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TMI Blog2022 (5) TMI 664X X X X Extracts X X X X X X X X Extracts X X X X ..... s also expressed the view that the said investigations might not have brought out anything against the assessee. Accordingly, the Tribunal has held that the impugned seized documents lack credence and could not be relied upon. Since the allegation of collection of capitation fee from PG students itself could not be proved, the addition made on substantive basis in the hands of Venkatesha Education Society were deleted. Accordingly, the above said conclusions reached by the Tribunal would equally apply to the case of the assessee herein also. Hence the protective addition made in the hands of assessee would automatically fall to the ground. Accordingly, we do not find any reason to interfere with the decision taken by Ld CIT(A) on this issue in AY 2009-10 to 2014-15. CIT(A) in confirming addition of Rs.25 crores made by the AO on the basis of statement/letter given by the assessee - The initial declaration of Rs.20 crores was obtained in the statement taken u/s 132(4) of the Act and we have found that the same is not supported by any incriminating material. Subsequently, the amount was increased to Rs.25 crores, again without any basis. We have also noticed that the surrender w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of students into MBBS and PG Courses. Even though the documents were related to a particular year, yet the AO concluded that the above said society would have been collecting capitation fee from all the students in all the years under consideration. Accordingly, on the basis of those documents, the AO estimated the capitation fee collected and extrapolated the same to all students in all the years. 4. The facts relating to the first addition are that, during the course of search, a document no. A/MJM/02, Pg. 2,3,4,5,6 was found from the residence of the assessee herein. It contained the name and address of students seeking admission into various PG Courses for the academic year 2013-14. The AO has scanned copy of the same in the assessment order. Against each of the student, some numbers were found noted in pen. For example, one number 20 is written against a student. Adjacent to this number 20, it is written as 10C and 10 A/c. The amount so mentioned against each of the students ranged from 10 to 1.50 Cr. The source of this document was also traced to the iMac Desktop computer seized from the office of medical college. The AO interpreted C as cash and A/c as cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er additional income of Rs.20.00 crores with the request that he may be exonerated from penal and prosecution proceedings. Subsequently, vide letter dated 20-11- 2013 written to DDIT (Inv), the assessee agreed to disclose additional amount of Rs.5 crores over and above the amount of Rs.20 crores, referred above. However, the assessee did not offer above said amount of Rs.25 crores separately in the return of income filed subsequently for AY 2014-15. When questioned, the assessee submitted that he has offered capital gains arising on sale of a property located at Sholingur, Chennai, which was sold for a consideration of Rs.20 crores, i.e., it was submitted that the offer made by him in the sworn statement was related to the capital gains arising on sale of above said property. The AO, however, did not accept the explanations of the assessee. He expressed the view that the additional income of Rs.25 crores surrendered by the assessee should mean income which was not already accounted for. He also expressed the view that the assessee has agreed to offer the above said amount in view of the incriminating document related to collection of capitation fee not accounted for. Accordingly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheets and the results of post search enquiry. For the detailed reasons given therein, the protective addition of Rs.20,70,00,000/- is hereby deleted. 7. With regard to the addition of Rs.25.00 crores relating to income surrendered by the assessee in the sworn statement, the Ld CIT(A) agreed with the view taken by the AO. Accordingly, he confirmed the addition made in AY 2014-15 with the following observations:- PARA 31. I have considered the stand of the Appellant in the present appeal on the said issue and the approach of the Assessing Officer while I am convinced on the stand taken by the AO in the assessment order in making the separate addition for the offer made by the Appellant at the time of search in delinking such offer relating to a property transaction. It is seen that the return came to be filed later but the offer of additional income was immediately after the search, i.e., on 20-12-2013. This offer looks as having been consciously made by the appellant. In this view of the matter, the addition on account of voluntary offer of Additional income of Rs.25 crores offered in terms of sec. 132(4) statement is deemed as separate and distinguishable from the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e students and the course to which they are admitted for the academic year 2013-14 in PG courses. This is a printed document found from the residence of the Secretary Shri M J Mohan. Against each of the student, some numbers were found noted in pen. For example, one number 20 is written against a student. Adjacent to this number 20, it is written as 10C and 10 A/c. The amount so mentioned against each of the students ranged from 10 to 1.50 Cr. The source of this document was traced to the iMac Desktop computer seized from the office of Medical College. We noticed earlier that the AO has interpreted C as cash and A/c as cheque payments. The AO took the view that amounts mentioned therein in C represent capitation fees. The AO estimated average amount of capitation fee collected at Rs.45.00 lakhs per student and accordingly applied the same to all the students in all the years under consideration. 19.1 We noticed earlier that the Secretary has stated that the noting made in pen are not either in his hand writing or in the handwriting of any of employees. We notice that the Ld CIT(A) has extracted following question and answers from the Sworn statement given by the Secret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also his statement that the same was not his handwriting or any of the staffs' handwriting. The AO could have made this addition on the basis of presumption prescribed u/s 132(4A) and sec.292C with regard to the noting found in the seized document. In our view, the presumption prescribed in the above provisions of the Act by legal fiction has been effectively rebutted by the assessee on the basis of actual amount received from the students and also entries made in the books of account. The entries may be presumed to be correct, if the cheque amounts mentioned in the seized document tallied with the actual receipts. It is not the case here, which the assessing officer is also aware of. Accordingly, we are of the view that the noting made in the above said list lacks credence. 19.3 We may derive support for our view from one more fact submitted before us, i.e., it was submitted that the investigation wing had issued summons to some or all the students in the list and also recorded the statements from them. However, the result of the said enquiry was not conveyed to the assessee in spite of specific request made by the assessee in this regard. The AO has also not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, we do not find any reason to interfere with the decision taken by Ld CIT(A) on this issue in AY 2009-10 to 2014-15. 12. We shall now take up the appeal filed by the assessee for AY 2014-15, wherein the assessee is assailing the decision of Ld CIT(A) in confirming the addition of Rs.25.00 crores. 13. The Ld A.R submitted that the assessee had made disclosure of Rs.20.00 crores initially in the sworn statement given on 21-10- 2013. Subsequently, it was increased to Rs.25.00 crores, vide letter dated 20-11-2013. He submitted that the assessing officer has wrongly understood that the above said disclosure was related to capitation fee collected by the assessee. He submitted that the assessee has, nowhere, stated that the above said disclosure was on account of collection of capitation fee. In fact, the assessee has denied collection of capitation fee and further he has expressed ignorance about the noting made in Pen on the sheet. However, it is the AO who has considered the noting as related to collection of capitation fee. Accordingly, he submitted that there is no correlation of the disclosure made in the sworn statement and the alleged collection of capitation fee. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 19-09-2013, which means, the assessee had enough time to apply his mind. Further, vide his letter dated 20-11-2013, the assessee has also enhanced the additional income to Rs.25.00 crores, which could not have been done without proper application of mind. Accordingly, the Ld D.R submitted that the assessee has consciously admitted additional income after the appraisal of all facts surrounding his case. Since the assessee had offered additional income, the revenue did not carry out further investigation. The Ld D.R placed his reliance on the following case laws in support of his contentions:- (a) T.Lakhamshi Ladha Co vs. CIT (2016)(386 ITR 245)(Bom) (b) Raj Hans Towers (P) Ltd vs. CIT (2015)(373 ITR 9)(Delhi) (c) Pr. CIT vs. Avinash Kumar Setia (2017)(395 ITR 235)(Delhi) Accordingly he submitted that the Ld CIT(A) was justified in confirming the addition of Rs.25 crores made by the AO. 15. The Ld A.R, in the rejoinder, submitted that the impugned addition of Rs.25.00 crores is not based on any material and further, it was not shown that the same is represented by any undisclosed income, if any, found during the course of search in the form of any asset or otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly maintained for the relevant assessment year. Accordingly I offer an additional income of Rs. 5 crores (Rupees five crores) in addition to my original offer of additional income of Rs.20 crores (Rupees Twenty crores) totalling to Rs.25 crores (Rupees Twenty five crores) to complete post search enquiries and without prejudice shall act in accordance with the provisions of law. A careful perusal of the both the replies referred above would show that the replies given by the assessee are couched with many caveats. We shall dissect the Reply given on 21-10-2013 to question no.19. It contains following sentences. (a) I hereby disclose Rs.20 crores as additional income (b) either in my hands or in the hands of any other person(s) (c) on the appraisal of factual position existing on this day (d) based on the issues discussed till date. A perusal of various other questions posed to the assessee in the sworn statement would show that they are related to jewellery, family settlement, document containing list of PG students, report given to MCI, loan given to Smt. Dharini Mohan. None of the questions was related to any undisclosed income, if any, earned by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to declare a taxable income of Rs. 25 crores in my hand. Before the AO, the assessee has filed a letter dated 27-02-2016, wherein he has referred to the Statement given on 21-10-2013, letter dated 20-11-2013 and the statement given on 20-12-2013. In this letter, referring to the statement given on 20.12.2013, the assessee has stated that the sale of property at Chennai was admitted at Rs.20 crores in the return of income filed for the AY 2014-15. At the end, the assessee has stated as under:- Right from the end of the search, I was under confusion with regard to disclosure of income. The change in the quantum of income was necessitated by facts obtained/emerged later. As on date my offer of additional income may please be taken as Rs.20 crores as originally offered. 18. On a combined reading of above said replies, we notice that the assessee has not identified any additional income, i.e., it does not appear to be surrender of income in a blanket manner, as presumed by the tax authorities. In our view, It appears that there was some kind of compulsion upon the assessee to make surrender of additional income. The confusion/uncertainty in the mind of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings were started from February, 2015 onwards. The assessment was completed on 29-02-2016, i.e., after about one year. It can be noticed that there was time span of more than one year available with the AO from the date of filing return and completion of assessment. The AO was well aware that the assessee has not offered the additional income (as understood by the AO) in the return of income filed. In fact, the AO has also raised a specific query in this regard and the reply given by the assessee was extracted earlier. Subsequent enquiries made by the AO also did not bring out any undisclosed income, if any, belonging to the assessee. Under these set of facts, in our view, the question of estopping the revenue from carrying out further investigation does not arise in the present case. 21. In fact, the assessee has also explained the nature of surrender made by him before the assessing officer. If the AO was of the view that the additional income surrendered could not be related to capital gains , it was within the powers of the AO to probe the matter further. However, it is a fact that no incriminating material relating to alleged undisclosed income of the assessee was found d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in bills, which was also endorsed by another partner. Subsequently yet another partner sent a letter to the department seeking to withdraw/retract earlier statement in respect of surrender of Rs.10 lakhs. The senior partner T merely confirmed the same. The Hon ble High Court noticed that the income was surrendered in the context of signed black vouchers and loose papers found during the search. These loose papers were explained as record of payments made outside the books of accounts. So far as blank signed vouchers are concerned, it was stated that the figures are filled in later so as to enable inflating the expenses actually incurred. Under these set of facts, it was held by Hon ble Bombay High Court that the retraction is an afterthought. It can be noticed that, in this case, (i) the department has unearthed specific incriminating materials, which could not be disowned by the assessee. Hence the assessee had no other option, but to surrender additional income. (ii) the income so surrendered by partner T was endorsed by another partner at the time of making statement. (iii) the retraction was some other partner and it was merely confirmed by partner T . Under these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntary and sought to retract it. The reply, a copy of which has been placed on record, undoubtedly makes reference to some previous letter retracting the statement. Learned counsel urged that that letter was written on 21.12.2007. However, the actual reply to the show cause notice is silent as to the date. This itself casts doubt as to whether the retraction was in fact made or was claimed as an afterthought. 11. Furthermore, this Court is of the opinion that in the circumstances of the case both the CIT (A) and ITAT were correct in adding back the amount of Rs.63,33,260/- after adjusting the expenditure indicated. The explanation given by the assessee, in the course of the appellate proceedings, that the surrender was in respect of a certain portion of the receipt which had remained undisclosed or that some parts of it were supported by the books, is nowhere borne out as a matter of fact, in any of the contentions raised by it before the lower authorities. For these reasons, this Court is of the opinion that no substantial question of law arises. The appeal is accordingly dismissed. We notice that the Hon ble High Court has taken into consideration that (i) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g upon the decision in Khader Khan Son (supra), which as noted hereinbefore, is distinguishable on facts. The Court is not satisfied that that the retraction made by the assessee two years after the declaration was not bonafied. There was no satisfactory explanation for not including the said amount in the return of income filed by the assessee on 26th September, 2009. In view of the above facts, the decision rendered by ITAT was reversed. From these discussions, it can be noticed that the Hon ble Delhi High Court has rendered the decision on the basis of facts prevailing in that case. 24. The facts prevailing in the present case is totally different. The initial declaration of Rs.20 crores was obtained in the statement taken u/s 132(4) of the Act and we have found that the same is not supported by any incriminating material. Subsequently, the amount was increased to Rs.25 crores, again without any basis. We have also noticed that the surrender was not blanket surrender as presumed by the tax authorities. We also noticed that the surrender was couched with various caveats. In any case, the surrender of income without any basis is against the circular issued by CBDT (referred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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