9911796707
TMI Blog2023 (6) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... and simultaneously survey has been conducted on the premises of various entities including that of Emkay Hindustan Infrastructure (present assessee). During the course of search, various books of accounts, documents, etc., have been seized evidencing contract receipt in cash sales by cheque/RTGS/DD by M/s. Emkay Hindustan Infrastructure from Mr. Ali Kutti, Managing Partner of Creek Developers and Builders for the contract works done for the Creek Galaxy project. The information contained therein pertain to M/s. Emkay Hindustann Infrastructure - present assessee and having a bearing on the determination of total income of the assessee. Seized material A/IK/07 pages 145 to 150 which was found and seized during the course of search u/s 132 of the Act as the premises of Ibrahim Khaleel at Dr.No.20-6-363/1, Mannar, 2nd Cross, Kandak, Mangalore contains the following details:- 2.2 This was confronted to Shri Ibrahim Khaleel who said that he has received an amount of Rs.4,93,05,000/- in cash up to 3.1.2017. This amount is received either from Mr. Ali Kutti or the amount received from the buyers of flat Mr. Ibrahim Khaleel on behalf of Ali Kutti and this amount said to be unaccounted in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. According to AO, the total expenditure up to 22/3/2016 as mentioned in the income & expenditure account, as per which 'expenses Rs. 1,24,11,897/- tallies and supported with proper supporting evidences. Further, most of the above expenses are liable for disallowance u/s. 40A(3) or 40(a)(ia). Even without considering any such aspects, the net profit ratio is about 28% of the total contract receipts. As per the accounted balance sheet, the assessee has got only very limited liabilities for the above period. If there exists any unaccounted liability, it is for the assessee to include all receipts and liabilities in the return filed u/s. 153C and to prove the same as when several opportunities were given. However, the assessee had not done this. The assessee has not even cared to furnish any reply to the statutory notices issued from time to time. 2.8 The ld. AO further observed that the statement has been recorded from Mr. Ibrahim Khaleel on-the total receipt and expenditure incurred up to 22/3/2016. He had stated in the sworn statement where in it was explained that Rs. 10,88,75,180/- was the total receipt till 22/3/2016 and Rs. 7,84,58,769/- is the total expenditure incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-IT(Inv.) dated March 23, 2003 and various case laws, in respect of retractions on the ground of coercion and threat in the course of Search and Survey operations, as well as the various case laws on the loose sheets found during the course of search, additions made deleted. 8. The 14rned CIT(A)-2, Panaji has failed to appreciate the alternative plea of the appellant that, the learned Assessing Officer ought to have estimated the profit at 2 percent of the alleged additions made, as undisclosed income of the Appellant. 9. The leaned CIT(A)-2, Panaji has erred in relying on various case laws, which are not at all applicable to the Appellant's case. 10. The Appellant craves leave to add, amend or alter any of the forgoing grounds. 11. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost." 2.11 The crux of above grounds of appeals are that the ld. CIT(A) erred in sustaining addition made by AO on the basis of entries in loose slips found during the course of search without any corroborative materials. The ld. A.R. submitted that an amount of Rs.4.93 crores has been added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing no incriminating document having been found or seized during search and the statement also being abstruse, the addition in question had no legs to stand on." 2.15 Further, she relied on the judgement of Karnataka High Court in the case of Shri Dinakar Suvarna Vs. DCIT 143 taxmann.com 362 page 11 of the case law book "Where Assessing Officer on basis of search conducted at premises of A reopened assessment of assessee, since no proceedings were initiated against assessee under section 153C and Assessing Officer did not record his satisfaction with regard to escapement of income, impugned reassessment proceeding was not sustainable Where Assessing Officer, on basis of search conducted at premises of A seized a diary which contained details of payment made by A to assessee, made addition in hands of assessee under section 69B as unexplained investment, in view of fact that author of diary had passed away prior to date of search and relevant entry had not been used in case of 'A' but it had been used in assessee's case who was third party to proceedings, Commissioner (Appeals) was justified in deleting impugned additions." 2.16 The ld. D.R. submitted that the assessee Ibrahim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... broad. Mr. Ibrahim Khaleel had received this amount on behalf of Mr. Ali Kutty and this amount even Mr. Ibrahim Khaleel admitted to be received the said amount cannot be taxed in the hands of the present assessee who has no element of income on this count. Now the question before us is whether above incriminating material was found during the course of search, which is being scribbling in loose pad is sufficient enough to draw an adverse inference against the assessee to conclude that information contained therein the said incriminating material relates to undisclosed income of the assessee, though assessee's partner Mr. Ibrahim Khaleel categorically denied the receipt of said amount on behalf of present assessee and confirmed that it was received on behalf of Mr. Ali Kutty who was non-resident and lives in abroad. In our opinion, statement recorded under various provisions of the Income Tax Act are a vital tool in the hands of the Income Tax authorities to make an addition in an assessment coupled with the admission made by the maker/assessee, if it is supported by corroborative evidence. In the present case, the contents recorded in the statement not supported by corroborative ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ali Kutty of Creek builder. Regarding page 181 he has stated that it is an estimate given to customer for flat No.304 in Creek Galaxy. Page 180 is a receipt given to Mr. Sk. Nizamuddin for the same flat for Rs.7 lakhs and signed by Mr. Ali Kutty for flat no.304 and the amount received in cash. Page 179 was the total receipt of Rs.35 lakhs up to 14.9.2015 for the same flat signed by Mr. Ali Kutty. To the question No.33, Mr. Khaleel has stated as follows: 3.4 Finally, Mr. Ibrahim Khaleel has stated in Q.No.47 a reproduced in page 19 of this order 3.5 Thus, the AO came to the conclusion that the assessee has systematically recorded cash receipts from various parties, which are not recorded in regular books of accounts maintained by the assessee. The said finding has been arrived on the basis of admission of Mr. Ibrahim Khaleel. However, fact remains that there were no corroborative material either to support the assessee or AO's contention. The assessee has also made an allegation before us that statement was recorded at the time of search under duress and Mr. Ibrahim Khaleel was with totally confused state of mind. The ld. A.R. also submitted that while recording the statement Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport the same. It is well settled principle of law that when any document like present scribbling pad/loose slips are recovered during the course of search action and the revenue wants to make use of it, the onus is on the revenue to collect cogent evidence to corroborate the noting in alleged documents. In this case, revenue has failed to bring on record any cogent evidence to prove conclusively that the noting in the seized documents refer to the unaccounted cash receipts of the assessee. Further, no circumstantial evidence in the form of unaccounted assets and liabilities outside the books of accounts were found in the course of search action except physical cash of Rs.55 lakhs. In our opinion, the impugned additions made by AO on the basis of seized materials in the form of entries in the loose slips/scribbling pad is an in-advocate material. As such, since it cannot stand on its own legs. 3.8 The main contention of ld. D.R. is that the statement recorded u/s 132(4)/131 of the Act is self-speaking document and it cannot be overruled. In our opinion, reliability of these statements depends upon the facts of each case and particularly surrounding circumstances and in this case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the loose slips/scribbling pads by making further enquiries and examination/cross examination of the alleged persons or payee of said amount. Further, on perusal of entries in the loose slips/scribbling pads as recorded by AO in the assessment order, we find that nothing was emanating regarding name and address of persons through whom the said amount was received and the parties for which it has been paid. In the absence of any effort from AO by way of further proper enquiries, merely on the basis of entries in the loose slips/scribbling pad coupled with the statement recorded during the course of search, addition cannot be sustained. Being so, we are inclined to delete the addition made by AO in these assessment years towards unaccounted cash receipts by assessee. These grounds of appeal in all these appeals are allowed. 3.11 Since we allowed the main ground of the assessee, the alternative ground of the assessee is infructuous and dismissed. 3.12 In the result, the assessee's appeals in ITA Nos.979 to 983/Bang/2022 for the AYs 2014-15 to 2018-19 are allowed. ITA 733/Bang/2022 (AY 2016-17): 4. Facts of the case are that assessee is an individual and carrying on the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as confirmed the additions. Again, the assessee is in appeal before us challenging the above additions. The ld. A.R. submitted that the Commissioner of Income tax (Appeals) while upholding the additions made has grossly overlooked the fact that, additions made is purely on assumptions and presumptions based on the oath statements and no other materials were found at the time of search. Further, argued that, mere admission pf amounts under section 132(4) as additional unexplained income would not lead to drawing of adverse inference that, unexplained income was from sale of property was made by assessee, particularly when no evidence was produced to justify said receipts by assessee without cross examining the payee of the alleged cash receipts. Further, whatever amount received through cheques have duly been declared in the return of income filed as per the provisions of section 44AD of the Act on presumptive tax basis. Also, overlooked the following case laws, which are squarely applicable to the Appellant's case. 1. Common Cause (A Registered Society) Vs. Union of India [2017] (77 Taxmann.com245) (SC) 2. Principal CIT, Central III Vs. Krutika Land (P) Ltd. 103 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of on money * To tax any particular payments/receipts, primary evidence is very much necessary and unless there is primary evidence, circumstantial evidence cannot be considered as conclusive evidence against any person to tax any particular payments/receipts. Circumstantial evidence plays an important role in income tax proceeding. The payment/receipt of on money is purely a factual issue which cannot be decided based on circumstantial evidence. * Section 132(4) was subject to variation and once the appellant had access to seized documents and he realised subsequently that, there was no occasion to make this disclosure, he was having an inherent right to clarify the situation so that he could be taxed only on real income and not on an income which was not there at all, since there was no evidence to prove otherwise too. In addition, the very important fact that, remains that inspite of the search, no material/evidence was found to show that the assessee was having any other undisclosed assets which could be linked with this disclosure. 4.8 The ld. A.R. further submitted that the learned Commissioner of Income tax (Appeals) has failed to note the, alternative plea of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to addition of Rs.88,000/- i.e. the profit estimated at 8% on Rs.11 lakhs amount received by cheques/RTGS, this being the actual amount received through banking channels, the AO has taken the income on Rs.11 lakhs at 8% which is very reasonable and the same is confirmed. This issue in ground No.2 of assessee is rejected. Hence, this ground of appeal in ground No.2 is partly allowed, thereby a sum of Rs.88,000/- is sustained out of Rs.15,88,000/- addition made by AO and Rs.15,00,000/- is deleted. 8.4 Next ground of assessee's appeal is with regard to declaration of Rs.5 lakhs for which statement recorded u/s 132(4) of the Act offered in the return of income. The assessee has not put any serious objection before us and this being admitted income in the return of income, hence, we do not find any merit in this ground and the same is dismissed. 8.5 In the result, ITA No.733/Bang/2022 is partly allowed. ITA No.734/Bang/2022 (AY 2017-18): 9. As discussed earlier, the AO has made addition of Rs.24,77,120/- towards unaccounted cash receipts. As discussed in earlier para in 8.2 of the order, this addition is deleted. 9.1 Next ground is regarding addition of Rs.2,82,560/- at 8% on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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