2015 (2) TMI 943 - AT - Income Tax

Unexplained money - sale of plots - Held that - From the record we found that during the course of survey, the assessee was found to be in receipt of on money in respect of sale of industrial plot of land. On the basis of seized material, the A.O. computed the on money received by the assessee amounting to ₹ 1,50,000/- per guntha. The statement of the assessee was also recorded where he agreed for receipt of on money which has not been accounted for in the regular books of account. In the statement, the assessee also surrendered cash component of ₹ 1,21,24,500/- as additional income in addition to its regular income shown in the books of account. On the basis of the impounded documents, Proprietor Shri Aslam Chand Khan had agreed that ₹ 1.5 lacs in the above noting indicates the cash component received over and above the registration charges from individuals to whom the land was sold. Even before the ld. CIT(A), full opportunity was given to the assessee, however, nothing was brought on record by the assessee with regard to the actual receipt of on money. The ld. CIT(A) has also dealt with the assessee s contention regarding projections and not actual, after recording detailed finding and the ld. CIT(A) reached to the conclusion that note book contained the details of actual and it is not projections as claimed by the assessee. The ld. CIT(A) has also dealt with various judicial pronouncements in support of his contention that mere retraction of the statement by filing the affidavit is not an acceptable evidence in the eyes of law. The ld. CIT(A) has dealt with each and every objection of the assessee with regard to the findings recorded by the A.O. and after considering the same, he confirmed the findings recorded by the A.O. to the effect that the assessee has actually received on money which was over and above the amounts in the books of account. No reason to interfere with the findings recorded by the lower authorities with respect to the addition of ₹ 1,21,24,500/- on account of on money received on sale of plots which has not been accounted for in the books of account. - Decided against assessee.

Issues Involved:
1. Jurisdiction of the Assessing Officer (A.O.) to frame the assessment.
2. Validity and voluntariness of the statement recorded during the survey.
3. Legitimacy of the retraction of the statement by the assessee.
4. Addition of undisclosed income based on the impounded documents.
5. Compliance with CBDT Circular regarding confession of additional income during search and survey.
6. Verification of the assessee's books of account and third-party confirmations.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Officer (A.O.) to Frame the Assessment:
The assessee challenged the jurisdiction of the A.O. to frame the assessment, arguing that the survey action u/s 133A by ITO Ward 4(1), Thane was not tenable. The A.O. countered that the action was legal and proper under clause (a) of Section 133A(1). The case was transferred to ITO 24(1)(3) for scrutiny, and the jurisdiction was upheld as legal and proper.

2. Validity and Voluntariness of the Statement Recorded During the Survey:
The assessee claimed that the statement recorded during the survey was not voluntary and was obtained under duress. The A.O. and CIT(A) rejected this claim, noting that the statement was recorded in the presence of the assessee's advocate and was voluntarily given. The CIT(A) emphasized that the assessee did not approach higher authorities to report coercion, thus the claim of coercion was not accepted.

3. Legitimacy of the Retraction of the Statement by the Assessee:
The assessee retracted the statement regarding the disclosure of Rs. 1,21,24,500/-. The A.O. and CIT(A) found the retraction to be an afterthought without any corroborative evidence. The CIT(A) cited several judicial precedents to support the view that mere retraction without substantive evidence is not acceptable. The retraction was deemed invalid, and the original statement was upheld as valid evidence.

4. Addition of Undisclosed Income Based on the Impounded Documents:
The impounded documents, specifically the "True Friendship (Sundaram)" notebook, indicated receipt of cash components against the sale of plots. The A.O. added Rs. 1,21,24,500/- as undisclosed income based on these entries. The CIT(A) confirmed this addition, noting that the entries were actual receipts and not projections. The assessee's claim that the entries were projections was rejected due to lack of supporting evidence.

5. Compliance with CBDT Circular Regarding Confession of Additional Income During Search and Survey:
The assessee argued that the addition was contrary to the CBDT Circular dated 10-03-2003, which discourages confession of additional income during search and survey without corroborative evidence. The A.O. and CIT(A) maintained that the addition was based on concrete evidence from the impounded documents and the voluntary statement of the assessee, thus complying with the circular.

6. Verification of the Assessee's Books of Account and Third-Party Confirmations:
The A.O. conducted further enquiries from third parties to verify the transactions. No discrepancies were found in the books of account, and third-party confirmations supported the assessee's claim that all payments were made by cheque without any cash component. Despite this, the A.O. and CIT(A) upheld the addition based on the impounded documents and the assessee's statement.

Conclusion:
The appeal of the assessee was dismissed, with the tribunal confirming the addition of Rs. 1,21,24,500/- as undisclosed income based on the impounded documents and the voluntary statement recorded during the survey. The tribunal found no merit in the assessee's arguments regarding jurisdiction, the validity of the statement, and the retraction. The detailed findings of the lower authorities were upheld, and the addition was deemed justified.

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