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TMI Blog2025 (1) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the considered view that the suo-moto disclosure made before the Settlement Commission without corroborative material/evidence cannot be made base for making the addition. Hence the question no.2 is answered accordingly. In the present case admittedly except a letter filed before the DCIT, Central Circle-6(4)/Settlement Commission; there is no other corroborative material/documents for making and sustaining the addition in hand. Even otherwise, no opportunity was given by the AO or the Commissioner to the Assessee to cross examine the person who gave the statement/made disclosure/issued the letter as relied on for making the addition. Hence, the addition in hand is unsustainable, hence the same is deleted. Decided in favour of assessee. - Shri Narender Kumar Choudhry, Judicial Member And Shri Gagan Goyal, Accountant Member For the Assessee : Shri Prakash Jhunjhunwala, A.R. For the Revenue : Shri R.R. Makwana, Sr. D.R ORDER PER : NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER: This appeal has been preferred by the Assessee against the order dated 25.06.2024, impugned herein, passed by the National Faceless Appeal Centre/Ld. Commissioner of Income Tax (Appeals) (in short Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , challenged the said addition before the Ld. Commissioner, who more or less on the same reasoning as given by the AO, ultimately affirmed the addition. 6. The Assessee, being aggrieved, is in appeal before us and has raised various issues including reopening of the case by issuing notice u/s 148 of the Act, however, at the time of argument of this case has not emphasized on the same and on merits the Assessee has claimed as under: That during the assessment the Assessee had categorically denied of having made any onmoney to the builder. Further, the Assessee had purchased the flat on executing the registration agreement at Rs. 3,97,54,516/- which is much in excess of the value adopted by the stamp value authority to the tune of Rs. 2,79,42,000/-. Further, the materials found at the premise of third party and the statement of third party recorded at the back of the Assessee is not binding on the Assessee. Further, even in spite of written request, the copies of contrary material and statement of third party had not been provided to the Assessee for confrontation and opportunity of cross examination has also not been provided to the Assessee. Therefore, the addition in hand is unsus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l by dismissing the appeal of the Revenue Department. 8.2 It is also a fact that the aforesaid judgment in the case of Smt. Sunit Dhadda (supra) stands affirmed by the Hon ble Apex Court in the case of Commissioner of Income Tax, Central vs. Sunita Dhadda (2018) 100) taxman 526 (SC). Hence, on this aspect itself, the addition is unsustainable. 8.3 We further observe that Hon ble High court of Delhi in the case of Commissioner of Income Tax-II vs. Anil Khandelwal ITA No.247 of 2015 ITA No.248/2015 decided on 21.04.2015 has also dealt with the identical issue wherein certain documents were seized from third party. The Assessee denied the contents of the impugned seized documents and the person from whom the impugned documents were seized as also stated during the cross examination that there has been no cash transaction between him and the Assessee or his family members or entity in which they are interested. The Hon ble High Court considered the aforesaid aspects and held that it is well settled law that the loose papers, diaries and documents cannot possibly be construed as books of account regularly kept in the course of business, such evidence would therefore be outside the purvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closure ultimately ended in settlement order under section 245D(4) of the Act. The disclosure came to the possession of AO. The fact that the disclosure made under section 245D(1) of the Act even if constructed as if no order under section 245D(4) has been passed it will not give a license to the AO to use the confidential information disclosed in an annexure to the application of the Settlement Commission. If the application is treated as not admitted under 245D(1) of the Act, then the provisions are clear that confidential information can never be passed on to the AO nor can it be used in evidence against the assessee. Section 245D(4) has clearly held that admission of assessee s application under section 245(1) was incorrect. We find that any confidential information disclosed in annexure to the settlement application before Income Tax Settlement Commission can never be the basis to make the addition. We find that in the instant case, the AO has reopened the assessment under section 147. Thereafter, AO has not brought any evidence or made any inquiry that assessee has earned additional income of Rs. 5 lakhs as brokerage income. In the instant case, after reopening the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence has been produced before such Central Excise Officer, while adjudicating the show cause notice and the proceedings. If the contention on behalf of the appellant is accepted, in that case, there is no question of further adjudication by the Central Excise Officer with respect to the amount admitted by the assessee while submitting the application before the Settlement Commission submitted under Section 32E(1) of the Act. Once the application or proceedings before the Settlement Commission fails, the Central Excise Officer is required to adjudicate the entire proceedings and show cause notice. Under the circumstances, so far as proposed question of law No.1 is concerned, the present Tax Appeals deserve to be dismissed and are, accordingly, dismissed by answering the proposed question of law No.1 against the Revenue. 14. Respectfully following the same, we hold that Hon ble Gujarat High Court s judgment in the case of Maruti Fabrics pertains to Central Excise but if we compare central excise under section 32E of the Central Excise Act this section is parallel to section 245C of the Income Tax Act. One primary condition mentioned in section 32E for filing central excise settlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Gujarat High Court has held that if the petition filed before the Settlement Commission wherein assessee has made declaration but proves that assessee has neither earned such income nor any incriminating material was found during the search relating to undisclosed income then no addition can be made. 17. We have also gone through the judgment of ITAT, Mumbai in the case of Dolat Investment vs. Dy. Commissioner of Income Tax wherein the ITAT has specifically held in para 22 which reads as under: 22. The first issue is whether the case of the assessee for assessment year 2005-06 was admitted by the Settlement Commission under section 245D(1) of the Act? On this issue, we have already seen that in the order dated 30-11- 2007 under section 245D(4) of the Act, the Settlement Commission has clearly held that the assessee for assessment year 2005-06 does not satisfy the criteria of offering income on which at least an income tax payable should exceed Rs. 1 lakh. The Settlement Commission has further held that when admitting the petition of the assessee for assessment year 2005-06, this aspect was overlooked and that they are rectifying the apparent error by excluding assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion referred to in sub-section (2A) or subsection (2D), on or before the 31st day of March, 2008; (ii) in respect of an application made on or after 1st day of June, 2007 within nine months from the end of the month in which the application was made. (2) Where a proceeding before the Settlement Commission abates, the Assessing Officer or as the case may be any other income-tax authority before whom the proceeding at the time of making the application was pending, shall dispose of the case in accordance with the provisions of this Act as if no application under section 245C had been made. (3) For the purposes of sub-section (2), the Assessing Officer or as the case may be, other income-tax authority, shall be entitled to use all the material and other information produced by the assessee before the Settlement Commission or the results of the inquiry held or evidence recorded by the Settlement Commission in the course of the proceedings before it, as if such material, information inquiry and evidence had been produced before the Assessing Officer or other income-tax authority or held or recorded by him in the course of the proceedings before him. 21. Thus, when a proceedings before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) is deleted. 8.7 We further observe that Co-ordinate Bench of the Tribunal at Jaipur in the aforesaid case i.e. ACIT vs. Smt. Renu Sehgal in ITA No.837/JP/2018 decided on 19.08.2019 by considering the identical issue has ultimately held that addition made merely on the basis of suo-moto disclosure made by the Assessee before the ITSC, is not sustainable in the eyes of law. 8.8 Therefore on the aforesaid analyzations and discussions, we are of the considered view that the suo-moto disclosure made before the Settlement Commission without corroborative material/evidence cannot be made base for making the addition. Hence the question no.2 is answered accordingly. 8.9 Coming to the instant case, we observe that admittedly except a letter dated 20.03.2020 filed before the DCIT, Central Circle-6(4)/Settlement Commission; there is no other corroborative material/documents for making and sustaining the addition in hand. Even otherwise, no opportunity was given by the AO or the Ld. Commissioner to the Assessee to cross examine the person who gave the statement/made disclosure/issued the letter as relied on for making the addition. Hence, respectfully following the judgments referred to ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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