TMI Blog2020 (10) TMI 655X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual transaction, by part payment through banking channel probably it could be assumed that apart from account payee payment, some cash amount might have been made. But that live link is grossly missing in the instant case. Therefore, we do not find any hesitation in holding that these additions are not sustainable in the hands of these assessee. Accordingly, the appeals and three COs of the assessee are allowed. - Decided in favour of assessee. - IT(SS)A No. 180 to 181/Ahd/2019, Cross Objection No.51, 52 and 53/Ahd/2019 IN IT(SS)A.No.308, 309 and 301/Ahd/2019 - - - Dated:- 5-10-2020 - Shri Rajpal Yadav, Vice-President And Shri Amarjit Singh, Accountant Member For the Assessee : Shri P.F. Jain, AR For the Revenue : Shri O.P. Sharma, CIT-DR ORDER PER RAJPAL YADAV, VICE-PRESIDENT The ld.CIT(A) has decided five appeals of the assessee i.e. appellants herein, as well as cross objectors by way of separate orders in the Asstt.Year 2013-14. Against five orders, Revenue filed appeal bearing IT(SS)A.No.308, 309 and 310/Ahd/2018 in the case of Shri Sureshbhai Gordhanbhai Prajapati, Rajivbhai Gordhanbhai Prajapati and Vithalbhai Gordhanbhai Prajapati. On receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37,82,102 3. Shri Ravjibhai Gordhanbhai Prajapati APRPP0713K 2,26,25,000 89,04,488 4. Shri Sureshbhai Gordhanbhai Prajapati APRPP0781K 2,26,25,000 1,66,39,762 5. Shri Vitthalbhai Gordhanbhai Prajapati AFZPP0251L 2,26,25,000 1,28,88,093 1. No. CIT(A)-11/C.C.1(2)/Ahd/060-A/2015-16 2. No. CIT(A)-11/C.C.1(2)/Ahd/062-A/2015-16 3. No. CIT(A)-11/C.C.1(2)/Ahd/058-A/2015-16 4. No. CIT(A)-11/C.C.1(2)/Ahd/061-A/2015-16 5. No. CIT(A)-11/C.C.1(2)/Ahd/059-A/2015-16 5. That considering the heavy additions and as the appeals of the assessee were partly allowed and the alleged disclosures were upheld, we were under the bona-fide belief that the department will file appeals in all the above cases and on receipt of appeal memo of the department, Cross-Objections which is also in the category of regular appeal will be filed. 6. That on receipt of appeal memos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se employed in the section has also been used identically in sub-section 3 of section 249 of Income Tax Act, which provides powers to the ld.Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon ble High Court as well as before the Hon ble Supreme Court, then, Hon ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji Others, 1987 AIR 1353: 1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. Every day's delay must be explained does not mean that a pedantic approach should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that the words sufficient cause under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hesh Prajpati and Naresh Prajapati were also covered under section 132 of the Act. During the course of search one pocket diary, namely, bhakti diary was seized and inventorised as Annexure-1 and 2. According to the AO, this diary contained nine written pages and on page no.7, 8 and 9 of Annexure-A/1, certain notings exhibiting amount given in advance for purchase of land at Village Ranchada was recorded. English translation of such noting has been reproduced on page no.3 of the assessment order, which reads as under: Amount advanced for purchase of land at village Ranchada Serial number Page number Date Amount (Rs.) 1 7 8.06.2012 50,00,000 2 7 15.06.2012 50,00,000 3 7 28.06.2012 75,00,000 4 7 15.07.2012 50,00,000 5 7 06.08.2012 1,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Thaltej Shilaj Road, Thaltej, Ahmedabad 380 059, c) I, Sureshbhai Gordhanbhai Prajapati, son of Gordhanbhai Prajapati,aged 43 years, by nationality Indian, residing at 308/4, Prajapati Vas, Post Thaltej Gam, Thaltej Shilaj Road, Thaltej, Ahmedabad 380 059, d) I, Maheshbhai Ramanbhai Prajapati, son of Ramanbhai Prajapati,aged 32 years, by nationality Indian, residing at Prajapati Vas, Kumbhar Vas, Post Thaltej Gam, Thaltej Shilaj Road, Thaltej, Ahmedabad 380 059, and e) I, Nareshbhai Ramanbhai Prajapati, son of Ramanbhai Prajapati,aged 25 years, by nationality Indian, residing at Prajapati Vas, Kumbhar Vas, Post Thaltej Gam, Thaltej Shilaj Road, Thaltej, Ahmedabad 380 059, do hereby solemnly affirm and state as follows: This affidavit is made by us to clarify the sequence of events and the correct position of the facts related to search by Income-tax Dept. on 06/11/2012,events occurring thereafter in sequence and filing of return for various block assessment years. 1) That search operations u/s 132 of I.T. Act, 1961 was initiated on 06/11/2012 on me and my brothers as listed hereunder: Name of Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven after two years does not under any circumstances undermine the power of the truth, because the truth will remain as it is, even if it is declared sooner or later. In the absence of such affidavitfor bringing the truth on the surface,the artificial, wrong and self-generated factswill look like correct even after generations. So as to make the things correct, the undersigned through this affidavit and with full zeal and determinationwants to bring the truth on the surface and bury the wrongs. The whole contents of this affidavit are embedded with the spirit of truth and remove the evil of falsehood. We again solemnly declare that the contents hereinafter are TRUTH AND ONLY TRUTH . 3) That cash of ₹ 1.49 crores was found from lockers of our family which was duly seized by IT Dept. on 06/11/2012 along with other documents related to purchase / sale of lands, which have been duly inventorized by IT Dept. 4) That during search operation the then Dy. Director of Income-tax (Inv.), Mr. Sumit Kumar (hereinafter referred to as DDIT ) had resorted to coercive measures and forcing me and my family members to declare such higher non-existence amount as undisclosed inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,00,000 25/8/2012 1,10,00,000 13/9/2012 65,00,000 28/9/2012 1,15,00,000 25/10/2012 7,15,00,000 Total 25/10/2012 Page no. 9 of Bhakti Pocket Diary 7,15,00,000 Total 25/10/2012 1,00,00,000 29/10/2012 90,00,000 4/11/2012 These details were totally wrong and non-existence and Shri Vitthalbhai Prajapati was forced to make these entries only with a sole purpose of ruining us and our family and collecting wrongful income-tax thereon for the purpose of meeting the unknown goals of DDIT and his team. These payments were totally non-existence and we were forced and wrong story was fed into our mouth to make these wrong statements that these alleged payments were made for purchase of land at Rancharda. This is proven by the fact that for the period starting from 08/06/2012 to 4/11/2012, i.e during this period of 5 months there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce amount of ₹ 9.05 cores but of no avail to us. Further, we also state that the statement recorded on 31/12/2012 at 3.00 PM under question No. 8 9 there is reference of ₹ 80,00,000/- being received from so-called non-existence amount of ₹ 9.05 crores is also a fabricated story cooked up by DDIT and his team and that the question of receiving back ₹ 80 Lacs from non-existence advance given of ₹ 9.05 crores does not arise at all. 9) It is very surprising that the whole team of DDIT did not bother to further investigate the false payments for the purchase of land at Rancharda by inquiring about the recipients, their names, addresses identity, the details of land, copies of 7/12 documents, etc. though the magnitude of such payment was to the extent of ₹ 9.05 crores, because they knew in their conscience about the fact that this is a cooked up and coloured declaration on the basis of their own fabricated story. Had they inquired about this content, they would have come to know that there is nobody or blank in existence on the other side of the transaction who have received these payments, but that was not to be because the team of DDIT knew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any existence of advances for purchase of non-existent land made to non-existent person, undisclosed income cannot arise.That in the absence of any such undisclosed income, the question of paying any wrongful income-tax does not arise. 13) All the contents stated hereinabove are declared solemnly and jointly with a sole purpose and intention to bring out the truth from the mountain of false and wrongful facts. The phrase that TO BE LATE IS BETTER THAN NEVER is the spirit behind this declaration and without which the truth would never have come out and we would have been buried under the burden of lies at the later stage along with ourselves. The argument that late affidavit undermines the power of content of the affidavit is totally unfounded and cannot be considered as applicable here in this case because TRUTH REMAINS TRUTH AND THAT TOO ALWAYS. Had we declared these very contents at early stage will also have similar values and strength as that is prevailing now. 14) That the original statements were recorded on 06/11/2012 at 1.30 AM and one is not supposed to be in normal and physical mental condition at such wee hours of night. In the statement recorded on 31/12/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile, at the juncture of opening of P.O. and recording statement of Shri Vitthalbhai Prajapati, on 31/12/2012, signature of only Shri Vitthalbhai Prajapati was obtained. In the statement recorded on 31/12/2012, the questions related to advance given for Rancharda land of ₹ 9.05 crore were raised and DDIT team tried to reaffirm the cooked up story by linking the receipt of ₹ 80 Lakhs and signature of only Shri Vitthalbhai Prajapati was obtained. All the above referred facts and sequence of events proves that the advances given for Rancharda land of ₹ 9.05 crore is nothing but a fabricated, false, cooked story made with a sole motive of achieving DDIT teams overzealous goals with intention of ruining less literate farmers like us. DDIT and his team have in the melee of fabricating and weaving the lies, forgotten to take signatures of all brothers of our group and have faltered in their own game of lies. That, we strongly reiterate that there is no deliberate intention in ourmind to evade income-tax, and that too on the foundation of wrong and false income forced upon us through DDIT and his team. We are of strong opinion that the exchequer cannot make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rced and forged into Bhakti Pocket Diary at the behest of DDIT and his team. 19) The above referred statements are true and correct and to the best of our knowledge and belief on the basis of facts and the contents of the same. The whole above referred statements have been conveyed by us in our vernacular language, i.e. Gujarati, and in turn the same are also explained and translated to us in our vernacular language, i.e. Gujarati. These statements are given by all of us without any coercion, force, etc. and are given with stable mind without any effect of drug, medicine, alcohol, etc. DEPONENTS Solemnly affirmed at Ahmedabad This day of December 2014 ____________________________ (Vitthalbhai Gordhanbhai Prajapati) ____________________________ (Ravjibhai Gordhanbhai Prajapati) ____________________________ (Sureshbhai Gordhanbhai Prajapati) ____________________________ (Mahesbhai Ramanbhai Prajapati) ____________________________ (Naresbhai Ramanbhai Prajapati) 11. There were two independent witnesses, who were called as panchas at the time of search viz. Kanubhai Prajapati, and Gautam Prajapati. This fact h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thalbhai G. Prajapati and other four family members viz. Shri Vitthalbhai G. Prajapati, Shri Ravjibhai G. Prajapati, Shri Sureshbhai G. Prajapati, Shri Maheshbhai R. Prajapati and Shri Nareshbhai R. Prajapati. 2) That now we are making this affidavit almost after two years of search during November 2012, with a sole and only intention to bring the truth to the light of this universe. It is pertinent to point out that there is unintended delay in making this retraction-cum-affidavit on account of fact that the copies of statements recorded of whole family were not initially granted to them though requested to DDIT. Ultimately an application was made by them during last week of February 2014 to their A.O. Their authorized representative Shri Aseem L. Thakkar gave copy of statement approximately during first week of March, 2014.They were provided during 3rd week of November, 2014, the copies of all the statements recorded during search operations, in which both of us have signed on each page as witness and to be specific on statements recorded on 06/011/2012 and 07/11/2012. The delay in making this affidavit is on account of above referred sequence of events. If we are not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, pressure, oppression, harassment, warning, force, compulsion, tyranny and domination Shri Vitthalbhai Prajapati was forced to write through his own hand-writing on page Nos. 7, 8 9 of Bhakti Pocket Diary , the false and fake details about amount given as advance for purchase of land and date of payment and that too not for any small amount but for exorbitant and enormous amount of ₹ 9.05 crores. 8) Before writing of page No. 7, 8 9 in the Bhakti Pocket Diary by Shri Vitthalbhai Prajapati, Dy. Director of Income-tax (Inv.), Mr. Sumit Kumar (hereinafter referred to as DDIT ) wrote by his own handwriting the fabricated contents on a separate piece of paper the details of advances given for purchase of land at Rancharada with fabricated dates in total amounting to ₹ 9.05 crores and then asked and forced Shri Vitthalbhai Prajapati to write these same contents by Shri Vitthalbhai Prajapati s hand-writing. These details were totally non-existent hitherto i.e. before forcefully and writing under coercion by Shri Vitthalbhai Prajapati. In other words, the contents in Bhakti Pocket Dairy are nothing but only fabricated and artificial and hereto non-existent crea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not intentionally bothered not to inquire because it was a mischievous plan to ruin our agriculturist family and less educated persons like usso as to meet their overzealous goals at the cost of a citizen and agriculturist of this country. 13) All the contents stated hereinabove are declared solemnly and jointly with a sole purpose and intention to bring out the truth from the mountain of false and wrongful facts.The spirit behind this declaration is that truth must be told in its original form and without which the truth would never come out. The argument that late affidavit undermines the power of content of the affidavit is totally unfounded and cannot be considered as applicable here in this case because truth has got its same value intact at every moment. 14) All the above referred facts and sequence of events proves that the advances given for Rancharda land of ₹ 9.05 crore is nothing but a fabricated, false, cooked story made with a sole motive of achieving DDIT teams overzealous goals with intention of ruining less literate farmers like us. DDIT and his team have in the melee of fabricating and weaving the lies, forgotten to take signatures of all brothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Nareshbhai Ramanbhai Prajapati, and ₹ 2,26,25,000/- each in the hands of Vithalbhai, Sureshbhia and Ravjibhai respectively totaling to ₹ 9.05 crores. 13. Dissatisfied with the additions, the assessees carried the matter in appeals before the ld.CIT(A), but the appeals to the CIT(A) did not bring any relief to the assessee. The ld.CIT(A) has confirmed orders of the AO by recording the following findings (in the cases of Nareshbhai Prajapati): 5.2 Facts of the case, submission of the appellant and assessment order has been carefully considered. Ground No.2 is against the addition of ₹ 1,13,12,500/-. A search was conducted upon the appellant on 6.11.2012 and subsequent days. During the course of search at the premise of Shri Vitthalbhai G. Prajapati his two brothers namely Ravjibhai G. Prajapati Shri Sureshbhai G. Prajapati and nephew Shri Mahesh Prajapati Naresh Prajapati, one pocket diary was found seized. One loose paper file containing 12 pages were also found seized, which have been annexurised as Annexure 1 2. The matter is pertaining to material in the form of Bhakti Pocket Diary found during the search operation in the form of diar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the assessee has failed to submit any other evidence to prove otherwise. The affidavit is in the form of self-serving affidavit and during this long two years period has not bothered to retract the facts. The details noted therein are of a nature that were in the exclusive knowledge of the assessee and the same could not have been fed by the DDIT. Thus the contention of the assessee is peculiar wherein one part of the statement is still taken to be correct but another part is being said to have been recorded under duress. Further he was also advised by professional tax advisor and Chartered Accountant. It is also pertinent to note the following judgements: 1. Commissioner of Income Tax V/s 0. Abdul Razak (2012) 20 TAXMANIM.COM 48 (Kerala):- A self-serving retraction, without anything more cannot dispel statement made under oath under section 132(4) 2. Ravindra Kumar Verma V/s Commissioner of Income Tax (2013) 30 TAXMANN.COM 367 (Allahabad) :- Where assessee at time of search had surrendered certain cash amount as undisclosed income and later on after four years retracted confessional statement stating that aforesaid amount was cash-in-hand as reflected from books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the Asstt.Year 2013-14. He took us through these inventories. He thereafter pointed out various defects in the manner entries alleged to have been found on the seized paper. He also pointed out certain type of arithmetical error while taking note of total amount in the statement of Shri Vittalbhai Prajapati. His main emphasis was that without identifying vendor, who alleged to have sold land to the assessee, without identifying the land, how it can be alleged that an advance was being given by the assessee, and that of ₹ 9.05 crores. It is highly improbable. While taking us through judgment of Hon ble Gujarat High Court in the case of K.P.Nair Vs. ACIT, in tax appeal no.1152 of 2007 dated 3.8.2016. he contended that Hon ble Court has made reference to circular no.286/2/2003 dated 10.3.2003 and observed that vide this circular department has directed its employees not to take confession rather focus on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the income-tax department. He also emphasizes that though disclosure made under section 132(4) of the Act binds an assessee, but in various aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manner in which these nothings have been made. However, other limb of the arguments of the assessee is that, neither this diary was found nor any land was purchased by these assesses or their family members. To buttress this proposition, the ld.counsel for the assessee drew our attention towards page nos.52 to 56 of the paper book, wherein certain entries of the land purchased by the assessee have been compiled by the search party and available on the record. The land transaction was made in the year 2006-07 and not during the accounting year relevant to this assessment year. The ld.counsel for the assessee further pointed out that neither the Department is able to lay its hand on any details qua this alleged transaction nor transaction alleged to have been taken place either in the name of the assessees or in the names of their family members. The Department failed to produce any details of vendors from whom the assessees have purchased or alleged to have been purchased the land with the amount of on-money of this magnitude. 16. In the light of the above background, we have been appraised ourselves about the scope of section 132(4) of the Income Tax Act, 1961, and whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rudence. As a general rule, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this grey situation, CBDT has issued Circular No.286/2/2003 prohibiting the departmental officials from taking confession in the search. The board is of the view that often the officials used to obtain confessions from the assessee and stop further recovery of the material. Such confessions have been retracted and then the addition could not withstand the scrutiny of the higher appellate authority, because no material was found supporting such addition. 19. An issue whether addition solely on the basis of statement u/s.132(4) can be made was considered by the Hon ble Jurisdictional High Court in the case of Kialashben Manharlal Chokshi Vs. CIT, 220 CTR (Guj) 138. In this case, search was conducted upon the assessee under section 132 of the Income Tax Act on 4.11.1988. The statement of the assessee was recorded under section 132(4) of the Act. He made disclosure of ₹ 7 lakhs. Later on, in January, 1989, the assessee retracted from the disclosure and stated the disclosure of ₹ 50,000/- was acceptable to him. The ld.AO made an addition of ₹ 7 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act. 20. Apart from the above, at the time of hearing, the ld.counsel for the assessee drew our attention towards judgment of Hon ble Gujarat High Court in the case of KPM Nair, Tax Appeal No.1152 of 2007 dated 3.8.2016. Copy of this judgement is placed on paper book. In this judgment also, Hon ble Court has considered the scope of section 132(4) as well as took cognizance of the circular of the Board issued in 2003. The discussion made by the Hon ble High Court reads as under: 5.Having heard learned advocates for both the sides and having gone through the materials on record, it is borne out that the authorities proceeded on the basis of the statement made by the assessee s wife that she was paying salary to the assessee every month. This statement had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/ materials gathered during the course of search/survey operations or thereafter while framing the relevant 5.3 In view of the above, we are of the opinion that the Assessing Officer has erred in proceeding with the calculation of undisclosed income without there being any cogent and corroborating evidence to the statement made u/s 132(4). 21. Thus, overall analysis of the above would indicate that an addition on the basis of disclosure made under section 132(4) of the Act is to be made on the basis of other corroborative evidence exhibiting unexplained investment or unexplained asset possessed by an assessee. In order to buttress this contention, the Revenue has relied on bhakti pocket diary and entries therein, because the search party is aware that mere disclosure will not withstand the kind of judicial scrutiny required for establishing the case, and therefore, they have recovered annexure-A more so pages 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re than ₹ 9.05 crores alleged to have been paid in cash without identifying the object for which it was paid and without corroborating it with details such as mode of payment, whether made through account payee cheques, because the land could not have been purchased simply by making huge cash payment, and no person would like to pay this much huge amount in cash without entering into any documentation viz. Agreement to purchase, MOU etc. showing the details of account payee cheques etc. apart from the above cash. Thus, neither the department is able to lay its hand on the details of prospective vendors, nor lay its hand on any of the details of land which alleged to have been purchased by the assessee. The department even is not able to lay its hand on the mode of payment, as to account payee cheques, bank details etc. If these aspects are being examined in the light of the allegations levelled by the assessee in the affidavit vis-a-vis corroboration of the affidavits of independent witnesses, then it would reveal that the department has failed to get any information showing unexplained investment in the land by these assessees. Evidence collected by the Revenue is superficia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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