TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 1476
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....ly be quashed. 2. The search action taken u/s 132 is illegal, bad in law and on the facts of the case for want of jurisdiction and various other reasons against the provisions and procedure as per law and further contrary to the real facts of the case, hence all the consequent notices as well as subsequent proceedings invalid, illegal and bad in law hence liable to be quashed. 3. Rs.1,17,20,000/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs.1,17,20,000/- made by the AO u/s 68 on account of alleged On Money paid by the assessee on purchasing of property in the name of son and nephew and also erred in not considering the material and evidences available on record in their true perspective and sense and presumptions. Hence, the addition so made by the AO and sustained by the ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the same may kindly be deleted in full. 3.2. The ld. CIT(A) has also grossly erred in law as well as on the facts of the case in confirming the addition despite the fact as the AO had denied the cross examination of the persons and ignoring the retra....
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.... laid down by Hon'ble Supreme Court in the cases of Sumati Dayal reported as 214 ITR 801SC and Durga Prasad More 82 ITR 540 (SC). 2.1 First of all, we take up the appeal of the assessee for adjudication of case wherein the ground of appeal Nos. 1,3 &,4 are related to one another and is being taken up together for adjudication 2.2 Briefly stated the facts of the case are that the assessee filed his original return of income u/s 139(1)declaring the total income of Rs.3,08,160/-. The assessee is engaged in the business of digging, tilling and levelling of agriculture farm and commission on sale of agriculture produce of other farmers and also other sources income. In the case of assessee i.e. Jai Singh group a Search and seizure operation u/s 132 was carried out by Income Tax Department on 19/11/2016 at the premises of assessee. By virtue of search, a warrant was issued in joint name of assessee Jai Singh Yadav and his brother Gopal Lal Yadav. In the course of search various documents were found and seized by the department. On the same date a Search was also carried out by the department at the residence/ premises of Sh. Harpal Yadav and M/s Kedia Real Estate LLP or Sh. Nirmal Kuma....
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....d at PB 73, wherein he had stated that the assessee had retracted from the statement through the affidavit placed at PB 1-6 and also asked the AO to provide cross examination of Sh. Harpal Yadave and also to provide the seized documents found at Sh. Harpal Yadav Premises. However, the AO has not accepted the request of the assessee and stated that request of assessee for cross examination is not acceptable as the right of cross examination is not an absolute right. The AO has also stated that the affidavit in respect of retraction against statement u/s 132(4) is not found acceptable because the statement of assessee were recorded in the presence of two witnesses. The AO had drawn inference that the practice of "on money" payment in cash is widely prevalent in the real estate market. The AO also observed that the claim of misrepresentation was not made by the assessee as well as his group till seven months after the search. The AO held that the claim made by assessee in the affidavit is merely unsubstantiated allegation which can only be considered as an afterthought since the same is neither supported by any evidence nor reported to the department anytime during the search and even....
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....assessee. Shop was purchased in year Aug.,2015 while as per alleged statement of Sh. Harpal Singh the transaction is said to have been done 2-3 years back which itself is contradictory. No addition can be made merely on the basis of statements of third person without documents substantiating the said transaction/income. The assessee had, in his retraction statement, requested for providing the copy of statements of Sh. HarpalYadav but it has not been provided to him. Further assessee also seeks copy of relied upon documents in respect of said transaction so that further explanation with reason may be given. Assessee also asked to the ld. AO to give an opportunity to cross examine Mr. HarpalBYadav and any other person who claims to have paid amount exceeding the transaction amount as per purchase deed but the same has been rejected admittedly. Assessee has not surrendered any undisclosed income on this account. 1.2 Covered by the Honble Supreme Court: And it is very settled law that no addition can be made only on the basis of third party statements and the statements which has been retracted and when no incriminating documents has been found during the course of search in the pos....
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....imited VsCIT(2002) 257 ITR 235 (MP) State of Kerala v. K T. Shaduli Yusuf (1977) 39 STC 478, Kishan Chand Chellaram v. CIT (1980) 125 ITR 713 (SC) Monga Metals Pvt. Ltd. v. ACIT 67 TT] 247 (All.) In case of Smt. Sunita Dhadda vs DCIT [2013] 33 Taxmann.com 639 (Jaipur - Trib.),Hon'ble tribunal ruled that Where Assessing Officer, while making addition on account of 'on money' received by assessee on sale of land to a builder group, relied upon statement of director of that group and did not allow assessee to cross-examine said person, there was violation of principle of natural justice and, therefore, addition could not be sustained. The same has been upheld by Hon'ble Rajsthan High Court on 31/07/2017 and SLP by Revenue in Supreme Court has been dismissed. The jurisdictional Jaipur ITAT has consistently followed principles as laid down by Supreme Court in case of Andaman Timber Industries and gave relief to the assesses. As far as case laws referred by learned AO, on one side all those have been over ruled by the latest decisions of Supreme Court and High Courts and on other side those case are not applicable in case of the assessee. The circumstances of the....
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....amined to the person it mean either he was satisfied or he has no material to disprove the same. If the AO has failed to give any comments thereon, then in-absence of the same how some comments can be made on the same without asking any question from the assessee for clarifications if any in the amount. An affidavit is the important piece of evidence, should not be taken in light and if there is any wrong affidavit is given by any of the party or person the same is offence and may be punished under the law. In absence of the same the same cannot be discarded but is the evidence of the acceptance. The affidavits are evidence until and unless not disproved by the authority who alleging the same. As Section 191 of the Indian Penal Code stipulates: "Whoever being legally bound by an oath or by an express provision of law to state the truth, or being bound by law to make a declaration upon any subject, makes a statement which is false, and which he either knows or believes to be false or does not believe it to be true, is said to give a false affidavit" Section 193 of the Indian Penal Code, 1860 lays down the punishment for false evidence- whosoever intentionally gives a false ev....
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.... retraction affidavit and stated that he had not surrendered any undisclosed income as alleged in statements recorded on 19/11/2016. However the ld. AO has not spoken a single word on the statements recorded by him u/s 131 on dt. 03.05.2018 in the assessment order nor he stated that the statements u/s 131 are not correct or not acceptable, rather he rejected his retraction concealing or ignoring these vital facts and evidences and proceeded to make addition solely on basis of statements dated 19.11.2016. It shows the contradictory approach of the ld. AO. If there was any wrong in the statement u/s 131 the ld. AO should have initiated the penal proceedings. Both the statements must be read together. 2.3 .Search was carried out at the premises of Mr. Harpal Yadav wherein a loose slip is said to have been found on which name of 'Kailash Bhutiya Jobner Walon KaHisab' is said to be written with detail of amount of Rs.1,27,50,000/- in cash and Rs. 30,50,000/- in cheque is written. (Copy of this document has not been made available to assessee). On the basis of this slip of paper, Mr. Harpal Yadav gave his statement that the said slip related to Mr. KailashBhutia who purchased plot in G....
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....the correct facts that emerges and the submission of assessee is as follows: Shop No. 16, Kardhani, Govindpura, has been purchased by sons and nephews of assesseeviz. Manoj, Rajkumar, Kailash and Shankar for Rs. 32,80,000/- and whole of the consideration had been paid vide 4 cheques of Rs. 8,20,000/- each. The assessee has himself not purchased that property. During assessment proceedings the assessee vide letter dated 05/11/2018, submitted the copies of the bank statements and ITRs of his sons and nephews to establish the transaction having been done by them on their own account. It was not that the assessee purchased shop for them. The learned AO did not bring this submission of assessee on record. Further it was Satya Prakash Bhutiya and Jitendra Bhutiya who sold the shop to sons and nephews of assessee. Kailash Bhutiya was not the seller of the shop. Neither the name of assessee is written on the loose slip nor the nature of transaction is written on this paper. But learned AO, on the basis of this slip, has stated in the assessment order (para 5) as follows: It may also be noted that there was no cheque of Rs. 30.50 lakh being given for purchase of shop by assessee's s....
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....ch. Addition towards undisclosed income without establishing the basis found during the course of search could not be sustained. The assessment u/s 153A should focus on the basis of material and evidences gathered during the course of search. In this respect assessee relied upon the following judgments: (i) CIT V/s Deepak Kumar Agrawal and others (2017) 299 CTR(Bom) 62 (ii) CIT and Anr V/s Lancy Constructions (2017) 295 CTR (Kar) (iii) CIT V/S KABUL CHAWALA(2016) 380 ITR 573.The ratio of above judgment is also followed in the case reported at (2017) 295 CTR (DEL) 466. (iv) PCIT V/s Saumya Construction P Ltd. (2017) 297 CTR(Guj) 387 If in relation to the assessment year, no increment material is found, no addition and disallowance can be made in relation to that assessment year in exercise of power u/s 153A and the earlier assessment shall have to be reiterated. Covered matter: Here also the same position because admittedly in the present case there is no incriminating documents have been founds admittedly and the ld. AO has made the addition on the basis of documents and statements of third party which have not been confronted despite the request made by the assesse....
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.... assessee from M/s Kedia Real Estate LLP where the director Sh. NirmalKedia has stated in his statements recorded u/s 132 (4) on dt. 19/20.11.2016 itself that he has paid on money of Rs.5.00 crore to Sh. Jai Singh (assessee) for purchase of 3 bhiga 18 biswa land from Sh. Jai Singh. And the addition has also been made in the hands of M/s Kedia Real Estate LLP ( although the additions have been deleted in the appellate proceedings). Then when no addition has been made in the hands of the seller then why the addition should be made in the hands of the assessee. It means the ld. AO has deemed or accepted that no on money was received by Sh. Kailash Bhutiya otherwise he could have recorded the statements of Kailash Bhutiya or addition could have also been made in his hands as undisclosed income. It clearly shows the contradictory approach of the ld. AO and also proved that the addition of Rs.1,17,20,000/- is baseless and on surmises and conjectures, without any material and liable to be deleted. The ld. CIT(A) has also ignored all these above facts and submission all together. Further under the same facts and circumstances and under the same search the this Honble ITAT has deleted the....
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....2.80 lakh in year 2015-16 which is increase of approx.36% during 3 years' time frame which is practical. And both the lower authorities were keep mum on these vital facts. There was also no case of purchase of shop in lower rate of DLC. Thus the price at which this shop no. 16 had been purchased was reasonable and at or above the DLC rates declared by State. The presumption of valuing the shop at Rs. 1.50 crore is baseless. Although the purchase deeds were on record but the assessee again explained regarding purchase of all these shops in letter dated 05/11/2018. 9.As per Section 142(3) of Income Tax Act states as under: 'The assessee shall, except where the assessment is made under section 144, be given an opportunity of being heard in respect of any material gathered on the basis of any inquiry under sub-section (2) or any audit under subsection (2A) and proposed to be utilised for the purposes of the assessment.' It clearly shows that it was legal duty of learned AO that she should have provided the copy of document on the basis of which Mr. Harpal gave his statement and copy of statements of any other person who has stated of receiving on money from assessee. The asses....
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....ed following decisions. CIT v/s SM Aaggrawal 293 ITR 43(Del). CIT v/s Grish Choudhary 296 ITR 619(Del) CIT v/s Jai Pal Agrawal 91 DTR 327 (Del) ACIT v/s Rakesh Goyal 87 TTJ 151 (Del) Pankaj Dahyabhai Patel (HUF)* vs. ACIT 63 TTJ 79(Ahd) In the case of Jayanti Lal Patel vs. ACIT & ORS. High Court Of Rajasthan : Jaipur Bench (1998) 233 ITR 588 (Raj). In the case Mahaan Foods Ltd. vs. DCITV ITAT, DELHI 'C' BENCH (2010) 123 ITD 590 v) ACIT vs. Satyapal Wassan ITAT, JABALPUR BENCH (2008) 5 DTR (Jab)(Trib) 202 ACIT Central Circle- Jaipur v/s M/s Kedia Real Estate LLP in ITA No. 127 & 289/Jp/2019 dt.03.06.219 copy is enclosed. 12. The AO proceeded on suspicion and it is settled principlesthat suspicion may be strong but cannot take the place of reality, kindly refer Dhakeshwari cotton Mills 26 ITR 775 (SC), Uma Charan Shaw v/s CIT 37 ITR 271 (SC). 13. Addition if any was to be made u/s 153C not 143(3): Further it is submitted that the addition of Rs. 1,17,20,000/- has been made on the basis of statements of Harpal Yadav who gave his search statement in relation to the loose paper found in his premises. And the addition of Rs.2,44,93,451/- was made on the ba....
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....r she provided copy of paper slip in relation to which Mr. Harpal Yadav gave his statement. And on this aspect we have already submitted hereinabove. 11.2 The copy of statement of assessee recorded under section 132(4) were not given to assessee inspite of repeated oral reminders to ADIT(Inv) together with letters dated 11/01/2017 & 21/03/2017 . It was on 11/05/2017, that the assessee received copy of his statements from Central Circle-3. The assessee then found that there is alleged surrender of income being recorded in his statement taken on 19.11.2016. Till the receipt of the copy of statement the assessee genuinely believed that he had not surrendered any income for taxation and that no incriminating material have been discovered in search, therefore he did not file any retraction statement. But on receipt of copy of his statements on 17/11/2017, he was astonished to note the surrender of income and after complete understanding of the contents of his statements dated 19.11.2016, he sworn in a Retraction Affidavit on 19/06/2017 wherein he retracted from the surrender of any undisclosed income for taxation. After the affidavit was filed before the assessing authority, the AO ....
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....e on the statements recorded u/s 131 by herself during the course of assessment proceedings. Further when the assessee sought cross examination of Sh. Harpal Yadav the AO has straight away denied the same. When it is now a settled principal of law that no addition can be made only on the basis of statements of the third party without providing opportunity of cross examination of the person when specifically asked by the assessee in whose hand the addition has been made. This issue is supported by the decision of The Hon'ble Supreme Court in case of Andaman Timber Industries Vs. CCE 127 DTR 0241 dated 02.09.2015 wherein it has been held that denial of opportunity to the assessee to cross-examine the witnesses whose statements were made the sole basis of the assessment is a serious flaw rendering the order a nullity in as much as it amount to violation of principles of natural justice. The Hon'ble Supreme Court has held while dealing with the issue whose relevant para 5 to 8 are as under: "5. We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. 6. According to us, not allo....
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.... appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice." Further Recently the Honble Raj. High Court in the case of Pr. CIT, Jaipur-2 v/s Sh. Sanjay Chhabra in DBIT No. 22/2021 dated 06.04.2022, the Honble HC held that :- " The Tribunal by impugned order has categorically held that the material information received by the Assessing Officer from the investigation wing alongwith certain statements recorded by DBIT Investigation, Calcutta could not be taken into considerationas that material was not disclosed nor an opportunity was accorded for cross-examination of the Assessee. This finding recorded by the Tribunal cannot be said to be perverse or suffering from any patent illegality. Learned counsel for the Revenue could not satisfy us with reference to any judgment on this aspect that even without disclosing any material to the Assessee and without allowing h....
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....tatement through the affidavit and there was no material found in his possession as In Pullangode Rubber Produce Co. Ltd. vs State of Kerela [1973]19 ITR 18 (SC) the Supreme Court has held that '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. The ld. A/R of the assesse has also furnished the copy of this Co-Ordinate Bench the case of ACIT Central Circle- Jaipur v/s M/s Kedia Real Estate LLP in ITA No. 127 & 289/Jp/2019 dt.03.06.219 of same search case where in under the same facts and circumstances this Co-Ordinate Bench has deleted the addition on account of On Money vide order. Thus also no addition is liable to made. Further it also noted that the AO has not provided the copy of seized document found at the premises of third party i.e Mr. Harpal who gave his statement and the addition was made despite the request by the assessee vide page 73PB of the assessee and no addition can be made without confronting or providing the documents to the assesse. It is also an admitted fact that no incriminating documents were found in the premises/ possession of ....
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....onducted u/s. 132 on 18th November, 2015 at the premises of the Assessee {being Anand Kumar Jain (HUF), its coparceners and relatives} as well as at the premises of one Pradeep Kumar Jindal. During the search, statement of Pradeep Kumar Jindal was recorded on oath u/s. 132(4) on the same date, wherein he admitted to providing ITA 23/2021 and connected matters Page 4 of 11 accommodation entries to Anand Kumar Jain (HUF) and his family members through their Chartered Accountant. The assessing officer framed the assessment order detailing the modus operandi as to how the cash is provided to accommodation entry operator in lieu of allotment of shares of a private company. Thereafter when the matter was carried up in appeal before the CIT(A), the findings of AO were affirmed. However, in further appeal before the ITAT, the said findings were set aside vide the impugned order. 4. The Revenue is aggrieved with the aforesaid impugned order and has filed the present appeal under Section 260A of the Act, proposing the following questions of law...... 10. Now, coming to the aspect viz the invocation of section 153A on the basis of the statement recorded in search action against a third pe....
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....ased 3 bhiga 18 biswa land from Sh. Jai Singh Yadav at a consideration of Rs.8.10 crores ( Rs.3.10 crores by cheque and Rs.5.00 crore in cash as "On Money" to Sh. Jai Singh Yadav. The AO reproduced the relevant part of statement at page 7 of the assessment order. The AO stated that subsequently statements of Sh. Jai Singh Yadav were recorded during search vide page 7 of the assessment order wherein the assessee has not accepted of receiving any on money from Sh. Nirmal Kedia. He has stated that assessee had not paid any capital gain tax on sale of 3 bhiga 18 biswa land for which he had received total consideration of Rs.8.10 crore (including on money of Rs.5 crores). The AO has issued the Show cause notice to the assessee for the Long Term Capital Gain addition on the sale of land for Rs.8.10 crores. In response thereto, the assessee filed the following reply placed at PB 73 also vide page No. 8 of the assessment order. "The assessee has sold agriculture land at Village Badarama, Jaipur (Khasra No.15) to KediaRealestate LLP. Total area of agriculture land sold was 3 Bigha 18 Biswa and total consideration was Rs. 3,10,00,000/-. The assessee had ½ share in the above property....
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....praying therein that When the addition has been deleted in the hands of M/s Kedia Real Estate LLP no addition is required to be made here. It has also been submitted that Sh. Nirmnal Kedia has retracted from his statements and the ld. CIT(A) as well as the Honble ITAT has deleted the additions vide order in ACIT Central Circle- Jaipur v/s M/s Kedia Real Estate LLP in ITA No. 127 & 289/Jp/2019 dt.03.06.219, the copy of which is also placed on record. Considering the above facts and circumstances of the case, the ld. CIT(A) deleted the additions at pages 20 to 21 of his order. 5.4 Against the order of the ld. CIT(A) as to deletion of addition, the revenue is in appeal before us. 5.5 During the course of hearing, the ld. DR supported the order of the AO. and stated that the addition was made on the basis of statement of Sh. Nirmal Kedia who purchased the land from assessee and paid the On-Money to the assessee and statement has been given u/s 132(4). 5.6 On the other hand, the AR of the assessee has submitted following written submissions: 1. At the very outset we strongly rely upon on the order of the ld. CIT(A) on this addition. The ld. CIT(A) has deleted the addition by observ....
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....f Rs.5.00 crore in the name of M/s Kedia Real Estate LLP, ther remain no grounds of treating the alleged on money of Rs.5.00 crore to have been received by the appellant. Further, the appellant has contended that the said transaction of sale of land, excluding the alleged on-money component duly disclosed by him in his ITR and exemption was claimed u/s 54B. On perusal of the assessment order it is observed that the AO has allowed the claim of exemption u/s 54B of the Act. And has thereafter worked out the capital gain at Rs.2,44,93,451/-. In view of the above findings, the AO is directed to verify the claim of the appellant and work out the long term capital gain in respect of the alleged property by reducing the on-money component of Rs.5.00 crores." 2. Directly Covered matter: It is also submitted that now the issue is directly covered by the decision of this Honble ITAT. Because under the same facts and circumstances and under in the same search and the same addition has been deleted on account of On Money given by the NirmalKedia to the assessee vide order in In the case of ACIT Central Circle-3 Jaipur v/s M/s Kedia Real Estate LLP in ITA No. 127 & 289/Jp/2019 dt.03.06.219 co....
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....re on security of a post dated cheque. The statement of Nirmal Kumar Kedia is misleading and seems to have been made with some other motive. No other document except his statement has been made available to substantiate the alleged 'On money' receipt.. The assessee also submits that had he received such a huge amount, then it must have been reflected either as unexplained deposits in banks or some other unexplained investments, but no such instances are there. It is to be noted that not a single document seized from his premises indicates that any on-money was received from Nirmal Kumar Kedia. At the time of search also cash amounting to Rs. 1003350/- only had been found at the premises and for which suitable explanation has already been given. It is also a well settled legal position that in absence of any corroborative incriminating documents, no addition can be made on the basis of statements of a third person. The assessee again seeks cross examination of Mr. Nirmal Kumar Kedia and request for copy of relied upon documents in addition to the statement of Mr. Kedia." However the ld. AO neither provide any opportunity of cross examination not any material. And made the a....
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....emption under section 54B and there is no evasion of tax. 8. Assessee is illiterate and does not understand the nitty gritty of taxation: We would like to draw your attention towards the fact that assessee, in his statement recorded on 19/11/2016, stated that he is illiterate and that he cannot read the contents of statement (Answer to Q.No. 1). He has also stated that work of filing of ITR is done by his nephew ManojYadav(Answer to Q. No. 9). In answer to Q.No.31 & 32 he has stated that he has not shown transaction of sale of land to Kedia Realestate and has not paid tax, while in fact the same was disclosed in his ITR but because he had claimed exemption under section 54B hence no tax was paid by him. 9. Addition if any was to be made u/s 153C not 143(3): Further it is submitted that the addition of Rs.2,44,93,451/- was made on the basis of statements of Nirmal Kedia recorded u/s 132(4) in whose case search was carried out u/s 132. Thus it is established that the material, if any, on the basis of which addition has been made was not found in the premises of assessee admittedly and thus neither action could be taken under section 153A nor any addition. The addition if any c....
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....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. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders". It is a well settled principal that the directions of CBDT are binding on authorities and thus in absence of any evidence/ incriminating material except for said surrender of income in statements under section 132(4), no addition can be made in the income of assessee.'' 5.7 We have heard the rival submissions and perused the materials available on record. From the assessment order, we noted that the AO has made addition of Rs.2,44,93,451- on account of Capital Gain of receiving Rs. 5.00 Crore by the assessee and hi....
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....no evidence/documents was found to the department which shows that the assessee made this much undisclosed payment Except to statement of partner of assessee which was given for the reasons mentioned hereinabove and retracted subsequently there is no evidence with the department to prove that the assessee made this much undisclosed payment. The department also carried out search on seller of land Shri Jai Singh Yadav and no evidence was also found during the search over Shri Jai Singh Yadav regarding undisclosed payment of Rs.5,00,00,000/-. 54 .....But in the case of the assessee, the surrender is not relatable to any material. In the case of assessee no any agreement, receipt, material was found to corroborate the surrender made in survey. Neither such material was found from the possession of assessee group nor from the possession of Shri Jai Singh Yadav group where the search was taken place on the same day. Further, the surrender was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statement, the recording of statement is against the principle of natural justice vitiate....