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Principal Commissioner of Income Tax-2 Versus M/s Kunvarji Finance Pvt Ltd

2015 (11) TMI 23 - GUJARAT HIGH COURT

Disclosure at the time of search had no basis even though the retraction was an afterthought - Held that:- Commissioner (Appeals) and the Tribunal have recorded concurrent findings of fact that the additions have no reference to the seized material and that there is no material or evidence to support the additions made by the Assessing Officer. The addition is sought to be made solely on the basis of the statement recorded under section 132(4) of the Act which has been subsequently retracted, wi .....

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ized from the business premises of the assessee and that the addition has been made only on account of client modification code. Under the circumstances, the conclusion arrived at by the Tribunal that the disclosure at the time of the search had no basis being based upon findings of fact recorded after appreciation of the material on record, does not give rise to any question of law. The ground of appeal raised vide question [A] is, therefore, rejected.

Addition on account of suppress .....

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ppression of profits by the assessee company by way of client code modification by the broker (which is a group concern) in a large number of commodity transactions? - It is clarified that Question-C stands included in Question-B. - Tax Appeal No. 610 of 2015 - Dated:- 6-10-2015 - Harsha Devani And A G Uraizee, JJ. For the Petitioner : Mr MR Bhatt, SR Adv. and Mrs Mauna M Bhatt, Adv For the Respondents : Mr SN Soparkar, Sr, Adv JUDGMENT ( Per : Honourable Ms. Justice Harsha Devani ) 1. By this a .....

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ion of profits by the assessee company by way of client code modification by the broker (which is a group concern) in a large number of commodity transaction? [C] Whether the ITAT has erred in law in holding that the AO was not justified in invoking provisions of section 145(3) of the I. T. Act?" 2. As regards the proposed Question-A, during the course of search, the main person of the group Shri Nayan Thakkar had voluntarily admitted unaccounted income of ₹ 12,00,00,000/- vide his le .....

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ffer the unaccounted income disclosed during the search operation. Along with the returns, the assessee company filed affidavit retracting the earlier disclosure made by the Director of the Company. The Assessing Officer made addition on account of suppressed profit on account of Modification in Client Code in respect of assessment year 2005-06, 2006-07, 2007-08 and 2008-09 to the tune of ₹ 17,71,02,750/-. As the suppression of profits worked out for different years was arrived at ₹ .....

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ing a letter wherein, the amount of disclosure was also bifurcated. However, upon consideration of all relevant facts, he found that when the statement of Shri Nayan Thakkar was being recorded during the course of search, no specific incriminating papers or documents were available and were confronted to him. As a matter of fact, voluminous records in the form of loose papers, documents, books of account and digital record were found and seized, the contents of which were never ascertained at th .....

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ist of 65 items of books/documents/papers. The Commissioner (Appeals) recorded that on the basis of Annexure-A, the statement under section 132 of the Act was recorded. However, the said Annexure was not made the basis of addition. The Commissioner (Appeals) found that the assessee company was never allowed adequate opportunity to inspect or go through voluminous seized records and even the copy of the statement recorded on 25th/26th March, 2008 was given to the assessee company on 20th March, 2 .....

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were not based on any seized documents and the same were made on the basis of various data collected by the department from the commodity exchanges which reflected client code modifications. 4. The Tribunal, in the appeals preferred by the revenue, noted that in the assessment order, the Assessing Officer has not pointed out any defect or discrepancy in any of the seized documents from the business premises of the assessee. The addition made by the Assessing Officer is an account of Client Code .....

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Nayan Thakkar was a voluntary statement which was followed by a letter showing bifurcation of the disclosed amount. Moreover, such statement had been made with the approval of other directors. The retraction is not made on affidavit, but along with the return of income. It was submitted that therefore, having regard to the statement made by main person of the assessee, which was reiterated by a letter issued subsequently, the Tribunal was not justified in holding that the disclosure made at the .....

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). 6. On the other hand, Mr. S. N. Soparkar, Senior Advocate, learned counsel for the respondents submitted that there is nothing on record to establish as to how the assessee has taken ₹ 12,00,00,000/- out of books. Referring to the findings recorded by the Commissioner (Appeals), it was pointed out that the statement under section 132(4) of the Act was made under duress. Upon retraction of the statement, no independent finding has been recorded by the Assessing Officer, nor is there any .....

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assessee Mr. Nayan Thakkar had admitted unaccounted income of ₹ 12,00,00,000/- which was subsequently reiterated by a letter dated 10.04.2008. However, the facts reveal that the statement had been recorded under circumstances which clearly disclose that the admission could not have been recorded voluntarily. The subsequent letter and the retraction which has been made much later have to be seen in the backdrop of the facts of the case, which clearly show that the relevant documents which .....

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