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TMI Blog2013 (11) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the return of these assessees. Only on the basis of ad hoc bifurcation of the disclosure or surrendered income at initial stage of proceeding and in absence of any incriminating document shall not make such addition sustainable. Overall disclosure was of a high amount. Initial bifurcation was not based on any reliable calculation in view of changed method of recognizing income. The fact shows that these bifurcations were made on ad hoc basis only. It was not even based on any seized material. No statement u/s 132(4) of the Act recorded in these companies. Neither the authorized officer during the search operation nor Assessing Officer had worked out any concealed income supported by any document. Hence, no adverse inference can be drawn when assessee filed return of income by making income on the basis of changed method of accounting - Decided against Revenue. - ITA No.2191/Del/2012, ITA No.2192/Del/2012 - - - Dated:- 11-6-2013 - Shri R. P. Tolani And Shri B. C. Meena,JJ. For the Petitioner : Shri U. N. Marwah K. Sundar, CAs For the Respondent : Dr. Sudha Kumari, CIT DR ORDER Per B. C. Meena, Accountant Member :- ITA No.2191/Del/2012 in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese companies were part of the 'Sareen Group' and the controlling shares were held by persons of the 'Sareen Group'. The statement recorded u/s 132(4) of the Act of persons in control and management of 'Sareen Group' were recorded and in these statements, no discloser of any additional income was made. Simultaneously, search was also carried at the premises of Emaar MGF Limited and M.G.F. Development Ltd. Statement of Shri Shravan Gupta, Managing Director of Emaar MGF Land Limited was recorded during the search u/s 132(4) of the Act. In his statement, he admitted the additional income of Rs.225 crores. In the statement recorded u/s 131 on 16.10.2007, Shri Shravan Gupta bifurcated this Rs.225 crores as, Rs.160 crores in the hands of M/s. Emaar MGF Land Limited and remaining Rs.65 crores in the other Emaar MGF Group companies/concerns/individuals and other entities. Further bifurcation was not provided in this statement. The details were provided at later date, i.e. 07.11.2007. As per this bifurcation, Rs.10 crores each was attributed to these two assessee companies. Thereafter, on 14.01.2008, further Rs.6 crores was also attributed to each of these assessee companies. Thus, the sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puty Director of Income Tax (Intelligence),. New Delhi, vide this office letter F.No. ACIT/CC-7/2011-12/235 dated 12.08.2011 and reminder letter F.No.ACIT/CC-7/2011- '12/325 date4d 26.9.2011. As soon as the above documents are received from him, the same shall be forwarded to your goodself. The assessee group as a whole has disclosed income of Rs.335.66 crore in the returns of income for the A. Y 2008-09. This fact has been verified from the records. However, as the statements recorded during the search were not furnished to this office despite the laps of time, a reminder was issued on 21.11.2011 stating that In your letter dated 29th September, 2011 you had stated that you have requisitioned a copy of the statement as mentioned in the said letter however, till date the same has not received by this office. In case you do not supply a copy of the letter/statement within the next 15 days than I shall proceed with the case as per documents available on record. And another reminder was issued on 13/1/2012, however these documents could not be supplied to the undersigned. 3.4 The Assessing Officer has relied upon the following decision i. Rameshchandra and Co. v. CIT[1987] 168 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment in the case of cinema theatre was deleted. In this judgment, there is no adjudication regarding retraction of statement. It is further observed that the search in this case was conducted because the assessee could not furnish the details of opening stock. In fact the Hon'ble High Court observed that "on the other hand, it was found that the search was resorted to only because of the failure of the assessee to produce the opening stock inventory. Shri Raman and a writer of the firm were examined in this connection on July 16, 1981, about nine days before the search. The search was conducted only when it was found that there was no chance of getting the opening stock inventory". Whereas in the case of Mrs. Aanisa Batool Ghani Vs. ACIT, C.C. 18, New Delhi [2008] 21 SOT 323 (Delhi), the addition was sustained because the assessee could not explain the credit entries pertaining to cash deposits in the bank. Thus, the addition was sustained because there was evidence against the assessee. The second issue in the later case was regarding the valuation of house property where the Hon'ble Tribunal observed that the assessee divulged the facts voluntarily without any specific query ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Whether when assessee had explained his statement as not correct in context of materials produced, amount of Rs.4 lakhs could be added to assessee's income on basis of his" statement - held, " no ". Similarly, in the case of ACIT Vs. Jorawar Singh M. Rathod [2005] 148 taxman 35 (Ahd.) (Mag.), it has been held by ITAT, Ahmedabad 'B' Bench that "addition made by the Assessing Officer merely on the basis of retracted statement u/s 132(4) could not be sustained in the absence of any evidence, material or recovery of any movable or immovable assets at the time of search to corroborate the disclosure made by the assessee." Further, reliance is being placed on the following decisions: i) Kailashben Mangarlal Chokshi Vs. CIT [2008] 174 Taxmann 466 (Guj.) / (2008) 14 DTR 257 (Guj.) ii) Arun Kumar Bhansali Vs. DCIT [2006] 10 SOT 46 (Bang.) (URO) iii) Shree Chand Soni Vs. DCIT [2006] 101 TTJ (JD) 1028 iv) Rajesh Jain Vs. DCIT [2006] 100 T~J (Del) 929 v) The Hon'ble Supreme Court in Vinod Solanki Vs. Union of India vi) India Seed House V s. ACIT [2000] 69 TTJ (Delhi) (TM) 241 Even the Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd Vs. State of Kerala and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "It is well settled that admissions constitute best piece of evidence because admission are self-harming statements made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one's own interest unless such a statement is true." Further reliance is placed on the decision of The Kerala High court in the case of Kunhambu(V.) and Sons v. CIT cited at (1996) 2191TR 235 wherein it has been held that "Assessment on the basis of the voluntary statement during search under the provisions of I.T.Act, 1961was valid." 3. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in law as well as in facts in ignoring the fact that the assessee has not filed any evidence in the present case which could prove that the statement was made under any threat or coercion. For the retraction to be valid, threat or coercion has to be proved. 4. The order of Ld CIT(A) is perverse in law and on facts. 5. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal." 4. While pleading on behalf of the revenue, ld. DR relied on the order of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter further attribution of Rs.6 crores each to these assessee companies was also not based on any seized documents or working of income on percentage completion method. These companies were under control of 'Sareen Group', therefore, Shri Shravan Gupta was not acquainted/authorized to make disclosure in his statement on behalf of the assessee companies. Further, the business relations of the Sareen Group and Emaar MGF Land Limited were strained in the case of joint ventures and the matter is in the court. The ld. AR also submitted a copy of the suit for permanent injunction filed with the Hon'ble Delhi High Court where assessee companies are plaintiffs and M/s. MGF Developments Pvt. Ltd. and Shri Shravan Gupta are defendants. The ld. AR further submitted that Shri Shravan Gupta as an independent Director was having no stock holdings as such. No economic interest was of Shri Gupta in the assessee companies. The Assessing Officer has also failed to furnish the statement recorded by Shri Shravan Gupta wherein he has disclosed income of Rs.225 crores. Ld. AR further submitted that the assessee has offered the income due to the change in the method of accounting to percentage completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompletely distinguishable from the facts of assessee's case. The ld. AR also relied on the decision of Hon'ble Supreme Court in the case of Kishanchand Cellaram vs. CIT reported in 125 ITR 713 wherein the Hon'ble Supreme Court has held that evidence to be used against assessee can only be done after an opportunity to controvert and cross examine such evidence/statement. He also relied on the following case laws in the following propositions :- "(i) CIT v. SMC Share Brokers Ltd., (2007) 288 ITR 345 (Delhi) Their lordship observed" that a statement of a director of the company is also subject to right of cross examination on the ground of natural justice and in the absence of right of cross examination being provided despite request by the assessee, such statement could not be relied upon to the detriment of the assessee". (ii) Prakash Chand Nahta v. Commissioner of Income Tax [2008] 301 ITR 134(M.P.) Assessment - Validity- Statement of Third Party Replied on by Revenue-Third Party Retracted statement Subsequently -Assessee not allowed to cross examine third party- Power of Assessing Officer to summon Third Party - Violation of Principles of Natural Justice -Assessment Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t filed on record. In the statement recorded u/s 131 of the Act, the bifurcation was initially given as Rs.160 crores was attributed to M/s. Emaar MGF Land Limited and balance Rs.65 crores was attributed to other Emaar MGF Group/concerns/individuals and the other entities although the names were not given. Thereafter out of RS.65 crores, Rs.10 crores each was attributed to each of these assessee companies. However, Rs.15 crores was left to be attributable to others. This Rs.15 crores was further bifurcated and Rs.6 crores was attributed to each of assessee companies. There were no incriminating documents seized in respect of the assessee company during the search operation. It is also an admitted fact that finally the Emaar MGF Group had disclosed Rs.335.66 crores as against the disclosure of Rs.225 crores made during the search operation. The allocation of disclosure in these assessee companies was from Rs.65 crores bifurcated in the statement u/s 131 of the Act and by a letter in further submissions. On the basis of documents available on record, it is clear that no incriminating documents were found and seized with regard to these assessee's companies which could have been made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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