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TMI Blog2021 (5) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... il Appeal No. 9488 & 9489/2019 dated 17 December, 2019, hold that such a delay; supported by cogent reasons, deserves to be condoned so as to make way for the cause of substantial justice. We accordingly hold that assessee's impugned delay of 3 days is neither intentional nor deliberate but due to the circumstances beyond its control. The same stands condoned. Case is now taken up for adjudication on merits. 2. The assessee has raised the following grounds in his appeal: "1. On the facts and the circumstances of the case, the appellate order passed by the Ld. CIT(A) on 04-09-2019 is erroneous to the extent the order is prejudicial to the interest of the appellant. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has grossly erred in upholding the invocation of provisions of sec 153A of the LT. Act by the Assessing Officer, without there being any incriminating material found during the course of search at the premises. 3. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in upholding the assessment order which was passed by the AO ul s 153A of the Act., without obtaining the prior approval of the competent authority JCIT I Additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not adjudicating the grounds on addition of Rs. 2,39,00,000 was based on the bank statements which is not an incriminating material for making addition u/s 68 of the Act in the search assessment proceedings u/ s 153A of the Act. 14. The appellant craves leave for addition/ revision/ deletion/ rescinding of any ground of appeal either before or at the time of hearing of the appeal." 2.1 The revenue has raised the following Cross Objections in its appeal: "1. The order of the Ld cIT(A) is erroneous in law and on facts of the case. 2. The Ld. CIT(A) erred in deleting the addition of Rs. 2,39,OO,OOO/- made towards unexplained cash deposits on the ground that the additional income of Rs. 26,OO,OO,OOO/- offered to tax is more than the cash deposits, ignoring the fact that the assessee did not furnish the details of the additional income. 3. The Ld. CIT(A) erred in deleting the addition of Rs. 2,39,00,OOO/- by giving credit for the additional income of Rs. 26,00,000/- when the assessee had filed an additional ground seeking to withdraw the admission of additional income. 4. Any other cross objection that may be filed at the time of hearing." 3. Brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, the assessee had deposited an amount of Rs. 2,39,00,000/- in his Axis Bank Account No. 02710100446525 during the demonetization period form 09/11/2016 to 31/12/2016. Further, the AO observed that during the course of search and seizure operation, assessee had submitted that he offered income of Rs. 4,70,28,830/- for the AY 2012-13 and paid tax of Rs. 2.10 crores for the same and submitted that the balance cash of Rs. 2.60 crore was stated to have been held as cash on hand since 2013. The details of cash deposits during the demonetization period is as under: Particulars Amount in Rs. 15/11/2016 30,00,000 16/11/2016 30,00,000 17/11/2016 30,00,000 18/11/2016 30,00,000 19/11/2016 1,19,00,000 Total 2,39,00,000 3.4 The AO observed from the cash book submitted by the assessee that for AY 2015-16, there was a cash balance of Rs. 5,29,36,571/- as on March, 2015 whereas in the return of income filed by the assessee cash on hand was shown of Rs. 1,53,795/-. The AO therefore was not satisfied and noted that there was a rule of inconsistency and never supplemented by any supporting evidence and mismatching of few entries between cash book and bank statement. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeks withdrawal of declaration made. The appellant himself has filed Return of Income after retracting the declaration made ujs.132(4) of I.T Act by way of affidavit. The appellant now raised the ground for accepting "Revised Computation of Income' allegedly filed during the course of assessment proceedings. The appellant has not adduced any reasons for 'Revising the Computation'. The Return of Income was filed way after the Search was concluded and the appellant has verified his records as mentioned in the affidavit. In view of the above, the contentions of the appellant are without any acceptable reasons. The conduct of the appellant has been 'inconsistent' throughout. As the appellant has not come out with any reason for filing alleged 'Revised Computation', the grounds raised by the appellant are not acceptable and the same are rejected." 5. Aggrieved by the order of CIT(A) the assessee is in appeal before us against the action of the CIT(A) in confirming the admission of additional income of Rs. 26 crores rejecting the additional ground of the assessee seeking to withdraw the declaration of the said income in the return of income filed in response ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose hands the additional is admitted. However, in the ROI filed in response to notice u/s 153A for AY 2017-18, the assessee had admitted the same as income from other sources in the individual ROI. During the course of assessment proceedings assessee was asked to furnish the nature and purpose of additional income admitted. However, assessee did not file any information in this regard. In absence of any such details forthcoming from the assessee, no benefit can be given to the assessee of the above disclosed income in the return u/s 153A against any further addition being made as per the subsequent paras. It is very clear that the AO himself has written in the order that declaration made has not mentioned anything about assessment year, assessee name and head of income declared. In those circumstances, in accordance with the CBDT circular in F.No. 286/2/2003-IT(INV.II) Dated 10.03.2003 and F.No. 286/98/2013-IT (Inv.!l) dated 18th December, 2014, no addition is warranted. Further, the AO only on the basis that, the assessee has admitted in ROI, made addition of Rs. 26 crores while finalizing the assessment which is erroneous. The admission made by assessee is not a conclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal income to be taxed In this regard, it is submitted that only real income should be brought to tax. Once the income has not accrued to the assessee, no tax can be charged on the notional income. In this regard, reliance is placed on * Hon'ble Supreme Court of India in case of Lok Housing Construction Ltd in [2016] 70 taxmann.com 2 (SC) "Where assessee-company filed revised return claiming that income declared in original return in respect of sale of land/FSI stood withdrawn due to cancellation of sale agreements and High Court by impugned order held that no hypothetical income of assessee in respect of said sale could have been brought to tax, SLP filed was to be granted" * Hon'ble Hyderabad ITAT in case of BS Limited in ITA No. 2187/Hyd/2017 "18.2 By considering the facts on record, we notice that this addition of Rs. 60 crores by AO is not real income or additional income. Assessee withdrew the additional income declared by it during search proceedings. Since assessee has increased the turnover in order to declare the additional income and the same was withdrawn subsequently. Assessee should have modified the turnover and filed the return of income, but, asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27.04.2018. Subsequently, assessee has retracted the admissions of addition income of Rs. 26 crores on 10.04.2018 by way of affidavit. The above facts clearly brings out the fact that even after search proceedings, assessee has only admitted an amount of Rs. 31,62,080 and has not disclosed an amount of Rs. 26 crores. We would like to further submit that, if any confession of income made during the search and seizure operation under the influence of officers, without any corroborative and credible evidence and later withdrawn by the assessee in his return of income filed then such confession made is not of any use. Without placing any reliance on the material evidence gathered during the search and only relying on the confession is not sufficient to make an addition as Undisclosed income. In this regard we place our reliance on the Instruction No. EN o. 286 2003-IT(IV.II) dated 10/03/2003, issued by the CBDT wherein it is clearly instructed that: "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts in the bank account of the assessee. It is to submit that the cash deposits of Rs. 2,39,00,000/- in the bank account are from the opening balances and additional income offered. The same fact can be evidenced from opening cash balance of Rs. 4,72,52,000 as on 01.04.2016. Enclosed in Page 34 of Paper book. In this regard, reliance is placed on Chennai IT AT ruling in case of N. Sasikala in 151 TAXMAN53 Further, it is humbly submitted that the revenue has raised this ground against the deletion of the addition of Rs. 2.39 crores. In support of the ground, the Revenuer has relied on the decision of Andhra Pradesh High Court in the case of Kermex Micro Systems (India) Limited v. DCIT [2014] 47 taxmann.com 375 (A.P.) which is totally distinguishable on facts. In that case the addition made was towards unexplained expenditure u/s 69C of the Act where as in the appellant's case, the addition of Rs. 2.39 crores had been made towards unexplained cash deposits u/s 68/69A of the Act. It is not out of place to submit here that the Assessing Officer himself is not clear as to the correct section under which the addition has been made, because he has mentioned both the sections of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 179. (Bom) 29. Lok Housing & Construction ltd., 27 taxmann.com 15 (Mumbai ITAT) 30. Lok Housing & Construction ltd., 70 taxmann.com 2 (SC) 31. Shoorji Vallabhdas & CO., [1962] 46 ITR 144 (SC) 32. Excel Industries Ltd., 358 ITR 295 33. Pruthvi Brokers & Shareholders, [2012] 23 Taxmann.com 23 34. Indian Express (Madurai) Pvt. Ltd., 140 ITR 705 (Mad.) 35. C. Radhakrishna Kumar, ITA No. 295/Hyd/2012 36. Industrial Roadways, [2008] 112 ITD 293 (Mum.) 37. N. Sasikala, 151 Taxman 42 (Chennai ITAT) 38. Lokesh Agarwal, ITA No. 1021/Hyd/2013 39. M. Prabhakar, ITA No. 1727/Hyd/2014. 7. The ld. DR, on the other hand, filed written submissions against the action of CIT(A) in deleting the addition of Rs. 2.39 crores made by the AO towards unexplained cash credits u/s 68 of the Act, which are as under: 2. It is humbly submitted that the AR argued at length on the point that the assessee was forced to file a return of income, pay the taxes and then only attachment was lifted. It is humbly submitted that the argument does not emanate from the grounds of appeal filed by the assessee before the Hon'ble ITAT or Ld. CIT(A). Therefore, these arguments being extrane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding above documents which were not filed before the AO. 7. It is humbly submitted that the AR relied on several decisions which are on the points of forcible admission and confession without any basis. It is humbly submitted that none of the decisions are applicable to the facts of the present case because it is a case of returned income, more so when returns of income were filed after a period of more than one year and more than two years after the search respectively. It is humbly submitted that the AO accepted the returns of income filed by the assessee and this is not a case where addition was made by the AO on any issue related to the returned income. 8. It is humbly submitted that the statement ujs 132(4) recorded from the assessee on 1.9.2017 contains ample evidence of the fact that the assessee indulged in large scale unaccounted transactions on his own and also by directing Sri Amit Bansal and Sri Jayant Kumar Dutta. Such unaccounted transactions are in the nature of bringing in huge cash into the firms and companies managed by the assessee and his associates. Following are some of the specific details: - At Question No.9, the assessee was asked to explain the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors and the entire transactions were done as per the directions of Ajaz Farooqi. Sri Ambit Bansal stated that wherever the assessee wanted him to sign, he has signed and only the assessee can explain the source of deposits. To this, the assessee could not give any satisfactory explanation. - At Question No.63, cash deposits of Rs. 2.861 Cr in the a/c of M/s Orbit Venture run by the assessee was shown. The assessee could not give any satisfactory explanation. - At Question No.65, it was pointed out that Sri Jayant Kumar Dutta admitted that he issued cheque from Mis Orbit Ventures at the directions of the assessee and all the transactions of M/s Orbit Ventures are maintained by the assessee. The assessee could not give any satisfactory explanation. - At Question No.69, cash deposit of Rs. 2.3567 Cr made during the period from 8.11.2016 to 31.12.2016 in Mis Ace Constructions was shown and the assessee could not give any satisfactory explanation. - At Question No.71, cash deposit of Rs. 2.2311 Cr in the Ale of Mis Royal Engineering during the period from 8.11.2016 to 31.12.2016 was shown to the assessee. The assessee could not give any satisfactory explanation except stating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income does not exist or the return of income is bad in law. The return of income is filed as per the statutory compliance mandated by the I.T. Act on the assessee. It is humbly submitted that there is no provision to reduce or delete the returned income unless there is an error in the return. In this case, there is no error. With regard to allegation of force, as seen from the above facts, there was no force by anyone as lifting of attachments is much prior to date of filing of return and also two returns of income were filed by the assessee out of which one return is filed one year after the search and the other return was after two years after the search. 11. As seen from above mounting evidence in the form of incriminating material, it is humbly submitted that the so called retraction letters (which were never filed before the AO) do not stand. Even at the first appeal stage, the issue was raised as additional ground. On one hand, the assessee prevented further investigation by Department by disclosing unaccounted income and filing return of income with payment of taxes. Now he wants to gain undue advantage by filing mere computation without any basis. It is submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement given u/s 132(4) by way of affidavit on 10/04/2018 citing the reason that on verification of records the declaration wound not be correct. In this regard, the observations of the CIT(A) are that the appellant filed Return of Income on 25.09.2018 admitting income of Rs. 26,31,52,080/- which included the income of Rs. 26,00,00,000/- admitted during the course of Search. Now, during the course of appellate proceedings, the appellant by way of Additional grounds filed on 11.08.2020 seeks withdrawal of declaration made. The appellant himself has filed Return of Income after retracting the declaration made ujs.132(4) of I.T Act by way of affidavit. The appellant now raised the ground for accepting "Revised Computation of Income' allegedly filed during the course of assessment proceedings. The appellant has not adduced any reasons for 'Revising the Computation'. He therefore held that the conduct of the appellant has been 'inconsistent' throughout. As the appellant has not come out with any reason for filing alleged 'Revised Computation', the grounds raised by the appellant are not acceptable and the same are rejected. 8.4 On the other hand, the submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,2003, issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements." 8.8 The High Court of Andhra Pradesh in case of Naresh Kumar Agarwal in 53 taxmann.com 306, held as under: "24 ..... 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 subsection (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. The finding of the Tribunal was based on the above well settled principle." 8.9 The Hon'ble Supreme Court of India in case of Pullangode Rubber Produce Co. Ltd in [1973] 91 ITR 18 (SC), wherein it has held that "An admission is an extremely important piece of evidence but it cannot be said that it is conclusive." 8.10 The High Court of Jharkhand in case of Shree Ganesh Trading Co. In [2013] 30 taxmann.com 170 (Jharkhand), wherein it has held that Statement on oath of an assessee under section 132(4) is a piece of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee at Rs. 31,62,080, copy of which is enclosed in Page 21-24 of Paper book. In support of this claim, the appellant relies on the following case laws: * High Court of Bombay in case of Pruthvi Brokers & Shareholders in 23 taxmann.com 23. * Decision of Madras High Court in the case of CIT v. Indian Express (Madurai) Pvt., [1983] 140 ITR 705 (Mad.) 8.15 Following the ratios laid down by the Hon'ble Courts, we are of the view that there is no basis for addition of Rs. 26 crores as there was no separate declaration in detail i.e., year-wise, head-wise, group concern-wise and quantities etc. during the course of search and seizure operation, which forms the basis for making addition. From the statements of the assessee as quoted above, there is no real income accrued in the hands of the assessee. Therefore, we set aside the order of the CIT(A) and allow the grounds raised by the assessee on this issue. 9. As regards ground No. 12 & 13 regarding Rs. 2,39,00,000/-, since the CIT(A) has deleted the addition made by the AO, these grounds become infructuous and dismissed as infructuous. And more so, in view of our foregoing detailed discussion as real income principle. 10. As regar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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