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2015 (10) TMI 2577 - ITAT AHMEDABAD

2015 (10) TMI 2577 - ITAT AHMEDABAD - TMI - Refund in relation to surplus sum - differential amounting between ₹ 1.75 crores alleged unaccounted income reduced by the actual sum declared of ₹ 27 lacs - Held that:- Revenue has failed to produce any material evidence supporting the impugned addition amount of ₹ 1.48 crores added merely on the basis of a very much vague and conditional disclosure statement of Shri Patel which stands retracted later on. We hold in these facts the A .....

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y has no legs to stand. - ITA Nos. 78 &973 /Ahd/2012 - Dated:- 14-10-2015 - Shri S. S. Godara, Judicial Member and Shri Manish Borad, Accountant Member Revenue by: Shri Raj Deep Singh, Sr. D.R. Assessee by: Shri Rasesh Shah, A.R. ORDER PER : S. S. GODARA, JUDICIAL MEMBER:- The assessee and the Revenue have filed these cross appeals for A.Y. 2009-10 against separate orders of CIT(A)-II, Ahmedabad dated 18-10-2011 and 01-02-2012, in appeal nos. CIT(A)- II/C.3/174/2010-11, and CIT(A)-II/C.3/126/201 .....

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s to cover any discrepancies, errors, omissions, mistakes, etc., in the seized documents and seized assets vis-a-vis the regular books, Even though on completion of the assessment proceedings, the AO has not been able to identify any unexplained asset, unexplained investment, undisclosed income or expenditure or point out any other noting, error or discrepancy in the seized documents / assets as amounting to income. Hence, the appellant prays that the tax paid of ₹ 54,85,781/- on the amoun .....

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ment of assessee s director Shri Kanaiyalal B. Patel on 24-25/09/2008 at plot no 539, 541-43, Road No. 5, Sachin GITC, Surat (Pages 141to 155 of the paper book). He stated that four entities namely; M/s Manish Packaging Pvt. Ltd (assessee), Manish Multi-Pack Films Pvt. Ltd, Vikash Traders and Add Plast Agencies (latter two are partnership firms) existed in the names of this Patel family. He answered question no. 35 at page 155 of the paper book as follows:- Q.35.During the search carried out fro .....

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g the answers given by me under section 132(4) of Income Tax Act, I declare unaccounted amount of Rupees one crore ten lakhs from business income. The underlying reason for this declaration is attributed to overcome long term dispute; for peace of mind; to protect myself from punishable offence; for administration of business which I carry out in association of my workers, supervisors, officers and thus, consider the possible mistakes or probabilities of mistakes and as per my memory, knowledge .....

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cash amount jewellery, investment, inventory, stock etc, that I take into account and accordingly shall provide detail break-up assessee-wise, year-wise from today onwards within 10 days which I request you to allow. For the above mentioned declaration I will pay applicable tax as per rules & regulations and considering principles of accounting. 4. The case file indicates that Shri Patel got recorded his second statement at the same place on 29-09-2008 (page 105 to 124 of the paper book). T .....

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dmitting further unaccounted income of ₹ 1,15,00,000/- over and above ₹ 1,10,00,000/- declared earlier. The same reads as under:- Q.2 During the course of search proceedings certain books of accounts in physical as well as digitized form were seized. Are you willing explain the entries mentioned such books of accounts? A.2 No. The explanation for each and every entry in such books of accounts will be submitted later on. However, having gone through some of the seized materials presen .....

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2,25,00,000/- (Rupees Two Crore Twenty Five Lacs only) which includes earlier disclosure made by me of ₹ 1,10,00,000/- and the disclosure made by me of ₹ 1,15,00,000/-. Further to this, in reference to question No. 32 of statement 29/09/2008 with regard to financial transactions carried out by my companies with my other group concerns, family members and myself of ₹ 400,00,000/- for which I accept that income arising due to the provisions of section 2(22)(e) is not disclosed in .....

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eals that Shri Patel s fourth and last statement came to be recorded on 03-10-2008 at his business premises ( pages 94- 101) of the paper book as follows:- Q.4. During the course of search proceedings several other books of accounts physically as well as digitized form were seized. Several discrepancies noticed were confronted to you and your staff. Are you willing to explain the same? A.4 No. the explanation for each and every entry in such books of accounts will be submitted later on. However, .....

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t of disclosure of unaccounted income would be ₹ 2,25,00,000/- (Rupees Two Crore twenty Five Lacs Only) which includes earlier disclosure made by me of ₹ 1,10,00,000/- and the disclosure now made of ₹ 1,15,00,000/-. Further to thus, in reference to question No. 32 of statement 29/09/2008 with regard to financial transactions carried out by my companies with my other group concerns, family members and myself of ₹ 4,00,00,000/- (Rupees Four Crore only) for which I accept th .....

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). Whatever stated above is true and correct to the best of my knowledge and belief. I have given this statement in sound state of mind and I stick to it. The above stament is given without any threat, coercion, or under any under influence. I know giving false statement on oath is an offence punishable under I.T. Act and Cr. P.C. 6. The assessee files a written note in the course of hearing before us inter alia averring that the impugned search commenced on 24-09-2008 at 8.35 a.m. Its proceedin .....

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nd conclusion along with Shri Patel s statements reproduced hereinabove. 7. We proceed further in the case record and notice that the assessee registered his retraction claim in a letter dated 01-09-2009 in the form of a note to return to be treated as part thereof. Return filed on 16-09-2009 declaring income of ₹ 8,57,06,733/-. The Assessing Officer took up scrutiny. He referred to Shri Patel s statements; more particularly dated 01-10-2008 (supra) admitting a sum of ₹ 2.25 crores a .....

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onditional basis only. The Assessing Officer came across assessee s retraction explaining that a preliminary review had been carried out for identifying all discrepancies, errors, omissions and commissions which highlighted only a sum of ₹ 27 lacs declared as its unaccounted income. The assessee sought for refund in relation to surplus sum of ₹ 1.48 crores as the differential amounting between ₹ 1.75 crores alleged unaccounted income reduced by the actual sum declared of ₹ .....

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one un-rebutted for want of tangible evidence. Retraction time period of 11 months was held to be based on legal advice only. The Assessing Officer took into account all these conclusions for rejecting assesee s retraction qua the impugned sum of ₹ 1.48 lacs and held that the entire sum of ₹ 1.75 crores (supra) was its unaccounted income. 9. The CIT(A) has upheld the Assessing Officer s action under challenge. 10. The learned authorized representative invites our attention to the abo .....

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of ₹ 4 crores (supra) stand on identical footing being based on Shri Patel s statements. It highlights the fact that the latter deemed dividend amount was finally disclosed as of ₹ 31,15,897/- only. It refers to Board s circular No. 286/02/2003 dated 10-03-2003 dealing with the issue of disclosure made in searches and seizures thereby directing the revenue authorities to keep focus and concentration on collection of evidence of income leading to information on what has not been discl .....

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(A) rejecting assessee s retraction in question. It seeks dismissal of the present appeal. 12. The assessee submits in rebuttal that the investigation authorities nowhere pin point any specific incriminating evidence during search to Shri Patel. Nor is there any question in this regard. It accordingly reiterates its earlier submissions. 13. We have heard both the parties. Case records and judicial precedents stand perused. We come to admitted facts first. The department commenced the impugned se .....

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usiness income. The above stated disclosure statements are very much vague ones and conditional as well without verifying necessary books and records. The relevant array of questions forming part of the paper book are found to be not throwing light on any specific material with contents thereof; whatsoever. The same factual position continues in assessment, lower appellate order and in the course of arguments before us. It is not out of place to reiterate that we are dealing with the issue of im .....

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Revenue has not collected any specific material supporting the impugned addition. 14. Now we come to relevant case law quoted. The first one (2010) 328 ITR 411 (Guj) Kailashben Manohar Choksi vs. CIT. The department had recorded disclosure statement at midnight hours. The same stood retracted after two months. There was no evidence collected in support of the said disclosures. We find that their lordships accepted retraction since the statement was recorded in very much odd hours. It has been h .....

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nand Sharma ITA 1748/Kol/2012 decided on 01-08-2014. This search is dated 26-023- 2010 followed a disclosure statement u/s. 132(4) on 06-05-2010 subsequently retracted on 02-09-2011 i.e. almost one and half years thereafter. The learned co-ordinate bench quotes absence of specific material evidence supporting the disclosure statement for deciding the issue against the Revenue. We have afforded the Revenue due opportunity to point out any distinction on facts or law. It is unable to do so. 16. We .....

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