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TMI Blog2024 (2) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... als raised by the revenue. - Dr. Manish Borad, Hon ble Accountant Member And Shri Sonjoy Sarma, Hon ble Judicial Member For the Assessee : Shri Ramesh Goenka, Advocate. For the Revenue : Shri Arun Bhowmick, JCIT, D/R. ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The present appeal filed by the revenue is directed against the order of the Learned Commissioner of Income Tax (Appeals), Guwahati - 2 (hereinafter the ld. CIT(A) ) dt. 03/07/2020, passed u/s 250 of the Income Tax Act, 1961 ( the Act ), for Assessment Year 2018-19. 2. The revenue has taken the following grounds of appeal:- (i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts of the case. (ii) That the Ld. CIT(A) erred in facts and in law in deleting the addition of Rs. 4,50,00,000/- made U/s 68 of the I-T Act, 1961 by the Assessing Officer U/s 143(3) of the I-T Act, 1961 and hence the impugned order of the Ld. CIT(A) is liable to be quashed and the order of the Assessing Officer be restored. (iii)That the Ld. CIT(A) erred in facts and in law in holding that the additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various flat buyers which was forfeited on account of non-payment of the balance dues. The assessing officer while making the assessment and held that out of disclosure of Rs.8,00,00,000/- an amount of Rs.35068253/- was offered for taxation by the assessee company. Hence, he added the balance amount of Rs.4,50,00,000/- in the total income of the assessee company, which according to the Assessing Officer though disclosed u/s 132(4) was not offered for taxation, and held it to be chargeable to tax u/s 115BBE of the Income Tax Act, 1961. 4. Aggrieved, the assessee carried the matter in appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee contended that the addition of Rs.4,50,00,000/- was based on total misconception of facts. The statements of Shri Kailash Lohia vide which he had made disclosure Rs.8.00 crore for the assessee company was retracted vide his affidavit dated 08.03.2018 as it was not based upon any incriminating/corroborative material. It was also submitted before the ld. CIT(A) that the amount of Rs.35068253/- which was written back by the assessee in its profit loss account was received as advance from various flats buyers which was forfeited on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, as per para 8 of the above affidavit, Shri Kailash Chandra Lohia has specifically stated that the earlier statements made by him were neither voluntary nor correct so far as they related to the disclosure of Rs.8.00 crore in the hands of the Appellant for AY 2018-19. 8.1. In the aforesaid back ground, a return of income for AY 2018-19 (i.e. the impugned assessment year) was filed by the assessee on 07.03.2019 declaring therein a total income of Rs.4,60,91,120/-. The aforesaid returned total income of Rs.4,60,91,120/- included an amount of Rs.3,50,68,253/- on account of balance written back (i.e. liabilities no longer required or balance no longer refundable). That, the amount of Rs.3,50,68,253/- was on account of balances received from customers towards booking of flats in various real estates projects of the assessee but customers could not pay the balance amounts due from them to the assessee. It was on this count that the assessee had forfeited the advances towards flat bookings from the corresponding parties and offered the aforesaid amount of Rs.350,68,253/- as its income for the above assessment year. During the course of assessment proceedings, the AO had treated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough to have admitted additional income in the hands of the assessee, it is a trite law and time and again has been reiterated by the Central Board of Direct Taxes (in short CBDT ) that the additions which are solely based on statement recorded during the course of search and surveys have no evidentiary value and in the absence of the incriminating material no addition can be made merely on the basis of the said statement. The CBDT has time and again issued instructions in this regard wherein it has been stressed upon that confessional statements taken during the course of search or survey must be backed by incriminating material. In this case, the AO has not been able to relate the additional income admitted to any purported incriminating material or asset, or investment or expenditure or entry in the books of accounts of the assessee and has speciously ignored the submissions/explanations furnished by the assessee. Thereafter, after re-producing circular F. No. 286/2/2003-IT (Inv-1) dated 10.03.2003 and circular F. No. 286/982013-IT(Inv-1) dated 18.12.2014 issued by the C.B.D.T., the ld. CIT(A) held that the addition made by the AO merely on the basis of confessional statement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements of the assessees, whenever a survey or search is conducted under the relevant provisions of law. The statements so recorded are referable to section 132 of the Act. Sub-section (4) thereof enables the authorities not only to rely upon the statement in the concerned proceedings but also in other proceedings that are pending, by the time the statement was recorded. 10. If the statement is not retracted, the same can constitute the sole basis for the authorities to pass an order of assessment. However, if it is retracted by the person from whom it was recorded, totally different considerations altogether, ensue. The situation resembles the one, which arises on retraction from the statement recorded under section 164 of the Code of Criminal Procedure. The evidentiary value of a retracted statement becomes diluted and it loses the strength, to stand on its own. Once the statement is retracted, the assessing authority has to garner some support, to the statement for passing an order of assessment. 11. In I. T. T. A. No. 112 of 2003 (see CIT v. Naresh Kumar Agarwal [2014] 369 ITR 171/[2015] 53 taxmann.com 306 (AP) this court dealt with the very aspect and held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that, it was evident no case of any unexplained investment, money or income, as also the nature and source of the such purported unexplained investment, money or income has been made out by the AO. Therefore, question of any income from any undisclosed source did not arise. On account of the above reasons, the action of the AO in invoking the provisions of Section 115BBE of the Act are, hereby, held wrong or incorrect. He further held that the A.O. has drawn unilateral conclusion on the purported confessional statement of Shri Kailash Chandra Lohia whereas his actions ought to have been based on the totality of the facts and on at-least some enquiry or evidence. The ld. CIT(A) therefore following the ratios of the above judicial precedents cited by him deleted the addition of Rs.4,50,00,000/- made by the AO on account of difference between the disclosure made by the Shri Kailash Chandra Lohia under Section 132(4) of the Act and the additional income declared by the assessee in its return of income filed for the above assessment year. 10. We have perused the statements of Shri Kailash Lohia made on 24.11.2017 u/s 131 of the Act which is placed at paper book page 33 36, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted with any incriminating material or asked any question relating to M/s. Subham Planners Ltd. The aforesaid statement of Shri Kailash Lohia is placed at pages 37 40 of the paper book. 12. Thus, vide both his statements, Shri Kailash Lohia was made to surrender Rs.8.00 crores for the assessee M/s. Subham planners Ltd. without there being any corroborative material or basis. Therefore, Shri Kailash Lohia retracted his statements vide his affidavit dated 0803-2017 (paper book page nos. 106 to 118) duly sworn before the Notary Public, Kamrup (Metro), Guwahati being document serial no. 6877/18 dated 08-03-2017. Para No. 7 of the aforesaid affidavit (at page 109 of the paper book) of Shri Kailash Lohia is reproduced below: - 7. That similarly no incriminating documents were either found or seized during the course of search in respect of disclosure of Rs.8.00 crores made by me for M/s. Subham Planners Ltd. for the assessment year 2018-19. Hence, the disclosure has also no basis. Hence, the same is also retracted. In para 8 of his aforesaid affidavit Shri Lohia has stated that since the statements given by him were neither voluntary nor correct, the disclosure of Rs.8.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 132(4) of the act on a stand alone basis without reference to any other incriminating material found during the search operation will not have any evidentiary value. It has been further held that such statements/enticement of confession, sans any tangible material, cannot be made sole basis for making any addition to the time of the assessee. The case laws relied upon by the ld. CIT(A) has been mentioned by us supra. It has also been held in the case of Gajjam Chinna and Ors. V/s. I.T.O. (supra) that the evidentiary value of a retracted statement becomes diluted and it loses its strength, to stand on its own. Once the statement is retracted, the assessing officer has to garner some support, to the statement for passing an order of assessment. In the present case no such exercise has been undertaken by the Assessing Officer. He has not made any enquiries. 17. Apart from the statements of Shri Kailash Chandra Lohia, no other document is being referred by the ld. Assessing Officer. No doubt, the disclosure or admission made under section 132(4) of the Act during the search proceeding is an admissible evidence but not conclusive one. This presumption of admissibility of evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group is on account of the common partners in various concerns. Assessee is separately assessed to tax. Search u/s 132(4) of the Act was initiated in the case of the assessee on 29.1.2014 and was concluded on 31.1.2014. This fact is proved on the basis of panchanama prepared by the officer of the search team which is placed at page 62-64. No surrender was made in the statements taken by the search team during the course of search from 29.1.2014 to 31.1.2014. There is no mention of any incriminating material referred by the Ld. A.O on the basis of which additions have been made. 11. The search action in the case of Signature Group continued ever after 31.1.2014. On 02.02.2014, Mr. Vipin Chouhan who is Ultimate Builders the partner of the assessee firm gave a statement before the search team wherein he made surrender of Rs.2,25,00,000/- on behalf of the appellant firm and agreed to offer it to tax. In the very same statement he also made surrender on behalf of another firm M/s. Virasha Infrastructure in the capacity of a partner. In the very same statement he also made surrender on behalf of other companies of Signature Group. Ld. A.O during the course of assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de with the incriminating material found during the course of search. 14. On the other hand Departmental Representative gave reference to various judgements referred above. She mainly placed emphasis on the judgment of Hon'ble High Court of Madras in the case of Kishore Kumar V/s DCIT (supra) holding that when there was a clear admission of undisclosed income in the statement sworn in u/s 132(4) of the Act there is no necessity to scrutinise the documents . 15. Now so far as the first contention of the assessee that the statement relied on by the revenue authorities cannot be construed as a statement given u/s 132(4) of the Act, we will like to first reproduce the provisions of Section 132(4) of the Act; (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is fond to be in possession or control of any books of account, documents, money, bullion, jewellery to other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act. 1 Explanation.- For the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014. 20. We therefore are of the considered view that the alleged statement given by Mr. Vipin Chouhan on 02.02.2014 may be construed as the Section 132(4) of the Act for all the other concerns named above except for the assessee i.e. M/s. Ultimate Builders. Therefore the statement referred to by the Ld. A.O on the basis of which the addition have been made in the hands of the assessee in our view cannot be construed as the statement u/s 132(4) of the Act. 21. Coming to the issue of addition made by the Ld. A.O on the basis of the statement but no reference been given to the incriminating material, we find that in the assessment order Ld. A.O has referred to various seized documents but none of them is directly related to the assessee. These seized documents are of the Signature Group and Ld. A.O has only mentioned the details of the seized document without uttering a word about their nexus with the Ultimate Builders business transaction carried out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before the A.O., which supported the contents of the statement. In the absence of such material, coupled with the fact that it is recorded by the Ld. CIT(A) that the assessee himself had surrendered a sum of Rs.69,59,000/- and Rs.75,00,000/- in A.Y. 2008-09 and 2009-10 respectively. The A.O. failed to co-relate the disclosures made in the statement with the incriminating material gathered during the search. Therefore, no inference is called for in the finding of the Ld. CIT(A) and is hereby affirmed. Ground raised by the revenue is dismissed. 23. Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.), 9. The Ld. Departmental Representative though not leaving his grounds, could not dispute the proposition that the additions in the present cases have not been made on the basis of any incriminating material found during search and if any material w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred by Mr. Vipin Chouhan in his statement given on 02.02.2014 and in case of such business concern wherein search action u/s 132 of the Act was continuing the said statement dated 02.02.2014 will be considered as the statement u/s 132(4) of the Act. Thirdly, no reference has been given by the Revenue Authorities to any incriminating material found during the course of search at the business premises of the assessee, which could be correlated to the alleged surrendered income earned by the assessee from undisclosed sources. 27. We therefore are of the considered view that the finding of Ld. CIT(A) needs to be set aside and the addition of Rs.2,25,00,000/- deserves to be deleted since it has been made on the basis of a Ultimate Builders statement not given u/s 132(4) of the Act and without referring to any incriminating material found during the course of search. 19. It is, therefore, a settled law that no addition can be made solely on the basis of statement recorded u/s 132(4) of the Act in the absence of any corroborative material or evidence to support the disclosure or the addition. We, therefore, respectfully following the decision of the Indore Bench of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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