TaxTMI 
TaxTMI 
2024 (11) TMI 1294
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....eet found at the time of search. 3. The learned CIT(A), has overlooked the facts that, no additions/disallowances u/s 153A can be made for the assessment year under questions, without the corroborative evidence unearthed and the original assessment has not abated as on the date of search. 4. The learned CIT(A), has erred in not considering the decision, which are squarely applicable to the appellant's case, i) CIT vs. Lancy constructions (237 taxmann 728) (kar), ii) CIT (central) III vs. Kabul Chawla (234 taxmann 300) (Delhi), iii) Canara Housing Development co. vs. DCIT, CC1(1), Bangalore (49 taxmqaann.com 98) (kar) 5. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. ITA 463/Bang/2024 (2014-15) 1. The learned CIT(A), erred in passing the order in the manner he did. 2. The learned CIT(A), is not justified in law in making additions u/s 69B amounting to Rs. 22,00,000/- purely on assumptions and presumptions based on the loose s....
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....heet found at the time of search. 3. The learned CIT(A), ought to have appreciated that an addition cannot be made on the basis of suspicion and guesswork and without bringing corroborative material on record. 4. The learned CIT(A), has erred in making an addition against the appellant on the basis of a piece of paper found during the course of search wherein certain figures were written 5. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed ITA 486/Bang/2024 (2014-15) 1. The learned CIT(A), erred in passing the order in the manner he did. 2. The learned CIT(A), is not justified in law in concluding assessment under section 144 of the Income Tax Act, 1961 by order 27.12.2019, when the assessment is not time barred. 3. The learned CIT(A), is not justified in law in making additions amounting to Rs. 9,63,350/- as undisclosed business income purely on assumptions and presumptions based on the loose sheets found at the time of se....
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....1961 (in short "The Act") in case of Mohammed Ibrahim Mohideen, the present assessee on 20.8.2017. Simultaneously, a survey u/s 133A of the Act was conducted in the case of assessee at its business premises. During the search/survey proceedings, various incriminating material said to be found during the course of search. A notice u/s 153A of the Act was issued to the assessee on 6.3.2019 to file a return of income. The assessee has filed the return of income on 30.3.2019 and assessment was completed u/s 153A r.w.s. 144 of the Act on 27.12.2019. Against this assessee went in appeal before ld. CIT9A) who has dismissed the appeal of the assessee. Once again assessee is in appeal before us. Now we will deal with each assessment year-wise. ITA No.485/Bang/2024 AY 2013-14: 3. First ground for our consideration is that no addition could be made in the assessment year under consideration without any corroborative evidence unearthed as the original assessment has been concluded on the date of search on 30.8.2017. The ld. A.R. submitted that this is the assessment year 2013-14 on the date of search, the time limit to issue a notice u/s 143(2) of the Act has been already lapsed as such ....
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.... Rs. 4 lakhs totaling of Rs. 84 lakhs. Now the contention of the ld. A.R. is that there was no assessment pending for the assessment year under consideration as on the date of search on 30.8.2017. The assessment of assessee was already completed u/s 143(3) of the Act vide order dated 31.3.2016 to reopen the assessment there should be a valid search material and without valid seized material, assessment cannot be reopened. However, we find that at the time of issuing of notice for reopening u/s 153A of the Act to concluded assessment there should be a prima facie material to do so. In the present case, there is a seized material marked as A/IK/3 at pages 67 to 70 and A/MI/4 pages 1 to 24, A/IK/3 pages 67 to 70 represent an agreement by assessee Smt. Praphulla Shetty for purchase of Rs. 1.67 acres of land at Manjeshwara for a total consideration of Rs. 1,70,34,000/-. This agreement was duly signed by both the parties. As such, he has paid Rs. 40 lakhs in cash and Rs. 10 lakhs by cheque. According to the ld. AO, this agreement was subsequently changed and revised, which is seized document A/IK/71 & 72. As per revised agreement, the sale consideration was Rs. 2,08,75,000/-. According t....
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....astily presumed that these loose slips contain details of unaccounted sales and purchases by extracting answer to question No.16 & 17 vide statement recorded u/s 132(4) of the Act. In our opinion, the additions were made as per AO's discretion and arrived at an imaginary amount by treating the unaccounted transactions. This addition has no legs to stand alone as such it was not based on any corroborative material other than statement recorded u/s 132(4) of the Act. 4.2 The ld. AO has merely relied upon the loose papers, obscure notings made in certain note books, statement of Mr. R. Ravish and has come to the above conclusion. The conclusions drawn by him are not forthcoming from the documents and statements. The AO has made his own analysis below each extract of the seized material. The analysis is not supported by any corroborative evidence. 4.3 The Tribunal in the case of Sri Y. Siddaiah Naidu, Tirupathi vs. Asst. Commissioner of Income-Tax 2015 {2} TMI 403 - ITAT HYDERABAD held that it is very much clear that from such notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular transaction. In t....
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....er the alleged parties to the transactions were not examined or cross-examined. At this point, it is appropriate to rely on the judgment of the Mumbai Bench in the case of ACIT v. Layers Exports P. Ltd [2017] 53 ITR (Trib) 416 (Mumbai), wherein it was held that no addition could be simply made on the basis of uncorroborated notings in the loose papers found during the search because addition on account of alleged payment made simply on the basis of uncorroborated noting and scribbling on loose sheets made by some person have no evidentiary value and is unsustainable and bad in law. 4.8 The Hon'ble Supreme Court in Common Cause (A Registered Society) v. UOI [2017] 394 ITR 220 (SC) observed with regard to evidentiary value that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against....
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....ce, the word used in the said Section is "may be" and not "shall". Secondly, such a presumption is rebuttable presumption and not a conclusive presumption because it is a presumption of fact not a presumption of law. In the present case, the assessee from the very beginning stated that the documents found during the course of search did not belong to him. 4.10 Therefore, the addition made by the AO is only on the basis of surmises and conjecture without bringing any cogent material on record to substantiate that the assessee was engaged in the business of gold and jewellery and the AO had not brought any material on record to substantiate that the denial of the assessee was false. Unless the burden of proving that the materials and cash belong to the assessee, is discharged those materials can neither be seized under section 132 nor relied upon to make assessment under section 153A. Therefore, the seizure of such material is illegal. The AO cannot rely upon such material whose seizure is illegal and the hence, assessment is void ab initio. Therefore, addition made on account of such seized material is not sustainable, 4.11 The Hon'ble Supreme Court in Andaman Timber Indus....
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....e of CIT v. Odeon Builders (P.) Ltd., 418 ITR 315 (SC) head-note is as follows: "Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to assessee, thus, denying opportunity of cross examination to assessee, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by assessee was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual findings - Whether no substantial question of law arose from impugned order of Tri....
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....examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re- examination, if necessary. 9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by him in his factory for sale. All payments were received by him through account payee cheques. In reply to question No. 5, he ....
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....interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result, we decline to answer the question." 4.16 No assets commensurate with the alleged undisclosed income is found by the AO. The unbounded loose sheets having jottings are not speaking either by itself or in the company of others and not corroborated by enquiry, cannot be the basis of any inference so as to sustain the addition. 4.17. The unsubstantiated and uncorroborated seized material alone cannot be considered as conclusive evidence to frame these assessments. The words "may be presumed" in section 132(4) of the Act given an option to the AO concerned to presume these things, but it is rebuttable and it does not give a definite authority and conclusive evidence. The assessee is having every right to rebut the same. The entire ca....
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.... position is that a non- speaking document without any corroborative material, evidence on record and finding that such document has not materialised into transactions giving rise to income of the assessee which had not been disclosed in the regular books of accounts of the assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. In these cases, moreover the documents are relied upon by the AO without confronting to any parties i.e seller or buyer of unaccounted transactions. These documents cannot bring assessee into tax net by merely pressing to service the provision of Sec 132(4A) r.w.s Sec 292C of the IT act, which creates deeming fiction on the assessee subject to search wherein it may be presumed that any such document found during the course of search from the possession and control of such document are true. What has to be noted here is that deemed presumption cannot bring such a document in the tax net and the presumption is rebuttable one and the deemed provisions have no help to the department. Therefore, in these cases addition is made by AO on arbitrary basis relying on the loose papers, containing scribbling, rou....
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....spects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission." 4.22 As per section 31 of Indian Evidence Act, 1878, admissions are not conclusively proved as against admitted proof. In the absence of rebuttable conclusion, admission bind the maker when these are not rebutted or retracted. An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and the maker can show that it was incorrect. In our opinion admission made by the assessee will constitute a relevant piece of evidence but if the assessee contends that in making the admission, he had proceeded on a mistaken understanding or on misconception of facts or untrue facts, such admission cannot be relied upon without considering the aforesaid contention. In our opinion, th....
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.... undisclosed income under undue pressure/coercion shall be viewed by the Board adversely." From the above Circular, it is amply clear that the CBDT has emphasized on its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/under influence. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. ................................................................................................ ................................................................................................ 4.24 At this stage, it is pertinent to refer to the judgment of the Supreme Court in the case of Vinod Solanki (2009) (233) ELT 157 observed as under : "22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, whi....
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....ils down to this that the authority or any Court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law that this Court, in several decisions, has ruled that, even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the Foreign Exchange Regulation Act or the Customs Act, etc., the detaining authority should consider the subsequent retraction and record its opinion before accepting the inculpatory statement lest the order be vitiated. Reference may be made to a decision of the Full Bench of the Madras High Court in Roshan Beevi vs. Jt. Secretary to the Government of Tamil Nadu, Public Deptt. etc. (1983) Mad LW (Crl.) 289 : (1984) 15 ELT 289 : AIR 1984 NOC 103, to which one of us (S.Ratnavel Pandian, J.) was a party." 4.27 In our opinion, the above additions cannot be made solely based on the statements recorded u/s 132(4) of the Act. Reliance is placed on following decisions: * The Hon'ble Delhi High Court in Commissioner of Income-tax v. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi) hel....
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.... to during the course of hearing. In the instant case originally Id. CIT(Bx) cancelled the registration certificate u/s. 12A of the Act vide order dated 22-2-2016. Against the order of Ld, CIT(Ex) assessee preferred an appeal who directed the Revenue to provide an opportunity of cross-examination to assessee. Accordingly, appeal was allowed for statistical purpose." 4.28 We further rely in the case CIT Vs. S. Khader Khan Son reported in 352 ITR 480 (SC) where the Hon'ble Supreme Court has held that: -"Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition." 4.29 We also rely on the decision of the Hon'ble Tribunal in the case of Kamla Devi S. Doshi v. Income-tax Officer [2017] 88 taxmann.com 773 (Mumbai - Trib.) / [2017] 57 ITR(T) 1 (Mumbai - Trib.) held as under: - "We however are unable to persuade ourselves to subscribe to the view that such information arrived at on the basis of the stand-alone statement of the aforesaid person, viz. Sh. Mukesh Chokshi (supra), falling short of an....
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....ade by the Assessing Officer 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 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee." "16.4 We have duly considered the contention of the assessee and also perused the documentary evidences produced by the assessee. On perusing the facts, it is apparent that the addition is made based on the general practice of cash payments made outside the books of accounts in the case of immovable property transactions. The AO was of the opinion that there are ample instances that cash payments are made outside the books of accounts in effecting money lending transactions and therefore, the statement made by Mr, R. Ravish can be relied and the addition sustainable. However, we do not subscribe to this view of the AO. In order to establish that the assessee had paid amount outside the books of accounts for effecting money lending transactions substantial evidence has to be placed on record which is absent in this case. It....
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....t Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) (v) Umacharan Shaw & Bros vs. CIT (1959) 37 ITR 271 (SC) (vi) Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC) 4.33 Further, the Hon'ble Delhi High Court in the case of CIT vs. Dinesh Jain (HUF), 352 ITR 629 after referring to the decision of the Hon'ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) held that no addition can be made taking into account notorious practice prevalent in the similar trade. The relevant findings vide para 14 and 15 are as under: ".......... 14. In Lalchand Bhagat Ambica Ram Vs. Commissioner of Income Tax, Bihar and Orissa (1959) 37 ITR 288, the Supreme Court disapproved the practice of making additions in the assessments on mere suspicion and surmise or by taking note of the notorious practices prevailing in trade circles. At page 299 of the report, it was observed as follows: "Adverting to the various probabilities which weighed with the Income-tax Officer we may observe that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by D....
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....is also a settled position of law that addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the content of the statements. 21. In the case of Kailashben Manharlal Chokshi v. CIT^1, the Gujarat High Court held that the additions could not be made only on the basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph no. 26 of the said decision has been reproduced hereinbelow: - 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 below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later 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 from the statement recorded at such odd hours cann....
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....ion 132(4) of the Act. Nonetheless, such statements alone, without any other material discovered during the search which would corroborate said statements, do not grant the AO the authority to make an assessment. 24. Coming to the findings of the ITAT with respect to incriminating material in the case of M/s Pavitra Realcon Pvt. Ltd and M/s Delicate Real Estate Pvt. Ltd, it is seen that the ITAT has explicitly held in paragraph no.18 that no addition has been made on the basis of any incriminating material found during the course of search. Further, the ITAT relied on the decision of the Supreme Court in the case of CIT v. Sinhgad Technical Education Society^1 and held as follows: - "18. Further, while writing the order it has come to our notice that the Hon'ble Apex Court in the case of Sinhgad Technical Education Society has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143(3) as against 153C are invalid for want of any incriminating material found for the impugned assessment year. 19. In view of the above, the add....
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....ties Ltd.^7, upheld the position of law that the AO would not be justified to assess income in case no incriminating material is found during the search. The relevant paragraph is reproduced herein below: - "54. In any case, Abhisar Buildwell, in our considered opinion, is a decision which conclusively lays to rest any doubt that could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to firstly identify the AYs' to which the material gathered in the course of the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring con....
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....ct of search cases was regulated by Chapter XIVB of the Act, comprising of Sections 158B to 158BI and which embodied the concept of a block assessment. A block assessment in search cases undertaken in terms of the provisions placed in Chapter XIVB was ordained to be undertaken simultaneously and parallelly to a regular assessment. Contrary to the scheme underlying Chapter XIVB, Sections 153A, 153B and 153C contemplate a merger of regular assessments with those that may be triggered by a search. On a search being undertaken in terms of Section 153A, the jurisdictional AO is enabled to initiate an assessment or reassessment, as the case may be, in respect of the six AYs' immediately preceding the AY relevant to the year of search as also in respect of the "relevant assessment year", an expression which stands defined by Explanation 1 to Section 153A. Of equal significance is the introduction of the concept of abatement of all pending assessments as a consequence of which curtains come down on regular assessments. B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the A....
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....risdictional AO of the non-searched person. The shift of the relevant date in the case of a non-searched person being regulated by the First Proviso of Section 153C(1) is an issue which is no longer res integra and stands authoritatively settled by virtue of the decisions of this Court in SSP Aviation and RRJ Securities as well as the decision of the Supreme Court in Jasjit Singh. The aforesaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the boo....
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....s- examination was provided to the assessee by both the lower authorities despite specific and repeated requests made by the assessee in this regard. The Hon'ble Supreme Court in the case of M/s Andaman Timber Indusgies vs. CCE reported in 281 CTR 241 has held that not giving opportunity of cross- examination makes the entire proceedings invalid and nullity. The Co-ordinate Bench of the Tribunal in the case of Best City Infrastructure Ltd. (supra) has also held that not providing opportunity of cross-examination makes the addition invalid. It has come to our notice that the Hon'ble Delhi High Court recently has upheld the said decision as reported in 397 ITR 82." 31. On this aspect, it is beneficial to refer to the decision of the Supreme Court in the case of Andaman Timber Industries v. CCE9, wherein, it was held that not providing the opportunity of cross- examination to the assessee amounts to gross violation of the principles of natural justice and the same will render the order passed null and void. The relevant paragraph of the said decision is extracted herein below: - "6. According to us, not allowing the assessee to cross- examine the witnesses by....
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....trative law as principles of natural justice. It is, however, necessary to remember that the rules of natural justice are not a constant: they are not absolute and rigid rules having universal application. It was pointed out by this Court in Suresh Koshy George v. University of Kerala [AIR 1969 SC 198 : (1969) 1 SCR 317 :(1969) 1 SCJ 543] that "the rules of natural justice are not embodied rules" and in the same case this Court approved the following observations from the judgment of Tucker, L.J. in Russel v. Duke of Norfolk [(1949) 1 All ER 109] :"There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case." [Emphasis supplied]....
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....for making any addition and must be corroborated by independent evidence for the purposes of making assessments. 4.37 With regard to balance addition of Rs. 4 lakhs, the contention of the ld. D.R. is that this is based on the statement recorded u/s 132(4) of the Act and also evidence inventorized as A/MI/4 page no.1 to 24 which has been seized at the premises of the assessee. It is an agreement for Joint Development Agreement and sharing of shops/apartments entered into on 26.11.2012 between Mr. K.L. Chayabba and Mr. Mohammed Ali in one part as owner of the land and Mr. Mohammed Ibrahim, the present assessee in his individual capacity as a developer of the property for constructing the residential cum commercial project "Rose Garden" with a super built up area of 39,816 sq.ft. at Deralakatte, Mangalore. As per this agreement, the assessee paid a sum of Rs. 10 lakhs refundable security deposit, out of which sum of Rs. 4 lakhs was by cash. This was admitted by the assessee in section 132(4) statement recorded on 31.8.2017 and also on 30.10.2017. Further, it was admitted by assessee in sworn statement recorded u/s 131 of the Act on 5.9.2017 but however, the assessee was not adhered....
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....A/IK/07 pages 145 to 150, which reads as follows: 3.1 On the basis of this seized material, statement was recorded from Mr. Ibrahim Khaleel on 3.1.2017. The relevant question and answer recorded in the sworn statement is briefly stated as follows:- 8.5 As already stated, it is seen that Mr. Ibrahim Khaleel has been marketing the flats and collecting the consideration from the clients with the consent of Mr. Alikutty. In such cases, Mr. Kaleel had directly received the amount from the customers as evident from the seized record: page no 178 to 182 of Annexure' A/IK/07'. As Mr.. Ali Kutty is an NRI, who lives most of the time abroad, Mr. Khaleel received the amount on his behalf. The extract of the statement of Mr.. Ibrahim Khaleel is produced below Q4. During the course of search at your residence on 30.8.2017, certain documents were found seized. I am showing you page No. 178 to 182 of the seized folder A/K/07. Please go through these pages and explain the contents. Ans: I have gone through these pages and confirm that these papers were seized from my residence during the search. Page No. 182 is a receipt given by me to Mr. Roshan Shameer....
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....essee has stated that "..I under take to pay taxes on the above unaccounted cash receipts..". The relevant portion of the question and the answer given by the assessee in the voluntary statement given on oath u/s. 132(4) is reproduced here under: Q.33. I am showing you the document marked as Annexure A/IK/07, page Nos. 145 to 150 which was found and seized during the course of search u/s 132 of the Income Tax Act at your residence at Door No 20-6-363/1 Manar, 2nd Cross, Kandak, Mangalore. Kindly explain the contents of these pages. Ans. The tally sheet reflects ledger account details of Creek Developers & Promoters, Mangalore. In page Nos. 148 to 150, I have summed up the total receipts received through bank accounts (Corporation Bank Account of Emkay Hindustan infrastructure) as Rs. 9,97,77,000 as on 22-07-17 as written by me in the sheets. Sheet Nos. 145 to 147 of this document, reflect the total receipts in cash as Rs. 4,93,05,000 as on 03-01-2017. After this, there have been no payments received in cash, as can be confirmed also by the cash ledger book I am maintaining. The amount is not reflected in my books of accounts. i undertake to pay the taxes on the ab....
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....ents recorded in the statement not supported by corroborative evidence, solely on the basis of statement recorded during the course of search, no adverse inference can be drawn against the assessee, more particularly when there is absence of corresponding entry in the account of the opposite party, which precludes alleged transaction. It is not the case of the AO that, there is corresponding entry in the assessee's account providing corroboration. It is well settled principle of law that admission is an extremely important piece of evidence, but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect and that the assessee should be given a proper opportunity to show that the books of accounts did not correct disclose the correct state of facts. The principle is supported by the decision of Hon'ble Supreme Court in the case of Pullangode Rubber Produce Company Ltd. Vs. State of Kerala reported in 91 ITR 18 (SC). 3.3 In this factual background, if we examine the facts of present case, one has to see whether addition made by AO towards unaccounted cash receipts received from various persons as recorded in seized....
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....eflect the total receipts in cash as Rs. 4,93,05,000 as on 03-01-2017. After this, there have been no payments received in cash, as can be confirmed also by the cash ledger book I am maintaining. The amount is not reflected in my books of accounts. i undertake to pay the taxes on the above un accounted cash amount received accordingly for various financial years. 8.11 The evidences showing the cash receipt by the assessee firm towards the contract works in CASH outside the accounts have been cross verified by Mr. Ibrahim Kaleel. Mr. Ibrahim Kaleel had given the voluntary statements on oath u/s. 132(4) on 31/8/2017 and u/s. 131 on 6/9/2017, admitting the unaccounted cash receipts as the income of the assessee firm. The scanned copy of the sworn statements are attached here under: 3.4 Finally, Mr. Ibrahim Khaleel has stated in Q.No.47 a reproduced in page 19 of this order 3.5 Thus, the AO came to the conclusion that the assessee has systematically recorded cash receipts from various parties, which are not recorded in regular books of accounts maintained by the assessee. The said finding has been arrived on the basis of admission of Mr. Ibrahim Khaleel. Howe....
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.... 3.7 Further, on going through the answer to question no.47, it is abundantly clear that answer to question no.47 purport the statement of assessee and his declaration obtained by search team towards undisclosed income for the period covering the assessment year 2017-18 only and it looks like this is an obtained statement without bringing any material on record to support the same. It is well settled principle of law that when any document like present scribbling pad/loose slips are recovered during the course of search action and the revenue wants to make use of it, the onus is on the revenue to collect cogent evidence to corroborate the noting in alleged documents. In this case, revenue has failed to bring on record any cogent evidence to prove conclusively that the noting in the seized documents refer to the unaccounted cash receipts of the assessee. Further, no circumstantial evidence in the form of unaccounted assets and liabilities outside the books of accounts were found in the course of search action except physical cash of Rs. 55 lakhs. In our opinion, the impugned additions made by AO on the basis of seized materials in the form of entries in the loose slips/scribblin....
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....ace of evidence, which can be used against the assessee. Had it been the case of the AO that the alleged entries in loose slips/scribbling pads and its contents was tested by examination and by cross examining the parties, then obviously it would give rise to an occasion to the AO to rely on said documents to make additions. In the present case, the AO has not made any effort to verify the entries recorded in the loose slips/scribbling pads by making further enquiries and examination/cross examination of the alleged persons or payee of said amount. Further, on perusal of entries in the loose slips/scribbling pads as recorded by AO in the assessment order, we find that nothing was emanating regarding name and address of persons through whom the said amount was received and the parties for which it has been paid. In the absence of any effort from AO by way of further proper enquiries, merely on the basis of entries in the loose slips/scribbling pad coupled with the statement recorded during the course of search, addition cannot be sustained. Being so, we are inclined to delete the addition made by AO in these assessment years towards unaccounted cash receipts by assessee. These groun....
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.... additional tax liability on the assessee. The burden is on the department to prove conclusively that the document No.A/MI/06 found at page 49 to 53 found at the premises of the assessee represents the unaccounted payment made by assessee to Mrs. Gulzara Banu. The department without examining Mrs. Gulzara Banu had came to a conclusion that there was unaccounted payment made by assesse by way of cash to her. In our opinion, this addition is based only on conjectures and surmises and not based on corroborative material. As such, we are not in a position to sustain the addition. Further, the ld. AO has failed to establish live link between the seized material and the statement of recipient who has received this payment. There is no conclusive presumption to say that actual payment has been passed to Mr. Gulzara Banu unless he has confirmed this payment and there after given a cross examination to the present assessee so as to make addition. Being so, as discussed in earlier para of this order without corroborative material and or incriminating material for the actual payment of Rs. 5 lakhs to Mrs. Gulzara Banu, addition cannot be made. Hence, we delete the additions. 9. In the resu....
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....in the hands of present assessee at Rs. 9,63,350/-. Against this assessee is in appeal before us. 12. We have heard the rival submissions and perused the materials available on record. This is the project by name Sita Plaza Developed Mr. Manohar B. Shetty, joint development agreement with Hindusthan Infrastructure Developers (HID) wherein the present assessee Mohammed Ibrahim is the Managing Partner of (HID). In our opinion, the transaction took place in the hands of firm in the name of Hindusthan Infrastructure Developers (HID) cannot be brought to tax in the hands of the present assessee who is only the managing partner of the said firm (HID) since the present assessee and that firm are two different taxable units and each one is distinguished and separate assessable unit for the purpose of Income Tax. Accordingly, we are of the opinion that this impugned amount cannot be taxed in the hands of present assessee in his individual capacity. Accordingly, the addition is deleted. 13. Next ground is with regard to addition of Rs. 10 lakhs under the head "income from other sources". The seized material A/MI/6 pages 23 to 28 being a copy of sale agreement dated 17.9.2016. As per th....
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....ined investment of Rs.25 lakhs u/s 69 a) Purchase of property jointly with Ali Kutti b) The seized material A/MI/4 pages 116 to 118 in connection with the property transaction relating to 33 cents of land at Kothari village for Rs. 1.26 crores. c) The assessee paid Rs. 25 lakhs advance during the previous year 2017-18. 16.1 The contention of assessee that the assessee not party to this agreement and the party to this agreement were Hindusthan Greek Developers, wherein the assessee is partner and the property was purchased by Hindusthan Greek Developer who is being a separate and distinct assessee being a partnership firm. Further, it was submitted that Hindusthan Greek Developer had taken loans from SCDCC Bank and the said sources of payment has been explained. In our opinion, these facts require to be examined at the end of ld. AO. Accordingly, the issue is remitted to the file of ld. AO for fresh consideration. We also make it clear that addition shall not be made on the basis of unsubstantiated loose slips, if any and AO shall be precluded from making any addition on the basis of suspicion and guess work. Ordered accordingly. 17. Next ground in t....
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....e original agreement was kept with Mr. Pavoor Mohammed who do not sign that agreement. It is worth noting that as original agreement was kept with him, and the receiver of the money as well as the witness have duly signed, and the possessor of the document Mr. Pavoor Mohammed could sign the agreement at any time as the agreement was in his possession. Thus, it was inferred that PA Mohammed is son of Mohammed Ibrahim, the present assessee. However, this fact has been denied by the assessee in the statement recorded u/s 132(4) of the Act and he had no son namely PA Mohammed or Pavoor Mohammed as son names are (1) Mousin (2) Mufeev & (3) Muneeb. However, it was stated that this transaction was not took place. However, ld. AO placed reliance on seized document found at the premises of Tabesco Infra Development Pvt. Ltd. in which Mohammed Ibrahim is the Managing Partner. In that document marked as A/THI/8 page 7 specifically mentioned that "Pavoor Sir" which reads as follows: 19.1 Further statement of Smt. Jhansi Dinu was recorded who said that Pavoor Sir is none other than Mohammed Ibrahim. Since the source of this payment of Rs. 1,33,50,000/- is not explained by assessee though the....
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....lakhs to various bank accounts during demonetization period with the Federal Bank as follows: a) A/c No.11750200012182 - Rs. 59 lakhs b) A/c No.11750200014444 - Rs. 2.77 lakhs c) A/c No.11750100085841 - Rs. 1.5 lakhs Total - Rs. 63.27 lakhs 21.1 The assessee not at all explained the source of this deposit. Hence, the addition was made by ld. AO. 22. We have heard the rival submissions and perused the materials available on record. Before us, it was submitted that assessee had sufficient withdrawals from various bank accounts and past savings which arise out of agricultural income. Hence, the addition cannot be made. The order of the ld. AO is ex-parte. Before ld. CIT(A), assessee has not placed necessary evidence to explain the source of deposits whether it is from agricultural activities or from earlier savings/past withdrawals. It is the duty of the assessee to explain the source for deposit of said amount of Rs. 63.27 lakhs during the course of demonetization. Accordingly, we remit this issue to the file of ld. AO to examine the same. The assessee is required to furnish all details explaining the source of deposit. If the assessee furnis....
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....tead it was carried on by Hindusthan Infrastructure Developers having JDA with Manohar B. Shetty. Accordingly, this addition is deleted. This ground of appeal of the assessee is allowed on same principles. 27. Next ground of appeal of the assessee is Rs. 85 lakhs u/s 69 of the Act on account of cash invested by assessee in Tabesco Hindusthan Infra Developers Pvt. Ltd. outside the accounts for making payments to contractors M.K. Hindusthan Infrastructure Pvt. Ltd. in the statement recorded u/s 132(4) of the Act on 30.8.2017 it was stated that the above amount represent the undisclosed income of M/s. Tabesco Hindusthan Infra Developers Pvt. Ltd. The assessee had once again confirmed and reiterated this disclosure of the undisclosed income in the sworn statement u/s 131 of the Act recorded on 5.9.2017 and in the statement dated 30.10.2017 recorded u/s 132(4) of the Act. Thus, while passing the assessment order in the case of Tabesco Hindusthan Infra Developers Pvt. Ltd., the total cash payment of Rs. 2,00,30,600/- made to M.K. Hindusthan Infrastructure has already been assessed in the hands of Tabesco Hindusthan Infra Developers Pvt. Ltd. The same has been treated in the hands of a....
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.... (147) 14705000 2/13/7/15 a 120good 31/3/15 Plumones ты ole 650000 165,555 50300 27/3/14 29/3/44 a/414 24/44 Johan Beuernse Sne-Sile Oh to Dati mon Сам Рла топи of Bonk che to Patura the Bank The Pu 10/14/9/1 10.0015914 23/9/ 1600 200 ✓500 ux-1001 Hidis Puter MoniFlat._ 500 500 S-V che Shahab Bodking Dulat rims 90000 50000€ 1100,000 195550x 60700 Spooso 300000 1900000 3400000 500000 19/7/14 308114 3/9/14 10/9/14 20/9/4 [r[lk 8/1/14 8/17/46 9/2/15 Cam Alelu Ca 200 " Goal 200 500 shalate (904) 300 Dls tha 1000 Nawers Books 2500000 912/16 2002000 Cap Csy che) 14/2116 Patu mon 56000 Flat- 500000 1000 193800 10305000 1000 ice Bookery (me) 9/21 904 Qooky 15/16 A kulcha 19/7/16 DC 10,00.000 31/6/16 Di butcha wafund zelali Patu momes Flat 800000 109000 190000 3469000 kutcha 2169000 334,55,000 -90000 500000 2/3/19 13/15 7/3/15 10/3/15 m do Sabeen upla. 7/4/15 chz do Sulu....
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....Dli kutty Hayi 2000000 20,00,000 1500000 55.00000 200000 200,000 Zohara che Document 6 Q.47. Do you have anything else to say. I agree sir for most of the projects I have involved in Large scale cash transaction. These transactions are entered by me due to inadequate knowledge of the Tax laws. As discussed earlier the total unaccounted receipts from the various projects is as follows: Amount Assessment years unaccounted Rs. 4,93,05,000 2017-18 S.No Issue 1. EMKAY Hindustan Infrastructures Total receipt in the Galaxy 2 Ibrahim Kaleel 3 (Proprietor) EMKAY Hindustan Infrastructures EMKAY Hindustan Infrastructures Sales Creek project AY 2017 AY 2015-16 to Rs. 44,44,000 AY 2015-16, White shell project- Cash Rs. 43,23,500 Component of receipts Creek Galaxy project Cheque/NEFT/RTGS(8% of the total receipts of Rs.5,55,50,000) White Shell project - 8% Rs. 3,70,560 of Rs. 46,32,000/- Returns not filed for AY Rs. 15,00,000 2016-17 and AY 2017-18 4 4 IK Corporation S Individual in the house Total Unaccounted cash found Rs. 55,00,000....