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TMI Blog2022 (5) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... it in arguments of the assessee that there is no direct or indirect evidence that in past year the assessee got engaged and using same practice of following under-reporting of income in past year and based on the mistake found the assessee has already offered the additional income while complying the notice u/s. 153A of the Act wherein the AO has not found any fault that the said additional income offered is incorrect or under-reported, even the ld DR has not pointed that the past year addition made is based on the evidence found in the course of search. Thus, looking to these facts the addition merely based on the statement and that too for all the years at same rate @ 25 % as suppressed receipt proposed by AO is unwarranted and the same is not survived based on the finding and reasoning placed before us. Even the contention of the ld. CIT(A) sustaining the balance addition from the income already disclosed by the assessee will also not survive as there is no contrary arguments placed by the Ld. DR but mainly repeated the contentions of the AO and Ld. CIT(A). Based on the above finding, addition confirmed by the CIT(A) is deleted for A. Y. 2011-2012 and thus the ground raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital account is in fact not so, and thus in the absence of any incriminating material in respect of this credit the addition of credit already reflected in the original return of income can not be made in proceeding-initiated u/s. 153A of the Act considering the various decision relied upon. This addition has no merit and is required to be deleted. Thus, the Ground no. 3 raised by the assessee in this appeal is allowed. Jewellery as unaccounted purchase chargeable to tax u/s. 69C - HELD THAT:- DR has not disputed the fact that of the AR of the assessee that these ornaments are not found in the course of search in the absence of the assets it self at the time of purchase there is no case rest with the department that the assessee has made purchase and invested the said amount in the jewellery as unaccounted purchase chargeable to tax u/s. 69C of the Act. Not only that there is no details mentioned about the terms of the payment received, receivable or details of payment and its mode to be executed on this paper heavily relied upon by the department. Thus, in absence of the impugned asset being not available at the time of search the contention of the department has no force and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,3 4 above. This ground becomes academic and needs not required to be adjudicated upon for technical purpose and the same is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments before the lower authorities relating thereto were adverted by them for this year and we have also extracted the same for the sake of convenience from the said folder. 5. The grounds of appeal of the assessee in ITA No 198/JPR/2021 for the A. Y. 2011-12 are as under : ''1. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 2,74,080/- [ 3,51,415 less 77,335 ] on account of alleged suppressed receipt only on the basis of statement recorded u/s. 132(4) dt. 12.11.2016 by not appreciating the fact that :- (i) except the statement u/s. 132(4), no evidence of suppression of alleged receipt of Rs. 3,51,415 is found. (ii) the evidence of suppressed receipt found of Rs. 77,335/- is offered by the assessee in the return filed u/s. 153A and also accepted and reduced from suppressed receipt assessee by the AO. (iii) Once the statement stood retracted and evidence of suppressed receipt of Rs. 77,335/- is only found, no addition on the basis of the statement can be made by AO without bringing evidence on record that suppressed receipt is more than that found in search.'' 6. To adjudicate on these appeals, material facts need to be noted for understan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f bill and receipt amount recorded in patient register. On these differences, statement of the assessee was recorded u/s 132(4). The relevant extract of statement of the assessee is reproduced in assessment order on page no. 4 to 11. 6.5 In this statement, the assessee in reply to Q. No.12 (PB 6-11) admitted that she has shown receipt less by 20% to 25% approx. in the daily patient register. However, in the OPD fees actual receipt is recorded. In respect of indoor patients, in doing procedures (Normal delivery, Caesarean, D&C, MTP etc.) services of other specialist doctors, i.e. anaesthetists, paediatrician, surgeon are required to be taken for which they were paid in cash. Many a times in emergency specialist is called by making higher payment. She has further stated this typical type of services is started in the year under search. But the search team understood this version as on an average in last 6-7 years in procedure work for indoor patients, receipt is shown less and income is shown less by 25% net. Accordingly, surrender of Rs.25,72,465/- for last 6 FYs which included Rs.3,51,415/- for the year under consideration was obtained in a statement recorded at the time of search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to outside doctors, unaccounted income from suppression of receipts has been considered at 25% though assessee has not produced any evidence that outside doctors were actually paid or not. Accordingly, the AO after relying on the decision of Hon'ble Rajasthan High Court in case of Roshan Lal Sancheti rejected the retraction letter filed by the assessee as afterthought and made addition of Rs.3,51,415/- on account of suppression of receipt for the year under consideration based on the statement recorded. 8 Aggrieved from the said order, assessee filed an appeal before the ld. CIT(A) where in the ld. CIT(A) after allowing the set off of unrecorded receipt of Rs. 77,335 offered for tax by the assessee confirmed the addition of Rs. 2,74,080/- ( 3,51,415 - 77,335) on account of alleged supressed receipt by giving the following findings : (i) The appellant has contended that the bills impounded relate to the FY 2016-17 whereas inference has been drawn as if it was the normal practice in all earlier years. However, the appellant in her statement recorded u/s 132(4) has categorically admitted that the practice of declaring less receipts in the bill book was followed since the las ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of the appellant but also documents found and seized during the course of search which were relied upon by the AO. 9. The ld. AR of the assessee during the course of hearing argued the various points based on the written submission filed, are reproduced herein below; 1. From the facts stated above it can be noted that the lower authorities have made the addition on account of alleged suppressed receipt only on the basis of the statement of assessee recorded u/s 132(4) in search. Except for this statement no other evidence is available with them to make the addition. The evidence of suppressed receipt of Rs.77,335/- only was found which was offered for taxation by the assessee. The said statement was retracted by filing a detailed letter dt. 14.03.2017 before DDIT (Inv.), Jaipur (PB 14-15) in post search proceedings explaining the reasons as to why the statement given by assessee on this issue was misinterpreted and incorrectly written. The lower authorities have not accepted this retraction letter only because it has been filed after 4 months of search. However, after filing this letter neither the search party in post search proceedings nor the AO in course of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 397 ITR 82/ 159 DTR 257 (Del.) (HC) Statements recorded u/s 132(4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross-examination is not provided, the statement has to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assessees. The onus is on the Revenue to ensure his presence. CIT VS. SKS Ispat and Power Ltd. [2017] 398 ITR 584 (Bom.) (HC) In this case the learned counsel for the Department contended that the Tribunal was not justified in deleting the addition made on the basis of unaccounted sundry creditors (purchases) and unexplained share of the money, thereby limiting the scope of assessment under section 153A of the Act only on the basis of incriminating material discovered in the search and thus, denying the Revenue to assess the undisclosed income on the basis of other evidence or post search enquiries or investigations made during subsequent assessment proceedings. Dismissing the appeals of the Department, it was held in this case that the scope of assessment u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year(s); however, the said material cannot be made the basis for working out the income for other years for which no incriminating documents or entries in any cash book or note books were found during the course of search." Thakkar PopatlalVelji Sales Ltd. Vs. ACIT (2013) ITA No. 4845/M/2010 (Mum.) (Trib.) In its order, the ITAT held that "Considering the above, we are of the opinion that it is a reasonably settled issue that no estimation can be made by the AO for which no incriminating material were discovered and no estimations were made based on the theories of extrapolation and multiplication. In the absence of any material of evidence found during the course of search to suggest that assessee was all along indulging in such unaccounted transactions, we are of the opinion that the decision of the CIT (A) to all the issues raised in all the three appeals does not call for any interference. Accordingly, grounds raised by the Revenue in all the three appeals are dismissed" CIT Vs. CJ Shah & Co. 117 Taxman 577 (Bom.) (HC) The facts of the case are that the seized material had indicated unaccounted sale for the period 3.9.96 to 4.12.96 i.e. for the thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search relevant to the aforesaid assessment years, in our considered opinion, the learned CIT(A) was justified in deleting the addition made for these years only on the basis of assumption and surmises. 3. The AO in making the addition on the basis of statement has observed that the statement of assessee who is a qualified professional given on 12.11.2016 after proper rest in presence of two independent witness is voluntary and not under any pressure. Further Ld. CIT(A) also held that there was no coercion, inducement or threat while recording the statement. In this connection it may be noted that statement of assessee was first recorded at 7:30 PM on 11.11.2016 which was deferred at 10.30 PM on same date. On 12.11.2016 statement of Yogesh Shukla, husband of assessee was recorded at 8.00 AM which continued till 11.15 AM. Thereafter assessee and her husband was taken to bank locker for operation and after that statement of assessee was again recorded on 12.11.2016 at 8.30 PM and of her husband at 8.45 PM on the same day which was concluded at midnight. Therefore, these statements cannot be said to be after proper rest. Further only because it was recorded in presence of two wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent made during search are often venerable on ground that person giving such statement remain under a great mental stress and strain. They also do not have the availability of relevant details, documents and books of accounts at the time of giving statement in the absence of which precise information as to utilization of such income and year of investment cannot be correctly furnished. Harshad L. Thakker Vs. ACIT (2005) 3 SOT 277 (Mum.) (Trib.) In the course of search/survey, every assessee is under mental pressure and factual errors may be committed. Hence simply on the basis of statement which is retracted later on, addition can't be made. 4. It is a settled law that though the admission is an extremely important piece of evidence, it cannot be said to be conclusive. An admission which stood retracted has to be weighed with reference to facts and circumstances of that case. This is also accepted by CBDT in Instruction No.286/2/2003 IT(Inv.) dt. 10.03.2003 where it was directed as under: Instances have come to the notice of the Board where assessees have claimed that they have been forced confess the undisclosed income during the course of the search & seizure and surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und for addition of income. Federal Bank Ltd. Vs. State of Kerala 124 CTR 355 (Ker.) (HC) While an admission made by an assessee is relevant, it is not conclusive. It is open to the assessee to explain or clarify under what circumstances it was made or to prove that what was stated did not reflect the true state of affairs. CIT VS. Ashok Kumar Soni 291 ITR 172 (Raj.) (HC) Admissions are relevant & strong piece of evidence that may be used against the person making such admission but they are not conclusive proof of the statement contained in the admission & can always be explained. Ashok Kumar Vs. ITO 201 CTR 178 (J&K) (HC) It is true that an admission is no doubt a relevant piece of evidence but it is never conclusive. It is open to the assessee to explain or clarify under what circumstances it was made or to prove that what was stated did not reflect true state of affairs. Shri Nirmal Kumar Kedia Vs. DCIT ITA Nos. 124 to 126/JP/2019 order dt. 03.06.2019 (Jaipur) (Trib.) "From the record we found that 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 made undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments containing any undisclosed income having been found during the search..." 126. In view of the above discussion vis a vis finding of the ld. CIT(A), which has not been controverted by the ld DR by bringing any positive material on record, we do not find any reason to interfere with the findings so recorded by the ld. CIT(A) for deleting the addition of 5,93,76,213/-made by the A.O. 127. In the result, appeals of the revenue are dismissed whereas the appeals of the assessee are allowed in part in terms indicated hereinabove. 5. The case laws relied by the Ld. CIT(A) are not applicable on facts. In the present case, no variation in the bill book for earlier period was found. The Ld. CIT(A) has given a finding that the contention of the appellant that large amount was given to these doctors as their fees which were not entered into books as this amount was not received by the hospital is also not found acceptable in absence of any cogent evidence filed by the appellant in this regard. On the same analogy, when no evidence of suppressed receipts as stated in the statement is found, the same in the absence of any cogent evidence cannot be accepted as sacrosanct. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o stated that the CBDT's instructions squarely covers as there are evidence found based upon which the disclosure is obtained. Based on this argument he has strongly relied upon the order of the lower authorities and supported his arguments on the contentions stated as above and recommended to confirm the finding of the lower authorities. 11. We have heard the rival contentions and perused the material available on record and relied upon judicial decisions. It is not disputed about the understanding or misunderstanding about the ratio of the fees paid to doctors @ 25 % of the receipt. The AR of the assessee vehemently argued that the evidence that has been found in the search is for the particular period of around two month and even the same has been explained in detailed as to why there is such difference in the receipt recorded in the patient register and the bill book found for the said period. The Ld. AR further argued that now looking to the many experts team of doctors are available and to avoid the complication in birth of child it is the patient who insist the presence of various expert doctors at the time maternity of mothers and this is being their (patient ) instance th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount for which the tax has been paid at higher rate in the year of the search by filing a separate declaration under PMGKY. The ld. AR thus, argued that considering this information, the grievance of the assessing officer covers the amount for which assessee has suffered the tax and therefore, he has prayed to give the relief to the assessee considering her statement being not considered in the right perspective and in the absence of any clear-cut finding or evidence by applying the same ratio for all the past years, the benefit of doubt rests with the assessee. The ld. AR also argued that while filling the return of income of each year and whatever mistake assessee has observed has already been taken care of, considering the evidence found at the time search The AO has not observed any single defect on that additional disclosure offered while filling the return u/s. 153A of the Act. Even the regular receipt that she has offered for all these years is on increasing trend. She is a senior citizen and practicing since long and her regular tax compliance in past cannot be brushed aside merely on a statement which has been placed along with the evidence on record. The statement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2014-2015 and ITA No. 203/JPR/21, for Assessment year 2016-2017.Hence, the decision taken in ITA No. 198/JPR/2021 shall apply mutatis mutandis in these appeals of the assessee. Thus, the appeals of the assessee for the Assessment Years 2012- 2013, 2014-2015 and 2016-2017 are also allowed. 13. Now we take up the appeal of the assessee in assessment year 2013- 2014 in ITA No. 200/JPR/21 where in the assessee has taken following grounds 1. The Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 2,85,206/- [ 3,87,921-1,02,715/- ] for alleged suppression of receipts only on the basis of statement recorded u/s. 132(4) dt. 12.11.2016 by not appreciating the fact that once the statement stood retracted and no evidence of suppressed receipt was found for the year, no addition on the basis of statement can be made by AO without bringing evidence on record that there is actually any suppressed receipt in the year under consideration. 2. The Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 27,500/- treating it as expenditure from undisclosed source ignoring that some is dully verifiable from the revised capital account filed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the appellant is not found acceptable and the addition of Rs. 27,500/- made by the AO is confirmed." 14.3 The ld. AR of the assessee has argued before us that the seized material is to be read together when the assessee has already disclosed additional income of Rs. 1,02,715/- for the year under consideration and the expenses incurred is covered that such investment no separate addition is required to be made in the case of the assessee as she is having the additional income for her disposal to meet such investment in the capital asset and prayed to consider this aspect which the AO and Ld. CIT(A) failed to consider that the assessee has already shown sufficient income and the investment made is duly explained and no separate addition is required looking to the following facts:- 1. The Ld. DR has relied on the findings of the lower authorities and also stated that there is no direct evidence that the assessee has in fact made investment from that income and in the absence of that evidence the addition made is required to be sustained. 2. There is no dispute that the additional income is not disclosed by the assessee in the year under consideration, as argued by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the thus the addition made to the extent of Rs. 27,500/- for purchase of AC is deleted. Thus the ground no 2 raised by the assessee in this appeal is allowed. 15.1 Apropos Ground No. 3 of the assessee, the AO observed that during the year, there is increase in the capital of assessee by Rs.75,000/-, source of which has neither been explained nor any evidence in this regard is produced. Accordingly, the AO made addition of Rs.75,000/- u/s 69A of the IT Act, 1961. 15.2 Before Ld. CIT(A), the assessee submitted that the source of capital of Rs.75,000/- is sale proceeds of plot of land at Bagru which was purchased in earlier years. Accordingly, the cost of land is debited in the capital account and sale proceeds of land are credited in the capital account. Thus, the source of capital introduced during the year is fully verifiable. 15.3 The Ld. CIT(A) held that assessee has not filed any cogent evidence in this regard to justify her claim of sale of land at Bagru neither during the course of assessment proceedings nor during the course of present appellate proceedings. In fact, the claim of the assessee that the cost of land at Bagru is debited in the capital account and sale pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l capital account. Further she wrongly held that assessee has made a fresh claim before her ignoring that there is no fresh claim but only an explanation about the credit in the capital account which was never asked by the AO in course of assessment proceedings. Her further observation that cost of the land as stated by the assessee as debited in the capital account is not found recorded is by not correctly appreciating the explanation of assessee in as much as the assessee only stated that in earlier years when the land was acquired it was debited in the capital account and not in the year under consideration.In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. 15.5 The ld. DR has relied upon the order of the lower authorities and stated that there is no explanation of the assessee about this credit reflected in her capital account. 15.6 We have heard the rival contentions and perused the materials available on record. During the course of hearing, the ld. AR of the assessee has drawn our attention to the revised capital account and original capital account wherein the credit of Rs. 75,000 is appearing in both the capital account. Thus, the findings of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in response to notice u/s 153A. 4. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.30,800/- on account of unexplained expenditure in construction of house on the basis f Page 2 of Annexure AS 1 ignoring that the same is duly recorded in the revised capital account filed with return of income filed in response to notice u/s 153A. 5. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 2,27,741/- on account of unexplained expenditure by allowing set off against the supressed receipt confirmed during the year but not of previous year. 17. Apropos Ground no. 1, this ground raised by the assessee is similar to the ground that has been raised by the assessee in ITA No. 198/JPR/2021 and finding of this ground is equally applies to this ground and hence, the decision taken in ITA No. 198/JPR/2021 shall apply mutatis mutandis in these appeals of the assessee for ground no 1 and thus, the Ground No. 1 raised by the assessee in ITA No. 203/JPR/21 for assessment year 2016-2017 is allowed. 18. Apropos ground No.2, the AO observed that at Page 19 of Annexure AS-3 (reproduced at page no. 16 of the assessment order), papers relating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The conclusion of the lower authorities is thus, purely based on suspicion and surmises. It is a settled law that suspicion howsoever may be strong could not take place of legal proof. Therefore, in the absence of any document suggesting purchase of jewellery as per this slip or any payment there against, addition on the basis of this paper is not justified. In view of above submission, the addition confirmed by Ld. CIT(A) be directed to be deleted. 18.3 The ld. DR submitted that the slip is found very safely wherein the date, mobile number weight and items purchased is clearly mentioned and therefore the ld. DR has relied upon the order of lower authorities and vehemently argued that these items were purchased by her from her unaccounted sources and therefore the same should be sustained. 18.4 We have heard the rival contentions and perused the material available on record. The DR has not disputed the fact that of the AR of the assessee that these ornaments are not found in the course of search in the absence of the assets it self at the time of purchase there is no case rest with the department that the assessee has made purchase and invested the said amount in the jewellery as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth for Rs.80,000/- and Rs.49,000/- ignoring that the actual cost of purchase of fridge for which payment is made is only Rs.80,000/-. Thus, the addition of Rs.49,000/- is unwarranted because the 80,000/- includes that 49,000/- invoice value. So far as source of payment of Rs.80,000/- plus freight of Rs.500/- as noted on the paper is concerned, same is duly reflected in the capital account of assessee (PB page 42). Thus, the source of payment is also verifiable from the revised capital account prepared. In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. 19.3 The ld. DR has vehemently argued that the findings of the AO and ld. CIT(A) are both based on the business practice followed for not showing the correct value of the assets purchased not only that both the amount separately shown in these paper and therefore he relied upon the findings of the lower authorities and prayed to confirm the addition at Rs. 1,29,000/-. 19.4 We have heard the rival contentions and perused the material available on record. Looking to the bills and receipt shown and attached to assessee's paper book at page 21-22 ( which is page 16 & 17 of the seized annexure) it is clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credited on 15.04.2010 and thereafter Rs.98,900/- was credited on 01.10.2010 and that the last balance available in that account on 30.10.2010 was Rs. Nil as observed in the appellate proceedings for the AY 2011-12. Therefore, the contention of the appellant before the AO that the amount has been paid out of the housing loan is not correct. Further the contention of the appellant that this payment is duly verified from the capital account and therefore, source of payment is explained is not found acceptable as on perusal of the capital account, no such amount is discernible. Accordingly, he confirmed the addition of Rs.30,800/- made by the AO. 20.2 During the course of hearing, the Ld. AR of the assessee stated that page 2 of Annexure AS-1 indicate that assessee made payment of Rs.30,800/- on 01.05.2015 to Ratna Constructions in full and final settlement of construction work of basement flooring of Plot No.52/181, VT Road, Mansarovar, Jaipur. This payment is duly verifiable from the capital account of assessee (PB 42). Thus, the source of payment is explained. The Ld. CIT(A) has wrongly held that this amount is not reflected in the capital account of assessee. 20.3 On the other h ..... 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