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2021 (1) TMI 461 - AT - Income TaxAssessment u/s 153A - Unaccounted income on account of under invoicing of sales - HELD THAT - No evidence is found with regard to under invoicing of sales or unaccounted purchases either in the premises of the residence or the business premises of the assessee. From the assessment order, it is also seen that no excess stock was found and there was no stock difference. AO verified the books of accounts, no defects were found during the course of assessment. As stated earlier, search was continuously conducted in the business premises of the assessee and recorded the statements u/s 132(4) in multiple premises regularly without giving sufficient intervals to the assessee to apply the mind on the issues raised by the department. Thus there is a possibility of building up pressure on the assessee which resulted in confusion in his mind. The entire addition was made on the statement recorded from the assessee on 02.09.2016 on the basis of invoice No.2135 dated 30.07.2016 related to the sale invoice of Lakshmi Agencies which was billed for ₹ 361.53 per case which was accounted in the books of the assessee. The year wise unaccounted income was computed on sales declared by assessee on the presumption of cash received back @8% of actual sales which is incorrect since the distributors told that they paid the cash ranging from ₹ 50,000/- to ₹ 60,000/- per load. Admissions made under such circumstances without the corroborative evidence cannot be made basis for making the additions. Neither evidence was found nor the AO made out a case with the date wise, party wise cash of receipt from each distributor which was said to be unaccounted. In the instant case there was no evidence found in the premises of the assessee to show that the assessee is under invoicing the sales. No other material was found and seized from the premises of the assessee with regard to receipt of cash from the distributors. No evidence was found in the premises of the distributors also to establish that that the assessee was paid unaccounted cash by the distributors. The AO could not rebut the submissions of the assessee with regard to sale price and under invoicing with relevant facts and evidences. Therefore we, hold that the additions made solely on the basis of statement u/s 132(4) without having corroborating evidence is unsustainable and accordingly we uphold the order of the Ld.CIT(A) and dismiss the appeals of the revenue for the A.Ys 2013-14 to 2016-17 on this issue. Validity of making additions u/sec. 153A without having seized material - CIT(A) deleted the addition holding that the AO is not permitted to make the addition without having seized material. - HELD THAT - There is no dispute that the entire addition was made on the statement recorded u/s 132(4) without having any incriminating material. The Ld.CIT(A) followed the order of this Tribunal and the decision A.P. High court in the case of A.M.R. India Pvt. Ltd. 2014 (6) TMI 964 - ANDHRA PRADESH HIGH COURT Therefore respectfully following it we hold that in completed assessments the AO is not permitted to make additions without having the seized material / incriminating material. Accordingly, we uphold the orders of the Ld.CIT(A) and dismiss the appeals of the revenue on this issue. Cash deposit made during demonetization period - HELD THAT - In the instant case, the assessee had explained the source and furnished the confirmation letter and also explained the source of source. The creditor of Arunachalam Manickavel is having credit worthiness and there is no dispute. The department also conducted the search against the creditors, thus there is no dispute with regard to identification and credit worthiness of the creditor. Therefore, there is no case for making addition in the hands of the assessee. If at all the AO disbelieved the source of source, the same required to be made addition in the hands of the creditor, but not in the hands of the assessee. Therefore, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue.
Issues Involved:
1. Delay in filing appeals. 2. Addition of under-invoicing of sales and unaccounted purchases. 3. Legal validity of assessment orders passed under section 143(3) read with section 153A. 4. Probative value of voluntary admission under section 132(4). 5. Failure to prove coercion in admission of income under section 132(4). 6. Incriminating material found during the search. 7. Payment of significant amounts to third parties. 8. Holistic view of proof gathered during the search. 9. Cross-examination of cashiers and distributors. 10. Cash deposit during the demonetization period. Detailed Analysis: 1. Delay in Filing Appeals: The appeals were filed by the Revenue with a delay of 3 days due to administrative reasons. The Tribunal condoned the delay and admitted the appeals. 2. Addition of Under-Invoicing of Sales and Unaccounted Purchases: The Assessing Officer (AO) made additions based on the statements recorded under section 132(4) from the assessee and other individuals, alleging under-invoicing of sales and receipt of cash back from distributors. The AO added ?67,19,801 for the A.Y. 2013-14 and similar amounts for subsequent years. The assessee retracted the admission made under section 132(4) and argued that no corroborative evidence was found during the search to support the allegations of under-invoicing. 3. Legal Validity of Assessment Orders Passed Under Section 143(3) Read with Section 153A: The assessee contended that the assessments for A.Y. 2013-14 and 2014-15 were completed and no incriminating material was found during the search to justify the additions under section 153A. The CIT(A) agreed, holding that the AO could not make additions without seized material or incriminating evidence. 4. Probative Value of Voluntary Admission Under Section 132(4): The CIT(A) observed that the addition made solely on the basis of the statement recorded under section 132(4) is unsustainable without reference to any incriminating document. The Tribunal upheld this view, emphasizing that statements recorded under section 132(4) must be supported by corroborative evidence to be valid. 5. Failure to Prove Coercion in Admission of Income Under Section 132(4): The assessee argued that the statements were given under stress and without understanding the implications. The Tribunal noted that the statements were recorded continuously without sufficient intervals, which could have caused confusion and stress, leading to the retraction of the statements. 6. Incriminating Material Found During the Search: The CIT(A) noted that no material was found during the search except for gold and cash, which were seized. The Tribunal agreed, stating that no evidence was found to support the allegations of under-invoicing or unaccounted cash payments. 7. Payment of Significant Amounts to Third Parties: The AO alleged payments to third parties based on seized documents and statements. However, the CIT(A) and the Tribunal found that no corroborative evidence was provided to support these allegations. 8. Holistic View of Proof Gathered During the Search: The Tribunal emphasized that the AO should have taken a holistic view of the evidence gathered during the search. The CIT(A) found that the AO failed to provide specific details of unaccounted cash receipts and did not verify the statements with the cash book. 9. Cross-Examination of Cashiers and Distributors: The CIT(A) noted that the AO did not allow the cross-examination of witnesses, which weakened the case against the assessee. The Tribunal agreed, stating that the statements of cashiers and distributors were vague and not supported by evidence. 10. Cash Deposit During the Demonetization Period: For A.Y. 2017-18, the AO made an addition of ?1,74,52,500 for cash deposits during the demonetization period. The assessee explained the source of the deposits and provided confirmation letters. The CIT(A) deleted the addition, and the Tribunal upheld this decision, noting that the AO should have made the addition in the hands of the creditor if the source was disbelieved. Conclusion: The Tribunal dismissed the appeals of the Revenue for A.Y. 2013-14 to 2017-18, upholding the CIT(A)'s decisions to delete the additions made by the AO due to lack of corroborative evidence and procedural lapses.
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