TaxTMI 
TaxTMI 
2022 (5) TMI 1402
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....atement recorded u/s. 132(4) of the Act. (2) Addition based on the statement recorded u/s. 132(4) of the Act and based on the loose paper found 2. The hearing of the appeals were concluded through audio-visual medium on account of Government guidelines and on account of prevalent situation of Covid-19 Pandemic. Both the parties have placed their written as well as oral arguments during this online hearing process. 3. In all these bunch of appeals, one issue is identical for being the alleged suppression of professional receipt. In the statement recorded for alleged disclosure and under dispute is based on the one bill book found at the time of search for the period dated 11-09-2016 to 07-11-2016 which is daily patient register in which the errors were found in recording the receipt. This bill book was seized as annexure AS exhibit -05 and patient register as annexure AS, exhibit-06. At the time of the search the assessee explained that the indoor patient receipts shown in the books was 75 % of the total amount as 25 % was given to the visiting doctors. This version of the assessee is interpreted that the receipt for all the past years is shown less @ 25 % and the sta....
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....on the basis of the statement can be made by AO without bringing evidence on record that suppressed receipt is more than that found in search.'' 6. To adjudicate on these appeals, material facts need to be noted for understanding the issue on hand. The assessee is senior citizen and senior most Gynaecologist Doctor by profession and running a hospital in the name of Rajasthan Nursing Home. She filed the original return of income u/s 139(1) on 18.09.2011 declaring total income of Rs.4,59,060/- for the A. Y. 2011-2012. 6.1 A search and seizure operation was caried out at the premises of the assessee on 11.11.2016 as per provision of section 132 of the Income Tax Act, 1961 [ Here in after referred to as " the Act" ]. 6.2 In response to notice issued u/s 153A she filed the return on 31.08.2018 declaring total income of Rs.4,76,960/-. The reason for difference in the return filed u/s. 139(1) & 153A is because income side of the assessee is increased by net Rs. 77,335/- and the expenses side is increase by 59,446/- on account of salary not booked earlier in the books of accounts based on the evidence found in the search. Thus, net increase of Rs. 17,893/- is added to net profit ....
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....s, receipt is shown less and income is shown less by 25% net. Accordingly, surrender of Rs.25,72,465/- for last 6 FYs which included Rs.3,51,415/- for the year under consideration was obtained in a statement recorded at the time of search. 6.6 After search assessee vide letter dated 14.03.2017 (PB 14-15) addressed to DDIT (Inv.), Jaipur retracted from the statement recorded under section 132(4) of the Act and clarified that: (i) In course of search, she stated that 75% of the total amount of indoor patient receipt is shown in the books of accounts as 25% was given to the visiting doctors but the same was wrongly interpreted and written in a wrong way in the statement and considered as receipt unrecorded in the books. (ii) The bills impounded relate to current financial year ( the year of the search ) whereas inference has been drawn as ifit was the normal practice in all earlier years. (iii) Upto 31.03.2016, the amount charged from the patient was fully recorded in the patient register and same amount of receipt was given to the patient. (iv) Only from Sept. 2016 some advance surgical procedures were undertaken for which outside doctor's h....
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....lls impounded relate to the FY 2016-17 whereas inference has been drawn as if it was the normal practice in all earlier years. However, the appellant in her statement recorded u/s 132(4) has categorically admitted that the practice of declaring less receipts in the bill book was followed since the last 6-7 years. In fact the appellant has herself admitted that the bill book was written by her in her own handwriting. (ii) The contention of the appellant that large amount was given to these doctors as their fees which were not entered into books as this amount was not received by the hospital is also not found acceptable in absence of any cogent evidence filed by the appellant in this regard. Further no such document was found during the course of search to prove the claim of appellant. (iii) There is plethora of judgment (as reproduced at Pg 13-16 of the CIT(A) order) which hold that the burden to prove the admission as incorrect is on the maker and in case there is a failure then the earlier statement of assessee is sufficient to conclude a matter. For any retraction to be successful in the eyes of law, the maker has to show as to how earlier recorded statements d....
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....easons as to why the statement given by assessee on this issue was misinterpreted and incorrectly written. The lower authorities have not accepted this retraction letter only because it has been filed after 4 months of search. However, after filing this letter neither the search party in post search proceedings nor the AO in course of assessment proceedings examined the assessee to ascertain the veracity of the retraction letter filed by her more particularly when she herself in the letter has requested to take the statement on oath in this matter. Hence, solely on the basis of statement which is not considered to be an incriminating material, no addition can be made. Reliance in this connection is placed on the following cases: PCIT &Ors. Vs. Anand Kumar Jain (HUF) (2021) 432 ITR 384 (Del.) (HC) The relevant para 8 is as under: 8. Next, we find that, the assessment has been framed under s. 153A, consequent to the search action. The scope and ambit of s. 153A is well defined. This Court, in CIT vs. Kabul Chawla (2015) 281 CTR (Del) 45 (2015) 126 DTR (Del) 130 (2016) 380 ITR 573 (Del): 2015 SCC OnLine Del 11554, concerning the scope of assessment under s. 153A, has....
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....ion 153A of the Act only on the basis of incriminating material discovered in the search and thus, denying the Revenue to assess the undisclosed income on the basis of other evidence or post search enquiries or investigations made during subsequent assessment proceedings. Dismissing the appeals of the Department, it was held in this case that the scope of assessment u/s 153A of the Act is limited to the incriminating evidence found during the search and no further. Smt. Aruna Sankhla Vs. DCIT, ITA No.483/JP/2016-order dated- 16.05.2019 (Jaipur) (Trib.) Where no incriminating material was either found or seized during the course of search and seizure action to indicate any undisclosed income on account of on money payment by the assessee for purchase of land, subsequent recording of statement of sellers by ACB after a gap of around two years from the date of search and consequential inquiry conducted by the AO during the assessment proceedings u/s 153A r.w.s. 143(3) of the Act wherein sellers have admitted on money receipt in respect of the land purchase by the assessee cannot be treated as incriminating material to justify the addition on account of on money when the asses....
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....t the decision of the CIT (A) to all the issues raised in all the three appeals does not call for any interference. Accordingly, grounds raised by the Revenue in all the three appeals are dismissed" CIT Vs. CJ Shah & Co. 117 Taxman 577 (Bom.) (HC) The facts of the case are that the seized material had indicated unaccounted sale for the period 3.9.96 to 4.12.96 i.e. for the three month period. The AO on that basis had estimated undisclosed profit for the entire block period at Rs.3.40 crores. The tribunal however deleted the addition on the ground that there was no material found indicating undisclosed sale for the period prior to the three months period. The order of tribunal was upheld, by the High Court by holding as under: "It is well settled that in cases where material is detected after search and seizure operations are carried out, the Assessing Officer is required to determine the undisclosed income. In such cases additions are generally based on estimates. In matters of estimation some amount of latitude is required to be shown to the Assessing Officer particularly when relevant documents are not forthcoming. However, it does not mean that the Assessing Of....
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....t 8.00 AM which continued till 11.15 AM. Thereafter assessee and her husband was taken to bank locker for operation and after that statement of assessee was again recorded on 12.11.2016 at 8.30 PM and of her husband at 8.45 PM on the same day which was concluded at midnight. Therefore, these statements cannot be said to be after proper rest. Further only because it was recorded in presence of two witness would not ipso fact mean that statement was voluntary and not under pressure. The fact of getting surrender by extracting pressure on assessee is also accepted by the courts/Tribunal in various cases. Some of these cases are as under: CIT Vs. Hiranand 272 ITR 626 (Raj.) (HC) In Para 16, Court observed as under: "It is difficult to appreciate, what to say, to accept this approach of the revenue officer only to concern with the augmenting of the revenue by all means and seldom to bother about the rightful claims made of the deduction from the gross income as a result of business loss. The Income tax officers are first also the citizens of the country. They are equally concerned to see and look into that whatever legally permissible deduction available are to be give....
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...., it cannot be said to be conclusive. An admission which stood retracted has to be weighed with reference to facts and circumstances of that case. This is also accepted by CBDT in Instruction No.286/2/2003 IT(Inv.) dt. 10.03.2003 where it was directed as under: Instances have come to the notice of the Board where assessees have claimed that they have been forced confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, 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. ....
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....ence but it is never conclusive. It is open to the assessee to explain or clarify under what circumstances it was made or to prove that what was stated did not reflect true state of affairs. Shri Nirmal Kumar Kedia Vs. DCIT ITA Nos. 124 to 126/JP/2019 order dt. 03.06.2019 (Jaipur) (Trib.) "From the record we found that except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee made undisclosed investment in jewellery. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. The department has no evidence/documents which prove that surrender in statement by assessee is correct, therefore the same cannot be relied upon. The Hon'ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala & Another (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is upon to the assessee to show that....
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....k for earlier period was found. The Ld. CIT(A) has given a finding that the contention of the appellant that large amount was given to these doctors as their fees which were not entered into books as this amount was not received by the hospital is also not found acceptable in absence of any cogent evidence filed by the appellant in this regard. On the same analogy, when no evidence of suppressed receipts as stated in the statement is found, the same in the absence of any cogent evidence cannot be accepted as sacrosanct. The assessee has retracted the statement by not simply filing the retraction letter rather explained how incorrect inference has been drawn from the statement given by her. After filing this letter before DDIT (Inv.), neither in the post search proceedings nor in the assessment proceedings she was examined with reference to this letter more particularly when she herself in the letter (PB 15) has requested to take the statement on oath in this matter. Therefore, in the absence of any incriminating material regarding suppression of receipt for the year under consideration, solely on the basis of this statement addition cannot be made. 6. Without prejudice to ....
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....ce that has been found in the search is for the particular period of around two month and even the same has been explained in detailed as to why there is such difference in the receipt recorded in the patient register and the bill book found for the said period. The Ld. AR further argued that now looking to the many experts team of doctors are available and to avoid the complication in birth of child it is the patient who insist the presence of various expert doctors at the time maternity of mothers and this is being their (patient ) instance this type of practice is followed for such cases and not in all and in past years. There is no dispute pending before us for the year under search and whatever income earned on the evidence found at the time of search has reached to the finality and the only dispute is pending about applicability of the statement without any supportive evidence for past years. The Ld. AR stated that the doctor replied instantlyat reply to question no 12 wherein she has confirmed that this record has been kept for last some period. Thus, there is no afterthought so far as related to the record under question. The difference in bill book and patient register is ....
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....r and whatever mistake assessee has observed has already been taken care of, considering the evidence found at the time search The AO has not observed any single defect on that additional disclosure offered while filling the return u/s. 153A of the Act. Even the regular receipt that she has offered for all these years is on increasing trend. She is a senior citizen and practicing since long and her regular tax compliance in past cannot be brushed aside merely on a statement which has been placed along with the evidence on record. The statement of the assessee misunderstood so as to convey the content or the meaning that she intends to communicate. Therefore, looking to all these aspects and looking to the facts that in the absence of clear evidence for the past year, receipt @ 25 % cannot be added. The benefit of doubt based on the arguments advanced before us goes in favour of the assessee and it is evident that there was no such practice in past found based on the evidences found at the time of search. Her compliance and disclosing the additional income disclosing a sum of Rs. 29,44,800 in PMGKY, wherein she has disclosed a sum which is higher than the addition under dispute for ....
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....ded u/s. 132(4) dt. 12.11.2016 by not appreciating the fact that once the statement stood retracted and no evidence of suppressed receipt was found for the year, no addition on the basis of statement can be made by AO without bringing evidence on record that there is actually any suppressed receipt in the year under consideration. 2. The Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 27,500/- treating it as expenditure from undisclosed source ignoring that some is dully verifiable from the revised capital account filed with the return of income filed in response to notice u/s. 153A. 3. The Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 75,000/- for the amount duly recorded in the capital account of assessee without any incriminating material found in search which is beyond the scope of assessment u/s. 153A. 13.1 This ground No. 1 raised by the assessee is similar to the ground that has been raised by the assessee in ITA No. 198/JPR/2021 and finding of this ground is equally applies to this ground and hence, the decision taken in ITA No. 198/JPR/2021 shall apply mutatis mutandis in the appeal of the a....
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....Ld. CIT(A) failed to consider that the assessee has already shown sufficient income and the investment made is duly explained and no separate addition is required looking to the following facts:- 1. The Ld. DR has relied on the findings of the lower authorities and also stated that there is no direct evidence that the assessee has in fact made investment from that income and in the absence of that evidence the addition made is required to be sustained. 2. There is no dispute that the additional income is not disclosed by the assessee in the year under consideration, as argued by the Ld. AR of the assessee that this additional income was available before the assessee and the income and its utilisation both cannot be taxed in the hands of the assessee and in fact that the expenses is of the same year is not disputed by the DR but merely the same is not explained in the original return is the contention of the DR. Therefore, he has requested not give the benefit of the setoff against the additional income declared in the return of income filed in response to notice u/s. 153A.The Ld. CIT(A), however, held that assessee has filed the revised capital account with the re....
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.... plot of land at Bagru which was purchased in earlier years. Accordingly, the cost of land is debited in the capital account and sale proceeds of land are credited in the capital account. Thus, the source of capital introduced during the year is fully verifiable. 15.3 The Ld. CIT(A) held that assessee has not filed any cogent evidence in this regard to justify her claim of sale of land at Bagru neither during the course of assessment proceedings nor during the course of present appellate proceedings. In fact, the claim of the assessee that the cost of land at Bagru is debited in the capital account and sale proceeds of land is credited in the capital account is not found to be correct in view of the fact that no such amount has been debited to the capital account. Further this fact was never raised by the assessee before the AO and therefore a fresh claim made in the present proceedings without any cogent evidence is not found acceptable. The assessee has filed the revised capital account with the return of income in pursuant to notice u/s 153A. In the capital account filed with the original return of income, no such amount is reflected and therefore, the claim of the assessee i....
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....ebited in the capital account and not in the year under consideration.In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. 15.5 The ld. DR has relied upon the order of the lower authorities and stated that there is no explanation of the assessee about this credit reflected in her capital account. 15.6 We have heard the rival contentions and perused the materials available on record. During the course of hearing, the ld. AR of the assessee has drawn our attention to the revised capital account and original capital account wherein the credit of Rs. 75,000 is appearing in both the capital account. Thus, the findings of the lower authorities are incorrect on facts so far as to the contention that the same was in the revised capital account is incorrect that credit is already appearing in the old capital account already filed in the original return of income. Thus, the contention of the DR and lower authorities is incorrect that the same is filed or claimed or credited in the revised capital account is in fact not so, and thus in the absence of any incriminating material in respect of this credit the addition of credit already reflected in the original ret....
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.... expenditure by allowing set off against the supressed receipt confirmed during the year but not of previous year. 17. Apropos Ground no. 1, this ground raised by the assessee is similar to the ground that has been raised by the assessee in ITA No. 198/JPR/2021 and finding of this ground is equally applies to this ground and hence, the decision taken in ITA No. 198/JPR/2021 shall apply mutatis mutandis in these appeals of the assessee for ground no 1 and thus, the Ground No. 1 raised by the assessee in ITA No. 203/JPR/21 for assessment year 2016-2017 is allowed. 18. Apropos ground No.2, the AO observed that at Page 19 of Annexure AS-3 (reproduced at page no. 16 of the assessment order), papers relating to purchase of jewellery dated 29.12.2015 of Rs.4,03,000/- were found. The explanation of assessee that it was estimate of jewellery which was not materialized and not purchased is considered as unacceptable as this paper was found and seized from the premises of assessee and found kept with proper care. Accordingly, AO made addition of Rs.4,03,000/- by treating it as unexplained investment u/s 69C of IT Act, 1961. 18.1 The Ld. CIT(A) held that page 19 of Annexure AS 3 is a ....
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....tted that the slip is found very safely wherein the date, mobile number weight and items purchased is clearly mentioned and therefore the ld. DR has relied upon the order of lower authorities and vehemently argued that these items were purchased by her from her unaccounted sources and therefore the same should be sustained. 18.4 We have heard the rival contentions and perused the material available on record. The DR has not disputed the fact that of the AR of the assessee that these ornaments are not found in the course of search in the absence of the assets it self at the time of purchase there is no case rest with the department that the assessee has made purchase and invested the said amount in the jewellery as unaccounted purchase chargeable to tax u/s. 69C of the Act. Not only that there is no details mentioned about the terms of the payment received, receivable or details of payment and its mode to be executed on this paper heavily relied upon by the department. Thus, in absence of the impugned asset being not available at the time of search the contention of the department has no force and there is no reasons so as to believe the arguments placed by the AR of the assessee....
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....om the revised capital account prepared. In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. 19.3 The ld. DR has vehemently argued that the findings of the AO and ld. CIT(A) are both based on the business practice followed for not showing the correct value of the assets purchased not only that both the amount separately shown in these paper and therefore he relied upon the findings of the lower authorities and prayed to confirm the addition at Rs. 1,29,000/-. 19.4 We have heard the rival contentions and perused the material available on record. Looking to the bills and receipt shown and attached to assessee's paper book at page 21-22 ( which is page 16 & 17 of the seized annexure) it is clear that the price of the fridge is Rs. 80,000 as the same has been paid by the assessee and signature of the person accepting that money is written and page 16 being the purchase bill consisting of cash memo which is for Rs 49,000/- this being read with the loose receipt it is not separately shown that bill amount of Rs. 49,000/- already given by the assessee. In absence of this details, the cost cannot be considered more than what is confirmed by the party in roug....
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....urce of payment is explained is not found acceptable as on perusal of the capital account, no such amount is discernible. Accordingly, he confirmed the addition of Rs.30,800/- made by the AO. 20.2 During the course of hearing, the Ld. AR of the assessee stated that page 2 of Annexure AS-1 indicate that assessee made payment of Rs.30,800/- on 01.05.2015 to Ratna Constructions in full and final settlement of construction work of basement flooring of Plot No.52/181, VT Road, Mansarovar, Jaipur. This payment is duly verifiable from the capital account of assessee (PB 42). Thus, the source of payment is explained. The Ld. CIT(A) has wrongly held that this amount is not reflected in the capital account of assessee. 20.3 On the other hand, the ld. DR has heavily relied on the orders of the lower authorities. He has not controverted the fact of revised capital account placed on record. 20.4 On the contrary the Ld. AR of the assessee argued that since, the assessee has already owned that the payment made is considered in the revised capital account filed and the source of this payment is duly offered in the form of the additional income for the year under consideration no separate ....