9911796707
TMI Blog2022 (2) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... icer on account of additional income surrendered by the assessee u/s 132(4) of the I.T. Act. Thus, ground no.1 raised by the Revenue for the assessment year 2014-15 is dismissed. Unexplained unsecured loans - A.O. made the additions on the ground that in absence of the bank statement and the income tax returns, the genuineness and the credit worthiness of the parties are not established - HELD THAT:- The assessee has furnished all details such as documents relating to identity, and creditworthiness of the lenders and genuineness of the transactions except in AY 2012-13. Thus, prima facie liability of the assessee to prove the genuineness of the transaction and to establish the identity and credit worthiness of the lender stands discharged. We also note that the Assessing Officer in the remand report has raised a doubt about the genuineness of the transaction which is mainly based on non availability of any written agreement and non repayment of the loan. However, we find that the assessee in reply had submitted that the contract can be either verbal or written and simply non availability of a written contract would not make the loan non-genuine and in private arrangement of lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case, ld. CIT(A) has erred in confirming the additions in the years when no proceedings were pending for assessment as on the date of search. 2. On the facts and in circumstances of the case, ld. CIT(A) has erred in confirming the addition of ₹ 3,50,000/- on account of unexplained unsecured loan. In IT(SS)A No.62/Ind/2020 for the assessment year 2013-14, the Revenue has raised the following grounds of appeal: 1. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of ₹ 2,85,50,000/- made by the Assessing Officer on account of unexplained unsecured loan. In IT(SS)A No.63/Ind/2020 for the assessment year 2014-15, the Revenue has raised the following grounds of appeal: 1. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of ₹ 2,75,00,000/- made by the Assessing Officer on account of additional income surrendered by the assessee u/s 132(4) of the I.T. Act. 2. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of ₹ 55,00,000/- made by the Assessing Officer on account of unexplained uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wani, one of the partners, was recorded on 02.02.2014 in which he surrendered the income of ₹ 1100 Lakh on account of cash receipt outside the books of account jointly in the case of the assessee and in case of the firms M/s. Om Construction M/s. Sainath Infrastructure P. Ltd. However, the same was not offered as income in the return filed . Thus, the statement of Shri Rajkumar Khilwani was recorded after the completion of the search and seizure at the premises of the assessee. However, while filing the returns, the assessee retracted from the said surrender and filed the returns on the basis of the accounts which are duly audited. In the course of the assessment proceedings, all the information as required by the AO from time to time was furnished. The assessee is in the business of real estate, builders and developers. The assessee during the relevant period was developing a residential complex in the name of Sapphire Green, Raipur. The expense incurred on the purchase of land and construction expenses on the project were the business expenses of the assessee. The assessee had maintained regular books of account in which all the expenses including the cost of constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. In the remand report, the ld. A.O. has accepted the factual position and only in 2 cases has raised doubts about the genuineness of the transaction because of non-repayment. Thus, learned Counsel for the assessee submitted that since the assessees have established the genuineness of the transactions from all the sides, the ld. CIT(A) was right in deleting the additions. 5. We have considered the rival submissions of both the parties and gone through the material available on the file. We find that in the course of the assessment proceedings all the information as required by the AO from time to time was furnished. The assessee is in the business of real estate, builders and developers. The assessee during the relevant period was developing a residential complex in the name of Sapphire Green, Raipur. The expense incurred on the purchase of land and construction expenses on the project were the business expenses of the assessee. The assessee had maintained regular books of account in which all the expenses including the cost of construction were duly recorded. These books were presented before the AO during the course of assessment proceedings and were duly checked by him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various High Courts and the decision of ITAT Indore Bench in the case of Ultimate Builders in ITA 134/IND/2019. The Ld. CIT(A) observed that the additions were made merely on the basis of the statement recorded without specific reference to any incriminating material found during the course of the search suggesting any earning of unaccounted income. Thus, we are of the view that no addition was warranted as the surrender was not made with reference to any loose paper seized during the course of search and was accordingly not in accordance with the provisions of section 132(4) as the Ld. AO failed to bring on record any specific instance of the assessee having earned any undisclosed income or having made any unexplained investment which could justify the addition under reference. The sole basis for making the addition is the statement made by one of the partners. The Ld. A.O. did not make any addition for the documents found. He simply made addition in various years in respect of unsecured loans u/s 68 which are already entered in the books. Further, we find that the question asked and the answer given in the statement recorded were both vague and general in nature and were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld. Counsel for the assessee are that a search was conducted at the premises of the Signature Group on 29.01.2014 and also at the premises of the assessee firm. In the case of the assessee the search commenced on 29.01.2014 at 08.45 A.M and was concluded at 08.00 AM on 02.02.2014. The proceedings continued for 4 days (96 hours) without any break. The statement of Mr. Raj Kumar Khilwani commenced on 01/02/2014 and was concluded on 02/02/2014. During the course of the statement, the assessee declared the additional income of ₹ 25,00,000/- for the A.Y. 2013-14 and ₹ 3 crores for the A.Y. 2014-15 (Pg.222-240 of PB at page 239). In the statement Q.27 was asked as during the course of search at Bhopal and Raipur many loose papers have been found for which no satisfactory answer and explanations have been given. In relation to these papers, an opportunity is given for explanation after consulting the other partners/ directors. The assessee gave a reply as I have seen the loose papers of Raipur office and consulted the partners/ directors. For these loose papers and for receipt of unaccounted money for sale of some units I offer a sum of ₹ 11 crores as undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of search which would indicate the acceptance of the assessee of earning of any unrecorded income. Rather the assessee has made a categorical unambiguous statement that the assessee has not earned any unrecorded income. Reference in this regards may be made to the statement of Mr. Rajkumar Khilwani recorded on 01-02/02.2014 Q-9: Do you take any payment from customers in cash other than the sale price mentioned in the registree and additional charges recovered. A-9: No. No additional payment is taken in cash in addition to above 23. It is further submitted that no addition can be made without finding any incriminating material merely on the basis of the declaration. In this connection the attention is drawn to the direct judgment of the Hon ble Indore Tribunal in the case of Shri Sudip Maheshwari in ITA 524/IND/2013 pronounced on 13/02/2019 and in the case of M/s Ultimate Builders in ITA 134/2019 pronounced on 09/08/2019. The Hon ble Tribunal has relied on the various judgments of the various High Courts specially the decision of the Hon. Jharkhand High Court in the case of Shri Ganesh Trading co. v/s. CIT (2013), 257 CTR 0159 and the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order as well as order of the first appellate authority there is no mention of any incriminating material having its nexus with the alleged income declared u/s 132(4) of the Act. The Ld. A.O has failed to prove on record any specific instance with support of incriminating material found during the course of search which could show that the assessee has earned the alleged undisclosed income. It is not in dispute that various other additions have been made by the Ld. A.O for the undisclosed investment u/s 69B, undisclosed investment in projects of land and unexplained unsecured loan as well as unexplained cash u/s 69A of the Act. However specifically with regard to the addition of ₹ 25,00,000/- and ₹ 3,00,00,000/- made for the Assessment Years 2013-14 and 2014-15 the same is purely based on the statement given on oath u/s 132(4) of the Act by the authorised representative on behalf of the assessee which was collectively surrendered as additional income on behalf of various group concerns. But without the support of any incriminating material on which the revenue authorities were able to lay their hands, this addition totalling to ₹ 3.25 crores (₹ 25,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Virasha Infrastructure 225 225 Total 450 10 M/s Sainath Colonizers Pvt. Ltd 110 110 11 Shri Anil Kered Khilwani 40 40 Total 150 30. From the above we find that in the case of M/s Ultimate Builders also additional income was surrendered in the statement given u/s 132(4) of the Act for which the addition was made by the Ld. A.O without corroborating it with any incriminating material and the addition was confirmed by Ld. CIT(A). When the matter travelled before this Tribunal the addition of ₹ 2.25 crores was deleted by this Tribunal observing as follows:- 9. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of addition was accepted to have been made only on the basis of the statement of Mr. Vipin Chouhan. No reference was made to any incriminating material having its bearing on the surrendered income. During the course of hearing before us Ld. Counsel for the assessee contended that during the course of search i.e. between 29.1.14 to 31.1.2014 no cash or unrecorded assets was found, no incriminating material was found and no income was offered to tax in the statement recorded u/s 132(4) of the Act of the person found to be in the possession and control of the books of premises. Relevant questions asked about the loose paper found were duly replied in the statement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon ble Tribunal in the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and that of the other concerns of Signature Group are different. 17. After the word the authorised officer it reads during the course of search or seizure, examination of both the person . During the course of search is a period during which the search is initiated and concluded. In the instant case the search was initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised officer for the assessee which is verifiable from the Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is after the conclusion of the search in the case of the assessee on 30.01.2014. 18. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee s premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows:- 6. It is the case of the assessee that during the course of search seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared ₹ 3 crores in personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he was partner in the Ganesh Trading Company, i.e. the present assessee-firm in his individual status and that he surrendered ₹ 20 lacs for the assessment year 1988-89 as income, on which tax would be paid. He further stated that other partners would agree to the same; otherwise it would be his personal liability. However, in the returns filed after search, the income of ₹ 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not declared by the assessee-firm. On being asked to explain the reason for not showing the surrendered amount in the returns, it was submitted by the assessee that declaration made by the partner was misconceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee s said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut answering the question about retrospective operation of the proviso to section 134(4), we are holding that the authorities below have committed error of law in drawing inference from the materials placed on record, i.e. admission of the assessee coupled with its retraction by the assessee. The Revenue may now proceed accordingly . 25. In the light of ratio laid down in various judgments referred above including one in the case of ACIT(1) Vs. Sudeep Maheshwari (supra) decided by us wherein also we, after referred various judgments of Hon'ble High Courts have held that additions cannot be sustained merely on the basis of statement given during the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 26. In the given facts and circumstances of the case and respectfully following the judgements and decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above in the light of ratio laid down in these decisions (supra), we find that a common statement of Shri Rajkumar Khilwani was recorded during the course of the search in which he offered the various undisclosed incomes in various concerns of Signature Group. On the basis of this statement recorded u/s 132(4), the ld. A.O. made the additions in the cases of Ultimate Builders, Signature Builders and Signature Infrastructure and these additions have been deleted by the Tribunal in the respective cases holding that without finding any incriminating material, no additions can be made merely on the declaration u/s 132(4). We find that on the basis of the same statement and with the same reasoning, the additions have been made by the Ld. A.O. in the present case and the same have been deleted by the ld. CIT(A) following the judgment of the Tribunal (supra). In view of above discussion, we hold that the ld. CIT(A) rightly deleted the addition of ₹ 2,75,00,000/- made by the Assessing Officer on account of additional income surrendered by the assessee u/s 132(4) of the I.T. Act. Thus, ground no.1 raised by the Revenue for the assessment year 2014-15 is dismissed. 7. So far as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.4.3 at pg.90 observed that the assessee furnished all details such as the documents relating to the identity, credit worthiness of the lender and genuineness of the transaction. Thus, prima facie, the liability of the assessee to prove the genuineness, identity and credit worthiness stands discharged. The ld. CIT(A) further observed as under: In the remand report A.O. has raised doubt about the genuineness of the transaction which is mainly based on the non availability of any written agreement and non repayment of the loan. The appellant in reply has submitted that the contract can be either verbal or written and simply non availability of the written contract will not make the loan non genuine. Further, in private arrangement of loan between known persons, no practice of entering into a loan agreement is followed. Thus, considering the fact that the lenders are regular tax assessees and have given the loan through account payee cheque and have confirmed the transaction the liability of the assessee of explaining the genuineness of the transaction stands discharged and the addition cannot be made on mere suspicion how so strong the reasons of suspicion may be. Also, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing all the requisite details in order to prove genuineness of the transaction and creditworthiness identity of the loan creditors for the assessment years 2013-14 2014-15 in question. The requisite details in order to prove genuineness of the transaction and creditworthiness identity of the loan creditors for the assessment years 2013-14 2014-15 is summarised as under: Unsecured loans for AY 2012-13 Paresh O. Kalla (₹ 3,50,000/) The appellant has filed only a copy of confirmation received from the lender, however, no details regarding creditworthiness of lender and genuineness of the transaction were filed. Unsecured loans for AY 2013-14 i, Deepak Shadija (₹ 5,00,000/): The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. The loan was repaid on 15.07.2017. Appellant has also paid interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. vii. Pooja Shadija (₹ 3,50,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. The loan was repaid on 13.06.2014. Appellant has also paid interest of ₹ 66,625/upto 31.03.2014. viii. Rajat Consumer Services Private Limited (₹ 1,48,50,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. ix. Rajesh Agrawal (₹ 5,00,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction and identity and creditworthiness of the investor is duly established. Appellant has also paid interest of₹ 26,3011- upto 31.03.2014. iv. Harsha Harirarnani (₹ 1,00,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. Appellant has also paid interest of ₹ 822/- upto 31.03.2014. v. HemIal ji Funka HUF (₹ 4,50,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the year under consideration. On perusal of the same it is evidently clear that the genuineness of the transaction and identity and creditworthiness of the investor is duly established. VI. Indra Devi (₹ 4,50,000/-):- The appellant has furnished copy of confirmation obtained from the lender along with his PAN card, copy of relevant entry in his bank statement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit worthiness of the lender stands discharged. We also note that the Assessing Officer in the remand report has raised a doubt about the genuineness of the transaction which is mainly based on non availability of any written agreement and non repayment of the loan. However, we find that the assessee in reply had submitted that the contract can be either verbal or written and simply non availability of a written contract would not make the loan non-genuine and in private arrangement of loan between known persons, no practice of entering into a loan agreement is followed. We find that that the lenders are regular tax assessees and have given the loan through account payee cheques and have confirmed the transaction then the liability of the assessee of explaining the genuineness of the transaction stands discharged and the addition cannot be made on mere suspicion. Further, the Assessing Officer also failed to appreciate the fact that the assessee had paid interest on unsecured loans and had repaid the loan which is unjustified in view of the decision of Hon'ble Gujarat High Court in the case of Ayachi Chandrashekhar Narsangji (2014) 42 Taxmann.com 251 (Guj HC) wherein it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness and the genuineness. Further, we find that in the remand report, the ld. A.O. accepted the factual position and only in 2 cases had raised doubts about the genuineness of the transaction because of non-repayment. Since the assessee had established the genuineness of the transaction from all the sides, we are of the view that the ld. CIT(A) was right in deleting the additions. Therefore, we do not find any infirmity in the order of the ld. CIT(A) for the assessment years 2013-14 2014-15 in respect of the present issue. Thus, ground no.1 of the appeal of the Revenue for the assessment year 2013-14 and ground no.2 of appeal of the Revenue for the assessment year 2014-15 are dismissed. However, for the assessment year 2012-13, we find that the ld. CIT(A) confirmed the addition of ₹ 3,50,000/- on account of unexplained unsecured loan received by the assessee from Mr. Paresh O. Kalla on the ground that the assessee merely filed a copy of confirmation received from the lender but no details regarding creditworthiness of lender and genuineness of the transaction were filed. Even before us, the assessee could not controvert the finding of the ld. CIT(A) by bringing any positiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 2014- 15. M/s. Sainath Builders and Colonisers, Bhopal In ITA No.268/Ind/2020 for the assessment year 2014-15, the Revenue has raised the following grounds of appeal: 1. On the facts and in circumstances of the case, ld. CIT(A) has erred in deleting the addition of ₹ 1,98,43,500/- made by the Assessing Officer on account of unexplained unsecured loan. 12. Both the parties submitted that the facts and the above issue are identical to the case of Om Builders (above), therefore, the arguments advanced in the case of Om Builders may be considered in the case of M/s. Sainath Builders and Colonisers, Bhopal too. We find that the facts and the above issue are identical to the case of Om Builders, therefore, our order passed in the case of Om Builders shall prevail in the case of M/s. Sainath Builders and Colonisers, Bhopal too. Thus, by following the same discussion and reasoning thereof recorded in the case of Om Builder in the foregoing paragraphs, we do not find any infirmity in the order of the ld. CIT(A) on the present issue under appeal of the Revenue. Accordingly, the present departmental appeal is dismissed for the assessment year 2014-15. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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