TaxTMI 
TaxTMI 
2024 (9) TMI 542
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....ddition of Rs 33,60,000/- made by AQ on the basis of incriminating documents containing registered document for purchase of property and supported by assessee's statement-by simply relying on dicta from the decision of Hon'ble High Court of Kerala in the case of C.K. Abdul Azeez vs. CIT. Central Circle, Calicut [2019] 111 taxmann.com 74(Kerala) that "Statement on oath made by an assessee to income tax authority during survey proceedings under section 133A is not conclusive, assessee can explain or withdraw admission, if any, made by him in such statement and assessment of tax cannot be made solely on basis of such sworn statement made by assessee under section 133A(3)(iii) and such statement can be used to corroborate other materials before assessing authority, including contents of any document which does not apply directly to present case as the addition was made on concrete evidence. 3 Whether on facts and in circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs. 7,10,000/- not considering the fact that it was made on the basis of incriminating documents impounded and the true explanation of Naresh Jan in statement was recorded on oath u....
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....n oath u/s 131, which contention appears totally contrary to the factual and legal finding recorded by the CIT(A: "With regard to evidentiary value of the statement recorded under oath u/s 131 it is held in various decisions that the statement recorded under oath is having evidentiary value. (At pg.25) 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]" (at pg.26) Thus, the CIT(A) clearly held that the statement recorded on oath u/s 131 do have evidentiary value. However, thereafter the ld. CIT(A) also held that statement recorded during survey is not conclusive and also recorded categorical finding of fact that the corroborative material used by the AO wherein the assessee admitted, was fully explained and thereafter, in absence of any other corroborative evidence such admission alone could not be made a basis of the addition. Hence Revenues ground has no merits (subject to prayer mentioned below)....
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....ndly rely upon a statement alone: 2.1 During survey dt. 02.02.2017 statements of assessee were recorded u/s 131 and various impugned addition were based on statement of Shri Naresh Jain. However, it's crucial to note that Shri Naresh Jain retracted his statement on 14.02.2017 (APB 8-11). In the light of this fact, our submission are follows. 2.2.1 Sole Statement, not a good basis for Addition: At the outset, we submit that no addition can be made merely and solely on the basis of a statement of a third party. The ld. AO heavily relied upon the statement of the Shri Naresh Jain recorded u/s 131 on dated 02.02.2017 by the Survey Team. However, the credibility of such statements is highly doubtful and not binding for various reasons, as enumerated below: 2.2.2 No addition permissible solely based on statements : Pertinently, the impugned additions have been made solely based on the statement of the assessee without any corroborative evidence, and that too ignoring the retraction. It is settled that an admission cannot be made the sole basis of assessment since it is a matter of common knowledge that during the course of Search/Survey, the Revenue Authorities normally do exer....
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....dish Narayan Ratan Kumar 22 TW 209 (JP). Such statements, therefore are bound to give a distorted picture and are not fully reliable as such. 2.4.2 On this aspect it will be quite relevant to refer to decision of Hon'ble Gujarat High Court Kailashben Manharlal Chokshi vs. CIT (2008) 14 DTR 257/ (2010) 328 ITR 411 (Guj.) wherein, it was held as under: "22. It is also to be seen as to whether an addition made is merely based on the statement recorded by the AO under s. 132(4) of the Act and whether any cognizance may be taken of the retracted statement. So far as case on hand is concerned, the glaring fact required to be noted is that the statement of the assessee was recorded under s. 132(4) of the Act at midnight. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement if such statement is recorded at such odd hours. Moreover, this statement was retracted after two months. 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities belo....
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....the business premises started the survey on 2nd February, 2017 at around 7AM which continued till 5th February, 2017 around 3:30AM. The survey was conducted based on some suspicious information about our connection with Allen Career Institute. The Officials of the survey team, recorded my statement from time to time to establish, that we have unrecorded transactions with M/s Allen Career Institute. Having not found anything incriminating with reference to our transaction with Allen Career Institute, they started looking into our personal affairs and pressurised me to give statement about my transactions/properties. 6. THAT I gave the statement as per my information and knowledge without any verification from the books of accounts. This statement continued from 2nd February, 2017 to 5th February, 2017 and my statement was recorded in more than 25 pages. The survey party impounded various documents, books and papers and asked me to sign each and every paper without providing me any opportunity to read what they have written in my statement and thus concluded the survey at around 3:30 AM on 5th February, 2017. I was so exhausted in this continuous survey that I signed the papers as ....
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.... to accept that the assessee did retract within a period of just four days from the date of admission during the course of survey statement on dated 02.02.2017. Even the revenue has not taken any specific ground on this aspect nor the ld. DR could controvert these facts. 3.3 There is a sharp contradiction in the findings recorded by CIT(A) because while dealing with the same retraction claimed (i.r.t. statement of Shri Naresh Jain), the CIT(A) in case of Smt. Nisha Jain AY2017-18 has recorded the following finding in para 5.6.2 at pg 38 of order "In this case, the retraction is with sufficient, credible and corroborative evidence to support his claim". 3.4 Legal Principles: 3.4.1 It is trite law that an admission, though best evidence against such person, if shown to be out of ambiguity, under tension or was against the facts or misconception of law, can be validly retracted. It has been held by the Hon'ble Supreme Court in Pullangode Rubber Produce Co. Ltd. vs. State of Kerala & Others 91 ITR 18 (SC): "Such admission is an extremely important piece of evidence, but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is....
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....atement of assessee can't be incriminating material: 4.1 ACIT, Central Circle-1(4), Ahmedabad v. Himalaya Darshan Developers (Gujarat) (P.) Ltd [2021] 128 taxmann.com 435 (Ahmedabad - Trib.) held as under: "Besides the above, the Assessing Officer has also made reference to the statement of the director of 'SJSL' recorded under section 132(4) and statement of another director under section 131(1A), wherein it was admitted that the company namely 'SJSL' is engaged in providing accommodation entries. Thus the same is a paper company. On perusal of the statement recorded under section 133(4) reproduced by the Assessing Officer in his order there was remarks made by such director to the effect that material/document seized during the search does not belong to the PS i.e. 'SJSL', or belong to the assessee company. In this regard, there were no incriminating material against OP was found in the search. Further, section 153C emphasize that there should be material or document seized which belong to the OP. As such statement recorded during search is not a material or document found and seized. Therefore, the statement recorded under section 132(4) cannot be con....
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....y or during Survey. However, if recourse is taken to section 131(1), during the survey, a statement can be recorded on oath, as the powers to record a statement on oath are vested in the authority u/s. 131(1) read with section 133(6) and in the circumstances specified u/s. 133(6) only. Section 133A does not empower any ITO to examine any person on oath, so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. 5.2 Further, the statute has provided different provisions looking to the different factual situations as regard recording of the statement, somewhere on oath and somewhere without oath, u/s 132(4) (in such matters), u/s 133A(3)(iii) (in survey case) and u/s131 (for general inquiry). These provisions operate independently in their respective fields and cannot be used interchangeably. S.133A(3)(iii) is separate and independent from S. 131, as evident from the further fact that S. 133A (6), refers to use of the powers 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 pro....
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....ct states that the authorized officer may, during the course of search and seizure, "examine on oath any person who is found to be in possession or control of any books of account, documents, monies, bullion, jewellery..."and that any statement made during such examination may be used thereafter in evidence in any proceeding under the Act. On the other hand, Section 133A does not talk of the recording of any statement on oath. Under Section 133A (3) (iii), the Income Tax Authority acting under the said provision could "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act." Therefore, there is a considerable difference in the nature of the statement recorded under Section 132(4) and that recorded under Section 133A(3)(iii) of the Act. 41. This distinction was noticed by this Court in Dhingra Metal Works (supra). The Court there 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 Son (supra) and observed that the word 'may' occurring in Section 133A(3)(iii) of the Act "clarifies beyond doubt that the material colle....
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....ii)-misinterpretation of law: 6.1 In this regard it is submitted that, such a contention, on a bare perusal of the related provision, is completely devoid of merit and rather a misreading and misinterpretation of the provision. During survey statements are recorded u/s 133A(3)(iii) of the Act only. However, recourse u/s131 (1) can be taken only if S.133A(6) is invoked. For ready reference S. 133A (6) is being reproduced hereunder: "(6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under [sub-section (1) of section 131] for enforcing compliance with the requirement made : [Provided that no action under sub-section (1) shall be taken by an Assistant Director or a Deputy Director or an Assessing Officer or a Tax Recovery Officer or an Inspector of Income-tax without obtaining the approval of the Joint Director or the Joint Commissioner, as the case may be.]" A bare per....
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.... at the same time, he considered the documentary evidences, furnished by the assessee, with a view to explain the impounded document and clarify the admission made, hence, it can't be said that the CIT(A) granted relief only and only on the legal aspect (that statement recorded during survey u/s 133A(3)(iii) and/or u/s 131, has no evidentary value and not being conclusive, no addition can be made merely on that basis). On the contrary, it is discernible from his findings in all the 4 cases, where he has granted relief, he has extensively dealt with the merits of each case for examining the impounded documents, explanation of assessee, remand report and rejoinder etc., independently. Thus, under totality of the facts and circumstances detailed above, the CIT(A) order rightly deleted the addition. Therefore, this ground taken by the revenue deserves to be dismissed. 7. Regarding DGOA-6 raised by Revenue w.r.t. deleting of addition Rs. 1,43,67,131/- out of Rs. 1,83,20,000/- which alleged to be based on incriminating documents. it is submitted that since this ground is already considered in detail in various grounds (w.r.t. different amount included therein) above, no separate ....
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....his payment was not recorded in his books of accounts. This cash payment has not been accounted either by Naresh Jain or Nisha Jain. The entire submission of the assessee is considered an afterthought Therefore, his submission is not found maintainable, the amount of Rs. 33,60,000/- as paid in cash for purchase of house is added to the total income of the assessee as undisclosed income u/s 69. The appellant argued that the said amount was spent for construction of house situated at 7 Wonder Road, Kachibasti, Kota duly recorded in the books of accounts of his wife -Nisha Jain whose case was concurrently assessed by the L'd. AO himself. Hence, arbitrary addition made of Rs. 33,60,000/- and Rs. 5,00,000/- is bad in law and liable to be deleted. It is argued that the sale-purchase agreement of Rs. 57,50,000/- was executed by Pradeep Sharma and not signed by the appellant. Later on the Registry was made by Pradeep Sharma and Smt Nisha Jain and all payments amounting to Rs. 64,18,000/- were made by Smt Nisha Jain- Prop. of M/s Quick Advertising Company, Kota It is argued that the impounded document is an incomplete sale-purchase agreement between Pradeep Sharma as vendor and the ap....
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.... house property de-facto and de-jure belongs to Smt Nisha Jain W/o appellant and all the cost of house and construction expenses have been borne by Smt Nisha Jain and the same are well appearing in the books of Quick Advertising Company, Proprietor- Smt Nisha Jain. It is argued that Smt Nisha Jain is also Assessed to Tax, and information to the effect that this house has been purchased by Nisha Jain for Rs. 64,18,000/- and all the payments have been made through the books of accounts of Nisha Jain. The appellant also furnished following details in support of his arguments- -Ledger Account of Quick Advertising Company, showing expenses on purchase and repairs/construction in house at Kachhi Basti- (APB 85) -Copy of Cash Book Pages of relevant dates having cash in hand to meet the payments in cash (APB 86-88) relevant page of Bank Account with Syndicate Bank showing payment for purchase of above said property (APB 89-91) -Fixed Assets Depreciation Chart showing Rs. 64,18,000/- against New House at Sarovar Road, Kota, of Nisha Jain (APB 92) It is argued that as appearing in the supporting papers/documents as above, all the relevant amounts are duly reflected in the books of ....
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.... by documentary evidences. How, this expenditure of Rs. 5 lakhs is included in the amount of Rs. 33,60,0000/- is not explained with supporting evidences. Therefore, the explanation of the appellant is not found to be convincing and the same is rejected. The addition made by the AO of Rs. 5,00,000/- is based on admission in statement recorded during the survey and also supported by corroborative evidence in the form of impounded documents. The appellant could not explain the contents of the impounded document in the assessment as well as during the appellate proceedings. The appellant was provided sufficient opportunity in the remand proceedings also. However, the appellant has not furnished any plausible explanation. Therefore, the action of the AO in making addition of Rs. 5,00,000/- is found to be justified and upheld. In result of these grounds, ground number 4 is deleted and ground number 5 is dismissed." Submission: 1. At the outset we strongly place reliance upon our detailed submissions made before AO as also before the CIT(A). 2. We also place strong reliance upon the order of the CIT(A) to the extent (Pg. 38, Para 6.6) his findings and observations are given in the....
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.... in Cash and mainly does cover construction/repairs & registration related expenses etc. paid to Pradeep Sharma. The relevant transactions/entries are appearing in the ledger accounts of Quick Advertising. 6. Voluminous evidences submitted before lower authorities but could not be rebutted by the AO: The assessee in support of his claim submitted following documents before lower authorities listed hereunder: * Sale Purchase Deed agreement of house property at Kachhi Basti, 7 Wonders Road, Kota, (APB 79 to 84) * Ledger Account Quick Advertising Company, showing expenses on purchase and repairs/construction in house at Kachhi Basti- (APB 85) * Copy of Cash Book Pages of relevant dates having cash in hand to meet the payments in cash, (APB 86 to 88) * Relevant page of Bank Account with Syndicate Bank showing payment for purchase of above said property (APB 89 to 91) * Fixed Assets Depreciation Chart showing Rs. 64,18,000/- against New House at Sarovar Road, Kota, of Nisha Jain, (APB 92) Pertinently, the Accounts of Smt. Nisha Jain Prop. M/s Quick Attaching Agency were duly produced before the AO. However, the AO could not find any fault therein, nor therefore he rejected....
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.... confirming/indicating that these figures relate to any value in Rupee Term. It is also very humbly submitted that page No 68 of the impounded documents is just a rough jotting and does carry any material information. (ii) It appears that the Survey Team/Assessing Authority placing reliance on the reply of appellant for Q-23 of Recorded Statement 'On page No 68, there is account figures of construction expenses for house at 7 Wonders, Kachhibasti, Kota, and this amount is Rs. 5.00 lac, paid to in cash to the Contractor Ramesh Kharwal and has not been entered in the books of accounts"has taken these figures to (i)indicate value in rupee terms and (ii) The value pertains to some masonary items, construction, repair works etc. and resultnatly made addition of Rs. 5,00,000/- in the taxable income of appellant as undisclosed investment. (iii) Detailed submission and relevant clarifications have already been made by the appellant vide reply letter dated 18/12/2019 about the facts and circumstances of purchase of house property and the amount of Rs. 5,00,000/- includes the amount Rs. 33,60,000/- spent in cash on 26/04/2016 towards construction/repair of the above said house property, ....
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....before him, at Page 46, Para. 7.6 concluded in following words: "7.6 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted that during the Survey action at office premises of Shri Naresh Jain some incriminating documents were seized and inventories by Annexure-A, Exhibit-2. This annexure was shown to Shri Naresh Jain he explained that these documents related to agreement, power of attorney etc of agriculture land at Hanutia Road, Vill.- Mandana, Kota. Shri Naresh Jain again admitted that only a sum of Rs. 6,90,000/- was paid through cheque and balance Rs. 7,10,000/- was paid in cash. The cash payment was nowhere recorded in books of accounts. Regarding this assessee filed his reply in which the assessee has accepted the cash payment however only contention is the AY in which the amount to be taxed is not 2017-18. The reply of the assessee is considered but not found acceptable. As per the submission made by the assessee, he himself accepted in h....
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....d. Here the transaction of cash is not denied by the appellant but according to the appellant, the relevant AY should be AY 2009-10 and not AY 2017-18. The appellant has furnished the copy of agreement of transaction of Agricultural land situated at Hanutia Road, village Mandana, Tehsil Ladpura District Kota, admeasuring 0.75 hectare and recorded with the Revenue Department under Khasra No 73. The actual entry date in the documents/papers is 03/10/2008 and the sale-purchase agreement executed on 06/10/2008 which makes it to pertaining to A/Y 2009- 10 and not to A/Y 2017-18. No evidence is brought on record which could prove that the cash transaction is pertaining to AY 2017-18. The appellant is in a position to prove that the land was purchased during AY 2009-10. Therefore, the related cash transaction cannot be assumed to be belonging to AY 2017-18. Therefore, the addition made by the AO during this AY 2017-18 is not found to be sustainable and deleted. The ground numbers 6 and 7 of appeal are treated as allowed." Submission: 1. At the outset we strongly place reliance upon our detailed submissions made before AO as also before the CIT(A). 2. We also place strong reliance ....
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.... finally the ld. CIT(A), after considering the detailed submissions, the remand report, rejoinder made before him, at Page 53, Para. 8.6 concluded in following words: "8.6 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO noted in this case that during the survey action u/s 133A of the Income Tax Act at office premises of Shri Naresh Jain some incriminating documents were seized and inventoried by Annexure-A, Exhibit-13 (APB 113). This annexure was shown to Shri Naresh Jain and was specifically asked the nature thereof. He explained that this document was related to expenses incurred for construction of house at E-15, Ballabhbari, Kota, wherein a sum of Rs. 35,00,000/- was spent in cash and this cash payment was also nowhere recorded in books of accounts. He again submitted that at this moment he couldn't explain as to how much expenditure was already recorded in regular books of accounts, and shall explain the same later on. Regarding this assessee f....
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....t Rs. 35.00 lac on page No 358 of the relevant Exhibit inventorized by the Survey Team. How much amount out of the expenses has been recorded in books, I have no knowledge at the hour. I shall provide the details later on. Therefore, during the survey also the appellant claimed that some of the amount is entered in the books of accounts. The appellant has now furnished evidences to show that out of Rs. 35,00,000/-the sum of Rs. 27,97,131/- has been accounted for in the books of accounts by Smt. Nisha Jain. The AO was asked to verify the claim of the appellant in the remand proceedings. No adverse comments received from the AO with regard to claim of the appellant that the amount of Rs. 27,97,131/- has been accounted for in the books of accounts by Smt. Nisha Jain. In view of these facts, since this amount is already entered in regular books of accounts of Mrs. Nisha Jain, the addition in the hands of the appellant is not found to be justified and deleted to that extent. The appellant has not explained the remaining amount of Rs. 7,02,869/-. However, it is stated that this should be appropriated out of the amount Rs. 46,43,251/-, already declared by the appellant under the head "O....
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.... the question is incomplete/ambiguous and cannot be relied upon and nothing meaningful, appellant query raised by the survey team, the appellant has replied that the amount relates to construction/repair/renovation of their house at E-15, Ballabhbari Kota. Placing undue emphasis on the recorded statement the Assessing Authority has added the amount in the income of appellant whereas actually the said amount has been booked and accounted for by Smt Nisha Jain, wife of appellant who happens to be proprietor of Quick Advertising Company Kota. This is against provisions under law and natural justice. It is very humbly submitted that as per books of accounts, actual figures work out to Rs. 27,97,131/ and not Rs. 35,00,000/- The sum of Rs. 27,97,131/- has been well accounted for in the books of accounts by Smt. Nisha Jain. However, the Assessing Authority did not agree with the submission made by the appellant in the reply letter dated 18/12/2019 against addition of Rs. 35,00,000/- (i) the actual expenses appearing in the books of accounts of Smt. Nisha Jain Rs. 27,97,131/ and balance amount (ii) of Rs. 7,02,869/- be appropriated out of the amount Rs. 46,43,251/-, already declared by t....
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....where recorded in books of accounts,' the Assessing Authority has ineralia observed - "The reply of assessee is perused but not found acceptable. As per submission made by assessee, he himself accepted in his statement u/s 131 that Cash payment Of Rs. 35,00,000/- was made for construction of house and the same was not entered in regular books of accounts. The Assessee has not produced any bills, vouchers, valuation report etc in support of claim" "The documents were found from the premises of the assessee and assessee has accepted the contents of documents and offered the amount as reflecting in the seized papers during survey for taxation and now during assessment proceedings the assessee is denying his own statement which is not acceptable. The entire submission of assessee is only an after thought to save himself from Tax liability. Therefore his submission is not found maintainable and sustainable in the eyes of law and hence the amount of Rs. 35,00,000/- as paid in cash for house construction is added to the total income of assessee as un-disclosed income u/s 69. Hence the AO had rightly made addition of Rs. 35,00,000/- and the contention of assessee/appellant is not acc....
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.... 218) (iii) Ledger Account showing payments routed through Bank Account & (APB 219 to 237) (iv) Assets Depreciation Chart showing Rs. 27,97,131, (APB 92). Thus, under totality of the facts and circumstances detailed above, the CIT(A) order rightly deleted the addition. Therefore, this ground taken by the revenue also deserves to be dismissed. DGOA-5: Rs. 75,00,000/-: on account of undisclosed income u/s 69C alleged expenditure on marriage of Shri Ativeer Jain (Son of Shri Naresh Jain) Facts: The AO has dealt with this issue at Pg. 10 para 9 and copied at page no.55 para 9.1 of CIT(A) order. The detailed written submissions dt. 02.12.2022 filed before the CIT(A) are at page no.56 para 9.2, the remand report thereupon by the AO dt. 07.06.2023 is at page no.59 para 9.4, the rejoinder dt. 29.06.2023 at page no. 62 para 9.5 and finally the ld. CIT(A), after considering the detailed submissions, the remand report, rejoinder made before him, at Page 64, Para. 9.6 concluded in following words: "9.6 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under considerati....
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....ant's son Ativeer Jain, was held on 17/01/2017 and for the occasion, a sum of Rs. 76,60,417/- as on 31/03/2017 and with the payment of unpaid items, the expenses as on 31/03/2018 stand at Rs. 77,92,747/-, was spent by SmtNisha Jain- w/o appellant and the details are well entered in the ledger account of M/s Quick Advrtising Company, Kota a propriety concern of SmtNisha Jain. That the entries in the ledger accounts of the above firm reveal that around Rs. 2,76,890/- have been paid through cash. The self-speaking fact that the marriage of the son of appellant has taken place of 17/01/2017, and good amount of marriage expenses have been paid through Banking channel and the Survey Action did take place during first week of February 2017, by any stretch of imagination, logic, reasoning and inference it cannot be said that the expenses already debited and paid through Banking channel have been an "afterthought". Even a layman would agree that the amounts routed through Banking channel cannot be changed for time/period etc and cannot be reversed to any other mode/form/channel. It is evident that the marriage expenses Rs. 75,00,000/-, roughly jotted in the impounded and inventorized shee....
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....cion. It is evident from the impounded document that theses were rough jottings and mere estimates only. On the contrary, the wife of the assessee Smt. Nisha Jain had already accounted for a higher sum being Rs. 76,60,417/- upto 31.03.2017 together with the unpaid items of the marriage expenses upto Rs. 1,32,330/-, total to Rs. 77,92,747/- in the books of accounts of her proprietary M/s Quick Adevertising Agency, Kota. Pertinently, most substantial amount out of that was even paid through banking channels only and a small amount was paid in cash. Copy of ledger account and the books accounts, showing the marriage expenses were duly produced before the AO during the assessment and also during the remand proceedings, however these substantive facts could not be denied or controverted by the AO. Even in the statement, the assessee never categorically admitted it to be undisclosed income but as it was stated that he was not in the position to explain how much was the expenditure recorded in the books of accounts. Therefore, the reliance placed on the impounded documents and the statement of the assessee was not at all a good basis when documentary evidence of disclosing the marriage ex....
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....lic School. The appellant has offered this amount in the return of income furnished for AY 2017-18. Accordingly, the appellant claimed that Rs. 46,43,251/- was available with the assessee. Therefore, against the additions confirmed during the year the set off should be given for the cash which is already offered for tax by the assessee. The appellant has also relied upon decisions as discussed above. The argument of the appellant are considered. The appellant has offered additional income in the reopened assessments which has been accepted by the AO. Therefore, the availability of cash with the assessee during the year is established from the records. Accordingly, the credit of cash available to the assessee which has already been offered for taxation is claimed. This issue is related to theory of telescoping benefit. If income is available to an Assessee, then that income can be explained as a source for an item of investment or expenditure that the Assessee is unable to explain, provided the income was available to the Assessee when the investment or expenditure is made/incurred. The idea is ultimately tax is levied either only on the income or only on its application. The ....
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....parate additions, one on account of suppression of profit and another on account of cash credit, it is open to the assessee to explain that the suppressed profits had been brought in as cash credits and one has to be telescoped into the other resulting only in one addition. It was, therefore, held that the Tribunal was right in its view in telescoping the additions made towards the cash credits. - [CIT v. K.S.M. Guruswamy Nadar and Sons (1984) 149 ITR 127 (Mad)] In the case of CIT v. Tyaryamal Balchand, additions were made to the trading results as also amounts representing cash credits were added as income from undisclosed sources. It was held that the AAC and the Tribunal had committed no error of law in holding that the unproved cash credit of Rs. 16,950 should be taken to have come out of intangible additions as substantial additions had been made even in the earlier years. It had also been rightly held by the Tribunal that even during the present assessment, an addition of Rs. 18,117 had been made, which would sufficiently cover any unexplained income to the extent of Rs. 16,950. The amount of Rs. 16,950 could not, therefore, be added as income from undisclosed sources. Addi....
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....-42). On the other hand, we find that the ld. CIT(A) had confirmed various additions totaling to Rs. 49,20,869/- as detailed in his order. 2. The Revenue has not brought anything on record to show that the additional income so offered in A.Y. 17-18 stood utilised elsewhere and was not available for the undisclosed income/undisclosed investment made by the assessee in this year to the extent, they were confirmed by the CIT(A). 3. Similar benefit of telescoping was claimed and allowed by ld. CIT(A) but the ld. CIT(A) wrongly reduced Rs. 11.60 lakhs of AY 2015-16 as utilization which is under challenge along with addition confirmed/ deleted are also under challenge by both parties hence, the working for benefit of telescoping may kindly be recomputed after giving effect to ITAT order of AY 2016-17 and the surplus cash availability, if any found in that year may kindly be carried forward against which the addition sustained, if any at the stage of ITAT has to be setoff. 4. Supporting Case Laws: 4.1 The issue of telescoping is no more res integra and rather a well settled principle because long back in the case of Anantharam Veerasingaiah & Co vs CIT [1980] 3 Taxman 56, the Hon'....
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....u/s 131 it is held in various decisions that the statement recorded under oath is having evidentiary value. (At pg.25 )"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] (at pg.26)", 3.2 The assessee, feeling aggrieved from such finding recorded by the CIT(A) against the assessee, made a prayer orally as also through the written submission under Rule 27 of ITAT Rules, 1963. However, we do not find any categorical denial/objection from the side of the Revenue on this aspect. 3.3 We have given our thoughtful consideration to the prayer so made. We have perused Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, which reads that: "The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him". The said Rule provide that where an assessee is not in Appeal or CO against any adverse findling recorded or any ground decided by the CIT....
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....prayer of the assessee under Rule 27 as above, we now proceed to adjudicate the grounds of appeal no. 1 & 6 taken by the Revenue and such prayer. However, since a similar issue has already been considered and decided in detail in para no. 3.2 of our order dated 05-08-2024 in Naresh Jain A.Y. 2016-17 ITA No 349/JPR/2024(A) & 318/JPR/2024(A) and the same is reproduced hereunder: "3.2 The short question raised in the modified ground appeal no. 2 by the assessee, to be decided is whether the statement recorded by the authorities during the course of survey carried out u/s 133A of the Act has evidential value so that the admission made, if any in such statement (whether on oath or otherwise), can be used against the assessee. We find that the statute has provided different provisions looking to the different factual situations w.r.t recording of the statement, which may be recorded with or without administering oath viz u/s 132(4) (in search cases), u/s 133A(3)(iii) (in survey case) and u/s131 (for general inquiry). No doubt, these provisions operate independently in their respective fields and cannot be used interchangeably (except unless specifically provided in the statute). S.133A....
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....Act but under Section 133A of the Act. There is a difference between a statement made during a survey under Section 133A of the Act and that made during the course of search under Section 132 (4) of the Act. Section 132(4) of the Act states that the authorized officer may, during the course of search and seizure, "examine on oath any person who is found to be in possession or control of any books of account, documents, monies, bullion, jewellery..."and that any statement made during such examination may be used thereafter in evidence in any proceeding under the Act. On the other hand, Section 133A does not talk of the recording of any statement on oath. Under Section 133A (3) (iii), the Income Tax Authority acting under the said provision could "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act." Therefore, there is a considerable difference in the nature of the statement recorded under Section 132(4) and that recorded under Section 133A(3)(iii) of the Act. 41. This distinction was noticed by this Court in Dhingra Metal Works (supra). The Court there referred to the decision of the Kerala High Court in Paul Mathews & Sons v.....
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....above legal position, the value of the alleged excess stock can be ascertained in the light of the facts of this case. The legal issue is decided in favour of the assessee" We also find support from Paul Matthew's & sons Vs CIT [2003] 263 ITR 101, S. Kadar Khan Sons [2008] 300 ITR 157 (Madaras) affirmed by Hon'ble Apex court in CIT Vs S. Kadar Khan [2013] 352 ITR 480 (SC). 3.4 The reliance placed by the ld. CIT(A) on certain decisions are based on the peculiar facts available in those cases only not available in the present case. The ld. CIT(A) in his order in A.Y. 17-18 (in ITA No. 374/JPR/2024(D)) has wrongly placed reliance on the case of Ravi Mathur (RHC) incorrectly stating that the evidentiary value of the statement recorded during survey was upheld whereas, the said decision was rendered in the context of search u/s 132(4) of the Act and the bone contention raised by the assessee was that there is a significant difference between the language of S. 132(4) viz-a-viz S. 131(1) and S. 133A for that reason, which aspect, has been fully appreciated by the various decisions cited by the ld. A/R. The ld. CIT(A) has completely misinterpreted and misapplied the ratio of the afore....
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....n 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 agreement with the dissenting findings recorded by the CIT(A) on this aspect. For the above reasons, the modified ground of appeal no. 2 taken by the assessee is hereby allowed. " However, except the above legal aspect decided by the ld. CIT(A) against the assessee, we agree with the ld. CIT(A) in the respective grounds that the AO used the statement to corroborate said material found during the survey but, at the same time, the assessee had successfully explained the contents of the said impounded document/s in responding to the additions made by the AO and thus, were rightly deleted as by the ld.CIT(A). Hence, no blind reliance could be placed on th....
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....ilable at APB 85, which is a copy of the ledger account in the books of M/s Quick Advertising Company. The AO never held the assessee to be the benamidar of Smt Nisha Jain. These facts and findings could not be rebutted by the ld D/R. Further heavy reliance is placed on the statement of the assessee recorded during the survey u/s 133A is completely misplaced. In the case of Naresh Jain ITA 349/JPR/2024(A) & 358/JPR/2024(D) for A.Y. 2016-17, we have already dealt with this issue in detail in para 3.2 of our order dated 05-08-2024 (Reproduced hereinabove) holding that survey statement alone, cannot be relied upon as such statement has no binding evidentiary value. We also agree with the ld. CIT(A) that the AO used the statement to corroborate said material found during the survey however, at the same time, the assessee had explained the contents of the said impounded agreement. The AO ignored that the impounded agreement was of April, 2016, whereas the registered sell deed was entered in May 2016, whereas survey took place long thereafter on 02.02.2017. In view of all this direct and cogent evidences, surrounding circumstances, no blind reliance could be placed on the statement of th....
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.... M/s Quick Advertising Company, Kota to the extent of Rs. 27,97,131/- and the balance of Rs. 7,02,869/- has already been offered by the assessee with the clam of telescoping. The said books of accounts containing the relevant ledger account, etc. were produced before the authorities below. However, the ld. AO could not find any fault therein, nor he rejected the books of accounts. We have also seen the impounded documents relied upon by the AO however, we find that no blind reliance could be placed on the statement of the assessee, alleging admission because in the same very statement, he clearly stated that he was not in a position to tell the exact amount of expenditures recorded in the accounts. Further, we find that the ld. CIT(A), recorded categorical findings of fact after verification of the record, and obtained a remand report from the AO, wherein nothing substantial adverse was found and he rightly deleted the addition to the extent of Rs. 27,97,131/- and the balance addition of Rs. 7,02,869/- has been upheld. Therefore, the ground No. 4 of the Revenue is dismissed. 7.1 In Ground No. 5, the Revenue has challenged the deletion of the addition of Rs. 75,00,000/- based on so....
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....on in the ITR furnished for these years. The income so offered was duly assessed by the AO also and the ld. CIT(A) has recorded factual findings on this aspect in relation to the A.Y. 13-14 to A.Y 16-17. On the other hand, the ld. CIT(A) has confirmed various additions totaling to Rs. 1,11,90,778/- as detailed in his order. There is nothing on record to show that the additional income so offered in these years stood utilised elsewhere and was not available for the undisclosed investment/outgoings made by the assessee in this year (to the extent they were confirmed by the ld.CIT(A)). The ld. DR was also not in a position to controvert these fact findings. On the other hand, the issue of telescoping is no more res integra and rather a well settled principle because in the case of Anantharam Veerasingaiah & Co vs CIT (Supra), the Hon'ble Apex Court has in principle agreed that the undisclosed income in one year will constitute a fund which can be drawn by the assessee later on and can be utilised for acquiring goods or in making investments, etc. and therefore, separate additions on both the counts cannot be made. The Hon'ble jurisdictional High Court in the case of CIT v. Thyaramal B....