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TMI Blog2020 (10) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... ) was right in deleting the addition of Rs. 25,86,60,550/- ignoring the fact that assessee himself stated in his statements recorded U/s 132(4) of the Act during the course of search as well as past search proceedings that he has received on-money in cash from the buyers of various flats and subsequently he failed to show the same in the return of income. 2. Whether on the facts and the circumstances of the case, ld. CIT(A) was right in deleting the addition of Rs. 2,50,00,000/- ignoring the fact that the assessee himself stated in his statements recorded U/s 132(4) of the Act during the course of search as well as post search proceedings that there are certain discrepancies in the documents seized from his house and subsequently he failed to show the same in the return of income." 4. The brief facts of the case are that the assessee is a private limited company engaged in the business of real estate. A search was conducted at the premises of the assessee on 04.09.2013. Subsequently, return was filed on 29.11.2014 declaring loss of Rs. 1,47,63,169/- in response to notice u/s 153A of the Income Tax Act, 1961 (in short, the Act). The Assessing Officer (A.O.) completed the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income for the AY 2014-15 filed on 29.11.2014, no such surrender income was shown. In view of the above, the AO has issued show cause notice to the assessee and after considering its reply and dealing with various contentions raised by the assessee, the AO has given detailed findings in the assessment order and has made the addition of Rs. 30.01 Crore to the income of the assessee and for the sake of brevity, the same are not repeated here. 2 Findings of ld. CIT(A) Vide the impugned appellate order, the Ld. CIT(A) has deleted the addition of Rs. 25.01 Crore by observing that: (i) The AO has solely relied upon the statement of director of the assessee company and has not carried out any enquiries to prove the receipt of on money. (ii) The seized documents are dumb documents. (iii) The onus is on the AO to prove the contents of the seized documents are true u/s 292C. (iv) The AO has not brought on record any independent corroborative evidence to support the addition. (v) No enquiries were made from the buyers of the flats. (vi) No on money was credited in the books of accounts, so no addition could be made u/s 68 as made by the AO. 3 It is humbly submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/- under "B" DPB-28 Ledger account, wherein individual payments are tallying with payments stated in the affidavit. Payments upto 25.06.2013 were stated at Rs. 92.50 Lac Flat No. 501 & 502 JKD Pearl APB-3 Affidavit of Shri Sudhakar Rao stating total payment at Rs. 2,06,72,190/- DPB-18 Seized document wherein, accounted payment 'A' is stated at Rs. 2,01,21,875/- and on money stated at Rs. 1,93,40,625/- (98,40,625 + 95,00,000) under "B" DPB-30 Ledger account, wherein individual payments are tallying with the payments stated in the affidavit. Payments upto 04.06.2013 were stated at Rs. 81.20 lac and upto 22.10.2013 at Rs. 1.56 lac. 3.1 Thus, it is evident from the above examples that the recorded payments upto the date of search were subset of the 'A' i.e. accounted payments stated in the seized document and rightly so, as the sale deeds of the flats were not made till the date of search and thus, no question of making entire 'A' payments. 3.2 It is evident from the details submitted by the assessee to the AO in response to show cause notice appearing on page no. 21 to 22 of the assessment order that area of the flats as stated in the seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the person by whom it purports to have been so executed or attested. 4.1 Thus, it is evident from the above that u/s 292C of the Act, the presumption is that the content of the documents seized during search are true. The said presumption is rebuttable but the burden is on the assessee to prove that the contents of the seized documents are not true and not on the AO to prove that the contents of the seized documents are true. It may be mentioned that in the instant case under consideration, the assessee has failed miserably to rebut such presumption. Finding No. 4 & 5 5 It is an undisputed fact that the director of the assessee company made disclosure under consideration in its statement recorded u/s 132(4), affirmed the same in statement recorded u/s 131 during post search enquiries and reaffirmed in affidavit of the director of the assessee company, which was issued after getting the consent of other directors. So, after that specific surrender, no enquiries were made by the ADI(Inv). Vide letter dated 31.03.2015, the AR made a request to make enquiries from the buyers. It is to be noted that in search proceedings, time is the essence of matter and if any enquiries are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I Vs M. S. Aggarwal [2018] 93 taxmann.com 247 (Delhi) X Ravindra Kumar Verma Vs CIT [2013] 30 taxmann.com 367 (Allahabad) XI Sudharshan P. Amin Vs ACIT [2013] 35 taxmann.com 370 (Gujarat) XII Lakhamshi Ladha & Co. Vs CIT 2016] 73 taxmann.com 117 (Bombay), XIII Manmohansingh Vig Vs DCIT [2006] 6 SOT 18 (MUM.), Thus, in view of the above discussion, it was submitted that the impugned appellate order of Ld. CIT(A) may kindly be set aside and the order of AO may be restored." 9. On the other hand, the ld AR appearing on behalf of the assessee has reiterated the same argument as was raised before the ld. CIT(A) and also filed written submissions in order to controvert the ground of appeal raised by the revenue, the same is reproduced below: The assessee made following submission before the Learned CIT(A) and who has deleted the entire addition made by the Learned Assessing Officer after considering the submission of the assessee and has given the finding that Assessing Officer has simply relied upon the sworn statement of Shri Vijay Kumar Jain Director of the appellant company without placing any further corroborative evidence to prove his contention. Therefore, Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to submit that the Learned Assessing Officer has made additions without making any post search enquiries with reference to contents of pages 1 to 4 of annexure A-2. No material has been brought on record that the assessee company received any on money on sale of flats. During the course of search no receipt of on money was found signed and issued by the assesse to buyers. Although the Learned Assessing Officer has admitted as mentioned in the assessment order on page 24 & 25 that the pages 1 to 4 are undated, that the amount noted on these pages does not exactly tally with the amount of sale as per registered sale deeds and these pages admittedly do not contain name of any buyer yet additions have been made solely on the basis of these papers on presumption and assumption. Further during the course of assessment proceedings affidavits were furnished by the assesseefrom buyers to the effect of the exact amount of sale and that no on money was paid by them, but these affidavits have been ignored and disregarded without examining the deponents. Thus the contents of these affidavits have remained uncontroverted. Lastly the Learned Assessing Officer has erred in invoking the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made the additions. The contents of page 1 to 4 of annexure A-2 are discussed and analyzed below: - Page No. 1 of annexure A-2 JKD Pearl landmark (Jaipur) Sr. no. Flat No Flat Area in Sq.ft Rate/Sq.ft Amount A @3500 Per sq.ft B 1 201 6850.00 9500000.0 2 202 6850.00 9500000.0 3 301 6850.00 9500000.0 4 302 6850.00 9500000.0 5 401 2937.50 6850.00 20121875.00 10281250.00 9840625.00 6 402 2937.50 6850.00 20121875.00 10281250.00 9840625.00 7 501 2937.50 6850.00 20121875.00 10281250.00 9840625.00 8 502 2937.50 6850.00 9500000.0 9 601 2937.50 6850.00 20121875.00 10281250.00 9840625.00 10 602 2937.50 6850.00 20121875.00 10281250.00 9840625.00 11 701 2865.25 6850.00 19626962.50 10028375.00 9598587.50 12 702 2865.25 6850.00 19626962.50 10028375.00 9598587.50 13 801 2571.25 6850.00 17613062.50 8999375.00 8613687.50 14 101 493.75 6850.00 3382187.50 1728125.00 1654062.50 126168050.00 Page No. 2 of annexure A-2 JKD Pearl Aura (Alwar) Sr. no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was made on the allegation that the amounts noted in column 'B' was received in cash against sale of various flats in the aforesaid multi storied buildings located at various places in Jaipur and Alwar. However it is submitted that no effort was made by the authorized officer regarding the genuineness of the transactions noted in these papers. The minimum thing which was expected from the authorized officer was that he should have ascertained the date and the year of transaction and then he should have verified whether the accounted amount shown in column 'A' was verifiable or not from the regular books of accounts. This minimum exercise was not done. It appears that the investigation team was in haste in getting the surrender from the assessee by pressing him and by threatening him with dire consequences. It is settled position of law that if the seized papers and narration thereon do not carry any date then such papers are to be treated as rough papers. It is submitted that in all the transactions on all these four pages dates are nowhere available, hence these are nothing but rough papers not warranting any attention. When the papers do not contain the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly and the only action the Learned Assessing Officer is taking is sticking to the statement of the assessee recorded u/s 132(4) of the Income Tax Act, 1961. (iii) Flats sold subsequent to search - We are furnishing a chart in the following paras which discloses that certain flats were not sold upto the date of search as such there was no question of receiving any amount from them. The flat no. 201, 202, 301, 602 of JKD Pearl Landmark and flat no. 101, 102, 302 of JKD Pearl Stylome i.e. Mahaver Nagar Jaipur and flat no. 102, 604 of JKD Pearl Aura, Alwar were sold much later i.e. in the year 2014 whereas the search was conducted on 05.09.2013. It is the submission of the assessee that mentioning of receipt of amount against these flats in the seized papers is therefore fake as these have been sold at a later date. In these circumstances the sale amount mentioned against these flats and shown to be have been received by the assessee is not verifiable with reference to the books of accounts. It is strongly submitted that not a single payment (A) which is alleged to be accounted amount is also not verifiable with reference to the regular books of accounts. This shows that the sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id table discloses that the area mentioned in the seized papers is at variance with the regular records. If the seized papers were true and genuine then the area of flats mentioned in these papers should have tallied with the regular records. The variance in the area establishes the submission of the assessee that these papers are rough and dump. (vii) Comparison of amount of sales with regular books viz-a-viz seized papers: - It is further submitted that not only the area mentioned in these pages is at variance with the actual area of the flats, even the accounted amount mentioned in column 'A' of these pages also does not tally with the consideration shown in the registered sale deeds. Therefore the papers are rough and dump and deserve to be ignored. JKD Pearl Landmark FLAT NO. SALE PRICE AS PER SEIZED PAPERS SALE PRICE AS PER SALE DEED 101 1728125 2242209 301 * 10616900 10616900 302 10616900 10616900 401 10281250 10333820 402 10281250 10333820 501 & 502 20562500 20672190 601 & 102 10281250 12201500 602 * 10281250 10616900 701 10028375 10030720 702 10028375 10030720 801 8999375 9310980 JKD Pearl Styl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e papers were required as the case was being contested before the Learned CIT(A). However the Learned Assessing Officer has not furnished the information. Your honour is humbly requested to call for the records of the Learned Assessing Officer and peruse the statement recorded u/s 131 and also the information collected u/s 133(6). A copy of the letter dated 02.11.2016 submitted to the Learned Assessing Officer is scanned below: - The buyers have stated that whatever has been paid for purchase of flat has been paid by cheque which is fully verifiable from the records. The position being so there was no case with the Learned Assessing Officer for making any addition on the basis of alleged on money receipts on sale of flats. The Learned Assessing Officer has not been able to bring any material on record either to controvert the affidavits of these persons or otherwise. The addition therefore deserves to be deleted. The aforesaid facts established that these pages are rough and dump. No addition is warranted on the basis of these papers. The following case laws are quoted in support: - (i) DCIT Vs. Rajendra Kumar Sancheti (ITAT Jaipur) 42 Taxworld 152 dated 27.03.2009 (ii) Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of this the contents of these papers is far from truth and has no relevance with the business of the assessee. There is no evidence or material regarding receipt of money by the assessee as per these papers so as to consider the same for purposes of surrender. Amount either mentioned in column 'A' or in column 'B' is not all verifiable from the regular books of accounts of the assessee even in the case of a single flat. This is enough to establish that these papers are rough and deserve no consideration. Therefore the surrender made on the basis of these papers is retracted. Therefore the surrender was illegal and unlawful. Hence the assessee retracted from the surrender vide letter dated 29.02.2016 addressed to DGIT(Inv) Jaipur copy of which is available on paper book cited supra. It is submitted that the Learned Assessing Officer has failed to take into consideration the retraction made by the assessee. No reasons have been given for the same. It is settled position of law that if there is evidence then assessee has a right to retract. During the course of search amidst a number of officers, the poor assessee is brow-beaten and on account of undue pressure exert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escape further harassment. In the normal course if the surrender was genuine the revenue authorities should have and would have crossed checked the details and facts of amount mentioned in these pages. They should have verified at least a few entries of the accounted amount mentioned in these pages. No such exercise was done neither during the search nor during the course of assessment proceedings The post search enquiries do not reveal anything against the assessee. Merely harping on the rough pages and on the statement of the assessee u/s 132(4) wont help in making additions. Further during the course of assessment proceedings parties have been called u/s 131 who have purchased the flats and they have stated that no on money was paid by them. The Learned Assessing Officer also called for information u/s 133(6). Despite a written request the Learned Assessing Officer has not furnished copies of statement recorded u/s 131 and information collected u/s 133(6) as these go in favour of the assessee. The assessee humbly requests that the records of the Learned Assessing Officer may be called for the purpose and verified. Further a number of affidavits were furnished by the assessee fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd circulars dated 10.03.2003 and 18.12.2014 are quoted below- (i) F. No. 286/2/2003-IT (Inv) dated 10.03.2003 No confessional statement in the course of search, seizure and survey. March 10th, 2003 Confession of additional Income during the course of search &seizure and survey operation GOVERNMENT OF INDIA MINISTRY OF FINANCE & COMPANY AFFAIRS DEPARTMENT OF Revenue CENTRAL BOARD OF DIRECT TAXES Room No. 254/North Block, New Delhi, the 10th March, 2003 To All Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. Sir Subject : Confession of additional Income during the course of search &seizure and survey operation -regarding Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search &seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search &seizure and survey operations do not serve any useful purpose. It is, therefore, advised that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issues with approval of the Chairperson, CBDT (K. Ravi Ramchandran) Director (Inv.)-II, CBDT- It is submitted that the action of the i.t. authorities in obtaining surrender of income that too under duress is against the circulars of the CBDT which are binding upon them. Hence the surrender obtained from the assessee was illegal and addition made on the basis of such surrender is unlawful and deserves to be deleted. 5. Presumption u/s 132(4) and section 292C is rebuttable: - In the assessment order the Learned Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found. In the circumstances when the contents of the affidavits remained uncontroverted there was no case with the Learned Assessing Officer for making addition on account of alleged on money on sale of facts. The following case laws are quoted in support: - (i) Mehta Parikh & Co. Vs. CIT (1956) 30 ITR 181 (Supreme Court) (ii) Rajshree Synthetics (P) Ltd. Vs. CIT (2002) 256 ITR 331 (Raj) (iii) Dilip Kumar Roy Vs CIT (1974) 94 ITR 1 (Bom) (iv) L. SohanLal Gupta Vs. CIT (1958) 33 ITR 786 (All) 7. Addition made u/s 68 is invalid - The Learned Assessing Officer has made the addition by giving the following finding in para 9(a) on page 28 of the assessment order that- "Therefore, amount of Rs. 25,86,60,550/- received as unaccounted on money for three projects is treated as assessee's undisclosed/untaxed income and added to total income u/s 68 of the Income Tax Act, 1961 for the year under consideration" The perusal of the aforesaid para reveals that the Learned Assessing Officer has made the additions u/s 68 of the Income Tax Act, 1961. It is submitted that no addition could be made u/s 68 of the Income Tax Act, 1961. The provisions of section 68 are quoted below: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s raj v/s C.I.T.118 ITR 999 (cal) (ii) Laxminarain Gupta 124 ITR 94 (pat) 3 (iv) Shanta Devi vs. CIT 171 ITR 532 (P&H) (v) Anand Ram RAITani v/s CIT (1997) 223 ITR 544 (gau) (vi) CIT vs. Bhai Chand S. Gaudhi 141 ITR 67 (Mum) In view of these facts the addition deserves to be deleted on this ground also. 8. Crux of the matter: - In view of the aforesaid submission it is clear that the addition made by the Learned Assessing Officer deserves to be deleted:- (i) Because the addition has been made with reference to page no. 1 to 4 which are dump papers. (ii) Because the addition has been made simply and simply on the basis of statement u/s 132(4) which stands retracted by the assessee with supporting evidences. (iii) Because the addition has been made on the basis of presumption u/s 292C which has been rebutted by the assesssee. (iv) Because the addition has been made on the basis of confessional statement recorded in violation of board circulars cited above. (vii) Because the addition has been made without examining the affidavits furnished by the assessee. (viii) Because the addition has been made invoking provisions of section 68 which are not applicable. " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was deducted is shown in advance received and not in the sales of the assessee Company. Therefore the sale consideration of property in ITR is less than consideration. The fiats are fully prepared in A Y 2015-16 and then they are sold. On perusal of assessment record, it is seen that AO has not carried out any investigation / enquiry to prove his contention with regard to receipt of on- money as mentioned in the seized documents (Supra). AO has simply relied upon the admission based on the recorded sworn statement u/s 132(4) of the Act of Sh Vijay Kr Jain & added the receipt of on-money of Rs. 25,86,60,550/= from the three projects. The Hon'ble Bombay High Court in the case of Surendra M. Khandhar Vs ACIT 321 ITR 254 held as under: 'The language of section 132(4A) of the Income- tax Act, J 961. is similar to the language used in section 292C. The provisions raise a presumption that the contents of a document found during search proceedings are rue. The presumption can be rebuffed. " Here would like to quote the decision of Hon'ble ITAT Jabalpur in the case of ACIT vs Satyapal Wassan [(2007) 295 ITR (AT) 352 ITAT Jabalpur] wherein elucidating with respect to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized document is not correct state of affairs and the state of affairs stated in the seized document has to be presumed to be true as mandated by Sec.292C of the Act. In this regard, AO has also not brought out any further corroborative evidence to support his contention. However, appellant submits that even there are other corroborative evidences to suggest and confirm its contention. Therefore, in view of the facts and circumstances of the case itself would be sufficient to rebut the presumption u/s 292C of the Act. When no independent material or evidence had been brought on record by the AO to establish that the noting as appearing in the computer prints out (Reference Seized Documents Annexure-A-2 Pg 1 to 4) which according to him, represented an unaccounted transaction; then AO has no option but to accept the explanation of the assessee. The legal provision relating to presumption J/s 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. It is further held that the presumption is rebuttable and not conclusive and various courts including the Hon'ble Apex Court have held that it cannot be applied in the absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to investigate from buyers of the flats about alleged on-money payment made to the assessee. During the search no other evidence including money trail evidencing on- money payment by the buyers of the flats to assessee has been found. Even during the appellate proceeding, the AO vide letter dt 07.12.2016 has been asked to carry out necessary enquiry u/s 250(4) of the Act to substantiate his contention. Copies of the affidavits of 28 buyers as submitted by the assessee has also been provided to the AO. However, AO has reiterated the same facts as mentioned in the assessment order. It is also a fact that on the day of search flats were not sold and on y booking amounts were received from the customers. Meaning thereby facts (contention of the assessee as well as those buyers who filed affidavits has not been controverted by the AO. Therefore. ultimate addition to be made in a case would depend on facts and circumstances of case and not purely on the disclosure made under section 132(4) which also stood retracted subsequently. and also when there was no supportive material or evidence to justify such addition. Now coming to the question of addition of Rs. 25,86,60,550/= made u/s 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material placed on record. We have also deliberated upon the judicial pronouncements referred by the lower authorities in their respective orders as well as before us with reference to factual matrix of the instant case, the judgments cited by both the parties, as well as the orders passed by the revenue authorities. Before we decide merits of this ground, it is necessary and imperative to evaluate the orders passed by the ld. CIT(A) while disposing of this ground. The ld. CIT(A) has discussed the ground raised by the revenue in detail in para Nos. 2 to 4 of its order. The operative portion of the order is contained in para 4.1.2 and the same is reproduced below: "4.1.2 I have duly considered assessee's submission and carefully cone through assessment order passed by the AO. I have also. taken a note of factual matrix of the case as well as applicable case laws relied upon. I have also carefully perused the assessment record. On careful perusal of the seized documents (Supra), on which during the search assessment Sh Vijay Kr Jain in his sworn statement on oath u/s 132(4) of the Act recorded on 05.09.2013, had admitted to have received on-money of Rs. 27,50,31,216/= and Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peration from his premises located at 401, Pearl Survanshi, A-5, Sardar Patel Marg, Jaipur. b) No money trail or cash seizure evidencing receipt of on-money was found during the search operation. c) The area as per seized documents (in sq. ft.) does not match with the area mentioned in the Sale Deed. The Sale Deed in respect of flats mentioned had not been executed by the date of search; accordingly, the amount mentioned in these papers is not verifiable vis-a-vis total sales consideration. d) The seize paper are computer printouts having no date and also unverifiable contents. The seized papers don't contain (i) date of transactions, (ii) name of buyers, (iii) details of the cheque payments vide which accounted money was given, and (iv) name of the person receiving such on-money from buyers. Even the amounts shown on "column A" which is alleged to be the accounted part of sale price is also not verifiable for books of accounts, meaning thereby the details mentioned in the seized documents cannot be corroborated with the transactions recorded in the regular books of accounts. e) The assessee company recognizes the sale of flats only when the flats are fully ready to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king one. The document should speak either out of itself or the company of other material found on investigation and /or in the search. The document should be clear and unambiguous in respect of all four components of charge of tax. If it is not so, the document is only a dumb document and no charge of tax can be levied on the assessee on the basis of a dumb document. The search action at the appellant's premises has yielded materials which justify such inference. It is so, in my opinion, even after presumption applied to the facts under Section 292C of the Act, there are not adequate materials to conclude that the transactions in the seized documents are the transactions of the appellant which remained undisclosed. The appellant, under the principles of natural justice, has the right to rebut the presumption. This is very important since the presumption under section 292C is permitted only in respect of the documents in "possession or control" of the assessee. Therefore, onus is on the AO to prove that what was stated in the seized document, are true. Such an interpretation would render the deeming provisions of section 292C otiose and presumption as to the correctness of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sive. It is open to the assessee who made the admission to show that it is incorrect. The Hon'ble Apex Court again in Nagubai Armal v. B. Sharma Rao AIR 1956 SC 100, has laid down that an admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue. According to Govindram M. Oberoi v. ITO (1996) 58 ITD 73 (Pune-Trib), statement given under section 132(4) can be used as evidence against the assessee. Presumption can be drawn on the basis of such evidence. But, this gives to rise to presumption, which can be rebutted; statement given at the time of search cannot be treated as sacrosanct. Hon'ble Madras High Court in case of M. Narayanan & Bros. v. ACIT (2011) 339 ITR 192 (Mad) has held as under: ".......While statement rendered by assessee at time of search under section 132(4) may be used in evidence in any proceeding, yet that, by itself, does not become sole material to rest assessment, more so when assessee seeks to withdraw same by producing material in support of such retraction " Or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Therefore, the provisions could not be ignored and no addition could be made under this section. From the aforementioned judgments, it is seen that an admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances in which it is made. It can be shown to be erroneous or untrue. Therefore, addition made on the basis of confessional made before DDIT (Inv), which was subsequently retracted, and as the additions which are not supported by corroborative evidence cannot be sustained. In view of facts and circumstances of the case as discussed above and most respectfully relying on the above decisions(supra), addition made of Rs. 25,86,60,5507= is hereby deleted. Assessee's appeal in Gr No 1 stands allowed." 12. After having heard the ld. Counsels at length and after appreciating the facts contained in the present case, we found that the addition in the present case was made by the A.O. by simply relying upon the sworn statement made U/s 132(4) of the Act by Shri Vijay Kumar Jain Director, of the assessee company without placing any further corroborative evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said affidavits. Therefore, the contents of those affidavits remained uncontroverted. As per the assessee, the papers i.e. page No. 1 to 4 of Annexure-A2 are rough and dump papers because these papers do not have any signature of the assessee/directors, even the originator/writer of these papers are not found and these papers are undated. On the analysis of page Nos. 1 to 4 of Annexure-A2, we also found that the allegations levelled by the assessee are correct and apart from that these papers do not contain the name of any buyer and the A.O. was not in a position to correlate these papers with regular books of account. As per the assessee, certain flats shown as sold in these papers were actually sold subsequent to the search and in this respect they have also submitted documents with the A.O.. It is an admitted fact that the A.O. himself in the order of assessment at page No. 24 has categorically admitted that these papers do not have any date but he still presumed that these belong to the period when found and seized. In our view, no liability can be fastened on the basis of assumptions and presumptions and it is a settled law that the presumption whosoever strong may be but it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns numerical figures then such document is vague and dump document and no addition can be made on the basis of such document. Similarly, in the case of ACIT Vs Satyapal Wassan, it was also held by the Coordinate Bench of the ITAT, Jabalpur 295 ITR 352 wherein it was held that the document found during search must be a speaking one. Document must reflect all the details about the transaction of the assessee in the relevant Assessment Year and in case if there is any gap then in that eventuality the same has to be filled by the A.O. through post search enquires and co-relate the material found with the business of the assessee, without which no addition can be made on the basis of a loose paper. The Coordinate Bench of ITAT, Hyderabad, in the case of K.V. Laxmi Savitri Devi Vs ACIT 60 DTR 148 has held that no addition can be made on the basis of a loose paper which does not contain the name and the date of payment. The department is precluded in drawing inferences on the basis of suspicion, conjecture and surmises and no addition can be made on the basis of such dump document or loose sheets. The ld AR also invited our attention to the chart which was also filed before lower authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JKD Pearl Stylome FLAT NO. AREA AS PER SEIZED PAPERS (Sq. ft) AREA AS PER SALE DEED (Sq. ft) 101 * 2615.6 102 * 2615.6 201 & * 201 5231.1 301 2491.25 2615.6 302 * 2491.25 2615.6 401 2491.25 2615.6 501 2491.25 2586.3 502 2491.25 2586.3 801 2491.25 2586.3 802 2491.25 2586.3 JKD Pearl Aura FLAT NO. AREA AS PER SEIZED PAPERS (Sq. ft) AREA AS PER SALE DEED (Sq. ft) 102 * 1734.8 601 1648 1770.2 604 * 1279 1365.7 703 1279 1362.2 704 1279 1365.7 15. On the scrutiny of those documents in detail, we also found that the area mentioned in the seized paper is at variance with the regular records. The assessee had also drawn our attention to the comparison made by him with respect to amount of sale with regular books vis a vis seized papers. The assessee had also drawn our attention to the fact that even the accounted amount mentioned in column 'A' of these pages i.e. page Nos. 1 to 4 of Annexure-A2 also do not tally with the consideration shown in the registered sale deeds and in this respect, following chart has been placed on record, which is reproduced below: JKD Pearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) DCIT Vs. Rajendra Kumar Sancheti (ITAT Jaipur) 42 Taxworld 152 dated 27.03.2009 Addition cannot be made on the basis of seized paper which is not prepared by the assessee and which appears to be a deaf and dumb document. (ii) Mahaan Foods Ltd. Vs. DCIT (ITAT Delhi) (2009) 27 DTR 185 In the absence of any other evidence found during the course of search or brought on record by the Assessing Officer to show that the expenditure found noted on seized documents was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee. No inference could be drawn against the assessee much less any inference of unexplained expenses on the basis of a dumb document found at the residence of its director as there is no proof to show that the amount mentioned in the said document was paid by the company. (iii) MoolchandKumawat& Sons Vs. DCIT (Ajmer) ITAT Jaipur Bench 42 Taxworld241 in M.A. No. 93/JP/2008 arising out of ITSSA No. 24/JP/2005 order dated 20.02.2009 Addition cannot be made on the basis of a dumb document or on the basis of entries found recorded on a paper seized during search without conducting any enquiry from the concerned par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in particular, by various loose sheets found at the premises of the assessee as well as vouchers, some of which related to the two films in question. In an appeal filed to the Tribunal, the Tribunal framed three issues, two of which were unnecessary for the reason that the statement recorded on August 25, 1995, was said to be relevant but not conclusive. Therefore, whether the statement was made under duress and whether it was retracted lawfully would have no relevance at this stage. However, the Tribunal went into these issues as well and ultimately, found that the statement could be used as evidence. Further, it examined other corroborative evidence referred to in the assessment order and arrived at a finding that the added income would be income which can be added under section 158BC for the block assessment period in question. In an appeal filed under section 260A to the Bombay High Court, the High Court found, after narrating the facts, that no substantial question of law arises. 4. We are of the view, in accordance with the view of the High Court, that no substantial question of law arises. Further, though it was vehemently argued by Shri Devansh A. Mohta, learned counsel a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers (D.B Appeal No. 67/2002 & others) vide its order dated 13-5-2016 where Hon'ble High Court has laid down the following proposition in law in respect of retraction of statement recorded under section 132 (4) of the Act: "14. Having noticed the arguments of the learned counsel for the parties, we deem it proper at the outset to take into consideration the finding of the Tribunal about retraction/resiling of the statements recorded under Section 132 (4) as the Tribunal has primarily come to a finding that retraction is proper. We would also deal with the judgments relied on by the learned counsel which has a bearing on the issues and would then give our own view on questions posed by the Revenue. 15. In our view, the statements recorded under Section 132 (4) have great evidentiary value and it cannot be discarded as in the instant case by the Tribunal in a summary or in a cryptic manner. Statements recorded under Section 132 (4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial. 15.1 Thus, in our view, the Tribunal in a summary manner has held that retraction is proper, without going in detail and manner, time of retraction, the addition deleted, is wholly on a perverse finding. 15.2 This Court in Raj kumar Sodhani v. The CIT (D.B ITA No. 15/2015 decided on 28-4-2016) has taken this very view that retraction after a sufficient long gap loses its sanctity." 24. In light of legal proposition laid down by the Hon'ble Rajasthan High Court, there is clearly an inordinate delay in retraction and no justifiable explanation has been given by the assessee company for such delay. It is clearly an afterthought and loses its signifance. The statement recorded under section 132 (4) has great evidentiary value and there is no material which has been brought on record that such statement has been recorded and obtained forcefully/by coercion/undue influence. Further, the assessee has been consistent in his statements so recorded even during the post search proceedings when his statement was recorded under section 131. Hence, in light of above discussions, the retraction of the statement recorded under section 132 (4) cannot be accepted in the instant case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to explain the source of cash amounting to Rs. 3,380/- found at his office and Rs. 1,21,43,210/- found at his residence, he submitted regarding the amount of Rs. 1,21,43,210/- found at his residence that he was unable to give any explanation and admitted that he was in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and that the income so generated on account of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed income belonged to his company M/s Bannalal Jat Construction Pvt. Ltd. In response to question no.11 wherein he was asked to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure details have been found and taking all that into consideration, he surrendered Rs. 4,01,43,210/- as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s Bannalal Jat Construction Private Limited in respect of unexplained cash amounting to Rs. 1,21,43,210/-and Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surrender without having evidence or proof of retraction is not permissible in the eyes of law. The statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. In view of the above discussion, the question formulated vide order dated 09.05.2018 is answered in favour of the revenue and against the assessee." II-A It may be mentioned that the SLP filed by the assessee in the above case has been dismissed by the Hon'ble Apex Court as reported in Bannalal Jat Constructions (P.) Ltd. Vs CIT [2019] 106 taxmann.com 128 (SC). III-A In the case of PCIT Vs Shri Roshan Lal Sancheti, in D. B. ITA No. 47/2018 vide its judgement dated 30.10.2018, the Hon'ble Rajasthan High Court has affirmed its above referred earlier judgement in the case of Banna Lal Jat and held as under: "In view of the law discussed above, it must be held that statement recorded under Section 132(4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been made under some mistake or to be otherwise incorrect. But, the onus would be on the maker of that admission. In this case it is the appellant/assessee who has admitted and surrendered a sum of Rs. 1.75 crore as his undisclosed income. It was incumbent upon him to show that he had made a mistake in making that admission and that the said admission was incorrect. He had access to all the documents which has been seized inasmuch as the copies had been supplied to him. However, he did not produce anything to establish that the admission was incorrect in any way. That being the position, the appellant/assessee cannot resile from his earlier statement made on 10-11.11.2005 and 21.11.2005. 12. The learned counsel for the appellant/assessee also referred to the Supreme Court decision in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [19731 91 ITR 18 for the proposition that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It was contended that it was open to the person who made the statement to show that it was incorrect. There cannot be any doubt about this position in law, but, in the present case the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he additions vis-a-vis the property transactions on the reasoning that the department cannot do so on the basis of the admission made under Section 132(4) and on the premise that the Department ought to have proved retraction to be untrue cannot be countenanced in view of the specific words employed in Section 132(4)." VI In the case of CIT Vs Lekh Raj Dhunna [2012] 20 taxmann.com 554 (Punjab & Haryana), it has been held by the Hon'ble High court that: "17. Thus, in view of sub-ss. (4) and (4A) of s. 132 of the Act, the AO was justified in drawing presumption against the assessee and had made addition of Rs. 9,00,000 in his income under s. 68 of the Act. The onus was upon the assessee to have produced cogent material to rebut the aforesaid presumption which he had failed to displace. The assessee retracted from the said statement vide letters dt. 24th Nov., 1998 and 11th March, 1999 during the course of assessment proceedings. However, no value could be attached thereto in the present case. In case the statement which was made by the assessee at the time of search and seizure was under pressure or due to coercion, the assessee could have retracted from the same at the earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to bring the case under Section 69 of the Act. In our considered view nothing more is required than the facts, which were considered by the Assessing Officer as well as the Commissioner of Income Tax (Appeals) and the Tribunal. The notings are clear and it is not any scribbling, which shows the figures and also shows whether the payments were in cash or in cheque. The retraction made by the assessee, after a period of two years, was rightly rejected as an afterthought." 18. Whereas on the contrary, the assessee has relied upon the following decisions: (a) Contech Transport Service (P) ltd Ors V/s ACIT (2009) 19 DTR 191 (Mumbai) 28-11-08 No addition can be made only on the basis of admission in statement u/s 132 (4) (b) Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone. (c) KailashhenManharlalChokshiVs CIT (2008) 14 DTR 257 (Guj) It is also to be seen as to whether an addition made is merely based on the statement recorded by the AO under s. 132(4) and whether any cognizance may be taken of the retracted statement. So far as cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree with the authorities so as to escape further harassment. In the normal course if the surrender was genuine the revenue authorities should have and would have crossed checked the details and facts of amount mentioned in these pages. They should have verified at least a few entries of the accounted amount mentioned in these pages. No such exercise was done neither during the search nor during the course of assessment proceedings the post search enquiries do not reveal anything against the assessee. Merely harping on the rough pages and on the statement of the assessee u/s 132(4) wont help in making additions. Further during the course of assessment proceedings parties have been called u/s 131 who have purchased the flats and they have stated that no on money was paid by them. The Learned Assessing Officer also called for information u/s 133(6). Despite a written request the Learned Assessing Officer has not furnished copies of statement recorded u/s 131 and information collected u/s 133(6) as these go in favour of the assessee. The assessee humbly requests that the records of the Learned Assessing Officer may be called for the purpose and verified. Further a number of affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er made do not contain requisite minimum details of transactions and it is a settled proposition of law that if a document does not contain any date and name and only contains numerical figures then such document is vague and dump document and no addition can be made on the basis of such document. In order to avoid any repetition, we would like to confine ourselves to the glaring errors in the investigation/verifications carried out by the revenue authorities. The ld. CIT(A) has already mentioned in detail the deficiencies/discrepancies in the verifications carried out by the revenue department and even according to the assessee, since the sale already stood completed, there was no occasion for the assessee to have shown outstanding amount against the sale of flats and apart from the above certain flats have been sold much after the date of search details of which have also been supplied by the assessee to the revenue authorities. Therefore, according to the assessee, it was all enough to establish that the papers were rough and deserves no consideration, therefore, surrender made on the basis of these papers was correctly retracted. The assessee had retracted on the surrender vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the search &seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search &seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration 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 Departments. Similarly, while recording statement during the course of search it seizures and survey 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 assessment orders Yours faithfully, Sd/- (S. R. Mahapatra] Under Secretary (Inv. II) (ix) F.No. 286/98/2013-IT (Inv.II) dated 18.12.2014 Admissions of Undisclosed Income under coercion/pressure du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and assessment should be completed not on the basis of such surrender but on the basis of material gathered during search. However, in the present case, the A.O. had made additions solely on the basis of solitary statement made by the Director of the assessee. Even the Hon'ble Jurisdictional High Court of Rajasthan in the case of CWT vs. Sanwarmal Shivkumar 171 ITR 337 has held that the officers of the Department are bound by the circulars of the board. Further in the following cases the Courts have held that circulars issued by the Board are binding: - (i) Navnit Lal C Javeri Vs. Sen (1965) 56 ITR 198 (SC) (ii) K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) (iii) UCO Bank vs. CIT (1999) 237 ITR 889 (SC) (iv) Union of India vs. Azadi Bachoo Andolan (2003) 263 ITR 706(SC) 22. Although, ld CIT-DR has stressed on the fact that the presumption of correctness is attached to the statement recorded U/s 132(4) of the Act and even the A.O. has categorically mentioned that page No. 1 to 4 of Annexure-A2 were found and seized during the course of search, therefore, the assessee cannot claim these documents as dump documents. However, on the contrary, we found that the presumption a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following submission before the Learned CIT(A) and who has deleted the entire addition made by the Learned Assessing Officer after considering the submission of the assessee and has given the finding that Assessing Officer has simply relied upon the sworn statement of Shri Vijay Kumar Jain Director of the appellant company without placing any further corroborative evidence to prove his contention. Therefore, Assessing Officer has failed to establish the contrary. Following the same principle other addition was also made of Rs. 2.5 Crore without carrying out any enquiry or placing any corroborative evidence in support of his contention is hereby deleted. The submission made before the Learned CIT(A) is quoted as under: - The Learned Assessing Officer has made addition of Rs. 2,50,00,000/- as per para 9(b) of the assessment order appearing on page 28. The same is reproduced as under: - "It is worthwhile to mention here that vide show cause notice referred in above paras of this order assessee was asked to state its case in respect of surrender of undisclosed income of Rs. 2.50 Cr. on account of any discrepancy in the papers seized during the course of search proceedings and same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year: Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income." The perusal of the aforesaid provisions reveals that it is applicable in the following conditions: - (i) When the assessee has incurred any expenditure. (ii) When assessee fails to offer no explanation about the source of such expenditure. It is submitted that in the case of the assessee no such conditions exist. The Learned Assessing Officer has not pointed out any expenditure incurred by the assessee of which the source could not be explained. In view of this it submitted that the addition has been made by the Learned Assessing Officer without any basis and just for the sake of addition. The same deserves to be deleted. " The Learned CIT(A) on the basis of finding given in the ground no. 2 has also dele ..... X X X X Extracts X X X X X X X X Extracts X X X X
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