TaxTMI 
TaxTMI 
2024 (9) TMI 505
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.... made under different heads. (ii) Whether on facts and in circumstances of the case, the Ld. CTT(A) is justified in nor appreciating the facts that in respect of cash payment to Devilal Bairwa and Ajay Modi and that the assessee failed to the discharge the onus to prove with explanation of the persons concerned in respect of these transactions. (iii) Whether on facts and in circumstances of the case, the Lil. CIT(A) is justified in deleting the addition of Rs. 9,75,000/- out of total addition of Rs. 20,22,500- on the account of unaccounted investment in agricultural land situated at Mandalia, Jhalawar Road, Keta which was made on the basis of incriminating documents impounded during the survey dated 04.02.2017, without appreciating the facts that the agricultural land belong to SC/ST category which cannot be transferred in the name of Naresh Jain, the assessee made an arrangement to make it registered in name of Devilal Bairwa of SC category and occupied it. (iv) Whether on facts and in circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs. 9,50,000/- on account of unaccounted investment in ST land situated at Mandana Kota.....
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.... the alleged repayment of salary to the staff u/s 69A of the Act. The addition so made and confirmed being contrary to the provision of law and facts may kindly be deleted in full. 6. The Id. AO further erred in law as well as on the facts of the case in imposing tax, surcharge, cess etc, as per provision of S. 115BBE of the Act. The invoking of 8.115BBE is contrary to the provisions of law, on facts and without jurisdiction. The appellant totally denies its liability. The tax liability no created, kindly be deleted in full. 7. Rs. 55,490/ The Id. CIT(A) also erred in law as well as in fact to the case in confirming the addition made by the AO u/s 69C on account of the unexplained agricultural expenses. The addition so made and confirmed being contrary to the provision of law and facts may kindly be deleted in full. 8. Rs. 33,43,380/- The Id. AO erred in law as well as on the facts of the case in charging interest u/s 2344 & 234B of the Act. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, kindly be deleted in full.'' 2.1 It may be noted that both th....
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....eyond comprehension. 1.3 The authorities below even violated the binding CBDT Circular No. 286/2/2003 dt. 10.03.2003 and the Budget Speech, 2003 by the Finance Minister please be referred, which is reproduced herein below : "Instances have come to the notice of the Board where assessee have claimed that they have been forced to 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 assessee while filing returns of income. In these circumstance, 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 & 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....
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....ter on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not (sic) to disbelieve the retraction made by the AO (sicassessee) and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lacs on the basis of statement recorded by the AO under s. 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee." 2. Admission retracted / Not acted upon - Hence addition invalid: 2.1 Unfortunately, in present case the AO ignored the settled legal position that a person making a statement is legally entitled to retract from what it had stated earlier. It has been held that an admission, though best e....
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.... I came to know that the Income Tax Survey Party has sought a declaration of undisclosed income of around Rs. 9 ers from me, On hearing this news, I was shocked as I had not made any such declaration nor the survey party have stated about any such undisclosed income in course of survey. 1, therefore, immediately went to the Income Tax Office, CAD Road, Kota - Room No.217 at around 7 PM but no official who came for survey was present there. Therefore, I rang up Shri Dinesh Gehlot, Commissioner but as soon as I started talking to him about the media news of my declaration of undisclosed income, he disconnected the call. Thereafter, I tried to contact Shri Mukesh Ji Sharma (ITO) but he also did not meet me. Thereafter, I called Mr. Jakhad, Jodhpur who informed me that as per my statement on various points, I have mentioned some amount which amounts to approximately Rs. 9 crs and this is the amount which I have surrendered in my statement. 8. THAT I am not aware that what has been recorded by the survey team in my statement recorded in survey as I was not given any opportunity to understand and read that statement. These statements were recorded under coercion and undue influe....
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....ch it is made. It can be shown to be erroneous or untrue". 2.4.3 In Rajesh Jain v/s DCIT (2006) 100 TTJ 929 (Del), held that computation of undisclosed income solely on the basis of confessional statement of the assessee was not justified, inter alia, where the conduct of affairs by the Revenue Authorities showed that good amount of psychological pressure was built on the assessee to make the said statement and all material found during search was duly explained by assessee on which no adverse comments was made by the AO. This decision contains various references and relevant extract quoted from various case laws. 2.4.4 Further kindly refer Polat Marmo Agglomerates Ltd vs. Union of India (1994) 73 ELT 536 (Raj.) wherein it was held that the admission made in ignorance of correct position of law and facts are not binding upon a party. 2.4.5 Similarly, in the case of Ambalal vs. Union of India (1983)13 ELT 1321 (SC) it was held that confessional statements recorded under threat, coercion, inducement or promise are not valid but persons concerned should take care to retract such confessions without delay. Retraction would then be weighed in the light of othe....
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....d on non-existent facts or suppressed/misrepresented facts, fulfilling the ingredients of undisclosed income, would constitute the documents sufficient to make assessment for the purposes of the Act. The courts have referred such documents as an 'incriminating material'. While going through a large number of the decision rendered in the context of search assessment, it was observed that the word 'incriminating material' has been used very often, but the point here is that what is the meaning of 'incriminating material' or in other words what meaning can be attributed to 'incriminating material', as the same is the main bone of contention while framing the search assessment order under section 153A/153C and the same has not been defined under the Act. Therefore, it is imperative to understand the meaning of the word 'incriminating material'. Practically stating it can be stated that the 'incriminating material' can be in any form such as a document, content of any document, entry in the books of account, an asset etc. [Para 8.5] Any fact/evidence which could suggest that the documents/transactions claimed or submitted in any e....
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....provided such statement to be used as evidence against the assessee in any proceedings, the statement recorded under these two provisions loses their evidentiary value on the strict interpretation of the fiscal statute. Ignoring this significant difference will render the use of these words intendedly u/s 132(4), purposeless or nugatory. Therefore, to say that statement recorded u/s 133A(3)(iii) is equivalent to statement recorded u/s 131 is a gross misinterpretation of the provisions. 4.3 Reliance placed on: 4.3.1 CIT v. Khader Khan Son (2008) 300 ITR 157 (Mad.) (HC). Affirmed by Apex Court in, CIT v. S. Khader Khan Son (2012) 210 Taxman 248(2013) 352 ITR 480 (SC) / (2012) 25 taxmann.com 413 (SC). 4.3.2 Moreover in a comparatively recent case of Pr. CIT, Central -2, New Delhi v. Meeta Gutgutia [2017] 82 taxmann.com 287 (Delhi) Hon'ble Delhi High Court referred to the decision of the Kerala High Court in Paul Mathews & Sons v. CIT [2003] 263 ITR 101/129 Taxman 416 and of the Madras High Court in S. Khader Khan while considering distinction between statements under Sections 132(4) and 133A held as under: "40. The main plank of Mr. Manchanda's ....
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....ed by the Revenue against the said decision after granting leave. To the same effect is the decision of this Court in Sunrise Tooling System (P.) Ltd. (supra) and of the Jharkhand High Court in Shree Ganesh Trading Co. (supra). The CBDT's instructions dated 10th March, 2003 and 18th December, 2014 have also emphasized that there should be no recording of statement during "search/seizure/other proceeding" under the Act under "undue pressure or coercion". 42. Therefore, in the present case, it would be wrong on the part of the Revenue to characterize the statement of Mr. Pawan Gadia as by itself an incriminating material that could be used for making additions in all the AYs in question apart from the year of search." 4.3.3 Covered issue: This Hon'ble ITAT in the case of Unique Art Age v. AO [2014] 50 taxmann.com 194 (Jaipur - Trib.), has also taken similar view holding that: "3.8 Effect of admission made in statements recorded during survey under section 133A of the Act 18. The position of law regarding the evidentiary value of admissions made in such statements is now settled. After considering the rival stands on this issue, we have already ....
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....o be dismissed. AGOA-3: Wrong confirmation of addition upto Rs. 10,47,500/- (out of Rs. 20,22,500/-) by the CIT(A) (also refer DGOA-2 & DGOA-3 for deletion of addition of Rs. 9,75,000/- separately dealt with): Facts: The AO has dealt with this issue at Pg 2 Pr 4 and copied at page no.5 para 4.1 of CIT(A) order. The detailed written submissions dt.19.11.2019 filed before the CIT(A) are at page no.16 para 4.2, the remand report thereupon by the AO dt. 07.06.2023 is at page no.36 para 4.4, the rejoinder dt. 20.06.2023 at page no. 47 para 4.5 and finally the ld. CIT(A), after considering the detailed submissions, the remand report, rejoinder made before him, at Page 52, Para. 4.6 concluded in following words: "4.6.1 The discussion on various additions against which appeal has been filed are being discussed as under. i. Addition for payment for land of Rs. 20,22,500/- ( Revised Ground No. 2) In this case, the AO noted that in reply to Q No. 23 of his statement recorded during survey action u/s 133A on 04.02.2017, Sh. Naresh Jain explained that these documents relate to purchase of agriculture land at Khasra No. 495/ 251, Mandalia, Jh....
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....R 505 (SC) and Dr. Pratap Singh v. Director of Enforcement [1985] 155 ITR 166/22 Taxman 30 (SC), that evidence collected during illegal surveys also can be relied upon. Even otherwise this plea cannot be accepted on the ground of breach of fundamental right of privacy because of the decision of Supreme Court in above cases. [Para 8] The next objection of the assessee is that statement on oath could not be recorded in course of survey. This issue is covered by the decision of the Bombay High Court in the case of Dr. Dinesh Jain v. ITO [2014] 363 ITR 210/226 Taxman 27/45 taxmann.com 442 and, therefore, this objection raised by assessee does not survive. [Para 9]" The ITAT while giving decision has relied upon the decision of Supreme Court and High Courts. It is clearly held that survey was validly conducted, therefore, objection of assessee regarding evidentiary value of statements recorded during survey does not survive. In this case also there is no dispute that survey was validly conducted. Therefore, the statement recorded during survey is a valid piece of evidence. The next objection of the appellant is that statement on oath could not be recorded in course of ....
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.... whereby cash, jewellery, books of account and certain documents were found and seized - Assessee on same day had given a statement under section 132(4) whereunder admissions with regard to unaccounted income of Rs. 6.20 lakhs were made - Said unaccounted income consisted of marriage expenditure, unexplained household expenditure, etc. - Assessing Officer, made additions in respect of unaccounted income of Rs. 6.20 lakhs admitted under section 132(4) - However, after lapse of about nine months from date of admission, assessee through an affidavit sought to retract from statement made under section 132(4) on ground that (a) when there was no evidence or incriminating material discovered at time of search no addition could have been made merely on basis of statement under section 132(4) and (b) that impugned disclosure under admission was obtained forcefully and, hence, not binding - Whether statement recorded under section 132(4) is an evidence by itself and any retraction contrary to that should be supported by strong evidence for demonstrating that earlier evidence recorded was under coercion - Held, yes - Whether assessee retracted from his earlier statement without demonstrating....
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....- Whether any statement recorded under section 132(4), statutorily deemed to have evidentiary value, cannot be retracted at mere will of party - Held, yes - Whether a statement made under oath deemed and permitted to be used in evidence, by express statutory provision, has to be taken as true unless there is contra evidence to dispel such assumption - Held, yes - Pursuant to a search conducted at residential premises of assessee, Assessing Officer computed undisclosed income on basis of clear admission made by assessee in sworn statement recorded under section 132(4) - First addition was with regard to actual money paid by assessee for purchase of four properties - Assessee had voluntarily submitted before ITO that amount shown in document with regard to purchase of four properties were not actual amounts and he had paid more than that shown in documents - Second addition was with respect to personal expenses - Last additions was of amount of Rs. 3 lakh which assessee claimed as an NRI loan in his cash flow statement and later in a reply stated to be a loan from his elder brother - Later on, assessee retracted from his statement and contended that admissions were made under threat ....
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.... found to be acceptable and rejected. However, the documentary evidence to clarify the admission made is admitted in the interest of justice. The facts of the case are considered. In the statement recorded during The assessee only admitted that out of total expenditure as recorded on the paper found during the survey of Rs. 20,22,500/- an amount of Rs. 9,75,000/- was not paid by him because the assessee purchased only 50 per cent share in the property. No evidence brought on record by the AO to prove that the assessee paid entire amount. The document was explained by the appellant with reasoning during the survey also. Therefore, the addition of entire amount of transaction in the hands of the appellant was not found to be justified. In view of these facts, the addition made by the AO is reduced by Rs. 9,75,000/-. The appellant gets a relief of Rs. 9,75,000/-. Remaining addition amount of Rs. 10,47,500/- is confirmed. The appellant gets a partial relief. The ground number 1 is treated as partially allowed." Hence this ground. Submission: 1. At the outset we strongly place reliance upon our detailed submissions made before AO as also before the CIT(A....
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....pted for S. 44 AD Presumptive Taxation does not mean that accounts otherwise regularly maintained cannot be relied upon. The assessee merely stated the position of law u/s 44AD but never categorically denied maintaining accounts hence there is no contradiction as alleged by CIT(A). Thus, the assessee merely paid Rs. 9,75,000/- and that too was duly accounted for. Although, specific contention was raised to this effect, in Para 4.6.1 reproduced at page 52 of the appellate order, yet however, the CIT(A) completely ignored this vital fact that the subjected payment of Rs. 9,75,000/- was duly accounted for. The accounts produced were not rejected, by the AO or CIT(A). The CIT(A) however, did not appreciate these facts correctly and sustained the addition to the extent Rs. 10,47,500/- granting relief of Rs. 9,75,000/-. Once he has already granted relief to the extent of Rs. 9,75,000/-, there is no reason why the balance amount of Rs. 10,47,500/- be not deleted, which was a part of the purchase consideration already paid by Shri Devilal to the seller at the time of purchase long back. 5.1 Reply filed during Remand Report (reproduced in CIT(A) order at pg. 37): ....
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.... at village- Mandliya in his Benamidar Shri Devi Lal Bairwa from his undisclosed income. Hence, an addition of Rs. 20,22,500/- was made by the then AO and added to the total income of the assessee as undisclosed income. Hence, the AO had rightly made addition of Rs. 20,22,500/- and the contention of the assessee is not acceptable being not correct." No adverse comment in the Remand Report nor any concrete evidence brought on record to show that the entire consideration was paid by the assessee alone. Hence above addition of Rs. 10,47,500/- deserves a complete deletion. D-GOA-2: Part1: Alleged Cash payment to Devilal Bairwa: Facts: As discussed in AGOA-3 above. Revenue in this ground of appeal raised the following issue: "Whether on facts and in circumstances of the case, the Ld. CIT(A) is justified in not appreciating the facts that in respect of cash payment to Devilal Bairwa and Ajay Modi and that the assessee failed to the discharge the onus to prove with explanation of the persons concerned in respect of these transactions." D-GOA-3: Deletion of Rs. 9,75,000/- (out of Rs. 20,22,500/- w.r.t. unexplained investment in purchase of land)....
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.... Thus, under totality of the facts and circumstances detailed above these two grounds taken by the Revenue deserves to be dismissed. AGOA - 4: Additions of alleged cash payments of Rs. 1.58 crores (58 lacs and Rs. 60 lacs) to Shri Ajay Modi (Bhagat Public School): Facts: This addition consists of three figures being Rs. 40 lacs, Rs. 60 lacs and Rs. 58 lacs paid to Shri Ajay Modi. The AO has dealt with this issue Pg.4 Pr. 5 and copied at page no.7 of CIT(A) order. The detailed written submissions dt.19.11.2019 filed before the CIT(A) are at page no.9 para 4.2, the remand report thereupon by the AO dt. 07.06.2023 is at page no.35 para 4.4, the rejoinder dt. 20.06.2023 at page no. 47 para 4.5 and finally the findings of the CIT(A) are at page no.52 onwards para 4.6. The addition of Rs. 60 lacs & Rs. 58 lacs were confirmed by CIT(A) hence, the assessee is in appeal (though addition of Rs. 58 lacs is not being pressed) whereas, addition of Rs. 40 lac was deleted, against which the department is not in appeal. The facts as noted by the ld. CIT(A) and his findings at Pg.57 are as under: "ii. Addition of Rs 1,58,00,000/- on the basis of ....
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.... the course of survey proceedings. On the above facts, assessee has made expenses and cash payment to Shri Ajay Modi from his unaccounted income of Rs. 1,65,00,000/- out of which Rs. 1,58,00,000/- made during the FY 2015-16 and Rs. 7,00,000/- in the F.Y. 2016-17. Hence, considering his statements given during survey proceedings. Hence, an addition of Rs. 1,58,00,000/- is made in assessment year 2016-17 and added to the total income of the assessee. The appellant explained with regard to addition made of Rs. 1,58,00,000/- as under: 1. Rs. 18,00,000/- through cheque to Mr. Ajay Modi by Nisha Jain 2. Rs. 22,00,000/- through cheque to Ajay Modi by Nisha jain. 3. Rs. 58,00,000/- in cash to Mr. Ajay Modi by Naresh Jain 4. Rs. 60,00,000/- was to be paid for CBSE affiliation but did not materialize and transaction did not take place. The appellant argued that he has duly retracted the statement by filing Affidavit dated 14.02.2017 before the ADIT(Inv.), hence the alleged statement does not have any evidentiary value. The evidentiary value of the statement is already discussed in the preceding paragraphs. In view of the....
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....unt of Rs. 60,00,000/- has never been paid as appeared in the alleged agreement being de-facto & de-jure, the deal was not materialized. The explanation of the appellant that the amount of Rs. 60,00,000/- was not paid is not found to be acceptable because, if the payment was not made, the same should have been mentioned during the survey. The cash transaction takes place in secret manner and there is no trace is left. Therefore in the absence of credible evidence, the claim of the appellant remains unsupported with any evidence. The logic of the appellant that because the deal was not materialised the payment is not made is also hollow claim. The deal was for entire transaction and not for piecemeal work. The appellant has accepted other transactions like the payment made by Ms. Nisha Jain of Rs. 40,00,00/- and payment of Rs. 58,00,000/- recorded on same evidence impounded during survey. Therefore, the claim of the appellant is not found to be acceptable and the addition of Rs. 60,00,000/- made by the AO is found to be justified and confirmed. The appellant further stated that source of such advance of Rs. 58 lacs is treated as application of additional income dec....
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....lacs did not materialize at all. It was an erroneous term which was not rectified in the due course." The ld. CIT(A) rejected such contention saying that such facts should have been mentioned during the survey; normally cash transactions take place in secret manner and it was a composite deal for the entire transaction and not for piecemeal work. However, such findings are completely contrary to the facts on record and a purported misreading, as submitted hereunder: 2A 1.2 Firstly, the very fact that the parties in the said agreement has given the breakup showing different heads of the total agreed consideration of Rs. 3 crores (as alleged) towards taking over of the management of Bhagat Public School, viz. towards security money, construction expenses. One of the head was expenses for CBSE affiliation, which itself imply that it was not a composite contract of Rs. 3 crore payable to Shri Modi. In the agreement there is no whisper that the entire Rs. 3 crores was payable to Shri Modi even though part of the work is not carried out by him or some of the terms & conditions are not fulfilled by Shri Modi. The very fact showing specific amounts payable towards a speci....
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.... and therefore, a specific contention of non-inquiry from him, was also raised before the CIT(A)(Pg.61) but was rejected as under: "It is argued that no inquiries have been made from Shri Ajay Modi to whom the alleged amount of Rs. 1.58 crore was alleged to be paid. The argument of the appellant are not relevant for the case of the appellant as the appellant has accepted making payment in cash in his statement. Whether inquiry is made from the receiver or not is of no consequence in the case of the appellant. Hence, the argument of the appellant is not found to be relevant and the same is rejected." 2A 2. Transaction fall in the AY 2014-15: 2A 2.1 In the alternative, even assuming it is held that the assessee made the payment of 60 lakhs, but there is no evidence found during the course of survey nor referred by the revenue to show that such unexplained investment was made in subjected AY 2016-17 only. On the contrary, the said agreement, heavily relied upon by the AO itself shows at page 1 para1, that the amount of Rs. 60 lakhs was already kept deposited with the first party Ajay Modi in the following words: "tatha CBSE affiliation mein....
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....ejoinder made before him, at Page 64, Para. 4.6 concluded in following words: Hence this ground. Submission: 1. At the outset we strongly place reliance upon our detailed submissions made before AO as also before the CIT(A). 2. During appellate proceedings, remand report was called for by ld. CIT(A) whereby assessee submitted rejoinder as under (also reproduced at CIT(A) pg 51): "Addition of Rs. 55,490/- on account of un-accounted agriculture expenses. (i) It is very humbly submitted that referring to the facts and circumstances of the case and the submissions filed by the appellant with relevant documentary evidences, the Assessing Authority interalia observes that- During the course of Survey Proceedings, page No 12 of Exhibit 11 was impounded wherein agricultuural expenses of Rs. 55,490/-. Therefore, same expenses of Rs. 55,490/- is addeded to total income of the assessee. Hence the AO had rightly made addition of Rs. 55,490/- and the contention of the assessee is not acceptable being not correct." It is very humbly submitted that L'd Assessing Authority itself has interalia observed that 'During Assessment pro....
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....e addition of Rs. 9,50,000/- on account of unaccounted investment in ST land situated at Mandana Kota: Facts: The AO has dealt with this issue at Pg 8 Pr 6 and copied at page no.9 para 4.1 of CIT(A) order. The detailed written submissions dt.19.11.2019 filed before the CIT(A) are at page no.28 para 4.2, the remand report thereupon by the AO dt. 07.06.2023 is at page no.45 para 4.4, the rejoinder dt. 20.06.2023 at page no. 50 para 4.5 and finally the ld. CIT(A), after considering the detailed submissions, the remand report, rejoinder made before him, at Page 62, Para. 4.6 concluded in following words: "iii. Addition of Rs 9,50,000 as unaccounted investment (Ground No. 5) During the course of assessment proceedings, the AO had relied upon the statement recorded during the course of survey proceedings. In view of above facts, the AO had made addition of Rs. 9,50,000/- for the assessment year 2016-17 and added to the total income of assessee. The appellant argued that he is an individual and shown his business income as per provision of Section 44AD of the Act and hence, not liable to maintain his books of account. The reply of the ....
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....the appellant in their Personal Balance sheet as on 31/03/2017. Considering the reply of the appellant that transaction was dated 4-11-2016 pertaining to AY 2017-18. The addition made during the year is not found to be sustainable as the transaction does not pertain to the current year. Therefore, the addition is deleted in current year. However, this amount is added in AY 2017-18 by way of enhancement. The appellant gets relief of Rs. 9,50,000/- in the current year. The ground no. 5 is accordingly treated as allowed." Hence this ground. Submission: 1. We strongly rely upon our detailed submissions (Pg.9-35 Pr.4.2) and rejoinder (Pg.47-52 Pr.4.5 of CIT(A) Order) and the paper book filed before the CIT(A). 2. We place strong reliance on the order of the CIT(A) to the extent, his findings and observations are given in the favour of assessee. 3. The ld. CIT(A) has not completely deleted this addition but merely that it pertains to AY 2017-18 and rightly so because in the impounded paper (APB 47) itself the date mentioned towards Rs. 9.50 lakh as advance given was 04.11.2016 which falls to AY 2017-18. Accordingly, the CIT(A) h....
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....oping in dealing with the Income Tax issues before them. The appellant relied upon the decision of Apex Court in case of Mahaveer Kumar Jain v. CIT (2018) 404 ITR 738 : 302 CTR 1 : 255 Taxman 161 : 165 DTR 113 (SC)], ITAT Jaipur in the case of Kushal Dasot v/s ACIT, Circle-7, Jaipur, in Appeal No ITA-675/JP/2012, Bombay High Court, in the case of Commissioner Of Income-Tax, ... vs Jawanmal Gemaji Gandhi on 5 October, 1983 discussing on the earlier decision of Kerala High Court in [1980] 121 ITR 433. The facts related to claim of telescoping benefit is presented as under AY 2013-14 (Rs. 5,53,474/-) Return filed in response to notice u/s 148 on 23.03.2019. The same assessed on 3-07-2019. The assessee claimed this amount as income from other sources. This amount was in the form of cash withdrawn from excess salary claimed to be paid to employees in Bhagat Public School. AY 2014-15 (Rs. 16,34,573/-) Return filed in response to notice u/s 148 on 08.04.2019. The same assessed on 3-07-2019. The assesse claimed this amount as income from other sources. This amount was in the form of cash withdrawn from excess salary claimed to be paid to employe....
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.... income or only on its application. The telescopic theory operates on the basic presumption that when there are undisclosed income and also certain undisclosed investments, then it could be reasonably presumed that the undisclosed investments have been sourced out of the undisclosed income, so that only the income may be taxed or only the investment may be taxed and not both, in the hands of the assessee under the provisions of the Act. When an income is taxed/addition is made to taxable income in an earlier year, the assessee may claim that the income arising in subsequent year/subsequent period is sourced out of the income taxed earlier. Hon'ble Bombay High Court held in the case of CIT v. Jawanmal Gemaji Gandhi [1983] 15 Taxman 487 (Bombay)/[1985] 151 ITR 353 (Bombay)/[1984] 39 CTR 127 (Bombay)[05-10-1983] held as under - "The Supreme Court has held in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457 that the secret profits or undisclosed income of an assessee earned in an earlier assessment year can constitute a fund, though concealed, from which the assessee may draw subsequently. The assessee, in the instant case, acquired the gold in th....
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....Rs. 16,950 could not, therefore, be added as income from undisclosed sources. Additions were made to the trading results as also amounts representing cash credits were added as income from undisclosed sources. The Tribunal found that the additions in trading results would cover the amount of cash credits as also substantial additions had been made in earlier years, it was held that the Tribunal was justified in deleting the addition on account of cash credits. - [CIT v. Tyaryamal Balchand (1987) 165 ITR 453 (Raj)] In view of the decisions relied upon by the appellant and the decisions discussed above, the additional income declared by the appellant in the return filed u/s 148 in earlier years would cover the amount of unexplained investments of the current year. The claim of the appellant is found to be acceptable in this regard. Accordingly, following additions confirmed in appeal are given benefit of telescoping. Rs. 10,47,500/- (2022500-975000) Rs. 58,00,000/- Rs. 60,00,000/- Rs. 55,490/- Total Rs. 1,29,02,990/- As discussed earlier, Rs. 1,00,30,778/- was already available with the assessee during the year as per add....
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.... Net Addition sustained after telescoping benefit (8-7) 28,72,212/- 4. Submission on AGOA-10: 4.1 The ld. CIT (A) has wrongly reduced Rs. 11,60,000/- showing as income utilising in AY 2015-16, which is contrary to the facts on record in as much as in this case, additions were made to the extent of Rs. 13,18,875/- by the AO in its order dated 20.12.2018 passed u/s 147 r/w 143(3)(APB-90-97), against which the assessee went in appeal. However since the assessee opted for VSV(APB-98-101), the appeal stood withdrawn and dismissed vide order dated 29.03.2022 of the CIT (A)-2, Udaipur (APB-102). The assessee accordingly even paid tax which became due under VSV (APB-100). Admittedly since, the assessee is not disputing this addition and paid the taxes thereon, it can't be a case of the income utilized and hence could not have been reduced for the purposes of computing availability of cash for telescoping. Thus, the addition sustained by the CIT(A) of Rs. 28,32,212/- has to be reduced by 11,60,00 and the net amount should remain at Rs. 16,72,212/- only. 4.2 However again, the above is the position upto the stage of CIT(A). If these additions (of outgoing....
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....94/-: on account of alleged receipt from staff of Bhagat Public School u/s 69A of the Act. * Rs. 55,490/-: on account of alleged unaccounted agriculture expenses. Submission: 1. At the outset it is submitted that the AO before invoking S.115BBE never confronted assessee, which is serious violation of principles of natural justice therefore, application of S.115BBE deserves to be quashed on this ground alone. 2. Invoking S. 115BBE of the Act is without jurisdiction: There is absolutely no case made out by AO to invoke S.115BBE. Admittedly the additions so made which are under challenge, are not the income from other sources but by AO's own admission, these are the cases of business income only. Once it is so, S.115BBE cannot be invoked. The entire impugned additions as listed above though not at all admitted but once made, could not have been assessed as income under the head Income From Other Sources. (these submissions are without prejudice to our basic contention that the entire additions itself was bad in law and without jurisdiction and for various reasons). 3. AO can't change head of income: 3.1 It is submitted that S.115BB....
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....hd/2009 AY 2004-05 dated 05.08.2011) held that for invoking deeming provisions u/s 69, 69A, 69B & 69C of the Act there should be clearly identifiable investment or asset or expenditure (i.e. in our understanding not connected with business so as to make convenient to invoke aforesaid sections). In case source of investment or asset or expenditure is clearly identifiable and has no independent existence of its own where a case arises to claim that it cannot be separated from business then first 'what is to be taxed is the undisclosed business receipt. Only on failure of such exercise, it would be regarded as taxable u/s 69 on the premises that such excess investment or asset or expenditure is unexplained and unidentified, satisfying the mandate of the law. 4.3 In the case of Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014-15 dated 25.05.2018), the Jodhpur Tribunal applying the proposition of law laid down by the Hon'ble Rajasthan High Court in the Bajargan Traders (supra), held that the lower authorities were not justified in taxing the surrender made on account of excess stock and excess cash found U/s 69 of the Act and accordingly held that there is no....
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....nd No. 1, it is noted that the assessee has challenged the legality of the survey conducted, however in the absence of any contention raised in support of this ground by the ld.AR of the assessee, the Ground No. 1 of the assessee is dismissed. At the time of hearing with regard to the ground no.2 taken by the assessee, the ld A/R pointed out that there are certain typing mistakes which does not convey the real grievance raised by the appellant in as much as S. 131 has been wrongly typed as against S. 133A and also that the said ground has not been properly drafted. Therefore, a prayer for modification of the ground of appeal by way of modifying the grounds of appeal no. AGOA NO. 2 was submitted. After careful consideration of such a prayer and after going through the modified ground, we do not find anything new or extra or additional in nature nor it requires any investigation of facts therefore, such modification, is considered necessary for disposing of the appeal and to decide the issue therein raised by the assessee, hence the same is admitted. The original GOA No. 2 taken by the assessee shall be replaced/substituted by the following modified GOA No. 2 reproduced hereunder:....
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....s u/s 131 only in a given fact situation (as stated above), which manifests the legislative intention that statement of the assessee can be recorded under any of these three provisions as the situation may demand. Further, S.132(4) provides that such statement recorded during search may be used as evidence against the assessee in any proceedings, which is not the situation with S. 133A(3)(iii) nor with S. 131. In other words, though statement may be recorded on oath u/s 131, yet the statute not having provided such statement to be used as evidence against the assessee in any proceedings, the statement recorded under these two provisions loses their evidential value on the strict interpretation of the fiscal statute. Ignoring this significant difference will render the use of these words intendedly u/s 132(4), purposeless or nugatory. Therefore, to say that a statement recorded u/s 133A(3)(iii)/ or even u/s 133A(6) r/w s. 131, is equivalent to a statement recorded u/s 132(4) to be used as evidence against the assessee, is a gross misinterpretation of the provisions. We thus, agree with the contentions raised by the ld. A/R Shri Gargieya. We are supported by the decision, in case of ....
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.... that the word 'may' occurring in Section 133A(3)(iii) of the Act "clarifies beyond doubt that the material collected and the statement recorded during the survey is not a conclusive piece of evidence by itself." Incidentally, the decision of the Madras High Court in S. Khader Khan Son (supra) has been affirmed by the Supreme Court by the dismissal on 20th September, 2012 of SLP (Civil) No. 13224/2008 filed by the Revenue against the said decision after granting leave. To the same effect is the decision of this Court in Sunrise Tooling System (P.) Ltd. (supra) and of the Jharkhand High Court in Shree Ganesh Trading Co. (supra). The CBDT's instructions dated 10th March, 2003 and 18th December, 2014 have also emphasized that there should be no recording of statement during "search/seizure/other proceeding" under the Act under "undue pressure or coercion". 42. Therefore, in the present case, it would be wrong on the part of the Revenue to characterize the statement of Mr. Pawan Gadia as by itself an incriminating material that could be used for making additions in all the AYs in question apart from the year of search." Further the ITAT, Jaipur in the case of Un....
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....in that case, validity of survey itself was under challenge and the statements were recorded u/s 131 r/w 133A(6) because of non-cooperation from the side of the assessee and powers were also assumed u/s 131(1A) of the Act, which is not the case here hence, the same is completely distinguishable. The decision in the case of Dinesh Jain (Supra) is also not applicable in as much as there also, the lower authorities were not satisfied with the explanation furnished w.r.t the impounded document though the assessee had earlier admitted income based thereon, which are not the facts in the present case. Moreover, Meeta Gutgutia (Supra) is a much later decision, making a comparative study of the relevant provisions in detail. Thus, respectfully following the ratio laid down in the above cited decisions, we are of the considered opinion that, the plea of the Revenue that the CIT(A) should have solely relied upon the survey statement of Shri Naresh Jain recorded u/s 133A(3)(iii) (or even u/s 131 on oath) admitting income but ignoring the impounded documents found and the explanation furnished thereon with the supporting evidences should be ignored, can not be accepted. We are thus not in agre....
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....00/- + Rs. 72,500/-) made by the AO based on impounded document being Exhibit 4 Pg 1-9 , which is a registered sale deed dot. 29.06.2015 in the name of one Devilal Bairava showing the purchase of the agricultural land for Rs. 19,50,000/- and further Exhibit 9 Pg. 2 relates to expenditure incurred of Rs. 72,500 agricultural land at Mandaliya 5 and based on Q&A No. 23 of the appellant recorded during survey on 04.02.2017 wherein, the assessee admitted making cash payment of Rs. ,75,000/-. Out of the total addition made by the AO of Rs. 20,22,500/-, the CIT(A) deleted the addition of Rs. 9,75,000/- which is under challenge by the Revenue in its D-GOA-3 however, he confirmed the addition of Rs. 10,47,500/- which is under challenge by the assessee in its A-GOA-3 . Since these cross grounds relate to the same issue and addition, we are dealing with the same at one place. 5.2 On a careful consideration of the rival contentions, the material available on record and in the light of the judicial pronouncements cited at bar, we find no force in the ground of the Revenue. The undisputed facts are that the impounded registered sale deed dated 29.06.2015 copy of which is placed at assessee PB....
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....s no force in the ground taken by the Revenue. In the result, GOA-3 taken by the assessee is hereby allowed whereas GOA-3 taken by the Revenue is hereby dismissed. 6.1. In ground No. 4, the assessee has challenged the addition made on account of the alleged cash payments of Rs. 60 lakh and Rs. 58 lakh made to one Ajay Modi in connection with taking over the management of Bhagat Public School. The addition is based on an impounded document, an agreement dated 16.10.2015 impounded as Annexure-A, Exhibit 11, Page no. 7 (APB 46), which contained information about cash payment of Rs. 30 lakh made to Ajay Modi and the statement of the assessee recorded during the course of the survey u/s 133A of the Act vide Q&A 23 (APB 74) and 26, whereby the payment of Rs. 3 Crore is stated to have been admitted by the assessee (out of this, Rs. 1.65 Crore are cash payments not recorded in the accounts). However, the present dispute is confined to the addition of Rs. 60 lakh only, although in the grounds taken by the assessee, the addition of Rs. 58 lakh has also been assailed but during the course of the hearing and in the written submission, this part of the ground was not pressed. For completenes....
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....he ground of the Revenue. It is noticed from a perusal of the assessment order that the AO invoked S. 115BBE of the Act with reference to the total additions made by him totaling Rs. 2, 46,40,114/-, the detailed breakup of which is available in the written submission of the assessee reproduced somewhere in this order. However thereafter, the additions were subjected to scrutiny by the CIT(A) and his order is now under challenge before us by way of cross appeals by the parties. Therefore, only those additions which are finally sustained up to the stage of the ITAT may be subjected to application of S. 115BBE of the Act, if at all so required. Since some of the additions have been sustained by us and some of the grounds relating to additions, though agitated, were not pressed. Hence, the following additions have been sustained finally: addition of Rs. 58 lakh (out of Rs. 1.58 crore), being the unexplained payment made to Shri Ajay Modi in relation to Bhagat Public School, Kota, Rs. 48,46,094/- addition made u/s 69A of the Act on account of receipt of excess salary paid to the staff of Bhagat Public School - Not pressed and Rs. 55,490/- unaccounted agriculture expenses. Thus, total ad....
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....peal of the Department in ITA No. 349/JPR/2024. 12.1 In ground of appeal no. 1 taken by the Revenue, the deletion of the total addition of Rs. 2,36,73,684/- which are alleged to be based on incriminating documents and also contrary to the admission made by Naresh Jain in the statement recorded on oath u/s 131. However, we find that this total Rs. 2.37 Crore (app.) consisted of various additions discussed in the other grounds of appeal already taken by the Revenue and appears to be general in nature, hence no separate adjudication is required. However, the other part of the ground placing reliance on the admission by the assessee, has already been dealt with while deciding assessee's modified grounds of appeal no. 2 herein above and decided against the Revenue. Hence the latter part of this ground is dismissed, as indicated above. 13.1 In ground no. 2 taken by the Revenue, the Revenue has alleged that the ld. CIT(A) did not appreciate that cash payments were made to Devilal Bairwa and Ajay Modi and the assessee failed to discharge the onus, to prove with explanation of the concerned persons. However, we find that a part of this ground relating to payment made to Devilal Bairwa....
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....ements cited at bar, we find no force in the ground of the Revenue. At the time of the hearing, the ld A/R of the assessee made oral prayer for admission of a legal grounds of appeal which was also repeated in its written submissions to the effect that the ld. CIT(A) wrongly computed the amount of benefit of telescoping and that the same has to be recomputed in the light of the result in the ITAT order as both the parties are under appeal challenging the additions/deletions in this year. After careful consideration of the grounds so raised and the pleas so raised, we find that it is a purely legal ground of appeal and necessary facts to decide the issue are already available on record and do not require another examination of the facts hence following the decisions in the case of NTPC (229 ITR 383 (SC)), we admit the additional ground of appeal (which has been numbered as AGOA-10 by the assessee) and proceed to adjudicate the same. 16.3 Based on the said additional ground no.10, it was contended by the assessee that the l'd CIT(A) wrongly reduced the additions made, totalling to Rs. 11,60,000/- relating to A.Y- 15-16 as income utilised, from the cash availability (due to the add....