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2021 (9) TMI 1387 - AT - Income TaxUnaccounted income of the assessee - reliance on statement furnished u/s 131 - AO held that the retraction of the statement cannot be relied upon and thus treated the sum as unaccounted income of the assessee by adding to the total income - HELD THAT - Admittedly, the income as discussed was based on the statement furnished by the assessee u/s 131 - It was submitted in the statement furnished under section 131 of the Act that the assessee along with 3 other persons has entered into a land transaction deal and earned an income of Rs. 3 crores by way of commission. There was no discussion about any piece of evidence/document found during the search proceedings under section 132 of the Act at the premises of the assessee suggesting that the assessee has earned commission income. We note that the CBDT by way of instruction bearing number F.No. 286/98/2013-IT(Inv.III) dated 18th December 2014 has discouraged its officers to make any addition based on the statement obtained during survey/search proceedings until and unless it is corroborated by the documentary evidence. We also note that the Hon ble Courts in numerous cases held that there cannot be any addition merely on the basis of the statement furnished during survey/search proceedings. However, the facts of the case on hand is peculiar in the sense that the assessee himself in the retraction affidavit has admitted to have entered into the land transaction deal along with other persons. But in the affidavit it was claimed that he has earned along with other persons only a sum of ₹18 Lacs only out of the impugned land transaction deals. In our considered view, the affidavit discussed above is a vital piece of evidence wherein the assessee himself has admitted to have earned commission income. In the affidavit it was furnished that the area of the land in dispute was 33,881 square yard which matches with the registry documents of the properties in dispute as evident from the finding of the authorities below. Accordingly, there remains no dispute to the fact that the assessee has earned commission income out of the land transaction deal as discussed above. Quantum of commission earned by the assessee along with the other parties - We note that the statement furnished by the assessee by way of retracted affidavit has to be admitted either in full or it should be rejected in full. As such it cannot be admitted in piece meal basis especially in a fact and circumstances where no other material available on record except admission of the assessee in such affidavit. Likewise, there was no inquiry conducted by the authorities below from the concerned parties despite having the necessary details on record. Furthermore, there is no yardstick to take the rate of commission at 3% on the value of the land sold. It was the range of the rate i.e. 1 to 3% suggested by the assessee to indicate the prevailing rate which purely depends upon the facts and circumstances. Thus the same cannot be taken on presumption basis to determine the commission income. Thus, in such facts and circumstances, we hold that the amount of commission in impugned transaction stands at Rs. 18 lacs only. Share of assessee in impugned commission - We note that the learned CIT (A) has given categorical finding that the assessee has sold the land in dispute along with 3 other parties and therefore the share of the assessee stands only at 25% of the commission income. In this regard, we note that the assessee before the learned CIT (A) has furnished the PAN along with addresses of all the other 3 parties. Therefore in view of above discussed facts, there remains no ambiguity to the fact that the assessee s share is only of 1/4th i.e. 25% of entire amount of commission of Rs. 18 lacs. Thus assessee share will be of Rs. 4.5 lacs only. Whether the impugned amount has already been to tax in the income offered by the assessee based on the diary found during the search? - The assessee in affidavit and before CIT (A) submitted that whatever commission received on impugned land transaction was recorded in diary. We are also conscious to the fact that out of 3 land transaction one was executed in the A.Y. 2010-11 and other two were executed in the year under consideration i.e. A.Y. 2011-12. Moreover, the assessee in the year under consideration has offered peak amount of Rs. 16,50,000/- to tax. This fact has not been disputed by the revenue in its appeal. Thus we hold that amount of commission has already been offered by the assessee in the amount of income offered to tax on peak credit theory basis. Moreover, the Revenue has not brought anything on record establishing that the impugned was not part and parcel of the seized document. Hence, no further addition is required to be made. In view of the above we dismiss the ground of appeal raised by the Revenue whereas assessee s ground in CO is allowed. Unaccounted commission - Admittedly, the amount in dispute was very much appearing in the diary seized during the search proceedings. The income based on seized diary has already been offered to tax by the assessee considering the peak amount. The peak credit theory was applied for the reason that there were many entries reflecting the receipt of cash as well as the payment of cash. The impugned amount of commission was also very much appearing as cash receipt in the impugned diary. It was also contended by the assessee that his share in the impugned land transaction deals stands at ₹8.75 Lacs and 11 Lacs only. This contention of the assessee was nowhere doubted by the authorities below which is also appearing in question No. 27 to 34 of the statement furnished under section 131. Since the impugned amount of commission has already been considered by the AO in the working of peak balance based on the diary seized, therefore there cannot be any separate addition to the total income of the assessee. If it is done so, it would lead to the double addition which is unwarranted under the provisions of law. Hence the ground of appeal of the revenue is dismissed.
Issues Involved:
1. Deletion of addition of ?3,00,00,000/- on account of unaccounted commission. 2. Deletion of addition of ?68,00,000/- on account of unaccounted brokerage. 3. Confirmation of addition of ?10,16,250/- on account of brokerage income. 4. Procedural and evidentiary concerns regarding statements under section 131 and their retraction. Issue-wise Detailed Analysis: 1. Deletion of Addition of ?3,00,00,000/- on Account of Unaccounted Commission: The Revenue contended that the CIT(A) erred in deleting the addition of ?3,00,00,000/- made on the basis of the assessee's statement under section 131, which indicated unaccounted commission from land deals. The assessee argued that the statement was given under duress and later retracted, asserting that the actual commission was much lower and already included in the diary seized during the search. The CIT(A) found that the area of land and the rate of commission stated in the initial statement were factually incorrect and excessive. The CIT(A) recalculated the commission based on the actual sale consideration and prevailing market rates, confirming only ?10,16,250/- as the assessee's share. The Tribunal upheld the CIT(A)'s decision, noting the lack of corroborative evidence for the higher commission and emphasizing the need for documentary evidence to support additions based on statements. 2. Deletion of Addition of ?68,00,000/- on Account of Unaccounted Brokerage: The Revenue challenged the deletion of ?68,00,000/- added as unaccounted brokerage. The assessee's statement under section 131 indicated that he, along with other partners, earned this amount from land transactions, but the AO added the entire amount to the assessee's income. The CIT(A) deleted the addition, noting that the assessee had already offered brokerage income in his returns and there was no evidence of additional undisclosed income. The Tribunal agreed, highlighting that the impugned amount was already included in the peak credit offered by the assessee, and any further addition would result in double taxation. 3. Confirmation of Addition of ?10,16,250/- on Account of Brokerage Income: The assessee contested the confirmation of ?10,16,250/- as brokerage income. The CIT(A) had recalculated this amount based on the actual sale consideration and prevailing market rates. The Tribunal upheld the CIT(A)'s decision, noting that the assessee's retraction affidavit admitted to earning commission, and the recalculated amount was reasonable and supported by evidence. 4. Procedural and Evidentiary Concerns Regarding Statements Under Section 131 and Their Retraction: The Tribunal emphasized the importance of corroborative evidence when making additions based on statements obtained during search or survey operations. Citing CBDT instructions and judicial precedents, the Tribunal noted that statements under section 131 should not be the sole basis for additions unless supported by documentary evidence. The Tribunal found that the assessee's retracted statement and subsequent affidavit provided a more accurate account of the transactions, which was supported by documentary evidence and the actual sale deeds. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's cross-objection, confirming the deletion of ?3,00,00,000/- and ?68,00,000/- while upholding the addition of ?10,16,250/-. The Tribunal stressed the need for corroborative evidence to support additions based on statements and highlighted the procedural safeguards against undue influence or coercion during search and survey operations.
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