TaxTMI 
TaxTMI 
2024 (2) TMI 746
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.... No. 22/GTY/2023 in the case of Aroma India Private Limited:- (i) For that the Ld. CIT(Appeal) has erred in law in not using the statement under section 132(4) of the Act as an evidence in the proceedings of the Income Tax Act, 1961 in view of judicial pronouncements in the following cases: - a. C.I.T. Vs. MAC Public Charitable Trust (2022) 144 taxmann.com 54 (Madras) b. Thiru. A.J. Ramesh Kumar Vs. D.C.I.T. (2022) 139 taxmann.com 190 (Madras) (ii) For that the Ld. CIT(Appeal) had erred to in law in accepting the retraction ignoring the fact that the assessee did not do so for the period from 26.02.2019 to 06.12.2019, which is clearly an afterthought. (iii) For that the Ld. CIT(Appeal) has erred to allow the assessee in estimating an income of Rs. 8,33,000/- only (disclosed amount of Rs. 1,00,00,000/- shown in return U/s. 153A - Rs. 91,67,000/- amount recorded in incriminating document seized) on account of omissions and commissions totally ignoring that the estimate ought to have been at Rs. 10,08,33,000/- (Rs. 11,00,00,000, disclosed amount U/s. 132(4) - Rs. 91,67,000/- amount recorded in incriminating document seized) on account of om....
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....ave to submit any other ground or alter or amend or reframe any or other ground of appeal. 3. As the issues involved in all these appeals are mostly common, they were heard together and are being disposed off by way of this common order and for the purpose of adjudication, we at the request of both the parties take Aroma India Private Limited in ITA No. 22/GTY/2023; Assessment Year 2019-20 as the lead case and our the decision shall apply mutatis mutandis on the similar issue raised in the case of Leade Liquor Manufacturing Pvt. Ltd. in ITA No. 21/GTY/2023; Assessment Year 2019-20. 5. Brief facts of the case are that the assessee is a Private Limited Company. It had filed original return of income for the assessment year 2019-2020 on 31.10.2019 disclosing total income at NIL after claiming deduction of Rs. 4,74,02,782/- under Chapter VIA of the Income Tax Act, 1961. However, the income U/s.115JB was shown at Rs. 5,10,13,075/-. There was a search in the case of the assessee on 26/27-02-2019. In course of the search the statement of the appellant's director Shri Amit Kumar Jain was recorded on 26/27-02-2019 u/s.132(4) of the Income Tax Act, 1961. While recording his statement, ....
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....10000000/- 6. M/s. M.S. Aromatic 2018-2019 Rs. 10000000/- Total Rs. 250000000/- Given along with the retraction statement vide affidavit dt.06/12/2019 Sl. No. Name of the person Additional income surrendered Financial year 1. Aroma India Pvt. Ltd Rs. 1,00,00,000/- 2018-19 2. Leade Liquor Manufacturing Pvt. Ltd Rs. 75,00,000/- 2018-19 3. Smt. Mayuri Jain Rs. 50,00,000/- 2018-19 4. Amit Kumar Jain Rs. 50,00,000/- 2018-19 Total - Rs. 27,50,00,000/- 5.1. Referring to the above details, it was submitted on behalf of the assessee that addition for the instant year could have been made only on the basis of incriminating material found during the course of search. However, the ld. Assessing Officer was not satisfied and he, without specifically referring to any incriminating material and merely relying on the statement given u/s 132(4) of the Act, made the alleged addition of Rs. 10 Crores and completed the assessment on 18.09.2021 u/s.143(3) of the Income Tax Act, 1961 at a total income of Rs. 11,21,84,530/-. While making the assessment, the assessing officer has made the f....
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....red to any other material or evidence which would prove earning of any Additional Income by the Appellant. e. That, from a perusal of the impugned Assessment Order and the Submissions filed by the Appellant, it is seen that no enquiry seems to have been made by the Officers of the Investigation Wing or even by the Assessing Officer as to the nature or the source of the impugned Undisclosed/Additional Income. f. That, from a perusal of the impugned Assessment Order and the Submissions filed by the Appellant, it is seen that the impugned sole addition of Rs. 10,00,00,000/- owes its genesis ONLY to the purported admission of Additional Income by the Appellant. g. That, from a perusal of the impugned Assessment Order and the Submissions filed by the Appellant, it is seen that the impugned addition of Rs. 10,00,00,000/- is not ascribed to any incriminating document, loose paper or evidence found during the course of Search in the case of the Appellant or even from the premises of "any other person", during the course of Search or Survey conducted in the case of such other person pertaining to the "S.K. Jain Group". h. That, from a perusal of the impug....
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....Appellant vide his Submissio Dated 08/09/2021 explained to the Assessing Officer that the computation of the Additional Income admitted by the Director of the Appellant i.e. Shri Amit Jain vide his Disclosure Letter Dated 25/03/2019 was made on adhoc/estimated basis. However, the Assessing Officer has not brought on record any material which would have dispelled the contention of the Appellant. m. That, the director of the Appellant i.e. Shri Amit Jain and his other family members had retracted their respective Statements via separate Affidavits Dated 16/12/2019 duly sworn in before the Notary Authority(s). n. That, in the aforesaid retraction Letters, the Director of the Appellant i.e. Shri Amit Jain has contended that the Appellant and other family members of Shri Amit Jain (i.e. the father as well as the sibling of Sh. Amit Jain) were made to confirm and re-confirm the disclosure of Additional Income of Rs. 25,00,00,000/- in their various statements recorded during the course of Search and during the course of post Search Investigations. o. That, by not offering the aforesaid impugned Income of Rs. 10,00,00,000/- in his Return of Income for the impugne....
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....e contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention." (iii) In the case of Gajjam Chinna Yellappa and Ors.vs. ITO [(2015) 370 ITR 671 (AP)], it was held/averred, as follows, by the Hon'ble Andhra Pradesh High Court: "9. The Act empowers the Assessing Officers or other authorities to record the statements of the assessees, whenever a survey or search is conducted under the relevant provisions of law. The statements so recorded are referable to section 132 of the Act. Sub-section (4) thereof enables the authorities not only to rely upon the statement in the concerned proceedings but also in other proceedings that are pending, by the time the statement was recorded. 10. If the statement is not retracted, the same can constitute the sole basis for the authorities to pass an order of assessment. However, if it is retracted by the person from whom it was recorded, totally different considerations altogether, ensue. The situation resembles the one, which arises on retraction from the statement....
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....Order dated 30/08/2022] 10. The learned CIT(A) dealt with the statement of Shri Amit Kumar Jain, director of the appellant company recorded on 26/27.02.2019 at his residence. Question No. 19 put to Shri Amit Kumar Jain and his reply as referred to at page no. 7, 8 and 9 of the assessment order is reproduced below: - "19 As you are aware, a search and seizure operation has been conducted on 26.02.2019 on the following group concerns where you are associated in - a) M/s Aroma India Pvt. Ltd. b) M/s Bhairavi Infrastructure Pvt. Ltd. c) M/s M.S. Concrete Pvt. Ltd. d) M/s Milestone Beverages Pvt. Ltd e) M/s Milestone Concretes Pvt. Ltd. f) M/s Sunshine Aromatic Pvt. Ltd g) M/s Welcos Insurer & Consultant Pvt. Ltd. h) M/s Conpro Industries i) M/s Jalshakti Plastic Industries j) M/s Lifeline Clean Technology k) M/s M.S. Aromatics l) M/s Madhushree m) M/s Milestone Coke n) M/s Medsave Insurer TPA Pvt. Ltd. o) M/s Leade Liquor Manufacturing Pvt. Ltd. p) M/s Oaken Gold Bottling Pvt. Ltd. q) M/s Manobal Vinimay Pvt. Ltd. ....
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....ll such amounts when added up shall not be less than the voluntarily disclosed amount of Rs. 25 (twenty-five) Crores. Since the surrender has been made by me voluntarily, I request that no penal/ prosecution proceedings be initiated against us." 10.1. The ld. CIT(A) observed that in reply to Q. No. 19 of his statement Shri Amit Jain states that as "Yes, I agree that, as informed by the you" [in other words as informed by the Officer who was recording the Statement of Sh. Amit Kumar Jain] many records and documents were found and either seized or impounded from the places where the businesses of M/s. Aroma India P. Ltd., M/s. Bhairavi Infrastructure P. Ltd., M/s. M.S. Concrete P. Ltd., M/s. Milestone Beverages P. Ltd., M/s. Milestone Concretes P. Ltd., M/s. Sunshine Aromatic P. Ltd., M/s. Welcos Insurer & Consultant P. Ltd., M/s. Conpro Indusrtries, M/s. Jalshakti Plastic Industries, M/s. Lifeline Clean technology, M/s. M.S. Aromatics, M/s. Madhushree, M/s. Milestone Coke, M/s. Medsave Insurer TPA P. Ltd., M/s. Leade Liquor Manufacturing P. Ltd., M/s. Oaken Gold Bottling P. Ltd., M/s. Manobal Vinimay P. Ltd., M/s. Corobus Alchobrew Products P. Ltd., M/s. Wallendorfer (Assam) P. L....
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....rections have been given to the Assessing Officer that they should rely upon the evidence and material gathered during the course of search and survey for making additions and framing assessments and the statement or confession taken during the course of search or survey do not serve any useful purpose without any corroborative evidence. Reliance was also placed on various decision of the co-ordinate benches of the ITAT adjudicating similar issues wherein it has been consistently held that in search assessments, additions cannot be made merely on the basis of statement given u/s 132(4) of the Act and reference has to be made to the incriminating material found or seized during the course of search. 14. We have heard rival contentions and perused the record placed before us and carefully gone through the decisions relied upon by both the sides. The issue for our consideration is whether the ld. CIT(A) has rightly deleted the addition made by the Assessing Officer based on the voluntary disclosure made by the key person of the assesse group during the course of search which has subsequently been retracted. We observe that a search action was carried out in the group cases of SK Ja....
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....e of the search to that effect. Also, there is no link or nexus to the aforesaid disclosure of Rs. 25.00 crores to any document/material found during the search. The said disclosure of Rs. 25.00 crores was made on adhoc/ estimate basis at the instance of the Authorized Officer who took his aforesaid statement. It may be pertinent to state that the search at his residence was concluded immediately after he made the aforesaid disclosure and thereafter no search proceedings was continued. 4. That the search in our group had taken place at various places i.e. at the residence of our director, Shri Amit Kumar Jain at Guwahati; at the residences of Shri. Shanti Kumar Jain at Rajapara and flat at Subham Greens, Lokhra, Guwahati (father of Shri. Amit Kumar Jain); the factory of M/s. Leade Liquor Manufacturing Pvt. Ltd at Kolkata; at our Bangalore Residence; at our factory premises at Amingaon, Guwahati; at our office at "Sanmati Plaza", G.S. Road, Guwahati; factory of M/s. M.S. Concrete at Rajapara; Factory of M/s. Supertech Cornbit Industries at Adokgre, North Garo Hills, Meghalaya; Factory premises of M/s. M.S. Aromatic, Dhupguri, Singra; Factory of M/s. Oken Gold Bottl....
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....isclosure in his subsequent statements recorded on 02.04.2019 and 22.04.2019 just to ensure that he stuck to the disclosure of Rs. 25,00,00,000/-. Similarly, his father Shri Shanti Kumar Jain, his brother Shri Sumit Kumar Jain and Shri Haridas Saha were also made to confirm the statement made by him. This was ostensibly done as there was no document/material to support or corroborate such a huge disclosure. Even he had to disclose an income of Rs. 8,50,00,000/- for M/s. Leade Liquor Manufacturing Pvt. Ltd., a company, of which he was not even a director. 8. That subsequently, on receipt of photocopies of seized documents some times in May'2019, we had analyzed the seized documents. However, there was nothing to support/co-relate/corroborate such a huge disclosure of Rs. 25,00,00,000/- which he was compelled to make as aforesaid. 9. That the aforesaid disclosure of Rs. 25,00,00,000/- which he was compelled to make by the Authorized Officer is ex-facie incorrect and contrary to the materials on record. 10. That since his aforesaid statements dated 26.02.2019, 02.04.2019 and 22.04.2019 made U/s.132(4) of the Income Tax Act, 1961 given by him were neither vol....
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....total income of the Appellant meaning thereby that out of the so-called "total surrendered amount" of Rs. 11,00,00,000/-, since the Appellant had already offered the sum of Rs 1,00,00,000/- for taxation, the remaining/additional amount of Rs. 10,00,00,000/- was being added to the total income of the Appellant. That being the scenario, if the Assessing Officer had material evidence (as reproduced in the impugned Assessment Order) of only Rs. 91.67 Lacs, then that amount was already telescopically subsumed in the amount of Rs 1,00,00,000/- which the Appellant had already offered for taxation. In that event, the Assessing Officer was not justified in making the addition of the remaining/additional amount of Rs. 10,00,00,000/-." ................................................................................... "General references by way of unsubstantiated statements about incriminating material (i.e. the material evidence against the Appellant) having been present cannot lead to the assumption that incriminating material (i.e. the material evidence against the Appellant) was indeed present and the Appellant had unaccounted income as per the imaginary incriminating ma....
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....uthorities from taking confession under section 132(4) of the Income Tax Act. There are a large number of decisions which suggest that without corroborating evidence, addition ought not to be made on the basis of a declaration made under section 132(4) of the Income Tax Act. 18. During the course of hearing, the learned D.R. has submitted that there was a delay in retraction of the statement by Shri Amit Kumar Jain. The statement U/s.132(4) was recorded by him on 26/27- 02-2019 which was retracted on 06-12-2019. Thus, it was clearly after thought. We find that the assessee was given photocopies of the seized documents only in May'2019. Thereafter, it took some time to analyze the seized documents. The assessee retracted the disclosure on 06-12- 2019 by filing an affidavit. 18.1. It has been held that delay in retraction of a statement may not be of much consequence in the light of uncontroverted facts regarding absence of any corroborative material. (Kailashben Manharlal Chokshi (supra). The two Board Circulars dated 10.03.2003 and 18.12.2014 relied upon by the assessee also provides that if confessions are not based upon credible evidence these are later retracted while fili....
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....he society. The Assessing Officer made an effort to depict that the withdrawal or retraction on the part of the appellants is not genuine. We do not hesitate to observe that an Assessing Officer does not have any power, right or jurisdiction to tell, much less to decide, upon the nature of withdrawal or retraction. His duty ends where the statement is recorded. If the statements are retracted, the fate thereof must be decided by law meaning thereby, a superior forum and not by the very authority, who is alleged to have exerted force. 13. It is not as if the retraction from a statement by an assessee would put an end to the procedure that ensued on account of survey or search. The Assessing Officer can very well support his findings on the basis of other material. If he did not have any other material, in a way, it reflects upon the very perfunctory nature of the survey. We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support ....
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....in the case of Signature Group continued ever after 31.1.2014. On 02.02.2014, Mr. Vipin Chouhan who is Ultimate Builders the partner of the assessee firm gave a statement before the search team wherein he made surrender of Rs. 2,25,00,000/- on behalf of the appellant firm and agreed to offer it to tax. In the very same statement he also made surrender on behalf of another firm M/s. Virasha Infrastructure in the capacity of a partner. In the very same statement he also made surrender on behalf of other companies of Signature Group. Ld. A.O during the course of assessment proceedings observed that the assessee has not offered surrendered income of Rs. 2,25,00,000/- for tax and confronted the assessee. During the assessment proceedings u/s 143(3) of the Act, assessee made the retraction by submitting that no such undisclosed income was earned and therefore no such income was required to be offered to tax. However, Ld. A.O giving reference to the statement of Mr. Vipin Chouhan, partner of Ultimate Builders and also giving reference to the seized documents found during the search at Signature Group made addition for undisclosed income. When the matter came up before Ld. CIT(A) ....
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....e 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 is fond to be in possession or control of any books of account, documents, money, bullion, jewellery to other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. 1 Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Incometax Act, 1922 (11 of 1922), or under this Act." 16. The above sub Section 4 of Section 132 of the Act starts with reference to "authorised officer", which means that the Officer who is authorised to conduct search on the assessee. In th....
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....dition 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 none of them is directly related to the assessee. These seized documents are of the Signature Group and Ld. A.O has only mentioned the details of the seized document without uttering a word about their nexus with the Ultimate Builders business transaction carried out by the assessee or by pointing out assessee's connection with the seized document in name or otherwise. Thus it can be safely concluded that the addition made by the Ld. A.O was not on the basis on the incriminating material found during the course of search but only on the basis of statement of Mr. Vipin Chouhan given on 02.02.2014. 22. Recently the Co-ordinate Bench in the case of ACIT(1) VS. Sudeep Maheshwari (supra) in which the undersigned was also a co-author while adjudicating the issue that "whether addition can be made merely on the basi....
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....espectively. 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.), 9. The Ld. Departmental Representative though not leaving his grounds, could not dispute the proposition that the additions in the present cases have not been made on the basis of any incriminating material found during search and if any material was unearthed no nexus could be established in respect of the additions made. 24. Hon'ble Jharkhand High Court Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No.8 of 1999 order dated 03.01.2013 held as under; "4. We considered the submissions of the learned counsel for the parties and perused the reasons given in the impugned orders as well as reasons given in the case of Kailashben Manharlal Chokshi (supra). 5. It appears from the statement of facts that there was a search in the business premi....
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....sion 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 undisclosed income as admitted by the assessee in his statement under section 134(2) in fact situation where during the course of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of Rs. 20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of....
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....ces. 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 Ultimate Builders statement not given u/s 132(4) of the Act and without referring to any incriminating material found during the course of search." 21. It is, therefore, a settled law that no addition can be made solely on the basis of statement recorded u/s 132(4) of the Act in the absence of any corroborative material or evidence to support the disclosure or the addition. We, therefore, respectfully following the judgments and decisions referred supra, and under the given facts and circumstances of the case find that the ld. AO was not justified in making addition only on the basis of statement recorded during the course of search u/s 132(4) of the Act which has subsequently been retracted and no other incriminating material was found during the course of search which could have a live link with the alleged addition made in the hands of the assessee. We thus, uphold the findings of the ld. CIT(A) deleting the additions made by the Assessing Officer and dismiss all the....