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TMI Blog2025 (3) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... s Bench does not concur with the findings of the ld. CIT(A) and the impugned addition made on account of alleged excess cash in hand is wrong and against the fact of the case. Thus the Ground No. 1 of the assessee is allowed. Addition as excess stock of silver jewellery - HELD THAT:- The Bench noted from the orders of the lower authorities that no details or particulars were asked regarding silver jewellery received on approval by the ld. AO. The assessee had submitted the copy of statement of the Director from which facts and submissions are evident from the statement of the Director of the company recorded during the course of search. Thus, the allegation of the AO that the appellant "could not explain such as name of the entity from which the same has been received." In the statement recorded u/s 132(4) of the IT Act, 1961, the appellant further submitted that the goods received on approval was duly recorded in the stock register and a copy of purchase bills of M/s Sangam Handicrafts for purchase of silver earlier received on approval was filed. It is also evident from the assessment order that the AO made no enquiry or collected any other legal evidence at his level regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M The assessee has filed an appeal against order of the ld. CIT(A), Jaipur-4, dated 20-08-2024 for the assessment year 2018-19 wherein the assessee has raised the grounds of appeal as under:- ''1. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the learned AO that out of cash of Rs. 16,03,210/- found at business premises of the appellant at the time of search, sources of cash to the extent of Rs. 11,76,838/- allegedly remained unexplained and in further upholding addition said amount of Rs. 11,76,838/- to the income of the appellant as unexplained money u/s 69A of the IT Act, 1961 on this count. 2. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the learned AO that out of silver jewellery weighing 47831 gms. found at business premises of the appellant at the time of search, jewellery weighing 18704.46 gms was allegedly found in excess, sources of which also allegedly remained unexplained and in further making an addition of Rs. 6,57,672/-to the income of the appellant u/s 69A of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as as per the cash book so furnished during the course of search the cash in hand was at Rs. 4,26,372. Hence, excess cash amounting to Rs. 11,76,838 was found. Out of which cash amounting to Rs. 11,00,000 was seized. The appellant has claimed in the appeal that the cash in hand as per the regular cash book maintained was Rs. 9,34,327 and not Rs. 4,26,372 as adopted by the learned AO. Appellant has also claimed that amount of Rs. 6,68,893 was advance received from customers to purchase the ornaments as per their desire/requirement. The total worked out by the appellant comes to Rs. 16,03,220. Regarding the first contention of the appellant which is on the issue of the amount of cash in hand as on the date of search, the appellant has stated that the books of accounts were incomplete on the date of search action and book entries has been made after the conclusion of the search proceedings. However the appellant has not placed on record the all versions of relevant cash book. The appellant has:- (i) not proved and not shown that the entries in the cash book which the appellant is claiming that were not entered in the books of accounts till 02.08.2017/03.08.2017 represent the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax (CIT v. Durga Prasad More [1971] 82 ITR 540 (Supreme Court)]. Further, the claim of the appellant is contrary to the statement of director of the company who at question no. 27 has explained the excess cash due to cash sale against which Invoices has not been issued. 4.3 The statement recorded during the course of search and seizure action is an evidence itself and in the present case there is no retraction (the question of valid or invalid retraction does not arise) is on record and the statement is still in force as per the appellant itself also. The statement itself is evidence against the appellant as the statement was given by the director of the company. Such evidence cannot be brushed aside and can only be countered with sterling evidences which has not been done in the present case and there is no retraction. Appellant is bound by such statement. In this regard reference is made to the following judgements:- Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation connected with any proceeding under the Income-tax Act. We find that a reading of section 132(4) with Explanation would be relevant. Hence we quote the same for easy reference "Section 132(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books 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 Explanation For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act. 1922 (11 of 1922), or under this Act" Going by the above provision along with its Explanation we find that the statement of the partner and employees recorded and documents collected are relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaint 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 pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence which we have observed hereinbefore. Once a statement is recorded under section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 20.05.2013. The very fact that the search continued for as long as 36 hours indicates that coercion and undue influence were exercised by the authorities of the appellant-department for making surrender. The affidavit filed by the assessee on 20.05.2013 explained in minute details the circumstances which led to surrender and how the surrender was extracted from the assessee from the aforesaid seven papers. The assessee has not brought any evidence on record to prove the facts mentioned by the assessee in the affidavit. The persons whose names were mentioned on the papers seized by the department have also denled any amount having been received by them from the assessee as advance against the sale of the properties/land Learned counsel argued that the Assessing Officer has not given any reason in the assessment order as to why the explanation given by the assessee in the affidavit was not acceptable Learned CIT(A) has given detailed reasons in respect of each deletion of the addition made by the Assessing Officer. Learned counsel in support of his arguments relied upon the judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. State of Kerala & Another, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 (Emphasis supplied) CIT, Bikaner vs. Shri Ravi Mathur (D.B. Income-tax Appeal No. 67/2002), Hon'ble Rajasthan High Court "Once a statement is recorded u/s 132(4), such a statement can be used as a strong evidence against the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 132(4) was recorded before witnesses. Hence, there is a presumption that there was no pressure/coercion unless proved. d) Disclosure was enhanced during statement under section 131(1A) as compared to the statement given under section 132(4). Hence, the theory of pressure or coercion applied during recording not of statement under section of statement e) The assessee is silent for about 11 months. No letter/correspondence was sent immediately after recording of statement under section 132(4). Hence, theory of pressure or coercion is only an afterthought. f) Disclosure of several items were based on documents found in the search. These documents were explained under sections 132(4) and 131(1A). Hence, there is a strong reason to believe that statement under sections 132(4)/131(1A) reveal correct state of affairs and retraction has to be ignored. 4.4 In view of the above discussion this ground of appeal of the appellant is hereby dismissed 2.2 During the course of hearing, the ld.AR of the assessee submitted that the ld. CIT(A) is not justified in confirming the addition of Rs. 11,76,833/-made by the AO u/s 69A of the Act. It may be noted that the ld. AR of the assessee re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... स्पष्टीकरण देवे। उत्तर : जो स्टॉक कम पाया गया है वो बिना बिल कटे सेल हो गयी है । और इसी वजह से स्टॉक कम पाया गया है, और cash अधिक पाया गया है।" (c) The learned AO and the learned CIT(A) both are also of the view that the assessee failed to furnish details i.e. name, full address of the persons from whom a sum of Rs. 6,68,893/- were received and as such, the claim made during the course of assessment proceedings by the assessee is in contradiction to the supra statement of the Director of the appellant company. It is also noted from the records that the learned CIT(A) dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as CIT(A) appears one sided and not supported by legal legs. We noted that ld. CIT(A) relied upon the following judgments :- A. Commissioner of Income-tax v. Hotel Meriya [2010] 195 Taxman 459 (Kerala) / [2011] 332 ITR 537 (Kerala) [26.05.2010] - In this case, the issue decided was regarding evidence of the statement as per definition given in Section 3 of the Evidence Act and additions made have been confirmed on the basis of the statement. In appellant's case, the appellant has not denied and / or objected the statement of the Director but the objections have been made on the calculation of alleged excess cash in hand. Thus, the facts of the said case are in applicable in appellant's case. B. Principal Commissioner of Income-Tax Vs Roshan Lal Sancheti [2023] 150 taxmann.com 227 (Rajasthan) - In this case the statement recorded during the course of search u/s 132(4) of the IT Act, 1961, the Hon'ble High Court held that when a statement is recorded at two stages and the assessee had categorically admitted in clear terms additional income, could not be discarded simply in satiric manner. In appellant's case, no second statement was recorded and in the statement rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 49 (Madras) wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. Further, Hon'ble Delhi High Court in CIT vs. Sunil Aggarwal, 64 Taxmann.com 107 held that addition cannot be made merely on the basis of the statement which is subsequently retracted even belatedly. It is also noted that The appellant also placed reliance on the following judgments to support his submission :- (a) Escorts Heart Institute and Research Centre Limited Vs DCIT (TDS) JP (2017) 87 taxmann.com 184 (Rajasthan) and CIT Vs Vegetable Products Ltd. (1973) 88 ITR 192(SC) - The Hon'ble Court held that if, two views are possible, the view in favour of the assessee should be preferred. (b) Shree Ganesh Trading Co. Vs CIT, Dhanbad (2013) 257 CTR 159 (Jharkhand) (c) CIT, Karnataka Vs Shri Ramdas Motor Transport Ltd. (2015) 230 Taxman 187 (Andhra Pradesh) (d) Chetnaben J. Shah Vs Income Tax Officer, Ward 10(3) (2016) 288 CTR 579 (Gujarat). (e) Mantri Share Broker P Ltd. (96) Taxmann.com 279 (Rajasthan) Hence taking into consideration entire facts of the case and the case law as mentioned, the Bench does not concur wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f on approval material from Messers Sangam Handicrafts. Clearly the two new issues raised in the appeal are mere afterthoughts and are made self-serving claims without any supporting evidences. In the appeal only a general reference has been made to these issues and no specific facts in terms of the valuation report, stock register, purchase bills, sales bills etc. have been filed to substantiate these grounds of appeal. Regarding the first issue, the appellant has not filed the copy of the relevant bills and documents from M/s Sangam Handicraft even during the appeal. Further self-serving statements have been made in the appeal which are baseless and are rejected. A party who relies on a recital has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax (CIT v. Durga Prasad More [1971] 82 ITR 540 (Supreme Court)] Further, the claim of the appellant is contrary to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement recorded u/s 132(4) of the IT Act, 1961, the appellant further submitted that the goods received on approval was duly recorded in the stock register and a copy of purchase bills of M/s Sangam Handicrafts for purchase of silver earlier received on approval was filed. It is also evident from the assessment order that the AO made no enquiry or collected any other legal evidence at his level regarding the said silver purchased from the above said concern. Thus, the addition made by the AO on this account is against the correct facts duly supported by the documentary evidences and it is wrong in view of the decision of ITAT Jodhpur Bench in the case of Suraj Kanwar Devra Vs ITO ITA No. 50/Jodhpur/2021. It is pertinent to mention that the appellant in this regard submitted that since beginning that the purity of the silver jewellery was 72% to 75% and not 90% uniformly adopted by the registered valuer. Further, we noticed that it is evident from the order of the CIT(A) that he confirmed the action of the AO without giving legal thought to the submissions and documentary evidences submitted by the assessee which are available at assessment records. In this view of the matter, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed valuer has been duly signed by the authorized person of the assessee company During the course of physical verification no such issue was raised that 22Kt Gold jewellery has been inventoried under 18Kt Gold jewellery Also, the express legal presumption provided under sections 132(4A) and 2920 of the Act are against the appellant in this regard. Further, both gold jewellery tems Le. 18Kt and 22Kt are different all together and excess of 1 item cannot be setoff with item which is found short. Further the appellant has also raised the issue that the valuation rate is high. No specific submission has been made in this regard and no supporting evidences have been filed. This issue has been raised for the first time in the appeal. This also shows that the appellant is not acting bona fide in presenting the facts of the case. Another important aspect is that even after the conclusion of search (date of search being 03.08.2017) the appellant could have immediately gone in writing before the Investigation Wing officers had there been the discrepancy as claimed by the appellant. The same should have been noted by the appellant immediately as the stock inventory must have been taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of director, the appellant has referred to the statement of the director during the course of search and seizure action in reply to question number 29 wherein it has been stated that the said jewellery of said weight was at the residence of the director of a no book entry was done in this regard. There is no contra evidence on record. The submission of the appellant was rejected in the assessment order as there was no supporting documentary evidence with the appellant. Further the appellant has also relied upon the order of the Hon'ble Interim Board of Settlement in the case of the director of the company. Appellant has relied upon the part of the said order at Page No. 19 of the order. The appellant has submitted as under:- "The contention of the assessee company that gold ornament weighing 1000 gms were lying at residence of the Director has been accepted by the Hon'ble Interim Board for Settlement vide order passed Uis 245 D(4) of the IT Act, 1961 date 20.11.2023. The relevant part of the said order at Page No. 19 thereof are reproduced here in below:- Verification of Gold Jewellery found at the residence of applicant during the search: PCIT's comments: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on part of the appellant. At the same time the appellant has not supported these contentions with the specific facts and the relevant evidences. As referred in para 3.1 of this order, the appellant was noncompliant during the assessment proceedings and the similar approach continues in the present appeal proceedings as well and the relevant documents have not been filed in the appeal. Thus this claim of the appellant is hereby rejected. Accordingly this ground of appeal is hereby partly allowed in above terms.'' 4.2 During the course of hearing, the ld.AR of the assessee submitted that the ld. CIT(A) is not justified in confirming the addition of Rs. 41,48,637/- on account of excess (qty)stock of 18 Cts. Gold Jewellery and addition of Rs. 4,82,124/- on account of short stock quantity of 22 Cts. Gold Jewellery. It may be noted that the ld. AR of the assessee repeated the same arguments as made before the ld. CIT(A) 4.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 4.4 We have heard both the parties and perused the materials available on record. The bench noticed that the issues involved in third and fourth grounds are almost identical, inextricably inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence available on assessment record that the total weight taken by the AO of the 22 cts. gold jewellery was 34489.250 + 1480.600 gms. weight of diamonds gold jewellery and gold coins = 35969.850 gms. Thus, the actual correct short weight of 22 cts gold ornaments was (34489.250 - 32210.820) = 2278.430 gms. as against the short weight 3683.36 gms. worked out and considered in assessment order by the AO. The said facts were submitted before the lower authority but evident from the order of the said authority, the contention / submission of the appellant has not been addressed by the AO in assessment order and the ld CIT(A) has rejected summarily. This fact was also submitted before the AO during the course of assessment proceedings but AO did not discuss this issue in the assessment order. The appellant also submitted a statement after taking into account the above referred mistake in considering wrong weight. As per the said statement/submission, there was no excess alleged weight and the shortage works out to 0191.142 gms. as follows :- (Table - B) (i) Total excess weight of 18 cts gold ornaments as per supra chart 5.1 + 1567.888 (ii) Total short weight of 22 cts gold ornam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms at one place instead of segregation of ornaments of both purities. It is noticed that during the said process, the tags of so many items were jumbled / separated and vice versa from the ornaments and the registered valuer valued the ornaments as per his own wisdom and experience. However, as evident from the records and Table-A and B supra that after taking together, the weight of 22 cts. and 18 cts. gold jewellery, there remains a negligible difference in the total weight of jewellery ornaments as per books of accounts and physically found and valued during search. In this connection, it is also pertinent to mention here that in jewellery shop, the movement of each and every ornament including physical existence thereof is being monitored minutely otherwise no businessman can survive. For verification and in support of the above facts, appellant also submitted copy of day-to-day stock register maintained for the period 01.04.2017 to 02.08.2017 before the lower authorities. We noted that the said record was available at the time of search and a copy thereof is lying seized with the AO. Hence, in view of the above facts dully supported by the documentary evidence, short weight of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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