TMI Blog2019 (1) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... essee during search operation. Further in respect of the Mr. Assem Kumar Gupta, as has been submitted hereinabove, in his statement there is no allegation whatsoever qua the assessee and further his statement is factually incorrect and also his statement was also recorded in the forced circumstances and lastly despite the specific requested he has not been confronted for the cross examination. In fact, on the basis of the independent enquiry conducted by the learned AO, aforesaid broker has confirmed the factum of sale and purchase of the shares, in such circumstances, the statement of Shri. Aseem Kumar Gupta is of no much credence, more so when he has also not been confronted for the cross examination of the assessee, despite specific request. It is settled law that where addition of undisclosed income was made on basis of mere statement under section 132(4) which was not corroborated by any material evidence, neither such statement would be a conclusive evidence, nor any addition could be made. In the instant case, since the surrender was made under pressure which was immediately retracted, and except the aforesaid, no adverse material has been found from the premises of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in Appellant's case the search operation u/s 132 was illegal; iii) in holding that there was no violation of the principles of natural justice by the A.O in completing the assessment without giving adequate opportunity and issuing show cause regarding the additions made; iv) in confirming the addition of ₹ 86,15,583/- as unexplained cash credit u/s 68 of the I.T. Act ignoring the facts and material evidences to the effect that the amount was long term capital gain exempt u/s 10 (38) of the Act; v) in confirming the interest charged by the AO u/s 234A and 234B of the Act; Above actions being arbitrary, erroneous and unjust be quashed with directions for relief. Grounds raised in A.Y. 2007-08: 1. On the facts and in the circumstances of the case, Id. CIT (A) erred:- i) In holding that there was no infirmity in the action of the A.O. assuming jurisdiction and passing order u/s 153A/143 (3) of the Income-tax Act despite the fact that there was no undisclosed income and no materials found during the search showing undisclosed income; ii) in declining to justly and fairly adjudicate Appellant's contention that since ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,21,200 3.11.2004 1,42,04,366 Limtex Investment Ltd. 23.06.2003 10,69,200 14.01.2005 74,86,776 Total Rs.11,90,400/- ₹ 2,16,91,142/- A.Y. 2006-07: Name Purchase Cost (Rs.) Sold Amount (Rs.) Sudama Trading Investment Ltd. 15.04.2004 1,95,600/- 24.11.2005 47,03,772/- 29.11.2005 41,07,409/- Total ₹ 1,95,600/- Rs.88,11,181/- A.Y. 2007-08: Name Purchase Cost (Rs.) Sold Amount (Rs.) Basukinath Coal Pvt. Ltd. Amalgamated into Blue Print Securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee has shown long term capital gain of ₹ 1,40,83,166/- and ₹ 64,17,575/- on the sale of 60,000 equity shares each of M/s Konark Commercial Industries Ltd. and Lemtex Investment Ltd. The detailed chart showing the name of the script, date of purchase, number of shares, amount of purchases, date of sale and the closing stock are enclosed for your perusal and ready reference. Further assesses is filing herewith the copies of the contract notes issued by the registered share brokers for the sale and purchase of securities and Investment Ledger Account. The Demat Account Statement would show the receipt of the various securities sold during the year under assessment Certificate in respect of the Security Transaction Tax paid is also enclosed herewith. The purchase and sale consideration of the securities was duly shown in the books of account maintained in the regular course of business. The books of account and bank statement showing the purchase and sale are being produced. 5. From the above submissions, the Assessing Officer observed that the assessee has not given reply of specific questions. He has submitted general reply. The Assessing Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empt income. 6.10 In view of the above discussion, it can be easily concluded that the share broker M/s P.K. Aggarwal Co. was involved in cross trading and price manipulation of shares of M/s Konark Commerce and Industries Ltd. and M/s Limtex Investment Ltd. as found by the SEBI. The broker manipulated the price of above mentioned shares and provided entries of bogus capital gain to the assessee. Subsequently assessee with the help of the share broker tried to give impression that transactions were genuine and STT was paid on them by furnishing brokers bill in respect of STT payment. The fact is contrary to day to day experience as STT is deducted/paid at the time of execution of transaction at the trading platform and amount of STT paid is always mentioned on the Settlement note. There is no provision for payment of STT in the off market transactions. Therefore, in totality of the circumstances it is concluded that the long term capital gain of ₹ 2,05,00,742/- shown by the assessees in its return of income and claimed exempt u/s 10(38) of the Act is accommodation entries taken in the garb of capital gain. Therefore, the same is treated as assessee s undisclosed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) Ledger Account of investment in shares 9 9 9 iii) Ledger account of the broker (M/s P.K. Aggarwal Co) in the books of the assessee 10 10-12 10-11 iv) Ledger account of the assessee in the books of the Broker (M/s P.K. Aggarwal Co) 11 13 12 v) Letter confirming issue of the shares of Bluepring in lieu of shares of Basuknath Coal Pvt. Ltd. on account of amalgamations 13 vi) Purchase Bill and contract note 12-15 14-15 14-21 vii) Ledger Account of the sale of the shares 17-18 17 24-25 viii) Ledger account of the broker in respect of the gain earned from the sale of the shares 19-21 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, same would not affect the genuineness of the purchase and sale of the shares. 1.5 The Calcutta High Court in the case of CIT vs. Korlay Trading Co. Ltd. reported in 232 ITR 820 (Cal) (pages 306-308 of JPB) has held that Once the assessee has furnished the name of the company, number of shares purchased, date of sale, amount of purchase money, amount of sale money, etc. The assessee had discharged its initial burden and if the broker did not maintain any accounts, the transaction could not be doubted for no fault of the assessee. Once the assessee had discharged its initial burden, no investigation or proper steps had been taken by the ITO to bring on record the materials to controvert the claim of the assessee. 1.6 It is submitted that while making the aforesaid addition, the learned Assessing Officer has sought to place reliance on the statement of Shri. I.C. Jindal recorded during the course of the search. It is most humbly submitted that aforesaid statement which was recorded during the course of the search has no connection with the appellant company and in any since the same was recorded under pressure and,the same was not acted upon. 1.7 It is submitted that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tirely unwarranted, particularly when there is no material or basis both in law and on facts to make the arbitrary addition and, particularly when the appellant has never acted upon such surrender, which in any case did not pertain to the assessee. 1.10 It is respectfully submitted that, it is settled law that, an admission or acquiescence cannot be foundation for assessment, as has been held in the judgment of Hon'ble Allahabad High Court in the case of Abdul Qayum v CIT reported in 184 ITR 404. It is further submitted that, admission made by the assessee is an important piece of Nos. 4964 to 4966/Del/2012 15 evidence, but it cannot be held to be conclusive. It is open to the assessee who made the admission to show that it is incorrect as has been held in the case of Pullangode Rubber Produce Co. Ltd. vs. Swift of Kerala by Apex Court reported in 91 ITR 18.. 1.11 Further, the Hon'ble Madras High Court in the case of M. Narayanan Bros, vs. ACIT, Special Investigation Circle, Salem reported in 13 taxmann.com 49 (Mad.) has held that Whether when assessee had explained his statement as not correct in context of materials produced, amount of ₹ 4 lakhs could be ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid, the appellant seeks to place reliance on the judgment of the High Court of Delhi in the case of CIT vs Value capital Services (P) Ltd. reported in 307 ITR 334, wherein their lordship s have held as under: Learned counsel for the Revenue submits that the creditworthiness of the applicants can nevertheless be examined by the Assessing Officer. It is quite obvious that is very difficult for the Assessee to show the creditworthiness of strangers. If the Revenue has any doubt with regard to their ability to make the investment, their returns may be reopened by the department. In any case, what is clinching is the additional burden on the Revenue. It must show that even if the applicant does not have the means to make the investment, the investment made by the applicant actually emanated from the coffers of the Assessee so as to enable it to be treated as the undisclosed income of the Assessee. This has not been shown insofar as the present case is concerned and that has been noted by the Tribunal also. [Emphasis Supplied] 1.15 Infact, Hon ble Delhi High Court in the case of CIT v Real Time Marketing (P) Ltd reported in 306 ITR 35 has held as under: 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue s case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non- compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be suffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and the Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion. iv) 37 ITR 288 (SC) Lai Chand Bhagat Ambica Ram v CIT The Tribunal in arriving at the conclusion it did in the present case indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, perverse and the Court is entitled to interfere. 2. In view of the aforesaid, it is submitted that the addition made by the learned AO and sustained by the learned CIT(A) is wholly unsustainable and deserves to be deleted. 3. Ground No. l(v) and (vi) of Grounds of Appeal for Assessment Year 2007-08: Next issue pertains to the disallowance of the short term capital loss of ₹ 1,42,66,800/- and addition made of ₹ 43,25,000/- under section 2(22)(e) of the Act in assessment year 2007-2008. 3.1 At the outset it is submitted that the both the aforesaid additions/disallowances made by the learned Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction being a colorable device to avoid tax and hence cannot be said to genuine transaction. 4.2 It is most humbly submitted that merely because the director of the appellant company is also the director of the M/s Magnum Steel Ltd., the transaction of the sale of the shares by the appellant company cannot be doubted. It is submitted that revenue cannot decide the commercial prudence of the assessee and same has to be judged from the point of view of the assessee. It is therefore submitted that disallowance made by the learned AO and sustained by the learned CIT(A) deserves to be deleted. 5 In respect of the addition made of ₹ 43,25,000/- under section 2(22)(e) of the Act, it is most respectfully submitted that aforesaid addition has been made protectively in the hands of the appellant and substantive addition has been made in the hands of Shri. I.C. Jindal being the beneficial shareholder, which addition has also been sustained on the protective basis. It is submitted that the CIT (A) could not confirm an addition on protective basis, though the Id AO can make the addition protectively, but CIT(A) has to adjudicate the validity of such addition independently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee appellant against the consolidated order of the learned CIT(A) dated 13.08.2014 for the AY 2005-06 to AY 2007-08, whereby learned CIT(A) has substantially upheld the order of assessment. 2. Before the Hon ble Tribunal, appellant has filed three paper books for each of the aforesaid assessment years containing the documentary evidences and replies/submissions filed before the learned AO/CIT(A). Appellant has also filed two common paper books, i.e. PB-II (containing the orders of assessment for the AY 2004-05, 2008-09, 2009-10, 2010-11, order of Hon'ble Tribunal for the AY 2010-11 and statement of Shri. I.C. Jindal) and PB-III (containing the enquiries made by the AO from the stock exchange, excerpt of monthly update of NEST for the month of January, 2005, copy of demat account of the assessee and also copy of the confirmation from M/s P.K. Aggarwal CO). In addition to the aforesaid paper books, appellant has filed its synopsis dated 01.09.2014 before the Hon ble Tribunal wherein appellant has made its submission contending that additions/disallowances made in the order of assessment, and sustained by the learned CIT(A) are unsustainable in law. 3. In addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates Ltd. ii. M/s Magnum Steel Limited iii. M/s Magnum Iron and Steel Ltd. iv. M/s N.R. Sponge Pvt. Ltd. v. M/s Deluxe Alloys Pvt. Ltd.M/s Magnum International Ltd. vi. M/s Triple Stock Shares Pvt. Ltd. vii. M/s Courage Financial Services Pvt. Ltd. viii. M/s Jeevan Jyoti Society. 4.5 It is respectfully submitted that during the course of the search on the appellant company no incriminating material was found from the premises of the appellant. Infact, from the whole group, and from all the place i.e. Delhi. Gwalior, Raipur, Indore, Banmore, only a total cash of ₹ 5,62,635(Rs.5,07,485 from Gwalior and ₹ 55,150 from Delhi Office) was found, out of which only ₹ 5,00,000 was seized. Chart giving analysis of the cash found during search at various places in enclosed as annexure to the synopsis as 'Annexure-A . 4.6 That on the same date, search was also conducted at the premises of the Shri. I. C. Jindal, and during the course of the search, his statement was also recorded. It is submitted that search commenced around 8.00AM in the morning of 26.03.2010 and authorized officer started the recording of statement of Shri. I. C. Jindal then ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010, (as 27-03-2010 was Saturday and 28-03-2010 was Sunday), aforesaid statement of Shri. Jindal was retracted when Shri. Jindal met with the DGIT(Inv) stating the circumstances under which statement was recorded and retracted the statement recorded during the course of search and also requested to not to deposit the cheques in respect of alleged surrender. The Shri. Jindal on the same date also met with ACIT (Inv) and stating the aforesaid facts, requested to return the cheques, and learned ACIT(Inv) assured not to use the cheques, but did not return the cheques. It is submitted that because of the aforesaid retraction, the cheques given by Shri. Jindal in respect of the tax liability on account of surrendered sum were never deposited. 4.9 In pursuance to the aforesaid search, learned AO issued notices under section 153A of the Act on 20.04.2011 and framed the assessments under section 153 A of the Act vide orders dated 30.12.2011, interalia making following additions disallowances: S. No Particulars of the addition Assessment years 2005-06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : I have given ₹ 2 crores from M/'s Moderate Credit Corporation Ltd. to M/s Magnum Steel Limited and another ₹ 80 lakhs through Ravnet Solutions Pvt. Ltd. in lieu of cash received on his instruction from his office. I arranged a deal of capital gain amounting to ₹ 20 crores between Magnum Steel Limited and Shri. Santosh Shah r/o Lai Bazar, Kolkata (Mobile no. 09830053858) in lieu of cash received from his office. This money was handed over to me by employees of M/s Magnum Steel limited whose name are Shri. Som Nath. Shri Som Nath was introduced me by Shri. I.C. Jindal, MD Magnum Steel Limited. I gave ₹ 20 crores to Shri Santosh Shah who arranged capital gain for Shri. I.C. Jindal and his company through stock broker Sh. P.K Aggarwal resident of Kolkata. 4.12 From the perusal of the aforesaid statement of Shri. Aseem Kumar Gupta, it would be seen that there is no reference of the assessee at all. Further in respect of statement of Shri. Jindal is concerned, in fact in the whole statement, no statement has been made in respect of the assessee. And further observation of the AO that the allegation of Shri. Aseem Kumar Gupta was not denied by Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der and statement was not recorded with free will. Your good self are aware that due to retraction no cheque was deposited. It is thus submitted that no adverse inference be drawn in our case in view of aforesaid forceful surrender and statement of Shri Aseem Gupta, CA and Shri Somnath, employee of M/s Magnum Steel Ltd be taken in my presence by giving opportunity to cross examining them before drawing any adverse view on the basis of forced surrender made by me as well as forced statement taken from Shri Aseem Gupta as neither any money transacted between Shri Somnath my employee and Shri Aseem Guota nor any dealings of shares were made through Shri Aseem Gupta. In fact, Aseem Gupta already denied having any relationship with P.K. Aggarwal Co. during the course of statement recorded during search. The shares were purchased and sold only through broker P.K. Aggarwal Co., Kolkata 4.13 It would be seen from the aforesaid reply that it has specifically been submitted that statement made during the course of search was not voluntary and statement of Shri. Aseem Kumar Gupta and Shri. Somnath be taken in the presence of the assessee by giving opportunity to cross examini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A), that in the, case of the appellant no incriminating material has been found as a result of search. In so far as the statement of Shri. I.C. Jindal is concerned, it is submitted that such statement is not incriminating qua the assessee and in any case, such statement was recorded under duress and same has also been retracted immediately after the search, as such, such statement cannot be made the basis of making the addition. 5.1 It is submitted that statement of Shri. Jidnal was recorded whole night and next day in the morning he was made to surrender, which itself shows that such statement is not voluntary and was recorded under duress. Aforesaid submission is supported by the judgment of the High Court of Gujarat in the case of Kailashben Manharlal Chokshi vs. CIT reported in [2010] 328 ITR 411 (Gujarat), wherein also statement of the assessee had been recorded under section 132(4) at mid night, and such statement was also retracted after a lapse of two months and learned AO did not accept the retraction and accordingly, made an addition representing income disclosed by the assessee under section 132(4). On appeal, the Commissioner (Appeals) and the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee. 5.2 In view of the aforesaid since the statement of the Shri. Jindal has been recorded in the night, which has immediately been retracted same cannot be treated as incriminating material. It is submitted that in the instant case, apart from the retracted statement of Shri. IC Jindal, and unsubstantiated allegation of Shri. Aseem Kumar Gupta, no material was found from the premises of the appellant. It is submitted that in fact in the case of CIT vs. Harjeev Aggarwal reported in [2016] 70 taNmann.com 95 (Delhi), it has been held that statements recorded during search and seizure operations are not evidence found as a result of search. However, it was held that the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following judgments,: a. Andaman Timber Industries Vs. Commissioner of Central Excise (2015) 281 CTR (SC) 241 b. Vinod Solanki Vs. Union of India (2008) 16 SCC 535 (SC) c. Kishni Chand Chella Ram v CIT 125 ITR 713 (SC) d. CIT V SMC Share Stock Brokers 288 ITR 345 (Del) e. CIT V S M Aggarwal 293 ITR 43 (Del) f. CIT vs Dharam Pal Prem Chand Ltd 295 ITR 105(Del) g- CIT Vs Pradeep Kumar Gupta 207 CTR 115 5.5 It is further submitted that it is settled law that where addition of undisclosed income was made on basis of mere statement under section 132(4) which was not corroborated by any material evidence, neither such statement would be a conclusive evidence, nor any addition could be made. It is submitted that in Instruction No. F no. 286/2/2003- IT (Inv) dated 10.03.2003), the CBDT has directed that, Instances have come to the notice of the Board where assessee have claimed that they have been forced to confess the undisclosed income during the course of search seizure and survey operations. Such confessions, if not based upon reliable evidence, are later retracted by the concerned assessees while filing return of income. In these circumstances, on co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, since the surrender was made under pressure which was immediately retracted, and except the aforesaid, no adverse material has been found from the premises of the appellant, as such, such statement cannot be made the basis for the assessment. Furthermore in the case of G. Chinna Yelllappa vs ITO in ITA No. 268 of 2003 dated 6.11.2014, Hon ble Andhra Pradesh High Court has held as under: It is not as if the retraction from a statement by an assessee would put an end to the procedure that ensued on account of survey or search. The Assessing Officer can very well support his findings on the basis of other material. If he did not have any other material, in a way, it reflects upon the very perfunctory nature of the survey. We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support from the Circular dated 10.03.2003 issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incriminating document was found to support the impugned addition. This Bench has been continuously taking the view that a statement recorded under s. 132(4) of the Act does not tantamount to unearthing any incriminating evidence during the course of search, therefore, no addition can be made on that score alone. Therefore, in our opinion, the impugned addition cannot survive, and the same has to be deleted. [Emphasis supplied[ Reliance is placed on the following judgments: i) 247 ITR 448 (Bom) CIT vs. Vinod Danchand Ghodawat ii) 185 Taxman 18 (Chd) Jagdish Chander Bajaj vs. ACIT 5.10 In view' of the aforesaid, the submission of the appellant is that, the additioncan be made only qua the incriminating material found as a result of search;which is none in the instant case. Reliance is placed on the judgment of Hon ble Delhi High Court in the case of CIT v. Kabul Chawla reported in 380 ITR 573 wherein their Lordships have held as under: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006- 07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed. [Emphasis supplied] 5.11 Infact, in the subsequent judgment in the case of Pr. CIT v. Lata Jain reported in 384 ITR 543 (Del)), it was also held that in absence of any incriminating material found as a result of search, assumption of jurisdiction was also not in accordance with law. Reliance is also placed on the following judgments: i) ITA No. 369/2015 CIT vs. Kurele Paper Mills P Ltd. dated 06.07.2015 ii) 63 taxmann.com 137 (Del) CIT vs. MGF Automobiles Ltd. iii) ITA No 634/2015 Pr. CIT vs. Smt. Kusum Gupta dated 01.09.201 iv) 49 taxmann.com 172 (Bom) CIT vs. M/s Murli Agro Products Ltd. v) ITA No. 1969 of 2013 CIT vs. All Cargo Gobal Logistics Ltd. vi) 58 taxmann.com 78 (Bom) CIT vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. vii) 259 CTR 281 (Raj) Jai Steel India vs ACIT viii) 120 DTR 79 (Bom) C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, we find that there were a lot of discussion but no material has been referred to which was relied upon and found during the search. In fact, share capital and long-term capital gain were declared by the assessee in the books of account and along with the return all the necessary details were filed. Further this assessment was specifically taken under scrutiny to examine the investments. 35. In AY 2006-07 also assessee has declared long term capital gain in the return of income and the AO while making the assessment u/s 143(3), has made disallowance of LTCG by treating them as STCG and addition of ₹ 36,72,01,641/- was made. In the assessment made u/s 153A of the Act, the AO has treated the same figure that was already added during the 143(3) assessment as undisclosed income. It is not understood the income already disclosed, how can be treated as undisclosed. Here again Revenue has failed to refer to any material unearthed during the search which could led ld. Assessing Officer to such conclusion. This assessment can only be disturbed as we discussed in the preceding paragraphs above, if any incriminating material is found during the course of search, but not otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee company recorded on 26/-27.03.2010 can be treated as incriminating material, specifically when it was retracted and no other incriminating material supporting the statement was found. This statement of Shri. I.C. Jindal was made the basis for making the addition in AY 2005-06 and 2006-07, however same was not referred to at all in AY 2007-08. 39. Ld AR has claimed that the examination of Shri. IC Jindal was started after the search whole day at all the places at late evening hours of 26.03.2010 at 8.40 PM, which continued for whole night, and merely 7 questions were asked till midnight on the investment of properties and also investment in shares of various companies. Question no. 7 was in relation to details of various immovable properties as per details furnished by Smt. Shashi Prabha Jindal, wife of Shri. IC Jindal to income tax department who assessee claimed, had strained relationship with Shri. IC Jindal as she had filed civil and criminal cases against him. Other few questions were asked in the night till morning, as date was mentioned 27.03.2010 thereafter. Shri. Aseem Gupta was called in the morning of 27.03.2010 when he stated that he has given ₹ 2 crores f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Hon ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of Central Excise (2015) 281 CTR (SC) 241, has again reiterated their earlier view and expressed their opinion that the evidence/statement relied upon by the Assessing Officer for making addition which was not confronted cannot be used against the assessee. The Hon. SC has held that : 6.According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the statement of Shri. Aseem Gupta is factually incorrect. 43. Regarding the authenticity of the retraction statement the arguments of the revenue fails when the same is available on the file of the ld AO and ld AO himself has issued certified copy of that retraction letter, same letter is also referred to in the order of ld CIT (A). Revenue before us could not submit any evidences that the retraction statement is not authentic. Further revenue has no answer why it took the cheques for taxes when it is so sure of the undisclosed income and further not deposited the same at all leave aside on time. All these cumulative factors go strongly in favour of the assessee about its timely retraction of the admission. 44. We find that the statement was recorded at odd hours and nothing concrete related to any other evidence in support arrived at. The figures of investment made by the companies were not matching with the statement of Shri. Aseem Gupta as assessee has not received any sum from M/s Moderate Credit Corporation Ltd. and further only a sum of ₹ 71 lakhs as against ₹ 80 lakhs (stated by Shri. Aseem Gupta) has been received from M/s Ravnet Solutions Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is in the case PCIT vs. Avinash Kumar Setia 81 Taxmann.com 486. In this case, statement was recorded during the survey and not during the search. Assessee made a statement after two months of survey on his own and assessee waited for two years to retract it. Assessee in that case pleaded that non-disclosure of sum in the return of income is a retraction by the assessee and retraction in writing was only on 16/12/2010. Therefore Hon high court held that retraction is too much delayed and not bonafide. Facts in that case were as under :- 11. The facts of the case on hand are plainly different. Here, there was no statement of the assessee recorded during the survey under section 133A of the Act. As observed by the Commissioner of Income-tax (Appeals), the assessee voluntarily made a declaration two months after the survey. There was absolutely no compulsion on the assessee to make such a declaration. The assessee waited for two years to resile from the said declaration. The submission of learned counsel for the assessee that since he had filed a return on September 26, 2009 without disclosing the sum of ₹ 1.25 crores, he should be deemed to have resiled from the said de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial once the same has been retracted and the statement of Shri. Aseem Gupta recorded on the same date is also not incriminating material as after the retraction, no efforts have been made by the AO to bring any other material in support of that statement. Moreover, facts and figures stated by Shri. Aseem Gupta are totally incorrect as per record. The additions had already been made in the original assessment u/s 143(3) in AY 2006-07 and 2007-08 and which were merely repeated in the order u/s 153A of the Act. In AY 2005-06, additions made also are not related to incriminating material. We have repeatedly held that no addition can be made in the absence of incriminating material and our view was further strengthened by the Hon ble jurisdictional High Court in the case of CIT v. Kabul Chawla reported in 380 ITR 573 (Del.) which was further followed in subsequent decisions. All these decisions propounded the law that no additions can be made in absences of incriminating material for each of the years and on that basis, addition u/s 153A by the revenue for AYs 2000-01 to 2003-04 was without any legal basis as there was no incriminating material qua each of those AYs. We therefore hold t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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