TaxTMI 
TaxTMI 
2022 (4) TMI 1646
X X X X Extracts X X X X
X X X X Extracts X X X X
....irming the addition of Rs. 1,50,00,000/- made by ld. AO solely on the basis of alleged loose paper though same was dumb document and without bringing any material on record to support the allegation. Appellant prays that addition so made deserves to be deleted. 3. On the facts and in the circumstances of the case ld. CIT(A) erred in confirming the action of ld. AO in making addition of Rs. 1,39,581/- without appreciating the submission made by assessee. Appellant prays addition so made is not in accordance with law and deserves to be deleted. 4. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. The brief facts of the case are that the assessee is a trader dealing mainly in Iron and Steel business. Besides this, he was director in M/s Bagru Ferro Alloys Pvt. Ltd., M/s Siddhi Vinayak Induction Pvt. Ltd. and M/s Panchsheel Infotech Pvt. Ltd. During the year under consideration, a search action u/s 132 of the Act was conducted on Adventa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t voluntary statements as they were recorded by putting the assessee under severe tension / pressure and the uncomfortable circumstances created due to the presence of so many departmental officials asking on various issues so many times during the entire period. They also did not allow the assessee to properly read and understand what has been written in the statements recorded and simply got his signatures on them. Immediately after conclusion of the search proceedings (i.e. within a week), the assessee filed an affidavit on 24.12.2014 (APB 34-35) retracting from the statements recorded during search as the assessee had signed them in haste without reading completely for the main reason that statements were recorded at odd hours and as assessee was not in normal state of mind due to lack of sleep and charged atmosphere. At this juncture, it is submitted that surrender during the course of search was obtained from assessee on the basis of an alleged loose slip marked as page 7 of Exhibit 2 (APB 40), which was stated to have been found from the possession of assessee and as per statements recorded, said slip contained some entries of cash advances made to various persons f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ead "For" in place of "From" and "31.03.2015" in place of "31.03.2014". All these discrepancies clearly indicate that it was rough noting which is got signed from the assessee to create evidence for alleged declaration of undisclosed income of Rs. 1.50 crores which was obtained from the assessee on the dotted lines. It is settled law that the paper should be read as a whole. In the instant case the department has read the paper in the manner which suits to it and not considered the same in its entirety. In this regard reliance is placed on the following judicial pronouncements: 253 ITR 454 (Guj.) Glass Lines Equipments Co. Ltd. V/s CIT Interpretation of documents - Documents must be read as a whole. It is a well settled canon of interpretation that a document has to be read as a whole" it is not permissible to accept a part and ignore the rest of the document. 22 TW 684 Hissaria Brothers V/s ACIT (Jpr.) Held that the seized document has to be read in its entirety and the parties are not allowed to read only that part which is suitable to it. 21 Tax World 213 Lal Chand Agarwal V/s ACIT (Jpr) In no case AO can be allowed to consid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mitted to consult his tax advisors and not even was permitted to take or make the phone calls thus the atmosphere was deliberately converted in to a charged atmosphere where the normalcy of the human mind is bound to disappear. It is further submitted that Search officials even did not allow the assessee to read and understand what has been recorded and simply got his signatures on them, and thus statements so recorded cannot be relied upon. In this regard, reliance is placed on decision of Patna High Court in the case of Bihar Human Rights Commission vs Rajendra Singh, (case law paper book pages 128-150): The said position was further clarified by CBDT vide Circular no.10 dated 2003, which clearly stated that focus and concentration should be on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments rather than on obtaining confession. It is further submitted that ld.AO has not even tried to identify and verify the persons to whom alleged advances were made as per the AO's version. In fact, when the statements were already recorded and concluded, no soo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ipient of alleged advances. It is submitted that the Learned Assessing Officer has failed to take into consideration the retraction made by the assessee. No plausible reasons have been given for the same. It is settled position of law that if there is evidence then assessee has a right to retract. During the course of search amidst a number of officers, the poor assessee is brow-beaten and on account of undue pressure exerted there remains no option but to surrender. It was a case like this and the assessee was forced to surrender income of Rs. 1,50,00,000/- with reference to pages 7 of Annexure-1 whereas the paper is rough paper and has no relevance with the business of the assessee. The retraction of the assessee was fully justified and substantiated with adequate evidence. However ignoring and disregarding the retraction made by the assessee the Learned Assessing Officer has stuck to surrender obtained from the assessee under coercion in statement recorded u/s 132(4) of the Income Tax Act, 1961. It is settled position of law that no addition can be made simply and simply only and only on the basis of a naked statement having no clothing. The Learned Assessing Officer has not bro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was retracted late on and got re-affirmed by the department, additions were made on the basis of such surrender was deleted by this hon'ble bench in the case of DCIT Vs. JKD Pearl India Developers Pvt. Ltd. in ITA NO. 324/JP/2017, copy of order at case laws paper book pages 154-259. It is further submitted that ld AO has disregarded the retraction affidavit on the allegation that the assessee has not filed retraction with his jurisdictional Income Tax officer [ITO Ward 3(1)] with whom he was filing his income tax returns or with DDIT(III)-Inv. Jaipur or Addl. DIT (Inv.), Jaipur or DIT (Inv.) Jaipur or DGIT (Inv.) Jaipur and has in fact filed the same with ACIT Circle-1, Jaipur. In this regard, as submitted before ld. AO, it is submitted that since M/s Shri Siddhi Vinayak Induction Pvt. Ltd. (in which Sh. D.P.Sehgal was also director and because of which search was conducted on assessee) had jurisdiction with ACIT, Circle 1, Jaipur, thus the assessee was under bonafide belief that ACIT, Circle-I was the competent authority for filing affidavit in case of assessee (Director) and therefore, assessee filed both the retraction affidavit vide letter dated 24.12.2014 and letter d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tment and therefore he retracted such statements at the earliest opportunity i.e. on 24.12.2014, which was again confirmed on 15.04.2015. However these evidences were not considered by ld.AO and additions were made without corroborating such statements with any material on record and it is therefore prayed that addition so made may be deleted. So far as slip on the basis of which is department has tried to substantiate the addition of Rs.1.50 crores is concerned, it is submitted that the slip did not bear any signature of third party nor were the figures mentioned therein proved to be undisclosed income of assessee with any supporting evidence. In fact, no effort whatsoever was made to verify the recipients of such advances. It is further submitted that learned AO in assessment order has mentioned that "As per the Computation of Income filed as well as the details available on record the assessee indulged in the sale of two properties during AY 2014-15 and AY 2015-16 as under: i) Flat G-13/21, Chitrakoot Yojana, Gandhi Path Jaipur sold on 13.11.13; and, ii) Plot No. H-34, Sun City Sikar Road, Jaipur sold on 31.01.2015. It is worth notici....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce, therefore, it is humbly prayed that the same deserves to be deleted." 6. On the other hand, the ld. CIT-DR has vehemently supported the orders of the lower authorities. 7. We have heard the rival contentions of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. As per the facts of the present case, we noticed that the assessee is a trader and dealing in Iron and Steel business. He was also a director in M/s Bagru Ferro Alloys Pvt. Ltd., M/s Siddhi Vinayak Induction Pvt. Ltd. and M/s Panchsheel Infotech Pvt. Ltd. etc. During the year under consideration, a search action u/s 132 of the Act was conducted on Adventage Group on 17.12.2014 of which Mr. D.P.Sehgal was key person and one of the director in the company namely Shri Siddhi Vinayak Induction Pvt. Ltd., residence of assessee was also searched. During the course of search, surrender to the tune of Rs.1.50 crores was obtained from assessee in the statements recorded which is solely based on the scribbling found....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad made advances in cash to Siddhi Vinayak Inductions Pvt. Ltd. for purchase of material. A summary of scribbling found noted on slip is as under SVIPL for purchases of material 15.12.2014 ...07.2014 Rs. 25,00,000/- ...07.2014 Rs.35,00,000/- 19.08.2014 Rs. 25,00,000/- 14.10.2014 Rs.20,00,000/- 15.11.2014 Rs. 40,00,000/- 24.11.2014 Rs.5,00,000/- Total 150.00 lacs Condition: Goods to be recd. From SSVIPL before 31.03.2014. From the above, it is clear there are major inconsistencies in the notings on such loose slip which are evident from the face of it such as (i) while against each entry, value is given in rupees where as in total the value is mentioned in Lacs. Surprisingly it is even signed and dated by the assessee which is again not a normal practice / behavior. Further, though the entries pertain to F.Y. year 2014-15, the condition in the last says that the goods to be received from SSVIPL before 31.03.2014. In fact, it nowhere stated that the value written against each entry is cash given. Further, while it is duly signed and dated by the assessee, there is no confirmation / signatures by SVIPL. Moreov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal High Court in the case of Shri Ashok Kumar Jain 369 ITR 145 wherein the Hon'ble High Court held that "if the assessee does not adhere to the surrender made then it is for the Assessing Officer to bring on record cogent material and other evidences to support the addition rather than simply rely on the statement". In this case the position is exactly the same. As stated above, the AO has just made addition on the basis of statement recorded u/s 132(4) of the Act which has been retracted by the assessee and without bringing any material on record. It is important to mention here that the A.O. has made additions without making any post search enquiries with reference to contents of page. No material has been brought on record that the assessee has received the goods or the company has received the goods against such money alleged as advance given to various persons. These pages admittedly do not contain name of any supplier or the person to whom advance was given yet additions have been made solely on the basis of these papers on presumption and assumption. As per the A.R., the Search officials had not allowed the assessee to read and understand what has been recorded and simply g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ays, without the prior approval of the Chief Commissioner." The above said position was further clarified by CBDT vide Circular no.10 dated 2003, which clearly stated that focus and concentration should be on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments rather than on obtaining confession. From the above, it can be said that the AO had not even tried to identify and verify the persons to whom alleged advances were made. In fact, when the statements were already recorded and concluded, no sooner the intimation of retraction of statements was received by department, again summons were issued to assessee and his statements were recorded after the lapse of almost 4 months i.e. on 14.4.2015 which are at page No. 36-38 of the paper book, wherein no new queries were made and rather assessee was to state that the slip marked as page 7 of Annexure II was documentary evidence in support of surrender made and undisclosed income of assessee was earned from property transactions. Also, assessee was to re-affirm statements recorded during search (however there was no mention of sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of the assessee was fully justified and substantiated with adequate evidence. However ignoring and disregarding the retraction made by the assessee the Assessing Officer has stuck to surrender obtained from the assessee under coercion in statement recorded u/s 132(4) of the Act. It is settled position of law that no addition can be made simply and simply only and only on the basis of a naked statement having no clothing. The A.O. has not brought any material to establish the truthfulness of the contents of the paper on the basis of which surrender was obtained. On the other hand, the assessee has established that the paper is dump document. In this regard, we draw strength from the decision in the case of Shri Ashok Kumar Jain 369 ITR 145 wherein the Hon'ble Jurisdictional High Court of Rajasthan has held that "if the assessee does not adhere to the surrender made then it is for the Learned Assessing Officer to bring on record cogent material and other evidences to support the addition rather than simply rely on the statement. In this case the position is exactly the same." We also found support from the following judicial pronouncements: (a) Contech Transport Service (P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the parties, as well as the orders passed by the revenue authorities. Before we decide merits of this ground, it is necessary and imperative to evaluate the orders passed by the ld. CIT(A) while disposing of this ground. The ld. CIT(A) has discussed the ground raised by the revenue in detail in para Nos. 2 to 4 of its order. The operative portion of the order is contained in para 4.1.2 and the same is reproduced below: "4.1.2 I have duly considered assessee's submission and carefully cone through assessment order passed by the AO. I have also. taken a note of factual matrix of the case as well as applicable case laws relied upon. I have also carefully perused the assessment record. On careful perusal of the seized documents (Supra), on which during the search assessment Sh Vijay Kr Jain in his sworn statement on oath u/s 132(4) of the Act recorded on 05.09.2013, had admitted to have received on-money of Rs. 27,50,31,216/= and Rs. 2.5 crore on a/c of other discrepancies, the gist of head wise & entry wise break up of admission of undisclosed income is mentioned as under: S. No. Amount admitted in Rs. Basis of admission of undisclosed income Relevant question....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. c) The area as per seized documents (in sq. ft.) does not match with the area mentioned in the Sale Deed. The Sale Deed in respect of flats mentioned had not been executed by the date of search; accordingly, the amount mentioned in these papers is not verifiable vis-a-vis total sales consideration. d) The seize paper are computer printouts having no date and also unverifiable contents. The seized papers don't contain (i) date of transactions, (ii) name of buyers, (iii) details of the cheque payments vide which accounted money was given, and (iv) name of the person receiving such on-money from buyers. Even the amounts shown on "column A" which is alleged to be the accounted part of sale price is also not verifiable for books of accounts, meaning thereby the details mentioned in the seized documents cannot be corroborated with the transactions recorded in the regular books of accounts. e) The assessee company recognizes the sale of flats only when the flats are fully ready to be sold and title is transferred to the purchaser and the possession is give. But during the year under consideration the flats were not fully developed and also the title of pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he seized documents are the transactions of the appellant which remained undisclosed. The appellant, under the principles of natural justice, has the right to rebut the presumption. This is very important since the presumption under section 292C is permitted only in respect of the documents in "possession or control" of the assessee. Therefore, onus is on the AO to prove that what was stated in the seized document, are true. Such an interpretation would render the deeming provisions of section 292C otiose and presumption as to the correctness of seized documents is automatic under section 292C of the Act unless the contrary is proved and as such, the assessee was legally required to substantiate the seized documents with supporting evidence. Here I would also like to quote decision in case of ACIT vs. VATIKA GREENFIELD (P) LTD (Del) 121 TTJ 208 (2009), wherein Hon'ble Delhi High Court has held that unless some evidence or material is brought on record by the assessee to show that what is stated in the seized document is not correct state of affairs and the state of affairs stated in the seized document has to be presumed to be true as mandated by Sec.292C of the Act. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an be drawn on the basis of such evidence. But, this gives to rise to presumption, which can be rebutted; statement given at the time of search cannot be treated as sacrosanct. Hon'ble Madras High Court in case of M. Narayanan & Bros. v. ACIT (2011) 339 ITR 192 (Mad) has held as under: ".......While statement rendered by assessee at time of search under section 132(4) may be used in evidence in any proceeding, yet that, by itself, does not become sole material to rest assessment, more so when assessee seeks to withdraw same by producing material in support of such retraction " Or similar facts, Hon'ble Ranchi High Court in case of CIT vs. Ravindra Kumar Jain (2011) 201 Taxman 95 (Jharkhand) in retraction case has held as under: "........Assessee retracted his statement- Surrender was not corroborated by independent EL7dence - Assessing Officer was duty bound to collect more evidence in respect of r disclosed income of assessee to justify the addition.." Now, facts of the case are that during the post search investigation and also during assessment proceeding, no effort was made to investigate from buyers of the flats about alleged on-mone....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rroborative evidence cannot be sustained. In view of facts and circumstances of the case as discussed above and most respectfully relying on the above decisions(supra), addition made of Rs. 25,86,60,5507= is hereby deleted. Assessee's appeal in Gr No 1 stands allowed." 12. After having heard the ld. Counsels at length and after appreciating the facts contained in the present case, we found that the addition in the present case was made by the A.O. by simply relying upon the sworn statement made U/s 132(4) of the Act by Shri Vijay Kumar Jain Director, of the assessee company without placing any further corroborative evidence to prove his contentions. The ld. CIT(A)after going through the facts of the case, had passed a detailed order discussing entire facts and circumstances and also controverted all the findings and observation of the A.O. As per the factual position during the course of search, statement of one of the directors of Shri Vijay Kumar Jain was recorded. During the course of statement Shri Vijay Kumar Jain was examined with reference to certain rough papers found during the course of search. These papers have already been placed on record as page ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....O. was not in a position to correlate these papers with regular books of account. As per the assessee, certain flats shown as sold in these papers were actually sold subsequent to the search and in this respect they have also submitted documents with the A.O.. It is an admitted fact that the A.O. himself in the order of assessment at page No. 24 has categorically admitted that these papers do not have any date but he still presumed that these belong to the period when found and seized. In our view, no liability can be fastened on the basis of assumptions and presumptions and it is a settled law that the presumption whosoever strong may be but it cannot take place of proof and thus the A.O. has acted more on suspicion and doubt than on evidence. It is settled principle of law that suspicion however strong cannot take the place of evidence. We also drawn our attentions from the decisions in different cases wherein it has been time and again held that suspicion howsoever cannot take place of evidence. In this respect we relied upon the following decisions: Uma Charan Shaw & Brothers 37 ITR 271 (i) CIT vs. Anupam Kapoor 299 ITR 179 (P&H) (ii) CIT vs. Dhiraj Lal Girdh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hen in that eventuality the same has to be filled by the A.O. through post search enquires and co-relate the material found with the business of the assessee, without which no addition can be made on the basis of a loose paper. The Coordinate Bench of ITAT, Hyderabad, in the case of K.V. Laxmi Savitri Devi Vs ACIT 60 DTR 148 has held that no addition can be made on the basis of a loose paper which does not contain the name and the date of payment. The department is precluded in drawing inferences on the basis of suspicion, conjecture and surmises and no addition can be made on the basis of such dump document or loose sheets. The ld AR also invited our attention to the chart which was also filed before lower authorities, which discloses certain flats were not sold upto the date of search as such there was no question of receiving any amount on account of on-money. Even in the written submissions filed before lower authorities, it has categorically mentioned by the assessee that flat no. 201, 202, 301, 602 of JKD Pearl Landmark and flat no. 101, 102, 302 of JKD Pearl Stylome i.e. Mahaver Nagar Jaipur and flat no. 102, 604 of JKD Pearl Aura, Alwar were sold much later i.e. in the year....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Aura FLAT NO. AREA AS PER SEIZED PAPERS (Sq. ft) AREA AS PER SALE DEED (Sq. ft) 102 * 1734.8 601 1648 1770.2 604 * 1279 1365.7 703 1279 1362.2 704 1279 1365.7 15. On the scrutiny of those documents in detail, we also found that the area mentioned in the seized paper is at variance with the regular records. The assessee had also drawn our attention to the comparison made by him with respect to amount of sale with regular books vis a vis seized papers. The assessee had also drawn our attention to the fact that even the accounted amount mentioned in column 'A' of these pages i.e. page Nos. 1 to 4 of Annexure-A2 also do not tally with the consideration shown in the registered sale deeds and in this respect, following chart has been placed on record, which is reproduced below: JKD Pearl Landmark FLAT NO. SALE PRICE AS PER SEIZED PAPERS SALE PRICE AS PER SALE DEED 101 1728125 2242209 301 * 10616900 10616900 302 10616900 10616900 401 10281250 10333820 402 10281250 10333820 501 & 502 20562500 20672190 601 & 102 10281250 12201500 602 * ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ears to be a deaf and dumb document. (ii) Mahaan Foods Ltd. Vs. DCIT (ITAT Delhi) (2009) 27 DTR 185 In the absence of any other evidence found during the course of search or brought on record by the Assessing Officer to show that the expenditure found noted on seized documents was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee. No inference could be drawn against the assessee much less any inference of unexplained expenses on the basis of a dumb document found at the residence of its director as there is no proof to show that the amount mentioned in the said document was paid by the company. (iii) Moolchand Kumawat & Sons Vs. DCIT (Ajmer) ITAT Jaipur Bench 42 Taxworld241 in M.A. No. 93/JP/2008 arising out of ITSSA No. 24/JP/2005 order dated 20.02.2009 Addition cannot be made on the basis of a dumb document or on the basis of entries found recorded on a paper seized during search without conducting any enquiry from the concerned party. (iv) Assistant Commissioner of Income Tax Vs. Satya Pal Wassan (2007) 295 ITR 9 AT 352 (Jabalpur) A document found during the course ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....various loose sheets found at the premises of the assessee as well as vouchers, some of which related to the two films in question. In an appeal filed to the Tribunal, the Tribunal framed three issues, two of which were unnecessary for the reason that the statement recorded on August 25, 1995, was said to be relevant but not conclusive. Therefore, whether the statement was made under duress and whether it was retracted lawfully would have no relevance at this stage. However, the Tribunal went into these issues as well and ultimately, found that the statement could be used as evidence. Further, it examined other corroborative evidence referred to in the assessment order and arrived at a finding that the added income would be income which can be added under section 158BC for the block assessment period in question. In an appeal filed under section 260A to the Bombay High Court, the High Court found, after narrating the facts, that no substantial question of law arises. 4. We are of the view, in accordance with the view of the High Court, that no substantial question of law arises. Further, though it was vehemently argued by Shri Devansh A. Mohta, learned counsel appearing fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case of Ravi Mathur & Others (D.B Appeal No. 67/2002 & others) vide its order dated 13-5-2016 where Hon'ble High Court has laid down the following proposition in law in respect of retraction of statement recorded under section 132 (4) of the Act: "14. Having noticed the arguments of the learned counsel for the parties, we deem it proper at the outset to take into consideration the finding of the Tribunal about retraction/resiling of the statements recorded under Section 132 (4) as the Tribunal has primarily come to a finding that retraction is proper. We would also deal with the judgments relied on by the learned counsel which has a bearing on the issues and would then give our own view on questions posed by the Revenue. 15. In our view, the statements recorded under Section 132 (4) have great evidentiary value and it cannot be discarded as in the instant case by the Tribunal in a summary or in a cryptic manner. Statements recorded under Section 132 (4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed herein....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd is simply a selfserving statement without any material. 15.1 Thus, in our view, the Tribunal in a summary manner has held that retraction is proper, without going in detail and manner, time of retraction, the addition deleted, is wholly on a perverse finding. 15.2 This Court in Raj kumar Sodhani v. The CIT (D.B ITA No. 15/2015 decided on 28-4-2016) has taken this very view that retraction after a sufficient long gap loses its sanctity." 24. In light of legal proposition laid down by the Hon'ble Rajasthan High Court, there is clearly an inordinate delay in retraction and no justifiable explanation has been given by the assessee company for such delay. It is clearly an afterthought and loses its signifance. The statement recorded under section 132 (4) has great evidentiary value and there is no material which has been brought on record that such statement has been recorded and obtained forcefully/by coercion/undue influence. Further, the assessee has been consistent in his statements so recorded even during the post search proceedings when his statement was recorded under section 131. Hence, in light of above discussions, the retraction of the statem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he IT Act was recorded at his business premises on 11.10.2014. In reply to question No. 8, he was asked to explain the source of cash amounting to Rs.3,380/- found at his office and Rs.1,21,43,210/- found at his residence, he submitted regarding the amount of Rs.1,21,43,210/- found at his residence that he was unable to give any explanation and admitted that he was in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and that the income so generated on account of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed income belonged to his company M/s Bannalal Jat Construction Pvt. Ltd. In response to question no.11 wherein he was asked to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure details have been found and taking all that into consideration, he surrendered Rs.4,01,43,210/- as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s Bannalal Jat ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... maintaining transaction on diaries and loose papers which was not permissible in any of the method of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surrender without having evidence or proof of retraction is not permissible in the eyes of law. The statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. In view of the above discussion, the question formulated vide order dated 09.05.2018 is answered in favour of the revenue and against the assessee." II-A It may be mentioned that the SLP filed by the assessee in the above case has been dismissed by the Hon'ble Apex Court as reported in Bannalal Jat Constructions (P.) Ltd. Vs CIT [2019] 106 taxmann.com 128 (SC). III-A In the case of PCIT Vs Shri Roshan Lal Sancheti, in D. B. ITA No. 47/2018 vide its judgement dated 30.10.2018, the Hon'ble Rajasthan High Court has affirmed its above referred earlier judgement in the case of Banna Lal Jat ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is not the correct position of law. The admission once made can certainly be retracted, if the circumstances permit, and it can also be shown to have been made under some mistake or to be otherwise incorrect. But, the onus would be on the maker of that admission. In this case it is the appellant/assessee who has admitted and surrendered a sum of Rs. 1.75 crore as his undisclosed income. It was incumbent upon him to show that he had made a mistake in making that admission and that the said admission was incorrect. He had access to all the documents which has been seized inasmuch as the copies had been supplied to him. However, he did not produce anything to establish that the admission was incorrect in any way. That being the position, the appellant/assessee cannot resile from his earlier statement made on 10-11.11.2005 and 21.11.2005. 12. The learned counsel for the appellant/assessee also referred to the Supreme Court decision in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [19731 91 ITR 18 for the proposition that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It was contended that it was open ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sidered as a self serving afterthought and no reliance can be placed on the same to disbelieve the clear admissions made in the statement recorded under Section 132(4). Deletion of the additions vis-a-vis the property transactions on the reasoning that the department cannot do so on the basis of the admission made under Section 132(4) and on the premise that the Department ought to have proved retraction to be untrue cannot be countenanced in view of the specific words employed in Section 132(4)." VI In the case of CIT Vs Lekh Raj Dhunna [2012] 20 taxmann.com 554 (Punjab & Haryana), it has been held by the Hon'ble High court that: "17. Thus, in view of sub-ss. (4) and (4A) of s. 132 of the Act, the AO was justified in drawing presumption against the assessee and had made addition of Rs. 9,00,000 in his income under s. 68 of the Act. The onus was upon the assessee to have produced cogent material to rebut the aforesaid presumption which he had failed to displace. The assessee retracted from the said statement vide letters dt. 24th Nov., 1998 and 11th March, 1999 during the course of assessment proceedings. However, no value could be attached thereto in the pres....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the immovable property. 8. The argument of the learned Counsel for the assessee is that there should be corroborative evidence to sustain the entries to link the same and treat it as an un-explained investment to bring the case under Section 69 of the Act. In our considered view nothing more is required than the facts, which were considered by the Assessing Officer as well as the Commissioner of Income Tax (Appeals) and the Tribunal. The notings are clear and it is not any scribbling, which shows the figures and also shows whether the payments were in cash or in cheque. The retraction made by the assessee, after a period of two years, was rightly rejected as an afterthought." 18. Whereas on the contrary, the assessee has relied upon the following decisions: (a) Contech Transport Service (P) ltd Ors V/s ACIT (2009) 19 DTR 191 (Mumbai) 28-11-08 No addition can be made only on the basis of admission in statement u/s 132 (4) (b) Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone. (c) K....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ablished that the exercise of surrender by the Revenue Authority was under duress. No effort was made at the time search and seizure to verify the genuineness of these rough papers. The revenue authorities just got hold of these papers and pressed the assessee for surrender. The assessee at that stage of search had no option but to agree with the authorities so as to escape further harassment. In the normal course if the surrender was genuine the revenue authorities should have and would have crossed checked the details and facts of amount mentioned in these pages. They should have verified at least a few entries of the accounted amount mentioned in these pages. No such exercise was done neither during the search nor during the course of assessment proceedings the post search enquiries do not reveal anything against the assessee. Merely harping on the rough pages and on the statement of the assessee u/s 132(4) wont help in making additions. Further during the course of assessment proceedings parties have been called u/s 131 who have purchased the flats and they have stated that no on money was paid by them. The Learned Assessing Officer also called for information u/s 133(6). Despi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hese papers do not contain name of the buyers and also do not contain the date of transactions. It is an admitted fact that the assessee has executed certain sale deeds post search and in this respect, details have also been placed on record. The buyers have also filed their respective affidavits with the revenue authorities. The paper of surrender made do not contain requisite minimum details of transactions and it is a settled proposition of law that if a document does not contain any date and name and only contains numerical figures then such document is vague and dump document and no addition can be made on the basis of such document. In order to avoid any repetition, we would like to confine ourselves to the glaring errors in the investigation/verifications carried out by the revenue authorities. The ld. CIT(A) has already mentioned in detail the deficiencies/discrepancies in the verifications carried out by the revenue department and even according to the assessee, since the sale already stood completed, there was no occasion for the assessee to have shown outstanding amount against the sale of flats and apart from the above certain flats have been sold much after the date of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....03 To All Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. Sir Subject : Confession of additional Income during the course of search &seizure and survey operation -regarding Instances have come to the notice of the Board where assessees 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 assessees while filing returns of income. In these circumstances, on confessions during the course of search &seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issues with approval of the Chairperson, CBDT (K. Ravi Ramchandran) Director (Inv.)-II, CBDT- 21. The CBDT had issued instructions wherein it has been instructed that no surrender should be obtained and assessment should be completed not on the basis of such surrender but on the basis of material gathered during search. However, in the present case, the A.O. had made additions solely on the basis of solitary statement made by the Director of the assessee. Even the Hon'ble Jurisdictional High Court of Rajasthan in the case of CWT vs. Sanwarmal Shivkumar 171 ITR 337 has held that the officers of the Department are bound by the circulars of the board. Further in the following cases the Courts have held that circulars issued by the Board are binding: - (i) Navnit Lal C Javeri Vs. Sen (1965) 56 ITR 198 (SC) (ii) K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) (iii) UCO Bank....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dings so recorded by the ld. CIT(A). Therefore, we uphold the order passed by the ld. CIT(A) qua this issue." 12. As per the ld. AR, the AO has disregarded the retraction affidavit on the allegation that the assessee has not filed retraction with his jurisdictional Income Tax officer [ITO Ward 3(1)] with whom he was filing his income tax returns or with DDIT(III)-Inv. Jaipur or Addl. DIT (Inv.), Jaipur or DIT (Inv.) Jaipur or DGIT (Inv.) Jaipur and has in fact filed the same with ACIT Circle-1, Jaipur. In this regard, as submitted before AO, we observed that since M/s Shri Siddhi Vinayak Induction Pvt. Ltd. (in which Sh. D.P.Sehgal was also director and because of which search was conducted on assessee) had jurisdiction with ACIT, Circle 1, Jaipur, thus the assessee was under bonafide belief that ACIT, Circle-I was the competent authority for filing affidavit in case of assessee (Director) and therefore, assessee filed both the retraction affidavit vide letter dated 24.12.2014 and letter dated 15.04.2015 with the ACIT Circle-I, Jaipur. We further observed that the assessee was called upon subsequently at the office of the Director of Income Tax (Investigation) on 14.04.2015 on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on record. So far as slip on the basis of which is department has tried to substantiate the addition of Rs.1.50 crores is concerned, it was submitted by the ld. AR that the slip did not bear any signature of third party nor were the figures mentioned therein proved to be undisclosed income of assessee with any supporting evidence. In fact, no effort whatsoever was made to verify the recipients of such advances. The AO in assessment order has mentioned that "As per the Computation of Income filed as well as the details available on record the assessee indulged in the sale of two properties during AY 2014-15 and AY 2015-16 as under: i) Flat G-13/21, Chitrakoot Yojana, Gandhi Path Jaipur sold on 13.11.13; and, ii) Plot No. H-34, Sun City Sikar Road, Jaipur sold on 31.01.2015. It is worthwhile to mention here that while the first property was sold in FY 2013-14, the second was sold after the date of search i.e. 17.12.2014 and thus both do not corroborate with the claim in the recorded statements that the income was earned out of sale transactions of property in current FY 2014-15. Further, the total value of these two sale transactions was only Rs. 44.00 lacs. In ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,450/- to the broker Mr. Sunil Gajeria. In support of such claim complete address of broker as well as PAN were furnished before the AO. At this juncture, details of expenses so disallowed is furnished as under: - Brokerage Expenses Rs.69,450/- - JDA Expenses Rs.6,776/- Indexed Cost Rs.12,593/- - JDA Expenses Rs.5,421/- Indexed Cost Rs. 7,807/- - JDA Expenses Rs.13,700/- Indexed Cost Rs. 19,731/- - Expenses to mediator Rs.30,000/- Rs.1,39,581/- We observed from the above that JDA Expenses of Rs. 6643/- and Rs.5315/- were incurred by assessee, which are evident in the copy of registered deed which is at pave No. 48 of the paper book furnished before AO as well as CIT(A) and after including incidental Misc. expenses comes to Rs.6776/- and Rs.5421/-. So far as brokerage expenses of Rs.69,450/- are concerned, the same are approximately 3% of the gross sale consideration, which is in accordance with market rates. Further, expenses of Rs.30,000/- were paid to mediator / broker Sh. Sunil Gajaria and assessee had submitted complete address as well as PAN details of the mediator / broker. Accordingly, ident....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¤¾ पेज नं0 6 पर मैं मै0 सिदà¥à¤§à¤¿ विनायक इणà¥à¤¡à¤•à¤¶à¤¨ पà¥à¤°à¤¾0 लि0 व पंचशील गà¥à¤²à¥‹à¤¬à¤² में शà¥à¤°à¥€ धरà¥à¤®à¤ªà¤¾à¤² सहगल कब से कब तक निदेशक रहे, उसका विवरण है। तथा उनके पास कमà¥à¤ªà¤¨à¥€ के कितने शेयरà¥à¤¸ रहे है उसका विवरण है। "इसके अलावा जो पृषà¥à¤ सं0 7 है, जो कि मेरे परà¥à¤¸ से निकà¤....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¤ªà¤¯à¥‡ Surrender किये है, उससे संबंधित Documents को पà¥à¤°à¤®à¤¾à¤£à¤¿à¤¤ करे ? Q. No. 4 Search के दौरान जबà¥à¤¤ दसà¥à¤¤à¤¾à¤µà¥‡à¤œ जिसको Exhibit-II के रूप में दिखाया गया है तथा जिनकी मैने फोटो कॉपी पà¥à¤°à¤¾à¤ªà¥à¤¤ कर ली है। इस Exhibit के पेज नं0 7 पर वितà¥à¤¤à¥€à¤¯ वरà¥à¤· 2014-15 की विà¤à¤¿à¤¨à¥à¤¨ तारीखों के सामने जो विà¤à¤¿à¤¨à¥à¤¨ राशियां ल....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¥à¤°à¤¾à¤ªà¥à¤¤ हो चà¥à¤•à¥€ है। Document 3 JKD Pearl JKD Pearl India Developers (P) Ltd. 'Pearl Suryavanshi, 401, A-5, Sardar Patel Marg, C-Scheme, Jalpur-302001 Ph: +91 141 4014044 e-mail: [email protected] www.pearlgroupIndia.com TO, The Deputy Commissioner of Income Tax Central Circle - 2, Jaipur Sub: Retraction from surrender of income of Rs. 27,50,31,216/- made in the statement recorded u/s 132(4) on 05.09.2013 by the authorized officer during the course of search being under threat and duress in the case of M/s JKD Pearl Developers Pvt. Ltd., Chomu House, C-Scheme, Jalpur-search conducted on 04.09.2013 PAN AAFCA5640Q 1. केस-2 In this case search was conducted on 04.09.2013 at the residential and business premises of the assessee group. During the course of search. Various document, loose papers etc. were seized as per annexure A-11 -12UL 2014 05.092013 statement u/s 132(4) of director of JKD Pearl Developers 2014 Vijay Kumar Jain was recorded. During the course of state felt surrender of income of Rs. 27,50,31,216/- was obtaine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sing him and by threatening him with dire consequences. If the accounted money on alleged sale of flats as shown in these papers is not verifiable from the books of accounts then the natural conclusion is that these papers are rough papers only. The papers contained only projections of imaginary sale value (dream of the directors) of the flats. Thus these papers taken out from the computer are nothing but a part of the business strategy of the assessee. These papers are not related to any sale of any flat of any building. The entire surrender obtained is unlawful and illegal. The Revenue has not been able to link the transactions of these papers either with the material seized during the course of search or by way of post search enquiries. The papers do not contain the name of buyers, these do not contain the details of cheques vide which accounted money was given. Likewise the department has also failed to find out the name of buyers. The entire exercise of surrender is nothing but a vanity of affairs. The papers on the basis of which surrender was following deficiency:- obtained - suffer from the For JKD Pearl India Deve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....statement of any of the buyers of these flats in support of the sale considerations alleged to be on these papers. The surrender was obtained simply under threat, pressure and stress. In view of the aforesaid deficiencies which are apparent from these papers, the assessee has full right to retract the surrender made during the course of search proceeding in statement recorded u/s 132(4) of the Income Tax Act, 1961 on 05.09.2013. The assessee has fully substantiated the basis for making the retraction. Such retraction is fully justified in the eye of law and deserves to be considered during the course of assessment proceedings. The following case laws support retraction: - (a) Pullanguegode Rubber & Produce Co. Ltd. Vs. State of Kerala 91 ITR 18 (Supreme Court) An admission is extremely an 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. For JKD Pearl India Developers Pvt. Ltd., Director Document 8Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\....