TaxTMI 
TaxTMI 
2024 (2) TMI 746
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....rivate 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 omissions and commissions, which had been accepted by him earlier in the statement....
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....re 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, Shri Amit Kumar Jain made a disclosure Rs. 25.00 crores on behalf of his entire group which included Rs. 11.00 crores on behalf of the assessee ....
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....e 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 following additions/ disallowances: - (i) On account of income disclosed during the search u/s.132(4) (which was retracted subsequently) - Rs. 10,00,00,000/- (ii) Disallowance of deduction under Chapter VIA on the addit....
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....s 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 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 Undisclosed Asset owned by the Appellant which was found during the course of Search in the case of the Appellant or even from the premises of "any other p....
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....terial 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 impugned Assessment Year filed in compliance with the Notice issued under Section 153A of the Act, the Appellant had impliedly retracted from the admission of Additional/Undisclosed Income to the extent of the impugned amount of Rs. 10,00,00,000/-. Thus, in the present case, the Assessing Officer has placed sole reliance on a confessional Statement of the....
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....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 recorded under section 164 of the Code of Criminal Procedure. The evidentiary value of a retracted statement becomes diluted and it loses the strength, to stand on its own. Once the statement is retracted, the assessing authority has to garner some support, to the statement for passing an order of assessment. 11. In I. T. A. No. 112 of 2003 (see CIT v. Naresh Kumar Agarwal [2014] 369 ITR 171/[2015] 53 taxmann.c....
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....astructure 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. r) M/s Corobus Alchobrew Products Pvt Ltd s) M/s Wallendorfer (Assam) Pvt Ltd t) M/s Supertech Conbrit Industries A large number of incriminating documents and other material has been either seized or impounded from the various spots where these companies operated from. Also, incriminating personal data pertaining to the directors and partners of your businesses have being either impounded or seized. Many of such documents and records have been shown to you for your reference and information. Please give your comments on seeing those documents and records. Ans. Yes, I agree that, as informed by you, many records and documents have been found....
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....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. Ltd. and M/s. Supertech Conbrit Industries operated from. The learned CIT(A) after referring to the aforesaid statement of Shri Amit Kumar Jain and after going through the assessment order held as follows: - (a) The assessing officer in the impugned assessment order has not referred any thing about the many incriminating documents and other material of the S.K. Jain Group claimed to have been found and impounded or seized. (b) The assessing officer has not even given minutest description or details of the many incriminating documents and records in the impugned assessment order on the basis of which addition of Rs. 10,00,00,000/- was made. (c) Further, not even the minutest enquiry has been conducted by the assessing officer and referred to in the assessment order about the so-called many incriminating documents and records ....
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....or 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 Jain Group which included the assessee on 26/27-02-2019. Mr. Amit Kumar Jain, a key person of the group concern during the course of search on 26/27-02-2019 and subsequently with support of the letter dt. 25/03/2019 made disclosure of Rs. 25,00,00,000/- in the name of six assessees of which three were private limited companies and three individuals. One of the group concern i.e., the assessee, amount of Rs. 11 Crore was disclosed for FY 2018-19. Thereafter on 06/12/2019, the statement given on 26/27-02-2019 was retracted on an affidavit wherein it has been stated that the disclosure at the time of search was under pressure and coercion and at late hours and survey and seized documents were not provided. Subsequently, on getting the photocopies of the seized documents, it was noticed that a higher amount of disclosure has been made and so far as the present ass....
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....mises 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 Bottling Pvt. Ltd., Baridua, Byrnihat (Meghalaya); Factory of M/s. Jalshakti Plastic Industries, Rajapara; and the common office premises we share with our other group concerns at Fancy Bazar, Guwahati. Shri. Amit Kumar Jain had no access to the documents seized/impounded from various places when he was compelled to make the disclosure of Rs. 25.00 crores by the Authorized officer on 26.02.2019 at my residence at Guwahati. Thus, he was compelled to make the aforesaid disclosure of Rs. 25.00 crores totally on adhoc and estimate basis without having any link/nexus with the seized/impounded material. 5. That since the aforesaid disclosure of Rs. 25.00 crores was made on ad-hoc/estimate basis without having any link/nexus with seized/impounded documents/material found during the course of search/survey, our director Shri Amit Kumar Jain was not able to give any detailed breakup of the afore....
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....ect 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 voluntary nor correct so far as these relate to the disclosure of Rs. 25,00,00,000/- those were substantially retracted from by him. 11. That as stated in para 8 above, after taking of photo copies of seized documents these were analyzed and there was nothing to support/corelate/ corroborate such a huge disclosure of Rs. 25,00,00,000/- which he was compelled to make. However, in order to cover omissions and commissions, if any, or any other discrepancy, the following additional incomes have been/are being surrendered by the persons mentioned in para 6 above in their respective returns of income filed for the F.Y. 2018-19: - 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 14.1. The ld. Assessing Officer had noticed that the assessee ....
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.....e. the material evidence against the Appellant) was indeed present and the Appellant had unaccounted income as per the imaginary incriminating material. The inferences drawn on the basis of imaginary incriminating material are, thus, perverse. If indeed there was incriminating material present, it ought to have been specifically brought out in the body of the impugned Assessment Order or at- least references to specific incriminating material (i.e. the material evidence against the Appellant) ought to have been made in the body of the impugned Assessment Order." 16. Before us, it is submitted by the learned A/R of the appellant that the reliance on page no. 5 of seized material marked "AKJ-1" was wrongly placed by the Assessing Officer without giving any finding to the effect that such an exercise was undertaken by the appellant. This was despite the fact that books of accounts and other relevant documents were produced before the Assessing Officer which were examined by him. This has been noted by the assessing officer in para 3 of his assessment order. 17. Apart from the above disclosure statement of Shri Amit Kumar Jain dated 26/27.02.2019, no other document is being referred....
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....14 relied upon by the assessee also provides that if confessions are not based upon credible evidence these are later retracted while filing returns of income or in subsequent proceedings. 19. In the case of Binit Agarwal vs. DCIT [2022 (9) TMI 243; I.T.A. No. 1447/Kol/2018, Order dated 30/08/2022], which has been referred above, Hon'ble Kolkata Tribunal has taken the same view. 20. In the case of Pullangode Rubber Produce Co. Ltd. V/s State of Kerala (1973) 91 ITR 18 (SC), it was held as follows:- "An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect". (iv) In the case of Satinder Kumar (HUF) V/s. CIT (1977) 106 ITR 64 (S.C.) it has been held by Hon'ble Apex Court "It is true that an admission made by the assessee is constitutes a relevant piece of evidence, but that it can be relied on as such without considering the assessee's case that he proceeded on a mistaken understanding or true position has not been laid down anywhere." (v) In the case of Gajjam Chinna Yellappa and Ors. V/s. ITO (2015) 370 ITR 671 (AP), Hon'ble Andhra Pradesh High Court he....
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....to fasten the liability upon the appellants. Our conclusion find support from the Circular dated 10.03.2003 issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements. 14. Therefore, I.T.A Nos.268, 273 and 308 of 2003 are allowed and the orders of assessment dated 01.12.1998 are set aside. Since the orders of assessment are set aside, I.T.A. Nos. 287, 291 and 294 of 2006 have virtually become infructuous and they are accordingly closed. There shall be no order as to costs." 20.1. We find that similar issue regarding addition made solely on the basis of statement given during the course of search u/s 132(4) of the Act and there being no corroborative or cogent incriminating material referred to by the Assessing Officer for making addition, the Indore Bench of the ITAT in the case of M/s. Ultimate Builders vs. ACIT in ITA No.134/Ind/2019; Assessment Year 2014-15, order dt. 09.08.2019, under identical circumstances has held as under:- "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 so....
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....he matter came up before Ld. CIT(A) addition was confirmed. However the basis of addition was accepted to have been made only on the basis of the statement of Mr. Vipin Chouhan. No reference was made to any incriminating material having its bearing on the Ultimate Builders surrendered income. During the course of hearing before us Ld. Counsel for the assessee contended that during the course of search i.e. between 29.1.14 to 31.1.2014 no cash or unrecorded assets was found, no incriminating material was found and no income was offered to tax in the statement recorded u/s 132(4) of the Act of the person found to be in the possession and control of the books of premises. Relevant questions asked about the loose paper found were duly replied in the statement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed 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 ma....
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....e it is stated before us that the authorised officer of the assessee and that of the other concerns of Signature Group are different. 17. After the word the authorised officer it reads "during the course of search or seizure, examination of both the person". During the course of search is a period during which the search is initiated and concluded. In the instant case the search was initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised Ultimate Builders officer for the assessee which is verifiable from the Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is after the conclusion of the search in the case of the assessee on 30.01.2014. 18. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee's premises or during the continuation of search, 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....
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....tement with incriminating material", we have decided the issue observing as follows:- "6. It is the case of the assessee that during the course of search & seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared Rs. 3 crores in personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, Ultimate Builders reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of 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, as....
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....l, on 24th September, 1987. During the course of search, the statement of Shri Sheo Kumar Kejriwal had been recorded under section 132(4) of the Income Tax Act and in the statement, he stated that he was partner in the Ganesh Trading Company, i.e. the present assessee-firm in his individual status and that he surrendered Rs. 20 lacs for the assessment year 1988-89 as income, on which tax would be paid. He further stated that other partners would agree to the same; otherwise it would be his personal liability. However, in the returns filed after search, the income of Rs. 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not declared by the assessee-firm. On being asked to explain the reason for not showing the surrendered amount in the returns, it was submitted by the assessee that declaration made by the partner was misconceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee's said retr....
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....nt case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs. 20 lacs. 7. In view of the above reasons, without answering the question about retrospective operation of the proviso to section 134(4), we are holding that the authorities below have committed error of law in drawing inference from the materials placed on record, i.e. admission of the assessee coupled with its retraction by the assessee. The Revenue may now proceed accordingly". 25. In the light of ratio laid down in various judgments referred above including one in the case of ACIT(1) Vs. Sudeep Maheshwari (supra) decided by us wherein also we, after referred various judgments of Hon'ble High Courts have held that additions cannot be sustained merely on the basis of statement given during the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is foun....
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....Ltd.. The facts in this appeal are identical except for variance in quantum. From perusal of the records we notice that at the time of search and survey operation in the statement u/s 132(4) of the Act, the total disclosure of Rs. 25 Crores was made which included the disclosure of Rs. 8.50 Crore in the case of the assessee i.e., Leade Liquor Manufacturing Pvt. Ltd. for Assessment Year 2018-19 and subsequently in the retraction statement filed on 06/12/2019, the surrendered amount was revised to Rs. 75 Lakhs only. The ld. Assessing Officer had made the addition for difference amount of Rs. 7.75 Crores referring to the statement given u/s 132(4) of the Act. Since in this case, also the ld. Assessing Officer has not referred to any incriminating material for the year under consideration pertaining to assessee an the alleged addition has been made purely on the basis of statement given u/s 132(4) of the Act which stands retracted at a later date the impugned addition has been rightly deleted by ld. CIT(A). Therefore, as stated earlier in this order, the decision rendered in the case of Aroma India Private Limited in I.T.A. No. 22/GTY/2023; Assessment Year: 2019-20, shall apply mutatis....