2011 (3) TMI 1676 - AT - Income Tax

Assessment u/s 153A - Papers found in search u/s.132 - Addition of on-money - calculation of year wise on money receipt based on loose papers - relevance of statement recorded u/s.132(4) - the search was conducted and the statement was recorded not only on the date of the search and but later on several statements were recorded u/s.131 - also Affidavit which was sworn however placed before the Revenue authorities later those statements were retracted. HELD THAT - The admitted factual position is that consequence upon the search u/s.132 of the Act conducted on 18/06/2003 no unaccounted cash, no unaccounted asset, no unaccounted jewellery or incriminating material of like nature was seized. The question of incriminating material has also been addressed by ld. AR. In the present case, the incriminating material on which the Revenue has placed reliance are three loose papers In the present case, the AO has proceeded to extrapolate the on-money of ₹ 180/- for rest of the flats in respective years. But there was no material in his possession to conclusively demonstrate that in respect of the other flats the assessee had in fact charged on-money from the customers. Once the Revenue Department has taken the extreme step of conducting a raid on this assessee, then it is expected to unearth every penny of unrecorded money, but the fact is that neither any unaccounted money was recovered nor any such document was found in possession of the assessee through which it could be held that the assessee was in the practice of charging on-money on other facts as well. As far as the general principle is concerned,an admission can be said to be an extremely important piece of evident, if made as per the prescribed law. But such an admission cannot be said to be conclusive. It is open for the assessee to show that the said admission was incorrect. The said retrieval is termed as retraction in legal terminology.A retraction is admissible but it must be within a reasonable time and the onus is on that person to establish that the impugned admission was incorrect. He has to place convincing reason or evidence to show that the earlier admission was not the correct position of fact but the correct position was as per the retracted statement.as far as the present case is concerned, since the statement is not by the partner of the firm and moreover the same was retracted by filing an affidavit, coupled with the fact that no incriminating material was found, therefore, the view taken by the AO could not said to be permissible in the eyes of law. Therefore, we hereby hold that the extrapolation was incorrect. The AO is empowered to confine himself on the incriminating material found during the course of search and material is to be treated as true and correct. Meaning thereby the AO is expected to confine himself in respect of the sale transaction of Flat No.A/204, alleged to be purchased by one Smt. Saralaben M.Patel. Therefore, we are not of the opinion that no addition at all is warranted in respect of all the flats. We are not with the view taken by the ld.CIT(A) that the entire addition is to be deleted. We, therefore, direct AO to reinvestigate the transaction in respect of Flat No.A/204, purchased by Smt. Saralaben and if the explanation offered by the assessee is found unsatisfactory, then the consequential action can be taken as per law but only in respect of that solitary transaction. With the result, rest of the addition pertaining to other flats as deleted by Ld. CIT(A) is hereby affirmed. For this year the said ground of the Revenue is partly allowed.

Summary

Issues Involved:
1. Deletion of addition on account of 'on-money' receipt on sale of flats.
2. Validity of retraction of statements made by the partners.
3. Addition of unaccounted payments made to an architect.

Detailed Analysis:

1. Deletion of Addition on Account of 'On-Money' Receipt on Sale of Flats:
The Revenue filed six appeals for different assessment years challenging the deletion of addition made by the Assessing Officer (AO) on account of 'on-money' received on the sale of flats. The AO's addition was based on three seized papers during a search conducted on 18/06/2003. These papers indicated undisclosed income from the sale of flats. The AO concluded that the assessee received 'on-money' on the sale of flats, which was not recorded in the books of accounts. The CIT(A) deleted the additions, stating that the AO's reliance on the loose papers was unfounded as they were not corroborated by any concrete evidence. The Tribunal upheld the CIT(A)'s decision, directing the AO to reinvestigate only the specific transaction related to Flat No. A/204 and affirmed the deletion of the addition for other flats.

2. Validity of Retraction of Statements Made by the Partners:
The AO relied on the statements of Shri Chimanbhai M. Shah and Shri Bimal C. Shah, which were later retracted through affidavits. The CIT(A) observed that the retraction was valid as it was made within a reasonable time and supported by evidence. The Tribunal agreed with the CIT(A), noting that the retraction was admissible and the AO could not solely rely on the initial statements without corroborative evidence. The Tribunal emphasized that an admission is not conclusive and can be retracted if shown to be incorrect.

3. Addition of Unaccounted Payments Made to an Architect:
The AO added amounts paid to an architect, Shri Rajesh Anklesharia, based on seized material and statements recorded during the search. The CIT(A) confirmed the addition as the assessee failed to provide any cogent evidence to refute the AO's findings. The Tribunal upheld the CIT(A)'s decision, affirming the addition of unaccounted payments made to the architect.

Conclusion:
The Tribunal partly allowed the Revenue's appeal for the specific transaction related to Flat No. A/204 and dismissed the appeals for other years. The cross objections filed by the assessee were partly allowed, and the addition of unaccounted payments to the architect was upheld. The Tribunal's order emphasized the importance of corroborative evidence in making additions based on seized documents and the validity of retraction of statements within a reasonable time.