was made exclusively by the assessee itself. 39. The next argument of the ld. AR is that the lower authorities have not granted opportunity to cross-examine various parties involved in this transaction. In this case, lower authorities have not placed any reliance on the statement recorded from various persons to sustain the addition of 4 crores. The addition was solely based on MoU found during the course of search action and it is not based on statement from various persons. Being so, there is no question of providing any cross-examination to the assessee in this case. 40. The assessee relied on various case laws. These decisions do not have any relevance at this stage since AO had not solely relied on the statement of parties to make such addition of 4 crores in the case of assessee. Accordingly, these case laws are not considered. 41. Finally considering the totality of facts and circumstances of the case, we are of the opinion that lower authorities are justified in bringing to tax an amount of 4 crores paid by assessee to Kiran Kumar Jain and Mahendra Kumar Jain. This ground of the assessee is dismissed. 42. The....
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....sed (Annexure - A). The assessee has not furnished such reconciliation." 45. In view of the above and the fact that AIS details clearly shows that the appellant has made a deposit of Rs. 30 lakhs in cash, the CIT(Appeals) that the appellant has not given the correct bank details or the break up of bank account balance and upheld the addition made by the AO. 46. The ld. DR supported the orders of lower authorities. 47. We have heard both the parties and perused the material on record. The contention of the ld. AR is that the alleged cash deposits were not made in the account assessee, as such it cannot be taxed in the hands of assessee. More so, the remand report by AO dated 28.4.2015 is not furnished to assessee for his comments wherein the AO himself confirmed that cash deposit of Rs. 30 lakhs was found in the Axis Bank account No. 267010100005906, therefore addition of 30 lakhs merely on the basis of assumption and surmises deserves to be deleted. The AO in his remand report stated that assessee has not furnished all his bank accounts tallying with closing balance as on 31.3.2010 at Rs. 11,44,112. However, the details of various bank accounts were not furnished to AO, as....
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.... same is not provided to the appellant which is in violation of the settled principles of natural justice and thus the order of assessment needs to be set aside. 9. The order of assessment suffers from the want of application of mind by superior authorities before granting approval under the facts and circumstances of the case. 10. The appellant denies himself liable to be levied to interest under sections 234A, 234B and 234C of the Act and further the computation of interest was not provided to the appellant as regard to the rate, period and method of calculation of interest under the facts and circumstances of the case. The appellant expressly urges that the period of levy of interest is not in accordance with sections 234A, 234B and 234C of the Act. 11. Without prejudice, the interest levied under sections 234A, 234B and 234C of the Act requires to be waived off under the facts and circumstances of the case. 12. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 13. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the....
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....lf that as per assessment order's last page, it is explicitly mentioned that the order has been passed after taking prior approval of Addl. CIT, Central Range-2, Bangalore vide letter dt. 30.3.2013. Hence the assessment order has been passed after the approval of Addl. CIT, Central Range-2, Bangalore. The D&CR entry for the demand was made on 30.3.2013 which is also after the receipt of approval by the Addl. CIT, Central Range-2, Bangalore. Hence the date of assessment order may be read as 30.3.2013, since the same is only a typographical mistake. The very mention of fact of approval of Addl. CIT, Central Range-2, Bangalore dt. 30.3.2013 and the date of booking of demand in D&CR on 30.3.2013 clearly proves that the order has been passed only after prior approval of the Addl. CIT, Central Range-2, Bangalore on 30.3.2013. Hence it is _'inadvertent typographical mistake." 57. In view of the above, it is to be noted that the mistake pointed out by the assessee is a typographical error and prior permission has been taken from the Addl. Commissioner. Hence there is no merit in the grounds of the assessee and accordingly dismissed. 58. Regarding validity of search a....
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....y are backed by tangible evidence admissible in the court of law. Thus, when the appellant has clearly stated that the statement made on 25.10.2010 was on a wrong appreciation of facts and moreover when the sources of cash found during search is explained trough documentary evidence, the addition made is not warranted and thus needs to be deleted on the facts of the case. 61. The CIT(Appeals) observed that the appellant has no evidence to support his claim and the onus is on him to prove with tangible evidence. It is also important to note that initially he had stated that the money belongs to his father in law in a statement recorded u/s. 132(4) and only subsequently, he changed his statement to suit his convenience. Statement recorded u/s. 132(4) is recorded under oath. It has far more evidentiary value than a letter written by the appellant. The statement recorded under oath u/s. 132(4) cannot be retracted ordinarily unless the appellant conclusively proves that it was a wrong statement on wrong understanding of facts or law or it has been recorded under threat, force or coercion. In the case of B. Kishore Kumar 62 taxmann.com 215 (SC), the SLP was dismissed against High Cour....
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....ts to say that statement u/s. 132(4) has no evidentiary value. All the judgments relied by the assessee were delivered under different set of facts which cannot be applied to the present case. In the present case, the assessee other than taking a different plea at different stage, he has not brought any material on record to suggest otherwise that physical cash found during the course of search was not belonging to the assessee. There is also no evidence to suggest that cash withdrawn from ETLL was unused and kept with the assessee idle though repeatedly withdrawals were made one after the other. As per the provisions of section 292C, presumption is that cash found during the course of search belongs to assessee and burden is on the assessee to prove otherwise. Being so, we do not find any infirmity in the lower authorities bringing the cash found during the search to tax in the hands of assessee as unexplained cash. Therefore this ground of the assessee is rejected. 65. The next ground is regarding unexplained jewellery of Rs. 36,03,938. Jewellery weighing 1296.560gms was found in the residential premise of the appellant which was valued at Rs. 36,03,938/-. Though the appellant....