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TMI Blog2024 (11) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... ought on record. AO should act in a judicial manner, proceed in a judicial spirit and come to the judicial conclusions. AO is required to act fairly as a reasonable person, not arbitrarily and capriciously. The assessment u/s 153C should have been supported by adequate material and it should stand on its own leg. This notebook or loose sheets found during the course of search is only circumstantial evidence and not full proof evidence to sustain the addition. No addition can be made in the absence of any corroborative material. If it is circumstantial evidence in the form of loose sheets and notebook, it is not sufficient to come to the conclusion that there is conclusive evidence to hold that assessee has any unaccounted transactions. The notes in the diary/loose sheets are required to be supported by corroborative material. Since there was no examination or cross-examination of persons concerned, the entire addition in the hands of the assessee on the basis of uncorroborated writings in the loose papers found during the course of search cannot be sustained. The evidence on record is not sufficient to uphold the stand of AO that assessee has unaccounted transactions. There are var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iciently, the earlier stated facts lose their effect and relevance as binding evidence and the authorities cannot conclude the matter on the basis of the earlier statements alone. However, bald retraction of earlier admission will not be enough after retraction. Such statements cannot automatically become nullified. If the assessee proves that the statement recorded was involuntary and it was made under coercion, the statement has no legal validity. Thus, the above additions cannot be made solely based on the statements recorded u/s 132(4). See Commissioner of Income-tax v. Harjeev Aggarwal [ 2016 (3) TMI 329 - DELHI HIGH COURT ] The onus lies on the Department to collect the evidence to corroborate the notings on the loose sheets. In the present case, it is undisputed position that as a result of search and seizure action in the case of respondent- assessee and its group companies, no material whatsoever was seized and found indicating payment of on-money consideration at the time of purchase of the lands. A sworn statement cannot be relied upon for making any addition and must be corroborated by independent evidence for the purposes of making assessments. Balance addition content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusively that there was an actual payment made by assessee, which was undisclosed by the assessee in his books of accounts. The evidence brought on record by the department is not enough to fasten additional tax liability on the assessee. The department without examining Mrs. Gulzara Banu had came to a conclusion that there was unaccounted payment made by assesse by way of cash to her. In our opinion, this addition is based only on conjectures and surmises and not based on corroborative material. As such, we are not in a position to sustain the addition. Further, the ld. AO has failed to establish live link between the seized material and the statement of recipient who has received this payment. There is no conclusive presumption to say that actual payment has been passed to Mr. Gulzara Banu unless he has confirmed this payment and there after given a cross examination to the present assessee so as to make addition. Hence, we delete the additions. Addition made on the basis of 26QB Challan, wherein it was showing the TDS made on the immovable property transaction u/s 194IA - This is the project by name Sita Plaza Developed Mr. Manohar B. Shetty, joint development agreement wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER For the Appellant: Smt. Sheetal Borkar, A.R. For the Respondent: Shri D.K. Mishra, D.R. ORDER PER BENCH: These appeals by assessee are directed against common order of CIT(A) for the assessment years 2013-14 to 2018-19 dated 18.12.2023. Since these appeals are related to a single assessee emanated from the common order of CIT(A), these appeals are clubbed together, heard together, and disposed of by this common order for the sake of convenience. The grounds of appeal raised by the assessee as follows: ITA 485 of 2024 (2013-14) 1. The learned CIT(A), erred in passing the order in the manner he did. 2. The learned CIT(A), is not justified in law in making additions u/s 69B amounting to Rs. 84,00,000/- purely on assumptions and presumptions based on the loose sheet found at the time of search. 3. The learned CIT(A), has overlooked the facts that, no additions/disallowances u/s 153A can be made for the assessment year under questions, without the corroborative evidence unearthed and the original assessment has not abated as on the date of search. 4. The learned CIT(A), has erred in not considering the decision, which are squarely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... III vs. Kabul Chawla (234 taxmann 300) (Delhi), iii) Canara Housing Development co. vs. DCIT, CC1(1), Bangalore (49 taxmqaann.com 98) (kar) 5. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed ITA 465/Bang/2024 (2014-15) 1. The learned CIT(A), erred in passing the order in the manner he did. 2. The learned CIT(A), is not justified in law in making additions u/s 69B amounting to Rs. 29,50,000/- purely on assumptions and presumptions based on the loose sheet found at the time of search. 3. The learned CIT(A), ought to have appreciated that an addition cannot be made on the basis of suspicion and guesswork and without bringing corroborative material on record. 4. The learned CIT(A), has erred in making an addition against the appellant on the basis of a piece of paper found during the course of search wherein certain figures were written 5. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 6. For these and such other groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search wherein certain figures were written. 6. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 7. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. 2. Facts of the case are that the assessee is engaged in Real Estate business and properly developer. A search and seizure action was carried out u/s 132 of the Income Tax Act, 1961 (in short The Act ) in case of Mohammed Ibrahim Mohideen, the present assessee on 20.8.2017. Simultaneously, a survey u/s 133A of the Act was conducted in the case of assessee at its business premises. During the search/survey proceedings, various incriminating material said to be found during the course of search. A notice u/s 153A of the Act was issued to the assessee on 6.3.2019 to file a return of income. The assessee has filed the return of income on 30.3.2019 and assessment was completed u/s 153A r.w.s. 144 of the Act on 27.12.2019. Against this assessee went in appeal before ld. CIT9A) who has dismissed the appeal of the assessee. Once again assessee is in appeal before us. Now we will deal with each asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as refundable deposit and he has admitted this in the statement recorded u/s 132(4) of the Act on 31.8.2017. 4. We have heard the rival submissions and perused the materials available on record. In this case, addition based on the basis of statement recorded u/s 132(4) of the Act supported by unsubstantiated loose slips bearing No.A/IK/3 at pages 67 to 70 and for payment of Rs. 80 lakhs bearing No.A/MI/4 pages 1 to 24 for addition of Rs. 4 lakhs totaling of Rs. 84 lakhs. Now the contention of the ld. A.R. is that there was no assessment pending for the assessment year under consideration as on the date of search on 30.8.2017. The assessment of assessee was already completed u/s 143(3) of the Act vide order dated 31.3.2016 to reopen the assessment there should be a valid search material and without valid seized material, assessment cannot be reopened. However, we find that at the time of issuing of notice for reopening u/s 153A of the Act to concluded assessment there should be a prima facie material to do so. In the present case, there is a seized material marked as A/IK/3 at pages 67 to 70 and A/MI/4 pages 1 to 24, A/IK/3 pages 67 to 70 represent an agreement by assessee Smt. Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to make payments and receipts of cash or cheque corresponding to these transactions. These loose slips cannot be incriminating material or evidence to support the contention of the AO that there were unaccounted transactions carried on by the assessee. This is a mere case of guess work of investigating team as well as assessing officer as there is no concrete evidence to-prove such unaccounted transactions. The AO has hastily presumed that these loose slips contain details of unaccounted sales and purchases by extracting answer to question No.16 17 vide statement recorded u/s 132(4) of the Act. In our opinion, the additions were made as per AO s discretion and arrived at an imaginary amount by treating the unaccounted transactions. This addition has no legs to stand alone as such it was not based on any corroborative material other than statement recorded u/s 132(4) of the Act. 4.2 The ld. AO has merely relied upon the loose papers, obscure notings made in certain note books, statement of Mr. R. Ravish and has come to the above conclusion. The conclusions drawn by him are not forthcoming from the documents and statements. The AO has made his own analysis below each extract o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written evidence, the party against whom such oral evidence is being used must be allowed the opportunity of examining the person because, both the types of evidences need to weighed properly before rejecting one for the other. 4.7 The seized material shows vague figures presumed by the AO to be unaccounted transactions. These are unsigned documents and not supported by any corroborative material. Further the alleged parties to the transactions were not examined or cross-examined. At this point, it is appropriate to rely on the judgment of the Mumbai Bench in the case of ACIT v. Layers Exports P. Ltd [2017] 53 ITR (Trib) 416 (Mumbai), wherein it was held that no addition could be simply made on the basis of uncorroborated notings in the loose papers found during the search because addition on account of alleged payment made simply on the basis of uncorroborated noting and scribbling on loose sheets made by some person have no evidentiary value and is unsustainable and bad in law. 4.8 The Hon'ble Supreme Court in Common Cause (A Registered Society) v. UOI [2017] 394 ITR 220 (SC) observed with regard to evidentiary value that entries in books of account are not by themselves suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le material on record, lest liberty of an individual be compromised unnecessarily. In view of the above, reliance on Seized material for making addition cannot be sustained. 4.9 The Delhi Tribunal in Vijay Kumar Aggarwal v. ACIT 2Q17 (5) TMI 1354 held that it is clear that the presumption of facts u/s 292C of the Act is rot a mandatory or compulsory presumption but a discretionary presumption. Since, the word used in the said Section is may be and not shall . Secondly, such a presumption is rebuttable presumption and not a conclusive presumption because it is a presumption of fact not a presumption of law. In the present case, the assessee from the very beginning stated that the documents found during the course of search did not belong to him. 4.10 Therefore, the addition made by the AO is only on the basis of surmises and conjecture without bringing any cogent material on record to substantiate that the assessee was engaged in the business of gold and jewellery and the AO had not brought any material on record to substantiate that the denial of the assessee was false. Unless the burden of proving that the materials and cash belong to the assessee, is discharged those materials ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi Tribunal in the case of Veena Gupta v. ACIT in ITA No.5662/Del/2018 dated 27.11.2018 relying on the above judgment of Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) quashed the assessment order on the reason of not providing cross-examination of witnesses whose statements were recorded. 4.13 Further, the Hon'ble Supreme Court in the case of CIT v. Odeon Builders (P.) Ltd., 418 ITR 315 (SC) head-note is as follows: Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to assessee, thus, denying opportunity of cross examination to assessee, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight to cross-examine a witness adverse to the assessee is an indispensable right and the opportunity of such cross- examination is one of the corner-stones of natural justice. Here Shri Sukla is the witness of the Department. Therefore, the Department cannot cut short the process of taking oral evidence by merely having the examination-in-chief. It is the necessary requirement of the process of taking evidence that the examination-in-chief is followed by cross-examination and re- examination, if necessary. 9. It is not just a question of form or a question of giving an adverse party its privilege but a necessity of the process of testing the truth of oral evidence of a witness. Without the truth being tested no oral evidence can be admissible evidence and could not form the basis of any inference against the adverse parties. We have also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the comparative statement cited by the assessee before he can have the option to estimate the gross profit. Again, it is the comparative instance that alone can be the foundation of such estimate in case the accounts are really found to be unreliable and requiring to be rejected. Therefore, in the interest of justice for both the parties, the assessee and the Revenue, it is necessary for us to direct the Tribunal to remand the case to the Assessing Officer for reconsidering the whole matter in the light of the observations made by us in the foregoing and redo the assessment accordingly. All opportunities should be given to the assessee in order to lead any evidence that the assessee may feel necessary to rebut the case against him. As a result, we decline to answer the question. 4.16 No assets commensurate with the alleged undisclosed income is found by the AO. The unbounded loose sheets having jottings are not speaking either by itself or in the company of others and not corroborated by enquiry, cannot be the basis of any inference so as to sustain the addition. 4.17. The unsubstantiated and uncorroborated seized material alone cannot be considered as conclusive evidence to frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, the seized material relied by the assessing officer for sustaining addition is not speaking one in itself and also not speaking in conjunction with some other evidence which the authorities found during the course of search or post search investigation. Thus, the well settled legal position is that a non- speaking document without any corroborative material, evidence on record and finding that such document has not materialised into transactions giving rise to income of the assessee which had not been disclosed in the regular books of accounts of the assessee has to be disregarded for the purpose of assessment to be framed pursuant to search and seizure action. In these cases, moreover the documents are relied upon by the AO without confronting to any parties i.e seller or buyer of unaccounted transactions. These documents cannot bring assessee into tax net by merely pressing to service the provision of Sec 132(4A) r.w.s Sec 292C of the IT act, which creates deeming fiction on the assessee subject to search wherein it may be presumed that any such document found during the course of search from the possession and control of such document are true. What has to be noted here is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... einbefore, 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. 4.22 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 when these are not rebutted or retracted. An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and the maker can show that it was incorrect. In our opinion admission made by the assessee will constitute a relevant piece of evidence but if the assessee contends that in making the admission, he had proceeded on a mist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcion 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. 4.24 At this stage, it is pertinent to refer to the judgment of the Supreme Court in the case of Vinod Solanki (2009) (233) ELT 157 observed as under : 22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the Court that it may seek to rely thereupon. We are not oblivious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply 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. 4.27 In our opinion, the above additions cannot be made solely based on the statements recorded u/s 132(4) of the Act. Reliance is placed on following decisions: The Hon'ble Delhi High Court in Commissioner of Income-tax v. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi) held as under: 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst 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. 4.28 We further rely in the case 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. 4.29 We also rely on the decision of the Hon'ble Tribunal 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 at on the basis of the stand-alone statement of the aforesaid person, viz. Sh. Mukesh Chokshi (supra), falling short of any corroborative evidence would however justify drawing of adverse inferences as regards the genuineness of the share transactions in the hands of the assessee. We though are also not oblivious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded 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 on record which is absent in this case. It would be unjust if an addition is made on the assessee based on a statement made by third party without further making inquiries and collecting evidence. Therefore, we hereby request to delete the additions made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ca 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 every arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf. 15. This takes care of the argument of Mr. Sabharwal that judicial notice can be taken of the practice prevailing in the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eproduced 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 state ment, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve the retrac tion 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of search. Further, the ITAT relied on the decision of the Supreme Court in the case of CIT v. Sinhgad Technical Education Society 1 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 these two cases are concerned. 25. Also, the Supreme Court in the case of CIT v. Abhisar Buildwell (P) Ltd. 4, has clarified that in case no incriminating material is found during the search conducted under Section 132 of the Act, the AO will have no jurisdiction to make an assessment. The relevant par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex abundanti cautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory compulsion or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 thus came to be enlarged to stretch up to ten AYs'. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the relevant assessment year . The preconditions include the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. F. 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 search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it from the end of the assessment year . This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology immediately preceding when it be in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein, 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 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 was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by cash. This was admitted by the assessee in section 132(4) statement recorded on 31.8.2017 and also on 30.10.2017. Further, it was admitted by assessee in sworn statement recorded u/s 131 of the Act on 5.9.2017 but however, the assessee was not adhered to his statement while filing return of income. 4.36 In our opinion, as discussed in earlier para, this addition is based on only unsubstantiated statement recorded u/s 132(4) of the Act and 131 of the Act without any supporting evidence as discussed in earlier paras. 4.38 In view of the above discussion, we are of the opinion that addition cannot be made on the basis of statement recorded u/s 132(4) of the Act supported by the unsubstantiated loose slips. Accordingly, the addition of Rs. 84 lakhs is deleted. 5. In the result, appeal of the assessee in 485/Bang/2024 is allowed. ITA 463/Bang/2024 AY 2014-15 6. In this case, the assessee filed original return on 31.3.2016 and return was processed u/s 143(1) of the Act. Later consequent to search action notice u/s 153A of the Act was issued. The assessee filed return of income on 6.3.2019 declaring income of Rs. 6,06,430/-. While framing assessment u/s 144 of the Act, the ld. AO made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... papers were seized from my residence during the search. Page No. 182 is a receipt given by me to Mr. Roshan Shameer for Rs. 400000/-in cash. This amount is an installment of flat booked by him in Creek Galaxy, Pumpwell. I have received this amount on behalf of Mr. Ali Kutty of Creek Builders as I was present at the building premises. Page No. 181 is an estimate given to a customer for flat No. 304 in Creek Galaxy. Page No. 180 is a receipt given to Mr. Sheik Nizamuddin for the same flat for Rs. 7 lakhs and signed Mr. Ali Kutty for Flat No. 304 and the amount received in cash. Page No. 179 shows total receipt of Rs. 25 lakhs upto 14.9.2015 for the same flat and is signed by Mr. Alikutty. Q5: Please explain your business relationship with Mr. All Kutty of M/s Creek Builders 8.6 Here are the scanned copies of some of the evidences for Mr. Ibrahim Khaleel having collected cash from the buyers of the flat. The documents serially numbered from 178 to 181 found and seized from the residence of Mr. Ibrahim Khaleel at 20-6-363/1, Badriya, 2nd Cross, Kandak, Mangalore as folder 'A/IK/07' which clearly establishes the same. 8.7 It is also seen that on some occasion Mr. Ali Kutty hims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. i undertake to pay the taxes on the above un accounted cash amount received accordingly for various financial years. 8.11 The evidences showing the cash receipt by the assessee firm towards the contract works in CASH outside the accounts have been cross verified by Mr. Ibrahim Kaleel. Mr. Ibrahim Kaleel had given the voluntary statements on oath u/s. 132(4) on 31/8/2017 and u/s. 131 on 6/9/2017, admitting the unaccounted cash receipts as the income of the assessee firm. The scanned copy of the sworn statements are attached here under: 3.2 From the above statement, the AO came to the conclusion that since the books are maintained by Mr. Ibrahim Khaleel, who is the partner of the assessee firm and the said amount of cash of Rs. 4,93,05,000/- reflected in seized material A/IK/07 at pages 145 to 147 shows that the receipt of unaccounted cash up to 3.1.2017. Accordingly, he appropriated this amount of Rs. 4,93,05,000/- to four assessment years as above. Now the contention of ld. A.R. is that these loose slips cannot be basis for any addition as unaccounted cash receipts in these assessment years since Mr. Ibrahim Khaleel has bee marketing the flats and collecting the consideration fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded in seized document, which is being a scribbling pad. Admittedly, incriminating material found during the course of search does not bare the signature of any person and also the searched team have not brought on record that who has written the said document. It also does not contain any narrations with reference to who has paid the said amount, on what date, it has been paid and the purpose for which it has been paid. According to the A.O., the assessee has recorded the cash receipts from various parties and which is not reflected in the books of accounts maintained by the assessee. However, when the statement recorded by searched team from Mr. Ibrahim Khaleel, partner of assessee s firm clearly mentioned that he has been marketing the flats, collecting the consideration from the clients with the consent of Mr. Ali Kutty. Mr. Ali Kutty is an NRI who lives most of the time abroad. Mr. Ibrahim Khaleel received the amount on his behalf and this statement has been reproduced in the earlier para of this order. He also stated that an amount of Rs. 4 lakhs has been received from Roshan Shameer and this amount was towards the instalment of flat booked by him in Creek Galaxy, Pumpwell a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no corroborative material either to support the assessee or AO s contention. The assessee has also made an allegation before us that statement was recorded at the time of search under duress and Mr. Ibrahim Khaleel was with totally confused state of mind. The ld. A.R. also submitted that while recording the statement Mr. Ibrahim Khaleel clearly mentioned in his answer to question no.47 that he has incurred cash expenses also and which has to be considered while calculating the tax liability as per law. In our opinion, even the statement recorded to be considered as true, it has to be considered in its entirety and there shall not be any cherry picking and the AO cannot consider only the portion which is favourable to revenue. 3.6 The ld. D.R. stated that the assessee has entered only the receipt of cash and not recorded any expenses details. Hence, there is no question of giving any deduction towards expenses. The ld. A.R. also submitted that in the question no.47, it was stated by Mr. Ibrahim Khaleel that unaccounted cash collection was Rs. 4,93,05,000/- relating to assessment year 2017-18. Contrary to this, the AO spread it to 4 assessment years, which is contrary to the stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot stand on its own legs. 3.8 The main contention of ld. D.R. is that the statement recorded u/s 132(4)/131 of the Act is self-speaking document and it cannot be overruled. In our opinion, reliability of these statements depends upon the facts of each case and particularly surrounding circumstances and in this case, the lower authorities reached to the conclusion on the basis of assumption resulting into fostering liability on the assessee on the basis of in-advocate material coupled with statement recorded during the course of search since there is no corroborative material to support the contention of the AO. In the absence of corroborative evidence, merely on the basis of admission in the statement recorded u/s 132(4)/131 of the Act, no addition could be made by AO. The AO failed to bring on record any materials to support his view to make an addition and there was no reason as to why AO did not proceed further to enquire into the unaccounted income as admitted by assessee in statement recorded u/s 132(4) of the Act. This fact was also not taken care of and also no corresponding assets with reference to unaccounted cash receipt of Rs. 4,93,05,000/- was brought on record. In s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, the alternative ground of the assessee is infructuous and dismissed. 6.2 According to her, the ratio laid down by Tribunal in the case of Emkay Hindusthan Infrastructure is squarely applicable to the assessee s case and the addition based on that seized material in the case of Emkay Hindusthan Infrastructure to be deleted. 6.3 In our opinion, there is a force in the argument of ld. A.R. Being so, applying the same principles, reliance placed by seized material A/IK/7 pages 145 147 is devoid of merits as in the case of Emkay Hindusthan Infrastructure cited (supra). Accordingly, the addition is deleted in this case of assessee also. 6.4 In the result, assessee appeal in ITA No.463/Bang/2024 is allowed. ITA No.464/Bang/2024 (AY 2015-16): 7. In this assessment year ld. AO made addition of Rs. 5 lakhs u/s 69 of the Act placing reliance on the seized material marked as A/MI/06 pages 49 to 53 at the residence of assessee, which is in the agreement dated 6.12.2014 for purchase of non-agricultural property measuring of 10 cents at Kottekar Village, Bangalore entered with Smt. Gulzara Banu. As per agreement, total consideration was Rs. 20 lakhs and the assessee has paid Rs. 5 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was an addition of Rs. 29.5 lakhs have been made u/s 69 of the Act on the basis of seized material A/IK/7 pages 145 to 147 found during the course of search at the residence of Ibrahim Khaleel in the case of Emkay Hindusthan Infrastructure cited (supra). According to the ld. AO, as per this seized material assessee has paid a sum of Rs. 29.5 lakhs to Mr. Ibrahim Khaleel in cash towards the cost of construction as contract receipt. This evidence mainly contains the details of amount received from Ali Kutty, the promoter of the Greek Galaxy Project. The amount collected by Ibrahim Khaleel from the buyer of the flat on behalf of Ali Kutty and this payment has been received from one Mr. Puttu Monu . According to the ld. AO, Puttu means known other than the present assessee. The assessee outrightly rejected this payment and stated that these loose slips cannot be based for addition in the hands of the assessee. 10.1 As discussed in assessment year 2014-15, this seized material has been considered by this Tribunal in the case of Emkay Hindusthan Infrastructure in ITA Nos.979 to 983/Bang/2022 for the assessment years 2014-15 to 2018-19 dated 16.6.2023 and held that this seized materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration of Rs. 18.08 lakhs, out of which Rs. 10 lakhs was received as cash. 13.1 The ld. A.R. submitted that assessee has not received any amount in cash. He was only developer in said project. It is not yet been completed and the ld. AO made addition only on the basis of statement recorded u/s 132(4) of the Act on 31.3.2017, statement recorded u/s 131 of the Act on 5.9.2017 without properly verifying the disclosure of profit arose from this transaction as soon as the project was completed. 14. We have heard the rival submissions and perused the material available on record. In our opinion, there is a sale agreement dated 17.9.2016 which shows the payment. However, the contention of the assessee is that the assessee has offered the profit arose from this transaction in subsequent assessment years as soon as the project is completed, which is required examination. Accordingly, the issue is remitted to the file of ld. AO for fresh consideration to verify whether this income is subject to tax in any subsequent assessment year. 15. Next ground in this appeal is with regard to addition of Rs. 10 lakhs towards bogus loan based on the seized material marked as A/M16/pages 92 to 94. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0073510000606 to the said account of the firm with SCDCC Bank, Maidan Cross Road bramnch, Mangalore. The ld. AO asked to explain the source for the same, which was not explaioned. 17.1 Before us, the ld. A.R. submitted that this amount has been deposited by the firm not by the assessee and the assessee being individual not required to explain the source of the firm account. At best, the ld. AO can examine the same in the hands of the firm only not in the hands of the assessee. 18. We have heard the rival submissions and perused the materials available on record. As contended by the ld. A.R., if the amount of Rs. 12 lakhs deposited to the account of M/s. Hindusthan Greek Developers to their bank account No.00073510000606 with SCDCC Bank, Maidan Cross Road Branch, Mangalore, the assessee not required to explain the same. Hence, if it is so, the addition cannot be made in the hands of the assessee and if the deposit made in the firm s bank account, the addition to be deleted. However, if it is contributed by Md. Ibrahim as stated by latter filed before ITO Ward-2(2), Central Revenue Building, Hathavara, Mangalore vide dated 4.7.2019, it has been contributed by present assessee out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound during the course of search action marked as A/M16/pages 95 to 98 dated 18.7.2016 wherein Pavoor Mohammed, son of Mohammed Ibrahim entitled to agreement for purchase of 2.67 acres of property from Mr. PA Mohammed. According to the ld.AO, Pavoor Mohammed was son of present Mohammed Ibrahim. Hence, the addition was to be made in the hands of present assessee. To support his view, he took the benefit of the statement recorded u/s 132(4) of the Act from Jhansi Dinu and also loose slips A/THI/8 page 7 as reproduced in earlier para. As discussed in earlier para of the order, first of all, the assessee is not having a son by name Pavoor Mohammed. He had 3 sons that fact also recorded by ld. AO namely Mousin, Mufeev and Muyneeb. More so, the agreement was not signed by seller PA Mohammed. According to the ld.AO, since the document was retained by PA Mohammed, he could sign at any time. As such, he took the face value of that agreement. But the fact is that he has not verified with the PA Mohammed whether there was actual payment of money by Pavoor Mohammed to PA Mohammed. It is also recorded in the agreement in the 4th page of the agreement that even though this agreement does not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material marked as A/IK/7 pages 145 147 was found and seized which shows the details of amount received from Mohammed Ibrahim Khaleel in cash towards the cost of construction as contract receipt. The evidence mainly contains the amount received from Mr. Ali Kutti, Promoter of Greek Galaxy Project. The amount collected by Ibrahim Khaleel from the buyers of the flat on behalf of Mr. Ali Kutty as admitted and the amount collected by Mr. Ibrahim Khaleel; from one person written in the seized records as Puttu Monu. In the beginning it was written by Ibrahim Khalee, the amount in thousands. For example, Rs. 1,000/- means Rs. 10,00,000/-, which is very much evident since the total is to be in the full form. Later on Mr. Ibrahim Khaleel stated writing the amount in full form. As per the seized record, the total contract amount received either from Ali Kutty or from the buyer or from Mr. Puttu Monu, amounted in total to Rs. 4,93,05,000/- from the financial year 2013-14 to financial year 2016-17. This seized material resulted in addition of Rs. 7.70 lakhs in the assessment year 2017-18. 24. After hearing both the parties, we are of the opinion that this impugned seized material has been cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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