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TMI Blog2013 (6) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... llenged only the sufficiency of the reasons. 3.0. The learned Commissioner of Income-tax (Appeals) erred in law and in facts in confirming the addition of Rs.10,88,196/- u/s.69 of the Income Tax Act, 1961 merely on the basis of retracted statement of the appellant. 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) rws 147 of the IT Act, 1961 dated 23/12/2008 were that the assessee is a tobacco merchant. It was noted by the AO that a return of income was filed at Rs.78,712/-. The reason for the impugned proceedings was that a survey u/s.133A was conducted in the case of M/s.Vastu Construction on 23.09.2003. A document was found in a brief case. On the basis of that information, in the assessment proceedings on the said concern, a summon u/s.131(1) was issued to the assessee. His statement was recorded on oath. In the said statement, it was admitted that although the land document was made at Rs.1,32,500/- and construction agreement was made for Rs.7,75,000/-, but the price charged by the builder, i.e. Shri Bankim Patel as per the said document (page No.45) was as under:- "Built up Area Building No.7 (1) Ground Floor 1304.66sq.ft. (2) F.Flo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned without reading and under trust the same was signed. Thus, the information of the amount was not known. ii) Q.No.15 : I am showing you the page Nos.35 to 44 of Annex.A/1 impounded from Shri Bankimbhai D.Patel, at "Shantiniketan" Ishwar Patlikar Marg, Anand. After going through the same, can you say whether the marble fittings, electric fittings, kitchen fittings, bathroom fittings etc. are related to your house (Block No.7)? Ans. Yes. I have gone through and after verification, it is confirmed that the same are pertained to my house, No.7, Maruti Pravesh-II. iii) Q.No.16 : I am showing you page No.45 of Annex.A/1 wherein indication of block No.7 built up area with bifurcation totalling 3020.87 sq.ft.construction, plot cost Rs.8,71,200/- construction cost @ Rs.450/- per sq.ft. - cost Rs.13,59,000/- and extra work of Rs.1,85,996/- totalling to Rs.24,16,196/- is showing. After going through all these details, state whether the same is pertained to your house? If so, how much amount and how the payment has been made to the builder? Ans. All the details pertaining to my house no.7, Maruti Pravesh-II. After negotiating with a reduction of Rs.2,00,000/- the entire amount has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 8,71,200/- 1,40,000/- 7,31,200/- Building 13,44,996/- 9,88,000/- 3,56,996/- Total 22,16,196/- 11,28,000/- 10,88,196/-" 2.5. Against the said addition, the assessee had gone in appeal. 3. The assessee has challenged the validity of the proceedings initiated u/s.147 of IT Act. Relevant portion of the submission made before the ld.CIT(A) are reproduced below:- "(1) The combined reasons recorded for the A.Yr. 2003-04 & 2004-05 (kindly see page No.1 & 2 of the enclosed paper book) clearly state that the ld.A.O. embarked upon the reassessments solely to conduct investigation in order to verify the source of payments made by the appellant. The above would make it clear that there was no material with the ld.A.O. as on 28th March, 2008 to the effect that there was escapement of income by the appellant in the return for the A.Yr.2003-04 and he initiated the proceedings u/s.147 only on the basis of suspicion. As per the settled position of the law, this is not permissible. 2) The notices u/s 148 of the Act were issued by the ld.A.O. after recording reasons u/s.148(2) on 28th March, 2008 (copies of notices are placed at page No.3 & 4 of the paper book) on the basis of statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s.133A from the possession of other person and not from the possession of the assessee. As per the reasons recorded dated 28/03/2008 merely on the basis of 'reason to believe' the case was reopened. There was a denial of the statement at the time of cross-examination and it was stated that the cost of construction paid was Rs.10 lacs only. Even in the Affidavit, it was stated that the assessee was made to sit for 5 to 6 hours and after that the statement was recorded, meanwhile assessee became nervous. Rather, ld.AR has alleged that there was inducement by the AO, hence the statement was not recorded with independent mind and free-will. Legal aspect of his argument was that once the original assessment u/s.143(3) for AY 2003-04 had already been completed, then there was no occasion to reopen the assessment again. For AY 2003-04, a notice u/s.148 was issued on 28/03/2008. Ld.AR has admitted that the notice was issued within four years. However, he has vehemently contested that merely on the basis of a statement recorded which was later on retracted should not be made the basis for reopening of the assessment. He has placed reliance on the order of Dr.J.Mohanvs. Asst.CIT (2012) 18 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act for assessment year 2003-04 & 2004-05 and hence, it is a fit case for issuance of notice u/s.148 of I.T.Act." 6.1. The document which was found from the brief case of one Shri Bankim D.Patel, C/o.Vastu Construction marked as "page No.5, Annexure-A-1", extract of the same already reproduced above has indicated that in respect of Building No.7, the total area was 3020.87 sq.ft. for which the cost of plot was Rs.8,71,200/- and the cost of construction was Rs.13,59,000/-, thus totalling to (approximately) Rs.24,16,000/-. This was the information which was in the possession of the AO. On the basis of the said information, a statement of the assessee was also recorded on 20/01/2006. Relevant portion of that statement has also been reproduced hereinabove. The AO has shown the assessee the Page Nos.35 to 44 impounded from Shri Bankimbhai Patel and in reply the assessee has confirmed that those documents pertained to his House No.7, Maruti Pravesh. Then the AO has shown the assessee the Page No.45 and after seeing that paper the answer given was that an amount of Rs.2 lacs was reduced after negotiation and an amount of Rs.22,16,196/- was remitted to the builder. It may not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgement was that there was no material available with the AO on the basis of which the said statement was recorded. On that ground, the respected Bench has opined that a reason must be formed by the AO to reopen an assessment on the basis of material or information. In the present case, that observation is required to be applied because the existence of page No.45, the incriminating material, was not denied by the assessee. Similarly, in the case of Dr.N.Thipaa Setty (2010) 322 ITR 525 (Kar), the statement recorded was not based upon an existing material on record. A retraction having no supporting evidence has no value in the eyes of law. Therefore, the Ground Nos.1 & 2 raised by the assessee are hereby dismissed. 7. The next ground is Ground No.3 through which the assessee is aggrieved that merely on the basis of the said statement the impugned addition u/s.69 of the IT Act was made. 7.1. We have examined certain facts in the light of the grievance of this appellant. We have noted that in the case of M/s.Vastu Construction, the concern who had developed the project and from whom the assessee had purchased the property in question, vide an assessment order u/s.143(3) r.w.s.145( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing the details in respect of Block No.7 the assessee has shown only Rs.9,88,273/- (i.e. Rs.7,75,000/- value of block and Rs.2,13,273/- being cost of extra work). Similarly, the documentation of land indicate the value of plot only at Rs.1,32,500/-. In the instant case the on-money portion works out to Rs.11,21,700/- [Rs.20,30,200 (22,16,196 - 1,85,996) minus Rs.9,07,500 (1,32,500 + 7,75,000)]" 7.3. We are, therefore, of the opinion that this is not a case where merely on the basis of a statement the impugned addition was made. This is a case where the statement was recorded on the basis of an incriminating material recovered during the course of survey operation. 7.4. Next, before us, ld.AR Mr.U.S.Bhati has vehemently stated that the said statement was not a statement under free-will, but it was recorded under duress. He has referred an Affidavit of the wife of the deponent. In the said statement, she has stated that her husband was made to sit for 5 to 6 hours and, therefore, he was nervous at the time when the statement was recorded. Be that as it was, if a taxpayer is aggrieved by a conduct of a Revenue Officer, then the correct procedure is to approach a Senior Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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