9911796707
TMI Blog2019 (6) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... rd in appellate order which has not been controverted by the ld DR by bringing any contrary material, accordingly, we do not find any reason to interfere to hold that no cash component transaction was received by the assessee. Brokerage @ 4% earned on sale of plots - CIT (A) sustained the addition - HELD THAT:- Keeping in view the nature of business in which the assessee was engaged, it is reasonable to presume that the assessee must have earned some commission on the transactions routed through him. Keeping the case wherein normal part commission is earned by brokerage of seller and part commission is earned by the brokerage of buyer, it is reasonable to presume that the assessee has earned commission @ 2% on the alleged transactions. Accordingly, the A.O. is directed to restrict the addition to the extent of 2% of the brokerage on the alleged transaction of sale of plots. Undisclosed income alleged to be used for making undisclosed payment for purchases of agriculture land purchased from Shri Jai Singh Yadav - addition was made solely on the basis of search statement of Shri Nirmal Kedia partner of the assessee, which were retracted later-on - corroborative evidence/document - HE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace of profit estimated by the ld. CIT(A) at 31% Addition based on dump documents - HELD THAT:- CIT(A) has analysed each and every document and came to the conclusion that these documents are dump documents as name/date or narration return which could lead to an inference that the transaction on these documents are those which have been escaped assessment. Thereafter by following the judicial pronouncements, the ld. CIT(A) has deleted the addition. The detailed findings so recorded by the ld. CIT(A) has not been controverted by the ld DR by bringing any positive material on record. Therefore, we do not find any reason to interfere in the order of the ld. CIT(A) in deleting the impugned additions. Addition on the basis of AS-1 - HELD THAT:- As found from the examination of the document that no name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee. No any plot No. or name of the scheme has been written over this paper by which it can be conclude that these papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. There is no reference in this paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee or regarding to sales made by the assessee or assessee group. No name of any buyer or name of the scheme has been written over this paper by which it can be conclude that this papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. Assessee has only one scheme Kedia Kingdome wherein size of plot no 40 is 164.21 sq mt as against 196.94 mentioned in the seized paper. Similarly, size of plot no 127 is 115.52 sq mt as against 169.62 mentioned in the seized paper. Similarly, size of plot no 122 is 135.35 sq mt as against 100 mentioned in the seized paper. Most interestingly, plot no 123 mentioned in the seized paper does not exist in the scheme of the assessee. The detail as per books of account of the assessee in respect of sales of plots Addition as per Ext.-10 Annexure-A - HELD THAT:- The scribbling on the paper are in relation to some renovation work which was to be carried out but the same was actually not carried out by the assessee group. The assessee group was planning to carry out some renova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the assessee as the assessee is neither buyer nor seller of such plots. 2. The appellant prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal." Grounds of revenue's appeal: "1. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of ₹ 86,81,500/- made by the A.O. on account of unaccounted business income. 2. The appellant craves, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 4. Rival contentions have been heard and record perused. Facts in brief are that the assessee is an individual and during the year under consideration derived income from house property, business of property developers, capital gain on sale of plots, interest and other income. Search and seizure operations u/s 132(1) of Income Tax Act, 1961 were carried out by Income Tax department over the assessee group on 19.11.2016. Notice U/s 153A of the Act was issued in response to notice issued u/s 153A of the Act, the assessee filed his return of total income on 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of these papers reveals all the plot were sold at similar rate irrespective to the fact whether the plot is sold in cash or cheque. On page 1-3(refer APB page 70-72) the word remitted (bank)' and remitted (cash) and total remitted has been mentioned which implies whatever amount is received it has been given to the seller of plot 3. That the AO has not taxed the cheque transaction evident from such seized document in the hand of appellant. It is the cash component which is assumed to be undisclosed income of the appellant. It is a trite law that transaction from the seized document cannot be interpreted differently. If the cheque transaction is taxed in the hand of seller, in this case different individual sellers, then cash as evident from the seized document can only be attributable to respective individual sellers. 8.3 Considering the above I am of the view entire cash cannot be taxed in the hands of appellant especially when the cheque undisputedly has gone into different seller as listed. It is only the brokerage which can be taxed, same was admitted by the AO also in the order. The total remittance (cash and cheque as per these pages is as under Cheque remitta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed along with our submission dated 07.02.2018 and 28.02.2018. As explained in such submission this is an excel sheet send by Sub-broker in mail id of assessee group. The sheet consists the details of plot sold of various persons in the scheme naming "Ganesh Vihar Vistar" through Shri Nirmal & Nitin Kedia on which the brokerage of ₹ 4,80,000/- was receivable but due to disputes the sub-broker/party refused to pay brokerage. Ganesh Vihar scheme does not belong to assessee but this scheme was developed by M/s Ganpati Grah Nirman Sahakari Samiti Ltd in 1995 and earlier and none of the plots mentioned in the sheet belongs to assessee and his family members. The copy of allotment letter of the society to prove that these plots does not belong to assessee group has been submitted along with our submission dated 07.02.2018. Further the copies of registered sales deeds of such plots, which are readily available with the assessee group, to prove that in dealing of such plots the assessee group was neither buyer nor seller were also submitted along with our submission dated 28.02.2018." 5. Explanation regarding page No. 4 to 6 of Annexure 9 found and seized from Shop No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of plot owner as per impounded document Name of allotee i.e. buyer as per impounded document Documents submitted during assessment proceedings 1 Suryaprakash Saini Sarashree Suvhadarshini * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 107-108) * Copy of registered sales deed dated 28.10.14 between owner and buyer (Copy at PB Page 109-116) 2 Manoj Kumar Saini Manoj Kumar Jaiswal * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 117-118) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 119-126) 4 Satyanarayan Saini (Babulal) Shweta Jain * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 127-130) * Copy of registered sales deed dated 28.10.14 between owner and buyer (Copy at PB Page 131-138) 5 Arvind Saini Jagdish Kumar Koli * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 139-140) 6 Chittar Meena B M Gupta * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 141-144) * Copy of registered sales deed dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f year 1995 (Copy at PB Page 254-255) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 256-263) 38 Vikrant Narendra Kumar * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 264-267) * Copy of registered sales deed dated 28.10.14 between owner and buyer (Copy at PB Page 268-274) 41 Sunil Jain Keshari lal Meena * Documents of this plot were not available with assessee so the same did not submitted. 42 Satyanarayan Saini (Babulal) Mohit Sharma * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 275-278) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 279-286) 43 Ankit Choudhary Mohit Sharma * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 287-288) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 289-295) 44 Ashok Saini Ram Singh Rajput * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 296-297) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le with assessee so the same did not submitted. 21 Sunil Jain Pranav Kumar Mishra * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 409-410) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 411-419) 22 Ashok Saini Pranav Kumar Mishra * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 420-421) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 422-429) 23 Goverdhan Kiran Meena * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 430-431) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 432-439) 31 Jitendra Kumar Samrendra Kumar * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 440-441) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 442-449) 40 Vishal Mittal Jagmohan Meena, Kuldeep * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 450-453) * Copy of registered sales deed dated 28.10.14 between owner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was neither owner/seller and nor buyer of the plot. These plots were being owned by the respective owners of plot since 1995 and the same were sold by them through registered sales deeds during the year under consideration. In this regard it is relevant to mentioned here that all the plots mentioned in these sheets were sold by the uniform rate. The sales consideration in some of the cases were received entirely through a/c payee cheque, and in some cases partly through cheque and partly through cash and in some cases entirely in cash. The AO has not brought any material to prove that these plots were owned by the assessee or the assessee was beneficial owner of these plots. The AO herself has accepted the taxability of the cheque receipt in the hands of the actual plot owner as the same not taxed in the hands of the assessee. The action of AO shows that the assessee was not the beneficial owner of such plots. 13. It is also pertinent to mention here that the A.O. has only taxed the cash component of alleges sale proceed and not the amount received through cheque. The A.O. has taxed the cheque consideration in the hands of the actual plot owner whereas with respect to the ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed as under: - "7.2. However, it is required to be noted that the respective petitioners assessee were never owners of the land in question. It is also required to be noted that in fact the subsequently sale deeds are executed by the original land owners in favour of one Shri Popatbhai Kakadia. It is an admitted position that the respective petitioners assessee have never executed any sale deeds. Therefore, nothing is on record that any sale consideration was received by the respective petitioners assessee. Therefore, merely on the basis of the sauda chitthi dated 12.03.2008 signed by the respective petitioners assessee (signed and executed though admittedly they were not owners of land for which the sauda chitthi was executed / signed), it cannot be said that any amount is received by the petitioners assessee." The department filed SLP in Hon'ble Supreme Court against the above order which was rejected by the Hon'ble Supreme Court by its order dated 16.05.2016. 18. In the case of the assessee also no documents were found from the possession of assessee or from the other one to prove that any consideration was received/receivable to assessee. On the contrary, we find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by the AO during the course of assessment proceedings on 23.02.2018, relevant question No. 22, and in such statement, it was categorically denied of receiving any brokerage on dealing of these plots. However, these statements have not considered and additions was sustained solely on the basis of presumption and assumption and without having any material. Ld. AR has further contended that admittedly the assessee was acting as a broker in the transactions but as stated in the reply submitted to the AO as well as CIT (A) due to dispute arose with sub-brokers/plot holders no brokerage was received to the assessee. Since after dispute the assessee was not expecting any brokerage against the deal, therefore no brokerage income could not include in the Income Tax return. 23. On the other hand, the ld DR has supported the order passed by the A.O. upholding the addition of 4% on account of brokerage earned by the assessee. 24. We have considered the rival contentions and carefully gone through the orders of the authorities below and found that no documentary evidence was found during the course of search to substantiate that the assessee has earned brokerage at 4% on these transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of unaccounted business income. 4. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of ₹ 6,99,000/- made by A.O. on account of unaccounted income from sale transactions. 5. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of ₹ 8,03,001/- made by A.O. on account of unaccounted income from sale transactions. 6. Whether on the facts and in the circumstances of the case and in law the. CIT(A) is justified in deleting the addition of ₹ 42,07,083/- made by A.O. on account of unaccounted business income from sale of plots. 7. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of ₹ 33,14,580/- made by A.O. on account of unexplained expenditure u/s 69C of the I.T. Act, 1961. 8. The appellant craves, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 27. Rival contentions have been heard and record perused. The facts in brief are that the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 32,09,120/-. Against the said order of the ld. CIT(A), both the revenue and the assessee are in further appeals before the ITAT. 30. It was vehemently argued by the ld CIT-DR that after considering all the facts and circumstances, the assessee has recorded his statement U/s 132(4) of the Act and surrendered the amount in respect of income earned by him. Since the statement was recorded under oath, there is no reason for retraction without brining any supporting evidence for the same. He further relied on the detailed observation made by the A.O. and the investigation team while recording the statement U/s 132(4) of the Act. 31. On the other hand, the ld AR has pointed out various discrepancies in the statement so recorded and contended that the statement was recorded under fear and duress and there were serious irregularities and discrepancies in recording the statement. The detailed submissions of the ld AR of the assessee was as under: "Nitin Kedia's Statements were recorded under fear & duress and serious other discrepancies in recording of the Statement of Shri Nitin Kedia:- (a) If we see the copy of statement Shri Nitin Kedia recorded at F-110 Evershine Towe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Nitin Kedia at Kedia House on 20/11/2016. (c) Other discrepancies in statement Statement at Shop at Ganesh Nagar: - During the course of survey u/s 133A of the Act, statement of Shri Nitin Kedia was recorded at the premise Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura Jaipur. There are following discrepancies in the recording of statement by the survey team. c.i) Commencement of the statement and after recording 7 questions the postponing of the statement at same time As per the copy of the statement provided by the department, the department commenced the recording of the statement of Shri Nitin Kedia on 19/11/2016 at 2.00 PM. (APB page 75). After recording of answer to question number 1 to 7 in three pages, the statement was postponed for physical verification. The time marked for postponing the statement is 2.00 PM (APB page 77) i.e. commencement of the statement and postponing the statement at same time which shows no time consumed in question, answer and in writing of 7 question answer on paper. c.ii) Shri Nitin Kedia could not be present at two places at same time on 19/11/2016. After postponing the statement at 2.00 PM, the statement was resumed at 6.30PM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement for dinner and he was without dinner in night. He was sick and tired. So, a break in statement was given at 11.50 PM on 19-11-2016. In Sanganer Office there was no bed or other basic facilities. The assessee was kept awaken whole night and he was not allowed to go at home. On 20-11-2016 at early morning his statement was resumed at 6.30 AM. The assessee was kept tired, sleepless and without food, this was nothing but torture by the survey team to get the desired surrender and sign on the prewritten statements. This was the reason of surrender of ₹ 5 crores in just in first effective question of the statement on 20/11/2016 (APB page 50) without any corroborative material or incriminating documents. Then the assessee was taken to Kedia House. The search party started to recorded the statement of the assessee at 1.00 PM (APB page 41). Here in very first question the assessee had to confirmed the surrender of ₹ 5 Crore made at Sanganer office and has to overall surrender ₹ 20 Crore without any corroborative material or incriminating documents. The assessee made surrender under inhumanity conditions created by search/ survey party. The search/survey party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey/search several requests were made to Investigation wing as well as AO to provide the copy of statements recorded by the survey/search party. After the continuous efforts of the assessee group, the copy of the statements were provided on 19.01.2018 (Friday) and thereafter on very first working day i.e. 22.01.2018 the assessee filed the affidavit (Copy at APB Page 97-107) before ld. AO to retract the statements. The relevant para of the affidavit is as under: - (ii) In reply to the Q. No. 4 and 5 of the statement I accepted to having been earned undisclosed income of ₹ 20 Crore from sales of plots/buildings by my concern naming Kedia Real Estate LLP while no such income was actually earned by me or our business concerns or my family members. The entire receipts and payments pertaining to our group are duly recorded in books of accounts/ITR of respective person. No unaccounted money was received by me or our business concerns or my family members against any transactions and likewise no unaccounted payments/investments were made. During the course of search, the search party said to me that several documents and evidences have been found from various places which prove tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch statement Except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee has undisclosed income. The AO herself has made addition for the balancing amount merely on confession statement. Further, in confession statement the person wise and year wise bifurcation was not given by the assessee. Further, the confession statement is not in relation to incriminating documents. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. The department has no evidence/documents which prove that surrender in statement by assessee is correct, therefore the same cannot be relied upon. Further Reliance is placed on the following decisions:- (i) Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala & Another (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is upon to the assessee to show that it is incorrect. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB (1) read with Section 158B (b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence should not be treated as conclusive evidence against the maker of the statement…" Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh) "…it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed in manner incorporating principles of natural justice and quasi judicial bodies should generally read in the provision relevant section a requirement of giving a reasonable opportunity of being heard before an order is made which will have adverse civil consequences for parties effected. Rajesh Jain Vs. DCIT 100 TTJ 929 (ITAT, Delhi 'A' Bench) Search and seizure - Block assessment - Retraction of statement - Addition of ₹ 25 lacs made solely on the basis of confessional statement of assessee that he earned the said amount in the last ten years was not justified - Confessional statement should be corroborated with some material to show that assessment made is just and fair. KRISHNA TERINE (P) LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, AHMEDABAD 'D' BENCH 56 DTR, ITAT 395 Held that it appears that both the additions have been made by the AO because the assessee in the statement under s. 132(4) of the IT Act made surrender of the above amounts but later on did not disclose the same in the return of income filed for the block period. However, on consideration of the orders of the authorities below, we are of the view that no evidence or materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y complained of a high handed behaviour of raiding parties particularly while recording a statement. It was pointed out that overenthusiastic aiding parties would often coerce a 'surrender'. As a result all follow up investigations are distracted and generally brought to a stand still. Since the surrender is not backed by adequate evidence, the tax evader invariably retracts from the statement of surrender by which time it is too late for the Department to resume investigations. Similarly, where adequate evidence is indeed found, a surrender is not necessary to establish tax evasion. Therefore, the Task Force recommends that the CBDT must issue immediate instructions to the effect that no raiding party should obtain any surrender whatsoever. Where a tax payable desires to voluntarily make a disclosure, he should be advised to make so after the search. As a result, the taxpayer will not be able to allege coercion and successfully distract investigations. All cases where surrender is obtained during the course of the search in violation of the instructions of the CBDT, the leader of the raiding party should be subjected to 'vigilance enquiry. Further the task force also recommends th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter dated 18.12.2008 addressed to the assessing authority requested to provide the copy of statement in case the same were to be used against him. Till such time the copy of statement was not provided, assessee entertained a bonafide belief that in the absence of any documentary evidence or corroborative evidence having been found as a result of search, such statement would not be used against him. If such statements were to be used, the department was under legal obligation to have provided the copy thereof to the appellant. It is only on persistent efforts of the appellant, copies of statement were provided only on 13.3.2009. The appellant after understanding the legal implication of such statement made a valid retraction as the surrender was not supported by any corroborative evidence. The affidavit filed in this regard is laid on assessee's paper book pages 64 to 68. This affidavit has carefully been perused. After the affidavit was filed before the assessing authority, he remained silent on the face of it and carried no enquiry thereon to verify the correctness thereof. The assessee was also not cross examined on the point of retraction nor was required to produce any docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect."(emphasis supplied) The reliance placed by the assessee on the judgment by Hon'ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. (supra) and Hon'ble Rajasthan High Court in the case of Ashok Kumar Soni (supra) are well placed as the assessee has successfully demonstrated that the admission made during the course of search is not correct. The ingredient for retraction of statement made during the search, therefore, stand duly satisfied as the assessee is found to have made retraction within a reasonable time immediately after the copies of statement were provided to him. Furthermore, there being no material or evidence on record to show that appellant has carried any business outside the books for sale and purchase of items of pharmaceutical companies that could give rise to income to the extent of ₹ 30,00,000/-, addition merely on the basis of such statement which stood validly retracted could not have been made. On similar basis and reasoning in the case of Suresh Medical Agency another assessee of the group who were also searched on the same day along with this appellant, vide our order dated 21.8.2013 in ITA No. 443/JP/2012 have found the retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid plot of land to third party Mrs. Nirmala Devi and, therefore, once the said plot of land was sold by the owner to third party and not to the assessee or his son, then the question of investment of ₹ 5,75,000/- which was to be paid at the time of sale deed does not arise. The AO has made the addition only on the basis of surrender made by the assessee during the course of survey though there was an agreement found during the survey action. As per the said agreement only ₹ 1,00,000/- was found to be paid by the son of the assessee as an advance for purchase of the plot of land and, therefore, to that extent the addition can be made if assessee has not surrendered the amount. Since the assessee has already surrendered the amount of ₹ 1,00,000/-, therefore no further addition can be made on account of investment in the land when the said agreement found during the course of survey was not given effect by the parties and the plot of land was sold by the owner to some third party vide sale deed dated 18th May, 2012. Hence, when the facts were brought on record by the assessee regarding the sale of plot of land to the third party, then the statement recorded under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalal Jat Constructions Pvt. Ltd. Versus ACIT, Central Circle-2, Ajmer In this case a search was conducted at the business/residential premises of Shri Banna Lal Jat, the Director of appellant company - M/s. Bannalal Jat Constructions Private Limited, on 10.10.2014, in which he was also operating his proprietary concern in the name of M/s. Bannalal Jat Contractor. During the search proceedings at residential premises of Shri Bannalal Jat, a cash worth of ₹ 1,21,43,210/- was found and inventorised as per Annexure CF of Panchnama dated 11.10.2014. He, in his statement, recorded under Section 132(4) of the Income Tax Act, 1961 (for short 'the IT Act') during the course of search and even subsequent statement recorded under Section 131 of the IT Act, admitted the same as undisclosed income of the appellant-company. However, subsequently while filing the return of income for the relevant assessment year, the appellant-company did not offer the said undisclosed income to tax. Therefore, in this case, surrender was backed by cash found during the search. But in the case of the assessee, the surrender is not relatable to any material. Further, the surrender was obtained under d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of statement given by appellant. 8.3 It is a settled law that statement alone cannot be treated as incriminating material for the purposes of making addition for assessment completed u/s 153A / 143(3). It has been held in many judgments that mere statement u/s 132(4) or u/s 131 is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or the statement must be made relatable to material by subsequent inquiry/investigations. Hon'ble High Court of Rajasthan in the case of Mantri Share Brokers PL (96 taxmann.com 279) have held as under: Section 698 of the Income-tax Act, 1961 - Undisclosed investments (Burden of proof) Whether where except statement of director of assessee-company offering additional income during survey in his premises, there was no other material either in form of cash, bullion, jewellery or document or in any other form to conclude that statement made was supported by some documentary evidence, said sum could not be added in hands of assessee as undisclosed investments - Held, yes [Paras 10-11] [In favour of assessee] Para 10 & 11 of the order is as under : 10. Before proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. 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...." Though the above principle is laid down in relation to assessment of block period u/s 158 BC of the Act, the same was also applied in respect of assessment u/s 153A by Delhi High Court in case of Best Infrastructure (84 Taxmann.com 287) when it was held thus: 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-section (4) is obviously based on the well-established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement.." Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made in the hands of the assessee merely on the basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above mentioned case relied on its earlier order in the case of Kailashben Manharlal Chokshi [2008] 174 Taxman 466 (Guj.),wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 72 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party recorded the statement of Shri Nitin Kedia u/s 132(4) at Kedia House on 19-11-2016 at 10 AM which was temporarily suspended at 11 AM of 19-11-2016. The statement was resumed on 20-11-2016 at 9 AM starting from question no. 4. This was again suspended for rest after recording the statement up to question no 14. The statement was again resumed and Shri Nitin Kedia in question no 15 confirmed the surrender made by Shri Nirmal Kedia. Post search statement recorded on 02.12.2016, Shri Nirmal Kedia partner of the assessee confirmed his earlier statement but here also no year wise or person wise bifurcation of undisclosed income could be given or worked out by the ADIT. Here the assessee has specifically stated that he has surrendered ₹ 20 Crore for peace and self satisfaction. 36. However, the assessee retracted the from the surrender by not disclosing the said income in his return filed on 31-10-2017. The assessee could obtain the copy of statement on 19-01-2018 (Friday). Subsequent to that the assessee and his brother Shri Nitin Kedia filed affidavit on 22-01-2018. They said that they admitted the undisclosed income under mental tension & fear. 37. Thereafter, Statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ytri Nagar-1, Main Sanganer Flyover, Tonk Road, Jaipur on 19.11.2016. During the course of survey, the survey party recorded the statement of partner of assessee u/s 131 of Income Tax Act on 19.11.2016. In answer to question No. 18 and 19 of statement the partner of assessee accepted the undisclosed payment of ₹ 5 Crore made to Shri Jainsingh Yadav for purchases of agriculture land. Regarding making the reliance by the AO on the statement of the assessee u/s 131 recorded at the time of survey u/s 133A at Sanganer Office and subsequently confirmed in statement u/s 132(4) at Kedia House, wherein he admitted the undisclosed income of ₹ 5 crores. In this regard, we found that the partners of the assessee made repeated request to ADIT, AO and other senior authorities to provide the copy of statements. As soon as the copy of search statements was received to assessee he filed an affidavit before the AO retracting from surrender made in his statements given during search. Thereafter during the course of assessment proceedings, the AO recorded the statement of the partner of assessee u/s 131 of Income Tax Act, 1961 on 23.02.2018 wherein in reply to Q. No. 4 of the statement as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement) whereas the statement at Kedia House shows that Shri Nitin Kedia was present at Kedia House during 9.00 AM on 20/11/2016 to conclusion of statement. How it can be possible to record the statement of Shri Nitin Kedia at Kedia House on 20/11/2016. 46. The ld AR has also pointed out the other discrepancies in the statement. He has invited our attention to the statement recorded at shop at Ganesh Nagar, during the course of survey u/s 133A of the Act, statement of Shri Nitin Kedia was recorded at the premise Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura Jaipur. There are following discrepancies in the recording of statement by the survey team. c.i) Commencement of the statement and after recording 7 questions the postponing of the statement at same time As per the copy of the statement provided by the department, the department commenced the recording of the statement of Shri Nitin Kedia on 19/11/2016 at 2.00 PM. (APB page 47-49). After recording of answer to question number 1 to 7 in three pages, the statement were postponed for physical verification. The time marked for postponing the statement is 2.00 PM (APB page 49) i.e. commencement of the statement and postponing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2016. There was no break in statement for dinner and he was without dinner in night. He was sick and tired. So, a break in statement was given at 11.50 PM on 19-11-2016. In Sanganer Office there was no bed or other basic facilities. The assessee was kept awaken whole night and he was not allowed to go at home. On 20-11-2016 at early morning his statement was resumed at 6.30 AM. The assessee was kept tired, sleepless and without food, this was nothing but torture by the survey team to get the desired surrender and sign on the prewritten statements. This was the reason of surrender of ₹ 5 crores in just in first effective question of the statement on 20/11/2016 without any corroborative material or incriminating documents. Then the assessee was taken to Kedia House. The search party started to recorded the statement of the assessee at 1.00 PM. Here in very first question the assessee had to confirmed the surrender of ₹ 5 Crore made at Sanganer office and has to overall surrender ₹ 20 Crore without any corroborative material or incriminating documents. The assessee made surrender under inhumanity conditions created by search/ survey party. The search/survey party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessee group, the copy of the statements were provided on 19.01.2018 (Friday) and thereafter on very first working day i.e. 22.01.2018 the Shri Nirmal Kumar Kedia Partner of assessee filed the affidavit (Copy at APB Page 81-86) before the AO to retract the statements. The relevant para of the affidavit is as under: - "a) Regarding my statements recorded on 19.11.2016 and 20.11.2016 at my residence at Kedia House, Benar Road, Ganesh Nagar, Near Nadi Ka Phatak, Jhotwara, Jaipur i) In reply of the Q. No. 4 of the statement, I confirmed to my reply given in respect to Q. No. 18 and 19 of my statement recorded at our Sanganer Office wherein I accepted that the undisclosed payment of ₹ 5 Crore was made to Shri Jaisingh Yadav for purchases of agriculture land. Actually no such undisclosed payment was made by me or our business concerns or my family members and whatever payment was made against purchases of land from this person is duly recorded in regular books of accounts. During the course of survey it was said to me by the survey party that some documents has been found from the possession of Shri Jaisingh Yadav which proves that the undisclosed payment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of partner of assessee which was given for the reasons mentioned hereinabove and retracted subsequently there is no evidence with the department to prove that the assessee made this much undisclosed payment. The department also carried out search on seller of land Shri Jai Singh Yadav and no evidence was also found during the search over Shri Jai Singh Yadav regarding undisclosed payment of ₹ 5,00,00,000/-. 51. From the record, we also found that the admission of undisclosed payment against the purchase of the land is not supported even by the market rate of land in the area. Further it is relevant to mention here that the land so purchased from Jai Singh Yadav is situated in Village Badaram, Patwar Halka Sirsi, Teh. Jaipur. The land is 400 mts. inside from road and about 2 Km far from Jaipur Express highway flyover on Kalwar Road. The total area of land so purchased is 3 Bigha and 18 Biswa. The total cost of the land as per books of accounts is ₹ 3,31,85,000/- and if the alleged undisclosed payment of ₹ 5 Crore is added in this amount, the cost of the land becomes ₹ 8,31,85,000/- i.e. 2.13 crore per bigha which is impossible in this area. The compari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of statement, reliance was placed on the decision of Hon'ble Supreme Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala & Another (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is upon to the assessee to show that it is incorrect. Hon'ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.) has held that admission in statement during search is not conclusive proof of fact and can always be explained. Hon'ble Rajasthan High Court in the case of Mantri Share Brokers PL (96 taxmann.com 279) have held as under: Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Burden of proof) - Whether where except statement of director of assessee-company offering additional income during survey in his premises, there was no other material either in form of cash, bullion, jewellery or document or in any other form to conclude that statement made was supported by some documentary evidence, said sum could not be added in hands of assessee as undisclosed investments - Held, yes [Paras 10-11] [In favour of assessee] Para 10 & 11 of the order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. 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…." Though the above principle is laid down in relation to assessment of block period u/s 158 BC of the Act, the same was also applied in respect of assessment u/s 153A by Delhi High Court in case of Best Infrastructure (84 Taxmann.com 287) when it was held thus: 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Harjeev Aggarwal (supra). Some of the mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement.." Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made in the hands of the assessee merely on the basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above-mentioned case relied on its earlier order in the case of Kailashben Manharlal Chokshi [2008] 174 Taxman 466 (Guj.), wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns have been made by the AO because the assessee in the statement under s. 132(4) of the IT Act made surrender of the above amounts but later on did not disclose the same in the return of income filed for the block period. However, on consideration of the orders of the authorities below, we are of the view that no evidence or material is discussed to show any incriminating material recovered during the course of search to make the above additions. The Tribunal in the first round of proceedings has already directed to examine the case on the basis of material seized, material available on record and books of account. In the absence of any specific findings as per the direction of the Tribunal dt. 31st May, 2005 and as per law for the block assessment noted above, before making the addition on the above issue the AO and the learned CIT(A) should have specified as to what material was found during the course of search to make the above additions. In the absence of any proper explanation and finding in the above grounds, we set aside the orders of the authorities below and restore these two grounds of appeal to the file of the AO with direction to re-decide both the grounds afresh on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result, the taxpayer will not be able to allege coercion and successfully distract investigations. All cases where surrender is obtained during the course of the search in violation of the instructions of the CBDT, the leader of the raiding party should be subjected to 'vigilance enquiry. Further the task force also recommends that statements recorded during the search should be video recorded. This will indeed add to the confidence of the taxpayer in the impartiality of the system.'' 2.38 The Finance Minister in the budget speech for the year 2003 stated that no confession shall be obtained during search and seizure operation. The instructions were followed by CBDT by issue of a circular on the lines desired by the Finance Minister. There can be an estoppel on the issue of the facts but there cannot be estoppel on the principle of law. It is not the case of the revenue that the assessee was not disclosing the amount received as a result of retirement from the firm. The assessee obtained the legal advice and was of the opinion that such revaluation is capital receipt which is not liable to tax. Hence, we feel that income cannot be added simply on the basis of surrender. The sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book pages 64 to 68. This affidavit has carefully been perused. After the affidavit was filed before the assessing authority, he remained silent on the face of it and carried no enquiry thereon to verify the correctness thereof. The assessee was also not cross examined on the point of retraction nor was required to produce any documentary evidence or any other evidence. Assessee was, therefore, entitled to assume that the income tax authorities were satisfied with the affidavit as sufficient on this point. The Hon'ble Allahabad High Court in the case of Sohan Lal Gupta vs. CIT (1958) 33 ITR 786 (All.), as also put to the parties during the course of argument, has made elaborate discussion on the evidentiary value of the affidavit. The relevant passage from the aforesaid judgment at page 791 of the report is reproduced as under :- " The most important points on which the Tribunal relied, is that mentioned at No. 2, viz., that, according to the Tribunal, the assessee had not satisfactorily established that the shares had to be sold as the purchaser of the Jaswant Sugar Mills was not willing to purchase that mill unless the shares in the Straw Board Mills Ltd. held by the fami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n merely on the basis of such statement which stood validly retracted could not have been made. On similar basis and reasoning in the case of Suresh Medical Agency another assessee of the group who were also searched on the same day along with this appellant, vide our order dated 21.8.2013 in ITA No. 443/JP/2012 have found the retraction made as valid and also deleted the addition. We, therefore, find no factual or legal justification in sustenance of addition by Ld. CIT (A) in this regard. As a result, the addition sustained by Ld. CIT (A) is deleted and ground no. 1 raised in appeal is allowed." Hon'ble ITAT Jaipur Bench in the case of Ashok Kumar Lakhyani vs DCIT ITA No 30/JP/2018 order dated 24/07/2018 held that "We have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. The assessee is engaged in the business of trading of Fertilizers and pesticides. A survey under section 133A of the I.T. Act was carried out at the business premises of the assessee on 19th December, 2012. During the course of survey action, an agreement to sale dated 1st March, 2012 executed between Shri Harish Kumar, the son of the assessee and one Shri Daya Kish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d agreement found during the course of survey was not given effect by the parties and the plot of land was sold by the owner to some third party vide sale deed dated 18th May, 2012. Hence, when the facts were brought on record by the assessee regarding the sale of plot of land to the third party, then the statement recorded under section 133A which is contrary to the actual facts, cannot be a basis of addition. Accordingly, in the facts and circumstances of the case, the addition made by the AO is not sustainable in law and the same is deleted." The following decisions of Hon'ble Rajasthan High Court is distinguishable on facts. Therefore the addition cannot be sustained on the basis of the following decisions:- a) 2018 (11) TMI 953 - Rajasthan High Court Pr. Commissioner Of Income Tax (Central), Jaipur Versus Shri Roshan Lal Sancheti, Prateek-13 In this case in the search, on the basis of seven loose papers were seized on which the assessee had written various amounts showing undisclosed investment in construction, purchase and advances the assessee agreed to surrender amount of ₹ 2,28,44,545/-. Thereafter, the statement of the assessee on these seven papers was recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also operating his proprietary concern in the name of M/s. Bannalal Jat Contractor. During the search proceedings at residential premises of Shri Bannalal Jat, a cash worth of ₹ 1,21,43,210/- was found and inventorised as per Annexure CF of Panchnama dated 11.10.2014. He, in his statement, recorded under Section 132(4) of the Income Tax Act, 1961 (for short 'the IT Act') during the course of search and even subsequent statement recorded under Section 131 of the IT Act, admitted the same as undisclosed income of the appellant-company. However, subsequently while filing the return of income for the relevant assessment year, the appellant-company did not offer the said undisclosed income to tax. Therefore, in this case, surrender was backed by cash found during the search. But in the case of the assessee, the surrender is not relatable to any material. In the case of assessee no any agreement, receipt, material was found to corroborate the surrender made in survey. Neither such material was found from the possession of assessee group nor from the possession of Shri Jai Singh Yadav group where the search was taken place on the same day. Further, the surrender was obtained un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- against alleged unaccounted sales. The ld CIT(A) confirmed the addition of ₹ 32,09,120/- by applying the GP rate of 31% of total amount of ₹ 1,03,52,000/- noted on Page No. 18 & 19 of AS-9 by holding that the same as undisclosed business transaction of the assessee. Thus, the ld CIT(A) confirmed the addition of ₹ 32,09,120/- and deleted the addition of ₹ 71,42,880/-. 56. Against the above order of the ld. CIT(A), both the assessee and the revenue are in appeals before us. We found that the ld. CIT(A) has deleted the addition of ₹ 1,03,52,000/- but upheld addition by estimating G.P. @ 31%. The precise observation of the ld. CIT(A) at para 22.4 to 22.5 are as under: "22.4 However wrt Ground No. 4 which relates to addition of ₹ 1,03,52,000/- as unexplained income being the on money received by the appellant, I am not in agreement with the contention of Ld. A/R that it is a dumb document for the g reasons (a) That this documents was found from the premises of appellant where in a word 'total collection' is written in the top. (b) That the appellant in the statement recorded u/s 131 of the Act on 23.2.2018 has confirmed that details on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts noted on this paper cannot be correlated with the entries in books of accounts of assessee group. Further the AO as well as CIT (A) presumed that the entire receipts on these papers are unaccounted receipt. This presumption is completely perverse. In this paper there is no reference of cash receipt or unaccounted receipts. The sales team of the assessee is having entire responsibility of making the collection of entire sales proceeds of sales made by entire assessee group. The collection can be through cheque as well as cash. Therefore, whatever collection made by the sales team of the assessee group on the date when this noting was made would be part of the figure of collection scrabbled by the sales team on this paper. Therefore, there is no reason to presume that collection noted by the sales team on this paper will only be part of unaccounted receipt only. It is further admitted fact that this noting would be made by the sales team to report the collection made by them on a particular date to the management, therefore the entire collection made by them either though cheque or cash would be mentioned by them on this paper and there is no reason to presume the same is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (2008) 299 ITR 179 (P & H) also held that suspicion, howsoever strong cannot take the place of legal proof. If the department considers it as income of the assessee, it is burden on the department to prove the figures appearing on the paper found in the search represents undisclosed income of the assessee. This burden is not discharged and therefore, on the basis of this paper no addition can be made. 58. The ld AR has further argued that page No 18 & 19 of Exhibit 9 of Annexure A are not speaking documents. The documents are bereft of necessary details about the year of transaction, ownership, nature of transaction, narration etc. to infer that transaction on these documents are those which have escaped income. Reliance is placed on the following decisions:- i) Commissioner of Income Tax Vs. S.M. Aggarwal High Court of Delhi (2007) 293 ITR 43 (Del) In this case the department seized documents "Annexure A-28 p. 15, - gives the details of certain handwritten monetary transactions which shows that the assessee had given a loan of ₹ 22.5 lacs on interest and earned interest income of ₹ 3.55 lacs on it. The Tribunal hold this document as dumb document. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond a reasonable doubt. As noted earlier in the first page, total of all the five figures is 57.50 but addition of ₹ 48 lakhs was made and not of ₹ 57.50 lakhs. Why figures mentioned at second place after some gap was not taken into consideration. How 48 have been made as ₹ 48 lakhs and that too undisclosed income of the assessee is absolutely not clear from the assessment order. It was stated that ₹ 9.50 lakhs is recorded to be received through Cheque and therefore above amount was not added. It is correct that before 9.50 the word, "Ch" is written but there was nothing on record to show this amount was any way different from other figures/amounts. No attempt whatsoever was made to link any of the entry in the seized book with any transaction carried by the assessee in his capacity as Director or by his wife or M/s I.G. Builders and Promoters Ltd. to show the amount in figure as assessable undisclosed income. No proper use of seized material was made to establish that entries in the seized document relates to undisclosed income of ₹ 48 lakhs. Seized document has rightly been held to be a dump-document. It was for the Revenue to put lif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SSIONER OF INCOME TAX vs. SATYAPAL WASSAN ITAT, JABALPUR BENCH (2008) 5 DTR (Jab)(Trib) 202 Held that the document was a dumb document containing no signature, no date, no unit like rupee, ton, kilogram, centimeter etc., full names of the parties were also not given, not showing whether it was position of assets or liabilities, receipts or payments, sale or purchase or advances made or loans received-AO did not carry out any enquiry whatsoever to find out the nature and period of transactions-The assessee had explained by way of affidavit that the document belonged to his brother 'D'-There was also an affidavit filed by widow of 'D' according to which the document belonged to her husband-Even if the affidavits are ignored as fresh evidence wrongly admitted by CIT(A), what is left behind is the dumb document bereft of any details without there being any enquiry by the AO to correlate the same with other documents seized, regular books of accounts, records kept by outside agencies or statements of concerned parties-The four essential components of s. 4, viz., the taxable event, the person chargeable, the assessment year in which charge is leviable and the total income are absent in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted. viii) JAGDAMBA RICE MILLS vs. ASSISTANT COMMISSIONER OF INCOME TAX ITAT, CHANDIGARH BENCH (2000) 67 TTJ (CHD) 838 Held that document seized during search not being clear as to whether items were payments or receipts or some other calculations, no addition could be made on the basis of such a dumb documents. ix) ASHWANI KUMAR vs. INCOME TAX OFFICER * ITAT, DELHI 'D' BENCH (1992) 42 TTJ (DEL) 644 Held that :- In order to attract the presumption under s. 132(4A), the first requirement is that the document should be found in possession or control of the assessee. In this case the Revenue has been saying that the document was found inside the shop of the assessee. However, there is nothing in the orders of the authorities below to show that the slip was in possession and control of the assessee. Everything physically present inside the shop of a person may not be in that person's control and possession. For proving possession it is necessary to show that the person concerned had the intentio possessendi. In this case nothing of that sort is pointed out by the authorities below. Then, for presuming that the contents of the books of account or document are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to AO that the diary belonged to his employee, who was working in the office located in the said service station and the record of transactions in the said diary was in the nature of worksheets only where the transactions were completed and subsequently were taken to the books of account. The AO has also confirmed that cheques were received and were found recorded in the books of account of the assessee or that of sister-concern, as was the case. In PKC-60, where these transactions have appeared there is no indication that this account relates to the assessee or to the sister-concern. The employee was recording transactions relating to both of them. For the financial year 2000-01, there are four parties, against which name, rate, amount, payment received and balance are duly recorded. And for the subsequent year, apart from these four, one KSI appeared. On perusal of these transactions one has to agree with the Authorised Representative that these were working sheets maintained by the employee and those transactions maturing, have been duly recorded in the books of account. The CIT(A) has taken a clear-cut view that the AO did not verify these so-called balances with the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orated with other evidences. There is no infirmity in the order of CIT(A) in deleting the additions xi) CHANDER MOHAN MEHTA vs. ASSISTANT COMMISSIONER OF INCOME TAX (INVESTIGATION) ITAT, PUNE BENCH (1999) 65 TTJ (Pune) 327 : 71 ITD 245 Loose paper indicating money-lending activities showing the amount borrowed and amount lent-These loose papers do not indicate the name of assessee-Therefore, the loose papers by themselves lead to no conclusion and have no evidentiary value-However, it has evidentiary value because of statement of assessee under s. 131 admitting money-lending activities and explaining the various amount noted in coded figures-This statement has to be considered and accepted as a whole if the AO wants to use it in evidence-Assessee has produced confirmations from all creditors-No material brought on record to prove that these confirmations were false- Same cannot be rejected-If the statement of the assessee is to be rejected in toto no addition can be made since in that case those papers would be dumb papers-If the statement is accepted in toto, then the borrowings mentioned in the papers have to be accepted as genuine-In either case no addition can be made. xi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey was conducted at the business premises of the assessee under s. 133A, but the same was converted into search after examining the materials found during the survey. So the survey was merged into search operation Shri Iqbal Ali Khan is the secretary and Shri Bhanwari Lal Vijay is working as president of the said society. There were two more persons, namely, Shri Hemchand Joshi and Shri Kamlesh Sharma who are the employees. They made the statement to the search party. In their statements they stated that the sale price of the plots were shown in the books of account at 1/3rd of the actual sale proceeds and remaining 2/3rd were not accounted for. But, later on these statements were rebutted by them on 25th Feb., 2002. On the basis of the statement and seized material, the AO opined that assessee was engaged in purchasing of agricultural land, developing the same and selling them to different persons under the garb of society. The profit was earned by these two persons, namely, Shri Iqbal Ali Khan, secretary and Shri Bhanwari Lal Vijay, president, hereinafter known as Shri Khan and Shri Vijay. In the absence of proper books of account, the AO estimated the concealed income @ 10% of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imating G.P. rate @ 30.6% on the alleged transaction. The ld CIT(A) estimated the profit @31% on this amount which is at very higher side. No any comparable case was given to support 31%. The weighted NP rate declared by the assessee during the last two years as under:- Asstt Year Turnover NP 2017-18 240142167 15509747 2016-17 7885664 -2055154 Total 248027831 13454593 Weighted Rate 5.42% In view of the above and considering the totality of facts and circumstances of the case, we modify the order of the ld. CIT(A) and direct for applying profit rate of 6% in place of profit estimated by the ld. CIT(A) at 31%. We direct accordingly. 60. Under Ground No 3, 4, 5, 6 and 7 the department has challenged the deletion of the following additions by ld CIT(A) by holding that these documents are dumb documents Ground No Seized Material APB Page No Addition deleted by CIT(A) Discussion of page of AO order G-3 Exh-A-5/page 1 Page 67 2,81,506 Pg 7 & 8 (Para 6.3) G-4 AS-1/P 26 70 6,99,000 Pg 11 (Para 8.3) G-5 AS-6 /P 28, 29 AS-8 /P 7 71, 72 & 73 8,03,001 Pg 12 & 13 (Para 9.3) G-6 Exh 1/10-12 74,75 & 76 42,07,083 Pg 14 (Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person: Provided that where by virtue of any provision of this act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under Sub-section (1), income- tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act From a reading of above section, we find following components which enter into the concept of taxation. The first is the taxable event which attracts the levy, the second is the person on whom the levy is imposed and who is obliged to pay the tax. The third is the assessment year in which charge of income-tax is levied. The fourth is the total income of the previous year and the fifth is the rate or rates at which tax is to be imposed. The rates are prescribed in the annual Finance Act. Therefore, this component has no value in determining total income on the basis of seized document. Our view in this regard is supported by the decision of Hon'ble Supreme Court in Govind Saran Ganga Saran v. CST wherein it was held that for the purpose of charging to tax, there should be four compone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h have escaped assessments. Accordingly Ground No. 3, 5, 6, & 7 are allowed. Consequently the AO is directed to delete the addition of ₹ 2,81,506/-, ₹ 6,99,000/-, ₹ 8,03,001/-, ₹ 42,07,083/- & ₹ 33,14,580/-." 62. We have considered the rival contentions and carefully gone through the orders of the authorities below. From the record we found that the documents so relied by the A.O. as stated above are not speaking documents as the name of the assessee group or its schemes is not mentioned on this paper. The noting made on the impounded page made by some broker of the assessee group because in scribbling of plot No. S-39 the "brokerage" is also written and if the noting on this paper would be pertaining to transaction relating to the assessee than there is no chance of receiving any amount against brokerage from the party. This proves that this paper pertaining someone else who were acting as an agent in these transactions and the cash payment was received by him at his own which was not received/receivable to the assessee group. However, if the same is presumed to be belonging to the scheme of the assessee naming "Kediaz Kingdome" than whatever payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e noting/hints regarding such business transaction but the same is missing in the seized document, therefore the noting on this paper is nothing but only rough noting from which no conclusion can be drawn and no addition can be made. 66. With regard to addition of ₹ 8,03,001/- in respect of AS-6, on examination of documents, we observe that no name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee or regarding to sales made by the assessee. No any plot No. or name of the scheme has been written over this paper by which it can be conclude that these papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. 67. In this regard, it is relevant to observe that during the course of day to day workings, several clients and prospective buyers visit the office of the assessee group and the discussion is held by them with the sale team of the assessee group regarding purchases of plots. During such discussion rough notings were made by the sales team. Had this paper would be having any relation with the actual business transaction of the assessee gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under: - Plot No. and size as per books of account of assessee/Map approved by JDA Name of Scheme Name of Buyer Sales amount Mode of payment received 40 (164.21 sq. mts) Kediaz Kingdome Anjana Sharma 6,88,550 Cheque 127 (115.52 sq. mts) Kediaz Kingdome Sagar Mal 5,25,000 Cheque 122 (135.35 sq. mts) Kediaz Kingdome Munni lal Gupta 5,15,000 Cheque 123 Kediaz Kingdome Plot No. does not exists in the scheme The ledger a/c of above parties in books of accounts of assessee is at PB page 213 to 215. The cheque payment noted in the seized paper has no nexus with the cheque amount recorded by assessee in its books of account. Further the area of the plots written in the seized documents is also different from actual area of the plot. The plot no. 123 is not existing on the scheme of the assessee. These all facts shows that the noting made on this paper is not in relation of plots sold by the assessee.Further during the course of assessment proceedings the assessee submitted the affidavit of buyers of plot No. 40 and 122 wherein they confirmed the payments made to assessee against purchases of these plots and the same is similar to receipts reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such documents are true. v) Shardha Construction Vs ACIT 76 ITD 85 ITAT Pune bench has held that no addition can be made in the hands of assessee firm for the papers found at the residence of partner. vi) Jayantilal Patel Vs. ACIT and others/ Dr Balbir Singh Vs ACIT & others (Rajasthan High Court) 233 ITR 588. / 244 ITR 500 (Departmental appeal in DB)/ Hon'ble Rajasthan High Court observed that addition on the basis of noting on a piece of paper cannot be sustained when it is not in assessee's own hand-writing. 71. As per the ld AR this seized paper shows cheque amount ₹ 21,95,068/- & ₹ 61560/-which has no nexus with the books of account/bank statement of the assessee. Had these transactions pertain to the assessee than the amount of cheque noted on these papers would have been found recorded in the books of account or bank statement of the assessee. Factually, the amount noted against cheque amount is neither reflected in books of account of the assessee or bank statement this clearly establish beyond doubt that the alleged sales were not affected by the assessee. 72. Our attention was also invited to the affidavits of various buyers of the plots filed, some of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n support of that will also found which proves that this work was actually did not carried out. In view of above submission this is to submit that no addition can be made on the basis of these paper and the addition made by AO is wrong and the CIT (A) rightly deleted the addition.
74. In view of the above facts and circumstances, we do not find any infirmity in the order of the ld. CIT(A) in deleting the impugned additions.
75. In assessee's appeal, the assessee is aggrieved by the action of the ld. CIT(A) for estimating G.P. at 31% with respect to transaction of sale of ₹ 1,03,52,000/- as noted on Page No. 18 & 19 of AS-9 seized from 1, Gayatri Nagar, Main Tonk Road, Sanganer Flyover, Jaipur by holding that the same as undisclosed business transaction of the assessee.
76. In this regard, we observe that we had already discussed the issue at para 52 to 57 hereinabove. Following the same reasoning, we direct the A.O. to apply profit rate of 6.5% on the alleged transaction.
77. In the result, appeals of the revenue are dismissed whereas appeals of the assessee are allowed in part.
Order pronounced in the open court on 03rd June, 2019. X X X X Extracts X X X X X X X X Extracts X X X X
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