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TMI Blog2018 (6) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the appellant and the figures mentioned therein allegedly impounded during the course of survey at the business premises of Sh. Mohan Bajaj in which the appellant has no stake/interest of any kind is neither in his handwriting' nor the same bears any acknowledgement by him under his signatures. Thus the order confirming the said addition is bad in the eyes of law. 3. That the Ld. CIT (A) has further erred in upholding an addition of Rs. 15 lacs on the basis of loose sheet entries, and one power of attorney in the name of the appellant which do not co-relate him with any investment made by him from undisclosed sources. Hence the action of the CIT (A) in confirming the addition by invoking section 68 when the appellant was not under any legal obligation to maintain books of accounts as he had opted to file the return under section 44AD is bad in the eyes of law. Hence the order deserves to be struck down. 4. That the Ld. CIT(A) has failed to exercise his judicious acumen in not appreciating that the admission/confession statement of the appellant recorded by the ITO is not as per the spirit of law. The ITO has neither given caution to the assessee/appellant that any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has passed the impugned order by considering the week, unreliable and untrustworthy documentary evidence of the department by ignoring the most credible version as well as the retraction made by the appellant. Hence the order of Ld. CIT (A) is unlawful & liable to be struck down. 10. That the Ld. CIT (A) has also miserably failed in not deciding the legal ground number 3 as he has failed to pass any speaking order in this regard. Hence the order is bad in the eyes of law." 3. The brief facts of the case are that a survey u/s 133A of the Act was carried out on 28.06.2007 at the business premises of M/s Mohan Lal Bajaj Group, Hadiabad, Phagwara. During the course of survey proceedings, certain incriminating documents were found which contained transactions relating to real estate business done by Assessee/Appellant herein who was summoned u/s 131 of the I.T. Act in the post survey enquiries and his statement was recorded on 06.07.2007 wherein, he allegedly admitted his unrecorded transactions relating to his real estate business done jointly with Sh. Mohan Lal Bajaj and Sh. Des Raj and for that he offered an additional income of Rs. 15,00,000/- over and above his normal busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) erred in observing para. 2.3 of his order to the effect that the appellant was a business associate in real estate business of Sh. Mohan Lal Bajaj and Sh. Des Raj. In fact, the referred documents do not indicate any alleged transactions nor do the same implicate the appellant in entering any into any unexplained property transactions. The Ld. AR also relied upon the order passed by the ITAT Bench at Jabalpur wherein it was held that power of attorney is not a statement of transactions with regard to any right, title or interest in any immovable property as the power attorney is recreation of an agency whereby guarantor authorizes guarantee to do acts specified therein on behalf of the guarantor, which will be binding on the guarantor as if done by him. It was further argued that even the presumption u/s 292C can only be drawn when the material as mentioned in Sec.292C of the Act is/are found in the possession or control of an Assessee concerned in the course of a search u/s 132 but not otherwise. The assessee has also filed an application under Right to Information Act, 2005 for seeking information qua material used against the additional/surrendered income of Rs. 15 lacs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it clear that the material collected and the statement recorded during the survey u/s 133A are not conclusive piece of evidence by themselves. The statement obtained u/s 133A would not automatically bind upon the assessee. 7.2 The Punjab and Haryana High Court in the case of Kishan Lal Shiv Chand that (ITR 293) , clarified that: It is an established principle of law that a party is entitled to show and prove that the admission made by him previously is in fact not correct and true. The Andhra Pradesh High Court in the case of Gajjam Chinna Yellappa and Ors. vs. ITO [2015] 370 ITR 671 (AP) held that "a retracted statement cannot constitute the sole basis of fastened liability of the assessee" . 7.3 Further, Kerala High in the case of Paul Mathews and Sons vs. CIT [2003] 263 ITR 101 (Ker) held that statement recorded under Section 133A of the IT Act is not given any evidentiary value obviously for the reason that the officer is not authorized to administer oath and to take any sworn in statement. para no. 11: The provision also enables the IT authority to impound and retain in not exceeding 15 days. Section 133A(3)(iii) enables the authority to to, any proceeding under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the relevant provisions of law. The statements so recorded are referable to section 132 of the Act. Sub-section (4) thereof enables the authorities not only to rely upon the statement in the concerned proceedings but also in other proceedings that are pending, by the time the statement was recorded. 10. If the statement is not retracted, the same can constitute the sole basis for the authorities to pass an order of assessment. However, if it is retracted by the person from whom it was recorded, totally different considerations altogether, ensue. The situation resembles the one, which arises on retraction from the statement recorded under section 164 of the Code of Criminal Procedure. The evidentiary value of a retracted statement becomes diluted and it loses the strength, to stand on its own. Once the statement is retracted, the assessing authority has to garner some support, to the statement for passing an order of assessment. 11. In I. T. T. A. No. 112 of 2003 (see CIT v. Naresh Kumar Agarwal [2014] 369 ITR 171/[2015] 53 taxmann.com 306 (AP) this court dealt with the very aspect and held that a retracted statement cannot constitute the sole basis for fastening liability upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of thesearch & seizure and survey operations. retracted by the concerned assessees while filing returns of income. In seizure and survey operations do not serve any useful purpose. It is, Tax Departments. Similarly, while recording statement during the made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders . 7.6 From the aforesaid decisions of Apex court and High courts and circular issued by the CBDT, it emerges that the confessional statement can not form the sole basis of addition, if the same is retracted and not supported with corroborative material. Now coming to the instant case, although, the statement was recorded by the Assessing Officer in pursuance to survey conducted on 28.06.2007 , u/s 133A of the Act at the business premises of Sh. Mohan Lal Bajaj proprietor of M/s. Super Cement and Iron Store, Phagwara and M/s Fine Traders, Phagwara and as per allegations, in the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance to RTI application, the assessee was provided the copy of the ledger and a copy of the power attorney dated 05.09.2012. Although, the Assessing Officer as well as the Ld. CIT(A) in their orders observed that in survey, the large number of papers containing incriminating entries relating to the purchase and sale of immovable properties done jointly by Sh. Mohan Lal Bajaj and Sh. Des Raj and the appellant were found and impounded, however, from the document supplied by the Department it reveals that the Revenue Department while making the addition qua additional income of Rs. 15 lacs, used two documents only that is one loose sheet of ledger where the name of appellant depicts and the amount of Rs. 12,50,000 have been shown as credit in the balance of the appellant, however, no-where, the same is acknowledged and/or signed by the appellant herein, therefore, the same cannot be relied upon for any purposes, specifically, in view of the judgments passed in the case of Central Bureau of Investigation vs. V.C. Shukla [1998] Crl.LJ 1905 know as Jain Hawala Case. 7.7 Let us reproduce the ratio laid down by the Apex Court in V.C Shukla's case (supra) "That entries in the Jain Hawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second part speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to first ascertain whether the entries in the documents, with which are concerned, fulfill the requirements of the above section so as to be admissible in evidence and if this question is answered in the affirmative then only its probative value need be assessed. 18. "Book" ordinarily means a collection of sheets of paper or other material, blank, written, or printed, fastened or bound together so as to form a material whole. Loose sheets or scraps of paper cannot be termed as "book" for they can be easily detached and replaced in dealing with the word "book" appearing in Section 34 in Mukundram v. Dayaram a decision on which both sides have placed relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter print outs, hard disk and pen drive etc. do not comply with the requirement of the Indian Evidence Act and are not admissible evidence. It further observed that the department has no evidence to prove that entries in these loose papers and electronic data were kept regularly during the course of business of the concerned business house and the fact that these entries were fabricated, nongenuine was proved. It held as well that the PCIT/DR have not been able to show and substantiate, the nature and source of receipts as well as nature and reason of payments and have failed to prove evidentiary value of loose papers and electronic documents within the legal parameters. The Commission has also observed that Department has not been able to make out a clear case of taxing such income in the hands of the applicant firm on the basis of these documents. It is apparent that the Commission has recorded a finding that transactions noted in the documents were not genuine and thus has not attached any evidentiary value to the pen drive, hard disk, computer loose papers, computer printouts. Since it is not disputed that for entries relied on in these loose papers and electronic data were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case, Revenue Department mainly relied upon statement/admission of the appellant and there is no substantive corroborative material on the basis of which it can be inferred that the addition is based upon corroborative material in addition to the admission/confession. 7.11 Even CBDT vide its circular dated 10.03.2003 (Supra) clarified that confessions during the course of search and seizure do not serve any useful purpose, if the same are not based upon the credible evidence and rather later retracted by the concerned assessees, while filing returns of income. The said instruction further states that it is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search and seizures and survey operations, no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. It was further cautioned that in respect of pending assessment proceedings also, the assessing officers should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the same being different, I propose my separate, assent order. 2. This is a case of an individual assessee, filing his returns of income with the Revenue declaring income from house property, work contract and interest. A survey u/s. 133A of the Income Tax Act, 1961 ('the Act' hereinafter) at the premises of one, Sh. Mohan Lal Bajaj, Prop. M/s. Super Fine Cement & Iron Store, Hadiabad, Phagwara, and a firm, M/s. M/s. Fine Traders, on June 28, 2007, led to the discovery of several documents indicating dealings in real estate. In relation to the assessee specifically, the two documents found were, a ledger account (PB pgs. 22) and a General Power of Attorney (dated 05/9/2002) in respect of a property in favour of the assessee (PB pgs. 23-27). The assessee, aged 64 years at the relevant time, was accordingly questioned and examined on oath u/s. 131 of the Act by the Assessing Officer (AO) on July 6, 2007 (at PB pgs. 14- 17), whereat he admitted to being engaged in the business of purchase and sale of land along with Sh. Mohan Lal Bajaj and another, Sh. Des Raj (of Des Raj Furniture House). The entries in the ledger account found, reflecting receipts from the assessee at a total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoked, to arrive at such an inference. The question therefore that arises in the instant case is if an inference could be drawn in the facts and circumstances of the case, given the material on record. Strict rules of evidence are not applicable to the proceedings under the Act, and the preponderance of probabilities can be applied to determine as well as to arrive at findings of fact. 3.2 That the assessee was dealing in purchase and sale of land, is not only admitted, but also evidenced by the GPOA found during survey. The same, however, pertains to the year 2002. There is nothing to show that the assessee returned any income from property dealing for the relevant year/s, so that both the amount invested (in the said business) as well as the income there-from, was chosen not to be disclosed by him to the Revenue. There is, at the same time, nothing on record to show that the assessee had been dealing in or, more appropriately, continued to deal in land, buying and selling it, during the current year. There is no admission in this regard in his deposition. The ledger account, reflecting credits in his name, which is the other corroborative material found, is also sans any date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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