TaxTMI 
TaxTMI 
2025 (12) TMI 1222
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....specific finding of the assessment order ignoring that this amount represented seizure of cash amounting to Rs. 11,84,34,650/- and jewellery amounting to Rs. 3,35,80,173/- found during the course of search u/s. 132 of the Act. 2) In the facts and on the circumstances of the case and in law, the ld. CIT(A) has erred in considering Rs. 1,81,75,387/- as business income subsumed in aggregate income as declared by assessee in R.O.I. as against brokerage income u/s. 28 of the Income tax Act without appreciating the specific finding of the assessment order. 3) The Revenue craves leave to add/alter/amend and/or substitute any or all of the grounds of appeal." 3. The assessee has raised the following grounds of appeal: ITA No. 1724/Ahd/2024 (A.Y. 2022-23) "1. In law and in the facts and circumstances of the appellant's case, the Hon'ble CIT(A)-11 has grossly erred in upholding the order of assessment dated 20.03.2024 passed in the concerned assessment year. 2. In law and in the facts and circumstances of the appellant's case, the Hon'ble CIT(A)-11, has grossly erred in upholding the validity of assessment proceedings initiated under section 14....
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....of recording, the assessee did not express any grievance, stated that the contents were true and correct, and signed each page of the statement. Subsequently, on 20.10.2022, more than seven months after the search, the assessee filed an affidavit-cum-clarification, asserting that he was mentally and physically exhausted during the four days of interrogation and that the officers recorded the statement under preconceived notions. He also claimed that he could not recollect what exactly was recorded and that he had not been provided copies of the statements. This affidavit stated that he had not earned brokerage as admitted in the statement, but rather earned "land trading / GAP income". The affidavit also alleged that he was not permitted to read the recorded statement. A second affidavit dated 12.01.2024 reiterating similar claims was filed during assessment. The Assessing Officer rejected both affidavits as afterthoughts, noting that the assessee never complained before the Investigation Wing, provided no evidence of having applied for copies of statements, and himself admitted in the affidavit that he had "no memory" of what was recorded yet simultaneously alleged incorrect recor....
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.... land trading was an attempt to retrospectively explain the seized assets and contradict his own earlier detailed admission of brokerage income in the 132(4) statement. The AO accordingly held that Rs. 12,22,36,163/- represented unexplained money and investment assessable under sections 69A and 69B read with section 115BBE, being accumulated unaccounted wealth unearthed during the search. 4.4 The AO therefore re-characterised the returned income of Rs. 14,73,11,550/- by holding that Rs. 2,50,75,387/- represented brokerage income chargeable under section 28 of the Act, comprising Rs. 19,00,000/- from KCL House (admitted by the assessee) Rs. 50,00,000/- from Rancharda Land, and Rs. 1,81,75,387/- from Mulsana Land. The balance Rs. 12,22,36,163/- was held to be unexplained money or investment. The total assessed income was assessed at Rs. 14,73,11,550/-, and penalty proceedings under sections 271AAB and 270A were initiated. 5. In appeal before CIT(Appeals), the assessee challenged the additions made by the Assessing Officer on the basis of seized material, the statements recorded under section 132(4) of the Act, and the rejection of the assessee's subsequent retraction affidavits....
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....ghts or that they lacked authenticity, noting that the assessee had not denied the ownership of cash or jewellery but had merely explained the correct nature of income. The CIT(Appeals) also held that if the AO intended to rely on the statement recorded under section 132(4) of the Act, the statement had to be read as a whole and not selectively, relying on the principles laid down by the Hon'ble Gujarat High Court in Glass Lines Equipments Co. Ltd. v. CIT (119 Taxman 813) and Navjivan Oil Mills v. CIT (124 Taxman 392), wherein it was held that a document must be read integrally and cannot be used piecemeal. 5.3 The CIT(Appeals) observed that in the assessee's statement under section 132(4), the assessee repeatedly stated that the cash and jewellery found belonged to him and were earned from dealings in immovable properties, described by him as brokerage in the ordinary sense. This, according to the CIT(Appeals), aligned with the concept of GAP or margin income that brokers routinely earn by negotiating between buyers and sellers. He found force in the assessee's explanation that land traders frequently operate in cash and that no cheques can be expected where transactions occur ....
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....ulsana land would already stand subsumed therein. Consequently, he deleted the addition of Rs. 1,81,75,387/-. 5.6 As a result, the CIT(Appeals) directed that Rs. 50,00,000/- alone be treated as brokerage income under section 28 and that the balance of Rs. 14,00,00,000/- be taxed as land trading/GAP income, both forming part of business income. Grounds concerning penalties under sections 271AAB and 270A were held to be premature and dismissed, and the general ground was also dismissed. The appeal was accordingly partly allowed. 5.7 Both the assessee and Department are in appeal before us against the order passed by CIT(Appeals). The Department is in appeal before us against the relief provided by CIT(Appeals) whereas the assessee is in appeal before us against Rs. 50,00,000/- being treated as brokerage income of the assessee. 6. We have heard the rival contentions and perused the material on record. 7. On careful consideration of the rival submissions, the material placed on record, the detailed findings in the assessment order as well as that of the CIT(Appeals), and applying the settled legal position emerging from the authorities cited before us, we find no infirmity ....
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....d that when the assessee has already offered the surrendered amount as business income and when there is no independent material showing any unexplained investment exceeding recorded amounts, sections 69B and 115BBE cannot be invoked. The ratio therein that the Assessing Officer must first bring tangible material evidencing unrecorded investment before shifting the burden upon the assessee squarely applies in the present case. 7.3 Similarly, the Bangalore Bench in Ramachandra Setty & Sons (supra) held that excess stock or assets found during search, where the assessee is engaged in a single known line of business and no other sources are detected, must be treated as business income and cannot be reclassified as unexplained investment under section 69B, unless independently corroborated. The CIT(Appeals) has applied this principle while holding that the assessee's declared land trading/GAP income was to be taxed under section 28 and not under sections 69A or 69B read with section 115BBE. 7.4 With respect to brokerage additions, the CIT(Appeals) has differentiated the Rancharda and Mulsana transactions on sound reasoning. As regards Rancharda, there was a clear admission of hav....