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TMI Blog2014 (10) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... nts can it be said that the undisclosed income of 7 crores is required to be assessed in the hands of the assessee i.e. Shri Pawan Kumar Bansal for AY 2007-08 - it cannot be said that the income is liable to be assessed in the hands of the assessee for the AY - CIT(A) adopted the right course of action i.e., to determine the undisclosed income on the basis of loose papers found and seized from the assessee’s premises - CIT(A) to the extent wherein he held that the income of the assessee i.e. Shri Pawan Kumar Bansal is to be determined on the basis of undisclosed income as per the noting on the loose papers – Decided against revenue. Income determined on the basis of loose papers – Held that:- The entry relates to some transaction dated 24th December, 2003 - the transaction cannot be said to be pertaining to the accounting year relevant to the AY under consideration - the only addition which can be sustained on the basis of loose papers found and seized during the course of search is 7,90,000 - the addition of 7,90,000/- in the case of the assessee i.e. Shri Pawan Kumar Bansal is upheld – Decided partly in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... rroneous and not tenable in law and on facts. (b) The appellant craves to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal." 4. At the time of hearing before us, it is submitted by the learned CIT-DR that there was search and seizure operation under Section 132 of the Income-tax Act, 1961 in the case of M/s Capital Meter group of cases. The assessee belonged to the said group. The search had taken place at the assessee's premises on 26th June, 2006. That on 1st September, 2006, a letter was filed duly signed by the assessee in which an income of ₹ 7 crores was disclosed. Such letter is at page 59 of the paper book. The letter is on the letter head of the company in which assessee is a director. The letter filed by the assessee is a voluntary act by which the additional income of ₹ 7 crores was disclosed by the assessee. That in the case of a surrender by way of filing the letter, it cannot be claimed by the assessee that the surrender was obtained under coercion, pressure or inducement because the submission of the letter is purely a voluntary act of the assessee. That on 8th September, 2006, the statement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be accepted as a proper retraction of the statement given at the time of search. In support of this contention, he relied upon the following decisions:- 1. Carpenters Classics (Exim) (P.) Ltd. Vs. DCIT - [2007] 108 ITD 142 (Bang.). 2. DCIT, Circle-2(1) Vs. Bhogilal Mulchand - [2005] 96 ITD 344 (Ahd.). 3. Hiralal Maganlal & Co. Vs. DCIT - [2005] 96 ITD 113 (Mum.). 4. Greenview Restaurant Vs. ACIT - [2003] 263 ITR 169 (Gauhati). 5. V. Kunhambu and Sons Vs. CIT - [1996] 219 ITR 235 (Kerala). 6. MDLR Resorts (P) Ltd. & Ors. Vs. CIT & Ors. - [2014] 265 CTR (Del) 356. 6. He further submitted that the Revenue is not required to bring the evidence for corroborating the income surrendered by the assessee in the statement recorded at the time of search. He, therefore, submitted that the order of learned CIT(A) should be reversed and that of the Assessing Officer may be restored. 7. Learned counsel for the assessee, on the other hand, stated that the search had taken place at the assessee's premises on 26.07.2006 and the panchnama was drawn. However, the search was not completed and one bank locker was sealed. The department was not concluding the search and was pressurizing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the companies in Capital Meter group. It is stated by the learned counsel that substantially, the search was concluded the very day and panchnama was also drawn. That a restraint order was issued on the said day i.e. 26th July, 2006 in respect of locker No.133 maintained with State Bank of Patiala, New Friends Colony, New Delhi in the name of Smt. Madhuri Bansal. The said locker was opened on 13th September, 2006 and the panchnama was drawn and restraint order was also vacated. That the surrender of ₹ 7 crores was made by a letter dated 1st September, 2006, copy of which is placed at page 59 of the assessee's paper book. Since the entire basis of the disputed addition before us is this letter dated 1st September, 2006, the same is reproduced below for ready reference:- "Capital Power Systems Ltd. Corporate Office & Works : B-40, Sector-IV, Noida - 201301 (U.P.) India, Ph : 0120- 2542904/5/6/7 Fax : 0120-2520708 CPS/IT/General/2006-07 1st September, 2006 The Additional Director of Income Tax (Investigation), Unit-II, ARA Centre, Jhandewalan, New Delhi. Sub : Surrender of Income. Dear Sir, With reference to search on 26th & 27th July which is yet to be conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier statement made vide letter dated 1-9-06 and voluntarily offered an additional income of ₹ 7 crore (seven crores) to avoid litigation and buy peace of mind subject to non initiation of penalty or prosecution or other coercive actions as per provision of law, on behalf of the company, its directors, senior executives, their spouse, family members and relatives including other companies, firm in which such persons are partners, directors or interested. Q-3: Kindly give the assessee wise details of this disclosure? Ans: The same will be provided after go through the seized material. Q-4: Kindly give the source of generation of this ₹ 7 crores of additional income? Ans: The detailed explanation regarding the source of this additional income of ₹ 7 crore will be submitted later on after going through the seized material. In general this additional income of ₹ 7 crores have been generated through different transactions conducted outside the regular books of accounts. Q-5: Do you want to say anything else? Ans: No. The above statement has been given by me voluntarily out of my free will without any pressure, force, coercion, undue influence. I have re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- 2. Sh. Mahesh Kumar Gupta Rs.3,45,000,00/- Total Rs.7,00,000,00/- The above money of ₹ 7 crores, received on account of undisclosed income from unaccounted property dealings have been invested in share capital/cash found. The investment have been made by me and Sh. Mahesh Kumar Gupta and the details are as follows:- Name Undisclosed investment 1. Sh. Pawan Kumar Bansal A. Cash found at the residence of Sh. Vikram Bansal amounting to Rs.20,000,00/-. B. Investment in share capital of various companies amounting to Rs.3,35,000,00/- Rs.3,55,000,00/- 2. Sh. Mahesh Kumar Gupta Investment in share capital of various companies amounting to Rs.3,45,000,00/- Total Rs.3,45,000,00/- Total of 1 and 2 = Rs.7,00,000,00/- Q-4: Do you want to say anything else? Ans: This statement given by me is final and I understand that no penalty or prosecution proceedings against me and the group will be initiated in relation to the afore stated voluntarily disclosure of additional income of ₹ 7 crores. The above statement has been given by me voluntarily out of my free will without any pressure, force, coercion, undue influence. I have read over the above statement and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter taking into account the letter dated 1st September, 2006 and the two statements recorded by the Revenue, it cannot be said that the income of ₹ 7 crores is liable to be assessed in the hands of the assessee for the assessment year under appeal. On these facts, in our opinion, learned CIT(A) adopted the right course of action i.e., to determine the undisclosed income on the basis of loose papers found and seized from the assessee's premises. When the income of ₹ 7 crores was not disclosed by the assessee in his individual capacity in the year under appeal, therefore, in our opinion, the Assessing Officer was wholly unjustified in relying upon only the last portion of the second statement i.e. 12th September, 2006 ignoring the letter dated 1st September, 2006, first statement dated 8th September, 2006 and reply to question No.2 of the statement dated 12th September, 2006 and even the first portion of the reply of question No.3 in the statement dated 12th September, 2006. When we see the cumulative effect of all the facts as well as the statements, following position emerges:- 12. Shri Pawan Kumar Bansal is an individual who is not carrying on any business in his indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Gupta is found. In the above circumstances, after considering the cumulative effect of the letter dated 1st September, 2006 and both the statements, the proper course would be to determine the undisclosed income on the basis of loose papers found and seized at the time of search. The CIT(A) did the same. 13. We, therefore, uphold the order of learned CIT(A) to the extent wherein he held that the income of the assessee i.e. Shri Pawan Kumar Bansal is to be determined on the basis of undisclosed income as per the noting on the loose papers. With this remark, the Revenue's appeal vide ITA No.5375/Del/2010 is dismissed. However, the assessee in his appeal vide ITA No.5201/Del/2010 has also disputed the correctness of the income determined on the basis of the loose papers. The brief description of the transactions of various pages of seized material is given by the Assessing Officer at page 4 of the assessment order which reads as under:- "Annexure A-6: Page 77 details of different figures in different names showing ₹ 7.90 lacs, and the back side is share transaction details of G.S. Control Pvt.Ltd. Page 80 slip contains the details of names and payments of ₹ 7 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 - Revenue's appeal in the case of Shri Mahesh Kumar Gupta:- 18. In this appeal by the Revenue, following grounds have been raised:- "1. On the facts and in the circumstances of the case, the ld.CIT(A) has erred in deleting the addition of ₹ 3,07,00,000/- on account of undisclosed income admitted by Shri Pawan Kumar Bansal in his statement recorded during the course of search. 2. The CIT(A) has erred in law in deleting the addition of ₹ 3,45,00,000/- made on protective basis in his hand on account of Shri Mahesh Kumar Gupta and also deleted the addition of ₹ 3,45,00,000/- made substantive in the hands of Shri Mahesh Kumar Gupta." 19. So far as ground No.1 is concerned, the same is misconceived because the only addition made by the Assessing Officer in the case of the assessee was the addition of ₹ 3,45,00,000/-. No addition of ₹ 3,07,00,000/- was made in the hands of the assessee and therefore, the question of any deletion of such addition by the CIT(A) does not arise. Accordingly, ground No.1 of the Revenue's appeal is rejected being conceived. 20. So far as ground No.2 is concerned, we have already discussed this issue at length while decidin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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