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TMI Blog2021 (9) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Delhi dated 01.01.2019, wherein the appeal filed by the assessee against the order passed by the ld ACIT, Central Circle-30, New Delhi passed u/s 153A read with section 153C of the Income Tax Act, 1961 dated 23.03.2017 was dismissed. 4. The Assessee has raised the following grounds of appeal for Assessment Year 2012-13:- "1 On the facts and in the circumstances of the case Ld. CIT (A) has erred both on facts and in law in upholding the impugned order passed by the respondent illegally, violating the principles of natural justice, without fair and objective application of mind to the facts of the case and the law applicable and without being guided by the binding decisions of courts and tribunals and hence liable to be set aside and quashed and declared non est in law. 2 On the facts and circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, in sustaining the action of AO in completion of proceedings u/s 153(A), of the IT Act, solely on the basis Unverified/ unratified/unsubstantiated/unconfirmed statement of Shri Mul Chand Malu. 3 That on the facts and circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -on account of share capital and share premium, ignoring the facts and circumstances of the case. Rs. 42,69,336/- 4 That on the facts and circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, in sustaining the assessment by the Ld. AO and in making addition of Rs. 1,45,00,000/- despite the fact that the assessee has discharged the onus cast upon it under section 68 of the Income-tax Act. 5 That on the facts and circumstances of the case, the learned Ld. CIT (A) has erred, both on facts and in law, in sustaining the assessment by the Ld. AO and in making addition of Rs. 1,45,00,000/- despite the fact that no incriminating documents were found during the course of search. 6 On the facts and in the circumstances of the case Ld. CIT (A) has erred both on facts and in law, in sustaining the action of AO violating the principle of natural justice by not providing opportunity for cross- examination of persons, whose statements have been relied upon by the AO, in spite of specific request made by the appellant in assessment proceedings as well as before CIT(A). 7 That the impugned assessment order is arbitrary, illegal, bad in law and in violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... max Pvt. Ltd for issuing share capital at a premium. Total income was assessed at Rs. 1,29,52,434/-. The assessee unsuccessfully contested the above addition before the ld CIT(A) and therefore, has preferred this appeal before us. 9. The ld AR submitted that for assessment year 2012-13 the return of income was filed on 29.09.2012. 30.09.2013 was the last date of issue of any notice u/s 143(2) of the Act and search took place on 09.10.2014. On 28.09.2016 documents pertaining to the assessee were received by the ld AO and framed the assessment. Accordingly, he submitted that this is the date of search in the case of the assessee. For Assessment Year 2013-14 return of income was passed on 31.10.2013 and the last date of issuing of any notice on 143(2) of the Act on 30.09.2014. The search took place on 09.10.2014. He submitted that the assessee challenged the order of the ld AO before the ld CIT(A) stating that there is no incriminating documents found during the course of search and further orders for both the assessment years not pending as on the date of search the addition cannot be made. It was further stated that statement of 3rd party cannot be relied upon and such statement al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pired and therefore, when the witness himself has passed away no cross-examination could have been given. She submitted that the entries have been obtained by the assessee in wrongful manner from entities and persons and therefore, it is clear-cut case that the unaccounted cash has been converted into the alleged genuine income which received by the assessee and therefore, there is no reason that the orders of the lower authorities suffer from any defect. 12. We have carefully considered the rival contentions and perused the orders of the lower authorities. First, we come to the fact of assessment year 2012-13. In this case, the assessee filed original return of income declaring an income of Rs. 2,47,566/- on 29.09.2012 which was processed u/s 143(1) on 09.12.2013. The prescribed period for issuing the notice u/s 143(1) of the Act was expiring on 30.09.2013. On 09.10.2014 search took place in case of Kuber Group of cases where the assessee is one of the group companies. The search also took place at premises of Shri Mulchand Malu and Shri Vikash Malu where documents pertaining to the assessee were found. The satisfaction note was recorded by the ld AO of Mulchand Malu stating that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that no evidence is available with the revenue with respect to the addition of Rs. 1.32 crores made during the year except the statement of Mr Malu. Naturally, merely the statement of third party cannot be considered an incriminating material unless is certain corroborative material substantiating or confirming the statement of that party is also found. Neither in the assessment order nor in the remand proceedings the learned assessing officer has stated that there is anything else against the assessee available corroborative the statement of Mr Malu. Admittedly, the assessment year 2012-13 is a concluded assessment and the date of issue of the notice u/s 153A read with section 153C is clearly dated 28.09.2016. In view of this, we constrain to hold that there is no incriminating material found during the course of search based on which the return income for the respective year can be disturbed. Such is the mandate of the decision of the Hon'ble Supreme Court in case of Shinghad Technical Education Society 397 ITR 344 and also of the Hon'ble Delhi High Court in case of CIT Vs Kabul Chawla 380 ITR 573. The Hon'ble Delhi High Court in its recent decision in case of Anand Kum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly no assessment u/s 143(3) of the Act was took place. Accordingly, the time line of issuance of notice u/s 143(2) expired on 30.09.2014. Admittedly, search on Kuber Group of cases took place on 09.10.2014 and admittedly, the date of issuance of notice or recording of satisfaction of the ld AO in case of assessee is 28.12.2016 for that year the addition of Rs. 1,45,00,000/- was made in the hands of the assessee on the basis of statement of Mr. Mulchand Malu. The name of the company who was issued share is also the same. There is no other material available that the ld AO accepts the statement issues shares is also the same. There is no other material available with the ld AO except the statement of Shri Mulchand Malu. The fact of the case for Assessment Year 2013-14 is also identical. Therefore, for Assessment Year 2013-14 also the addition has been made on the basis of statement of Mulchand Malu only no other incriminating documents were either placed in the assessment order and no such evidences were further placed in the remand report before the ld CIT(A). In view of this, we do not find any reason to uphold the orders of the lower authorities. Even otherwise, in both the cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Private Limited, 397 ITR 82 has held that statement under section 132(4) in the itself does not constitute incriminating material. The relevant finding of the Hon'ble High Court is reproduced as under: "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 Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission. " 9.4 The relevant paragraph of the decision of the Hon'ble Hon'ble Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 22. In CIT v. Sri Ramdas Motor Transport Ltd.: (1999) 238 ITR 177 (AP), a Division Bench of Andhra Pradesh High Court, reading the provision of Section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. The relevant passage from the aforesaid judgment is quoted below: "A plain reading of sub-section (4) shows that the authorised officer during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 25. In Commissioner of Income Tax v. Naresh Kumar Aggarwal: (2014) 3699 ITR 171 (T & AP), a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court (decision reported in 52 taxmann.com 449), wherein the Hon'ble Court has held that where the assessee himself has stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on the basis of the admission without be scrutinizing documents. The relevant finding of the Hon'ble High Court is reproduced as under: "6. With regard to the undisclosed income of Rs. 52,73,920/- supported by printouts, in the sworn statement dated 29.8.2006, the assessee says that he had separate business income which was not included in his income tax returns. Therefore, admission of undisclosed income of Rs. 52,73,920/- is categoric and undisputed. The assessee in the sworn statement made on 10.10.2006, stated that outstanding loans to the tune of Rs. 25 Lakhs to 30 Lakhs are to be recovered with interest at the rate of 18%. This is a clear admission. This amount has also been calculated and added as undisclosed income. When there is a clear and categoric admission of the undisclosed income by the assessee himself, in our considered opinion,, there is no necessity to scrutinize the documents. The document can be of some relevance, if the undisclosed inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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