TaxTMI 
TaxTMI 
2022 (9) TMI 1677
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....rranted and uncalled for. 2. The assessee reserves the right to add, amend or alter any grounds of appeal at any time of hearing." 2. Succinctly stated, the assessee company is engaged in the business of road construction for government departments. Search and seizure proceedings were conducted u/s. 132 of the Act on 08.02.2017 at the premises of the assessee company as well as the residential premises of its directors. Notice u/s. 142(1) was thereafter issued by the AO calling upon the assessee company to file its return of income for the year of search i.e AY 2017-18. In compliance the assessee company filed its return of income for the year under consideration i.e. A.Y.2017-18 on 30.10.2017, declaring an income of Rs.1,99,17,340/- a/w agriculture income of Rs.90,220/- Subsequently, the assessee revised its aforesaid return of income on 02.05.2018 at an income of Rs.2,22,99,380/- a/w. agriculture income of Rs.90,220/-. 3. During the course of the assessment proceedings, it was, inter alia, observed by the A.O that in the course of search proceedings an amount of Rs.1,04,15,670/- in cash was found from the residential premises of Shri Pawan Kumar Agrawal, director o....
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.... point of time was not in a proper state of mind. Be that as it may, it was submitted by the assessee that as Mr. Pawan Kumar Agrawal (supra) had retracted from the disclosure that was made by him in the hands of the assessee company by filing an "affidavit" dated 10.02.2017, therefore, the same could not be acted upon on a standalone basis for drawing of adverse inferences in its hands. 5. Rebutting the aforesaid allegation of the assessee that the department had taken recourse to undue pressure, coercion and threats to extract the disclosure from Mr. Pawan Kumar Agrawal (supra), it was observed by the A.O that the same was totally incorrect as the assessee had himself stated in the course of the search proceedings that his statement u/s. 132(4), dated 08.02.2017 was recorded without any pressure, coercion and threat. It was further observed by the AO that the retraction by the assessee of his statement recorded u/s.132(4) (supra) vide an 'affidavit' dated 10.02.2017 was merely based on an afterthought to nullify the disclosure that was voluntarily made by him in his aforesaid statement. It was observed by the A.O that as the statement recorded u/s. 132(4) was an important piec....
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....t and after analysing various incriminating documents found during the course of search." 7. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 8. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 9. Admittedly, it is a matter of fact borne from record that an amount of Rs.1,04,15,670/- in cash was during the course of the search proceedings found from the residential premises of Mr. Pawan Kumar Agrawal, director of the assessee company. On being queried as regards the nature and source of the aforesaid amount Mr. Pawan Kumar Agrawal (supra) in reply to Question No. 12 of his statement recorded u/s.132(4) of the Act had initially admitted the aforesaid amount as his undisclosed income and had agreed to offer the same for tax. For the sake of clarity Question No.12 a/w. reply of the assessee extracted from the statement of Shri Pawan Kumar Agrawal (supra) recorded on 08.02.2017 u/s.....
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....deration i.e. A.Y.2017- 18. Admittedly, the aforesaid self-contradictory statement of Shri Pawan Kumar Agrawal (supra) that was recorded u/s. 132(4) on 08.02.2017 had thereafter been retracted by him by filing an 'affidavit' dated 10.02.2017, wherein, he had specifically stated that the department had recorded his statement by subjecting him to undue pressure, coercion and threat, and thus, under the said set of circumstances had obtained the substantial amount of disclosure in order to justify their search action. It was stated by the assessee that he had in the course of the search proceedings due to the undue pressure of the search officials lost his mental balance and only as their per dictates had came forth with a disclosure of an undisclosed income of Rs. 1,04,15,670/-. It was further stated by Shri Pawan Kumar Agrawal (supra) that it was due to the undue pressure of the search team that he had earlier stated that the amount of cash found with him was his undisclosed income, but later on had stated that the same was the undisclosed income of the assesee company. The relevant contents of the 'affidavit' of Shri Pawan Kumar Agrawal (supra) which will have a strong bearing on t....
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....ld not sustain the dictate of the department. In these circumstances I had no option but to confess the disclosure of Rs. 1,04,15,670/- dictate by the department. It is also a matter of fact that due to constant undue pressure of the search party I first disclose the said amount of Rs.1,04,15,670/- as my undisclosed income and later on disclosed it in the hands of the Ramavatar Agrawal Road Constructions (P) Ltd. 5. That I do hereby restrict the undisclosed income to the extent arising out of seized records." 11. Considering the self-contradictory statement of Shri Pawan Kumar Agrawal (supra), wherein he had though initially admitted that the amount of Rs.1,04,15,670/- (supra) found lying with him in cash as his undisclosed income, but thereafter had for no rhyme or reason stated that the same was the undisclosed income of the assessee company, we find substance in the claim of the assessee that the statement of Shri Pawan Kumar Agrawal (supra) recorded u/s.132(4) on 08.02.2017 was not given under a free state of mind. 12. Be that as it may, we are reminded of the Circular F. No.286/98/2013/IT (Inv.-II), dated 18.12.2014 of the CBDT, wherein, the officials of the dep....
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.... the hands of the assessee. Also, a similar view had been taken by the ITAT, Mumbai "C" Bench in the case of DCIT &Ors Vs. Sitara Builders Pvt. Ltd. &Ors (2019) 56 CCH 99 (Mum) and that in the case of ACIT Vs. Oriental Decorators (2018) 52 CCH 14 (Mum). It was observed by the tribunal that an admission or concession is not a conclusive piece of evidence and is only a piece of evidence relevancy of which is required to be judged based on the basis of material evidence and the circumstances in which it was made. 13. Considering the aforesaid facts involved in the present case before us read with the aforesaid orders of the various judicial forums, we are of the considered view that the support drawn by the department on the statement of Shri Pawan Kumar Agrawal (supra), which as observed by us hereinabove had thereafter been retracted, in the absence of placing on record of any material or evidence which would otherwise justify the said disclosure and substantiate that the same rightly represented the undisclosed income of the assessee company, cannot be accepted on such standalone basis for drawing adverse inferences and inferring the undisclosed income of the assessee company as....
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.... have held that the cash amounting to Rs.1,04,15,670/- found in the course of search proceedings from the residential premises of Shri Pawan Kumar Agrawal (supra) was to be held as the undisclosed income of the assessee. Only basis for drawing of the aforesaid inference by the AO is the standalone statement of Shri. Pawan Kumar Agrawal (supra) recorded u/s 132(4) on 08.02.2017, which not only smacks of his confused state of mind, but as a matter of fact inspires no confidence. We, say so, for the reason that though Shri. Pawan Kumar Agrawal (supra) had retracted his aforesaid statement that was recorded u/s 132(4), dated 08.02.2017 on the basis of a serious allegation that it was recorded in the course of the search proceedings by subjecting him to undue pressure, coercion and threat, however, the said retraction had not been dislodged or disproved by the department on the basis of any independent material/evidence which would have irrefutably proved to the contrary. In absence of any material which would substantiate that the statement of Shri Pawan Kumar Agrawal (supra) recorded u/s. 132(4) of the Act revealed the correct state of financial affairs of the assessee company and, th....