TaxTMI 
TaxTMI 
2024 (12) TMI 1424
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....is passed 2012-13 389/JPR/2024 28.02.2024 22.12.2019 143(3) r.w.s. 153A 2014-15 624/JPR/2024 30.03.2024 22.12.2019 143(3) r.w.s. 153A 2015-16 625/JPR/2024 30.03.2024 22.12.2019 143(3) r.w.s. 153A 2016-17 626/JPR/2024 30.03.2024 22.12.2019 143(3) r.w.s. 153A 2. All these appeals of the assessee were listed for hearing on 16.10.2024 on that date Appeal no. 389/JP/2024 & 626/JP/2024 were argued and heard. Appeals in ITA no. 624/JP/2024 & 625/JP/2024 argued on 17.10.2024. Since the issues raised by the assessee are interconnected on the grounds and on facts, therefore, were heard together all these four appeals with the agreement of the parties and are being disposed of by this common order. 3. First, we take up the appeal of the assessee in ITA no. 389/JPR/2024 for assessment year 2012-13 wherein the assessee has raised following grounds: - "1. The impugned additions and disallowances made in the order u/s 143(3) r.w.s 153A of the Act dated 22.12.2019 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. Rs. 55,00,000/-: The....
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....onance Group, Kota" to which the assessee belongs. A number of persons / premises covered u/s 132 of the I.T. Act, 1961. The case of the assessee was also covered under search proceedings. The search action was carried out on the assessee on 07.09.2017. Consequent to search action, the case of the assessee was centralized to Central Circle-Kota by the Principal Commissioner of Income-tax, Kota on 12.10.2017. Assessee is an individual and derives income from salary, house property and other sources etc. Pursuant to the search action notice u/s 153A of the Act was issued to the assessee on 05.07.2018 which was duly served. In response to notice issued u/s 153A, the assessee furnished his return of income on 18.07.2018, declaring total income of Rs. 15,67,000/-. Earlier the assessee had filed his return of income u/s 139 of the Act on 30.03.2013 at the total income of Rs. 14,91,460/-. Notice u/s 143(2) of Act was issued on 11.09.2018 which was duly served. Further, notice under sub section (1) of Section 142 of the Act was issued on 30.11.2018 along with questionnaire / Annexure-A requiring certain details/information, which was served upon the assessee. In response to that he f....
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....ing the search action was given under pressure, threat, physical fatigue and mental confusion. The assessee retracted from his statement recorded u/s 132(4) vide his submission filed before AO. Further, the assessee submitted that the agreement is not related to him and the acceptance / surrender of Rs. 55 lacs made by the assessee was under pressure and therefore not to be added to his total income. Ld. AO considered the reply but not found convincing as the assessee is Chief Finance Officer in Resonance group, Kota and it is assumed that he knows very well the rules and various sections of the Act and proceeding of search and surveys. Therefore, the contention of the assessee that the statements recorded during the search were under pressure/ threat is not found convincing. Further, the assessee retracted from his statements vide his submission dated 11.12.2019 when the assessment proceeding is at its ending period. The assessee has not filed any application for retraction after search nor submitted any supporting evidence during post search enquiry and not submitted anything in this regard till 11.12.2019. The retraction made by the assessee was considered as an afterthought to ....
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....s questioned that it was not acceptable that Shri Lal Chand Aswani had sold the above referred plot to Smt. Prabha Jain w/o Shri Harish Jain for a consideration of Rs 40 lac bearing a huge loss of Rs. 50 lacs since the same property was purchased by him for a purchase consideration Rs. 90 lacs. In response to that Shri Harish Jain admitted in his statement in Question No. 17 that actually, Smt. Prabha Jain has purchased this property for Rs. 95 lakh. Vide reply of question No. 18 in his statement recorded during the search action, Shri Harish Jain admitted that an amount of Rs. 40 lacs was paid by cheque which was out of loan taken by Smt. Prabha Jain and her savings and remaining amount of Rs. 55 lacs was paid by cash. It has also been admitted by Shri Harish Jain that the amount of Rs. 55 lacs was paid by him out of undisclosed sources and had never been offered for taxation. Shri Harish Jain admitted Rs. 55 lacs as his undisclosed income for F.Y. 2011-12 i.e. A.Y. 2012-13. In the light of above fact and admission of un-accounted income it is crystal clear that an un-accounted sum of Rs. 55 lacs was paid in cash by Shri Harish Jain for purchasing of plot at 2-PA-8, Vigya....
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....see is considered his undisclosed income and added to his total income for AY 2012-13. Against the addition made by the AO, the appellant has furnished reply which is dealt as under- 5.3.1 Involvement of Cash in transaction of Property The appellant stated that originally this property was sold by Smt. Pushpa Devi w/o Sh. Nand Kumar (seller), sometime in the year 2008. for Rs. 90 lakhs as appears from the unregistered agreement found and seized during the course of Search conducted on 16.09.2008 being marked as Annexure AS, Exhibit 8 Pg-21 to 25. However thereafter, the assessee purchased the same property in year 2011 at the declared purchase consideration of Rs. 40 lakhs but since this unregistered agreement entered between those third parties was found from the possession of Sh Hanish Jain(the appellant) during search, merely based there on the impugned additions has been made. No doubt Sh. Harish Jain was asked and he stated having purchased by the wife the property for Rs. 95 lakhs and also allegedly agreed for the undisclosed income of Rs. 55 lakhs however, the totality of facts and circumstances creates a lot of doubts and strongly indicates, that ....
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.... would be rarely available. In this case the investigation team could gather an indirect evidence suggesting transaction in cash undertaken by the appellant. The appellant admitted the cash transaction in the statement recorded u/s 132(4) of the Income Tax Act. An inference about cash transaction is to be drawn on the basis of the circumstances available on the record. The AO has clearly brought out these facts in the assessment order. The appellant has failed to prove that the transaction as per the sworn in statement are not true with evidence. In the absence of not furnishing any credible evidence in support of the argument the arguments are not found to be acceptable. In view of the above discussion, the argument of the appellant are not found to be acceptable. 5.3.2 The incriminating Document is directly connected with the transaction of Property. "It is argued that the so called "agreement" was entered into by the totally unconnected & unrelated third parties, viz. Smt. Pushpa Devi w/o Sh. Nand Kumar (first seller) and the Aswani Couple (first buyer) The agreement nowhere shows any connection or signature or handwriting of the appellant thereon even....
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.... in fact, purchased the property for Rs. 90/95 lakh. The appellant argued that On the contrary, there is a registered Agreement entered by the Appellant Buyer which declares sale consideration of Rs 40 laktis only through the seized Arinexure AS, Exhibit 8 Pg-16 to 19 (PB 40-43). The transaction was completed before the Sub-Registrar in the presence of the witnesses. The Id. AO also alleges that why Sh. Lal Chand Aswani would have sold the property at Rs. 40 lakhs only by bearing a huge loss of Rs. 50 lakhs Firstly, it was a mere suspicion unless, Shri Aswani would have confirmed the AO of having sold the property at Rs. 90/95 lakhs, which was not done. The admission made by the appellant and the document seized during the search clearly show that the real value of the plot. The DLC value is not relevant in the case of 'On Money transaction which is paid in cash. The appellant duly accepted payment of cash in the statement recorded u/s 132(4) of the Income Tax Act. The statement was supported by the corroborative documents. The corroborative document established real value of land. The evidence itself proved the real transaction. Hence, there was no r....
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....rial is found during the search The appellant argued that assessments for AY 2012-13 to 2016-17 were not pending on the date of search ie 07.09.2017, could be completed u/s 153A, only based on the incriminating material/information as 153A of the Act. The argument of the appellant is considered. There is clear findings in the assessment order about incriminating material as under- "During the search action dated 07.09.2017 u/s 132 of the IT Act, a sale agreement made between Smt. Prabha Jain and Shri Lal Chand Aswani regarding sale of Plot No. 2-PA- 8. Vigyan Nagar, Kota was found from the premise of the assessee, Shri Harish Jain at 2-PA-8, Vigyan Nagar, Kota, and the same was seized as page No. 16 to 19 of Annexure - AS, Exhibit-8, in which total sale consideration was mentioned of Rs. 40 lacs. Another agreement was also found and annexurised as page No. 21 to 25 of Annexure- AS, Exhibit-8, for the same property which had been purchased by Shri Lal Chand Aswani in F.Y. 2008. In this agreement total sale consideration (at page No. 21 to 25 of Annexure - AS, Exhibit-8) is mentioned as Rs. 90 lacs." The AO has further noted that in the statement r....
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....ract from, what it had stated earlier It has been held that an admission, though a 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. Pertinently the appellant retracted from such admission in as much as he did not declare this income in the ROI file for AY 2012-13 us 1534. In addition during the course of the assessment proceedings a reply letter dt. 04.12.2019 was uploaded/Submitted before AD on 11.12.2019 (PB 14-19) to this effect The statement recorded during search and survey under oath is an important piece of evidence and it is an incriminating material. The Kerala High Court on this issue held in the case of Commissioner of Income-tax, Thichur Vs St. Francis Clay Decor Tiles [2016] 70 taxmann.com 234 (Kerala)/[2016] 240 Taxman 168 (Kerala)/[2016] 385 ITR 624 (Kerala)/[2016] 287 CTR 187 (Kerala)[22-03-2016] as under- "Neither under section 132 or under section 153A, is the phraseology "Incriminating" used by the Parliament Therefore, any material which was unearthed during search operations or any statement made during the course of search by the assessee is a ....
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....bsequent retraction." The argument of the appellant are found to be only assertions without any supporting evidence. There is no evidence of pressure or threat. The search is conducted in the presence of two independent witnesses. The appellant has not furnished any evidence with regard to claim of pressure by the search tearn during the search proceedings. In these circumstances, the AO was found to be justified in relying on the statement recorded under oath which is an important piece of evidence. The statements recorded under section 132(4). On the issue of retraction of statement recorded during search Hon'ble High Court Of Madras in the case of Thiru. A.J. Ramesh Kumar v. Deputy Commissioner of Income-tax [2022] 139 taxmann.com 190 (Madras) noted as under - "8. Pertinently, the Tribunal after recording the explanationa, affidavit and other documents filed by the appellant in support of his case, found that the same were not acceptable as the retraction was in the form of mere assertion and also belated. It was further pointed out by the Tribunal that there was no material evidence let in by the appellant to retract the statement made under secti....
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..... In this regard, in an important decision Hon'ble Gujrat High Court of in the case of Asstt. CIT v. Hukum chand Jain [2010] 191 Taxman 319 it was held that if an allegation of duress or coercion was made almost after two years, then such allegation has to be overruled. In this case also the allegation is made after two years. Hence, the retraction is not acceptable. Therefore, the allegations of coercion are not found to be acceptable. The ITAT Ahmedabad Bench 'C' in the case of Kantilal C. Shah v. Assistant Commissioner of Income-tax, Circle-3, Ahmedabad [2011] 14 taxmann.com 108 (Ahmedabad) considered the similar issue. The head note of the decision is as under- "Section 132, read with section 69, of the Income-tax Act, 1961- Search and seizure-Block penods 1-4-1985 to 31-3-1995 and 1-4-1995 to 12-12-1995-Whether section 13214) enables an authorized officer to examine a person on path and such a sworn statement made under section 132(4), thus can be used as an evidence under Act-Held, yes-A search operation was carried out at premises of assessee whereby cash, jewellery, books of account and certain documents were found and seized-Assessee ....
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.... only statement recorded during search is not found to be acceptable. The appellant has not furnished any evidence to support that it approached to higher authorities about the alleged coercion used during recording the statement. There is no evidence that the appellant filed any such complaint before higher authorities. Therefore, the allegations of the appellant are unfounded and therefore not found to be acceptable. On the issue of retraction Hon'ble High Court Of Kerala in the case of Commissioner of Income-tax, Kozhikode v. O. Abdul Razak (2012] 20 taxmann.com 48 (Ker.) held as under - "Section 132 of the Income-tax Act, 1961 Search and seizure - Block period 1988-89 to 1998-99 Whether any statement recorded under section 132(4), statutorily deemed to have evidentiary value, cannot be retracted at mere will of party Held, yes Whether a statement made under oath deemed and permitted to be used in evidence, by express statutory provision, has to be taken as true unless there is contra evidence to dispel such assumption Held, yes Pursuant to a search conducted at residential premises of assessee, Assessing Officer computed undisclosed income on basi....
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....ithout prejudice to the above, there is another angle to the admission during the search and retraction during assessment proceedings. By admitting the appellant during search and survey proceedings the assessee stopped further investigation by the investigation wing. The assessee prevented department to cause further enquiry in his case. Since, the appellant admitted that unaccounted cash payment the department officers stopped further enquiry. As such law of estoppels applies in this case. It is not the case that the admission made by assessee was incorrect or there is mistake or the admission was made on wrong facts. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence. 5.3.7 The appellant admitted earning of undisclosed income and payment of cash The appellant argued that the appellant not the legally correct assessee. The property was admittedly purchased by Smt. Prabha Jain who is a separate Assessee and a separate person. However, addition was made in the hands of the appellant Sh. Harish Jain (Husband). There is nothing on record which shows that statement of Smt. Prab....
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.... the case of Director of Income-tax (Exemption) V. Shia Dawoodi Bohra Jamat (2012) 25 taxmann.com 90 (Gujarat) observed as under. "11. It is settled legal position, that the decisions of the courts are not to be applied in the abstract, but are to be applied to the facts of the case. Without recording any findings of fact, one fails to understand as to how the Tribunal has come to the conclusion that the decisions on which it has placed reliance are applicable to the facts of the present case. It has been often reiterated that the Tribunal is the final fact finding authority, hence, the order of the Tribunal should reflect findings of fact as well the reasons for arriving at its conclusions on the basis of the findings recorded by it. The impugned order of the Tribunal is totally lacking in all quarters. 12. In CCE v. Srikumar Agencies (2008) 232 ELT 577 (SC) the Supreme Court was dealing with a similar case wherein without detailed analysis of the factual position involved, the Customs, Excise and Gold (Control) Appellate Tribunal had merely referred to some judgments and submissions of the learned counsel for the assessees to hold that the assessees were entitle....
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.... ld. CIT(A), the assessee has preferred the present appeal on the ground as stated hereinabove. Apropos to the grounds so raised the ld. AR of the assessee relied on the written submissions which are reproduced here in below :- "Brief General Facts: The assessee is an individual and derives income from salary, house property and other sources e-filed Return of Income on 30.03.2013 declaring total Income at Rs. 14,91,460/- u/s 139 of the Act (PB 01-03). A Search & Seizure operation was carried out by the Investigation Wing of the Department on 07.09.2017 u/s 132 of the Income Tax Act, 1961 at the residential and business premises connected with "Resonance Group, Kota". Cash, jewellery and other documents found and seized from some person's residence and business premise. The case of the assessee was also covered under Search proceeding. Consequent to Search action, the case of the assessee was centralized to Central Circle-Kota by the Principal Commissioner of Income-tax, Kota vide order dt 12.10.2017. Thereafter, as part of Resonance Group, the case was taken up for block assessment, by issuing notice u/s 153A which is stated to be served upon the assessee on 04.0....
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....ased this property for Rs. 95 lakh. Vide reply of question No. 18 in his statement recorded during the search action, Shri Harish Jain admitted that an amount of Rs. 40 lacs was paid by cheque which was out of loan taken by Smt. Prabha Jain and her savings and remaining amount of Rs. 55 lacs was paid by cash. It has also been admitted by Shri Harish Jain that the amount of Rs. 55 lacs was paid by him out of undisclosed sources and had never been offered for taxation. Shri Harish Jain admitted Rs. 55 lacs as his undisclosed income for F.Y. 2011-12 ie. A.Y. 2012-13" The AO after referring to and relying upon the statement of the appellant (Q.no 17-19), again askedand in response to which a detailed reply letter dt. 04.12.2019 was uploaded/submitted before AO on 11.12.2019 (PB 14-19). The AO at pg 4 held that: "In response the assessee replied on 11.12.2019 stating that the statement recorded u/s 132(4) during the search action was given under pressure, threat, physical fatigue and mental confusion. The assessee retracted from his statement recorded u/s 132(4) vide this submission. Further, the assessee submitted that the agreement is not related to him and the accep....
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.... However thereafter, the assessee purchased the same propertyin year 2011 at the declared purchase consideration of Rs. 40 lakhs but since this unregistered agreement entered between third parties was found from the possession of Sh. Harish Jain(the appellant) during search, merely based thereon the impugned additions has been made. No doubt Sh. Harish Jain was asked and he stated having purchased by the wife the property for Rs. 95 lakhs and also allegedly agreed for the undisclosed income of Rs. 55 lakhs however, the totality of facts and circumstances creates a lot of doubts and strongly indicates, that it was a case of tutored statement recorded under pressure, tension and confusion as emerges from the various facts discussed herein after. 1.1.1 Seized Agreement - not relevant: The so called "agreement" was entered into by the totally unconnected& unrelated third parties, viz. Smt. Pushpa Devi w/o Sh. Nand Kumar (first seller) and the Aswani Couple (first buyer). The agreement nowhere shows any connection or signature or handwriting of the appellant thereon even remotely, nor it is so claimed by the department. The ld. CIT(A) rejected the above contention with....
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....no whisper at all of the AO as to what was the future of the said Ikrarnama, whether it was proceeded on the same terms and conditions. Therefore, moving forward on a mere assumption that the Aswani Couple purchased the property in FY 2007-08 for Rs. 90 lakhs, it cannot be concluded that he must have sold the property to the buyer/appellant in F.Y. 2011-12 at Rs. 95 lakhs (of course after the lapse of some years) and is nothing more than a wild presumption, surmises & conjectures made by AO, which is absolutely without any corroboration. It is not the case of the AO that Aswani couple has declared sale consideration of Rs. 90 / 95 lakhs and assessment in his /their case has been completed considering these figures. In fact, the AO was completely silent on this aspect meaning thereby, the sellers have declared sale consideration of Rs. 40 lakhs only but not Rs. 90 lakhs or Rs. 95 lakhs as wrongly assumed by the AO. 1.1.5 Admittedly there is no iota of direct evidence found or referred or relied upon by AO except "Ikrarnama" dated 16.09.2008between strangers, showing that the appellant (Shri Harish Jain), in fact, purchased the property for Rs. 90 / 95 lakh. The ld.....
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....hat there was an understatement of consideration between the seller and buyer. Reliance is placed on: 1.1.8.1K.P. Varghese v. ITO [1981] 7 Taxman 13/131 ITR 597 (SC) it was held by Hon'ble apex court: "Since literal interpretation of section 52(2) leads to manifestly unreasonable and absurd consequences, the same should be construed having regard to the object and purpose for which it has been enacted and the setting in which it occurs. A fair and reasonable construction of section 52(2) would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. Accordingly, if the revenue seeks to bring a case within section 52(2), it must show not only that the fair market value of the capital asset as on the date of the transfer exceeds the full value of the consideration declared by the assessee by not ....
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....ne on a continuous &repeatedly basis, without any document. Moreover, he has wrongly distinguished the judgment of K.P. Varghese (supra.), in as much as it propounds a legal principal and rule of evidence, which is to be followed irrespective of it being a case of S.148 or S.153A or S.153C for that matter. Otherwise also, in principle, these are the reassessment provisions, where the AO certainly need much stronger evidence(s) before making any addition(s). Moreover, he has wrongly distinguished the judgment of KK Enterprises, (supra), by merely relying upon (1) the statements, which cannot be termed as incriminating material, and (2) by incorrectly placing reliance on the unregistered Ikrarnama, terming it as purchase agreement, without enquiring even enquiring whether the said agreement to sale was actually acted upon. 1.2 No Incriminating evidence found - Hence no Addition: The law is very well settled that in case of assessment of a search case u/s 153 A, any addition or disallowance can be made only and only if some incriminating material has been found during the course of search, where (or even if not ) the related assessment stands completed(but not abated and not ....
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....sition under s. 132A, as the case may be, have to be assigned simple and plain meaning. Where the assessment or reassessment is finalised, there are no pending proceedings to be abated and restored to the file of the AO. To abate means to diminish or to take away. The word 'abatement' is referable to something, which is pending alive, or is subject to deduction. The abatement refers to suspension or termination of the proceedings either of the main action, or the proceedings ancillary or collateral to it. The word is commonly used in the legislations, which provide for abatement of action/suit; abatement of legacies; abatement of nuisance; and all actions of such nature, which have the pendency or continuance. The proceedings which have already terminated are not liable for abatement unless statute expressly provides for such consequence thereof. The word 'pending' occurring in the second proviso to s. 153A is also significant. It is qualified by the words 'on the date of initiation of the search', and makes it abundantly clear that only such assessment or reassessment proceedings are liable to abate. The pendency of an appeal in the Tribunal against the ord....
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.... material unearthed during the search and the other material available with the AO including the income declared in the returns; and (iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under S. 132 or requisition under S. 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under S.s 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under S.s 147/148 of the Act and those powers are saved." 1.2.3 In the case of Jai Steel (India) v. ACIT [2013] 36 Taxman 523 (Raj), it was held that, "Section 153A bears the heading "Assessment in case of search or requisition". It is "well settled as held by the Supreme Court in a catena of decisions that the heading or the section can be regarded as a key to the interpretation of the operative portion of the ....
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....ourse of the search. Even in the counter affidavit of the Opposite Parties does not dispute this position." 1.2.6 In case of PCIT v. Saumya Construction Pvt. Ltd. [2016] 387 ITR 529 (Guj), it was held that: "16... any addition' or disallowance can be made only on the basis of material collected during the search or requisition, in case no incriminating material is found, as held by the Rajasthan High Court in the case of Jai Steel (India) v. Asst. CIT (supra), the earlier assessment would have to be reiterated, in case where pending assessments have abated, the Assessing Officer can pass assessment orders for each of the six years determining the total income of the assessee which would include income declared in the returns, if any, furnished by the assessee as well as undisclosed income, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act." 1.2.7 In Kabul Chawla Case [2015] 61....
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.... good basis for Addition: At the outset we may submit that no addition can be made merely and solely on the basis of a statement of a party. 3.2 No addition permissible solely based on statements: The major addition made was solely based on the statement of the assessee without any corroborative evidence, as discussed in para 3.3 and elsewhere of this w/s, that too ignoring the retraction. It is settled that an admission cannot be made the sole basis of assessment. A CBDT Circular No. 286/2/2003 dt. 10.03.2003 and the Budget Speech, 2003 by the Finance Minister please be referred. "Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income. In these circumstance, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore advised that there should be focus and concentration on collection of evidence of income which leads to informa....
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....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. Pertinently the appellant retracted from such admission in as much as he did not declare this income in the ROI file for AY 2012-13 u/s 153A. In addition, during the course of the assessment proceedings a reply letter dt. 04.12.2019 was uploaded/submitted before AO on 11.12.2019 (PB 14-19) to this effect. In case of Bharat Kumar Azad (2013) 50Tax World 33 (JP), retraction was made through ROI.It was held: "15) .......After treading through this entire record we have found that only the basis of admissions made in the statements recorded us 132(4) of the Act the A.O. has made huge addition. Now let us examine the value of a statement recorded u/s 132(4) of the Act. It would be apt to reproduce this provision which reads as under"132(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person d....
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....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 incorrect and the assessee should be given a proper opportunity to show that the books of accounts do not disclose the correct state of facts". 4.4.2 The Hon'ble Apex Court in Nagubai Ammal v/s B. Sharma Rao AIR 1956 SC 593:held as under "An admission is not conclusive as to be truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue". 4.4.3 In Rajesh Jain v/s DCIT (2006) 100 TTJ 929 (Del), held that computation of undisclosed income solely on the basis of confessional statement of the assessee was not justified, inter alia, where the conduct of affairs by the Revenue Authorities showed that good amount of psychological pressure was built on the assessee to make the said statement and all material found during search was duly expla....
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....see and vacated the orders of all the lower authorities. 4.4.9 Also referHeris and LRs of Late Laxman Bhai S. Patel v/s CIT (2009) 222 CTR 138 (Guj). Further kindly refer Polat Marmo Agglomerates Ltd vs. Union of India (1994) 73 ELT 536 (Raj.) wherein it was held that the admission made in ignorance of correct position of law and facts are not binding upon a party. Similarly, in the case of Ambalal vs. Union of India (1983)13 ELT 1321 (SC) it was held that confessional statements recorded under threat, coercion, inducement or promise are not valid but person concerned should take care to retract such confessions without delay. Retraction would then be weighed in the light of other evidence available. 5.1 Justification and valid reasons behind retraction: The ld. AO heavily relied upon the statement of the appellant. However, the credibility of such statements is highly doubtful and not binding for various reasons. Of course, in the statement assessee accepted the undisclosed income but the way he immediately agreed creates a doubt of existence of pressure exerted upon him. It is proved that finding the base of the figure of 90 Lakhs the assessee was compelled to a....
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....f such statement is recorded at such odd hours. Moreover, this statement was retracted after two months. ---------XXX------------------XXX------------------XXX------------------XXX--------- 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 s. 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 the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence there is no reason not (sic) to disbelieve the retraction made by the AO (sicassessee) and explanation duly supported by the evidence. We are, therefore, of the view that the....
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....bt about above facts, those witnesses may be examined by your goodself. In view of aforesaid extra ordinary circumstances, the alleged statement recorded under section 132(4) loses its credibility and cannot form the basis for making any additions to the declared income of the assessee if the proposal is based merely on such statement and not on any admissible evidence either in the form of a document or third party evidence. Your kind attention is invited to the judgement of T & AP High Court in the case of CIT Vs. Naresh Kumar Aggarwal (2014) 369 ITR 171(& AP) wherein the court observed as under: 11. The mandate under sub-section (4) gets honoured only when there is no other version from the assessee, vis-a-vis the statement. In such a case, the statement would constitute the basis for making block assessment even if the Department does not have any other material to buttress its case. However, if the statement is retracted by the person from whom it is said to have been recorded, it has to be subjected to the same test, as is done in matters of similar nature. This is particularly so, when the person, from whom it is recorded, is going to be visited with penal ....
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.... under article 20(3) of the Constitution of India which mandates no person, accused of any offence, shall be compelled to be a witness against himself. The citing of a statement of an individual as the only evidence, in the penal proceedings initiated against him, is never treated as part of a developed and mature legal system. Section 31 of the Evidence Act, 1872, also assumes significance in this regard. It reads: "Admissions not conclusive proof, but, may estop: Admissions are not conclusive proof of the matters admitted but they may operate as estoppels under the provisions hereinafter contained." 21. Parliament never intended to place the proceedings under the Income- tax Act on a higher pedestal than those under the criminal enactments. B. Hon'ble Allahabad High Court has also taken judicial notice of such circumstances in the case of CIT v. Radha Kishan Goel reported in [2005] 278 ITR 454, wherein it is observed that- "It is a matter of common knowledge, which cannot be ignored that the search is being conducted with the complete team of the officers consisting of several officers with the police force. Usually telehone and all other conne....
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.... agreement found is between Smt Pushpa Devi and Shri Lal Chand Aswani Vineeta Aswani and not related to the assessee. The assessee has no concern with such transaction. As already mentioned above that statement under consideration was recorded in absolutely extra ordinary circumstances not only of duress, threat and inducement but also physical fatigue and mental confusion as search was conducted continuously for three days. (Annexure-I)" However, the ld AO failed to controvert/disprove the factual assertions made before him. 7.1 Appellant not the legally correct assessee : Another aspect is that the property was admittedly purchased by Smt. Prabha Jain who is a separate Assessee and a separate person as defined u/s 2(31) of the Act in her own right. However, addition was made in the hands of the appellant Sh. Harish Jain (Husband). There is nothing on record which shows that statement of Smt. Prabha Devi (Wife of Shri Harish Jain) who stated that the undisclosed money, if any, belong to her husband Sh. Harish Jain only. In the statement of Sh. Harish Jain recorded during Search. Though question was raised that despite the property having being purchased by his wi....
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....s to be objectively tested. A good proof cannot be converted into no proof. Moreover, discretion conferred upon the AO has to be exercised judiciously as held in CIT vs Smt. P.K. Noorjahan (1999) 237 ITR 0570 (SC): "As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word "may". This clearly indicates that the intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the ITO under s. 69 to treat the source of investment as t....
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....9:(1980) 123 ITR 457 (SC) (supra), their Lordships of the Supreme Court have held that the additions made to the book profits in earlier years are the real income and can be treated as available for use in subsequent years or even in the same year. In the case reported in (1967) 66 ITR 722 (SC) (supra), their Lordships of the Supreme Court have held that the Tribunal can permit the appellant to raise grounds not set forth even in the memorandum of appeal at the time of arguments and in this case, these grounds were taken before the AAC also. 10. We are, therefore, of the considered opinion that the question raised in this reference should be answered in favour of the respondent and against the Revenue and we hold that in the facts and in the circumstances of the case, the Tribunal was right in treating the unexplained cash credit entries to the extent of Rs. 16,950 as covered by added gross profit in the sum of Rs. 18,117 on the basis of the estimate." 10.2 In AnantharamVeerasinghaiah& Co. v. Commissioner of Income tax [1980] 123 ITR 457 (SC) Hon'ble Apex court held as under: "It is now settled law that an order imposing a penalty is the result of quasi-c....
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.... recorded during a subsequent assessment year. The mere availability of such a fund cannot, in all cases, imply that the assessee has not earned further secret profits during the relevant assessment year. Neither law nor human experience guarantees that an assessee who has been dishonest in one assessment year is bound to be honest in a subsequent assessment year. It is a matter for consideration by the taxing authority in each case whether the unexplained cash deficits and the cash credits can be reasonably attributed to a pre-existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that very year. In each case, the true nature of the cash deficit and the cash credit must be ascertained from an overall consideration of the particular facts and circumstances of the case. Evidence may exist to show that reliance cannot be placed completely on the availability of a previously earned undisclosed income. A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the r....
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....mation provided of/by the client. 7. As the assessee raised additional ground to support that contention the ld. AR of the assessee also filed on 16.10.2024 another written submission to support that additional ground raised. The same is also reproduced herein below :- "Addl. GOA 6: Prior approval u/s S.153D - granted mechanically: Submission: 1. As per the mandatory provisions of S.153D of the Act, the AO, who is below the rank of the Jt. Commissioner of Income Tax, has to mandatorily obtain prior approval from the Jt. Commissioner of Income Tax before finally passing of any assessment order u/s 153A r.w.S.143(3) in a search case. Accordingly, the Respondent AO in this case also duly sought approval of the Addl. Commissioner of Income Tax, Central Range, Udaipur u/s 153D of the Act. 2.1 In this regard, a bare perusal of the approval (PB II for A.Y. 2012-13 - Pg. 47) clearly shows that there is absolutely no application of mind much less independent application of mind as contemplated under law. Rather, the same appears to have been granted mechanically, in absence of a single word even to show that the competent authority has really considere....
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.... of s. 153D itself makes it abundantly clear that the legislative intent was to be obtaining of "prior approval" by the AO when he is below the rank of a Jt. CIT, before he passes an assessment order or reassessment order under s. 153A(1)(b) or 153B(2)(b). That such an approval of a superior officer cannot be a mechanical exercise has been emphasized in several decisions. It is therefore not correct on the part of the Revenue to contend that the approval itself is not justiciable. Where the approval is granted mechanically, it would vitiate the assessment order itself.-Sahara India (Firm) vs. CIT (2008) 216 CTR (SC) 303 : (2008) 7 DTR (SC) 27 : (2008) 14 SCC 151 and Rajesh Kumar vs. Dy. CIT (2006) 206 CTR (SC) 175 : (2007) 2 SCC 181 applied. There is not even a token mention of the draft orders having been perused by the Addl. CIT. The letter simply grants an approval. In other words, even the bare minimum requirement of the approving authority having to indicate what the thought process involved was is missing in the aforementioned approval order. While elaborate reasons need not be given, there has to be some indication that the approving authority has examined the draft....
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....assessment order has also been passed on 21st Dec., 2018-Impugned approval was apparently issued in a mechanical and hurried manner without mentioning the reasons and the same has been issued without application of mind-Such approval is generic and listless and accorded in a blanket manner without any reference to any issue in respect of any of the five assessment years-Apparently, the approval has been granted on a dotted line without availability of reasonable time-Whole sequence of action apparently appears to be illusory to merely meet the requirement of law as an empty formality-Approval granted under s. 153D should necessarily reflect due application of mind, and if the same is subjected to judicial scrutiny, it should stand for itself and should be self-defending-In the instant case, approving authority did not mention anything in the approval memo towards his/her process of deriving satisfaction so as to exhibit his/her due application of mind-Plain reading of the letter of approval granted by the Addl. CIT clearly depicts that the Addl. CIT has routinely given approval to the AO to pass the order only on the basis of letter of the AO without any application of mind-Thus, t....
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....er the judgment of Hon'ble High Court of Madhya Pradesh in the case of CIT vs S. Goyanka Lime & Chemicals Ltd.[2015] 56 taxmann.com 390 (MP), wherein the Hon'ble Court held as under: "7. We have considered the rival contentions and we find that while according sanction, the Joint Commissioner, Income Tax has only recorded so "Yes, I am satisfied". In the case of Arjun Singh (supra), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- 'The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format "Yes, I am satisfied" which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material.' 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint....
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.... 11 3. CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 56 Taxmann.com 390 (MP) 12 4. CIT vs. S. Goyanka Lime & Chemicals Ltd. (2015) 64 Taxmann.com 313 (SC) (SLP (c) No. 11916 of 2015) 13-14 9. The ld. AR of the assessee in addition to the above written submission first started arguing the additional ground raised on technicality of the assessment done. He stated that there were 88 cases for which AO sent for approval from Kota to Udaipur as per provision of section 153D of the Act. In all 88 cases approval was granted on the very same day so the approval granted is mechanical and no application of mind was made in the case of the assessee [ page 47 of the paper book ]. To support this view, he relied upon the judgment of the Orissa High Court in the case of ACIT Vs. Serajudding & Co. 292 Taxman 566 (Ori), wherein the SLP filed by the revenue was also dismissed by the apex court. So, the ratio decided will squarely apply to the facts of the case. The ld. AR of the assessee also filed a decision of Madhya Pradesh High Court in the case of CIT Vs. S. Goyanka Lime & Chemicals Ltd. [ 56 taxmann.com 390 wherein also similar view is taken at para 7]. Even this iss....
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....by the revenue are against the evidence found without suggesting any contrary material. Ld. AO has not proved that what is apparent is not real. In the search proceedings no evidence of having been found any recording of payment of on money by the assessee. So as such no addition can be made merely based on that agreement and the content of the that agreement are not incriminating in nature. 10. The ld DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). Ld. DR vehemently opposed the ground for not quoting the DIN. As regards the approval of Addl. CIT the same being on going process it cannot be concluded that the approval was granted on the same day when Addl. CIT also regularly monitor the search assessment proceeding. As regards the merits of the case, the Panchanama was drawn in the name of the assessee and accordingly the addition was made based on the document found and the statement of the assessee recorded. When the assessee was confronted by the search team, the assessee categorically accepted that though the property purchased by his wife, but the on-money paymen....
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....Lal Chand Aswani in F.Y. 2008. In this agreement total sale consideration (at page No. 21 to 25 of Annexure AS, Exhibit-8) is mentioned as Rs. 90 lacs. The assessee, Shri Harish Jain was questioned that it was not acceptable that Shri Lal Chand Aswani had sold the above referred plot to Smt. Prabha Jain w/o Shri Harish Jain for a consideration of Rs 40 lac bearing a huge loss of Rs. 50 lacs since the same property was purchased by him for a purchase consideration Rs. 90 lacs. In response to that Shri Harish Jain admitted in his statement in Question No. 17 that, Smt. Prabha Jain has purchased this property for Rs. 95 lakh. Vide reply of question No. 18 wherein that statement recorded during the search action, Shri Harish Jain admitted that an amount of Rs. 40 lacs were paid by cheque which was out of loan taken by Smt. Prabha Jain and her savings and remaining amount of Rs. 55 lacs were paid by cash. It has also been admitted by Shri Harish Jain that the amount of Rs. 55 lacs were paid by him out of undisclosed sources and had never been offered for taxation. Shri Harish Jain admitted Rs. 55 lacs as his undisclosed income for F.Y. 2011-12 i.e. A.Y. 2012-13. In the light of....
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....g amount of Rs. 55 Lacs was paid by him, out of undisclosed sources and but not offered for taxation. Hence, the cash payment of Rs. 55 Lacs made by the assessee was considered as his undisclosed income and added to his total income for AY 2012-13. When the matter carried to ld. CIT(A), he has confirmed the appeal of the assessee merely on the ground that "in the statement recorded u/s 132(4) the appellant admitted that though the property is purchased in the name of wife of the assessee, the assessee is joint borrower for arranging the loan as source of the funds. Hence, the assessee is de facto co-owner of the property. Hence, the assessee is not completely unrelated to the transaction. Further, the assessee admitted in the statement recorded u/s 132(4) of the Income Tax Act that the payment of cash was made from the income earned out of undisclosed sources. In the statement the appellant mentioned name of the person Sh. Lalchand Aswani to whom payment of Rs. 55 lakh was made and also mentioned the date 2-12-2011. In these circumstances, the argument of the appellant are not found to be acceptable. The bench noted that the apple of discord in this appeal about the two-agreemen....
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....y that even the ld. AO having been aware about all the facts not made any independent enquiry. The assessee, based on the circumstances agreed to have accepted the disclosure which he has already retracted. Thus, when there is no incriminating document found, and the assessment year is 2012-13 no addition can be made except that is supported by incriminating document. We get support this view from the recent judgment delivered by the apex court in the case of Principal Commissioner of Income Tax, Versus Abhisar Buildwell P. Ltd., in CIVIL APPEAL NO. 6580 OF 2021 wherein it has been held that; 13. For the reasons stated hereinabove, we are in complete agreement with the view taken by the Delhi High Court in the case of Kabul Chawla (supra) and the Gujarat High Court in the case of Saumya Construction (supra) and the decisions of the other High Courts taking the view that no addition can be made in respect of the completed assessments in absence of any incriminating material. 14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the j....
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....we do not find any reason to sustain the addition and therefore, the same is directed to be deleted. Since we have decided the appeal of the assessee on merits the other technical grounds raised become educative in nature. In the result the appeal of the assessee in ITA no. 389/JP/2024 stands allowed. 12. Now we take up the appeal of the assessee in ITA no. 624/JP/2024 for assessment year 2014-15. In this appeal the assessee has raised the following grounds of appeal; To add GOA 13. Ground no. 2 raised by the assessee is related to the addition of Rs. 3,00,000/- made by the ld. AO and sustained by the ld. CIT(A). The brief facts related to the issue are that during the search action u/s. 132 of the Act at the premises of the assessee document bearing page number 10 to 13 of exhibit 2 of Annexure AS of Party no. 3 was found and seized. This document was printed and clearly contains rent agreement of house No. 175 Rajiv Gandhi Nagar Kota between Shri Umesh Kumar and Shri Harish Jain. On being asked to clarify the nature of annexure vide question number 4 he clarified that it contained rent agreement made with Shri Umesh Kumar regarding residential hostel at Kota. As per t....
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....s Annexure- AS, Exhibit-2, Pg10 to 13. The impugned addition has been made on merely surmises and conjectures, without correctly appreciating the facts and seized documents and seriously suffers from various deficiencies. The addition so made and confirmed, being contrary to the provisions of law and facts, kindly be deleted in full. 3. The Id. CIT(A) further erred in law as well as on the facts of the case in confirming interest charged u/s 234A, 234B and 234C of the Act. The appellant totally denies its liability of charging of any such interest. The interest so charged and confirmed, being contrary to the provisions of law and facts, kindly be deleted in full. 4. The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on on before the date of hearing." 14.1 Apropos to the ground no. 2 raised by the assessee the brif facts related to the dispute are that during the search action u/s. 132 of the Act at the premises of the assessee document bearing page number 10 to 13 of exhibit 2 of Annexure AS of Party no. 3 was found and seized. This document was printed and clearly contains rent agreement of house No. 175 Ra....
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....Act dated 25.12.2019 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. Rs. 15,00,000/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming impugned addition of Rs. 15,00,000/- on account of alleged unaccounted investment made in construction of house Plot No. 2-PA-8, Vigyan Nagar, Kota. The impugned addition has been made merely on the basis of statement but without there being any incriminating material found and even in absence of an expert opinion. The addition so made and confirmed, being contrary to the provisions of law and facts, the same may kindly be deleted in full. 3. The ld. CIT(A) further erred in law as well as on the facts of the case in confirming interest charged u/s 234B and 234C of the Act. The appellant totally denies its liability of charging of any such interest. The interest so charged and confirmed, being contrary to the provisions of law and facts, kindly be deleted in full. 4. The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing." 15.1....