9911796707
TMI Blog2019 (6) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 128/JP/2019 and Revenue's appeal being ITA No. 285/JP/2019 (A.Y. 2015-16). In these cross appeals, the assessee and the revenue have taken following grounds of appeal: Grounds of assessee's appeal: "1. On the facts and in the circumstances of the case and in law the ld. CIT (A) erred in confirming the addition of Rs. 6,29,260/- on a/c of brokerage @ 4% alleged to be earned on sales of plots noted on page No. 1 to 6 of exhibit 9 of Annexure AS seized from Shop No. 8,9,10, Ganesh Nagar-VIA, Murlipura, Jaipur without establishing 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 Rs. 86,81,500/- made by the A.O. on account of unaccounted business income. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed in the hand of appellant for the following reasons: 1. That in the statement itself Shri Nirmal kedia has indicated that appellant is not the buyer or seller in these documents. Infect there are buyers and seller who are well identifiable. The mere presence of sale deed does not conclude that these are plot which are 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 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 various persons in the scheme naming "Ganesh Vihar Vistar" through Shri Nirmal & Nitin Kedia on which the brokerage of Rs. 4,80,000/- was receivable but due to disputes the sub-broker/party refused to pay brokerage. Ganesh Vihar scheme does not belong to assessee but this scheme was developed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 Name of allotee i.e. buyer as per impounded document Documents submitted during assessment proceedings 1 Suryaprakash Saini Sarashree Suvhadarshini * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 107-108) * Copy of registered sales deed dated 28.10.14 between owner and buyer (Copy at PB Page 109-116) 2 Manoj Kumar Saini Manoj Kumar Jaiswal * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered sales deed dated 04.04.14 between owner and buyer (Copy at PB Page 226-233) 35 Mukesh Kumar Sharma Vimlesh Kumar * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 234-235) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 236-242) 36 Hanuman Sharma Rajendra Singh * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 243-244) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 245-253) 37 Ankur Patni Sandeep Kumar Jassal * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 254-255) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 256-263) 38 Vikrant Narendra Kumar * Copy of allotment letter of plot on the name of owner 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) Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na 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 registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 400-408) 17 Sonu Direct (Finance) * Documents of this plot were not available with assessee so the same did not submitted. 18 Vishal Mittal Direct (Finance) * Documents of this plot were not available with assessee so the same did not submitted. 21 Sunil Jain Pranav Kumar Mishra * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 409-410) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 411-419) 22 Ashok Saini Pranav Kumar Mishra * Copy of allotment letter of plot on the name of owner of year 1995 (Copy at PB Page 420-421) * Copy of registered sales deed dated 19.10.14 between owner and buyer (Copy at PB Page 422-429) 23 Goverd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to acting as a broker in the sales of such plots. The same fact is verifiable from the documents regarding ownership of plots and its sales submitted by the assessee. 11. We also observe that on page 4 to 5 the summary of the transactions mentioned at Page 1 to 3 is mentioned for the purpose of reconciliation of transactions. Thus, the noting made on page No. 4 to 5 is not different but the same is summary of page 1 to 3 and the transactions noted on these papers are not separate transaction. 12. We also observe that from the seized documents as well as documents submitted by assessee during the course of assessee proceedings its well proved that the assessee was neither owner/seller and nor buyer of the plot. These plots were being owned by the respective owners of plot since 1995 and the same were sold by them through registered sales deeds during the year under consideration. In this regard it is relevant to mentioned here that all the plots mentioned in these sheets were sold by the uniform rate. The sales consideration in some of the cases were received entirely through a/c payee cheque, and in some cases partly through cheque and partly through cash and in some cases entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions noted on page 1 to 3. The page No. 4 to 5 is reconciliation statement of the transaction mentioned at Page 1 to 3 thus the same tantamount to the double addition. 17. In the case of the assessee there is no positive material available on record to form a reasonable belief that the cash component in sale consideration of plots which were owned by third party was income of the assessee. In this regard reliance is placed on the decision of Hon'ble Gujarat High Court in the case of Vinodbhai Samjibhai Ravani v/s Deputy Commissioner of Income Tax, Central Circle-1 2017(3) TMI 114 (Copy at PB Page 496-500) wherein in para 7.2 of the order the court observed as under: - "7.2. However, it is required to be noted that the respective petitioners assessee were never owners of the land in question. It is also required to be noted that in fact the subsequently sale deeds are executed by the original land owners in favour of one Shri Popatbhai Kakadia. It is an admitted position that the respective petitioners assessee have never executed any sale deeds. Therefore, nothing is on record that any sale consideration was received by the respective petitioners assessee. Therefore, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 21. As per the ld AR, the addition so sustained by ld. CIT (A) is based only on the basis of presumption and assumption without considering the seized documents in the right & judicial perspective. From examination of the assessment order as well as order of CIT (A) it will reveal that the entire addition was made on the basis of presumptions, assumption, without having any material to prove the same to be correct. The submission and documents submitted by the assessee completed ignored and rejected without any cogent reason. 22. Our attention was invited to the statement of Shri Nirmal Kumar Kedia (whereon consent was given by the assessee too) recorded by the AO during the course of assessment proceedings on 23.02.2018, relevant question No. 22, and in such statement, it was categorically denied of receiving any brokerage on dealing of these plots. However, these statements have not considered and additions was sustained solely on the basis of presumption and assumption and without having any material. Ld. AR has further contended that admittedly the assessee was acting as a broker in the transactions but as stated in the reply submitted to the AO as well as CIT (A) due to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 5,00,00,000/- made by A.O. on account of undisclosed income. 2. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of Rs. 71,42,880/- by applying GP rate on account of unaccounted business income. 3. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of Rs. 2,81,506/- made by A.O. on account of unaccounted business income. 4. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of Rs. 6,99,000/- made by A.O. on account of unaccounted income from sale transactions. 5. Whether on the facts and in the circumstances of the case and in law the CIT(A) is justified in deleting the addition of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the very same premises. 29. Addition of Rs. 6,99,000/- was made as per page No. 26 of AS-1, addition of Rs. 8,03,001/- was made on the basis of page No. 28 & 29 of AS-6 and page No. 7 of annexure-8, addition of Rs. 42,07,086/- was made as per notings found on page No. 10-12 of AS-1. The A.O. has also made addition of Rs. 33,14,580/- on account of alleged unexplained expenditure as per page No. 54-56 of Annexure-10. Thus, out of total addition of Rs. 6,96,57,173/-, the ld. CIT(A) has deleted the addition of Rs. 6,64,48,053/- whereas he has upheld the addition of Rs. 32,09,120/-. Against the said order of the ld. CIT(A), both the revenue and the assessee are in further appeals before the ITAT. 30. It was vehemently argued by the ld CIT-DR that after considering all the facts and circumstances, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent). Then how could be his availability at Kedia House on 20-11-2016 from 9.00 AM to conclusion of statement on 20/11/2016. Shri Nitin Kedia could not be present at two places at same time. The statement at Evershine Tower, Vaisali Nagar shows that Shri Nitin Kedia was present at Vaisali Nagar in between 5.30 PM on 19/11/2016 to 21-11-2016 (up to conclusion of statement) whereas the statement at Kedia House shows that Shri Nitin Kedia was present at Kedia House during 9.00 AM on 20/11/2016 to conclusion of statement. How it can be possible to record the statement of Shri Nitin Kedia at Kedia House on 20/11/2016. (c) Other discrepancies in statement 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19-11-2016 at residence situated at Kedia House near Nadi ka Phatak, Murlipura, Jaipur. Statement of Shri Nirmal Kumar Kedia started at 9.00 AM at residence on 19-11-2016 and suspended at 10.00AM (APB page 39-40). The department also carried out survey at office situated at Sanganer (about 30 Km from residence) on same day. Shri Nirmal Kumar Kedia was taken there by the officers of the department and his statement was started to record at 6.40 PM on 19-11-2016 at Sanganer office which continued upto 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 Rs. 5 crores in just in first effective question of the statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 i.e. 22.01.2018 the assessee filed the affidavit (Copy at APB Page 97-107) before ld. AO to retract the statements. The relevant para of the affidavit is as under: - (ii) In reply to the Q. No. 4 and 5 of the statement I accepted to having been earned undisclosed income of Rs. 20 Crore from sales of plots/buildings by my conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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 assessee has undisclosed income. The AO herself has made addition for the balancing amount merely on confession statement. Further, in confession statement the person wise and year wise bifurcation was not given by the assessee. Further, the confession statement is not in relation to incriminating documents. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such 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 cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, 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 characterized as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence should not be treated as conclusive evidence against the maker of the statement..." Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh) "...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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 reading of section that the principles of natural justice are excluded, the provision of section should be construed in manner incorporating principles of natural justice and quasi judicial bodies should generally read in the provision relevant section a requirement of giving a reasonable opportunity 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the problem of confessions and surrenders during its studies and deliberations in para 3.27 and the same is reproduced as under: ''A cross section of people cutting across 4trade and industry complained of a high handed behaviour of raiding parties particularly while recording a statement. 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 par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's premises on 27.8.2008 and in the statement assessee made surrender of income of Rs. 30,00,000/- on account of income earned from trading of items in pharmaceutical business outside the books. The appellant, however, had been approaching the authorized officer to provide copy of statement so obtained in proceedings under section 132 of the Act. When these statements were not provided, the appellant vide letter dated 3.10.2008 addressed to the authorized officer and another letter dated 18.12.2008 addressed to the assessing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled 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 Appellate Assistant Commissioner of Income-tax or by the Income-tax Appellate Tribunal, the assessee should have been called upon to produce documentary evidence, or, at least he should have been cross-examined to find out how far his assertions in the affidavit were correct."(emphasis 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 outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 5,75,000/- which was not offered by the assessee to tax in the return of income but was surrendered during the course of survey proceedings. The assessee challenged the action of the AO before the ld. CIT (A) but could not succeed. 3. Having considered the rival submissions and the relevant material on record, we note that the assessee produced a sale deed dated 18.05.2012 whereby 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 Rs. 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 Rs. 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 Rs. 1,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table 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. 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 at residential premises of Shri Bannalal Jat, a cash worth of Rs. 1,21,43,210/- was found and inventorised as per Annexure CF of Panchnama dated 11.10.2014. He, in his statement, recorded under Section 132(4) of the Income Tax Act, 1961 (for short 'the IT Act') during the course of search and even subsequent statement recorded under Section 131 of the IT Act, admitted the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee it has vehemently argued that the settled position of law is that addition cannot be made simply on the basis of statement of the assessee alone. The same has to be substantiated and corroborated either by post search enquiries or by linking with the material found in search with the statement of the assessee. I find that AO has proceeded to make an addition merely on the basis of statement given by appellant. 8.3 It is a settled law that statement alone cannot be treated as incriminating material for the purposes of making addition for assessment completed u/s 153A / 143(3). It has been held in many judgments that mere statement u/s 132(4) or u/s 131 is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or the statement must be made relatable to material by subsequent inquiry/investigations. Hon'ble High Court of Rajasthan in the case of Mantri Share Brokers PL (96 taxmann.com 279) have held as under: Section 698 of the Income-tax Act, 1961 - Undisclosed investments (Burden of proof) Whether where except statement of director of assessee-company offering additional income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant 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 based on the statement recorded...." Though the above principle is laid down in relation to assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 who made such statement.." Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made in the hands of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee wise or year wise bifurcation of undisclosed income is given in the statement. The assessee confirmed this surrendered in his statement u/s 131 recorded at Sanganer office during the course of survey u/s 133A of the Act recorded on 20-11-2016 at 11.30 PM in answer to question no. 57 & 58. 35. Similarly, the search party recorded the statement of Shri Nitin Kedia u/s 132(4) at Kedia House on 19-11-2016 at 10 AM which was temporarily suspended at 11 AM of 19-11-2016. The statement was resumed on 20-11-2016 at 9 AM starting from question no. 4. This was again suspended for rest after recording the statement up to question no 14. The statement was again resumed and Shri Nitin Kedia in question no 15 confirmed the surrender made by Shri Nirmal Kedia. Post search statement recorded on 02.12.2016, Shri Nirmal Kedia partner of the assessee confirmed his earlier statement but here also no year wise or person wise bifurcation of undisclosed income could be given or worked out by the ADIT. Here the assessee has specifically stated that he has surrendered Rs. 20 Crore for peace and self satisfaction. 36. However, the assessee retracted the from the surrender by not disclosing the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct during the survey at Sanganer Office and was subsequently confirmed in statement u/s 132(4) at residence "Kedia House". The AO has not pointed out any material, seized document, incriminating material to support the addition. 40. From the record we also found that the department had carried out survey at 1, Gaytri Nagar-1, Main Sanganer Flyover, Tonk Road, Jaipur on 19.11.2016. During the course of survey, the survey party recorded the statement of partner of assessee u/s 131 of Income Tax Act on 19.11.2016. In answer to question No. 18 and 19 of statement the partner of assessee accepted the undisclosed payment of Rs. 5 Crore made to Shri Jainsingh Yadav for purchases of agriculture land. Regarding making the reliance by the AO on the statement of the assessee u/s 131 recorded at the time of survey u/s 133A at Sanganer Office and subsequently confirmed in statement u/s 132(4) at Kedia House, wherein he admitted the undisclosed income of Rs. 5 crores. In this regard, we found that the partners of the assessee made repeated request to ADIT, AO and other senior authorities to provide the copy of statements. As soon as the copy of search statements was received to assessee he fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 9.00 AM to conclusion of statement on 20/11/2016. Similarly, Shri Nitin Kedia could not be present at two places at same time. The statement at Evershine Tower, Vaisali Nagar shows that Shri Nitin Kedia was present at Vaisali Nagar in between 5.30 PM on 19/11/2016 to 21-11-2016 (upto conclusion of statement) whereas the statement at Kedia House shows that Shri Nitin Kedia was present at Kedia House during 9.00 AM on 20/11/2016 to conclusion of statement. How it can be possible to record the statement of Shri Nitin Kedia at Kedia House on 20/11/2016. 46. The ld AR has also pointed out the other discrepancies in the statement. He has invited our attention to the statement recorded 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The department also carried out survey at office situated at Sanganer (about 30 Km from residence) on same day. Shri Nirmal Kumar Kedia was taken there by the officers of the department and his statement was started to record at 6.40 PM on 19-11-2016 at Sanganer office which continued up to 11.50PM on 19-11-2016. 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 Rs. 5 crores in just in first effective question of the statement on 20/11/2016 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. Here in very first question the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has all the rights to have a copy of any statement that is used against him by the department. In the instant case, 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 i.e. 22.01.2018 the Shri Nirmal Kumar Kedia Partner of assessee filed the affidavit (Copy at APB Page 81-86) before the AO to retract the statements. The relevant para of the affidavit is as under: - "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 Rs. 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 payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material. The income tax department carried out search/survey and seizure operations over the assessee group and during the course of search/survey no evidence/documents was found to the department which shows that the assessee made this much undisclosed payment Except to statement of partner of assessee which was given for the reasons mentioned hereinabove and retracted subsequently there is no evidence with the department to prove that the assessee made this much undisclosed 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 Rs. 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 tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 statement of director of assessee-company offering additional income during survey in his premises, there was no other material either in form of cash, bullion, jewellery or document or in any other form t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 based on the statement recorded...." Though the above principle is laid down in relation to assessment of block period u/s 158 BC of the Act, the same was also applied in respect of assessment u/s 153A by Delhi High Court in case of Best Infrastructure (84 Taxmann.com 287) when it was held thus: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 who made such statement.." Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made in the hands of the assessee merely on the basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above-mentioned case relied on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proceedings has already directed to examine the case on the basis of material seized, material available on record and books of account. In the absence of any specific findings as per the direction of the Tribunal dt. 31st May, 2005 and as per law for the block assessment noted above, before making the addition on the above issue the AO and the learned CIT(A) should have specified as to what material was found during the course of search to make the above additions. In the absence of any proper explanation and finding in the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 confidence of the taxpayer in the impartiality of the system.'' 2.38 The Finance Minister in the budget speech for the year 2003 stated that no confession shall be obtained during search and seizure operation. The instructions were followed by CBDT by issue of a circular on the lines desired by the Finance Minister. There can be an estoppel on the issue of the facts but there cannot be estoppel on the principle of law. It is not the case of the revenue that the assessee was not disclosing the amount received as a result of retirement from the firm. The assessee obtained the legal advic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Assessee was, therefore, entitled to assume that the income tax authorities were satisfied with the affidavit as sufficient on this point. The Hon'ble Allahabad High Court in the case of Sohan Lal Gupta vs. CIT (1958) 33 ITR 786 (All.), as also put to the parties during the course of argument, has made elaborate discussion on the evidentiary value of the affidavit. The relevant passage from the aforesaid judgment at page 791 of the report is reproduced as under :- " The most important points on which the Tribunal relied, is that mentioned at No. 2, viz., that, according to the Tribunal, the assessee had not satisfactorily established that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any business outside the books for sale and purchase of items of pharmaceutical companies that could give rise to income to the extent of Rs. 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 retraction made as valid and also deleted the addition. We, therefore, find no factual or legal justification in sustenance of addition by Ld. CIT (A) in this regard. As a result, the addition sustained by Ld. CIT (A) is deleted and ground no. 1 raised in appeal is allowed." Hon'ble ITAT Jaipur Bench in the case of Ashok Kumar Lakhyani vs DCIT ITA No 30/JP/2018 order dated 24/07/2018 held that "We have heard the ld. A/R as well as the ld. D/R and considered the relevant material on record. The assessee is engaged in the business of trading of Fertilizers and pesticides. A survey under section 133A of the I.T. Act was carried out at the business premises of the assessee on 19th December, 2012. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs. 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 to the third party, then the statement recorded under section 133A which is contrary to the actual facts, cannot be a basis of addition. Accordingly, in the facts and circumstances of the case, the addition made by the AO is not sustainable in law and the same is deleted." The following decisions of Hon'ble Rajasthan High Court is distinguishable on facts. Therefore the addition cannot be sustained on the basis of the following decisions:- a) 2018 (11) TMI 953 - Rajasthan High Court Pr. Commissioner Of Income Tax (Central), Jaipur Versus Shri Roshan Lal Sancheti, Prateek-13 In this case in the search, on the basis of seven loose papers were seized on which the assessee had written various amounts showing undisclosed investment in construction, purchase and advances the assessee agreed to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 at residential premises of Shri Bannalal Jat, a cash worth of Rs. 1,21,43,210/- was found and inventorised as per Annexure CF of Panchnama dated 11.10.2014. He, in his statement, recorded under Section 132(4) of the Income Tax Act, 1961 (for short 'the IT Act') during the course of search and even subsequent statement recorded under Section 131 of the IT Act, admitted the same as undisclosed income of the appellant-company. However, subsequently while filing the return of income for the relevant assessment year, the appellant-company did not offer the said undisclosed income to tax. Therefore, in this case, surrender was backed by cash found during the search. But in the case of 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 Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee challenged the action of AO before ld CIT(A) regarding addition of Rs. 1,03,52,000/- against alleged unaccounted sales. The ld CIT(A) confirmed the addition of Rs. 32,09,120/- by applying the GP rate of 31% of total amount of Rs. 1,03,52,000/- noted on Page No. 18 & 19 of AS-9 by holding that the same as undisclosed business transaction of the assessee. Thus, the ld CIT(A) confirmed the addition of Rs. 32,09,120/- and deleted the addition of Rs. 71,42,880/-. 56. Against the above order of the ld. CIT(A), both the assessee and the revenue are in appeals before us. We found that the ld. CIT(A) has deleted the addition of Rs. 1,03,52,000/- but upheld addition by estimating G.P. @ 31%. The precise observation of the ld. CIT(A) at para 22.4 to 22.5 are as under: "22.4 However wrt Ground No. 4 which relates to addition of Rs. 1,03,52,000/- as unexplained income being the on money received by the appellant, I am not in agreement with the contention of Ld. A/R that it is a dumb document for the g reasons (a) That this documents was found from the premises of appellant where in a word 'total collection' is written in the top. (b) That the appellant in the statement recorded u/s 131 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much the same received from which party the receipts noted on this paper cannot be correlated with the entries in books of accounts of assessee group. Further the AO as well as CIT (A) presumed that the entire receipts on these papers are unaccounted receipt. This presumption is completely perverse. In this paper there is no reference of cash receipt or unaccounted receipts. The sales team of the assessee is having entire responsibility of making the collection of entire sales proceeds of sales made by entire assessee group. The collection can be through cheque as well as cash. Therefore, whatever collection made by the sales team of the assessee group on the date when this noting was made would be part of the figure of collection scrabbled by the sales team on this paper. Therefore, there is no reason to presume that collection noted by the sales team on this paper will only be part of unaccounted receipt only. It is further admitted fact that this noting would be made by the sales team to report the collection made by them on a particular date to the management, therefore the entire collection made by them either though cheque or cash would be mentioned by them on this paper and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana High Court in the case of CIT Vs Anupam Kapoor (2008) 299 ITR 179 (P & H) also held that suspicion, howsoever strong cannot take the place of legal proof. If the department considers it as income of the assessee, it is burden on the department to prove the figures appearing on the paper found in the search represents undisclosed income of the assessee. This burden is not discharged and therefore, on the basis of this paper no addition can be made. 58. The ld AR has further argued that page No 18 & 19 of Exhibit 9 of Annexure A are not speaking documents. The documents are bereft of necessary details about the year of transaction, ownership, nature of transaction, narration etc. to infer that transaction on these documents are those which have escaped income. Reliance is placed on the following decisions:- i) Commissioner of Income Tax Vs. S.M. Aggarwal High Court of Delhi (2007) 293 ITR 43 (Del) In this case the department seized documents "Annexure A-28 p. 15, - gives the details of certain handwritten monetary transactions which shows that the assessee had given a loan of Rs. 22.5 lacs on interest and earned interest income of Rs. 3.55 lacs on it. The Tribunal hold this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed income beyond a reasonable doubt. As noted earlier in the first page, total of all the five figures is 57.50 but addition of Rs. 48 lakhs was made and not of Rs. 57.50 lakhs. Why figures mentioned at second place after some gap was not taken into consideration. How 48 have been made as Rs. 48 lakhs and that too undisclosed income of the assessee is absolutely not clear from the assessment order. It was stated that Rs. 9.50 lakhs is recorded to be received through Cheque and therefore above amount was not added. It is correct that before 9.50 the word, "Ch" is written but there was nothing on record to show this amount was any way different from other figures/amounts. No attempt whatsoever was made to link any of the entry in the seized book with any transaction carried by the assessee in his capacity as Director or by his wife or M/s I.G. Builders and Promoters Ltd. to show the amount in figure as assessable undisclosed income. No proper use of seized material was made to establish that entries in the seized document relates to undisclosed income of Rs. 48 lakhs. Seized document has rightly been held to be a dump-document. It was for the Revenue to put life into it by co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ASSAN ITAT, JABALPUR BENCH (2008) 5 DTR (Jab)(Trib) 202 Held that the document was a dumb document containing no signature, no date, no unit like rupee, ton, kilogram, centimeter etc., full names of the parties were also not given, not showing whether it was position of assets or liabilities, receipts or payments, sale or purchase or advances made or loans received-AO did not carry out any enquiry whatsoever to find out the nature and period of transactions-The assessee had explained by way of affidavit that the document belonged to his brother 'D'-There was also an affidavit filed by widow of 'D' according to which the document belonged to her husband-Even if the affidavits are ignored as fresh evidence wrongly admitted by CIT(A), what is left behind is the dumb document bereft of any details without there being any enquiry by the AO to correlate the same with other documents seized, regular books of accounts, records kept by outside agencies or statements of concerned parties-The four essential components of s. 4, viz., the taxable event, the person chargeable, the assessment year in which charge is leviable and the total income are absent in the case. vi) RAKESH GOYAL vs. AS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. ASSISTANT COMMISSIONER OF INCOME TAX ITAT, CHANDIGARH BENCH (2000) 67 TTJ (CHD) 838 Held that document seized during search not being clear as to whether items were payments or receipts or some other calculations, no addition could be made on the basis of such a dumb documents. ix) ASHWANI KUMAR vs. INCOME TAX OFFICER * ITAT, DELHI 'D' BENCH (1992) 42 TTJ (DEL) 644 Held that :- In order to attract the presumption under s. 132(4A), the first requirement is that the document should be found in possession or control of the assessee. In this case the Revenue has been saying that the document was found inside the shop of the assessee. However, there is nothing in the orders of the authorities below to show that the slip was in possession and control of the assessee. Everything physically present inside the shop of a person may not be in that person's control and possession. For proving possession it is necessary to show that the person concerned had the intentio possessendi. In this case nothing of that sort is pointed out by the authorities below. Then, for presuming that the contents of the books of account or document are true, the document must be speaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee, who was working in the office located in the said service station and the record of transactions in the said diary was in the nature of worksheets only where the transactions were completed and subsequently were taken to the books of account. The AO has also confirmed that cheques were received and were found recorded in the books of account of the assessee or that of sister-concern, as was the case. In PKC-60, where these transactions have appeared there is no indication that this account relates to the assessee or to the sister-concern. The employee was recording transactions relating to both of them. For the financial year 2000-01, there are four parties, against which name, rate, amount, payment received and balance are duly recorded. And for the subsequent year, apart from these four, one KSI appeared. On perusal of these transactions one has to agree with the Authorised Representative that these were working sheets maintained by the employee and those transactions maturing, have been duly recorded in the books of account. The CIT(A) has taken a clear-cut view that the AO did not verify these so-called balances with the parties whose names were found mentioned. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in the order of CIT(A) in deleting the additions xi) CHANDER MOHAN MEHTA vs. ASSISTANT COMMISSIONER OF INCOME TAX (INVESTIGATION) ITAT, PUNE BENCH (1999) 65 TTJ (Pune) 327 : 71 ITD 245 Loose paper indicating money-lending activities showing the amount borrowed and amount lent-These loose papers do not indicate the name of assessee-Therefore, the loose papers by themselves lead to no conclusion and have no evidentiary value-However, it has evidentiary value because of statement of assessee under s. 131 admitting money-lending activities and explaining the various amount noted in coded figures-This statement has to be considered and accepted as a whole if the AO wants to use it in evidence-Assessee has produced confirmations from all creditors-No material brought on record to prove that these confirmations were false- Same cannot be rejected-If the statement of the assessee is to be rejected in toto no addition can be made since in that case those papers would be dumb papers-If the statement is accepted in toto, then the borrowings mentioned in the papers have to be accepted as genuine-In either case no addition can be made. xii) M.M. FINANCIERS (P) LTD. vs. DEPUTY COMMISSION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee under s. 133A, but the same was converted into search after examining the materials found during the survey. So the survey was merged into search operation Shri Iqbal Ali Khan is the secretary and Shri Bhanwari Lal Vijay is working as president of the said society. There were two more persons, namely, Shri Hemchand Joshi and Shri Kamlesh Sharma who are the employees. They made the statement to the search party. In their statements they stated that the sale price of the plots were shown in the books of account at 1/3rd of the actual sale proceeds and remaining 2/3rd were not accounted for. But, later on these statements were rebutted by them on 25th Feb., 2002. On the basis of the statement and seized material, the AO opined that assessee was engaged in purchasing of agricultural land, developing the same and selling them to different persons under the garb of society. The profit was earned by these two persons, namely, Shri Iqbal Ali Khan, secretary and Shri Bhanwari Lal Vijay, president, hereinafter known as Shri Khan and Shri Vijay. In the absence of proper books of account, the AO estimated the concealed income @ 10% of gross receipts and made the addition of Rs. 72,07, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimated the profit @31% on this amount which is at very higher side. No any comparable case was given to support 31%. The weighted NP rate declared by the assessee during the last two years as under:- Asstt Year Turnover NP 2017-18 240142167 15509747 2016-17 7885664 -2055154 Total 248027831 13454593 Weighted Rate 5.42% In view of the above and considering the totality of facts and circumstances of the case, we modify the order of the ld. CIT(A) and direct for applying profit rate of 6% in place of profit estimated by the ld. CIT(A) at 31%. We direct accordingly. 60. Under Ground No 3, 4, 5, 6 and 7 the department has challenged the deletion of the following additions by ld CIT(A) by holding that these documents are dumb documents Ground No 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 33,14,58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 of above section, we find following components which enter into the concept of taxation. The first is the taxable event which attracts the levy, the second is the person on whom the levy is imposed and who is obliged to pay the tax. The third is the assessment year in which charge of income-tax is levied. The fourth is the total income of the previous year and the fifth is the rate or rates at which tax is to be imposed. The rates are prescribed in the annual Finance Act. Therefore, this component has no value in determining total income on the basis of seized document. Our view in this regard is supported by the decision of Hon'ble Supreme Court in Govind Saran Ganga Saran v. CST wherein it was held that for the purpose of charging to tax, there should be four components to be satisfied. The Hon'ble ITAT Jabalpur has gone to the extent of explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly the AO is directed to delete the addition of Rs. 2,81,506/-, Rs. 6,99,000/-, Rs. 8,03,001/-, Rs. 42,07,083/- & Rs. 33,14,580/-." 62. We have considered the rival contentions and carefully gone through the orders of the authorities below. From the record we found that the documents so relied by the A.O. as stated above are not speaking documents as the name of the assessee group or its schemes is not mentioned on this paper. The noting made on the impounded page made by some broker of the assessee group because in scribbling of plot No. S-39 the "brokerage" is also written and if the noting on this paper would be pertaining to transaction relating to the assessee than there is no chance of receiving any amount against brokerage from the party. This proves that this paper pertaining someone else who were acting as an agent in these transactions and the cash payment was received by him at his own which was not received/receivable to the assessee group. However, if the same is presumed to be belonging to the scheme of the assessee naming "Kediaz Kingdome" than whatever payment received/receivable to the assessee group against sales of plot No. mentioned in this paper is duly re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the noting on this paper is nothing but only rough noting from which no conclusion can be drawn and no addition can be made. 66. With regard to addition of Rs. 8,03,001/- in respect of AS-6, on examination of documents, we observe 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 or regarding to sales made by 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. 67. In this regard, it is relevant to observe that during the course of day to day workings, several clients and prospective buyers visit the office of the assessee group and the discussion is held by them with the sale team of the assessee group regarding purchases of plots. During such discussion rough notings were made by the sales team. Had this paper would be having any relation with the actual business transaction of the assessee group than there should have been some noting/narration such as plot No., name of buyer, date etc. but the same is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uyer Sales amount Mode of payment received 40 (164.21 sq. mts) Kediaz Kingdome Anjana Sharma 6,88,550 Cheque 127 (115.52 sq. mts) Kediaz Kingdome Sagar Mal 5,25,000 Cheque 122 (135.35 sq. mts) Kediaz Kingdome Munni lal Gupta 5,15,000 Cheque 123 Kediaz Kingdome Plot No. does not exists in the scheme The ledger a/c of above parties in books of accounts of assessee is at PB page 213 to 215. The cheque payment noted in the seized paper has no nexus with the cheque amount recorded by assessee in its books of account. Further the area of the plots written in the seized documents is also different from actual area of the plot. The plot no. 123 is not existing on the scheme of the assessee. These all facts shows that the noting made on this paper is not in relation of plots sold by the assessee.Further during the course of assessment proceedings the assessee submitted the affidavit of buyers of plot No. 40 and 122 wherein they confirmed the payments made to assessee against purchases of these plots and the same is similar to receipts records in books of accounts of assessee. Further the assessee was not having any plot No. 123 in its scheme "Kediaz King ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the hands of assessee firm for the papers found at the residence of partner. vi) Jayantilal Patel Vs. ACIT and others/ Dr Balbir Singh Vs ACIT & others (Rajasthan High Court) 233 ITR 588. / 244 ITR 500 (Departmental appeal in DB)/ Hon'ble Rajasthan High Court observed that addition on the basis of noting on a piece of paper cannot be sustained when it is not in assessee's own hand-writing. 71. As per the ld AR this seized paper shows cheque amount Rs. 21,95,068/- & Rs. 61560/-which has no nexus with the books of account/bank statement of the assessee. Had these transactions pertain to the assessee than the amount of cheque noted on these papers would have been found recorded in the books of account or bank statement of the assessee. Factually, the amount noted against cheque amount is neither reflected in books of account of the assessee or bank statement this clearly establish beyond doubt that the alleged sales were not affected by the assessee. 72. Our attention was also invited to the affidavits of various buyers of the plots filed, some of them examined by the AO. As per the ld AR during the course of assessment proceedings the assessee submitted the affidavits of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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