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2016 (9) TMI 1062 - ITAT MUMBAI

2016 (9) TMI 1062 - ITAT MUMBAI - TMI - Addition to additional income offered during the survey action - dumb document - relevance / validity of statement made u/s 133A - threat undue influence or coercion - Held that:- The ld. CIT(A) thus disbelieved the part of the document which the AO had treated as depicting the unexplained investments of the assessee. Hence, out of the three parts of the document, one part has been ignored by the AO, the second part has been disbelieved by the CIT(A). Howe .....

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ption u/s 292C - Held that:- the section uses the word ‘may presume’ and not ‘shall presume’, hence the presumption of facts under section 292C is not a mandatory or compulsory presumption, but, a discretionary presumption; secondly, such a presumption is not a conclusive presumption but is a rebuttable presumption because it is a presumption of fact not a presumption of law. - No corroborative, correlating or circumstantial evidence has been found either during the survey action or during post .....

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sake of arguments, we assume it so, it is to be noticed that the assessee had paid taxes on the income disclosed and if the AO would have accepted his returned income as per the disclosure, the assessee would have got no chance or opportunity to claim that the disclosure made by him was under force, coercion or duress. - Once the assessee was forced into the litigation, then only he gathered courage to fight for his rights and to show that neither the alleged loose paper belongs to him nor he h .....

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gh, rightly admitted the question of law as to whether the income offered by the assessee in the return of income consequent to offer made in his statement recorded during the survey action can be challenged before the appellate authority, but wrongly decided the same in favour of revenue. In view of our findings given above we have no hesitation to hold that the additional income was returned by the assessee perhaps under force, pressure, threat or coercion and under the mistaken belief. The as .....

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Sanjay Garg, Judicial Member The cross appeals bearing ITA No.7089 & 7364/Mum/2011 have been filed by the revenue and assessee-Pandoo P. Naig, whereas, the Revenue has also filed two appeals i.e. ITA Nos.6671 & 6672 in cases of other two different assessees i.e. Shri Prakash B. Bandarkar & Shri Pravin B. Bandarkar. 2. Since common issues are involved in all the appeals, therefore, all the appeals have been head together and are being disposed of by this consolidated order. 3. Ld. AR .....

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on; hence, the facts and circumstances mentioned in ITA No.7089/Mum/2011 in case of assessee -Shri Pandoo Naig, be considered in deciding all the appeals. The Ld. DR has also pleaded no objection for the same. Hence, the facts, for the sake of convenience, have been taken from ITA No.7089/Mum/2011 in case of assessee -Shri Pandoo Naig. 4. The facts of the case as have been summed by the Assessing Officer (hereinafter referred to as the AO) in the assessment order dated 28.12.10 passed under sect .....

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he said Bank elicited no satisfactory explanation from Account Holders about the nature and source of used deposits and purpose /destination of the payments. ( iii ) The KYC forms filed by Shri Prakash & Pravin Badarkar filled by these persons indicated that they were men of meager means, whose annual income was below ₹ 1 lac. ( iv) Report of FlUIND suggested that Shri Prakash B.Badarkar and Shri Pravin B. Pandarkar were employees of Shri Pandoo Naig who was investing his funds in the .....

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ness premises of Shri Pandoo P. Naig at 22, Raja Bahadur Mansion, Bombay Samachar Marg, Mumbai- 400023 on 09.05.2008 simultaneously, one more premise at Baroda was also covered. (vii ) During the survey various loose papers and documents were found and impounded u/s. 133A (i)(3). (viii ) During the survey statements of Shri Pandoo P. Naig and his father Shri T.K. Prabhakar Naig who was also present, recorded u/s. 131. (ix) Shri Pandoo Naig has admitted undisclosed income of ₹ 4 crores for .....

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luded the amount of ₹ 4 crores declared during the survey action. The return was selected for scrutiny assessment under section 143(3) of the Act. In the course of assessment proceedings, the AO made enquiries relating to the loose papers found during the survey action. However, the assessee Shri Pandoo P. Naig denied that those papers belonged to him. The AO, however, observed that the loose papers found during the survey action were suggestive of a number of transactions in shares. Share .....

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assessment proceedings furnished any working in relation to declared income of ₹ 4 crore for the assessment year under consideration, even though, the working of the same was specifically asked by the AO vide order sheet entry dated 01.09.2010. The assessee was then questioned on this issue by the AO and several enquiries were made. The assessee filed reply in respect to the various queries raised by the AO wherein he submitted that the impounded papers were not found in his control and t .....

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there were several visitors in the premises and the papers in question might be left by any of such visitor and that the same did not belong to the assessee. The assessee had not carried out any transactions as mentioned in the said paper; that whatever the share transactions were done by the assessee that were fully disclosed in his accounts and the resulting capital gains were duly offered in the income tax returns. That neither there was any handwriting of the assessee or his employees on the .....

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he AO during the statement recorded of Shri Pandoo P. Naig that if, the assessee was not having any relationship with the said brothers, then, why the land line number of the assessee s premises was mentioned by them while opening the account in the HDFC bank branch at Fort, Mumbai; the assessee in his statement explained that he had not authorized Shri Prakash Bandarkar and Shri Pravin Bandarkar to give this number to the bank. However, they would have given the land line number of M/s. Sai Bro .....

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assessee to the various queries raised by him, the AO concluded that since the assessee was present at the office premises during the survey action and that the loose papers were found from the said premises, therefore, the premises was owned by the assessee and the loose papers belonged to him. He further observed that the assessee had owned up some of the papers but one (Annexure A1), which the assessee did not own up. He, therefore, relying upon the provisions of section 292C of the Income ta .....

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e assessee as undisclosed profit and investment. The Ld. AO also held that Shri Prakash Bandarkar and Shri Pravin Bandarkar were men of no means and in fact they were carrying on the share transaction business/investment on behalf of the assessee. He accordingly also added the amounts assessed/declared as undisclosed income of the said brothers as income of the assessee Shri Pandoo P. Naig on substantive basis, but, assessed the same on protective basis in the hands of the Bandarkar brothers. Th .....

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ore the Ld. CIT(A) took an additional ground, pleading that the amount of ₹ 4 crores offered as additional income in the statement during survey proceedings was offered under pressure, coercion and threat of the Income Tax Authorities; that apart from the other additions made by the AO, the addition of ₹ 4 crore, though offered by the assessee in the return of income, be also deleted. The Ld. CIT(A) admitted the said additional ground of the assessee for adjudication. The assessee su .....

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dditional income. That the assessee had accordingly declared the said additional income of ₹ 4 crore in his return of income and an entry was also made by the assessee in his books of accounts. The Ld. CIT(A), however, observed that the assessee had not raised any question regarding the surrendered amount of ₹ 4 crore during the assessment proceedings before the AO. He further observed that since the loose papers were found from the premises of the assessee and hence as per the provi .....

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ditions made by the AO on the basis of the loose paper, he observed that in view of the presumption laid under section 292C of the Act, the loose papers found during the survey action belonged to the assessee and the contents of the said papers were also presumed to be true and that the said transactions thus belonged to the assessee. He observed that the entries made in the relevant page No.36 were not reflected in the books of accounts of the assessee. He further observed that the entries give .....

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sh or other asset was found in the possession of the assessee during the course of survey. He, therefore, held that this fact established that the assessee was not in his possession of any other unexplained asset except the profit earned of ₹ 4,40,47,290 from the transactions noted in the loose paper, out of which the assessee, himself, had declared ₹ 4 crore as his additional income in his statement under section 131 of the Act recorded during/post survey action. He accordingly held .....

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rried out by the said brothers did not belong to Shri Pandoo P. Naig. All the entries in their bank accounts were made through cheques and not even a single entry was in cash. That the entries belonged to different clients of Bandarkar brothers, on whose behalf they were doing this business and that not a single entry or transaction belonged to Shri Pandoo P. Naig. He, therefore, held that the decision of the AO by making the addition on substantive basis in the hands of Shri Pandoo P. Naig, mer .....

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brothers against the addition made on protective basis by the AO, the Ld. CIT(A) called a remand report in respect of details and evidences submitted by the said Bandarkar brothers explaining the transactions of bank deposits in their bank account. After, considering the remand report, the Ld. CIT(A) observed that no transaction was carried out by the said brothers in the name of the assessee Shri Pandoo P. Naig; that it was established from the various evidences produced during the remand repo .....

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Vivek Enterprises by Bandarkar brothers after charging their common on the transactions. The bank account and other details of M/s. Hanuman Enterprises and M/s. Vivek Enterprises were also submitted to the AO for confirmation of the transactions. After perusal of the various documents, it was confirmed that the cheques issued by the said brothers were duly debited in their bank account in the name of M/s. Hanuman Enterprises and M/s. Vivek Enterprises, which transactions were duly confirmed by .....

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/s. Hanuman Enterprises and M/s. Vivek Enterprises only. Whatever the commission was earned by the said brothers, that was duly disclosed in their accounts/return of income. No entry or connection of assessee Shri Pandoo P. Naig was established with the deposits in the accounts of the Bandarkar brothers. He accordingly deleted the additions made on protective basis in the hands of the Bandarkar brothers. 7. Now aggrieved by the order of the Ld. CIT(A), the assessee, Shri Pandoo P. Naig has come .....

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ndarkar on peak credit basis in their accounts, but added by the AO into the income of the assessee Shri Pandoo P. Naig on substantive basis. The Revenue has also filed appeals agitating the action of the Ld. CIT(A) in deleting the additions made on protective basis in the hands of Bandarkar brothers namely Shri Prakash Bandarkar and Shri Pravin Bandarkar. 8. We have heard the rival contentions and have also gone through the records. 9. The Ld. A.R. of the assessee has brought our attention to p .....

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Pandoo P. Naig or any of his employees. He has further stressed that all the computers etc. were thoroughly checked/examined by the tax authorities. That the data in the alleged document did not match at all with any of the data/ entries/soft copies of documents in the computers at the premises in question. Even neither any such transactions in any of these scripts nor any name of any person, as may be deciphered from the seized document, was found entered into any of the details/data in the com .....

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data or the same had been prepared using the computer systems of the assessee, the same could have been very easily retrieved by the Revenue Authorities from the computers of the assessee. He has further invited our attention to question No.36 put during the statement recorded of Shri Pandoo P. Naig under section 131 during survey action on 9/10.05.2008. In the said question No.36, a mention has been made about a cheque payment of ₹ 18188000/- on 09.01.2008 to one Shri Nirmalbhai regarding .....

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rvey action. The Ld. A.R. has invited our attention to question No.3 put to Shri Pandoo P. Naig during the said statement, wherein, reference has been made to different papers and the assessee has been asked to explain regarding each set of papers. A table has been prepared in this regard and a reference has been made regarding USD account number 01-4792424-01 in the name of Image Securities FZC with Standard Chartered bank, Dubai and account No.6101224 in the name of M/s. Crikwood Capital Inves .....

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ting evidence or details on the said paper. The assessee, however, categorically denied his relation to other papers and his concern or relation with any of the names of persons mentioned in the said documents. The Ld. A.R. in this respect, has stressed that the data like account number, the name of the account holders, the reference of cheque payment etc. were the records which could have been verified by the Revenue Authorities and if the assessee would have got any concern, dealing or transac .....

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atedly by using different wordings put the same queries to the assessee so as to extract some concern or relation of the assessee with the seized documents but could not succeed in this respect. Even when the assessee was asked to give the details/computation in relation to the additional income declared of ₹ 4 crore, the assessee had categorically replied that neither any of the transactions belonged to him nor he had any concern with the said transactions. The additional income was just .....

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n of the said income, no penalty or prosecution be initiated against him or any of his family members or associate concerns and that he has offered the said income in bonafide belief that no adverse view will be taken. The Ld. A.R. has further invited our attention to the relevant observations of the AO in para 8(e) of the assessment order wherein he has observed that Shri Pandoo P. Naig has not owned up the documents impounded from the premises in question and further that though he had quantif .....

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e various case laws, addition cannot be made merely on presumption basis alone, but there should be some corroborative evidence for such a presumption. He has further submitted that the alleged document on the basis of which the presumption against the assessee has been drawn by the lower authorities is a dumb document and is not suggestive of any such presumption against the assessee. The Ld. A.R. has further invited our attention to the findings of the Ld. CIT(A) recorded at page 16 of the imp .....

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aper book which is the copy of the letter dated July, 16th, 2011 addressed to CIT(A), Mumbai wherein, it has been explained that the assessee was time and again asked questions regarding the said dumb document and the assessee Shri Pandoo P. Naig always denied that the said document belonged to him. It has been further submitted that the additional income was got declared under coercion, threat and undue influence of the survey party. In order to get rid of the mental trauma and long interrogati .....

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n to the fact that even in his accounts, the assessee made an entry on 31.03.08 i.e. at the end of the year, crediting his capital account with an amount of ₹ 4 crore on account of cash introduced .However, on the next day i.e. 01.04.08 i.e. on the first day of the next financial year, he reversed the said entry due to the fact that there was no such cash available with him. Further, since he was asked to make the payment of taxes on such additional income declared during survey action, he .....

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nd paid taxes also. However, when the case of the assessee was selected for scrutiny and the AO again made queries in this respect and even made the additions of all the figures which were written on the said dumb document, the assessee thus was left with no alternative, then to challenge the illegal additions made by the AO and gathered courage to bring the true facts before the first appellate authority and took the additional ground before him that the income declared during survey action was .....

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e said dumb document did not belong to assessee, but perhaps, to some other person, who visited the premises of the assessee and inadvertently left the same there. The Ld. A.R. has further invited our attention to the written submissions made by the assessee before the Ld. CIT(A) that in spite of explaining about all the papers which were found during the survey action and also explaining about the papers which the assessee specifically claimed that they did not belong to him; the assessee was, .....

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uch income from any source, hence no source of such income was explained in the return of income. The AO time and again asked for the working of the income but since there was no working and it was only declaration under threat, hence no working was filed with the AO. Even the AO has also not correlated the said additional income under any source of income but has given the credit of the same against the additions made on the basis of dumb document. The Ld. A.R. has further submitted that even i .....

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and report of the AO have been deleted by the CIT(A) and that, itself, proves that the declaration/ surrender not only from the assessee but also from the Bandarkar brothers was obtained by the revenue authorities under threat and coercion. The Ld. A.R., therefore, has submitted that the additions made by the AO on account of the seized document were liable to be set aside. 10. The Ld. D.R., on the other hand, has submitted that since the assessee himself had offered for taxation the additional .....

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account of unexplained income/investment. He has further submitted that the Bandarkar brothers were men of no means and that the investments made by them were on behalf of the assessee and even the phone number of the assessee s premises was given by them to the bank while opening bank account. He has further submitted that in view of the provisions of section 292C, the additions on the basis of the document found from the premises of the assessee have rightly been made by the AO. He has further .....

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lso of the firms where he was partner, copies of confirmations of any loan outstanding, copy of balance sheet, profit and loss account along with copies of bank accounts ever operated by him or his wife in any foreign country during last six years. Similar type of summons were also issued to Smt. Anandhi Naig - mother of assessee pandoo. P. Naig and wife of Shri T.K. Prabhakar Naig. Thereafter, summons dated May 28, 2008 were issued to Shri T.K. Prabhakar Naig and Mrs. Anandhi Naig asking them t .....

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investment found during the course of survey. 11. We have considered the rival contentions. The Ld. A.R. in this case has made two fold submissions. Firstly, that the incriminating document does not belong to Shri Pandoo P. Naig and that he has no concern, whatsoever, with the alleged loose papers found during the search action. Secondly, that his statement recorded under section 131 during survey action u/s 133A was under force, threat, coercion and undue influence etc. and that the same canno .....

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not bear any signature or handwriting of Shri Pandoo P. Naig or of any of his employees. There are three headings in the said document i.e. profit , funding and ownership . There are certain names of scripts/companies along with codes/short names of persons which have been mentioned in the said document. The assessee Shri Pandoo P. Naig has specifically denied his relation or connection with the document or any of the transactions or the name of the persons mentioned therein. Further a perusal o .....

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P. Naig had explained that this document did not belong to him and it might had been left by any person visiting his office. Along with the said document, certain other documents were also found wherein some reference of some amounts paid by cheque, bank account numbers etc. had been mentioned. The Revenue Authorities could have easily detected, if such an account number or payment had been made by or to the assessee through such a banking channel. Though the document in question is a computer .....

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he said document. There is no finding or observation made by the AO as to the name of persons mentioned in the said document against the transactions as to why those names should be ignored and the transactions be treated as relating to the assessee Pandoo P. Naig only. Even the AO has ignored the figures under the head funding. A perusal of the impugned document gives impression that the transactions mentioned therein relate to many persons and that the same do not belong to any single person o .....

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d/stopped a few years back. Even no data or any details relating to any such transactions or persons could be found or retrieved from the computers in the premises of the assessee. Under such circumstances, it is difficult to presume that the figures written on such a dumb document is the undisclosed income of the assessee. Even the Ld. CIT(A) in the impugned order has made a specific observation that no corroborative evidence or unexplained cash or other asset was found in the possession of the .....

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espect of heading profit . However, the point which gains importance at this stage is that when the source of funds/ investments have been disbelieved by the CIT(A) , there left no reason for him to assume the alleged profits from such non existing source/investments. The ld. CIT(A), thus, made the impugned additions only because the assessee had made a declaration/offer of income of ₹ 4 crores during the survey action. Hence, viewed from any angle, the Revenue could not establish the conc .....

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g under this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting o .....

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r 133A; it may be presumed that such books of account, other documents etc. belong to such person and that the contents of such books of account and other documents are true. 14. We find that the wording of the section 292C which supposes the presumption to be taken is qualified with the words may be , hence, it may or may not be presumed that such documents belong to the person searched. Firstly, the section uses the word may presume and not shall presume , hence the presumption of facts under .....

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esumption, thus, is not an absolute or conclusive presumption, but, it has to be taken in the light of any corroborative, correlating or circumstantial evidence found during the search or survey action. It has been held time and again by various courts of law that where, the Revenue Authorities are vested with any discretionary power, the same is to be exercised judicially. The assessee Shri Pandoo P. Naig, in this case, has, from the very beginning, denied his link or relation with the seized d .....

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sessee Shri Pandoo P. Naig. 15. Now we have to examine as to what should be the degree and evidence to be produced by the assessee/person searched to rebut such presumption. The assessee Shri Pandoo P. Naig in this case has denied any knowledge or link or connectivity with the said document or the contents of the said document. Now under such circumstances, how an assessee or the person searched can prove that the said document does not belong to him or that he has no connectivity with such a do .....

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y person or employee related to him with the alleged document/loose paper found during the search/survey action. The AO may also call upon or make enquiries whether such a relation of the assessee can be established with any of the transactions mentioned in such document; which course has, in fact, been adopted by the AO in this case but he could not find any evidence or of any relation of the assessee with such type of transactions of the assessee. The assessee is not supposed to prove the nega .....

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at where in a case no evidence of actual receipt of own money/capitation was found during the search action, no incriminating evidence or corroborative evidence was found; The presumption under section 292C stands rebutted by denial of the assessee under such circumstances. The Hon ble Delhi High Court in the case of Principal Commissioner of Income Tax vs. Delco India Pvt. Ltd. (2016) 67 taxman.com 357 (Del.) has observed that where the assessee had clearly denied having any dealing with the co .....

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considered, considering the totality of the facts of the case. The deeming provision cannot be applied mechanically ignoring the facts of the case and the surrounding circumstances of the facts are to be considered before the drawing and inference of undisclosed income on the basis of loose papers. Where the Revenue has searched the business premises as well as residential premises of the firm/partners and not a single evidence of purchase or sale outside the books of account was found, and, und .....

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ed. The co-ordinate Nagpur bench of the Tribunal in the case of ACIT vs. Buldana Urban Co-operative Credit Society Ltd. (2013) 153 TTJ (Nag) 728 in somewhat similar circumstances has observed that presumption given under section 292C is not conclusive but is rebuttable. The assessee, since, in the beginning has denied that the loose papers found to be belonged to him and the same were not in the handwriting of any of the employees; there being no corroborative evidence available on record of fou .....

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papers found during search action cannot be taken as a sole basis for the determination of undisclosed income. The circumstantial evidences in the case in hand, such as there being no soft copy/data available in the computer systems of the assessee in relation to the alleged document or correlating any transaction as mentioned in the said document; no recovery of any valuable asset, bullion money or jewellery or any other evidence of any investment at the premises of the assessee; no discovery o .....

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een found in relation or in contact with any of the person named in such document; no connection of the assessee with any of the bank accounts mentioned in the recovered documents and further the fact that the assessee has not introduced any cash in his books of accounts on account of additional income, for which he had already paid tax also, together constitute good rebuttal to the initial presumption u/s 292C in this case. 16. Now coming to the relevancy of statement/ disclosure made by the as .....

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ion as additional income. However the AO found that they had not included the transactions relating to the deposit of ₹ 33978291/- and ₹ 36710971/- respectively in their bank accounts for the purpose of determining the peak credit. He accordingly added the said amounts into their income but on protective basis. During the appellate proceedings before the Ld. CIT(A), the said Bandarkar brothers produced evidence relating to the transactions in their bank accounts and a remand report w .....

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d evidence, deleted the additions made by the AO in the hands of the Bandarkar brothers on protective basis, which amount in fact was added in the hands of the assessee by the AO on substantive basis. Now the fact which strikes one s attention as to when the transaction in Bandarkar brothers account was through banking channel and there was no scope for addition of ₹ 33978291/- and ₹ 36710971/- respectively as their undisclosed income then what prevented them to explain the transacti .....

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to see what sanctity can be attached to the surrender of income made by the assessee during the survey action. It is to be noted that during the survey action, no evidence of any such share transactions, investment, undisclosed income etc. was found except the loose paper which the assessee from the beginning and consistently denied to be belonged to him. Despite such denial, a declaration was made by Shri Pandoo P. Naig offering additional income of ₹ 4 crore. These facts and circumstanc .....

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or profit but the same perhaps was got from the assessee under force, pressure or threat. If, there might have been any income of the assessee and he had made voluntary declaration of additional income during the survey action, he, having deposited the tax on such additional income declared, under such circumstances, would have introduced the cash of ₹ 4 crores as his liquid assets in his accounts, which he would have been able to use as accounted for money for his future investments. But .....

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such an income. The assessee even deposited the taxes on the additional income by en-cashing his fixed deposits (FDRs) and by taking loan from other persons. Neither there was any evidence of assessee having any asset, undisclosed income or profit nor the assessee after declaration of the income introduced any cash into his books of account despite paying the taxes for the same. An argument can be made that it may be the modus operandi of the assessee to convince that the declaration made by him .....

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nsequence of such declaration made. Under such circumstances, it will be wrong to assume that the assessee would have taken such a risk only to get an opportunity to contend that the statement made by him was wrong or false or the same was under pressure, threat or coercion. Had the AO not made huge additions on the basis of the loose paper sheet trading of the figures mentioned therein as undisclosed income/profit of the assessee there might have no chance to claim the deletion of the additiona .....

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depends upon the mental state of a person and it may vary from person to person. The assessee Shri Pandoo P. Naig in this case appeared to be carrying on such pressure and fear of possible consequences of retracting from his declaration till he was burdened with additional additions based on the figures of the one loose paper and till he gathered courage to contest the same by way of filing appeal before the Ld. CIT(A). 17. So far so, the legal sanctity of a statement made under section 133A du .....

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income in the hands of the assessee. The Hon ble High Court further observed that section 133A of the Act does not empower any Income Tax Authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. The above findings of the Hon ble High Court have been upheld by the Hon ble Supreme Court as the appeal against the said order has been dismissed by the Hon ble Supreme Cou .....

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remises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of Shree Chand Soni vs. DCIT (2006) 101 TTJ 1028 (Jodhpur). The Hon ble Delhi High Court in the case of CIT vs. Harjeev Agarwal in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without reference .....

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ooks of accounts. The assessee did not immediately retract from the above admission but only during the assessment proceedings at a belated stage. In his retraction, the assessee stated that the surrender was made under a mistaken belief and without looking into books of account and without understanding law and that he had been compelled and perturbed by events of search and that the pressure of search was built so much that he had to make the surrender without having actual possession of the a .....

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r section 132(4) of the Act carries much greater weight than the statement made under section 133A of the Act, but a retracted statement even under section 132(4) of the Act would require some corroborative material for the AO to proceed to make additions on the basis of such statement. In the case of Basant Bansal vs. ACIT reported in (2015)63 taxmann.com 199 (Jaipur Trib.), having somewhat similar facts, the assessee therein, during the search and seizure action u/s 132 of the Act, offered a s .....

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enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it, observed that the assessee s surrender was not based on any incriminating material and that the discloser being not voluntary a .....

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bunal (supra) further observed that the issue of existence of pressure, threat, coercion during search proceedings is to be judged by reference to the existing facts and circumstances, human conduct and preponderance of possibilities. During the search proceedings, record relating thereto being in exclusive custody of the searching officers, it is their wish and will which prevails during the fateful period. That it is almost impossible for the assessee to adduce demonstrative evidence of exerti .....

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nt cannot be held as conclusive and additions cannot be made by solely relying on a statement or a letter. The case of the assessee, before us, is on better footing as in this case, the statement recorded of the assessee was under section 133A [not under section 132(4)], which being without oath has a very weak/ low evidentiary value as compared to the statement made u/s 132(4) of the Act. It has been held by the various High Courts and the Hon ble Supreme Court that a statement made under secti .....

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income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been .....

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ile framing the relevant assessment orders Yours faithfully, A perusal of the above circular also shows that it is in the notice of the statutory controlling body of the Income Tax Authorities that the revenue officials are used to take confessional statements from the person searched under force, pressure or threat and that is why they have made it mandatory that additions solely on the basis on such statements should not be made and that corroborative evidences should be collected or obtained .....

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ered in the return of income can be allowed at this stage? The Ld. Counsel for the assessee in this respect has placed reliance on the decision of the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT 229 ITR 383. The facts before the Hon ble Supreme Court were that the assessee in that case offered the interest amount for taxation and the assessment was completed on that basis. Before the Ld. CIT(A), the assessee though had taken a number of grounds of appeal, however .....

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of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has jurisdiction to examine the same? The Hon ble Supreme Court while answering the said question observed that under section 254 of the Income Tax Act, the power of the Tribunal in dealing with the appeals is expressed in the widest possible terms; the power of the Tribunal under section 254 is not restricted only to decide the grounds which arise from the order of the .....

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ing a bearing on the tax liability of the assessee. 20. The facts of the case in hand are on better footing. In the case in hand, though under consistent pressure, the assessee offered the additional income for taxation in the assessment proceedings but when he was burdened with many more additions, he at the first instance during the appeal before the Ld. CIT(A), challenged the offer of additional income on the basis of statement recorded under section 133A. Even the said ground was also admitt .....

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ppellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings before it and the material on record before it for the purpose of determining the correct tax liability of the assessee. The appellate authorities, of course, cannot travel beyond the proceedings and examine new source of income, for that purpose other separate remedies are provided to the department under the Income Tax Act. The Hon ble full bench of the Bombay High Court obser .....

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36 (Bom.) has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The words could not have been raised must be construed liberally and no .....

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n the returned income, the Ld. A.R. of the assessee has submitted before us that the action of the Ld. CIT(A) in rejecting the claim of the assessee on this ground was not justified. He has further relied upon the decision of the Hon ble Gujarat High Court in the case of Gujarat Gas Ltd. vs. JCIT (2000) 245 ITR 84. In the said case, the words of the Circular No.549, para 5.12, dt. 31st October, 1989, providing that the assessed income under section 143(3) shall not be less than the returned inco .....

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rcised his powers independently. The Hon ble High Court, therefore, directed the AO to make the assessment without keeping in mind the said circular. It may be further observed that the Hon ble Bombay High Court in the case of Pruthvi Brokers & Shareholders Pvt. Ltd. ITA No.3908 of 2010 decided on 21.06.12, while relying upon the various decisions of the Hon ble Supreme Court and other Hon ble High Courts has held that even if a claim is not made before the AO, it can be made before the appe .....

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ain such claim by way of additional ground. Even otherwise, the Ld. CIT(A) ought to have considered the claim of the assessee in exercise of his appellate jurisdiction under section 250 of the Act. Moreover, if the assessee is, otherwise, entitled to a claim of deduction but due to his ignorance or for some other reason could not claim the same in the return of income, but has raised his claim before the appellate authority, the appellate authority should have looked into the same. The assessee .....

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