TaxTMI 
TaxTMI 
2025 (11) TMI 649
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....ct during which certain documents were seized. During the course of survey, the AO noted from the statements recorded u/s 131 of the Act on 04/05.11.2019 of Shri Vishwanath Gupta, which was extracted by the AO in para 3.2that the assessee, has brought back its own un -accounted cash in the garb of unsecured loans. The said statement was retracted subsequently by director of the assessee company Shri Viswanath Gupta on the ground that it was given under undue influence and pressure put on them during survey. According to the AO there was no substantive material to withdraw the said statement. Finally, the AO treated the receipt of unsecured loans by the assessee during the year amounting to Rs. 10,25,00,000/- as unexplained cash credit u/s 68 of the Act and added the same during the income of the assessee. While passing the order the AO noted in the assessment order that the accommodation entries by way of unsecured loans from the lenders could not be verified as summons u/s 131 of the Act were not complied. 4. In the appellate proceedings, the Ld. CIT(A) deleted the addition as made by the AO after taking into account the submissions and contentions of the assessee. In the appel....
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....O treated the lenders as bogus based on the statements of Shri Mukesh Banka, Mr. Arun Nangalia and Mr. Manohar Nagalia recorded during search proceedings on them and other entry operators. 5. After hearing the rival contentions and perusing the material on record, we find that in this case, the assessee has received loans from 10 parties. We note that the assessee filed all the evidences/documents qua the said loans before the AO as well as before the Ld. CIT(A). We note that the basis for addition by the AO was the statements recorded during the course of survey conducted u/s 133A of the Act in which the directors/ other persons of the assessee admitted to have received accommodation entries in the form of unsecured loans. However, the statements recorded were retracted later on the ground that undue pressure was exerted on the persons whose statements were recorded. We note that apart from the statements of the key persons, there was no other material supporting the said addition and therefore addition cannot be made solely on the basis of retracted statements. The Ld. CIT(A) has rightly relied on the decision of Hon'ble Gujarat High Court in the case of Kalasben Mangarlal Cho....
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....covered by the decision of the Hon'ble Gujarat High Court in the case of Ambe Tradecorp (P.) Ltd., reported in [2022] 145 taxmann.com 27 (Gujarat), wherein it has been held as under :- "3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs. 8,50,00,000/- and Rs. 23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income-tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, "In this....
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.... of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, "Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. " 7. For the reasons recorded above, no question of law much less substantial questions arises in this appeal. It stands meritless and accordingly dismissed. 7. The case of the assessee is also squarely covered by the decision of the coordinate bench in a group entity in the case of DCIT, Central Circle 4(3) Vs. Avima Exports Pvt. Ltd., ITA No. 179 & 180/Kol/2024, dated 23.12.2....
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.... assessee, due interest was paid on the said loans, which was duly accounted for in the books of accounts of the creditors. The creditors had filed their Income Tax Returns. The source of source was duly explained, which was not doubted by the AO. The creditors had good financial worth and the loan amount was a very small percentage of their net creditworthiness. He observed that the only adverse comment noted by the AO was based on statements recorded during the survey operation of Shri Vishwanath Gupta and Shri Vivek Gupta, the key persons of the company who later retracted their statements as the same contended to be recorded in duress. The ld. CIT(A) in this respect has noted that the alleged statement was retracted by way of affidavits dated 29.11.2019 & 24.12.2019 respectively, as the same was recorded in duress and was not voluntary. It was also explained that at the time of survey, the family was going through tough phase, as wife of Shri Vishwanath Gupta & mother of Shri Vivek Gupta was detected with cancer and was in Mumbai for treatment. Thus, the statement was given purely to avoid the immediate pressure from survey party. Thus the statement were retracted. The Ld. CIT(....
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....nnot, by itself, be made the basis for addition. The above findings of the Hon'ble High Court have been upheld by the Hon'ble Supreme Court as the appeal against the said order has been dismissed by the Hon'ble Supreme Court vide order dated 20.09.12 reported in (2012) 25 Taxman.com 413. Similar view has been adopted by the Hon'ble Delhi High Court in the case of "CIT vs. Dhingra Metal Works" (2010) 328 ITR 0384 and by the Hon'ble Kerala High Court in the case of "Paul Mathews & Sons vs. CIT" (2003) 263 ITR 0101. Even the Hon'ble A.P. High Court in the case of "Naresh Kumar Agarwal" (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of "Shree Chand Soni vs. DCIT" (2006) 101 TTJ 1028 (Jodhpur). The Hon'ble Delhi High Court in the case of "CIT vs. Harjeev Agarwal" in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a....
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....tion. The stand of the department was that the admission was voluntary and was not under a mistaken belief of fact or law and that the assistance had enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it, observed that the assessee's surrender was not based on any incriminating material and that the discloser being not voluntary and extracted by the department in creating a coercive situation cannot be relied solely to be basis of addition as undisclosed income. The co-ordinate bench of the Tribunal while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement which is not supported by the department with cogent corroborative material cannot be a valid basis for sustaining such ad-hoc addition. The co-ordinate Jaipur Bench of the Tribunal (supra) further observed that the issue of e....
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.... 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. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders Yours faithfully 10 A perusal of the above circular also shows that it is in the notice of the statutory controlling body of the Income Tax Authorities that the revenue officials are used to take confessional statements from the person searched under force, pressure or threat and that is why they have made it mandatory that additions solel....