9911796707
TMI Blog2024 (8) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... t the time of purchase of the lands. We find that the conclusions reached by the AO are merely based on presumptions and assumptions without bringing corroborative material on record. It is settled position of law that no addition in the assessment can be made merely based on assumptions, suspicion, guess work and conjuncture or on irrelevant inadmissible material. As in the case of K.P. Varghese [ 1981 (9) TMI 1 - SUPREME COURT] held that the capital gains is intended to tax the gains of assessee not what an assessee might have gained and what is not gained cannot be computed as gain and the assessee cannot fastened with the liability on a fictional income. Similarly, the Hon ble Supreme Court in the case of CIT Vs. Shivakami Co. (P.) Ltd. [ 1986 (3) TMI 2 - SUPREME COURT] held that unless there is evidence that more than what was stated was received, no higher price can be taken to be the basis for making addition. We remit this issue to the file of ld. AO with a direction to the assessee to prove the ingredients of section 68 of the Act. If these ingredients are appearing in the balance sheet as on 31.3.2017, which is emanated from the corroborative seized material only and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner he did. 2. The ld. CIT(A) further erred in confirming the addition u/s 68 of the Income Tax Act, 1961 without appreciating the submission of the appellant. 3. The ld. CIT(A) further erred in confirming the order of assessing officer by merely relying on sworn statement of the partner without any incriminating material having being found. 4. The ld. CIT(A) further erred in not appreciating that return in response to notice u/s 148 was filed only on 4.1.2019 and hence the assessment was time barred. 5. The ld. CIT(A) further erred in assessing the income u/s 68 of the Act. 2.1 At the time of hearing, the assessee has not pressed ground No.4. Thus, the only ground remained for our consideration is with regard to sustaining addition u/s 68 of the Income Tax Act, 1961 (in short The Act ) at Rs. 87.25 lakhs on the basis of sworn statement recorded u/s 132(4) of the Act on 30.10.2017 without any corroborative materials. 3. Facts of the case are that the assessment order has been passed u/s 143(3) r.w.s. 153C of the Act. During the course of search proceedings at the residence of Mr. Mohammed Ibrahim, documents belonging to M/S Emirates Hindustan Builders Developers have been seized. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers whom the appellant firm was now claiming that they had introduced cash, source particulars etc. It was also proposed to assess the cash payment of Rs. 102.25 lakh made by the appellant to Mr. P B Ahammed, as per the disclosure made by Mr. Mohammed Ibrahim in the sworn statements recorded on three different occasions, that too in a gap of about two months: While the appellant filed objections against the above proposal, however, it failed to produce the partners who had claimed to have made the cash investments. Further, the cash flow or books etc also had not been furnished. Only plain confirmation letters had been furnished by the appellant firm in respect of some of the partners. The AO mentioned that despite specifically calling for, the appellant firm had failed to produce the partners who have claimed to have made cash payments. Further, other evidences called for were also not furnished. Therefore, another notice dtd. 28/11/2019 was issued to the appellant to produce the partners who were stated to have admitted introducing cash for JDA payments individually and also to comply with the terms of the notices issued earlier. Two subsequent notices dated 03.12.2019 and 12.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted in the sworn statement recorded u/s 132(4), u/s. 131 and also u/s. 132(4) again three different occasions that the cash payment of Rs. 102.25 Lakhs was the undisclosed income of the assesses and disclosed the same. 5. On appeal, the ld. CIT(A) observed that the only argument of the appellant during this proceeding is that Rs. 1,02,25,000/- paid in cash was not the undisclosed income of the appellant and addition cannot be made u/s 68 of the Act. It was the submission of the appellant that the cash payment made to Mr. PB Ahammed had been duly accounted for by the appellant as the payments were received from the partners of the appellant firm. It was the case of the appellant that by demonstrating the nature and source of the credit in the hands of the firm, the initial onus has been discharged and the burden shifts on to the department. Relying upon the Judgment of the Hon'ble Supreme Court in the case of CIT vs Lovely Exports (P) Ltd., 216 CTR 1 95, the appellant pleaded that the additions may be deleted. 5.1 It is the case of the AO that in spite of specially requiring to produce the partners who contributed cash, the appellant firm did not comply with it. Further, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed on 16.11.2019 and 28.11.2019. Neither the partners who contributed the above payments were produced before the AO nor any reasons for the failure to do so was accorded. On the perusal of the list of persons who alleged to have contributed to the cash payments, it is noticed that the cash payments were in the range of Rs. 2,00,000/- to Rs. 15,00,000/- except in the case of Mr. Yousuf Subbayakatta from whom no confirmation was filed. It is also interesting to note that Rs. 3,00,000/- was shown to have been paid in cash by Mr. Mohammed Ibrahim, the Managing Partner, who had all along not disclosed this alleged fact. 5.3 If the appellant's claim was the gospel truth, it is incomprehensible as to why the appellant waited for more than 2 years to disclose this fact and that too at the far end of the assessment period. The delay can only be perceived as an attempt by the appellant to escape from the taxation of the admitted undisclosed investments in the hands of the appellant and to dodge the proceedings. It is also a fact that the appellant had not produced the persons who contributed to the cash payments before the AO for examination. It is not the case that the investors/cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Imran, Mr. Abdul Ansar and Mr. Hidayathulla. 5.7 During assessment proceedings, the appellant was specifically required to substantiate the genuineness of the liability claimed by proving the identity, genuineness and creditworthiness of the credits shown. However, the details and evidences were not furnished in spite of specific direction of the AO. 5.8 Considering the failure on the part of the appellant to substantiate the nature and source of Rs. 5 Lakhs for the A/Y 2017-18 and amount totaling to Rs. 31,32,000/- for the A/Y 2018- 19 credited in the books of accounts during the above years as unsecured loans, Rs. 5 Lakh and Rs. 31,32,000/- were added as unexplained cash credits u/s. 68 of the Act for A/Y 2017-18 and 2018-19 respectively. 5.9 No explanation was offered by the appellant in respect of the above additions during this proceeding despite several notices and opportunities provided. Therefore, the additions made i.e. Rs. 5 Lakh and Rs. 3 1,32,000/-for A/Y 2017-18 and 2018-19 respectively were sustained by CIT(A). In view of the above, all the grounds of appeal for A. Y. 2017-18 and 2018 are dismissed and held against the appellant. Against this assessee is in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of Honorable Madras High Court in the case of B. Kishore Kumar vs. DCIT (supra) because the facts of that particular case are clearly different and distinguishable from the facts in this particular case of the assessee firm. The well settled position of law is that while the revenue can use a statement recorded u/s 132(4) as a piece of evidence but the statement itself cannot be conclusive evidence. The revenue ought to corroborate the admission contained in the statement with independent evidence. 7. On the other hand, ld. D.R. submitted that statement recorded u/s 132(4) and 131 of the Act which is not retracted by assessee and this is important evidence and it can be basis for initiation of proceedings u/s 153C of the Act. For this purpose, she relied on the judgement of Hon ble Supreme Court in the case of Roshanlal Sanchiti Vs. CCIT 292 Taxman 549 (SC). 7.1 Further, she relied on the judgement of Hon ble Supreme Court in the case of Video Master Vs. JCIT (378 ITR 374), wherein held that it is not possible to say that this is the case of no evidence at all in as much evidence in the form of statement made by assessee himself and other corroborative material are there on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers are not denied or disputed by the assessee. The CIT (Appeals) has found that the partners of the assessee firm had admitted to the practice of suppressing the profits. The papers themselves show two different rates, one higher and the other lower and on comparison with the sale bills it has been found that the sale bills show the lower rate and these findings have not been denied by the assessee. The Tribunal, therefore, erred in looking for some other corroboration to substantiate the contents of the loose papers, overlooking that the loose papers needed no further corroboration and the sale bills compared with the seized papers themselves corroborated the suppression of income. Fourthly, the Tribunal has relied on the observations of the CIT (Appeals) that no serious consideration can be given to the loose papers and has held that this shows that there is nothing more in Revenue s kitty apart from those said loose papers pertaining to November, 2005 (financial year 2005-06) to support suppression of sales receipts on the part of the assessee firm . The Tribunal, with respect, has misread the observations of the CIT (Appeals) and has relied on a single observation without read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Runwal has given the details of cash received on sale of flats at various projects of the Runwal Group with names of the customers and the exact amount. The name of the assessee is at Sl.No.21 for the Flat No. 501 at Runwal Elegante which shows the cash receipt by Runwal Group of ₹.82,13,261/-. The contention of the counsel that it is merely an estimation defies all commercial logic because an estimated figure is always a complete figure. But the figure mentioned hereinabove is so accurate that it cannot considered as an estimated figure. Most important fact is that the recipient i.e., seller has admitted of having received a cash component of the transaction. Therefore, it is reasonable to conclude that the payee must have made the said payment. The undisputed fact is that the assessee has in fact purchased the flat from Runwal Group. When the purchase is not in dispute, the payment is not dispute then in all probability the cash component is also correct. The seller has admitted of having received on-money which is the income of the seller and no prudent business man would offer income which it has never earned / received. The decision of the Coordinate Benches are misplace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute incriminating material. The relevant finding of the Hon ble High Court is reproduced as under: 38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non-existent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission. 8.3 As per section 31 of Indian Evidence Act, 1878, admissions are not conclusively proved as against admitted proof. In the absence of rebuttable conclusion, admission bind the maker ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the IT Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely. From the above Circular, it is amply clear that the CBDT has emphasized on its officers to focus on gathering evidences during search/survey operations and strictly directed to avoid obtaining admission of undisclosed income under coercion/under influence. Keeping in view the guidelines issued by the CBDT from time to time regarding statements obtained during search and survey operations, it is undisputedly clear that the lower authorities have not collected any other evidence to prove that the impugned income was earned by the assessee. 8.5 At this stage, it is pertinent to refer to the judgment of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while acting on the inculpatory statement of the maker, is not completely relieved of his obligation at least subjectively to apply its mind to the subsequent retraction to hold that the inculpatory statement was not extorted. It thus boils down to this that the authority or any Court intending to act upon the inculpatory statement as a voluntary one should apply its mind to the retraction and reject the same in writing. It is only on this principle of law that this Court, in several decisions, has ruled that, even in passing a detention order on the basis of an inculpatory statement of a detenu who has violated the provisions of the Foreign Exchange Regulation Act or the Customs Act, etc., the detaining authority should consider the subsequent retraction and record its opinion before accepting the inculpatory statement lest the order be vitiated. Reference may be made to a decision of the Full Bench of the Madras High Court in Roshan Beevi vs. Jt. Secretary to the Government of Tamil Nadu, Public Deptt. etc. (1983) Mad LW (Crl.) 289 : (1984) 15 ELT 289 : AIR 1984 NOC 103, to which one of us (S. Ratnavel Pandian, J.) was a party. 8.8 In our opinion, the above additions cannot be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption), Kolkata2017 (11) TMI 1586 ITAT Kolkata, the Tribunal held as under: - 6. We have carefully considered the entire gamut of facts, rival contentions raised by the parties before us and also the material referred to during the course of hearing. In the instant case originally Id. CIT(Bx) cancelled the registration certificate u/s. 12A of the Act vide order dated 22-2-2016. Against the order of Ld, CIT(Ex) assessee preferred an appeal who directed the Revenue to provide an opportunity of cross-examination to assessee. Accordingly, appeal was allowed for statistical purpose. (iii) In the case of CIT Vs. S. Khader Khan Son reported in 352 ITR 480 (SC) where the Hon'ble Supreme Court has held that: - Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. (iv) In the case of Kamla Devi S. Doshi v. Income-tax Officer [2017] 88 taxmann.com 773 (Mumbai - Trib.) / [2017] 57 ITR(T) 1 (Mumbai - Trib.) held as under: - We however are unable to persuade ourselves to subscribe to the view that such information arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no reason not to disbelieve the retraction made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee. 16.4 We have duly considered the contention of the assessee and also perused the documentary evidences produced by the assessee. On perusing the facts, it is apparent that the addition is made based on the general practice of cash payments made outside the books of accounts in the case of immovable property transactions. The AO was of the opinion that there are ample instances that cash payments are made outside the books of accounts in effecting money lending transactions and therefore, the statement made by Mr, R. Ravish can be relied and the addition sustainable. However, we do not subscribe to this view of the AO. In order to establish that the assessee had paid amount outside the books of accounts for effecting money lending transactions substantial evidence has to be placed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) (vi) Omar Salay Mohamed Sait vs. CIT (1959) 37 ITR 151 (SC) 8.11. Further, the Hon ble Delhi High Court in the case of CIT vs. Dinesh Jain (HUF), 352 ITR 629 after referring to the decision of the Hon ble Supreme Court in the case of Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288 (SC) held that no addition can be made taking into account notorious practice prevalent in the similar trade. The relevant findings vide para 14 and 15 are as under: . 14. In Lalchand Bhagat Ambica Ram Vs. Commissioner of Income Tax, Bihar and Orissa (1959) 37 ITR 288, the Supreme Court disapproved the practice of making additions in the assessments on mere suspicion and surmise or by taking note of the notorious practices prevailing in trade circles. At page 299 of the report, it was observed as follows: Adverting to the various probabilities which weighed with the Income-tax Officer we may observe that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above loose slips should be deleted in the assessment year 2015-16 since; (i) there is no documentary evidence either to support the statements of Mr. R. Ravish or of the parents of the students; and ii) the seized material is in the form of various loose sheets, scribblings, and jottings having no signature or authorization from the assessee's side. These are unsubstantiated documents and there is nothing to suggest any undisclosed assets of assessee found during the course of search. More so, search action not resulted in recovery of any undisclosed assets in the form of landed property, building, investments, money, bullion, jewellery or any kind of movable or immovable assets. 8.19 As discussed in paras 8.13 to 8.15 above, we remit this issue to the file of ld. AO with a direction to the assessee to prove the ingredients of section 68 of the Act. If these ingredients are appearing in the balance sheet as on 31.3.2017, which is emanated from the corroborative seized material only and not based on statement recorded u/s 132(4) or 131 of the Act. 8.20 Hence, we are of the opinion that it is appropriate to remit the issue to the file of ld. AO to re-examine the issue with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and liable to be quashed. 4. The learned CIT(A) further failed to appreciate that the Assessing Officer failed to provide an opportunity of cross examination which is against the principle of natural justice. 5. The learned CIT(A) failed to appreciate that the statement taken at the time of survey cannot be considered for making addiction u/s 153 C of the act. 6. The learned Assessing Officer is not justified in law in taxing Rs. 3,58,14,436/- which was declared in the oath statement and same has been later retracted by not declaring the same in the return of income filed and additions made are purely on assumptions and presumptions. 7. The learned Assessing Officer is not justified in law in additions made in the hands of the appellant as unexplained money, mainly based on the statement made at the time of survey without any corroborative evidence or material. 8. The learned assessing officer has grossly ignored the fact that the statement recorded at the time of survey was taken under coercive duress and with a totally confused state of mind of the appellant which was later retracted. 13.1. At the time of hearing, assessee pressed only the ground with regard to sustaining additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, Managing Partner, M/S. MKH Infrastructure as the contract receipts in respect of the Tabesco project. The relevant portion of the sworn statement of Mr. Ibrahim Kaleel is as follows: Q.38. I am showing you the document marked as Annexure A/IW03, Page Nos.83 to 91, w ich were found and seized during the course of search u/s 132 of the Income Tax Act at your residence at Door No. 20-6-363/1 Manar, 2 Cross Kandak, Mangalore. Please explain the contents. Ans: These are the vouchers towards payment of construction expenses (contract amount) to MKH Infrastructure by Tabesco Hindustan Infrastructure for the project Tabasco Hindustan. Mr. Basheer Malikayil, who is an NRI a d Sri Mohammed Ibrahim are the partners of Tabesco Hindustan Infrastructure. Total amount received by M/s. MKH Infrastructure as per these vouchers amounting to Rs. 1,88,81,000/-. Out of this amount, an amount of Rs. 88, 00, 000/- represents received through cheque and rest amount of Rs. 1,00,81,000/- is received by cash. 14.2 The details of evidences for payment made in cash and cheque amounting to Rs. 1,88,81,000/- were summarized in the respective assessment orders based on the cash vouchers found and seized. The v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- has been paid as cash. Mr. Mohammed Ibrahim had again confirmed the cash payment of Rs. 2,00,30,600/- in the statement recorded u/s. 131 on 5/9/2017 as well. 14.6 The receipt of the contract payments in cash has also been admitted categorically by Mr. Ibrahim Kaleel in his statement on oath. Considering Il of the above facts, on the basis of the evidences seized u/s. 132 and also impounded u/s. 133A as stated above in detail, it is evident the total cash received by the assessee towards the construction contract amount to Rs. 2,00,30,600/- out of the total receipt of Rs. 2,90,30,600/- up to the da e of search. During the remaining period of financial year 2018-19, after the search, the assessee firm had received contract amount of Rs. 1,38,67,960/- by cheque. Therefore, the total contract receipt by cheque during F.Y 2017-18 amounted to Rs. 2,18,67,960/-. 14.7 Thus, the ld. AO made addition of Rs. 1,90,30,600/- u/s 69B of the Act towards payment made to MKH Infrastructure in cash and Rs. 59 lakhs u/s 69C of the Act towards unexplained expenditure incurred by the assessee. However, assessee challenged before us addition of Rs. 3,58,14,436/-. However, we confine to the issue relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 7 impounded from the office of the assessee during the course of search u/s 133A f the Act contains the total cash payment of Rs. 2,00,30,600/-. The statement recorded on 30.8.2017 from Mrs. Jansi Dinu who is working as a office secretary stated that these entries made in impounded material A/THI/8 relating to cash payments. Her statement has been confronted to Mr. Md. Ibrahim, MD of the assessee company. He has also confirmed the same. However, while filing the return of income, they have not offered it for taxation on the reason that these are based on statement recorded u/s 132(4) of the Act and uncorroborated loose slips. It was mentioned by the ld. AO in the assessment order in para 8.3 that the voucher missing are not found and thus, it means that there was no full proof for the payment of cash to various parties. There was no examination of the parties concerned who has received the payment and the purpose of payment. The ld. AO merely relied upon the loose papers obscure noting made in that loose slips and statement of Mr. Md. Ibrahim recorded u/s 132(4) 131 of the Act. Thereafter, ld. AO made his own analysis which is not supported by any corroborative evidence. 15.2 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in which the Court has to enquire was subject to the salient proviso that such entries shall not alone be sufficient evidence to charge any person with liability. It is not, therefore not enough merely to prove that the books have been regularly kept in the course of business and the entries therein are correct. It is further incumbent upon the person relying upon those entries to prove that they were in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the seizure of such material is illegal. The AO cannot rely upon such material whose seizure is illegal and the hence, assessment is void ab initio. Therefore, addition made on account of such seized material is not sustainable, 15.9 The Hon'ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) held as follows: - Not allowing the assessee to cross-examine the witness by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity u as sought by the assessee. However, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual findings - Whether no substantial question of law arose from impugned order of Tribunal - Held, yes [Para 4] [In favour of assessee] 15.12. The Hon'ble High Court of Karnataka in Kothari Metals v. ITO, 377 ITR 581 (Karn) held as under: - Held, allowing the appeal, that the non-furnishing the reasons for re-opening an already concluded assessment goes to the very root of the matter. Since such reasons had not been furnished to the assessee, even though a request for them had been made, proceedings for the re-assessment could not have been taken further on this ground alone. Besides this, the statement of some other person which was recorded was the basis of reassessment and the assessee was asked to explain it but the statement was itself not furnished to the assessee. As such, besides non-furnishing of the reasons for re-opening there was also a gross violation of the principles of natural justice. The reassessment was not valid. 15.13 No assets commensurate with the alleged undisclosed income i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts by assessee. We place reliance on the following judgements in support of our above findings: (i) CIT vs D.K.Gupta 174 Taxman 476 (Delhi) (ii) Ashwini Kumar vs ITO 39 ITD 183 (Delhi) (iii) S.P.Goyal vs DCIT (Mum) (TM) 82 ITD 85 (MUM) (iv) D.A.Patel vs DCIT 72 ITD 340 (Mum) (v) Amarjeet Singh Bakshi (HUF) vs ACIT 86 ITD 13 (Delhi) (TM) (vi) Nagarjuna Construction Co Ltd vs DCIT 23 Taxman.com 239 (vii) CIT vs C.L.Khatri 174 Taxman 652 (viii) T.S.Venkatesan vs ACIT 74 ITD 298 (ix) CIT vs Atam Valves Pvt Ltd 184 Taxman 6 (P H) 15.16 As per seized material A/THI/8 page no.7, which reflects the transaction in respect of payment to MKH Infrastructure through cash and cheque amounting to Rs. 2,00,30,600/- in cash and Rs. 90 lakhs by cheque. Further, page nos.9 10 of same seized material amount typed as W was said to be received by cheque amounting to Rs. 67,14,908/- and typed as B are the amount received through cash amounting to Rs. 88,90,604/-. Further, seized material at page Nos.20 21 show the amount received W through cheque at Rs. 92,14,908/- and typed as B was of Rs. 1,08,90,604/-. Finally, the assessee stated the payment by cash, cheque and receipt by cash and cheque as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loose slips. As discussed in earlier para of this order in ITA No.167/Bang/2024 for assessment year 2017-18, this addition is also deleted as it is based on statement recorded u/s 132(4) of the Act and unsubstantiated loose slips. 18. Next addition is Rs. 1,10,90,104/- towards unaccounted cash receipts in respect of sale proceeds of shops and flats. According to the ld. AO, seized material pages 10, 20, 21 A/THI/8 shows the unaccounted receipt of the cash towards sale of the flats. Similarly, pages 8 to 19 AI/THI/8 there was mentioning of the receipt of black amount collected towards sale of the flats. There were also agreements entered by buyers pages 36 to 48 and 96 to 108 of seized material marked as A/THI/4, which is a copy of the agreement dated 2.8.2017 entered with Arun Kumar K.K. by Md. Ibrahim and Mr. Basheer on behalf of the present assessee. It was found by the ld. AO that there was a difference between the consideration shown in the agreement and the actual consideration on going through the seized material. This was questioned with Md. Ibrahim, M.D. who has admitted in his statement recorded u/s 132(4) of the Act on 31.8.2017 and statement recorded u/s 131 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of the statements. 21. In the case of Kailashben Manharlal Chokshi v. CIT , the Gujarat High Court held that the additions could not be made only on the basis of admissions made by the assessee, in the absence of any corroborative material. The relevant paragraph no. 26 of the said decision has been reproduced hereinbelow: - 26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority . We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the findings of the ITAT with respect to incriminating material in the case of M/s Pavitra Realcon Pvt. Ltd and M/s Delicate Real Estate Pvt. Ltd, it is seen that the ITAT has explicitly held in paragraph no. 18 that no addition has been made on the basis of any incriminating material found during the course of search. Further, the ITAT relied on the decision of the Supreme Court in the case of CIT v. Sinhgad Technical Education Society and held as follows: - 18. Further, while writing the order it has come to our notice that the Hon ble Apex Court in the case of Sinhgad Technical Education Society has held that section 153C can be invoked only when incriminating materials assessment year-wise are recorded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143(3) as against 153C are invalid for want of any incriminating material found for the impugned assessment year. 19. In view of the above, the additional grounds raised by the assessee in the case of M/s Pavitra Realcon Pvt. Ltd. And M/s Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at could have been possibly harboured. The Supreme Court in unequivocal terms held that absent incriminating material, the AO would not be justified in seeking to assess or reassess completed assessments. Though the aforesaid observations were rendered in the context of completed assessments, the same position would prevail when it comes to assessments which abate pursuant to the issuance of a notice under Section 153C. Here too, the AO would have to firstly identify the AYs' to which the material gathered in the course of the search may relate and consequently it would only be those assessments which would face the spectre of abatement. The additions here too would have to be based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may be ultimately made. The provision while speaking of AYs' falling within the block of six AYs' or for that matter all years forming part of the block of ten AYs', appears to have been put in place to cover all possible contingencies. The aforesaid provisions cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3C contemplate a merger of regular assessments with those that may be triggered by a search. On a search being undertaken in terms of Section 153A, the jurisdictional AO is enabled to initiate an assessment or reassessment, as the case may be, in respect of the six AYs' immediately preceding the AY relevant to the year of search as also in respect of the relevant assessment year , an expression which stands defined by Explanation 1 to Section 153A. Of equal significance is the introduction of the concept of abatement of all pending assessments as a consequence of which curtains come down on regular assessments. B. Both Sections 153A and 153C embody non-obstante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. These included, inter alia, the search assessment block being enlarged to ten AYs' consequent to the addition of the stipulation of relevant assessment year and which was defined to mean those years which would fall beyond the six year block period but not later than ten AYs'. The block period for search assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. E. While the identification and computation of the six AYs' hinges upon the phrase immediately preceding the assessment year relevant to the previous year of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akes the addition invalid. It has come to our notice that the Hon'ble Delhi High Court recently has upheld the said decision as reported in 397 ITR 82. 31. On this aspect, it is beneficial to refer to the decision of the Supreme Court in the case of Andaman Timber Industries v. CCE , wherein, it was held that not providing the opportunity of cross- examination to the assessee amounts to gross violation of the principles of natural justice and the same will render the order passed null and void. The relevant paragraph of the said decision is extracted herein below: - 6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case. [Emphasis supplied] 33. Further, the argument of learned counsel for the Revenue that this mistake is curable under Section 292B of the Act lacks merit as the plain language of the said Section makes it abundantly clear that this provision condones the invalidity which may arise merely by mistake, defect or omission in notice. The said Section reads as under: - 292-B. Return of income, etc., not to be invalid on certain grounds. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee not pressed ground nos.1 2. Accordingly, these grounds are dismissed as not pressed. 20. Next issue for our consideration is ground nos.3 to 8 wherein assessee challenged the addition of Rs. 10 lakhs made for the assessment year 2017-18 Rs. 2,07,80,040/- in assessment year 2018-19 on the basis of statement recorded u/s 132(4) of the Act. 21 . Facts of the case are that the assessee is a partnership firm, in which Mr. Ibrahim Kaleel and Mr. Ibrahim B.A. are the partners of the firm. A search and seizure operation u/s 132 was conducted in the case of Mr. Mohammed Ibrahim and Mr. Ibrahim Kaleel. M/S Tabasco Hindustan Infra Developers Pvt. Ltd. is engaged in developing the residential-cum-commercial complex project, Tabasco Inn at Kanhangad in a land owned by the said company, which was purchased in F.Y. 2014-15. Mr. Mohammed Ibrahim M is the Managing Director of the company and Mr. Basheer Malikayil is one of the directors. 21.1 Mr. Ibrahim Kaleel, the Managing partner of M/s MKH Infrastructure has a very long-standing association with Mr. Mohammed Ibrahim, the MD of M/S Tabasco Hindustan Infra Developers Pvt. Ltd. The construction contract of the residential-cum- commercial projec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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