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TMI Blog2024 (9) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... the survey but, at the same time, the assessee had successfully explained the contents of the said impounded document/s in responding to the additions made by the AO and thus, were rightly deleted as by the CIT(A). Hence, no blind reliance could be placed on the statement of the assessee alleging admission. The law is well settled that no addition can be made solely based on the statement. Even the CBDT directed the subordinate authorities not to press the assessee to make surrenders. We also find that the CIT(A) rightly placed reliance on the decision of C.K. Abdul Aziz [ 2019 (9) TMI 357 - KERALA HIGH COURT] Thus, we find no infirmity in the order of the CIT(A) on this aspect. It is necessary to clarify that we have confirmed the deletions of additions by the CIT(A) on merits independent of these legal aspects. Therefore, the ground of the Revenue, on the aspect of the admission by the assessee in statement is hereby dismissed. Alleged admission is claimed to have been retracted by filing affidavit before the ADIT (INV) within a period around 2 months after the survey when admission was made - CIT(A) although rejected the claim of the assessee of filing retraction in absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary namely M/s Quick Advertising Company, as per the computation of total income. There is no other known source of income, which could give rise to undisclosed income, under consideration. We find support from the decisions of Ram Narayan Birla [ 2016 (9) TMI 1354 - ITAT JAIPUR] Rekha Shekawat 2022 (8) TMI 791 - ITAT JAIPUR] and Bajranggan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT] - Thus, otherwise also in the facts circumstances of the present case Sec 115BBE could not have been invoked. For the above reasons the invoking of Sec 115BBE is therefore, quashed, and this ground taken by the assessee is therefore, allowed. Addition u/s 69C on account of unexplained agriculture expenses - We find no force in the ground so taken as the ld. CIT(A) has recorded cogent and detailed findings while rejecting this ground taken by the assessee before him. Therefore, this ground No. 7 taken by the assessee is dismissed. - SHRI SANDEEP GOSAIN, JM AND DR MITHA LAL MEENA, AM For the Revenue : Shri A.S. Nehra, Addl. CIT-DR For the Assessee : Shri Mahendra Gargieya Adv, Shri Hemang Gargieya, Adv. ORDER PER: SANDEEP GOSAIN, JM: Both these appeals are cross appeals filed by the Revenue and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction and therefore any inference or implications flowing from, such an illegal survey, deserves to be ignored or be not given effect to while adjudicating the other grounds relating to the additions towards the declared income or otherwise. 2. The statements of the appellant recorded on dated 04.02.2017 u/s 131 of the Act were recorded unauthorizedly and illegally by the person who was not authorized in law to administer oath. Consequently, there is no evidentiary value of such illegally recorded statement being without authority of law, hence the implication or inference flowing from such statements may be directed to be completely ignored. 3. Rs. 10,47,500/-: The Id. CIT(A) seriously erred in law as well as in facts of the case in partly confirming the addition of Rs. 20,22,500/- on account of unexplained investment in purchase of land to the extent of Rs. 10,47,500/- (20,22,500 less relief 9,75,000). The addition so made and partly confirmed being contrary to the provision of law and facts may kindly be deleted in full. 4. Rs. 58,00,000/- Rs. 60,00,000/-: The Id. CIT(A) erred in law as well as in fact the case in confirming the additions of Rs. 58,00,000/- as allegedly paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether. Submission: 1. AO cannot blindly rely upon a statement alone: 1.1 During survey dt. 02.02.2017 statements of assessee were recorded u/s 131 and various impugned addition were based on statement of Shri Naresh Jain. However, it's crucial to note that firstly, these statement u/s 132(4) so as to have binding evidentiary value against the person admitting and secondly, the assessee Shri Naresh Jain has retracted from his statement through affidavit dt. 14.02.2017 submitted on 06.04.2017 before ADIT (Inv.) (APB 8285). In the light of this fact, our submission are follows: 1.2.1 Sole Statement, not a good basis for Addition: At the outset, we submit that no addition can be made merely and solely on the basis of a statement. The ld. AO heavily relied upon the statement of the Shri Naresh Jain recorded u/s 131) on dated 02.02.2017 by the Survey Team. However, the credibility of such statements is highly doubtful and not binding for various reasons, as enumerated below: 1.2.2 No addition permissible solely based on statements: Pertinently , the impugned additions have been made solely based on the statement of the assessee without any corroborative evidence, and that too ignorin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch parties and consequently remarked very adversely. Reliance is placed on: 1.4.1 The existence of tension and surcharged atmosphere has been recognised even by the courts. Kindly refer Jagdish Narayan Ratan Kumar 22 TW 209 (JP). Such statements, therefore are bound to give a distorted picture and are not fully reliable as such. 1.4.2 On this aspect it will be quite relevant to refer to decision of Hon ble Gujarat High Court Kailashben Manharlal Chokshi vs. CIT (2008) 14 DTR 257/ (2010) 328 ITR 411 (Guj.) wherein, it was held as under: 22. It is also to be seen as to whether an addition made is merely based on the statement recorded by the AO under s. 132(4) of the Act and whether any cognizance may be taken of the retracted statement. So far as case on hand is concerned, the glaring fact required to be noted is that the statement of the assessee was recorded under s. 132(4) of the Act at midnight. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement if such statement is recorded at such odd hours. Moreover, this statement was retracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at my residence without prior notice and forced me to open the business premises at the same time. 5. THAT the Officials of Income Tax Department after forcing me to open the business premises started the survey on 2nd February, 2017 at around 7AM which continued till 5th February, 2017 around 3:30AM. The survey was conducted based on some suspicious information about our connection with Allen Career Institute. The Officials of the survey team, recorded my statement from time to time to establish, that we have unrecorded transactions with M/s Allen Career Institute. Having not found anything incriminating with reference to our transaction with Allen Career Institute, they started looking into our personal affairs and pressurised me to give statement about my transactions/properties. 6. THAT I gave the statement as per my information and knowledge without any verification from the books of accounts. This statement continued from 2nd February, 2017 to 5th February, 2017 and my statement was recorded in more than 25 pages. The survey party impounded various documents, books and papers and asked me to sign each and every paper without providing me any opportunity to read what they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceiving in the retraction letter/affidavit. The very fact of filing the affidavit together with the other facts and in absence of any contrary evidence, has to accept that the assessee did retract within a period of just four days from the date of admission during the course of survey statement on dated 02.02.2017. Even the revenue has not taken any specific ground on this aspect nor the ld. DR could controvert these facts. 2.4 Legal Principles: 2.4.1 It is trite law that an admission, though best evidence against such person, if shown to be out of ambiguity, under tension or was against the facts or misconception of law, can be validly retracted. It has been held by the Hon ble Supreme Court in Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Others 91 ITR 18 (SC): Such admission is an extremely important piece of evidence, but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect, and the assessee should be given a proper opportunity to show that the books of accounts do not disclose the correct state of facts . 2.4.2 The Hon ble Apex Court in Nagubai Ammal v/s B. Sharma Rao AIR 1956 (SC)593: held as under An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the statement of the director of 'SJSL' recorded under section 132(4) and statement of another director under section 131(1A), wherein it was admitted that the company namely 'SJSL' is engaged in providing accommodation entries. Thus the same is a paper company. On perusal of the statement recorded under section 133(4) reproduced by the Assessing Officer in his order there was remarks made by such director to the effect that material/document seized during the search does not belong to the PS i.e. 'SJSL', or belong to the assessee company. In this regard, there were no incriminating material against OP was found in the search. Further, section 153C emphasize that there should be material or document seized which belong to the OP. As such statement recorded during search is not a material or document found and seized. Therefore, the statement recorded under section 132(4) cannot be construed as material/document for invoking proceeding under section 153C specially, in the circumstances where no material of incriminating in nature found belonging to OP. [Para 8.4] The documents/any fact/evidence which could suggest that the documents/transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 133A does not empower any ITO to examine any person on oath, so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. 4.2 Further, the statute has provided different provisions looking to the different factual situations as regard recording of the statement, somewhere on oath and somewhere without oath, u/s 132(4) (in such matters), u/s 133A(3)(iii) (in survey case) and u/s 131 (for general inquiry). These provisions operate independently in their respective fields and cannot be used interchangeably. S.133A(3)(iii) is separate and independent from S. 131, as evident from the further fact that S. 133A (6), refers to use of the powers u/s 131 only in a given fact situation (as stated above), which manifests the legislative intention that statement of the assessee can be recorded under any of these three provisions as the situation may demand. Further, S.132(4) provides that such statement recorded during search may be used as evidence against the assessee in any proceedings, which is not the situation with S. 133A(3)(iii) nor with S. 131. In other words, though statement may be recorded on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence in any proceeding under the Act. On the other hand, Section 133A does not talk of the recording of any statement on oath. Under Section 133A (3) (iii), the Income Tax Authority acting under the said provision could record the statement of any person which may be useful for, or relevant to, any proceeding under this Act. Therefore, there is a considerable difference in the nature of the statement recorded under Section 132(4) and that recorded under Section 133A(3)(iii) of the Act. 41. This distinction was noticed by this Court in Dhingra Metal Works (supra). The Court there referred to the decision of the Kerala High Court in Paul Mathews Sons v. CIT [2003] 263 ITR 101/129 Taxman 416 and of the Madras High Court in S. Khader Khan Son (supra) and observed that the word 'may' occurring in Section 133A(3)(iii) of the Act clarifies beyond doubt that the material collected and the statement recorded during the survey is not a conclusive piece of evidence by itself. Incidentally, the decision of the Madras High Court in S. Khader Khan Son (supra) has been affirmed by the Supreme Court by the dismissal on 20th September, 2012 of SLP (Civil) No. 13224/2008 filed by the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y long period as against merely 2 months in the present case (04.02.2017) and affidavit towards retraction filed on 06.04.2017 (Pg.54 CIT(A) order). 4.5 It is pertinent to note that the CIT(A) has rejected the claim of filing retraction by the Assessee before him, at the same time, he considered the documentary evidences, furnished by the assessee with a view to explain the impounded document and to clarify the admission made hence, it can't be said that the CIT(A) granted relief only and only on the legal aspect (that statement recorded during survey u/s 133A(3)(iii) and/or u/s 131, has no evidentary value and not being conclusive, no addition can be made merely on that basis). On the contrary, it is discernible from his findings in all the 4 cases, where he has granted relief, he has extensively dealt with the merits of each case for examining the impounded documents, explanation of assessee, remand report and rejoinder etc., independently. Thus, under totality of the facts and circumstances detailed above, the CIT(A) deleted the addition. Therefore, this ground taken by the revenue deserves to be dismissed. AGOA-3: Wrong confirmation of addition upto Rs. 10,47,500/- (out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling Affidavit and hence does not have any evidentiary value. With regard to evidentiary value of the statement recorded under oath u/s 131 it is held in various decisions that the statement recorded under oath is having evidentiary value. The ITAT Delhi Bench E discussed these issues in detail in the case of Nokia India (P.) Ltd. v. Deputy Director of Income-tax, Circle -2(1), International Taxation, New Delhi [2015] 59 taxmann.com 212 (Delhi - Trib.) on these issues in detail. The relevant part is extracted as under- Accordingly, it is to be held that there was no illegality in carrying out survey and the statements recorded under section 131 at Chennai were validly recorded. [Para 7.19] Thus, as has been already held that survey was validly conducted, therefore, objection of assessee regarding evidentiary value of statements recorded during survey does not survive. However, even otherwise, it is well settled law, as held in the case of Pooran Mal v. Director of Inspection [1974] 93 ITR 505 (SC) and Dr. Pratap Singh v. Director of Enforcement [1985] 155 ITR 166/22 Taxman 30 (SC), that evidence collected during illegal surveys also can be relied upon. Even otherwise this plea cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n allegation of duress or coercion was made almost after two years, then such allegation has to be overruled. In this case also the allegation is made after long period of time. No evidence of coercion is furnished. Therefore, the allegations of coercion are not found to be acceptable. The ITAT Ahmedabad Bench 'C' in the case of Kantilal C. Shah v. Assistant Commissioner of Income-tax, Circle-3, Ahmedabad [2011] 14 taxmann.com 108 (Ahmedabad) considered the similar issue. The head note of the decision is as under Section 132, read with section 69, of the Income-tax Act, 1961 - Search and seizure - Block periods 1-4-1985 to 31-3-1995 and 1-4-1995 to 12-12-1995 - Whether section 132(4) enables an authorized officer to examine a person on oath and such a sworn statement made under section 132(4), thus can be used as an evidence under Act - Held, yes - A search operation was carried out at premises of assessee whereby cash, jewellery, books of account and certain documents were found and seized - Assessee on same day had given a statement under section 132(4) whereunder admissions with regard to unaccounted income of Rs. 6.20 lakhs were made - Said unaccounted income consisted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of land in cash is found and the statements were recorded on the basis of material found during the course of survey proceedings. Therefore, the addition is made on the basis of statement recorded during survey and the documents found during survey. The appellant has not furnished any evidence to support that it approached to higher authorities about the alleged coercion used during recording the statement. There is no evidence that the appellant filed any such complaint before higher authorities. Therefore, the allegations of the appellant are unfounded and therefore not found to be acceptable. On the issue of retraction Hon ble High Court Of Kerala in the case of Commissioner of Income-tax, Kozhikode v. O. Abdul Razak [2012] 20 taxmann.com 48 (Ker.) held as under - Section 132 of the Income-tax Act, 1961 - Search and seizure - Block period 1988-89 to 1998-99 - Whether any statement recorded under section 132(4), statutorily deemed to have evidentiary value, cannot be retracted at mere will of party - Held, yes - Whether a statement made under oath deemed and permitted to be used in evidence, by express statutory provision, has to be taken as true unless there is contra evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on account of admissions made under oath and statement corroborated by documents recovered in survey and attendant circumstances is found to be justified. Without prejudice to the above, there is another angle to the admission during the search and retraction during assessment proceedings. By admitting the appellant during search and survey proceedings the assessee stopped further investigation by the investigation wing. The assessee prevented department to cause further enquiry in his case. Since, the appellant admitted that part of the cash transactions. As such law of estoppels applies in this case. In such circumstances, it is against the principles of law if retraction letter is furnished before the AO during the assessment proceedings is considered. In view of above discussion, the outright retraction made by the assessee is not found to be acceptable and rejected. However, the documentary evidence to clarify the admission made is admitted in the interest of justice. The facts of the case are considered. In the statement recorded during The assessee only admitted that out of total expenditure as recorded on the paper found during the survey of Rs. 20,22,500/- an amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds which the assessee agreed and paid advance of Rs. 9,75,000/- to Shri Devilal, the owner and buyer. Accordingly, the assessee even accounted for the said transaction, which is reflected in the Balance Sheet as at 31.03.2016 (APB-89) submitted before AO vide submission dt. 28.09.2017 (APB 19). First of all, though the CIT(A) noted this fact and contention, yet however rejected by merely saying that the assessee filed ROI u/s 44AD and hence such accounts were not maintained / cannot be relied upon. Such basis for rejection by the CIT(A), is a misconception of law in as much as S.44AD nowhere prohibits an assessee from maintaining regular books of accounts and it is sole option or prerogative of the assessee whether to opt for S.44AD or not. But having opted for S. 44 AD Presumptive Taxation does not mean that accounts otherwise regularly maintained cannot be relied upon. The assessee merely stated the position of law u/s 44AD but never categorically denied maintaining accounts hence there is no contradiction as alleged by CIT(A). Thus, the assessee merely paid Rs. 9,75,000/- and that too was duly accounted for. Although, specific contention was raised to this effect, in Para 4.6.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Devi Lal about the land/transaction etc. 5.2 AO commented on this aspect in remand report as under: The reply of the assessee has been perused but the same can t be acceptable at this level, as the matter is under consideration before the appellate authority. During the course of assessment proceeding, the then AO had relied upon the statement recorded during the course of survey proceedings. Further, during the course of assessment proceedings, the assessee had also not submitted satisfactory documents in support of his claim. In view of above facts, in the opinion of the then AO that the assessee has invested total amount of Rs. 20,22,500/- for purchase of agriculture land at village- Mandliya in his Benamidar Shri Devi Lal Bairwa from his undisclosed income. Hence, an addition of Rs. 20,22,500/- was made by the then AO and added to the total income of the assessee as undisclosed income. Hence, the AO had rightly made addition of Rs. 20,22,500/- and the contention of the assessee is not acceptable being not correct. No adverse comment in the Remand Report nor any concrete evidence brought on record to show that the entire consideration was paid by the assessee alone. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no evidence brought on record to show that entire payment of Rs. 20,22,500/- by assessee alone (on the contrary assessee merely admitted Rs. 9,75,000/- cash payment to Devilal). This further shows contradictory approach of the Revenue where they rely upon the statement of the assessee as and when best suited to them, but where it did not suit they are ignoring them same. Though the CIT(A) was justified in deleting the addition of Rs. 9,75,000/- however, he was completely unjustified in sustaining part addition of Rs. 10,47,500/- which deserves complete deletion as stated above. Thus, under totality of the facts and circumstances detailed above these two grounds taken by the Revenue deserves to be dismissed. AGOA 4: Additions of alleged cash payments of Rs. 1.58 crores (58 lacs and Rs. 60 lacs) to Shri Ajay Modi (Bhagat Public School): Facts: This addition consists of three figures being Rs. 40 lacs, Rs. 60 lacs and Rs. 58 lacs paid to Shri Ajay Modi. The AO has dealt with this issue Pg.4 Pr. 5 and copied at page no.7 of CIT(A) order. The detailed written submissions dt.19.11.2019 filed before the CIT(A) are at page no.9 para 4.2, the remand report thereupon by the AO dt. 07.06. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough the impounded papers and statement of the assessee, it is found that assessee had taken administrative control on Bhagat Public School, Village Alaniya Since March 2012 and paid security money and incurred expenses on construction and for affiliation. Assessee has filed page wise reply during the course of assessment proceedings, wherein he has mentioned that Rs. 1,35,00,000/- paid by Nisha Jain who is assessee s wife which is not accepted that this issue was not raised in during the course of survey proceedings. On the above facts, assessee has made expenses and cash payment to Shri Ajay Modi from his unaccounted income of Rs. 1,65,00,000/- out of which Rs. 1,58,00,000/- made during the FY 2015-16 and Rs. 7,00,000/- in the F.Y. 2016-17. Hence, considering his statements given during survey proceedings. Hence, an addition of Rs. 1,58,00,000/- is made in assessment year 2016-17 and added to the total income of the assessee. The appellant explained with regard to addition made of Rs. 1,58,00,000/- as under: 1. Rs. 18,00,000/- through cheque to Mr. Ajay Modi by Nisha Jain 2. Rs. 22,00,000/- through cheque to Ajay Modi by Nisha jain. 3. Rs. 58,00,000/- in cash to Mr. Ajay Modi b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of survey proceedings. The reason for rejecting the explanation of the appellant is not found to be justified in view of evidences submitted before the AO. The addition made by the AO is not found to be sustainable in view of the explanation furnished by the appellant. The appellant gets partial relief of Rs. 40,00,000/- accordingly. The appellant also submitted that amount of Rs. 60,00,000/- has never been paid as appeared in the alleged agreement being de-facto de-jure, the deal was not materialized. The explanation of the appellant that the amount of Rs. 60,00,000/- was not paid is not found to be acceptable because, if the payment was not made, the same should have been mentioned during the survey. The cash transaction takes place in secret manner and there is no trace is left. Therefore in the absence of credible evidence, the claim of the appellant remains unsupported with any evidence. The logic of the appellant that because the deal was not materialised the payment is not made is also hollow claim. The deal was for entire transaction and not for piecemeal work. The appellant has accepted other transactions like the payment made by Ms. Nisha Jain of Rs. 40,00,00/- and payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement. Kindly refer the reply of the assessee reproduced at internal Pg. 5 6 of the assessment order of Naresh Jain AY 2016-17 is as under: As regards balance amount Rs. 60 lacs the same does appear only in the agreement. De-facto de-jure the deal and the amount of Rs. 60 lacs did not materialize at all. It was an erroneous term which was not rectified in the due course. The ld. CIT(A) rejected such contention saying that such facts should have been mentioned during the survey; normally cash transactions take place in secret manner and it was a composite deal for the entire transaction and not for piecemeal work. However, such findings are completely contrary to the facts on record and a purported misreading, as submitted hereunder: 2A 1.2 Firstly, the very fact that the parties in the said agreement has given the breakup showing different heads of the total agreed consideration of Rs. 3 crores (as alleged) towards taking over of the management of Bhagat Public School, viz. towards security money, construction expenses. One of the head was expenses for CBSE affiliation, which itself imply that it was not a composite contract of Rs. 3 crore payable to Shri Modi. In the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. 2A 1.7 It is further submitted that the best person who could have confirmed whether the assessee made payment of Rs. 60 lakh cash or not, could be Shri Ajay Modi who was the alleged or proposed recipient and therefore, a specific contention of non-inquiry from him, was also raised before the CIT(A)(Pg.61) but was rejected as under: It is argued that no inquiries have been made from Shri Ajay Modi to whom the alleged amount of Rs. 1.58 crore was alleged to be paid. The argument of the appellant are not relevant for the case of the appellant as the appellant has accepted making payment in cash in his statement. Whether inquiry is made from the receiver or not is of no consequence in the case of the appellant. Hence, the argument of the appellant is not found to be relevant and the same is rejected. 2A 2. Transaction fall in the AY 2014-15: 2A 2.1 In the alternative, even assuming it is held that the assessee made the payment of 60 lakhs, but there is no evidence found during the course of survey nor referred by the revenue to show that such unexplained investment was made in subjected AY 2016-17 only. On the contrary, the said agreement, heavily relied upon by the AO itself sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finally the ld. CIT(A), after considering the detailed submissions, the remand report, rejoinder made before him, at Page 64, Para. 4.6 concluded in following words: Hence this ground. Submission: 1. At the outset we strongly place reliance upon our detailed submissions made before AO as also before the CIT(A). 2. During appellate proceedings, remand report was called for by ld. CIT(A) whereby assessee submitted rejoinder as under (also reproduced at CIT(A) pg 51): Addition of Rs. 55,490/- on account of un-accounted agriculture expenses. (i) It is very humbly submitted that referring to the facts and circumstances of the case and the submissions filed by the appellant with relevant documentary evidences, the Assessing Authority interalia observes that- During the course of Survey Proceedings, page No 12 of Exhibit 11 was impounded wherein agricultuural expenses of Rs. 55,490/-. Therefore, same expenses of Rs. 55,490/- is addeded to total income of the assessee. Hence the AO had rightly made addition of Rs. 55,490/- and the contention of the assessee is not acceptable being not correct. It is very humbly submitted that L d Assessing Authority itself has interalia observed that Durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed investment in ST land situated at Mandana Kota: Facts: The AO has dealt with this issue at Pg 8 Pr 6 and copied at page no.9 para 4.1 of CIT(A) order. The detailed written submissions dt.19.11.2019 filed before the CIT(A) are at page no.28 para 4.2, the remand report thereupon by the AO dt. 07.06.2023 is at page no.45 para 4.4, the rejoinder dt. 20.06.2023 at page no. 50 para 4.5 and finally the ld. CIT(A), after considering the detailed submissions, the remand report, rejoinder made before him, at Page 62, Para. 4.6 concluded in following words: iii. Addition of Rs 9,50,000 as unaccounted investment (Ground No. 5) During the course of assessment proceedings, the AO had relied upon the statement recorded during the course of survey proceedings. In view of above facts, the AO had made addition of Rs. 9,50,000/- for the assessment year 2016-17 and added to the total income of assessee. The appellant argued that he is an individual and shown his business income as per provision of Section 44AD of the Act and hence, not liable to maintain his books of account. The reply of the appellant is contradictory to the stand taken by him where it is stated that the date and transaction is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The addition made during the year is not found to be sustainable as the transaction does not pertain to the current year. Therefore, the addition is deleted in current year. However, this amount is added in AY 2017-18 by way of enhancement. The appellant gets relief of Rs. 9,50,000/- in the current year. The ground no. 5 is accordingly treated as allowed. Hence this ground. Submission: 1. We strongly rely upon our detailed submissions (Pg.9-35 Pr.4.2) and rejoinder (Pg.47-52 Pr.4.5 of CIT(A) Order) and the paper book filed before the CIT(A). 2. We place strong reliance on the order of the CIT(A) to the extent, his findings and observations are given in the favour of assessee. 3. The ld. CIT(A) has not completely deleted this addition but merely that it pertains to AY 2017-18 and rightly so because in the impounded paper (APB 47) itself the date mentioned towards Rs. 9.50 lakh as advance given was 04.11.2016 which falls to AY 2017-18. Accordingly, the CIT(A) has rightly deleted here hence, under totality of the facts and circumstances detailed above this ground taken by the Revenue deserves to be dismissed. Additional Ground of Appeal AGOA -10: Telescoping benefit - not fully allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ITA-675/JP/2012, Bombay High Court, in the case of Commissioner Of Income-Tax, ... vs Jawanmal Gemaji Gandhi on 5 October, 1983 discussing on the earlier decision of Kerala High Court in [1980] 121 ITR 433. The facts related to claim of telescoping benefit is presented as under AY 2013-14 (Rs. 5,53,474/-) Return filed in response to notice u/s 148 on 23.03.2019. The same assessed on 3-07-2019. The assessee claimed this amount as income from other sources. This amount was in the form of cash withdrawn from excess salary claimed to be paid to employees in Bhagat Public School. AY 2014-15 (Rs. 16,34,573/-) Return filed in response to notice u/s 148 on 08.04.2019. The same assessed on 3-07-2019. The assesse claimed this amount as income from other sources. This amount was in the form of cash withdrawn from excess salary claimed to be paid to employees in Bhagat Public School. AY 2015-16 (Rs. 41,56,437/-) Return filed in response to notice u/s 148 on 26.04.2018. The same assessed on 20-12-2018. The assesse claimed this amount as income from other sources. This amount was in the form of cash withdrawn from excess salary claimed to be paid to employees in Bhagat Public School. Out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act. When an income is taxed/addition is made to taxable income in an earlier year, the assessee may claim that the income arising in subsequent year/subsequent period is sourced out of the income taxed earlier. Hon ble Bombay High Court held in the case of CIT v. Jawanmal Gemaji Gandhi [1983] 15 Taxman 487 (Bombay)/[1985] 151 ITR 353 (Bombay)/[1984] 39 CTR 127 (Bombay)[05-10-1983] held as under - The Supreme Court has held in the case of Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 that the secret profits or undisclosed income of an assessee earned in an earlier assessment year can constitute a fund, though concealed, from which the assessee may draw subsequently. The assessee, in the instant case, acquired the gold in the latter half of the assessment year: it could then very well be that the undisclosed income earned in that very year, which had been added on account of the increased estimated turnover, constituted the fund from which this asset was acquired. The conclusion reached in this behalf by the Tribunal was reasonable and justifiable. The assessee, in the present case, acquired the cash from the employees of school which is offered for tax as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lchand (1987) 165 ITR 453 (Raj)] In view of the decisions relied upon by the appellant and the decisions discussed above, the additional income declared by the appellant in the return filed u/s 148 in earlier years would cover the amount of unexplained investments of the current year. The claim of the appellant is found to be acceptable in this regard. Accordingly, following additions confirmed in appeal are given benefit of telescoping. Rs. 10,47,500/- (2022500-975000) Rs. 58,00,000/- Rs. 60,00,000/- Rs. 55,490/- Total Rs. 1,29,02,990/- As discussed earlier, Rs. 1,00,30,778/- was already available with the assessee during the year as per additional income declared in the form of cash from AY 2013-14 to AY 2016-17. Therefore, the net addition sustained is computed at Rs. 28,72,212/-. There is no amount of cash available for giving telescoping benefit in next year as the amount of cash available remains NIL as the cash available has been utilised in the additions upheld. In the result the addition to the extent of Rs. 28,72,212/- is upheld. The remaining additions of Rs. 1,00,30,778/- out of total additions confirmed of Rs. 1,29,02,990/- are not found to be sustainable as the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce could not have been reduced for the purposes of computing availability of cash for telescoping. Thus, the addition sustained by the CIT(A) of Rs. 28,32,212/- has to be reduced by 11,60,00 and the net amount should remain at Rs. 16,72,212/- only. 4.2 However again, the above is the position upto the stage of CIT(A). If these additions (of outgoing / investment) are further reduced by the Hon ble ITAT, the balance of Rs. 28,72,212/- or Rs. 16,72,212/- may be covered against the same, and only if there remains anything, may be the income to be finally assessed. At the same time however, if because of the deletion of additions by the Hon ble ITAT, it results into more availability then the balance leftover additions of outgoings, there will be no income and the balance available cash has to be carried forwards and set-off against the additions (if any sustained upto the stage of the ITAT) in AY 2017-18 and so on. Consequentially, this part of order of CIT(A) deserves to be modified. 5. Supporting Case Laws: 5.1 The issue of telescoping is no more Res Integra and rather a well settled principle because long back in the case of Anantharam Veerasingaiah Co vs CIT [1980] 3 Taxman 56, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention that the entire additions itself was bad in law and without jurisdiction and for various reasons). 3. AO can t change head of income: 3.1 It is submitted that S.115BBE specifically refers to the income which are of the nature as referred in S. 68,69,69A of the Act being the income from other sources. Therefore, subjected income has essentially to be classified u/s 14 of the Act as Income From Other Sources and that is possible only when the income is not capable of being classified under any other head being income from salary, house property, capital gain, business or profession. 3.2 A combined reading of S. 14 with S. 56 of the Act makes is evidently clear that for the assessment of an income it must have to be classified under four heads of income as enumerated u/s 14 and if it doesn't fall under any specific head of income as per item A to E of S. 14, such income has to be assessed under the residuary head of income i.e. item F of S. 14. Therefore, income added u/s 68 or 69 etc. has to be given a specific head in terms of S. 14, 4.3 The Hon'ble Supreme Court in case of Karanpura Development Co Ltd vs. CIT [1962] 44 ITR 362 (SC) held that these heads are in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xing the surrender made on account of excess stock and excess cash found U/s 69 of the Act and accordingly held that there is no justification for taxing such income u/s 115BBE of the Act. 5. In the present case the addition of Rs. 20,22,500/- is already subjected to challenge before the Hon ble ITAT. Only the amount upheld, if any, could be considered for this purpose. Addition of Rs. 1.58 crore relates to the Bhagat Public School which is a business activity. Again the deletion of Rs. 40 lakhs and confirmation of addition of Rs. 60 lakhs are subjected to ITAT decision and balance Rs. 58 lakhs is admitted by the assessee. However whatever addition is sustained by the Hon ble ITAT or Rs. 58 lakh as admitted income, they are all part of business income earned by assessee from advertising business as was result of suppressed income therefrom. Similar is the position with regard to the additions Rs. 9,50,000/-, Rs. 48,46,094/- and Rs. 55,490/-. To sum up, firstly the addition sustained by the Hon ble ITAT in response to cross appeal filed by the assessee and Department can only be considered but that also being suppressed business income could not be subjected to S.115BBE by assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing modified GOA No. 2 reproduced hereunder:- The ld. CIT(A) and the AO seriously erred in alleging / taking stand that statement of the assessee recorded during survey on 04.02.2017 were recorded u/s 131 as against legally and factually correctly stating u/s 133A(3)(iii) and therefore such survey statement has no evidentiary value at all therefore the reliance placed by the AO and supported by CIT(A) for making/confirming the additions (on this legal aspect that statement recorded u/s 131 on oath has evidentiary value hence can be used against the assessee), is a complete misinterpretation of law and misreading of the facts on record and hence, the stand of Revenue deserves to be rejected and moreover the implications flowing from such statements may be directed to be completely ignored. 4.2 We now proceed to adjudicate the modified ground of appeal no. 2. We may clarify that in the other three connected matters being Naresh Jain A.Y. 2017-18 ITA No 374/JPR/2024(D), Nisha Jain A.Y. 2015-16 ITA No. 377/JPR/2024(D) Nisha Jain A.Y. 2017-18 ITA No 378/JPR/2024(D) also, the Revenue has raised similar grounds/contentions on this very aspect and therefore, for the sake of convenience we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision, in case of Pr. CIT, Central -2, New Delhi v. Meeta Gutgutia [2017] 82 taxmann.com 287 (Delhi) Hon ble Delhi High Court referred to the decision of the Kerala High Court in Paul Mathews Sons v. CIT [2003] 263 ITR 101/129 Taxman 416 and of the Madras High Court in S. Khader Khan while considering distinction between statements under Sections 132(4) and 133A held as under: 40. The main plank of Mr. Manchanda's submission was that the disclosure made by Mr. Pawan Gadia in his statement under Section 133A was sufficient to be construed as incriminating material qua all the aforementioned AYs, the assessment for which could be re-opened by invoking Section 153A of the Act. It is significant that while in the written submission dated 26th April, 2017, Mr. Manchanda termed the statement of Mr. Pawan Gadia as the statement dated 23rd December, 2005 recorded under Section 132(4) of the Act , he was careful to describe it as such in the subsequent written submission dated 2nd May, 2017. This was for a good reason. The statement was in fact not under Section 132(4) of the Act but under Section 133A of the Act. There is a difference between a statement made during a survey und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014] 50 taxmann.com 194 (Jaipur - Trib.), has also taken similar view holding that: 3.8 Effect of admission made in statements recorded during survey under section 133A of the Act 18. The position of law regarding the evidentiary value of admissions made in such statements is now settled. After considering the rival stands on this issue, we have already discussed the same in the earlier part of this order. No admission made in a statement recorded under section 133A on oath during survey can be relied as evidence against the maker or the assessee. Undeniably, the Assessing Officer has made impugned addition on the basis of the statement of Shri Manohar Lal Agarwal and specifically by relying on his reply to question No. 23 of his statement. As per the assessment order, the excess stock of Rs. 5,08,98,166 has been worked out after giving the benefit of discount and the gross profit rate but mainly relying on the statement of one of the partners of the assessee-firm. If the statement of Shri Manohar Lal Agarwal and others are excluded in view of the above legal position, the value of the alleged excess stock can be ascertained in the light of the facts of this case. The legal issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the CIT(A) on this aspect. For the above reasons, the modified ground of appeal no. 2 taken by the assessee is allowed. 4.4 However, except the above legal aspect decided by the CIT(A) against the assessee, we agree with the ld. CIT(A) in the respective grounds that the AO used the statement to corroborate said material found during the survey but, at the same time, the assessee had successfully explained the contents of the said impounded document/s in responding to the additions made by the AO and thus, were rightly deleted as by the CIT(A). Hence, no blind reliance could be placed on the statement of the assessee alleging admission. The law is well settled that no addition can be made solely based on the statement. Even the CBDT directed the subordinate authorities not to press the assessee to make surrenders. We also find that the CIT(A) rightly placed reliance on the decision of C.K. Abdul Aziz (2019) 111 taxman.com 74 (Ker) . Thus, we find no infirmity in the order of the CIT(A) on this aspect. It is necessary to clarify that we have confirmed the deletions of additions by the CIT(A) on merits independent of these legal aspects. Therefore, the ground of the Revenue, on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral land for Rs. 19,50,000/- and the appellant neither signed the same nor was a party to the transaction. Thus, at the first instance, the entire transaction was between the strangers i.e. Devilal and the sellers. Admittedly, no evidence found nor is relied upon by the Revenue to support its allegation that the entire Rs. 22,50,000/- being the purchase consideration and the expenses incurred were paid by the assessee only. The allegation that it was a land of SC ST and which the assessee could not purchased and hence he might have transacted through Devilal, is a clear case of suspicion without any corroborative evidence and hence cannot be sustained. Thus, up to this stage, the said transaction could not have been considered in the hand of the assessee at all. However, in the statement, the assessee admitted having paid cash of Rs. 9,75,000/- as advance paid to Devilal towards the sale of half share in the said agricultural land in favour of the assessee. The assessee explained the said payment to have been accounted for in its Balance Sheet for the year ending in 31.03.2016 and we find that such payment has been shown therein as advance payment (copies placed at ABP Pg. 89). Tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was deleted by the ld. CIT(A), against which the Department is not in appeal. Thus, the dispute is confined only to the addition of Rs. 60 lakh. Although the addition of Rs. 60 lakhs has been challenged on various grounds, however, after careful consideration of the impounded document and its contents, we are satisfied that the payment of Rs. 60 lakh, in fact, did not pertain to the year under consideration (A.Y. 2016-17) as the Rs. 60 lakh was already paid earlier, as evident from the language used in the agreement (APB 49-52). It is stated that the amount of Rs. 60 lakh towards CBSE affiliation expenditure is already deposited, implying that such payment was made prior to entering into the impounded agreement dated 16.10.2015 and not on or after the said agreement. The aforesaid agreement also contains a reference to an earlier agreement dated 16.05.2013, for the period which had already expired on 31.03.2016. Moreover, there is a reference to various other payment entries on such dates (e.g. Nov 2013, Oct 2013 and 05.02.2014), falling within the financial year 2013-14 (A.Y. 201415). 6.2 We are therefore in full agreement with the contention of the ld. AR that, (alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT. However these additions are further subject to the benefit of telescoping, which, in this case, was allowed by the CIT(A) and the balance additions of Rs. 28,72,212/- remained uncovered at his stage. But in Departmental Ground of Appeal No. 5 taken by the Revenue against benefit of telescoping and after considering the claim made by the assessee in Additional Ground of Appeal No. 10, the additions sustained after giving effect to the present order remains NIL. Since there remains nothing on account of any addition made by the AO u/s 69 to 69C, there is no question of sustaining the invocation of S. 115BBE of the Act. But otherwise also we find that the only identifiable source of investment or asset or expenditure, which were alleged to be unexplained and additions were made by the AO, emanates from the only source of income being advertising business in his proprietary namely M/s Quick Advertising Company, as per the computation of total income placed at APB Pg. 39 40. There is no other known source of income, which could give rise to undisclosed income, under consideration. We find support from the decisions of the coordinate bench of ITAT, Jaipur, in the cases of Ram Narayan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ground no. 3 (A-GOA 3) taken by the assessee in relation to the addition of Rs. 20,22,500/- and therefore does not call for any separate adjudication. Similarly, the issue relating to payment made to Ajay Modi is also under challenge by the assessee in ground of appeal no. 4 (AGOA 4) taken by it. Further in absence of any specific amount having been mentioned by the Revenue in its ground, it is seen that the payment of Rs. 40 lakh (part of Rs. 1.58 cr) to Ajay Modi was made through cheque only and not in cash and the ld. CIT(A) after recording a detailed finding, and appreciation of the evidences, has deleted the same, which is not under challenge by the Revenue. The additions of Rs. 60 lakhs and Rs. 58 lakhs have also been dealt with separately in ground of appeal no. 4 taken by the assessee. In view of these facts, therefore, this ground also doesn't need any separate adjudication as indicated above. 14.0 This ground No. 3 of the Department has already been dealt with and adjudicated along with aassessee s ground No. 3 (AGOA-3) herein above. 15.0 In Ground No. 4, the Revenues is aggrieved by the deletion of the addition of Rs. 9,50,000/- made by the on account of unrecor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oping benefits at Rs. 28,32,212/- on the ground that the additions made by the AO A.Y 15-16 in the scrutiny assessment were challenged in the first appeal but during the pendency of the appeal, the assessee opted for VSV and paid the taxes becoming due thereon. Copies of the Assessment order, Appellate order and VSV certificates were submitted which are available in the II APB pages: 92-102 and have been duly perused by us. We agree with the contention of the ld A/R that once the assessee has already settled the issue by not further disputing the same and having paid the taxes thereon, such income (on account of investment/outgoing) could not have been termed as income utilised and the CIT(A) was not justified in reducing the same. Hence, the amount uncovered by the telescoping benefit computed by the CIT(A) at Rs. 28,32,212/- is to be reduced by Rs. 11,60,000/- as aforesaid, which leaves the balance of Rs. 16,72,202/- as the income not covered even by the telescoping benefit. 16.4 . However, again this is the position only upto the stage of the ld. CIT(A) order, which is further subjected to the result of the ITAT order as the additions sustained by the ld. CIT(A) were challenged ..... X X X X Extracts X X X X X X X X Extracts X X X X
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