9911796707
TMI Blog2024 (12) TMI 1424X X X X Extracts X X X X X X X X Extracts X X X X ..... , JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri Mahendra Gargieya, Adv. And Shri Hemang Gargieya, Adv. For the Revenue : Shri Arvind Kumar, CIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of separate four appeals filed by the assessee, the assessee challenges the separate orders of the Learned Commissioner of Income Tax (Appeal), Udaipur-2 [for short CIT(A) ] passed on dates and assessment year as mentioned here in below. That order of the ld. CIT(A) arises because the assessee challenged the separate orders passed by the ACIT, Central Circle, Kota under the provisions of Income tax Act, 1961 (in short 'Act') on the dates referred here in below for each of the assessment year mentioned against it: Asstt. Year Appeal No. Reference to the dated of order of the ld. CIT(A) Reference to the order of the ld. AO date and section under which the order is passed 2012-13 389/JPR/2024 28.02.2024 22.12.2019 143(3) r.w.s. 153A 2014-15 624/JPR/2024 30.03.2024 22.12.2019 143(3) r.w.s. 153A 2015-16 625/JPR/2024 30.03.2024 22.12.2019 143(3) r.w.s. 153A 2016-17 626/JPR/2024 30.03.2024 22.12.2019 143(3) r.w.s. 153A 2. All these appeals of the assessee were listed for h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake kindly be held as non-est and may kindly be quashed. 6. The impugned assessment order passed u/s 153A r.w.s. 153B/143(3) dated 30.12.2019 is nullity being without jurisdiction in as much as no prior approval as mandate by S.153D was obtained or the approval obtained u/s 153D was not obtained from the specified authority, as prescribed in law or else the approval obtained u/s 153D was accorded mechanically without any application of mind. Hence, there is no approval as such, as contemplated by law hence, the impugned assessment order may kindly be quashed. 4. Succinctly, the fact as culled out from the records are that a search seizure operation under section 132(1) of the Act was carried out on 07.09.2017 at the various premises of Resonance Group, Kota to which the assessee belongs. A number of persons / premises covered u/s 132 of the I.T. Act, 1961. The case of the assessee was also covered under search proceedings. The search action was carried out on the assessee on 07.09.2017. Consequent to search action, the case of the assessee was centralized to Central Circle-Kota by the Principal Commissioner of Income-tax, Kota on 12.10.2017. Assessee is an individual and derives in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Prabha Jain and her savings and remaining amount of Rs. 55 lacs were paid by cash. It has also been admitted by Shri Harish Jain that the amount of Rs. 55 lacs were paid by him out of undisclosed sources and had never been offered for taxation. Shri Harish Jain admitted Rs. 55 lacs as his undisclosed income for F.Y. 2011-12 i.e. A.Y. 2012-13. In the light of the above fact and admission of un-accounted income assessee was given an opportunity to explain the same vide notice u/s 142(1) dated 28.11.2019 asking him as to why the amount of Rs. 55 lac should not be added to his total income as unaccounted investment for the AY 2012-13. In response the assessee replied on 11.12.2019 stating that the statement recorded u/s 132(4) during the search action was given under pressure, threat, physical fatigue and mental confusion. The assessee retracted from his statement recorded u/s 132(4) vide his submission filed before AO. Further, the assessee submitted that the agreement is not related to him and the acceptance / surrender of Rs. 55 lacs made by the assessee was under pressure and therefore not to be added to his total income. Ld. AO considered the reply but not found convincing as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a sale agreement made between Smt. Prabha Jain and Shri Lal Chand Aswani regarding sale of Plot No. 2-PA-8, Vigyan Nagar, Kota was found from the premise of the assessee, Shri Harish Jain at 2-PA-8, Vigyan Nagar, Kota, and the same was seized as page No. 16 to 19 of Annexure AS, Exhibit - 8, in which total sale consideration was mentioned of Rs. 40 lacs. Another agreement was also found and annexed as page No. 21 to 25 of Annexure AS, Exhibit - 8, for the same property which had been purchased by Shri Lal Chand Aswani in F.Y. 2008. In this agreement total sale consideration (at page No. 21 to 25 of Annexure - AS, Exhibit-8) is mentioned as Rs. 90 lacs. The assessee, Shri Harish Jain was questioned that it was not acceptable that Shri Lal Chand Aswani had sold the above referred plot to Smt. Prabha Jain w/o Shri Harish Jain for a consideration of Rs 40 lac bearing a huge loss of Rs. 50 lacs since the same property was purchased by him for a purchase consideration Rs. 90 lacs. In response to that Shri Harish Jain admitted in his statement in Question No. 17 that actually, Smt. Prabha Jain has purchased this property for Rs. 95 lakh. Vide reply of question No. 18 in his statement re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. The assessee during search proceeding accepted that the immovable property was purchased by her wife Smt Prabha Jain at consideration of Rs. 95 Lac and Rs. 40 Lacs was paid by her out of her saving and loan and remaining amount of Rs. 55 Lacs was paid by him in Cash out of undisclosed sources and had never been offered for taxation. Therefore the assessee has offered Rs. 55 Lacs for taxation in FY 2011-12 i.e. AY 2012-13. Hence, the cash payment of Rs. 55 Lacs made by the assessee is considered his undisclosed income and added to his total income for AY 2012-13. Against the addition made by the AO, the appellant has furnished reply which is dealt as under- 5.3.1 Involvement of Cash in transaction of Property The appellant stated that originally this property was sold by Smt. Pushpa Devi w/o Sh. Nand Kumar (seller), sometime in the year 2008. for Rs. 90 lakhs as appears from the unregistered agreement found and seized during the course of Search conducted on 16.09.2008 being marked as Annexure AS, Exhibit 8 Pg-21 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the explanation offered by the appellant in respect of the said amounts had been rejected unreasonably and that the finding that the said amounts were income of the appellant from other sources was not based on evidence. As per the guidelines of the above case as held by the Hon'ble Supreme Court, the matter is to be considered in the light of human probabilities. Taking on money on transaction of lands is not an unusual practice but was very much of a usual practice. The transaction of cash takes place in secret and direct evidence about such transaction would be rarely available. In this case the investigation team could gather an indirect evidence suggesting transaction in cash undertaken by the appellant. The appellant admitted the cash transaction in the statement recorded u/s 132(4) of the Income Tax Act. An inference about cash transaction is to be drawn on the basis of the circumstances available on the record. The AO has clearly brought out these facts in the assessment order. The appellant has failed to prove that the transaction as per the sworn in statement are not true with evidence. In the absence of not furnishing any credible evidence in support of the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 90 lakhs, it cannot be concluded that he must have sold the property to the buyer/appellant in F.Y. 2011-12 at Rs. 95 lakhs (of course after the lapse of some years) and is nothing more than a wild presumption, surmises conjectures made by AO, which is absolutely without any corroboration. Admittedly there is no iota of direct evidence found or referred or relied upan by AO except Ikramama dated 16.09 2008 between strangers, showing that the appellant (Shn Harish Jain), in fact, purchased the property for Rs. 90/95 lakh. The appellant argued that On the contrary, there is a registered Agreement entered by the Appellant Buyer which declares sale consideration of Rs 40 laktis only through the seized Arinexure AS, Exhibit 8 Pg-16 to 19 (PB 40-43). The transaction was completed before the Sub-Registrar in the presence of the witnesses. The Id. AO also alleges that why Sh. Lal Chand Aswani would have sold the property at Rs. 40 lakhs only by bearing a huge loss of Rs. 50 lakhs Firstly, it was a mere suspicion unless, Shri Aswani would have confirmed the AO of having sold the property at Rs. 90/95 lakhs, which was not done. The admission made by the appellant and the document seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are evidence on record. The first evidence is the statement recorded u/s 132(4) and the second evidence is the purchase agreement of previous owner who also purchased in the value which is more than consideration shown in registered sale deeds. In these facts, the decision relied upon by the appellant is not found to be applicable on the facts of the case. 5.3.5 Incriminating Material is found during the search The appellant argued that assessments for AY 2012-13 to 2016-17 were not pending on the date of search ie 07.09.2017, could be completed u/s 153A, only based on the incriminating material/information as 153A of the Act. The argument of the appellant is considered. There is clear findings in the assessment order about incriminating material as under- During the search action dated 07.09.2017 u/s 132 of the IT Act, a sale agreement made between Smt. Prabha Jain and Shri Lal Chand Aswani regarding sale of Plot No. 2-PA- 8. Vigyan Nagar, Kota was found from the premise of the assessee, Shri Harish Jain at 2-PA-8, Vigyan Nagar, Kota, and the same was seized as page No. 16 to 19 of Annexure - AS, Exhibit-8, in which total sale consideration was mentioned of Rs. 40 lacs. Anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person, if shown to be out of ambiguity under tension or was against the facts or misconception of law, can be validly refracted. Admission once retracted not binding Reliance wrongly placed. The AD has ignored the settled legal position that a person making a statement is legally entitled to retract from, what it had stated earlier It has been held that an admission, though a 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. Pertinently the appellant retracted from such admission in as much as he did not declare this income in the ROI file for AY 2012-13 us 1534. In addition during the course of the assessment proceedings a reply letter dt. 04.12.2019 was uploaded/Submitted before AD on 11.12.2019 (PB 14-19) to this effect The statement recorded during search and survey under oath is an important piece of evidence and it is an incriminating material. The Kerala High Court on this issue held in the case of Commissioner of Income-tax, Thichur Vs St. Francis Clay Decor Tiles [2016] 70 taxmann.com 234 (Kerala)/[2016] 240 Taxman 168 (Kerala)/[2016] 385 ITR 624 (Kerala)/[2016] 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the SLP of the assessee against the order of the High Court in dismissing his appeal holding that the statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. The argument of the appellant are found to be only assertions without any supporting evidence. There is no evidence of pressure or threat. The search is conducted in the presence of two independent witnesses. The appellant has not furnished any evidence with regard to claim of pressure by the search tearn during the search proceedings. In these circumstances, the AO was found to be justified in relying on the statement recorded under oath which is an important piece of evidence. The statements recorded under section 132(4). On the issue of retraction of statement recorded during search Hon'ble High Court Of Madras in the case of Thiru. A.J. Ramesh Kumar v. Deputy Commissioner of Income-tax [2022] 139 taxmann.com 190 (Madras) noted as under - 8. Pertinently, the Tribunal after recording the explanationa, affidavit and other documents filed by the appellant in support of his case, found that the same were not acceptable as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. The filing of return without any valid explanation after the recording of statements u/s 132(4) of the Income Tax Act, 1961 cannot be treated as valid retraction. In this regard, in an important decision Hon'ble Gujrat High Court of in the case of Asstt. CIT v. Hukum chand Jain [2010] 191 Taxman 319 it was held that if an 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 two years. Hence, the retraction is not acceptable. 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 penods 1-4-1985 to 31-3-1995 and 1-4-1995 to 12-12-1995-Whether section 13214) enables an authorized officer to examine a person on path and such a sworn statement made under section 132(4), thus can be used as an evidence under Act-Held, yes-A search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id over and above the registered agreement. Therefore, the argument of the appellant that the addition is made on the basis of only statement recorded during search is not found to be acceptable. 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 evidence to dispel such assumption Held, yes Pursuant to a search co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts recovered in search 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 unaccounted cash payment the department officers stopped further enquiry. As such law of estoppels applies in this case. It is not the case that the admission made by assessee was incorrect or there is mistake or the admission was made on wrong facts. In fact, when there is a clear admission, voluntarily made, by the assessee, that would constitute a good piece of evidence. 5.3.7 The appellant admitted earning of undisclosed income and payment of cash The appellant argued that the appellant not the legally correct assessee. The property was admittedly purchased by Smt. Prabha Jain who is a separate Assessee and a separate person. However, addition was made in the hands of the appellant Sh. Harish Jain (Husband). There is nothing on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Income-tax (Exemption) V. Shia Dawoodi Bohra Jamat (2012) 25 taxmann.com 90 (Gujarat) observed as under. 11. It is settled legal position, that the decisions of the courts are not to be applied in the abstract, but are to be applied to the facts of the case. Without recording any findings of fact, one fails to understand as to how the Tribunal has come to the conclusion that the decisions on which it has placed reliance are applicable to the facts of the present case. It has been often reiterated that the Tribunal is the final fact finding authority, hence, the order of the Tribunal should reflect findings of fact as well the reasons for arriving at its conclusions on the basis of the findings recorded by it. The impugned order of the Tribunal is totally lacking in all quarters. 12. In CCE v. Srikumar Agencies (2008) 232 ELT 577 (SC) the Supreme Court was dealing with a similar case wherein without detailed analysis of the factual position involved, the Customs, Excise and Gold (Control) Appellate Tribunal had merely referred to some judgments and submissions of the learned counsel for the assessees to hold that the assessees were entitled to relief, the court held that courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R of the assessee relied on the written submissions which are reproduced here in below :- Brief General Facts: The assessee is an individual and derives income from salary, house property and other sources e-filed Return of Income on 30.03.2013 declaring total Income at Rs. 14,91,460/- u/s 139 of the Act (PB 01-03). A Search Seizure operation was carried out by the Investigation Wing of the Department on 07.09.2017 u/s 132 of the Income Tax Act, 1961 at the residential and business premises connected with Resonance Group, Kota . Cash, jewellery and other documents found and seized from some person s residence and business premise. The case of the assessee was also covered under Search proceeding. Consequent to Search action, the case of the assessee was centralized to Central Circle-Kota by the Principal Commissioner of Income-tax, Kota vide order dt 12.10.2017. Thereafter, as part of Resonance Group, the case was taken up for block assessment, by issuing notice u/s 153A which is stated to be served upon the assessee on 04.07.2018 (PB 4) and in response to which the assessee furnished return of income on 18.07.2018 (PB 05-08), declaring Total Income of Rs. 15,67,000/- u/s 153A. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Prabha Jain and her savings and remaining amount of Rs. 55 lacs was paid by cash. It has also been admitted by Shri Harish Jain that the amount of Rs. 55 lacs was paid by him out of undisclosed sources and had never been offered for taxation. Shri Harish Jain admitted Rs. 55 lacs as his undisclosed income for F.Y. 2011-12 ie. A.Y. 2012-13 The AO after referring to and relying upon the statement of the appellant (Q.no 17-19), again askedand in response to which a detailed reply letter dt. 04.12.2019 was uploaded/submitted before AO on 11.12.2019 (PB 14-19). The AO at pg 4 held that: In response the assessee replied on 11.12.2019 stating that the statement recorded u/s 132(4) during the search action was given under pressure, threat, physical fatigue and mental confusion. The assessee retracted from his statement recorded u/s 132(4) vide this submission. Further, the assessee submitted that the agreement is not related to him and the acceptance/surrender of Rs. 55 lacs made by the assessee was under pressure and therefore not to be added to his total income. 'The reply of the assessee is considered but not found convincing as the assessee is Chief Finance Officer in Resonanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been made. No doubt Sh. Harish Jain was asked and he stated having purchased by the wife the property for Rs. 95 lakhs and also allegedly agreed for the undisclosed income of Rs. 55 lakhs however, the totality of facts and circumstances creates a lot of doubts and strongly indicates, that it was a case of tutored statement recorded under pressure, tension and confusion as emerges from the various facts discussed herein after. 1.1.1 Seized Agreement not relevant: The so called agreement was entered into by the totally unconnected unrelated third parties, viz. Smt. Pushpa Devi w/o Sh. Nand Kumar (first seller) and the Aswani Couple (first buyer). The agreement nowhere shows any connection or signature or handwriting of the appellant thereon even remotely, nor it is so claimed by the department. The ld. CIT(A) rejected the above contention without appreciating that, such unregistered agreement may be relevant for the purpose of making inquiry from the assessee, as it was found from his possession, but the AO could not consider this as a sole basis for making addition. He rightly accepted that it was a part of chain document and therefore it was found from possession of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse after the lapse of some years) and is nothing more than a wild presumption, surmises conjectures made by AO, which is absolutely without any corroboration. It is not the case of the AO that Aswani couple has declared sale consideration of Rs. 90 / 95 lakhs and assessment in his /their case has been completed considering these figures. In fact, the AO was completely silent on this aspect meaning thereby, the sellers have declared sale consideration of Rs. 40 lakhs only but not Rs. 90 lakhs or Rs. 95 lakhs as wrongly assumed by the AO. 1.1.5 Admittedly there is no iota of direct evidence found or referred or relied upon by AO except Ikrarnama dated 16.09.2008between strangers, showing that the appellant (Shri Harish Jain), in fact, purchased the property for Rs. 90 / 95 lakh. The ld. CIT(A) has wrongly stated that statement of the assessee was supported by the corroborative documents,[Para 5.3.3Pg 26 of CIT(A) s order],in as much as he has failed to bring on record any such corroborative documents (except the said statements). Further, he completely ignored the legal position that through the unregistered agreement, no property, no ownership is transferred and therefore, merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it occurs. A fair and reasonable construction of section 52(2) would be to read into it a condition that it would apply only where the consideration for the transfer is understated or, in other words, the assessee has actually received a larger consideration for the transfer than what is declared in the instrument of transfer and it would have no application in case of a bona fide transaction where the full value of the consideration for the transfer is correctly declared by the assessee. Accordingly, if the revenue seeks to bring a case within section 52(2), it must show not only that the fair market value of the capital asset as on the date of the transfer exceeds the full value of the consideration declared by the assessee by not less than 15 per cent of the value so declared, but also that the consideration has been understated and the assessee has actually received more than what is declared by him. There are two distinct conditions which have to be satisfied before subsection (2) can be invoked by the revenue and the burden of showing that these two conditions are satisfied rests on the revenue. This burden may be discharged by the revenue by establishing facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of KK Enterprises, (supra), by merely relying upon (1) the statements, which cannot be termed as incriminating material, and (2) by incorrectly placing reliance on the unregistered Ikrarnama, terming it as purchase agreement, without enquiring even enquiring whether the said agreement to sale was actually acted upon. 1.2 No Incriminating evidence found - Hence no Addition: The law is very well settled that in case of assessment of a search case u/s 153 A, any addition or disallowance can be made only and only if some incriminating material has been found during the course of search, where (or even if not ) the related assessment stands completed(but not abated and not pending). In the instant case, undisputedly, some of the assessments of the subjected assessments years (i.e. 2012-13 to 2016-17) stands already completed and were not pending on the day of the search. Some of the assessments were completed under u/s 143(1) but the time limit to issue notice u/s 143(2) had already expired in those cases on the date of Search i.e. 07.09.2017 and hence such assessment even though made u/s 143(1) stand completed/attained finality. For better appreciation, kindly refer the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions of such nature, which have the pendency or continuance. The proceedings which have already terminated are not liable for abatement unless statute expressly provides for such consequence thereof. The word 'pending' occurring in the second proviso to s. 153A is also significant. It is qualified by the words 'on the date of initiation of the search', and makes it abundantly clear that only such assessment or reassessment proceedings are liable to abate. The pendency of an appeal in the Tribunal against the order of assessment against which an appeal has been decided by CIT(A) is not a continuation of the proceedings of assessment. An appeal under the IT Act lies to the Tribunal on a question of law. Even if it is pending on the date of search, no such intention as indicated by the Tribunal arises out of the provisions of second proviso to s. 153A, to abate the proceedings, which have been completed, or concluded, and to restore assessment to the file of the AO. There is no force in the submission that where a notice under s. 153A has been given after the search operations under s. 132, for filing assessment for the block period of six years, and if such period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conditions as envisaged/mentioned under S.s 147/148 of the Act and those powers are saved. 1.2.3 In the case of Jai Steel (India) v. ACIT [2013] 36 Taxman 523 (Raj), it was held that, Section 153A bears the heading Assessment in case of search or requisition . It is well settled as held by the Supreme Court in a catena of decisions that the heading or the section can be regarded as a key to the interpretation of the operative portion of the section and if there is no ambiguity in the language or if it is plain and clear, then the heading used in the section strengthens that meaning. From the heading of section 153, the intention of the Legislature is clear, viz., to provide for assessment in case of search and requisition. When the very purpose of the provision is to make assessment In case of search or requisition, it goes without saying that the assessment has to have relation to the search or requisition, in other words, the assessment should (be) connected with something found during the search or requisition viz., incriminating material which reveals undisclosed income. Thus, while in view of the mandate of sub-section (1) of section 153 A of the Act, in every case where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, if any, unearthed during the search or requisition. In case where a pending reassessment under section 147of the Act has abated, needless to state that the scope and ambit of the assessment would include any order which the Assessing Officer could have passed under section 147 of the Act as well as under section 153A of the Act. 1.2.7 In Kabul Chawla Case [2015] 61 taxmann.com 412/234 Taxman 300/380 ITR 573 (Delhi), it was held as: Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this Section only on the basis of seized material. 1.2.8 In case of Pr. CIT v. Mita Gutgutia [2017] 82 taxmann.com 287/248 Taxman 384/395 ITR 526 (Delhi), it was held: Section 153A of the Act is titled Assessment in case of search or requisition . It is connected to Section 132 which deals with 'search and seizure'. Both these provisions, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns of income. In these circumstance, on confessions during the course of search seizure and survey operations do not serve any useful purpose. It is, therefore advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments, Similarly, while recording statement during the course of search seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment. 3.3 The AO has mainly emphasized on the statement of the assessee, however, ignored the settled legal position that a person making a statement is legally entitled to retract from, what it had stated earlier. It has been held that an admission, though best evidence against such person, if shown to be out of ambiguity, under tension or was against the facts or mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922) or under this Act. 16) .The very plain reading of the above provision makes it evidently clear that any statement recorded as above is a relevant piece of evidence and it has to be considered while making assessment. But, no where it is stated in this provision that a statement recorded under this section becomes a conclusive proof or sanctum sanatorium for making addition of the admitted income. This issue has been churned by numerous courts as this issue has arisen every now and then in similar litigations, and the courts have settled the legal position by holding that on the issue that any admission made de hors any incriminating evidence found during search cannot be made a basis for making any addition in the hands of the assessee. On some of the decisions the ld. A.R. has relied and they have been extracted along with their held portion, in the earlier part of our order. Moreover, the assessee has disproved his [their] admiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material found during search was duly explained by assessee on which no adverse comments was made by the AO. This decision contains various references and relevant extract quoted from various case laws. 4.4.4 Krishan Lal Shiv Chand Rai v/s CIT (1973) 88 ITR 293 (P H) It is an established principle of law that a party is entitled to show and prove that the admission made by him probably is in fact not correct and true 4.4.5 The Hon ble Jaipur Bench of ITAT has already been taking this view in Ashok Kumar Soni vs. DCIT (2001) 72 TTJ 323 (Jd). Also, kindly refer Karam Chand vs. ACIT (2000) 73 ITD 434 (Chd): (2000) 68 TTJ 789 (Chd) Rishab Kumar Jain vs. ACIT (1999) 63 TTJ 236 (Del). 4.4.6 Control Touch Electronics (Pune) (P) Ltd. VS. Asstt. CIT (2001) 72 TTJ (Pune) 65: (2001) 77 ITD 522 (Pune): At para 9 it was held as under At this stage, it is mentioned that it is a settled legal position that there cannot be any estoppel against the statute. If any income is not taxable by virtue of any provision of the Act, then it cannot be taxed merely because it was offered by the assessee in his return. Therefore, the contention of the learned Departmental Representative in this regard is here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , looking to the fact that the transaction at Rs. 90 lakhs in financial year 2008-09, after a lapse of 4 years since then. When asked Sh. Harish Jain admitted the transaction was of Rs. 95 lakhs however, he was not asked whether he really paid this amount. 5.2 Further such statements were recorded under tensed moments and such circumstances which established that the appellant was not in a position to tender his free and fair voluntary statement, more detailed in letter of retraction dt.04.12.2019/11.12.2019(PB14-19). The possibility of existence of the surcharged atmosphere and tensed during the search action cannot be ruled out. Even the Courts and Tribunal have taken judicial notice of this fact time and again. Thus therefore, the retracted statement was otherwise not a valid piece of evidence to be based for an addition. 5.3 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.On this aspect it will be quite relevant to refer to decision of Hon ble Gujarat High Court Kailashben Manharla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee. 6. On this aspect, the following submission were made before AO, reproduced here under: 1. Unaccounted investment in house property Rs. 55,00,000/- (AY 2012-13) This is with reference to your Notice u/s 142((1) 28.11.2019 as to why should not be added the amount of Rs. 55,00,000/- to the returned income for the year on account of unaccounted investment in purchase of house property u/s 69 of the IT Act,1961, but the same is not shown in the ITR. It is humbly submitted that your said proposal is unwarranted in the light of attendant facts and applicable law as explained below:- A. In notice that in all the queries raised by you, a reference and reliance has been made on the statement of the undersigned recorded u/s 132(4) during the course of search and seizure operation at the residence and other premises of the undersigned during 07.09.2017 to 10.09.2017. However, in that regard we would like to point out that the statement under consideration was recorded in absolutely extra ordinary circumstances not only of duress, threat and inducement but also physical fatigue and menta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded under sub-section (4) of section 132 of the Act, partakes of the character of the one recorded by an investigating officer under section 162 of the Code of Criminal Procedure. Howsoever desirable, it may appear to be, it cannot be ascribed the status of a proven fact. At the most, it would constitute the basis for the prosecution to frame its case and correspondingly be a material for the defence to ensure that the prosecution sticks to its version. The question of a statement of that nature being treated as the clinching evidence, by itself, leading to any penal action does not arise. Attention is also invited to the observations of the court: 15. The question of discharge of burden, arises in respect of a fact, to be proved. If the contents of the statement recorded from an assessee are to be proved, that very statement cannot be a proof, by itself. Such a course would bring about hypellage logic, which is illustrated by a well known example. Question : who is a doctor ? Answer : The one who administers medicine. Question : What is medicine ? Answer : The one that is administered by a doctor. Such discussion does not lead one, any further. 16. The discharge of burden mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. C. The above decision of Allahabad High Court was also taken note of, with approval, by Gujarat High Court in Kailashben Manharlal Chokshi Vs. Commissioner Of Income-Tax [2010] 328 ITR 411 (Guj) D. The undersigned would also like to draw your kind attention to the circumstances under which the alleged statement of mine was recorded. In the morning of 7th Sept. 2017 itself the Income tax Search team with police force arrived and open the entry gate of residence, after removing the close circuit camera. E. The extracted confession of the undersigned during the course of search without supporting evidences, runs counter to the assurance given by the then Finance Minister to the Parliament while presenting the Annual Budget for the year 2003-04, that hereafter Second, no confession shall be obtained during search seizure operations. ([2003] 260 ITR 29(St.). It is matter of regret that inspite of assurance to the Parliament, and issue of binding instructions by CBDT such confessions are extracted by duress and threat, and attempts are made to make additions to the returned income solely on the basis of such confessions, leading avoidable harassment to the assessees. F. In the light o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chased house property for Rs. 40,00,000/- as per copy of agreement and deed of sale executed by Shri Lal Chand Aswani Vineeta Aswani. All payments have been made by cheques-Rs.39,50,000/-and Cash-Rs.50000/- only and source of payments are also appearing in books of account of Smt Prabha Jain and explained during the proceedings u/s 153A in her case for AY 2012-13. You may please refer her submission. Apart from such amount, the assessee has not paid any amount in cash to the seller and cash transaction of Rs. 55.00 Lakhs is baseless and without supporting of any evidences/proof of payment. The agreement found is between Smt Pushpa Devi and Shri Lal Chand Aswani Vineeta Aswani and not related to the assessee. The assessee has no concern with such transaction. As already mentioned above that statement under consideration was recorded in absolutely extra ordinary circumstances not only of duress, threat and inducement but also physical fatigue and mental confusion as search was conducted continuously for three days. (Annexure-I) Therefore, such an addition in the hands of an altogether third person is absolutely without jurisdiction and deserves a complete deletion here itself. 7.3 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be treated as income of the assessee. The High Court has agreed with the said view of the Tribunal. There is no error in the said finding recorded by the Tribunal. There is thus no merit in these appeals and the same are accordingly dismissed. CIT vs. Smt. P.K. Noorjehan (1980) 15 CTR (Ker) 138: (1980) 123 ITR 3 (Ker) :42R.1622, affirmed. However, the ld. AO failed to controvert/disprove the factual assertions made before him. Thus, considering all the facts and judicial precedents the entire addition of Rs. 55,00,000/- deserves to be deleted. 10. Common Submission: For All GOA 10.1 Benefit of telescoping/set-off deserves to be allowed:Alternatively, and without prejudice to our contentions that no addition can be made on account of the undisclosed income or unexplained expenditure yet however, if any addition of income as also on account of expenditure is sustained, the benefit of the availability of the income/funds towards the unexplained expenditure (as sustained) deserves to be allowed, based on the law which is well settled, as under: 10.2 Commissioner of Income-tax v. Tyaryamal Balchand [1987] 165 ITR 453 (Rajasthan) 9. It is clear from the law discussed above, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as a finding to that effect in the penalty proceeding. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the revenue, to ascertain whether a particular amount is a revenue receipt. No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment proceeding cannot be regarded as conclusive for the purposes of the penalty proceeding. In the instant case, the Tribunal had relied entirely on the basis that an intangible addition of Rs. 2,00,000 had been made to the book profits of the assessee for the assessment year 1957-58 and it inferred that an amount of Rs. 90,000 was available for being put to use in the relevant assessment year. Now it can hardly be denied that when an 'intangible' addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as 'intangible', is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case relied on by the revenue for the purpose of determining whether the revenue has succeeded in discharging its burden. But while considering the legal principles involved in the application of section 271(1)( c ) the High Court, had erred in entering into the facts of the case and determining in point of fact that the assessee earned income during the relevant previous year and that he was guilty of concealing such income or furnishing inaccurate particulars of it. Having found that the legal basis underlying the order of the Tribunal was not sustainable, the High Court should have limited itself to answering the question raised by the reference in the negative, leaving it to the Tribunal to take up the appeal again and redetermine it in the light of the law laid down by the High Court. It was the Tribunal which has been entrusted with the authority to find facts. A High Court is confined to deciding the question of law referred to it on facts found by the Tribunal. Because the finding of the Tribunal that no penalty was leviable rests on an erroneous legal basis, the opinion of the High Court was to be endorsed. But as the High Court should not have rendered findings of fact, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating of the words of the statute, or mere rubber stamping of the letter seeking sanction by using similar words like see or approved will not satisfy the requirement of the law. 2.2 Moreover, it is contented that the provisions contained in S. 153D as enacted by the parliament cannot be treated as an empty formality. The provision has certain purpose. It is apparent that the purpose behind the enactment of the above provision in the statute by the parliament are two folds. Firstly, the approval of the senior authority will ensure that the assessee is not prejudiced by the undue or irrelevant addition or assessment. Secondly, the approval by senior authority will also ensure that proper enquiry or investigation are carried out by the assessing authority. Thus, the above provision provides for mental application of a senior officer of the Department, which in turn, provides safeguard to both i.e., Revenue as well as the assessee. Therefore, this important provision laid down by the legislature cannot be treated as a mere empty formality. Thus, the legislative intent behind getting prior approval u/s 153D is that the work done by the junior officer is properly check analyzed and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders were therefore not in compliance with the requirement spelt out in para 9 of the Manual of Official Procedure. For all of the aforementioned reasons, the Court finds that the Tribunal has correctly set out the legal position while holding that the requirement of prior approval of the superior officer before an order of assessment or reassessment is passed pursuant to a search operation is a mandatory requirement of s. 153D and that such approval is not meant to be given mechanically. The Court also concurs with the finding of the Tribunal that in the present cases such approval was granted mechanically without application of mind by the Addl. CIT resulting in vitiating the assessment orders themselves The initial assessment order as also the impugned assessment order without jurisdiction is void-ab-initio being a nullity and hence the same deserves to be quashed and set aside. . Pertinently, the Dept. assailed this order of the Hon ble High Court before the Hon ble Supreme court in ACIT vs Serajuddin Co. [SLP (Civil) Diary No(s). 44989/2023], wherein the Hon ble court after hearing the Dept. dismissed the said petition. 3.2 Kindly refer Veena Singh vs. ACIT (2024) 38 NYPTTJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king approval by the AO (PB II for A.Y. 2012-13 Pg. 46)addressed to the Addl. CIT, will show that the AO has supplied only the draft assessment order and no other record has been supplied. 4.2.1 Alternatively, for once assuming that the AO did sent the draft assessment order along with all the records to the Addl. CIT. In that regard, the said approval (PB II for A.Y. 2012-13 Pg. 47) states that the approval was sought by the AO vide his letter dated 19.12.2019. Interestingly, the same reached the ld. Addl. CIT on 19thof December itself. Thereafter, on the very same day he went through the entire record, all the statements and the draft assessment orders for all the 6 years. 4.2.2 It is surely not humanely possible, rather impossible since assuming that the courier company almost instant supplied the record from Kota to Ajmer, which itself takes 10 hours by road, then a person i.e the Addl. CIT went through more than 500 pages (approx.) within no time and prepared his approval report. 4.2.3 Further, the recently the assessee filed an RIT application seeking the details regarding the approval granted u/s 153D. In response (PB II for A.Y. 2012-13 Pg. 44-45), the Addl. CIT stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -3 2. Notice u/s 153A dated 05.07.2018 for AY 2012-13 4 3. Copy of ROI e-filed along with Computation of Total Income u/s 153A for A.Y. 2012-13 5-8 4. Seized Annexure of sale agreement dt-16.09.2008 w.r.t. PA-8, Vigyan Nagar, Kota seized during the course of search being marked as Annexure AS, Exhibit 8 Pg- 21 to 25 by Shri Lal Chand Aswani. 9-13 5. Copy of reply dt. 04.12.2019 filed before the AO on 11.12.2019. 14-19 6. Copy of statement of the assessee recorded on 08.09.2017 u/s 132. 20-39 7. Seized Annexure of sale agreement dt. 05.10.2011 w.r.t. PA-8, Vigyan Nagar, Kota seized during the course of search being marked as Annexure AS, Exhibit 8 Pg- 16 to 19 between Smt. Prabha Jain and Shri Lal Chand Aswani 40-43 8. Copy of order dated 07.10.2024 under RTI Act, 2005 containing information regarding approval u/s 153D 44-45 9. Copy of letter for approval by ACIT(A) dated 19.12.2019 to Addl. CIT, Udaipur 46 10. Copy of approval u/s 153 by Addl. CIT dated 24.12.2019 47-48 11. Copy of purchase deed dated 30.01.2012 between pushpa Devi and lal Chand Ashwani 49-55 12. Copy of sale dee dated 1609-2008 between purshpa Devi and Lal Chand Ashwani 56-75 Case laws relied upon: Sr. No. particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in the hands of the assessee. The ld. AR of the assessee also submitted that the addition is made only on the agreement to sale and not the sale deed. The assessee also filed a retraction statement vide submission dated 11.12.2019 and on that retracted statement no addition can be made. Even the ld. CIT(A) vide para 5.3 has merely confirmed the addition merely based on the statement of the assessee and no corroborative evidence to prove the averments in the statement was placed on record. Therefore, ld. AR submitted that no addition of property acquired by wife can be made in the hands of the assessee in the absence of the proof not placed on record. Ld. AO has not examined the parties involved so as to bring the correct fact on record. When the property is not purchased by the assessee how can the addition of undisclosed income be added without any corresponding assets in the name of the assessee. The legal presumption to evidence be read as per provision of section 292C of the Act. The ld. AO has neither examined the wife of the assessee or that of Shri Lal Chand Aswani who sold the property to the wife of the assessee. Thus, without examining those interested parties how can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntralized to Central Circle-Kota by the Principal Commissioner of Income-tax, Kota on 12.10.2017. Assessee is an individual and derives income from salary, house property and other sources etc. Pursuant to the search action notice u/s 153A of the Act was issued to the assessee on 05.07.2018 which was duly served. In response to notice issued u/s 153A, the assessee furnished his return of income on 18.07.2018, declaring total income of Rs. 15,67,000/-. Earlier the assessee had filed his return of income u/s 139 of the Act on 30.03.2013 at the total income of Rs. 14,91,460/-. Notices as required under the law were issued to the assessee. In the assessment proceedings on examination of search records ld. AO noted that during the search action a sale agreement made between Smt. Prabha Jain and Shri Lal Chand Aswani regarding sale of Plot No. 2-PA-8, Vigyan Nagar, Kota was found from the premise of the assessee, Shri Harish Jain at 2-PA-8, Vigyan Nagar, Kota, and the same was seized as page No. 16 to 19 of Annexure AS, Exhibit-8, in which total sale consideration was mentioned of Rs. 40 lacs. Another agreement was also found and annexed as page No. 21 to 25 of Annexure AS, Exhibit-8, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incing. Further, the assessee retracted from his statements vide his submission dated 11.12.2019 when the assessment proceeding is at its ending period . The assessee has not filed any application for retraction after search nor submitted any supporting evidence during post search enquiry and not submitted anything in this regard till 11.12.2019. The retraction made by the assessee was considered as an afterthought to escape from taxation. Therefore, the retraction of the assessee was not considered. The immovable property in question was purchased by his wife Smt. Prabha Jain therefore the contention that he has nothing to do with the agreement was also baseless. Thus, ld. AO relying on the decision of apex court in the case of ABCAUS 2871 (2019) (04) SC, dismissed the SLP of the assessee against the order of the High Court in dismissing his appeal holding that the statement recorded during search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. The assessee during search proceeding accepted that the immovable property was purchased by her wife Smt Prabha Jain at consideration of Rs. 95 Lac and Rs. 40 Lacs was paid by her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prabha Jain wife of Harish Jain for an amount of Rs. 40,00,000/-. Out of that 40 lac 35,00,000 demand draft drawn from Central Bank is drawn favouring the ICICI Bank account of Shri Lalchand Aswani. What we observed is that first deed executed by Shri Lalchand Aswani for an amount of Rs. 95,00,000/- was also mentioned in the second agreement second para of the first page. Thereafter wife of the assessee has agreed to purchase that property as the same was having banking mortgaged to the ICICI Bank. There is no material that the assessee or that of his wife has paid any amount to Smt. Pushpa Devi or that to Shri Lalchand Aswani. Both the deeds are and independent deeds having been referred in the second agreement and as it emerges that the same forced sale is being made by Shri Lalachand Aswani on account of bank loan for which he tried to sale in 2008 for Rs. 95,00,000 for which he could not, and he has ultimately agreed to sell to the wife of the assessee for an amount of Rs. 40,00,000/-, out of that Rs. 35,00,000 is directly paid to the bank loan account and Rs. 5,00,000 to Shri Aswani. So, there is no finding of the search team after search proceeding with that Smt. Prabha Devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y based on the retracted statement no addition can be made. The relevant finding of binding judicial precedent is reproduced herein below: 11. Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the Assessing Officer. Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of the Hon'ble Supreme Court; one such decision was rendered in M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another (1973) 19ITR18. 12. Therefore, we hold that no substantial question of law arises between the parties and while so, the present Income Tax Appeal is not maintainable. Respectfully following the finding of apex court in the case of Abhisar Buildwell P. Ltd (Supra) and jurisdictional High Court judgment in the case of M/s. Esspal International P. Ltd. (Supra) we do not find any reason to sustain the addition a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income to the extent chargeable to tax and therefore, we direct to delete that addition of Rs. 3,00,000/- made in the hands of the assessee. In the light of the discussion so recorded ground no. 2 raised by the assessee is allowed. Ground no. 1 4 being general or technical does not require our adjudication and ground no. 3 being consequential in nature does not require to be adjudicated. In terms of this observation appeal of the assessee in ITA no. 624/JP/2024 stands allowed. 14. In ITA no. 625/JP/2024 the assessee has taken following grounds of appeal:- 1. The impugned additions made in the order u/s 143(3) r.w.s.153A of the Act dated 22.12.2019 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. Rs. 10,00,000/-: The Id. CIT(A) erred in law as well as on the facts of the case in confirming impugned addition of Rs. 10,00,000/- on account of alleged rental income received from Shri Umesh Kumar for residential hostel at House No. 175, Rajeev Gandhi Nagar, Kota as per rent agreement found and seized and marked as Annexure- AS, Exhibit-2, Pg10 to 13. The impugned addition has been made on merely surmises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding year and Rs. 9,50,000/- is offered in the year under consideration though the agreement was terminated in September. Therefore, the assessee has already offered the more income then what is recorded on the back side of the document. Ld. AO though ld. DR did not controvert this factual aspect of the matter and therefore, we found force in the argument made by the ld. AR of the assessee and accept the fact that when the assessee offer the income more than what is recorded in the seized record in that situation no more addition is required to be made. In the light of the discussion so recorded ground no. 2 raised by the assessee is allowed. Ground no. 1 4 being general or technical does not require our adjudication and ground no. 3 being consequential in nature does not require to be adjudicated. In terms of this observation appeal of the assessee in ITA no. 625/JP/2024 stands allowed. 15. In this appeal the assessee has raised following grounds of appeal:- 1. The impugned additions made in the order u/s 143(3) r.w.s. 153A of the Act dated 25.12.2019 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as under : There was no need to make reference to DVO when the assessee himself admitted the correct value of investment in construction of House. The assessee has not furnished any valuation report in search proceedings which could establish that the admission made by him was not based on correct facts milestone the appellant on the basis of his exclusive knowledge admitted undisclosed investment which is not disproved by any other material brought on record. In these facts, there was no need to make reference to the DVO. The assessee already accepted Rs 35,00,000/- investment out of undisclosed sources in the return of income filed in response to notice issued under section 153A out of the admitted amount of Rs. 50,00,000. Hence the argument of the appellant in this regard are not found to be acceptable. 15.4 The bench noted that in this case the addition so made for an amount of Rs. 15,00,000/- is purely based on the statement of the assessee recorded at the time of search. No supporting evidence or documents of having made the unaccounted investment was found by the search team. The addition is purely based on the statement so recorded. That statement the assessee already re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
