TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 806
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.... the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the learned AO that out of silver jewellery weighing 47831 gms. found at business premises of the appellant at the time of search, jewellery weighing 18704.46 gms was allegedly found in excess, sources of which also allegedly remained unexplained and in further making an addition of Rs. 6,57,672/-to the income of the appellant u/s 69A of the IT Act, 1961 as unexplained investment on this count. 3. That on the facts and in the circumstances of the case, the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the ld. AO that out of stock of gold jewellery, jewellery weighing 18 KT. valued at Rs. 41,48,637/- was allegedly found in excess at the time of search at the business premises of the appellant and in further confirming addition of said amount of Rs. 41,48,637/- to the income of the appellant as unexplained investment u/s 69A of the IT Act, 1961 on this count. 4. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the ld. AO that out of 22 KT gold jewellery ....
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....oks of accounts were incomplete on the date of search action and book entries has been made after the conclusion of the search proceedings. However the appellant has not placed on record the all versions of relevant cash book. The appellant has:- (i) not proved and not shown that the entries in the cash book which the appellant is claiming that were not entered in the books of accounts till 02.08.2017/03.08.2017 represent the actual pending transactions and (ii) has not proven and not shown that supporting documents regarding such pending book entries were found during the course of search action, and (ii) has not proven and not shown that statement was made by any responsible person of the company during the course of search and seizure action highlighting such pending book entries. Conversely, during the course of search statement of director of the company Shri Nagendrasingh Laxamsingh Rathor was recorded on oath u/s 132(4) of the Act wherein at question no. 27 the director of the company was asked to explain the excess cash amounting to Rs. 1176838/-. However, in reply to the same the director did not raised any question or objection that the cash in hand is not at Rs....
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....t is still in force as per the appellant itself also. The statement itself is evidence against the appellant as the statement was given by the director of the company. Such evidence cannot be brushed aside and can only be countered with sterling evidences which has not been done in the present case and there is no retraction. Appellant is bound by such statement. In this regard reference is made to the following judgements:- Commissioner of Income-tax v. Hotel Meriya [2010] 195 Taxman 459 (Kerala)/[2011] 332 ITR 537 (Kerala) [26-05-2010] "What is evidence? We shall examine it first. Evidence is defined in section 3 of the Evidence Act as follows: "Evidence"- "Evidence" means and includes (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry, such statements are called oral evidence; (2) all documents including electronic records produced for the inspection of the Court, such documents are called documentary evidence." The 'Court' mentioned above in the definition of evidence would include all persons, except arbitrators, legally authorised to take evidence as defined under section 3. ....
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....in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act. 1922 (11 of 1922), or under this Act" Going by the above provision along with its Explanation we find that the statement of the partner and employees recorded and documents collected are relevant and admissible in respect of all matters for the purpose of any investigation connected with any proceedings under the Income-tax Act Hence, we are of the opinion that the statements so recorded and documents collected by the Assessing Officer cannot be brushed aside as done by the appellate Tribunal stating that it is having only very limited application. We answer the question in favour of the appellant." Pr. CIT v. Shri Roshan Lal Sancheti [IT Appeal No 47 of 2018, dated 30-10-2018), Hon'ble Rajasthan High Court ''This court in CIT, Bikaner v. Ravi Mathur, supra, which judgment has been relied by the ITAT in the present case, after considering catena of previous decisions, held that the statements recorded under section 132(4) of the IT Act ....
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....ternal agencies. Thus, whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence which we have observed hereinbefore. Once a statement is recorded under section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time and in the instant case we notice that the AO in the Assessment Order observes:- "Regarding the amount of Rs. 44.285 lakhs, it is now contended that the statement u/s 132(4) was not correct and these amounts are in ITA No 720/JP/2017 M/s Bannalal Jat Construction Pvt. Ltd., Bhilwara v. ACIT, Central Circle-Ajmer thousands, not lakhs ie it is now attempted to retract from the statements made at the time of S & S operations Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized ....
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....t the Assessing Officer has not given any reason in the assessment order as to why the explanation given by the assessee in the affidavit was not acceptable Learned CIT(A) has given detailed reasons in respect of each deletion of the addition made by the Assessing Officer. Learned counsel in support of his arguments relied upon the judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. State of Kerala & Another, (1973) 91 ITR 0018 (SC) and submitted that the Supreme Court therein held that the 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 admission to show that it is incorrect and the assessee should be given proper opportunity to show the correct state of affairs. Reliance is also placed on the judgment of Madras High Court in M. Narayan and Bros. Vs. Assistant Commissioner of Income Tax, Special Investigation Circle, Salem, (2011) 13 Taxmann.com 49 (Madras) wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. It is argued that additions cannot be made merely on the basis of statements whic....
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....ee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days (Emphasis supplied) CIT, Bikaner vs. Shri Ravi Mathur (D.B. Income-tax Appeal No. 67/2002), Hon'ble Rajasthan High Court "Once a statement is recorded u/s 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time, such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material Commissioner of Income-tax V. MAC Public Charitable Trust [2022] 144 taxmann.com 54 (Madras)/[2023] 450 ITR 368 (Madras) [31-10-2022] "63. The statements given to the Assessing officer under section 132 (4) have legal force. Unless the retractions are made within a short span of time, supported by affidavit swearing that the contents are incorrect and it was obtained under force, coercion and by lodging a complain....
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....ement under sections 132(4)/131(1A) reveal correct state of affairs and retraction has to be ignored. 4.4 In view of the above discussion this ground of appeal of the appellant is hereby dismissed 2.2 During the course of hearing, the ld.AR of the assessee submitted that the ld. CIT(A) is not justified in confirming the addition of Rs. 11,76,833/-made by the AO u/s 69A of the Act. It may be noted that the ld. AR of the assessee repeated the same arguments as made before the ld. CIT(A). 2.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 2.4 We have heard both the parties and perused the materials available on record including the case laws cited by the respective parties. In this case it is noted that the assessee is aggrieved as to the addition of Rs. 11,76,838/- which has been confirmed by the ld. CIT(A) for the reason that :- (a) That during the course of search, total cash amounting to Rs. 16,03,210/- was found and as per the cash book, the alleged cash in hand was Rs. 4,26,372/-. Hence, alleged excess cash Rs. 11,76,838/- was found. (b) Relied upon the statement recorded during the course of search of the Director Shri Narendra Singh Laxman Singh ....
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.... (c) The learned AO and the learned CIT(A) both are also of the view that the assessee failed to furnish details i.e. name, full address of the persons from whom a sum of Rs. 6,68,893/- were received and as such, the claim made during the course of assessment proceedings by the assessee is in contradiction to the supra statement of the Director of the appellant company. It is also noted from the records that the learned CIT(A) discussed the issue in para No. 4.2 to 4.4 of the appellate order. In this regard, the appellant submitted that during the course of assessment proceedings, the appellant submitted complete and correct books of accounts including cash book had been maintained. It is submitted that as per the said cash book, the cash in hand as on date of search was Rs. 9,34,327/- and not Rs. 4,26,372/- as alleged and considered by the learned AO / learned CIT(A).The ld. AR further submitted that the appellant also made a request to the AO to provide a copy of the working details or any evidence based on the same, the cash in hand amount was worked out by the AO at Rs. 4,26,772/- as referred in the supra statement of the Director but the AO did not supply the required detai....
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....han Lal Sancheti [2023] 150 taxmann.com 227 (Rajasthan) - In this case the statement recorded during the course of search u/s 132(4) of the IT Act, 1961, the Hon'ble High Court held that when a statement is recorded at two stages and the assessee had categorically admitted in clear terms additional income, could not be discarded simply in satiric manner. In appellant's case, no second statement was recorded and in the statement recorded u/s 132(4), the appellant has submitted that presently he is unable to got verify from the books of accounts. Thus, the ratio decided in the said judgment are inapplicable in the appellant's case. C. Bannalal Jat Constructions (P) Ltd. Vs ACIT [2019] 106 taxmann.com 128 (SC) - The facts of this case were that during the course of search cash was found at the residential premises of Shri Banna Lal Jat one of the Directors of above referred Pvt. Ltd. company. In the statement recorded u/s 132(4) of the IT Act, 1961, Shri Banna Lal Jat disclosed the said cash found as undisclosed income of the Private Limited company and he further reconfirmed in the statement recorded in the second statement recorded u/s 131 of the IT Act, 1961. Thereafter, Shri B....
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....ree Ganesh Trading Co. Vs CIT, Dhanbad (2013) 257 CTR 159 (Jharkhand) (c) CIT, Karnataka Vs Shri Ramdas Motor Transport Ltd. (2015) 230 Taxman 187 (Andhra Pradesh) (d) Chetnaben J. Shah Vs Income Tax Officer, Ward 10(3) (2016) 288 CTR 579 (Gujarat). (e) Mantri Share Broker P Ltd. (96) Taxmann.com 279 (Rajasthan) Hence taking into consideration entire facts of the case and the case law as mentioned, the Bench does not concur with the findings of the ld. CIT(A) and the impugned addition of Rs. 11,76,838/- made on account of alleged excess cash in hand is wrong and against the fact of the case. Thus the Ground No. 1 of the assessee is allowed 3.1 Apropos ground No. 2 of the assessee, it is noticed that the ld CIT(A) dismissed this ground of appeal of the assessee by observing at para 5.2 of his order as under:- ''5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- During the course of the search dated 02-08-2017 on the business premises of M/s Kiran F....
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.... it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax (CIT v. Durga Prasad More [1971] 82 ITR 540 (Supreme Court)] Further, the claim of the appellant is contrary to the statement of director of the company wherein no where it was stated that the appellant company had received on approval items from Sangam Handicrafts. As discussed in detail in para 4.3 of this order, the statement recorded during the course of search and seizure action is an evidence itself and there is no retraction (the question of valid or invalid retraction does not arise) is on record and the statement is still in force as per the appellant itself also. Further as referred in para 3.1 of this order, the appellant was non-compliant during the assessment proceedings and the similar approach continues in the present appeal proceedings as well and the relevant documents have not been filed in the appeal. In the appeals no evidences have been filed r....
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....in this regard submitted that since beginning that the purity of the silver jewellery was 72% to 75% and not 90% uniformly adopted by the registered valuer. Further, we noticed that it is evident from the order of the CIT(A) that he confirmed the action of the AO without giving legal thought to the submissions and documentary evidences submitted by the assessee which are available at assessment records. In this view of the matter, we do not concur with the findings of the ld CIT(A). Thus the Ground No 2 of the assessee is allowed. 4.1 Apropos ground No. 3 & 4 of the assessee, it is noticed that the ld CIT(A) dismissed this ground of appeal of the assessee by observing at para 6.2 of his order as under:- ''6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- Adjudication of Ground No. 3 of the Appeal During the course of physical stock as taken by a registered valuer in the presence of trusted person of the assessee company, excess stock of 18Kt gold jewe....
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....e appellant is not acting bona fide in presenting the facts of the case. Another important aspect is that even after the conclusion of search (date of search being 03.08.2017) the appellant could have immediately gone in writing before the Investigation Wing officers had there been the discrepancy as claimed by the appellant. The same should have been noted by the appellant immediately as the stock inventory must have been taken by the appellant after the search and seizure action which is a regular affair in any jewellery business. However for a long period the appellant did not challenge the neither the carat wise quantification nor the valuation of the gold items. This shows that there was no problem in the valuation report. Only after several months, during the assessment proceedings, on 19-12-2019, the appellant claimed that the 18 Kt and 22 Kt gold items got mixed up and the valuation reports were also challenged. This proves that the claim of the appellant is a mere afterthought and self-serving statement without the support of any evidences. Further the statement of the director of the company in this regard also does not mention any such discrepancy. There is no such ref....
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....f the assessee company that gold ornament weighing 1000 gms were lying at residence of the Director has been accepted by the Hon'ble Interim Board for Settlement vide order passed Uis 245 D(4) of the IT Act, 1961 date 20.11.2023. The relevant part of the said order at Page No. 19 thereof are reproduced here in below:- Verification of Gold Jewellery found at the residence of applicant during the search: PCIT's comments: 3.9 During the search at residence of applicant and his Bank Locker of Kotak Mahindra Bank, Jaipur, gold Jewellery of net eight 1610.790 grms, value of Rs. 78,40,141/- and silver items of net weight 10.441 gms, value of Rs. 3,24,866/- was found. The applicant sub mitted that having regard to customary possessions and size of the family, gold and silver jewellery /articles found is reasonable. The PCIT stated that the applicant has not filed any documentary proof regarding claim that part of jewellery (1 Kg.) belongs to showroom of M/s Kiran Fine Jewellers Pvt. Ltd. The benefit of CBDT circular Instruction No. 1916 is allowed to the applicant in view of order of Hon'ble jurisdictional High Court. Therefore, the Board is requested to make addition of ....
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.... on account of short stock quantity of 22 Cts. Gold Jewellery. It may be noted that the ld. AR of the assessee repeated the same arguments as made before the ld. CIT(A) 4.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 4.4 We have heard both the parties and perused the materials available on record. The bench noticed that the issues involved in third and fourth grounds are almost identical, inextricably interlinked or in fact interwoven and the facts and circumstances are almost common. It is noticed that the addition of Rs. 41,48,637/- made to the declared income of the appellant on account of alleged excess stock weighing 1567.89 gms of 18 cts. Gold jewellery and Rs. 3,67,688/- as a GP on the alleged undisclosed sales of the short weight of 22 cts. jewellery and gold ornaments. The AO made the said additions for the reason that the 18 cts. Gold jewelry was in excess and 22 cts. gold jewellery was short as inventoried and valued by a registered valuer in presence of a representative of the assessee company. In this connection, it is submitted by the ld. AR that there was a shortage of 0191.142 gms. of gold and gold jewellery as against the alleged excess w....
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....s this issue in the assessment order. The appellant also submitted a statement after taking into account the above referred mistake in considering wrong weight. As per the said statement/submission, there was no excess alleged weight and the shortage works out to 0191.142 gms. as follows :- (Table - B) (i) Total excess weight of 18 cts gold ornaments as per supra chart 5.1 + 1567.888 (ii) Total short weight of 22 cts gold ornaments (-) 2278.430 (-) 710.542 (iii) Short weight of Gold Diamond jewellery / coins (-) 480 gms. (-) 1191.142 (iv) Add-Jewellery lying at residence of director (+)1000.000 Correct short weight (-) 0191.142 gms. Looking to the inventory quantity, the small difference of 0191.142 gms. is negligible and attributable to use of different weighing machines and handling in hasty manner/hurriedly of the goods at the time of valuation. Further, regarding alleged short and excess weight of 22 cts and 18 cts gold ornament jewellery, diamond jewellery and gold coins at the time of search occurred for the reasons that the purity of gold ornaments was not embodied on the ornaments / jewellery. As per the method regul....