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TMI Blog2016 (11) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... raders and M/s Balaji Perfumes, the facts of which are entirely different from that of the assessee under consideration. It is further noticed that the other two brothers of the assessee, on whose behalf a similar surrender of ₹ 10.00 each was made, also did not offer such income in their respective returns of income. The AO made additions of the income surrendered but not declared. However, the concerned CIT(A) deleted such additions. The appeals filed by the Revenue against such deletions have been dismissed by the tribunal due to low tax effect.We want to clarify beyond doubt that the validity or otherwise of the retraction of statements made by Sh. Abhay Gupta has neither been considered nor decided by us in this order, as the same is not relevant in so far as the instant addition of ₹ 10.00 lac, made in the hands of the assessee, is concerned. No finding given in this order in respect of the deletion of the addition has any significance or relevance with the additions made in the case of the above referred two concerns, whose appeals are pending before the tribunal. Income arising from the estimation of household expenses - Held that:- It is observed that the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord that the hearing of these appeals started on 28.7.2016. During the course of arguments, the ld. AR relied on certain decisions, some of which have been adverted to infra. Both the sides completed their submissions, except for the ld. DR wanting some time to rebut the decisions relied by the ld. AR. Though, there is no such practice of giving time to the other side for rebutting the case law relied by the other side, yet the Bench accepted the request of the ld. DR and adjourned the matter for 1.8.2016 as per the convenience of both the sides. It was made clear that the adjourned date of hearing was only for distinguishing the cases relied by the ld. AR or citing some new cases in the favour of the Revenue. Today on 1.8.2016, an adjournment application has been moved by the ld. DR stating that the records of the case, being very old, are not readily available with the AO and hence the appeals may be adjourned. This was strongly opposed by the ld. AR, who submitted that the effective hearing of the appeals got concluded on 28.7.2016 and hence the Revenue s request for adjournment be turned down. Here, it is pertinent to mention that these appeals are on board since 2010. Since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere accompanied by an authority letter. The AO found that the surrendered income of ₹ 10 lac was not offered by the assessee in his return of income filed u/s 153A of the Act. On being called upon to explain the reasons for not offering such income, the assessee stated that the statements of Shri Abhay Gupta were obtained under coercion and undue influence, which were later retracted by him vide his letter dated 3.10.2006. The AO did not accept the assessee s contention as, in his view, the statements recorded u/s 132(4) were relevant and had evidentiary value. He, therefore, made an addition for a sum of ₹ 10 lac. The ld. CIT(A) confirmed the addition of ₹ 10 lac by relying on the order passed by him in the case of group concern, namely, M/s Balaji Perfumes for the assessment year 2006-07. In doing so, the ld. first appellate authority held that surrender was made by the assessee and not by a third party, namely, Shri Abhay Gupta and, secondly, the statement of Shri Abhay Gupta was not validly retracted. The assessee is aggrieved against the confirmation of addition. 4. We have heard the rival submissions and perused the relevant material on record. It is noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned about the commission activity etc. ` as explained above , but there is no reference in the earlier parts of his statement to the commission business carried on by the three brothers outside the books of account. The assessment order also does not refer to any incriminating material qua the commission business carried on by the assessee, except to the surrender of ₹ 10.00 lac. This divulges that the surrender of ₹ 10 lac made by Shri Abhay Gupta on behalf of the assessee was in respect of commission income for which, admittedly, no incriminating material was found during the course of search. The entire discussion in the earlier parts of the statement recorded on 18.4.2006 and whole of the statement recorded on 3.5.2006 is about the extent and magnitude of the business carried on outside the books of account by the two concerns, namely, M/s Assam Supari Traders and M/s Balaji Perfumes etc. In so far as the surrender of commission income is concerned, there is no reference to any incriminating material either in the statement of Shri Abhay Gupta or in the assessment order of the assessee. This shows that the surrender made by Shri Abhay Gupta on behalf of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/2004), vide its judgment dated 10.3.2016 {copy placed on record}, has held that : `The statement recorded under section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded . Similar view has been taken by the Hon ble Delhi High Court in an earlier judgment in the case of CIT vs. Sunil Aggarwal (2015) 379 ITR367 (Del). To the similar effect is an earlier decision of the Hon ble Andhra Pradesh High Court in CIT VS. Shri Ramdas Motor Transport (1999) 238 ITR 177(AP), in which the Hon ble High Court refused to give any evidentiary value to the statement made by the assessee u/s 132(4) as the Department could not find any unaccounted money, article or thing or incriminating document either at the premises of the company or at the residence of managing director or other directors. In such circumstances, the finding of the Tribunal that the statement of managing director recorded patentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in sustaining the addition of ₹ 10 lac by relying on his finding given in the case of M/s Assam Supari Traders and M/s Balaji Perfumes, the facts of which are entirely different from that of the assessee under consideration. It is further noticed that the other two brothers of the assessee, on whose behalf a similar surrender of ₹ 10.00 each was made, also did not offer such income in their respective returns of income. The AO made additions of the income surrendered but not declared. However, the concerned CIT(A) deleted such additions. The appeals filed by the Revenue against such deletions have been dismissed by the tribunal due to low tax effect. 10. Before parting with this issue, we want to make it clear that the addition made on account of surrender of commission income made by the assessee is entirely different from the additions made in the case of two group concerns, namely, M/s Assam Supari Traders and M/s Balaji Perfumes, which are, inter alia, also based on the statements of Sh. Abhay Gupta. We want to clarify beyond doubt that the validity or otherwise of the retraction of statements made by Sh. Abhay Gupta has neither been considered nor deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved against this addition. 16. We have heard the rival submissions and perused the relevant material on record. It is observed that the AO made addition by estimating household expenses @ ₹ 25,000/- per month for the instant year and the immediately preceding year and at the rate of ₹ 20,000 p.m. for the prior years. The assessee appealed against such additions on the basis of estimation of household expenses before the CIT(A) and the tribunal for earlier years, but without any success, except that for the immediately preceding year, the estimate of household expenses has been sustained at ₹ 22,000 p.m. Considering the totality of the facts and circumstances of the instant case, we are satisfied that it would be in the fitness of things, if the estimation of household expenses for the instant year is restricted to ₹ 24,000/- per month as against ₹ 25,000/- made by the AO. The consequential addition is sustained pro tanto. This ground is partly allowed. 17. In the result, the appeal is partly allowed. Penalty appeals - A.Ys. 2005-6 and 6-07 18. The AO imposed penalty u/s 271(1)(c) in respect of the assessment years 2005-06 and 2006-07 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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