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2024 (9) TMI 542 - AT - Income TaxAddition based on survey recorded in survey u/s 131 - HELD THAT - We agree with the ld. CIT(A) in the respective grounds that the AO used the statement to corroborate said material found during the survey but, at the same time, the assessee had successfully explained the contents of the said impounded document/s in responding to the additions made by the AO and thus, were rightly deleted as by the ld.CIT(A). Hence, no blind reliance could be placed on the statement of the assessee alleging admission. The law is well settled that no addition can be made solely based on the statement. Even the CBDT directed the subordinate authorities not to press the assessee to make surrenders. We also find that the CIT(A) rightly placed reliance on the decision of C.K. Abdul Aziz 2019 (9) TMI 357 - KERALA HIGH COURT Thus, we find no infirmity in the order of the ld.CIT(A) on this aspect. It is necessary to clarify that we have confirmed the deletions of additions by the CIT(A) on merits independent of these legal aspects. Thus, following the findings recorded in the order A.Y. 16-17 as aforesaid, prayer of the assessee is decided in its favour whereas part of the ground no. 1 6 taken by the Revenue are decided against the Revenue. Addition made by the AO stated to be based on the impounded annexure and the statement of the Assessee record during the survey - There is no dispute with regards to the source of payment of total purchase consideration including all expenses at Rs. 64.18 lacs out of which Rs. 29.58 lacs paid through cheque and Rs. 33.60 was paid in cash. Further, Rs. 1 lac was paid towards stamp charges details are available at APB 85, which is a copy of the ledger account in the books of M/s Quick Advertising Company. AO never held the assessee to be the benamidar of Smt Nisha Jain. These facts and findings could not be rebutted by the D/R. Further heavy reliance is placed on the statement of the assessee recorded during the survey u/s 133A is completely misplaced. In the case of Naresh Jain 2024 (9) TMI 505 - ITAT JAIPUR for A.Y. 2016-17, we have already dealt with this issue in detail of our order dated 05-08-2024 (Reproduced hereinabove) holding that survey statement alone, cannot be relied upon as such statement has no binding evidentiary value. We also agree with the ld. CIT(A) that the AO used the statement to corroborate said material found during the survey however, at the same time, the assessee had explained the contents of the said impounded agreement. AO ignored that the impounded agreement was of April, 2016, whereas the registered sell deed was entered in May 2016, whereas survey took place long thereafter on 02.02.2017. In view of all this direct and cogent evidences, surrounding circumstances, no blind reliance could be placed on the statement of the assessee. We also find that the CIT(A) rightly placed reliance on the decision of C.K. Abdul Aziz 2019 (9) TMI 357 - KERALA HIGH COURT Thus, we find no infirmity in the order of the CIT(A). Therefore, the ground No. 2 of the Revenue is dismissed. Purchase of the agricultural land at Manadana, Kota - On a careful consideration of the rival contentions, the material available on record and in the light of the judicial pronouncements, we find no force in the ground of the Revenue. It is noticed that the impounded papers are bearing the dates of 2008 and other years, but do not show any date falling in the F.Y 16- 17(A.Y. 2017-18). Even the payment of Rs. 6,90,000/- was made by the assessee on different dates through cheques between the period from October, 2008 to March, 2009 as per the ledger account in the books of M/s Quick Advertising Company, copies placed at ABP Pg. 111. In the views of these facts which remained unrebutted, we find no infirmity in the order of ld. CIT(A) who rightly deleted the addition in this year. Hence, ground No. 3 of appeal is dismissed. Addition based on impounded documents and the statement of the assessee (Q/A 23) recorded during survey u/s 133A - HELD THAT - We find no force in the ground of the Revenue in as much as undisputedly, the amount of construction expenditure was already booked by the wife of the assessee, Smt. Nisha Jain in the regularly maintained books of accounts of her proprietary M/s Quick Advertising Company, Kota to the extent of Rs. 27,97,131/- and the balance of Rs. 7,02,869/- has already been offered by the assessee with the clam of telescoping. The said books of accounts containing the relevant ledger account, etc. were produced before the authorities below. However, the ld. AO could not find any fault therein, nor he rejected the books of accounts. We have also seen the impounded documents relied upon by the AO however, we find that no blind reliance could be placed on the statement of the assessee, alleging admission because in the same very statement, he clearly stated that he was not in a position to tell the exact amount of expenditures recorded in the accounts. Further, we find that the ld. CIT(A), recorded categorical findings of fact after verification of the record, and obtained a remand report from the AO, wherein nothing substantial adverse was found and he rightly deleted the addition to the extent of Rs. 27,97,131/- and the balance addition of Rs. 7,02,869/- has been upheld. Therefore, the ground No. 4 of the Revenue is dismissed. Addition of marriage expenditure - Mere rough-jottings, and in the shape of mere estimations, and does not inspire any confidence and has lost relevance in the light of the fact that the related marriage expenses had already been recorded in the accounts. No blind reliance could be placed on the statement of the assessee, alleging admission by the assessee because in the same very statement, he clearly stated that he was not in a position to tell the exact amount of expenditures recorded in the accounts. Further, we find that the ld. CIT(A), recorded categorical findings of fact after verification of the record, and obtained a remand report from the AO, wherein nothing substantial adverse was found and thus, he rightly deleted the addition. Therefore, this ground No. 5 of the Revenue is dismissed. Benefit of telescoping of the additional income against the undisclosed outgoings - There is nothing on record to show that the additional income so offered in these years stood utilised elsewhere and was not available for the undisclosed investment/outgoings made by the assessee in this year (to the extent they were confirmed by the CIT(A)) - DR was also not in a position to controvert these fact findings. The issue of telescoping is no more res integra and rather a well settled principle because in the case of Anantharam Veerasingaiah Co 1980 (4) TMI 2 - SUPREME COURT has in principle agreed that the undisclosed income in one year will constitute a fund which can be drawn by the assessee later on and can be utilised for acquiring goods or in making investments, etc. and therefore, separate additions on both the counts cannot be made. The Hon ble jurisdictional High Court in the case of CIT v. Thyaramal Balachand 1986 (4) TMI 14 - RAJASTHAN HIGH COURT has also held so, following the aforesaid apex court judgement. Therefore, in principle, we are in full agreement with the findings recorded by the ld. CIT(A) in giving benefit of telescoping of the additional income against the undisclosed outgoings, to the extent sustained by him. Hence, we don t find any merit in ground No. 7 Telescoping effect to set off against sustained additions - In the case of R. K. Mehta 2012 (9) TMI 1158 - ITAT RAJKOT Tribunal held that there is no statutory condition for availing telescopic benefit that the assessee should raise the issue of telescopic before AO or CIT(A). Issue can be raised or allowed for the first time at stage of the Tribunal provided Tribunal is satisfied that assessee is entitled to the benefit of telescopic. It is noticed that there was an uncovered balance of Rs. 2,59,618/-, as aforesaid, which is telescoped against the carried forward cash available of Rs. 46,64,712/- from A.Y. 2016-17 hence, there remains nothing uncovered and therefore, the addition sustained by the CIT(A) of Rs. 2,59,618/- is hereby deleted. The assessee thus get relief of Rs. 2,59,618/-. Hence this ground of the Revenue is dismissed whereas the prayer of the assessee as aforesaid, is hereby allowed.
Issues Involved:
1. Evidentiary value of statements recorded under oath u/s 131 during survey. 2. Deletion of addition of Rs. 33,60,000/- for purchase of property. 3. Deletion of addition of Rs. 7,10,000/- for purchase of agricultural land. 4. Deletion of addition of Rs. 27,97,131/- for construction expenses. 5. Deletion of addition of Rs. 75,00,000/- for marriage expenses. 6. Deletion of addition of Rs. 1,43,67,131/- out of total additions of Rs. 1,83,20,000/-. 7. Granting telescoping effect to set off Rs. 46,43,251/- against sustained additions. Issue-wise Detailed Analysis: 1. Evidentiary Value of Statements Recorded Under Oath u/s 131: The Tribunal held that statements recorded during survey under section 133A do not have conclusive evidentiary value. It was emphasized that such statements cannot be the sole basis for additions unless corroborated by other evidence. The Tribunal referred to various judicial precedents, including the case of Meeta Gutgutia [2017] 82 taxmann.com 287 (Delhi), which distinguished between statements recorded under sections 132(4) and 133A. The Tribunal concluded that the CIT(A) rightly did not rely solely on the survey statements for making additions. 2. Deletion of Addition of Rs. 33,60,000/- for Purchase of Property: The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 33,60,000/-. It was found that the property was purchased by the assessee's wife, Smt. Nisha Jain, and the payment details were duly recorded in her books of accounts. The Tribunal noted that the agreement relied upon by the AO was not signed by the assessee and was not acted upon. The Tribunal also observed that the AO's reliance on the survey statement was misplaced. 3. Deletion of Addition of Rs. 7,10,000/- for Purchase of Agricultural Land: The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 7,10,000/-. It was found that the transaction related to the purchase of agricultural land pertained to AY 2009-10, not AY 2017-18. The Tribunal noted that the impounded documents bore dates from 2008, and the payment details were recorded in the books of accounts for AY 2009-10. The Tribunal concluded that the AO's addition for AY 2017-18 was not sustainable. 4. Deletion of Addition of Rs. 27,97,131/- for Construction Expenses: The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 27,97,131/-. It was found that the construction expenses were duly recorded in the books of accounts of the assessee's wife, Smt. Nisha Jain. The Tribunal noted that the AO could not find any fault in the books of accounts and that the impounded documents were mere rough jottings. The Tribunal concluded that the AO's reliance on the survey statement was misplaced. 5. Deletion of Addition of Rs. 75,00,000/- for Marriage Expenses: The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 75,00,000/-. It was found that the marriage expenses were duly recorded in the books of accounts of the assessee's wife, Smt. Nisha Jain. The Tribunal noted that the impounded documents were rough estimates and that substantial amounts were paid through banking channels. The Tribunal concluded that the AO's reliance on the survey statement was misplaced. 6. Deletion of Addition of Rs. 1,43,67,131/- out of Total Additions of Rs. 1,83,20,000/-: The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 1,43,67,131/-. It was found that the AO's reliance on the survey statements and impounded documents was not justified. The Tribunal noted that the assessee had successfully explained the contents of the impounded documents and that the CIT(A) had rightly deleted the additions based on merits. 7. Granting Telescoping Effect to Set Off Rs. 46,43,251/- against Sustained Additions: The Tribunal upheld the CIT(A)'s decision to grant the benefit of telescoping. It was found that the assessee had disclosed additional income in previous years, which was available for set-off against the additions sustained in the current year. The Tribunal noted that the AO had accepted the additional income disclosed by the assessee and that the CIT(A) had correctly applied the principle of telescoping. The Tribunal also allowed the assessee's prayer for carrying forward the surplus cash available from the previous year to the current year for set-off purposes. Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s decisions on all grounds. The Tribunal emphasized the importance of corroborative evidence and the limited evidentiary value of survey statements. The Tribunal also supported the principle of telescoping for set-off purposes.
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