TMI Blog2019 (6) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that no cash component transaction was received by the assessee. Brokerage @ 4% earned on sale of plots - CIT (A) sustained the addition - HELD THAT:- Keeping in view the nature of business in which the assessee was engaged, it is reasonable to presume that the assessee must have earned some commission on the transactions routed through him. Keeping the case wherein normal part commission is earned by brokerage of seller and part commission is earned by the brokerage of buyer, it is reasonable to presume that the assessee has earned commission @ 2% on the alleged transactions. Accordingly, the A.O. is directed to restrict the addition to the extent of 2% of the brokerage on the alleged transaction of sale of plots. Undisclosed income alleged to be used for making undisclosed payment for purchases of agriculture land purchased from Shri Jai Singh Yadav - addition was made solely on the basis of search statement of Shri Nirmal Kedia partner of the assessee, which were retracted later-on - corroborative evidence/document - HELD THAT:- No corroborative or incriminating material was linked to the addition. The A.O made the addition of ₹ 5,00,00,000/- merely on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed each and every document and came to the conclusion that these documents are dump documents as name/date or narration return which could lead to an inference that the transaction on these documents are those which have been escaped assessment. Thereafter by following the judicial pronouncements, the ld. CIT(A) has deleted the addition. The detailed findings so recorded by the ld. CIT(A) has not been controverted by the ld DR by bringing any positive material on record. Therefore, we do not find any reason to interfere in the order of the ld. CIT(A) in deleting the impugned additions. Addition on the basis of AS-1 - HELD THAT:- As found from the examination of the document that no name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee. No any plot No. or name of the scheme has been written over this paper by which it can be conclude that these papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. There is no reference in this paper that whether the same regarding the revenue of expenses . There is no reference of Cash on this paper as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion that this paper pertaining to the assessee or regarding to sales made by the assessee or assessee group. No name of any buyer or name of the scheme has been written over this paper by which it can be conclude that this papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. Assessee has only one scheme Kedia Kingdome wherein size of plot no 40 is 164.21 sq mt as against 196.94 mentioned in the seized paper. Similarly, size of plot no 127 is 115.52 sq mt as against 169.62 mentioned in the seized paper. Similarly, size of plot no 122 is 135.35 sq mt as against 100 mentioned in the seized paper. Most interestingly, plot no 123 mentioned in the seized paper does not exist in the scheme of the assessee. The detail as per books of account of the assessee in respect of sales of plots Addition as per Ext.-10 Annexure-A - HELD THAT:- The scribbling on the paper are in relation to some renovation work which was to be carried out but the same was actually not carried out by the assessee group. The assessee group was planning to carry out some renovation work, therefore the staff of the assessee group send the tentative estimati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blishing the fact that such brokerage was actually received or receivable to the assessee. It is contended that Id AO made the addition more so when the plots mentioned in the seized documents do not pertain to the assessee as the assessee is neither buyer nor seller of such plots. 2. The appellant prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal. Grounds of revenue s appeal: 1. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of ₹ 86,81,500/- made by the A.O. on account of unaccounted business income. 2. The appellant craves, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 4. Rival contentions have been heard and record perused. Facts in brief are that the assessee is an individual and during the year under consideration derived income from house property, business of property developers, capital gain on sale of plots, interest and other income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owned by appellant. Fact of ownership as per sale deed and the persons who have purchased is established by appellant by filing the allotment letters and also the necessary affidavit of the seller to whom the plot were sold. 2. That the name of each plot owner and buyer of such plot is mentioned at page 1-3 (APB 70-72). On the main page the sale price of each plot is mentioned. Perusal of these papers reveals all the plot were sold at similar rate irrespective to the fact whether the plot is sold in cash or cheque. On page 1-3(refer APB page 70-72) the word remitted (bank)' and remitted (cash) and total remitted has been mentioned which implies whatever amount is received it has been given to the seller of plot 3. That the AO has not taxed the cheque transaction evident from such seized document in the hand of appellant. It is the cash component which is assumed to be undisclosed income of the appellant. It is a trite law that transaction from the seized document cannot be interpreted differently. If the cheque transaction is taxed in the hand of seller, in this case different individual sellers, then cash as evident from the seized document c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page No. 1-3 and the AO made the addition of both the amount treating as separate transaction. 8. By the impugned order, the ld. CIT(A) has deleted the addition of ₹ 85,32,240/- and upheld the addition of ₹ 6,29,260/- in this regard we observe that during the course of assessment proceedings the assessee in letter dated 05.03.2018 submitted to the AO as under: - 4. Explanation regarding page No. 1 to 3 of Annexure 9 found and seized from Shop No. 8 to 11, Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur The detail explanation on this account has been submitted in the case of brother of assessee Shri Nirmal Kumar Kedia and the same may kindly be considered here also. For the sake of convenience the submission given on this issue in the case of Shri Nirmal Kumar Kedia is reproduced as under: - The explanation and documents in this regard has already been submitted along with our submission dated 07.02.2018 and 28.02.2018. As explained in such submission this is an excel sheet send by Sub-broker in mail id of assessee group. The sheet consists the details of plot sold of var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten on page No. 1 to 3 of Annexure 9 found and seized from Shop No. 8 to 11, Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura, Sikar Road, Jaipur. Further the copies of registered sales deeds of such plots, which are readily available with the assessee group, to prove that in dealing of such plots the assessee group was neither buyer nor seller were also submitted along with our submission dated 28.02.2018. Proof of ownership of the plots filed before ld AO:- During the course of the assessment proceedings the assessee submitted the copies of allotment letter of the plots by the society to the actual plot owner mentioned in the list and the copies of registered sales deeds of such plots sold by the actual plot owner, (to the extent which were available with the assessee), to prove that such plots were not belonging/owned by the assessee. From perusal of these documents, it is apparent that the assessee is neither buyer nor seller of these plots. Such evidences and detail are summarized in the table as below: - Plot No. Name of plot owner as per impounded document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 166-169) Copy of registered sales deed dated 28.10.14 between owner and buyer (Copy at PB Page 170-177) 19 Sunil Jain Sunita Sharma Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 178-181) Copy of registered sales deed dated 11.04.14 between owner and buyer (Copy at PB Page 182-189) 20 Satyanarayan Sunita Sharma Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 190-193) Copy of registered sales deed dated 11.04.14 between owner and buyer (Copy at PB Page 194-201) 25 Ankit Choudhary Ritu Chhabra Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 202-203) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of year 1995 (Copy at PB Page 264-267) Copy of registered sales deed dated 28.10.14 between owner and buyer (Copy at PB Page 268-274) 41 Sunil Jain Keshari lal Meena Documents of this plot were not available with assessee so the same did not submitted. 42 Satyanarayan Saini (Babulal) Mohit Sharma Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 275-278) Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 279-286) 43 Ankit Choudhary Mohit Sharma Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 287-288) Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 289-295) 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the name of owner of year 1995 (Copy at PB Page 362-363) Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 364-371) 7 Pankaj Saini Savita Biji Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 372-375) Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 376-383) 8 Jitendra Kumar Meena Savita Biji Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 384-387) Copy of registered sales deed dated 19.1014 between owner and buyer (Copy at PB Page 388-395) 10 Pratap Singh Narendra Kumar Aggarwal Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 396-399) Copy of regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page 454-461) 47 Manoj Kumar Saini Shaileldra Nath Documents of this plot were not available with assessee so the same could not be submitted. 49 Satyanarayan Saini (Babulal) Vipin Jain Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 462-465) Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 466-474) 54 Mukesh Sharma Kumar Bhatnagar Ji Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 483-486) Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 475-482) 9. We have gone through the seized material and found that the seized page No. 1 to 5 are prepared in relation to transactions of sales of plots i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt in the hands of the actual plot owner as the same not taxed in the hands of the assessee. The action of AO shows that the assessee was not the beneficial owner of such plots. 13. It is also pertinent to mention here that the A.O. has only taxed the cash component of alleges sale proceed and not the amount received through cheque. The A.O. has taxed the cheque consideration in the hands of the actual plot owner whereas with respect to the very same transaction of sale, the A.O. has taxed cash component in assessee s hand. How a single transaction can be taxed in the hands of two different persons. Once it has been proved that the assessee was not the owner of such plots than how it can be presumed that no consideration would be paid to the actual owner of such plot against sales of such plots. Examples of such cases are Plot No. 26, 41, 17, 18, 21,40,49. 14. We also observe that all the plots mentioned in the seized documents were sold at uniform rate. From examination of the seized document we find that there are several parties in the list which were owing more than one plot. In such cases the payment of one or more plot was received entirely t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d executed though admittedly they were not owners of land for which the sauda chitthi was executed / signed), it cannot be said that any amount is received by the petitioners assessee. The department filed SLP in Hon ble Supreme Court against the above order which was rejected by the Hon ble Supreme Court by its order dated 16.05.2016. 18. In the case of the assessee also no documents were found from the possession of assessee or from the other one to prove that any consideration was received/receivable to assessee. On the contrary, we find that the detailed finding has been recorded by the ld. CIT(A) in this regard at para 8 to 8.4 of his appellate order which has not been controverted by the ld DR by bringing any contrary material, accordingly, we do not find any reason to interfere to hold that no cash component transaction was received by the assessee. 19. Now coming to the addition upheld by the ld. CIT(A) by presuming of brokerage @ 4% earned on sale of plots. With regard to these transactions, the ld. CIT (A) sustained the addition of ₹ 6,29,260/- presuming that the brokerage @ 4% was received to the assessee on the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kers/plot holders no brokerage was received to the assessee. Since after dispute the assessee was not expecting any brokerage against the deal, therefore no brokerage income could not include in the Income Tax return. 23. On the other hand, the ld DR has supported the order passed by the A.O. upholding the addition of 4% on account of brokerage earned by the assessee. 24. We have considered the rival contentions and carefully gone through the orders of the authorities below and found that no documentary evidence was found during the course of search to substantiate that the assessee has earned brokerage at 4% on these transactions. However, keeping in view the nature of business in which the assessee was engaged, it is reasonable to presume that the assessee must have earned some commission on the transactions routed through him. Keeping in view the entirety and facts and circumstances of the case wherein normal part commission is earned by brokerage of seller and part commission is earned by the brokerage of buyer, it is reasonable to presume that the assessee has earned commission @ 2% on the alleged transactions. Accordingly, the A.O. is directed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in deleting the addition of ₹ 8,03,001/- made by A.O. on account of unaccounted income from sale transactions. 6. Whether on the facts and in the circumstances of the case and in law the. CIT(A) is justified in deleting the addition of ₹ 42,07,083/- made by A.O. on account of unaccounted business income from sale of plots. 7. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of ₹ 33,14,580/- made by A.O. on account of unexplained expenditure u/s 69C of the I.T. Act, 1961. 8. The appellant craves, leave or reserving the right to amend modify, alter add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 27. Rival contentions have been heard and record perused. The facts in brief are that the assessee is limited liability partnership (LLP) incorporated on 31-07-204. Search and seizure operations u/s 132(1) of Income Tax Act, 1961 and survey u/s 133A were carried out by Income Tax department over the assessee Group on 19.11.2016. During the course of search, statement of Shri Nirmal Kumar K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, the assessee has recorded his statement U/s 132(4) of the Act and surrendered the amount in respect of income earned by him. Since the statement was recorded under oath, there is no reason for retraction without brining any supporting evidence for the same. He further relied on the detailed observation made by the A.O. and the investigation team while recording the statement U/s 132(4) of the Act. 31. On the other hand, the ld AR has pointed out various discrepancies in the statement so recorded and contended that the statement was recorded under fear and duress and there were serious irregularities and discrepancies in recording the statement. The detailed submissions of the ld AR of the assessee was as under: Nitin Kedia's Statements were recorded under fear duress and serious other discrepancies in recording of the Statement of Shri Nitin Kedia:- (a) If we see the copy of statement Shri Nitin Kedia recorded at F-110 Evershine Tower, Vaisali Nagar, Jaipur (APB 85-92), we find that here the statements were commenced at 5.30 PM on 19/11/2016, which remained continued up to 21-11-2016 except a small break for rest on 20-11-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Statement at Shop at Ganesh Nagar: - During the course of survey u/s 133A of the Act, statement of Shri Nitin Kedia was recorded at the premise Ganesh Nagar, 6A, Nadi Ka Phatak, Murlipura Jaipur. There are following discrepancies in the recording of statement by the survey team. c.i) Commencement of the statement and after recording 7 questions the postponing of the statement at same time As per the copy of the statement provided by the department, the department commenced the recording of the statement of Shri Nitin Kedia on 19/11/2016 at 2.00 PM. (APB page 75). After recording of answer to question number 1 to 7 in three pages, the statement was postponed for physical verification. The time marked for postponing the statement is 2.00 PM (APB page 77) i.e. commencement of the statement and postponing the statement at same time which shows no time consumed in question, answer and in writing of 7 question answer on paper. c.ii) Shri Nitin Kedia could not be present at two places at same time on 19/11/2016. After postponing the statement at 2.00 PM, the statement was resumed at 6.30PM on 19-11-2016 (APB page 77) at Shops at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 11.50PM on 19-11-2016 (APB Page 45-50). There was no break in statement for dinner and he was without dinner in night. He was sick and tired. So, a break in statement was given at 11.50 PM on 19-11-2016. In Sanganer Office there was no bed or other basic facilities. The assessee was kept awaken whole night and he was not allowed to go at home. On 20-11-2016 at early morning his statement was resumed at 6.30 AM. The assessee was kept tired, sleepless and without food, this was nothing but torture by the survey team to get the desired surrender and sign on the prewritten statements. This was the reason of surrender of ₹ 5 crores in just in first effective question of the statement on 20/11/2016 (APB page 50) without any corroborative material or incriminating documents. Then the assessee was taken to Kedia House. The search party started to recorded the statement of the assessee at 1.00 PM (APB page 41). Here in very first question the assessee had to confirmed the surrender of ₹ 5 Crore made at Sanganer office and has to overall surrender ₹ 20 Crore without any corroborative material or incriminating documents. The assessee made surr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide letter dated 18/05/2017 and 08/01/2018 that despite to the repetitive request of the assessee to ADIT and AO, the copy of the statements recorded at the time of search and post search has not been provided to the assessee and from this it appears that the department does not want to use these statements against the assessee and want to make assessment on the basis of documents seized during the course of search. The assessee group was under bonafide belief that since the survey/search party has not given the copy of the statements, therefore, the same would not be used against them. This attitude of search party is against CHARTER OF RIGHTS AND DUTIES OF PERSONS SEARCHED AS REPORTED IN (1994) 208 ITR 5 (ST), which provides that the assessee has right to have a copy of any statement that is used against him by the department. After the survey/search several requests were made to Investigation wing as well as AO to provide the copy of statements recorded by the survey/search party. After the continuous efforts of the assessee group, the copy of the statements were provided on 19.01.2018 (Friday) and thereafter on very first working day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.02.2018 wherein, the assessee explained the factual position. (APB pg 108-118). Thus, the surrender of ₹ 20 crores made by the Assessee during the course of search was not voluntarily but the same was because of mental tension, fear and under torture and inhumanity conditions. The Board of direct taxes issued instruction to the All Chief Commissioners of Income Tax, (Cadre Contra) All Directors General of Income Tax Inv. vide letter F. No. 286/2/2003-IT (Inv) dated 10.03.2003 in regard of confiscatory statement in the course of search and seizer. The Board has again issued a Circular dated 18th December, 2014 and advised the taxing authorities to avoid obtaining admission of undisclosed income under coercion/undue influence. But in spite of clear-cut board circular the surrender of income was taken by the search/survey party without having any corroborative or incriminating material. The Addition cannot be made merely on the basis of search statement Except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supreme Court also. Further, Hon ble Delhi High court in case of Harjeev Agarwal (70 Taxmann.com 95) held: A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred . If the assessee makes a statement under Section 132(4) of the Act, and if there are any incriminating documents found in his possession, then the case is different. On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material, has to be given credence, than it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the search CIT v/s G.Krishnan (1994) 210 ITR 707 Mad. Held, that additions cannot be made merely on the basis of statements. The Jodhpur ITAT Bench in Maheshwari Industries v. Asstt. CIT [2005] 148 Taxman 74 (Jodh) (Mag.) has held that additions should be considered on merits rather than on the basis of the fact that the amount was surrendered by the assessee. It is settled legal position that unless the provision of statute warrant or there is a necessary implication on read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block assessment as noted above. The law relating to retraction is well-settled by Supreme Court in Sri Krishna V. Kurukshetra University, AIR 1976 SC 376, wherein it is held that if the original statement suffers from any defects, the person is entitled to go back on the statement already made by making correct statement. The Supreme Court have laid down the ratio, after considering S. 18 of the Evidence Act, 1872 that any admission made in the ignorance of the legal rights or under duress, cannot bind the maker of the admission. This right has been tested under Income-tax Act and the same has been upheld by Punjab Haryana High Court in Kisan Lal Shivchand Rai v. CIT, (88 ITR 293). Hon ble ITAT Jaipur Bench in the case of Shri Pawan Lashkary ITA No 808/JP/2011 dated 06.01.2012has held that income cannot be assessed merely on the basis of statement. Hon ble ITAT has observed in Para 2.37 to 2.38 as under:- 2.37 The revenue has relied upon the statement of the assessee recorded during the course of search in which the assessee surrendered the amount on account of revaluation of land as undisclosed income. Kelkar Panel studied th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to tax. The search party took the similar type surrender in the case of M/s Suresh Medical Agency ITA No 443/JP/2012 dated 21.08.2013, Shri Radhey Shyam Mittal ITA No 420/JP/2012 dated 26.08.2013, Shri Suresh Kumar Mittal ITA No 947/JP/2013 dated 24.09.2015 and Shri Madan lal Mittal ITA No 948/JP/2013 dated 24.09.2015. In these cases without having any corroborative material, the AO made the addition in these cases merely on the basis of search statement. In these cases the copy of statements were given at much later stage and the assessee retracted from the statement after receipt the copy of statement. Hon ble ITAT has deleted the addition in all these cases. The findings of Hon ble ITAT in the case of Shri Radhey Shyam Mittal are produced as under:- 6. We have heard parties with reference to material on record and case laws brought to our notice. The action under section 132 was carried out at assessee s premises on 27.8.2008 and in the statement assessee made surrender of income of ₹ 30,00,000/- on account of income earned from trading of items in pharmaceutical business outside the books. The appellant, however, had been approach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int, the only material available on the record is the affidavit which was filed by the assessee before the Income-tax Officer. The assessee in his affidavit, had definitely stated that the purchaser wanted to purchase both the going concerns, the Jaswant Sugar Mills and the Straw Board Mills Ltd., together and one of his conditions of purchase was that all the shares of Lala Jaswant Rai, his sons and other relatives had to be transferred to the purchaser. The Income-tax Appellate Tribunal rejected this affidavit of the assessee on the mere ground that there was no documentary evidence in corroboration in the form of any correspondence of otherwise on this point. Shri G.S. Pathak contended rightly before us that the Tribunal was not entitled to reject the affidavit on this point on such a ground. After the assessee had filed the affidavit, he was neither cross-examined on that point, nor was he called upon to produce any documentary evidence. Consequently, the assessee was entitled to assume that the Income-tax authorities were satisfied with the affidavit as sufficient proof on this point. If it was not to be accepted as a sufficient proof either by the Income-tax Officer or by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the assessee. As per the said agreement Shri Harish Kumar agreed to purchase the plot of land from Shri Daya Kishan for a consideration of ₹ 6,75,000/- and a sum of ₹ 1,00,000/- was paid as an advance on the date of agreement and balance of ₹ 5,75,000/- was to be paid by 10th May, 2012. Accordingly, the assessee who is the father of Shri Harish Kumar in his statement recorded under section 133A surrendered the undisclosed income including the income of ₹ 5,75,000/- on account of investment in plot. After the survey, the assessee vide letter dated 16.01.2013 informed the AO that the agreement found during the survey was cancelled by his son though the assessee was not aware about this fact and, therefore, the surrender of ₹ 5,75,000/- on account of investment in the plot was mistakenly made during the survey. The assessee filed his return of income declaring undisclosed income of ₹ 24,50,000/- inclusive of ₹ 1,00,000/- on account of the advance given for purchase of land. The AO made an addition of ₹ 5,75,000/- which was not offered by the assessee to tax in the return of income but was surrendered during the course of sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on these seven papers was recorded on 27.09.2012 where surrender of the aforesaid amount was made by the assessee. But in the case of the assessee, the surrender is not relatable to any material. Further, the surrender was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statement, the recording of statement is against the principle of natural justice vitiated in law and no cognizance of these statements should be taken. b) 2016 (5) TMI 1304 - RAJASTHAN HIGH COURT CIT, Bikaner Versus Ravi Mathur and others In this case the assessee agreed to surrender certain amount on the basis of incriminating documents, cash, jewellery etc., in statements recorded under Section 132(4) on 9.11.1995 and later, however, it was contended by the assessee that the statements under Section 132(4) of the Act was not correct and the amounts which were taken into lakhs are in thousands and attempted to retract from the statements made at the time of search and seizure operation. But in the case of the assessee, the surrender is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making undisclosed payment for purchases of agriculture land purchased from Shri Jai Singh Yadav. The addition was made solely on the basis of search statement of Shri Nirmal Kedia partner of the assessee, which were retracted later-on, without having any corroborative evidence/document to prove the same to be correct. 31. By the impugned order, the ld. CIT(A) has deleted the addition after observing as under: 8. Basic facts relating to Ground 1 is about addition of ₹ 5 Crores made by the AO. During the course of search Sh. Nirmal Kedia stated u/s 132(4) that he has paid ₹ 5 Crores to Shri Jal Singh Yadav for acquisition of plot. The relevant portion of statement is reproduced by the AO on page 3 of the order. While filing return u/s 153A the sum of ₹ 5 crore was retracted. This retraction as reiterated in the statement recorded by the AO u/s 131 of the Act. A letter was filed by the appellant before the AO confirming his retraction. The AO was not satisfied with explanation of appellant and added a sum of ₹ 5 Crores as undisclosed income. I have perused the written submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supreme Court also. Further, Hon'ble Delhi High court in case of Harjeev Agarwal (70 Taxmann.com 95) held thus: Harjeev Agganval [2016] 70 taxmann.com 95 (Delhi) ...A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred.... ...If the assessee makes a statement under Section 132(4) of the Act, and if there are any incriminating documents found in his possession, then the case is different. On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material, has to be given credence, then it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterized as undisclosed and on the facts and circumstances of the case, we are of the view that me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed, the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the-Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the search... It is clear from order of AO in para 5 of the order by the AO there is no other material other than statement of appellant which forms the basis of adding a sum of ₹ 5 Crores as undisclosed income. Since the addition is made merely on statement of appellant u/s 132(4) and there is not incriminating material linking it with statement, the addition of ₹ 5 Crores is unsustainable. On the facts and in the circumstances of the case, the AO is directed to delete the addition of ₹ 5 Crores. Appellant's Ground No. 2 is allowed. 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order, documents submitted during the course of assessment proceedings and submission given to the AO following facts emerges: - i) During the course of survey/search proceedings carried out over the assessee group no documents/evidence were found to prove that the assessee group made some unaccounted payment to Shri Jai Singh Yadav for purchases of agriculture land. No such documents/evidence was also found from the possession of assessee as well as from the possession of Shri Jai Singh Yadav during the search/survey carried out over this person. ii) The entire additions was made solely on the basis of statement of Shri Nirmal Kumar Kedia recorded during the course of search/survey. iii) As soon as the copy of statements of partners of assessee Shri Nirmal Kumar Kedia and Shri Nitin Kedia recorded during the course of search/survey was provided to the assessee group they filed an affidavit before the AO for retracting the incorrect statement given in search/survey. iv) During the course of assessment proceedings to verify the veracity of the affidavit filed by Shri Nirmal Kumar Kedia and Shri Nitin Kedia whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement Shri Nitin Kedia recorded at F-110 Evershine Tower, Vaisali Nagar, Jaipur, we will find that here the statements were commenced at 5.30 PM on 19/11/2016, which continued up to 21-11-2016 except a small break for rest on 20-11-2016. 42. It is clear that Shri Nitin Kedia was not allowed for break for dinner, sleep, breakfast, rest etc. as the statement at Evershine Tower started at 5.30 PM on 19/11/2016 which remained continuous up to 21-11-2016 except a small break for rest on 20-11-2016. 43. In this regard, the ld AR placed before us CHARTER OF RIGHTS AND DUTIES OF PERSONS SEARCHED AS REPORTED IN (1994) 208 ITR 5 (ST), which provides that the assessee has right to have facility of having meals etc. at normal time. Shri Nitin Kedia was not allowed for break for dinner, sleep, breakfast, rest etc. Shri Nitin Kedia was kept whole night in office situated at Evershine Tower Vaisali Nagar, Jaipur where there is no facility of bed in office to sleep. Therefore, Shri Nitin Kedia was kept awaken whole night. All these were noting but torture to partner of assessee with a motive to get the desired surrender and get the signature over the statement wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at same time which shows no time consumed in question, answer and in writing of 7 question answer on paper. c.ii) Shri Nitin Kedia could not be present at two places at same time also on 19/11/2016. After postponing the statement at 2.00 PM, the statement were resumed at 6.30PM on 19-11-2016 (APB page 49) at shop at Ganesh Nagar. This statement was again postponed at night 11.00 PM on 19-11-2016 (APB page 50). These statements were resumed at 10.00AM Morning on 20-11-2016 (APB page 51) and concluded on 20-11-2016 after recording answer to question no. 11 to 23. As per the copy of statement given, the assessee should be at Premise situated at Ganesh Nagar from 6.30PM to 11PM on 19-11-2016 and 10 AM to conclusion of statement on 20-11-2016. Question and answer for Q.No. 18-19 was in between 6.30 PM to 11PM. But if we see the copy of statement Shri Nitin Kedia recorded at F-110 Evershine Tower, Vaisali Nagar, Jaipur (APB page 57-64), we find that here the statements were commenced at 5.30 PM on 19/11/2016, which remained continue up to 21-11-2016 except a small break for rest on 20-11-2016 (APB 61). Therefore, Shri Nitin Ke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er inhumanity conditions created by search/ survey party. The search/survey party kept the assessee and his brother Shri Nitin Kedia whole night without sleep and without meal, and they created an atmosphere of fear where the assessee made the surrender. 48. From the record we also found that the survey/search party after recording of statement of assessee did not provide copy of statements to the assessee group. The assessee made the repeated request by following letters (copy at APB page 240-249/Vol II) :- S.No Date of letter Addressed to Copy of letter given to 1 Dated 21/11/2016 ADIT-3 Jaipur 1. Principal Director of Income Tax, Investigation, Jaipur 2. Additional Director of Income Tax, Investigation, Jaipur. 2 Dated 08/03/2017 DCIT Central Circle-3, Jaipur 1. Principal Commissioner of Income Tax, Central, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Regarding my statements recorded on 19.11.2016 and 20.11.2016 at my residence at Kedia House, Benar Road, Ganesh Nagar, Near Nadi Ka Phatak, Jhotwara, Jaipur i) In reply of the Q. No. 4 of the statement, I confirmed to my reply given in respect to Q. No. 18 and 19 of my statement recorded at our Sanganer Office wherein I accepted that the undisclosed payment of ₹ 5 Crore was made to Shri Jaisingh Yadav for purchases of agriculture land. Actually no such undisclosed payment was made by me or our business concerns or my family members and whatever payment was made against purchases of land from this person is duly recorded in regular books of accounts. During the course of survey it was said to me by the survey party that some documents has been found from the possession of Shri Jaisingh Yadav which proves that the undisclosed payment of ₹ 5 Crore has been made against land purchase from this person, therefore under this misrepresentation of fact by survey party and under fear and mental tension, I admitted the undisclosed payment of ₹ 5 Crore to Shri Jaisingh Yadav for purchases of agriculture land. Actually no undisclosed pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment. The department also carried out search on seller of land Shri Jai Singh Yadav and no evidence was also found during the search over Shri Jai Singh Yadav regarding undisclosed payment of ₹ 5,00,00,000/-. 51. From the record, we also found that the admission of undisclosed payment against the purchase of the land is not supported even by the market rate of land in the area. Further it is relevant to mention here that the land so purchased from Jai Singh Yadav is situated in Village Badaram, Patwar Halka Sirsi, Teh. Jaipur. The land is 400 mts. inside from road and about 2 Km far from Jaipur Express highway flyover on Kalwar Road. The total area of land so purchased is 3 Bigha and 18 Biswa. The total cost of the land as per books of accounts is ₹ 3,31,85,000/- and if the alleged undisclosed payment of ₹ 5 Crore is added in this amount, the cost of the land becomes ₹ 8,31,85,000/- i.e. 2.13 crore per bigha which is impossible in this area. The comparison of market rate in the main highway i.e. main Jaipur Express High Way, Ajmer Road, Tonk Road, Sikar Road, Agra Road is as under: - Location ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the if the cost is derived by adding the alleged unaccounted payment made for purchases of land the same is much more to sale rate. In view of the above, it was argued that no would like to purchase the agricultural land which if developed into a colony, would give the sale of the plots at much lesser value than the gross. 53. In support of the contention that no addition can be made merely on the basis of statement, reliance was placed on the decision of Hon ble Supreme Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala Another (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can t be said that it is conclusive. It is upon to the assessee to show that it is incorrect. Hon ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.) has held that admission in statement during search is not conclusive proof of fact and can always be explained. Hon ble Rajasthan High Court in the case of Mantri Share Brokers PL (96 taxmann.com 279) have held as under: Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Burden of proof) - Whether where except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB (1) read with Section 158B (b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desh) it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-section (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity of being heard before an order is made which will have adverse civil consequences for parties effected. Rajesh Jain Vs. DCIT 100 TTJ 929 (ITAT, Delhi 'A' Bench) Search and seizure - Block assessment - Retraction of statement - Addition of ₹ 25 lacs made solely on the basis of confessional statement of assessee that he earned the said amount in the last ten years was not justified - Confessional statement should be corroborated with some material to show that assessment made is just and fair. KRISHNA TERINE (P) LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX, ITAT, AHMEDABAD D BENCH 56 DTR, ITAT 395 Held that it appears that both the additions have been made by the AO because the assessee in the statement under s. 132(4) of the IT Act made surrender of the above amounts but later on did not disclose the same in the return of income filed for the block period. However, on consideration of the orders of the authorities below, we are of the view that no evidence or material is discussed to show any incriminating material recovered during the course of search to make the above additions. The Tribunal in the first round of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It was pointed out that overenthusiastic aiding parties would often coerce a surrender . As a result, all follow up investigations are distracted and generally brought to a stand still. Since the surrender is not backed by adequate evidence, the tax evader invariably retracts from the statement of surrender by which time it is too late for the Department to resume investigations. Similarly, where adequate evidence is indeed found, a surrender is not necessary to establish tax evasion. Therefore, the Task Force recommends that the CBDT must issue immediate instructions to the effect that no raiding party should obtain any surrender whatsoever. Where a tax payable desires to voluntarily make a disclosure, he should be advised to make so after the search. As a result, the taxpayer will not be able to allege coercion and successfully distract investigations. All cases where surrender is obtained during the course of the search in violation of the instructions of the CBDT, the leader of the raiding party should be subjected to vigilance enquiry. Further the task force also recommends that statements recorded during the search should be video recorded. This will indeed add to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing authority requested to provide the copy of statement in case the same were to be used against him. Till such time the copy of statement was not provided, assessee entertained a bonafide belief that in the absence of any documentary evidence or corroborative evidence having been found as a result of search, such statement would not be used against him. If such statements were to be used, the department was under legal obligation to have provided the copy thereof to the appellant. It is only on persistent efforts of the appellant, copies of statement were provided only on 13.3.2009. The appellant after understanding the legal implication of such statement made a valid retraction as the surrender was not supported by any corroborative evidence. The affidavit filed in this regard is laid on assessee s paper book pages 64 to 68. This affidavit has carefully been perused. After the affidavit was filed before the assessing authority, he remained silent on the face of it and carried no enquiry thereon to verify the correctness thereof. The assessee was also not cross examined on the point of retraction nor was required to produce any documentary evidence or any other evidence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied) The reliance placed by the assessee on the judgment by Hon'ble Apex Court in the case of Pullangode Rubber Produce Co. Ltd. (supra) and Hon'ble Rajasthan High Court in the case of Ashok Kumar Soni (supra) are well placed as the assessee has successfully demonstrated that the admission made during the course of search is not correct. The ingredient for retraction of statement made during the search, therefore, stand duly satisfied as the assessee is found to have made retraction within a reasonable time immediately after the copies of statement were provided to him. Furthermore, there being no material or evidence on record to show that appellant has carried any business outside the books for sale and purchase of items of pharmaceutical companies that could give rise to income to the extent of ₹ 30,00,000/-, addition merely on the basis of such statement which stood validly retracted could not have been made. On similar basis and reasoning in the case of Suresh Medical Agency another assessee of the group who were also searched on the same day along with this appellant, vide our order dated 21.8.2013 in ITA No. 443/JP/2012 have found the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby the owner of the land Shri Daya Kishan sold the said plot of land to third party Mrs. Nirmala Devi and, therefore, once the said plot of land was sold by the owner to third party and not to the assessee or his son, then the question of investment of ₹ 5,75,000/- which was to be paid at the time of sale deed does not arise. The AO has made the addition only on the basis of surrender made by the assessee during the course of survey though there was an agreement found during the survey action. As per the said agreement only ₹ 1,00,000/- was found to be paid by the son of the assessee as an advance for purchase of the plot of land and, therefore, to that extent the addition can be made if assessee has not surrendered the amount. Since the assessee has already surrendered the amount of ₹ 1,00,000/-, therefore no further addition can be made on account of investment in the land when the said agreement found during the course of survey was not given effect by the parties and the plot of land was sold by the owner to some third party vide sale deed dated 18th May, 2012. Hence, when the facts were brought on record by the assessee regarding the sale of plot of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, the surrender is not relatable to any material. In the case of assessee no any agreement, receipt, material was found to corroborate the surrender made in survey. Neither such material was found from the possession of assessee group nor from the possession of Shri Jai Singh Yadav group where the search was taken place on the same day. Further, the surrender was obtained under duress, coercion, and in the atmosphere of fear. Further, in view of several discrepancies pointed out by the assessee in recording of the statement, the recording of statement is against the principle of natural justice vitiated in law and no cognizance of these statements should be taken. c) 2019 (4) TMI 1120 - Rajasthan High Court in the case of M/S Bannalal Jat Constructions Pvt. Ltd. Versus ACIT, Central Circle-2, Ajmer In this case a search was conducted at the business/residential premises of Shri Banna Lal Jat, the Director of appellant company - M/s. Bannalal Jat Constructions Private Limited, on 10.10.2014, in which he was also operating his proprietary concern in the name of M/s. Bannalal Jat Contractor. During the search proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PB pg 68-69) was found and impounded. The finding of the AO is at page 10 of the assessment order wherein she held that The reply of the assessee has been considered but not found acceptable as the names and the amounts involved are categorically recorded in the said documents. Thus, the documents cannot be called deaf and dumb. Further, on top of both the pages Today s collection is clearly written. This clearly shows that the amounts written on these papers were actually collected by the assessee group. Further, Shri Nirmal Kumar Kedia has himself stated in his statement that this amount represents daily collection made by the sales team against sale of plots. However, the assessee has failed to prove that this amount ₹ 103.52 Lakh is reflected in the books of accounts of the assessee concern. Since, the assessee has not been able to corroborate these collections from the books of accounts, the same are prima facie undisclosed and liable to be added to the total income of the assessee The AO made the addition of ₹ 1,03,52,000/-. The assessee challenged the action of AO before ld CIT(A) regarding addition of ₹ 1,03,52,000/- against alleged unaccounted sales. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounded pages Nos. 18-19 of AS-9 and argued that from examination of this document we find that no conclusion can be drawn from this paper and no evidently verification can be done from the books of accounts. From examination of this paper your honour s will find that on this paper: - a) No name of the assessee of assessee group is mentioned, therefore it is not subject to verification that from whom its pertaining. b) No date has been mentioned on this paper so to examine that from which date it pertain. c) No mode of receipt of payment is mentioned i.e. received through cash or cheque. Therefore, in absence of above essential detail no conclusion can be drawn from this paper and till that this paper is a deaf dump paper and no addition can be made on the basis of this paper. The AO as well as CIT (A) presumed that the noting made on these papers are in relation to unaccounted receipts of the assessee as the assessee failed to corroborate these payments from books of accounts. However in absence of any date or details regarding collection made i.e. how much the receipt was through cheque, how much the same was through ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the statement of Shri Nirmal Kumar Kedia on the basis of which the CIT (A) is drawing the negative interference and holding that the noting on these documents is not dumb. The AO made the addition on the basis of deaf dump papers and the same was also partly confirmed by CIT (A) without proving the same to be real. From examination of the assessment order, as well as seized document and finding of CIT(A) we find that the entire additions were made on the basis of presumptions, assumption, without having any material or irrelevant material. The submission and documents submitted by the assessee completed ignored and rejected without any cogent reason. The assessing officer merely disbelieved the explanation/statements given by the assessee and has converted good proof into no proof. Hon ble Justice Hidayatullah of the Supreme Court in the case of Sreelekha Banerjee Vs CIT [1963] 49 ITR 112 (SC); 120 observed that the Income Tax Department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof . Hon ble Supreme Court in the case of Uma Charan Shaw Bros Co Vs CIT 37 ITR 271 has held that the surmises and conjectures, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndwriting of that person, on such document by itself cannot prove the contents of the document. These are the findings of fact recorded by both the authorities i.e. CIT(A) and the Tribunal. 15. Similarly, in the present case, as already held above, the documents recovered during the course of search from the assessee are dumb documents and there are concurrent findings of CIT(A) and the Tribunal to this effect. Since the conclusions are essentially factual, no substantial question of law arises for consideration . ii) Commissioner Of Income Tax Vs. Girish Chaudhary High Court Of Delhi (2008) 296 ITR 619 (Del) Premises of M/s I.G. Builders Promoters (P) Ltd. in which the assessee is a Director and of the assessee were searched on 18th Jan., 2000 and a document marked as Annex. A-37 was found and seized. The said document contained the following entries : Annexure A-37 (Page 13) Cash RB- 31.50 Ch. 9.50 41.00 16.50 57.50 31.50 16.50 48.00 The Tribunal hold this document as dumb document. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... official found a slip containing some figures. This piece of paper claimed to have been recovered at the time of search contains figures under two columns. In one column, the total of these figures comes to ₹ 17,25,000 from 31st May, 1989, to 8th Dec., 1989, and in the other column, the total of these figures comes to ₹ 22,12,500. An addition of ₹ 22,12,500 on the basis of figures on a small piece of paper in respect of purchase of Plot No. B-4, Govind Marg, Jaipur was made by the AO. This plot B-4, Govind Marg, Jaipur, has been purchased jointly by Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar, HUF. Held that no addition on account of entries on a piece of paper which is claimed to have been found at the time of search, can be made, treating the figures as investment for purchase of plot No. B-4, Govind Marg, Jaipur in the hands of Dr. Tomar, Dr. Mrs. Tomar and B.S. Tomar HUF. iv) MAHAAN FOODS LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX ITAT, DELHI C BENCH (2010) 123 lTD 590 Held that although the contents of the relevant seized documents show that the amounts mentioned therein relate to some expenditure, in the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they cannot be considered for making any addition. This is a settled principle of law that any document or entry recorded in those documents should be corroborated with a positive evidence. Here in the present case nothing has been corroborated or proved that assessee was dealing in money lending business. vii) N.K. MALHAN vs. DEPUTY COMMISSIONER OF INCOME TAX* (2004) 91 TTJ (Del) 938 The findings of Hon ble Tribunal was as under:- We have perused the aforesaid explanation and the seized document placed at assessee s paper book-I pp. 48 and 50. The document does not state of any date or the year against the entries written therein. It does not show whether the assessee has made or received any payment. It also cannot be deciphered from the said documents that the entries therein pertain to the block period. The AO also did not bring on record any material to show that any investment has been made by the assessee in any chit fund company or otherwise. The document found and seized might raise strong suspicion, but it could not be held as a conclusive evidence without bringing some corroborative material on record. The doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total of the right side of the slip without supplying the figures any language to indicate their meanings. In the case of such a dumb document, the provisions of s. 132(4A) do not permit anyone to presume that the total of the figures of right side of the slip represents the assessee's income. The presumption at the most is attracted to the figures and a further presumption that they represent the income of the assessee is not permissible under s. 132(4A). When a dumb document, like the present slip, is recovered and the Revenue wants to make use of it, it is the duty of the Revenue to collect necessary evidence which may provide an acceptable narration to the various entries. The evidence collected should be such that any reasonable man would accept the hypothesis advanced by the Revenue that the figures written on the right side of the slip represent incomes earned by the assessee. It was conceded that no such evidence has been brought on record. Further, the Revenue has given no adjustment to the entries on the left side of the slip. Therefore, the slip in question did not indicate that the figures represents receipt of income to that extent by the assessee and it was not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t received appears but the date and mode of receipt are not mentioned. The AO has also noted that cheques received as per this diary are duly recorded in the books of account. These accounts cannot be treated as reliable and properly maintained for another reason also. The next year s accounts give no indication regarding movement of amount. The parties show drastic reduction in the balances but how the payments were accounted for is not forthcoming from these entries. The Authorised Representative has invited attention to the fact that the AO did make enquiry, which the assessee has not disputed. However, the AO has not brought on record the result of such an enquiry. The only plausible conclusion, under these circumstances, would be that the findings of such an exercise was favourable to the assessee. Coming to the applicability of provisions of s. 132(4A), the assessee has explained the circumstances under which his employee maintained these documents in the premises of MDSS. Thus, the ownership is not disputed. However, there is no presumption about the earning of income. The assessment is made under Chapter XIV-B. The AO cannot make addition on the basis of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issaria Bros Vs ACIT (ITA No. 179/JDPR/1998) 22 Taxworld 684 ITAT Jaipur It was held that addition cannot be made on the basis of vague figures found noted on seized loose paper without proving that the alleged amount are receipts and income of the assessee. xiv) ITO Vs Mannalal Jhalani (ITA No. 250 TO 260/JP/1998) 22 Taxworld 551 ITAT Jaipur. It was held that addition cannot be made simply recovery of some papers found and seized during the course of search without making necessary verification and examination. xv) Ashwani Kumar Bhardwaj Vs DCIT 21 Taxworld 358 ITAT Jaipur. It was held in para 29.6 that no addition can be made on the basis of deaf and dumb documents. xvi) Mohd. Illias Choudhary Vs DCIT 25 Tax World 394 ITAT Jaipur. It was held that the addition cannot be justifiably be made as undisclosed income on the basis of certain entries found recorded on a seized paper without making any inquiry and investigation and without examining the assessee. xvii) Moonga Metals Pvt. Ltd., Vs. ACIT (All.) 67 TTJ 247 Burden is on the revenue to establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings of Hon ble ITAT was as under:- 25. In the light of above discussion and by considering the totality of facts and circumstances of the case, we are of the view that had there not been any search/survey, these illegal transactions might have not seen the light of the day. In the absence of books of account, the AO applied s. 145 and estimated the net profit rate at 10 per cent. We uphold the application of s. 145 for the reasons mentioned in the AO's order. However,.the addition is looking on higher side due to the peculiar facts and circumstances of the case. Therefore, we modify both the orders of lower authorities and restricted the addition by keeping in mind the doctrine of equity, justice and good conscious to ₹ 60 lakhs (sixty lakhs) only. Thus, the assessee will get ad hoc relief of ₹ 12,07,770 (twelve lakhs seven thousand seven hundred seventy) from the order of AO. Thus, ground Nos. 1 and 2 are partly allowed in favour of the Department. c) Further, Hon ble Gujarat High Court in the case of CIT vs. President Industries, (2002) 258 ITR 654 (Guj.), held that the entire sales could not be added as income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Seized Material APB Page No Addition deleted by CIT(A) Discussion of page of AO order G-3 Exh-A-5/page 1 Page 67 2,81,506 Pg 7 8 (Para 6.3) G-4 AS-1/P 26 70 6,99,000 Pg 11 (Para 8.3) G-5 AS-6 /P 28, 29 AS-8 /P 7 71, 72 73 8,03,001 Pg 12 13 (Para 9.3) G-6 Exh 1/10-12 74,75 76 42,07,083 Pg 14 (Para 10.3) G-7 Exh -10 Ann-A/p 54 to 56 77 to 80 33,14,580 Pg 16 (Para 11.3) 61. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of search is dealt in detail in ACIT Vs. Satyapal Wassan 295 ITR (AT) 352 the Hon'ble ITAT Jabalpur has discussed as under: 12. Let us now examine how all these transactions are necessary for the purposes of levying tax on the basis of a seized document. 13. Section 4 relates to charge of Income-tax. It reads as under: Section 4(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person: Provided that where by virtue of any provision of this act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under Sub-section (1), income- tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act From a reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupee. The Assessing Officer did not carry out any enquiry either during the course of search or during the course of assessment proceedings to find out the nature of transactions and the period in which those transactions were carried out; he had simply presumed that the figures were advances without there being any material on record to support such presumption. The Assessing Officer had drawn inferences, made presumptions, relied on surmises and thus made unsustainable additions. 22.3 Applying the basic principal as laid down by the Hon'ble tribunal I am of the view no adverse inference can be drawn for the documents listed for Ground No. 3, 5, 6,7 8. Bare perusal of copy of document indicated that these are dumb document as no name, dates or narration written which could makes us infer that transaction on these documents are those which have escaped assessments. Accordingly Ground No. 3, 5, 6, 7 are allowed. Consequently the AO is directed to delete the addition of ₹ 2,81,506/-, ₹ 6,99,000/-, ₹ 8,03,001/-, ₹ 42,07,083/- ₹ 33,14,580/-. 62. We have considered the rival contentions and carefully gone throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. No any plot No. or name of the scheme has been written over this paper by which it can be conclude that these papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. There is no reference in this paper that whether the same regarding the revenue of expenses . There is no reference of Cash on this paper as alleged by the AO in the assessment order, therefore from the examination of this paper it cannot be presumed that this paper is containing the unaccounted transactions. 65. It is clear that the basis details which are required for verification of transactions is not available on this paper, therefore the same is not subject to verification from regular books of accounts and in absence of that the same can only be treated rough noting, deaf dump paper. Had this paper would be having any relation with the real business transaction of the assessee group than there should have been some noting/hints regarding such business transaction but the same is missing in the seized document, therefore the noting on this paper is nothing but only rough noting from which no conclusion can be drawn and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mohit Vijayvergiya. No name of any person is mentioned over this paper. From this paper it cannot be drawn any conclusion that this paper pertaining to the assessee or regarding to sales made by the assessee or assessee group. No name of any buyer or name of the scheme has been written over this paper by which it can be conclude that this papers pertaining to business transaction of the assessee group. No date has been mentioned on this paper. 69. We further observe that the assessee has only one scheme Kedia Kingdome wherein size of plot no 40 is 164.21 sq mt as against 196.94 mentioned in the seized paper. Similarly, size of plot no 127 is 115.52 sq mt as against 169.62 mentioned in the seized paper. Similarly, size of plot no 122 is 135.35 sq mt as against 100 mentioned in the seized paper. Most interestingly, plot no 123 mentioned in the seized paper does not exist in the scheme of the assessee. The detail as per books of account of the assessee in respect of sales of plots No. noted on the paper seized from the residence of Shri Mohit Vijayvergiya is as under: - Plot No. and size as per books of account of assessee/Map approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the assessee group. It is admitted position of law that no addition can be made in the hands of the assessee on the basis of documents found from the possession of some other one without proving the relation of such paper and transaction recorded therein with the assessee which has not been done in the instant case. No any narration has been made to visualize that the notings made on this paper pertaining to business transactions of the assessee and that any consideration against the same was received to the assessee. 70. It was also argued by the ld AR that the presumption u/s 132(4A)(ii) is only against Shri Mohit Vijayvergiya and the said presumption cannot be drawn against the assessee. Reliance is placed on following decisions:- i) CIT v. K.K. Abdul Kareem [ 1996] 88 Taxman 323 (Kerala). Presumption u/s 132 (4A) can arise only if it is established that the paper was in the control on or in the possession of the assessee ii) Chandalal Kalyanmal Vs ACIT 21 Taxworld 125 ITAT Jaipur Bench in ITA No. 385/JP/ 1992 order dated 3/2/1998. Held that on the basis of paper recovered from brother of partner, addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot rebutted the contents of the affidavits. The contents of affidavits, which are not vague should be accepted correct. Reliance is placed on the following decisions:- (i) Mehta Parikh Co v CIT [1958] 30 ITR 181 (SC) (ii) Dilip Kumar Rao Vs CIT (1974) 94 ITR 1 (Bom); (iii) Malwa Knitting Works Vs CIT (1977) 107 ITR 379, 381 MP 73. With regard to addition of ₹ 33,14,580/- as per Ext.-10 Annexure-A, we observe that the assessee gave the following explanation to AO: - This is rough estimates made regarding Sanganer office renovation expenses. Actually no renovation work was carried out in the office. Further the paper pertaining to the period prior to incorporation of assessee firm. From the examination of the document we found that the scribbling on the paper are in relation to some renovation work which was to be carried out but the same was actually not carried out by the assessee group. The assessee group was planning to carry out some renovation work, therefore the staff of the assessee group send the tentative estimation for such renovation work. It is relevant to mention here a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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