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TMI Blog2022 (4) TMI 1646X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO solely on the basis of alleged loose paper though same was dumb document and without bringing any material on record to support the allegation. Appellant prays that addition so made deserves to be deleted. 3. On the facts and in the circumstances of the case ld. CIT(A) erred in confirming the action of ld. AO in making addition of Rs. 1,39,581/- without appreciating the submission made by assessee. Appellant prays addition so made is not in accordance with law and deserves to be deleted. 4. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal." 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. The brief facts of the case are that the assessee is a trader dealing mainly in Iron and Steel business. Besides this, he was director in M/s Bagru Ferro Alloys Pvt. Ltd., M/s Siddhi Vinayak Induction Pvt. Ltd. and M/s Panchsheel Infotech Pvt. Ltd. During the year under consideration, a search action u/s 132 of the Act was conducted on Adventage Group on 17.12.2014 to which the assessee belongs. Various asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vere tension / pressure and the uncomfortable circumstances created due to the presence of so many departmental officials asking on various issues so many times during the entire period. They also did not allow the assessee to properly read and understand what has been written in the statements recorded and simply got his signatures on them. Immediately after conclusion of the search proceedings (i.e. within a week), the assessee filed an affidavit on 24.12.2014 (APB 34-35) retracting from the statements recorded during search as the assessee had signed them in haste without reading completely for the main reason that statements were recorded at odd hours and as assessee was not in normal state of mind due to lack of sleep and charged atmosphere. At this juncture, it is submitted that surrender during the course of search was obtained from assessee on the basis of an alleged loose slip marked as page 7 of Exhibit 2 (APB 40), which was stated to have been found from the possession of assessee and as per statements recorded, said slip contained some entries of cash advances made to various persons for supply of goods from M/s Shri Siddhi Vinayak Induction Pvt. Ltd. It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough noting which is got signed from the assessee to create evidence for alleged declaration of undisclosed income of Rs. 1.50 crores which was obtained from the assessee on the dotted lines. It is settled law that the paper should be read as a whole. In the instant case the department has read the paper in the manner which suits to it and not considered the same in its entirety. In this regard reliance is placed on the following judicial pronouncements: 253 ITR 454 (Guj.) Glass Lines Equipments Co. Ltd. V/s CIT Interpretation of documents - Documents must be read as a whole. It is a well settled canon of interpretation that a document has to be read as a whole" it is not permissible to accept a part and ignore the rest of the document. 22 TW 684 Hissaria Brothers V/s ACIT (Jpr.) Held that the seized document has to be read in its entirety and the parties are not allowed to read only that part which is suitable to it. 21 Tax World 213 Lal Chand Agarwal V/s ACIT (Jpr) In no case AO can be allowed to consider a part of a particular document as true being favourable revenue and other part of the very document as false since that is favourable to assessee - Duality of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normalcy of the human mind is bound to disappear. It is further submitted that Search officials even did not allow the assessee to read and understand what has been recorded and simply got his signatures on them, and thus statements so recorded cannot be relied upon. In this regard, reliance is placed on decision of Patna High Court in the case of Bihar Human Rights Commission vs Rajendra Singh, (case law paper book pages 128-150): The said position was further clarified by CBDT vide Circular no.10 dated 2003, which clearly stated that focus and concentration should be 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 rather than on obtaining confession. It is further submitted that ld.AO has not even tried to identify and verify the persons to whom alleged advances were made as per the AO's version. In fact, when the statements were already recorded and concluded, no sooner the intimation of retraction of statements was received by department, again summons were issued to assessee and his statements were recorded after the lapse of almost 4 months i.e. on 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is settled position of law that if there is evidence then assessee has a right to retract. During the course of search amidst a number of officers, the poor assessee is brow-beaten and on account of undue pressure exerted there remains no option but to surrender. It was a case like this and the assessee was forced to surrender income of Rs. 1,50,00,000/- with reference to pages 7 of Annexure-1 whereas the paper is rough paper and has no relevance with the business of the assessee. The retraction of the assessee was fully justified and substantiated with adequate evidence. However ignoring and disregarding the retraction made by the assessee the Learned Assessing Officer has stuck to surrender obtained from the assessee under coercion in statement recorded u/s 132(4) of the Income Tax Act, 1961. It is settled position of law that no addition can be made simply and simply only and only on the basis of a naked statement having no clothing. The Learned Assessing Officer has not brought any material to establish the truthfulness of the contents of the paper on the basis of which surrender was obtained. On the other hand the assessee has established that the paper is dump document. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book pages 154-259. It is further submitted that ld AO has disregarded the retraction affidavit on the allegation that the assessee has not filed retraction with his jurisdictional Income Tax officer [ITO Ward 3(1)] with whom he was filing his income tax returns or with DDIT(III)-Inv. Jaipur or Addl. DIT (Inv.), Jaipur or DIT (Inv.) Jaipur or DGIT (Inv.) Jaipur and has in fact filed the same with ACIT Circle-1, Jaipur. In this regard, as submitted before ld. AO, it is submitted that since M/s Shri Siddhi Vinayak Induction Pvt. Ltd. (in which Sh. D.P.Sehgal was also director and because of which search was conducted on assessee) had jurisdiction with ACIT, Circle 1, Jaipur, thus the assessee was under bonafide belief that ACIT, Circle-I was the competent authority for filing affidavit in case of assessee (Director) and therefore, assessee filed both the retraction affidavit vide letter dated 24.12.2014 and letter dated 15.04.2015 with the ACIT Circle-I, Jaipur. Further, as submitted above, that the assessee was called upon subsequently at the office of the Director of Income Tax (Investigation) on 14.04.2015 on the pretext of discussions on aforesaid retraction but was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is therefore prayed that addition so made may be deleted. So far as slip on the basis of which is department has tried to substantiate the addition of Rs.1.50 crores is concerned, it is submitted that the slip did not bear any signature of third party nor were the figures mentioned therein proved to be undisclosed income of assessee with any supporting evidence. In fact, no effort whatsoever was made to verify the recipients of such advances. It is further submitted that learned AO in assessment order has mentioned that "As per the Computation of Income filed as well as the details available on record the assessee indulged in the sale of two properties during AY 2014-15 and AY 2015-16 as under: i) Flat G-13/21, Chitrakoot Yojana, Gandhi Path Jaipur sold on 13.11.13; and, ii) Plot No. H-34, Sun City Sikar Road, Jaipur sold on 31.01.2015. It is worth noticing here that while the first property was sold in FY 2013- 14, the second was sold after the date of search i.e. 17.12.2014 and thus both do not corroborate with the claim in the recorded statements that the income was earned out of sale transactions of property in current FY 2014- 15. Further, the total value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as cited before us and we have also gone through the orders passed by the revenue authorities. As per the facts of the present case, we noticed that the assessee is a trader and dealing in Iron and Steel business. He was also a director in M/s Bagru Ferro Alloys Pvt. Ltd., M/s Siddhi Vinayak Induction Pvt. Ltd. and M/s Panchsheel Infotech Pvt. Ltd. etc. During the year under consideration, a search action u/s 132 of the Act was conducted on Adventage Group on 17.12.2014 of which Mr. D.P.Sehgal was key person and one of the director in the company namely Shri Siddhi Vinayak Induction Pvt. Ltd., residence of assessee was also searched. During the course of search, surrender to the tune of Rs.1.50 crores was obtained from assessee in the statements recorded which is solely based on the scribbling found noted on the slip alleged stated to have been found from the possession of assessee. 8. We observed from perusal of the record that a search and seizure action was carried out at residential premises of the assessee on early morning of 17.12.2014, which was continued till 18.12.2014 night. During the search proceedings, assessee was required to be continuously present on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 150.00 lacs Condition: Goods to be recd. From SSVIPL before 31.03.2014. From the above, it is clear there are major inconsistencies in the notings on such loose slip which are evident from the face of it such as (i) while against each entry, value is given in rupees where as in total the value is mentioned in Lacs. Surprisingly it is even signed and dated by the assessee which is again not a normal practice / behavior. Further, though the entries pertain to F.Y. year 2014-15, the condition in the last says that the goods to be received from SSVIPL before 31.03.2014. In fact, it nowhere stated that the value written against each entry is cash given. Further, while it is duly signed and dated by the assessee, there is no confirmation / signatures by SVIPL. Moreover, though it is specifically mentioned in the slip that the Goods to be received from SSVIPL before 31.03.2014, however, search officials as well as by the AO miss-interpreted and twisted the facts to read "For" in place of "From" and "31.03.2015" in place of "31.03.2014". All these discrepancies clearly indicate that it was rough noting which got signed from the assessee to create evidence for alleged declarati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of statement recorded u/s 132(4) of the Act which has been retracted by the assessee and without bringing any material on record. It is important to mention here that the A.O. has made additions without making any post search enquiries with reference to contents of page. No material has been brought on record that the assessee has received the goods or the company has received the goods against such money alleged as advance given to various persons. These pages admittedly do not contain name of any supplier or the person to whom advance was given yet additions have been made solely on the basis of these papers on presumption and assumption. As per the A.R., the Search officials had not allowed the assessee to read and understand what has been recorded and simply got his signatures on them, and thus statements so recorded cannot be relied upon. In this regard, we draw strength from the decision of Hon'ble Patna High Court in the case of Bihar Human Rights Commission vs Rajendra Singh in CWJC No. 10707 of 2011 judgment dated 02/02/2012, wherein it was held as under: "the members of the raiding party may take their own time to conclude the search & seizure operations but suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid that the AO had not even tried to identify and verify the persons to whom alleged advances were made. In fact, when the statements were already recorded and concluded, no sooner the intimation of retraction of statements was received by department, again summons were issued to assessee and his statements were recorded after the lapse of almost 4 months i.e. on 14.4.2015 which are at page No. 36-38 of the paper book, wherein no new queries were made and rather assessee was to state that the slip marked as page 7 of Annexure II was documentary evidence in support of surrender made and undisclosed income of assessee was earned from property transactions. Also, assessee was to re-affirm statements recorded during search (however there was no mention of statements recorded on 14.04.2015). Thus, basically re-affirmation of statements was nothing but another attempt by the department not to accept the retraction, which is further evident from the fact that the very next day, i.e. on 15.04.2015 assessee again filed letter before the AO which is at page No. 39 of the paper book, wherein the assessee again retracted from the confirmatory statements obtained from him on 14.4.2015 duly exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not brought any material to establish the truthfulness of the contents of the paper on the basis of which surrender was obtained. On the other hand, the assessee has established that the paper is dump document. In this regard, we draw strength from the decision in the case of Shri Ashok Kumar Jain 369 ITR 145 wherein the Hon'ble Jurisdictional High Court of Rajasthan has held that "if the assessee does not adhere to the surrender made then it is for the Learned Assessing Officer to bring on record cogent material and other evidences to support the addition rather than simply rely on the statement. In this case the position is exactly the same." We also found support from the following judicial pronouncements: (a) Contech Transport Service (P) ltd Ors V/s ACIT 19 DTR 191 (Mumbai) (b) Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 (c) Kailashhen Manharlal Chokshi Vs CIT (2008) 14 DTR 257 (Guj) (d) Pullanguegode Rubber & Produce Co. Ltd. Vs. State of Kerala 91 ITR 18 (SC) (e) Kailash Ben Mohanlal Choksi v/s CIT (2008) 14 DTR (Guj) 257 ITA 324/JP/2017 & 1 Anr (f) Hukum Chand Jain Vs. Income Tax Officer (2011) 334 ITR 197 (Rajasthan High Court) (g) Ajit Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cone through assessment order passed by the AO. I have also. taken a note of factual matrix of the case as well as applicable case laws relied upon. I have also carefully perused the assessment record. On careful perusal of the seized documents (Supra), on which during the search assessment Sh Vijay Kr Jain in his sworn statement on oath u/s 132(4) of the Act recorded on 05.09.2013, had admitted to have received on-money of Rs. 27,50,31,216/= and Rs. 2.5 crore on a/c of other discrepancies, the gist of head wise & entry wise break up of admission of undisclosed income is mentioned as under: S. No. Amount admitted in Rs. Basis of admission of undisclosed income Relevant question No. of the sworn statement Remark 1. 27,50,31,216/- Unaccounted receipts in cash on sale of flats Q. No. 1 & 12 of statements of Shri Vijay Jain director of M/s JKD Pearl India Developers Pvt. Ltd. dt. 04/09/2013 Shri Vijay Jain director of M/s JKD Pearl India Developers Pvt. Ltd. had admitted the undisclosed income of Rs. 30,00,31,216/- in the hands of the company 2. 2,50,00,000/- Other discrepancies Q. No. 13 of statements of Shri Vijay Jain director of M/s JKD Pearl India Devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given, and (iv) name of the person receiving such on-money from buyers. Even the amounts shown on "column A" which is alleged to be the accounted part of sale price is also not verifiable for books of accounts, meaning thereby the details mentioned in the seized documents cannot be corroborated with the transactions recorded in the regular books of accounts. e) The assessee company recognizes the sale of flats only when the flats are fully ready to be sold and title is transferred to the purchaser and the possession is give. But during the year under consideration the flats were not fully developed and also the title of property was not transferred and no possession was given. Hence there was no sale of flats. There was only booking of flats in advance. The person who made the advance payment against purchase of property deduct TDS as per provision of section 192(IA) of the Act. So the amount received on which TDS was deducted is shown in advance received and not in the sales of the assessee company. Therefore the sale consideration of property in ITR is less than consideration. The flats are fully prepared in AY 2015-16 and then they are sold. On perusal of assessment reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act unless the contrary is proved and as such, the assessee was legally required to substantiate the seized documents with supporting evidence. Here I would also like to quote decision in case of ACIT vs. VATIKA GREENFIELD (P) LTD (Del) 121 TTJ 208 (2009), wherein Hon'ble Delhi High Court has held that unless some evidence or material is brought on record by the assessee to show that what is stated in the seized document is not correct state of affairs and the state of affairs stated in the seized document has to be presumed to be true as mandated by Sec.292C of the Act. In this regard, AO has also not brought out any further corroborative evidence to support his contention. However, appellant submits that even there are other corroborative evidences to suggest and confirm its contention. Therefore, in view of the facts and circumstances of the case itself would be sufficient to rebut the presumption u/s 292C of the Act. When no independent material or evidence had been brought or record by the AO to establish that the noting as appearing in the computer prints out (Reference Seized Documents Annexure-A-2 Pg 1 to 4) which according to him, represented an unaccounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in case of CIT vs. Ravindra Kumar Jain (2011) 201 Taxman 95 (Jharkhand) in retraction case has held as under: "........Assessee retracted his statement- Surrender was not corroborated by independent EL7dence - Assessing Officer was duty bound to collect more evidence in respect of r disclosed income of assessee to justify the addition.." Now, facts of the case are that during the post search investigation and also during assessment proceeding, no effort was made to investigate from buyers of the flats about alleged on-money payment made to the assessee. During the search no other evidence including money trail evidencing on-payment by the buyers of the flats to assessee has been found. Even during the appellate proceeding, the AO vide letter dt 07.12.2016 has been asked to carry out necessary enquiry u/s 250(4) of the Act to substantiate his contention. Copies of the affidavits of 28 buyers as submitted by the assessee has also been provided to the AO. However, AO has reiterated same facts as mentioned in the assessment order. It is also a fact that on the day of search flats were not sold and only booking amounts were received from the customers. Meaning thereby fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A)after going through the facts of the case, had passed a detailed order discussing entire facts and circumstances and also controverted all the findings and observation of the A.O. As per the factual position during the course of search, statement of one of the directors of Shri Vijay Kumar Jain was recorded. During the course of statement Shri Vijay Kumar Jain was examined with reference to certain rough papers found during the course of search. These papers have already been placed on record as page no. 1 to 4 of Annexure A-2. We have also perused the scanned copies of those page Nos. 1 to 4 put up as Annexure-A2. However, the A.O. has made additions without making any post search enquiries with reference to contents of pages 1 to 4 of annexure A-2. We have also perused the copies of affidavits of the buyers which have been placed on record by the assessee in paper book page No.1 to 28 but in the entire assessment proceedings, we noted that the A.O. has not carried out any investigation or verification in respect of those affidavits of the buyers. Even no material has been brought on record that the assessee company received any on-money on sale of flats. It is an admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus the A.O. has acted more on suspicion and doubt than on evidence. It is settled principle of law that suspicion however strong cannot take the place of evidence. We also drawn our attentions from the decisions in different cases wherein it has been time and again held that suspicion howsoever cannot take place of evidence. In this respect we relied upon the following decisions: Uma Charan Shaw & Brothers 37 ITR 271 (i) CIT vs. Anupam Kapoor 299 ITR 179 (P&H) (ii) CIT vs. Dhiraj Lal Girdhari Lal 26 OTR 736 (iii) State Vs. Guljari Lal Tondon AIR 1979 (SC) 1382 (iv) J.A. Naidu vs. State of Maharastra SC 1537 (v) Krishnand vs. State of Mandharsinghji P. Jadera (2005) 281 ITR 0019 AIR 1977 SC 796 (vi) Dhakeshwari Cotton Mills 26 ITR 775 (SC) (vii) Omar Shaa 37 ITR 151 (SC) (viii) Lal Chand Bhagat Ambika Ram (1959) 37 ITR 288 The A.O. at page 25 of the assessment order has admitted that the amount of sale mentioned in these papers i.e. page No. 1 to 4 of Annexure- A2 was not verifiable with reference to actual sale consideration. 13. We have noticed that those papers which are now in dispute i.e. page Nos. 1 to 4 of Annexure-A2 are computer printouts ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain flats were not sold upto the date of search as such there was no question of receiving any amount on account of on-money. Even in the written submissions filed before lower authorities, it has categorically mentioned by the assessee that flat no. 201, 202, 301, 602 of JKD Pearl Landmark and flat no. 101, 102, 302 of JKD Pearl Stylome i.e. Mahaver Nagar Jaipur and flat no. 102, 604 of JKD Pearl Aura, Alwar were sold much later i.e. in the year 2014 whereas the search was conducted on 05.09.2013.The assessee had also specifically submitted that mentioning of receipt of amount against these flats in the seized papers is therefore fake as these have been sold at a later date. Therefore, in these circumstances the sale amount mentioned against these flats and shown to be have been received by the assessee was not verifiable with reference to the books of account. 14. We noticed that the A.O. has not brought on record any independent material to establish that any on-money was received from any of the buyer. Since admittedly, no statement of any buyer was recorded even in respect of fact that buyers have already submitted their respective affidavits which are at page No. 1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andmark FLAT NO. SALE PRICE AS PER SEIZED PAPERS SALE PRICE AS PER SALE DEED 101 1728125 2242209 301 * 10616900 10616900 302 10616900 10616900 401 10281250 10333820 402 10281250 10333820 501 & 502 20562500 20672190 601 & 102 10281250 12201500 602 * 10281250 10616900 701 10028375 10030720 702 10028375 10030720 801 8999375 9310980 JKD Pearl Stylome FLAT NO. SALE PRICE AS PER SEIZED PAPERS SALE PRICE AS PER SALE DEED 101 * 6538925 102 * 9572985 201 & * 201 13077850 301 6228125 6538925 302 * 6228125 6538925 401 6228125 6538925 501 6228125 6465675 502 6228125 6465675 801 6228125 6465675 802 6228125 6465675 JKD Pearl Aura FLAT NO. SALE PRICE AS PER SEIZED PAPERS SALE PRICE AS PER SALE DEED 102 * 6071940 601 4120000 6195665 604 * 3197500 4780055 703 3197500 4767735 704 3197500 4780020 16. From perusal of the said table discloses that the sale amount (A) mentioned in the seized papers is at variance with the regular records. In some of the cases, sale deeds were executed post search by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the concerned party. (iv) Assistant Commissioner of Income Tax Vs. Satya Pal Wassan (2007) 295 ITR 9 AT 352 (Jabalpur) A document found during the course of a search must be a speaking one and without any second interpretation, must reflect all the details about the transaction of the assessee in the relevant Assessment Year. Any gap in the various components for the charge of tax must be filled up by the Assessing Officer through investigation and correlation with the other material found either during the course of the search or on investigation. Without this no addition can be made on the basis of a loose sheet. (v) It was held in the following cases that addition could not be made on the basis of uncorroborated noting on loose sheets and papers - (1) S.P. Goyal VS. DCIT (2002) 77 TTJ 1 (Mum) (2) Chandra Mohan Mehta Vs. ACIT (1999) 65 TTJ 327 (Pune) (3) Bansal Strips Pvt. Ltd. VsACIT (2006) 100 TTJ 665 (Del) (4) Kishan Chand Sobhraj Mal (1991) 42 TTJ 423 (JP) (5) CIT Vs. Naresh Khattar (HUF) (2003) 261 ITR 664 (Del) (6) Lal Chand Agarwal vsA CIT 21 TW 213 (ITAT Jaipur) (7) CIT Vs. S.M. Agarwal (2007) 293 ITR 43 (Del) (8) CIT Vs. Girish Choudhar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Shri Devansh A. Mohta, learned counsel appearing for the assessee, that this was a case both of perversity and of there being no evidence at all. We find that not only are the findings of fact recorded in some detail but that it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made by the assessee himself and other corroborative material are there on record. 5. In view thereof, we find no substance in the present appeal which is accordingly, dismissed." II In the case of Banna Lal Jat Construction P Ltd Vs ACIT in ITA No.720/JP/2017, vide order dated 29.12.2017, the Hon'ble ITAT, Jaipur has held as under: "20. The said admission has been reiterated in not just one statement but two subsequent statements - one recorded under section 132 (4) and second recorded under section 131 during post search proceedings. We therefore do not see any inconsistency in assessee's statements, rather the latter statements have been made more clearly and given that these subsequent statements have been recorded on oath under section 132 (4) will thus have a great evidentiary value. 21. Thereafter, the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed hereinbefore, we have noticed that while the statements were recorded at the time of search on 9-11-1995 and onwards but retraction, is almost after an year and that too when the assessment proceedings were being taken up in November 1996. We may observe that retraction should be made as soon as possible and immediately after such a statement has been recorded, either by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials, either by way of a duly sworn affidavit or statements supported by convincing evidence through which an assessee could demonstrate that the statements initially recorded were under pressure/coercion and factually incorrect. In our view, retraction after a sufficient long gap or point of time, as in the instant case, loses its significance and is an afterthought. Once statements have been recorded on oath, duly signed, it has a great evidentiary value and it is normally presumed that whatever stated at the time of recording of statements under Section 132 (4), are true and correct and brings out the correct picture, as by that time the assessee is uninfluenced by external agencies. Thus, whenever an assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 132 (4) cannot be accepted in the instant case." III It may be mentioned that in D.B. ITA No.140/2018 in the case of M/s Bannalal Jat Constructions Pvt. Ltd. Vs ACIT, the Hon'ble High Court of Rajasthan vide its judgement dated 31.08.2018 has upheld the order of Hon'ble ITAT, Jaipur and has observed that: "This court in CIT, Bikaner Vs. Ravi Mathur, supra, which was relied by the ITAT in the present case, after considering catena of previous decisions, held that the statements recorded under Section 132(4) of the IT Act have great evidentiary value and it cannot be discarded in a summary and cryptic manner, by simply observing that the assessee retracted from his statement. One has to come to a definite finding as to the manner in which the retraction takes place. Such retraction should be made as soon as possible and immediately after such statement has been recorded by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials by way of duly sworn affidavit or statement supported by convincing evidence, stating that the earlier statement was recorded under pressure, coercion or compulsion. We deem it appropriate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unexplained cash amounting to Rs.1,21,43,210/-and Rs.2,50,00,000 and Rs.30,00,000/- totalling to Rs.2,80,00,000 in his individual capacity. Subsequently, on 04.12.2014 during the post-search proceedings, statement of Shri Bannalal fat was again recorded under Section 131 of the IT Act, wherein he was again confronted with the various documents seized and cash found during the course of search and the consequent surrender made by him in respect of his two concerns and in response thereto, he again confirmed the surrender of undisclosed income amounting to Rs.1,21,43,210/- and Rs.1,35,00,000/-. It is in this background that we have to view his reply to the show-cause notice submitted on 02.12.2016. This show-cause notice was issued to him by the assessing officer when the appellant-company offered the said undisclosed income to tax. The reliability, importance and sanctity of admission made during search could be refuted only by cogent and convincing evidence. We may in this connection refer to earliest judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd., supra, wherein it was held that admission is an extremely important piece of evidence but it can't be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be held that statement recorded under Section 132(4) of the Act and later confirmed in statement recorded under Section 131 of the Act, cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessee in a belatedly filed affidavit has retracted from his statement. Such retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days. In view of above discussion, we are persuaded to allow the appeal of the revenue which is accordingly allowed. The substantial question of law formulated by this Court vide order dated 10.04.2018 is answered in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out this position in law, but, in the present case the appellant/assessee has not produced any material to show that the admissions made by him were incorrect. The statements recorded u/s 132(4) of the said Act are clearly relevant and admissible and they can be used as evidence. In fact, once there is a clear admission, voluntarily made, on the part of the assessee, that would constitute a good piece of evidence at the hands of the Revenue. 13. The learned counsel for the appellant also referred to the circular dated 11.03.2003 issued by the Central Board of Direct Taxes on the subject of Additional Income during the course of Search and Seizure Operation. As per the circular, there is an observation of the Board that the focus of the search party should be 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 Department. There is a further observation that, while recording statements during the course of search, seizure and survey operations, no attempt should be made to obtain confessions as to undisclosed income and that any action to the contrary would be viewed adversely. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the assessee could have retracted from the same at the earliest. No plausible explanation has been furnished as to why the said statement could not be withdrawn earlier. In such a situation, the authenticity of the statement by virtue of which surrender had been made at the time of search cannot be held to be bad. The Tribunal, thus, erred in concluding otherwise. The Tribunal, therefore, was not justified in reversing the order of the AO which was affirmed by the CIT(A) also." VII In the case of Thiru S. Shyam Kumar Vs ACIT [2018] 99 taxmann.com 39 (Madras), it has been held by the Hon'ble Madras High Court that: "7. After elaborately hearing the learned counsels for the parties and carefully perusing the materials placed on record, we find that the decision arrived at by the Commissioner of Income Tax (Appeals) as well as by the Tribunal are cogent and clear. The entire issue revolves around the factual matrix as to whether the slips, which contain certain details, were pertaining to payments made by the assessee, not brought into the books of account. Before the assessing Officer, the assessee has given more than one statement accepting the on-money payment. For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether any cognizance may be taken of the retracted statement. So far as case on hand is concerned, the glaring fact required to be noted is that the statement of the assessee was recorded under s. 132(4) at midnight. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement if such statement is recorded at such odd hours. Moreover, this statement was retracted after two months. The main grievance of the AO was that the statement was not retracted immediately and it was done after two months. It was an afterthought and made under legal advise. However, if such retraction is to be viewed in light of the evidence furnished along with the affidavit, it would immediately be clear that the assessee has given proper explanation for all the items under which disclosure was sought to be obtained from the assessee. (d) Pullanguegode Rubber & Produce Co. Ltd. Vs. State of Kerala 91 ITR 18 (Supreme Court) An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer may be called for the purpose and verified. Further a number of affidavits were furnished by the assessee from persons who had purchased the flats and in these affidavits it has been stated that no on money was paid. These affidavits have remained uncontroverted. Considering all these facts the addition made deserves to be deleted. In view of the aforesaid facts it is submitted that the retraction of the assessee of surrender made of income of Rs. 27,50,31,216/- is in order and is well substantiated with facts and documentary evidence. The same deserves to be accepted. No addition is warranted on the basis of the statement u/s 132(4) of the Income Tax Act, 1961. The case of the assessee is further strengthened by the following circulars of the board wherein the revenue authorities have been advised not to obtain surrender of income during search proceedings. 19. We have gone through the decisions referred by both the parties but after analyzing the facts of the present case, we are of the opinion that no efforts were made by the A.O. to find out the genuineness of the transactions noted in these papers. The minimum thing which was expected from the authorized o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these papers was correctly retracted. The assessee had retracted on the surrender vide letter dated 29.02.2016 to the DGIT(Inv.) Jaipur, copy of which has already been placed on record. The judgment cited by the ld CIT-DR are not applicable to the facts and circumstances of the present case as para materia contained in those judgements are altogether different from the facts of the present case. Since we have already discussed in detail the discrepancies pointed out in the investigation carried out by the A.O. as well as the discrepancies in the papers at page No. 1 to 4 of Annexure-A2 and we are also conscious of the fact that it is a settled proposition of law that no addition can be made simply on the basis of solitary statement having no corroborative evidence. The A.O. at the same time has not been able to brought on record any material to establish the truthfulness of the contents of pages 1 to 4 of Annexure-A2 on the basis of which surrender was made. In the case of Shri Ashok Kumar Jain 369 ITR 145, the Hon'ble Jurisdictional High Court of Rajasthan has categorically held that if the assessee does not adhere to the surrender made then it is for the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 286/98/2013-IT (Inv.II) dated 18.12.2014 Admissions of Undisclosed Income under coercion/pressure during Search/Survey Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated- 18th December, 2014 To 1. All Principal Chief Commissioners of Income Tax 2. All Chief Commissioners of Income Tax 3. All Directors General of Income Tax (Inv.) 4. Director General of Income Tax (I & CI), New Delhi Subject: Admissions of Undisclosed Income under coercion/pressure during Search/Survey - reg. Ref: 1) CBDT letter F.No. 286/57/2002-IT(Inv.II) dt. 03-07- 2002 2) CBDT letter F.No. 286/2/2003-IT(Inv.11) dt. 10-03-2003 3) CBDT letter F.No. 286/98/2013-IT(Inv.11) dt. 09-01-2014 Sir/Madam, Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee cannot claim these documents as dump documents. However, on the contrary, we found that the presumption available U/s 132(4A) of the Act is limited to search period and is not available in the assessment proceedings. In the case of P.R. METRANI vs. COMMISSIONER OF INCOME TAX (SUPREME COURT OF INDIA) (2006) 287 ITR 209, it was held that any presumption available under the Act is always rebuttable. In the case of the assessee pages 1 to 4 of Annexure- A2, found during search have been established by the assessee as defective and even the A.O. could not establish that the contents of these papers related to the business of the assessee and were true. In this respect, we draw strength from the decision of the Hon'ble Jurisdictional High Court and the Coordinate Bench of the ITAT as follows: (i) ACIT Vs. Thahrayamal Balchand (1980) 124 ITR 111 (Raj) (ii) CIT vs. SMS Investment Corporation Pvt ltd (1994) 207 ITR 364 (Raj) (ii) CIT vs. Kishanchand (1993) 45 TTJ (JP) 20 23. From the totality of the facts and circumstances of the case as narrated and discussed, we are of the considered view that the mere admission is not conclusive as to the truth of the matter. It is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled him again to file another affidavit accepting the earlier statements. Such conduct of the Income tax department officials clearly establishes that as there were no incriminating documents or any other corroborative evidence found as a result of search or gathered in post search enquiry in support of surrender obtained, they simply went ahead in forcing the assessee to re-affirm the retracted statement that too with new set of alleged recipients. It is a known fact that the assessee is a businessman and not an expert in taxation laws to have detailed knowledge on the jurisdiction and acted in bonafide belief and to the best of his knowledge and understanding in respect of filing of retraction affidavit and letter. The retraction letters filed by assessee were not recorded in Dak Register. In this regard, as per ld. AR that the assessee had sent his accountant to file the retraction letters, who was instructed to receive acknowledgement on office copy, by way of stamp of the Income Tax Office. He was not aware of the procedures internally followed by the department and thus did not ask for any other evidence like receipt number along with the stamped copy. It is only on receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -15 and 2015-16 was declared. This further proves that the addition is made on mere conjecture and surmises without any corroborative material. It is a settled law that the presumption whosoever strong may be but it cannot take place of proof and thus the A.O. has acted more on suspicion and doubt than on evidence. It is settled principle of law that suspicion however strong cannot take the place of evidence. In following cases it has been time and again held that suspicion howsoever cannot take place of evidence. The AO has interpreted a dumb document having no legal validity as per his suitability and addition based on this paper deserves to be deleted more particularly when the paper itself contained errors and addition is made merely and solely on the basis of confession without any corroborative evidence. Moreover the said confession made by the assessee was subsequently retracted and since the addition was not supported by any cogent, convincing independent documentary evidence, therefore, considering the totality of facts and circumstances, judicial precedents referred above as well as following the decision of the Coordinate Bench of this Tribunal in the case of DCIT Vs. JK ..... X X X X Extracts X X X X X X X X Extracts X X X X
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