TMI Blog2020 (11) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... computation sheets seized, there is no other document found during the search which could indicate that the income declared by the assessee or his family members were incorrect. No corroborative evidence or material was brought on record by the A.O. to prove that the assessee had any other source of income other than that declared by him and that the assessee earned more than what he had declared in his return of income - A.O. had not recorded any finding and had mechanically added the amount while the A.O. ought to have supported the addition by recording findings on the basis of seized material. No addition can be made only on the basis of statements particularly when there is no material available with the department to prove that the surrender made was correct. In the present case, the department has not placed on record any material to prove that the surrender made by the assessee was correct. As admittedly, the assessment proceedings of the year under consideration was not pending as on the date of search and there was no incriminating document found, relating to the year under consideration, during the course of search. There cannot be any addition in the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as tried to relate it to the documents relating to boundary wall expenses but we noted that among all the seized documents, there is only one document at Page no. 1 of Exhibit No. 7 which is relating to construction of boundary wall at Village Bhikhawas but these expenses relate to AY 2017-18 - these boundary wall expenses are not related in any way in respect of any construction in AY 2015-16 i.e. year under consideration. Therefore, we are of the considered view that the A.O. had made additions by misreading or misinterpreting the documents placed on record - Decided in favour of assessee. - ITA No. 1290 And 1291/JP/2019 - - - Dated:- 21-10-2020 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Avinash Khandelwal (CA) For the Revenue : Ms. Chanchal Meena (Addl.CIT) ORDER PER: SANDEEP GOSAIN, J.M. Both these appeals have been filed by the assessee against the two separate orders of the ld. CIT(A)-4, Jaipur dated 18/09/2019 for the A.Y. 2014-15 2015-16 respectively. Grounds taken by the assessee in both these appeals are reproduced as under: Grounds of ITA No. 1290/JP/2019 (A.Y. 2014-15) 1. The learned AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- had been issued in name of shop owned by his nephew Manoj Kumar Yadav and nephew had accepted the said bills by filing an affidavit in related proceedings. The learned CIT has erred in not considering the fact on record. 3. The learned AO has erred in stating that there were boundary expenses in the AY-2015-16 and that assessee failed to explain about it. The AO has also erred in stating that page no. 20-28 of Exhibit 6 were hand written papers containing transaction of construction of shop for ₹ 292867/-. The learned CIT (Appeals) has erred in not considering the mistakes of AO and confirming the additions in hand of assessee. The appellant crave leave to add, alter or amend any grounds of appeal raised above at the time of hearing. 2. The hearing of the appeals was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. Firstly, we take ITA No. 1290/JP/2019 for the A.Y. 2014-15. Briefly stated facts of the case are that the assessee is engaged in the activities of digging, tilling and leveling of agriculture farms and commission on sale of agriculture produce of other farmers other sources being interest from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessee or these female members was incorrect. Hence it is clear that there was no incriminating material qua this addition in income of assessee. 2. The addition in income is only on the basis of statements recorded under section 132(4) during search proceedings and without any incriminating document. The statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material. 2.1 The learned AO has made addition of ₹ 1274700/- in income only on the basis of statements recorded under section 132(4) during search proceedings and there is no incriminating document to substantiate the finding of AO. The assessee has retracted from his search statements by filing an affidavit dated 19/06/2017 (PB Page Nos. 1-5). Furthermore during assessment proceedings, to verify the truth of the retraction affidavit filed by assessee, the statements of assessee were recorded u/s 131. In those statements, the assessee reiterated the contents of retraction affidavit and stated that he had not surrendered any undisclosed income as alleged in statements recorded on 19/11/2016. However the learned AO neither considered it nor referred it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k is being categorized as business income and has been disclosed as such in the return of income filed by assessee. If required, the assessee is ready to get confirmations from farmers from whom he has received income. We had requested to learned AO for certified copy of statement u/s 131 and other relevant documents vide letter dated 07/05/2019 which is still awaited. Assessee is illiterate and does not understand the nitty gritty of taxation: We would like to draw your attention towards the fact that assessee, in his statement recorded on 19/11/2016, stated that he is illiterate and that he cannot read the contents of affidavit (Answer to Q.No. 1). He has also stated that work of filing of ITR is done by his nephew Manoj Yadav (Answer to Q. No. 9). In answer to Q.No.31 32 he has stated that he has not shown transaction of sale of land to Kedia realestate and has not paid tax, while in fact the same was disclosed in his ITR but because he had claimed deduction under section 54B hence no tax was paid by him. (Relevant pages of statement recorded on 19.11.2016 are attached at PB Page Nos. 6 - 8). These submissions of assessee shows that he does not understand the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of the year under consideration was not pending as on the date of search and there is no incriminating document found, relating to the year under consideration, during the course of search therefore there cannot be any addition in the income of assessee. Thus the addition of ₹ 1274700/- made by learned AO need to be deleted. We would like to draw your attention to under mentioned case wherein jurisdictional Rajasthan High Court and Jaipur ITAT and other High Courts have consistently expressed similar views and reiterated the above mentioned legal position: i. Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 (Raj) ii. Pr. Commissioner Of Income Tax-Central, Jaipur Vs Smt. Daksha Jain DB ITA No. 125/2017 (Raj) iii. Commissioner of Income Tax (Central-III) v. Kabul Chawla (2016) 380 ITR 573 (Del) iv. Pr.CIT, Delhi-2 Vs Best Infrastructure (India) Pvt Ltd. (and others) ITA Nos. 11 to 22 of 2017-01.08.2017 (Delhi) v. Principal Commissioner of Income Tax Central-2, New Delhi v. Meeta Gutgutia 2017 (295) CTR 466 (Del). vi. Commissioner of Income Tax v. Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78 (Bom) vii. Ratan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of diesel, repairs etc which has been claimed as expenses for earning income. 4.2 It is also to be noted that the assessee and the female members have been declaring their business earnings since AY -2010-11 continuously (and up to AY 2017-18) but it is in this assessment year only that such an arbitrary addition on account of alleged undisclosed income has been made. In all other assessment years the income declared by assessee has been accepted and therefore there is no reason that arbitrary addition of ₹ 1274700/- can be made in income of assessee. 5. No additions made on the same ground in case of assessee s brother Sh. Gopal Lal Yadav It is also to be noted that similar question regarding income of female members and alleged surrender of undisclosed income in that respect was done in the statements recorded u/s 132(4) in case of the assessee s brother Sh. Gopal Lal Yadav. Sh. Gopal Lal Yadav also retracted from the said surrender statement and submitted his reply in response to show cause notice during assessment proceedings (Copy of relevant portions of statements, retraction affidavit and reply of assessee are enclosed at PB Page No. 9 - 11). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and without going into the facts of the case. 8. The copy of statement of assessee recorded under section 132(4) were not given to assessee in spite of repeated oral reminders to ADIT(Inv) together with letters dated 11/01/2017 21/03/2017 . It was on 11/05/2017, that the assessee received copy of his statements from Central Circle-3. The assessee then found that there is alleged surrender of income being recorded in his statement taken on 19.11.2016. Till the receipt of the copy of statement the assessee genuinely believed that he had not surrendered any income for taxation and that no incriminating material have been discovered in search, therefore he did not file any retraction statement. But on receipt of copy of his statements on 11/05/2017, he was astonished to note the surrender of income and after complete understanding of the contents of his statements dated 19.11.2016, he sworn in a Retraction Affidavit on 19/06/2017 wherein he retracted from the surrender of any undisclosed income for taxation. After the filing of retraction affidavit the learned AO remained silent on the face of it and carried no enquiry thereon to verify the correctness thereof. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affidavit dated 19/06/2017. Moreover in the said case of Roshan Lal Sancheti the delay in retraction statement was almost 7 months, but in the present case there is not much delay. The time gap between the date of receipt of copy of search statements and the date of sworn in of retraction affidavit is just more than a month. Thus the grounds of rejection of retraction affidavit filed by assessee are not correct and are based on wrong facts. Further the learned AO has not provided an opportunity to assessee before rejecting the retraction affidavit filed by assessee. No enquiry was made in this regard by learned AO during assessment proceedings. We would also refer to CBDT Instruction F No. 286/2/2003-IT (Inv) dated 10/03/2003 regarding confession of additional income during the course of search and seizure and survey operation wherein it has directed as under: 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 whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed income as discussed above in Para -6 It may be noted that the learned AO has not mentioned any section of Income Tax Act under which the addition in income has been made. Thus the addition made in income is illegal and void. Without prejudice to above, otherwise also any addition in income on account of undisclosed income can be made only under section 68. But section 68 is invoked only if any sum is found credited in the books of an assessee maintained for any previous year . In the present case the addition has been made on the basis of assumptions and retracted statement and not on the basis of any sum found credited in books maintained by assessee. ITRs of other persons cannot be regarded as books of assessee and thus the provisions of Section 68 can also not be invoked in the present case. The assessee has forwarded a separate application for admission of this additional ground of appeal under Rule 26 of ITAT Rules 2017, which may please be approved. Looking to the above submissions we request you to please delete the addition of ₹ 1274700/- and oblige. 7. On the other hand, the ld DR has relied on the orders of the authorities below 8. We have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these income tax returns and computation sheets seized, there is no other document found during the search which could indicate that the income declared by the assessee or his family members were incorrect. From the record, we also noticed that the additions were made only on the basis of these documents as well as on the basis of statement of the assessee recorded U/s 132(4) of the Act during the search proceedings. The said statement of the assessee recorded U/s 132(4) of the Act was also retracted by the assessee later on by filing affidavit dated 19/06/2017. During the assessment proceedings, in order to verify the truth of retraction affidavit filed by the assessee, statement of assessee was recorded U/s 131 of the Act. In those statements, the assessee made categorical statement that the contents of retraction affidavit were correct and he had not surrendered any undisclosed income as alleged in the statement recorded U/s 132(4) of the Act on 19/11/2016. 8.1 It is also an admitted fact that no corroborative evidence or material was brought on record by the A.O. to prove that the assessee had any other source of income other than that declared by him and that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, if it is retracted by the person from whom it was recorded, totally different considerations altogether, ensue. The situation resembles the one, which arises on retraction from the statement recorded under section 164 of the Code of Criminal Procedure. The evidentiary value of a retracted statement becomes diluted and it loses the strength, to stand on its own. Once the statement is retracted, the assessing authority has to garner some support, to the statement for passing an order of assessment. 11. In I. T. T. A. No. 112 of 2003 (see CIT v. Naresh Kumar Agarwal [2014] 369 ITR 171/[2015] 53 taxmann.com 306 (AP) this court dealt with the very aspect and held that a retracted statement cannot constitute the sole basis for fastening liability upon the assessee. 12. In the instant case, the appellants specifically pleaded that the statements were recorded from them by applying pressure, till midnight, and that they have been denied access outside the society. The Assessing Officer made an effort to depict that the withdrawal or retraction on the part of the appellants is not genuine. We do not hesitate to observe that an Assessing Officer does not have any power, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly income tax returns and computation sheets belonging to the female members of the family of the assessee as well as his brother Shri Gopal Lal Yadav which admittedly were already in possession of the department, therefore, these documents itself cannot be termed as incriminating material . On this proposition, we rely on the following judicial pronouncements: i. Jai Steel (India), Jodhpur v. ACIT (2013) 36 Taxman 523 (Raj) which had held that the assessment in respect of each of the six assessment years, preceding the year of search is a separate and distinct assessment. It was further held in the said decision that If in relation to any assessment year, no incriminating material is found, no addition or disallowance can be made in relation to that assessment year in exercise of powers under section 153A of the Act and the earlier assessment shall have to be reiterated. ii. Pr. Commissioner Of Income Tax-Central, Jaipur Vs Smt. Daksha Jain DB ITA No. 125/2017 (Raj) iii. Commissioner of Income Tax (Central-III) v. Kabul Chawla (2016) 380 ITR 573 (Del) wherein whole gamut of assuming jurisdiction and assessment under section 153A has been discussed. iv. Pr.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the A.O. and confirmed by the ld CIT(A) is hereby deleted. 10. Since, we have deleted the addition, therefore, there is no need to adjudicate the other grounds taken in this appeal. 11. In the result, this appeal of the assessee is allowed. 12. Now we take ITA No. 1291/JP/2019 for the A.Y. 2015-16. Grounds No. 1 and 2 of the appeal reads as under: 1. The learned A.O. has seriously erred in law and facts in making addition of ₹ 292867/- in the income of assessee as unexplained expenditure. The learned CIT(Appeals) has erred in confirming the additions made by the A.O. without considering the facts of the case. 2. The learned A.O. has erred in applying provisions of Section 292C despite of the fact that bills of ₹ 292867/- had been issued in name of shop owned by his nephew Manoj Kumar Yadav and nephew had accepted the said bills by filing an affidavit in related proceedings. The learned CIT has erred in not considering the fact on record. 13. Grounds No. 1 and 2 of the appeal raised by the assessee relate to challenging the order of the ld. CIT(A) in confirming the addition of ₹ 2,92,867/- as unexplained expenditure. Both these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents but at the same time he explained that the document was related to his nephew Manoj Kumar Yadav. Further in related assessment proceeding of Gopal Lal Yadav, an affidavit obtained from Manoj Kumar Yadav was submitted wherein Manoj Kumar Yadav had owned the said transactions of 2,92,867/- as the turnover of his shop M/s Mehta Kirana General Store . Thus, it was clear before AO that the documents did not belong to the assessee but the A.O. still proceeded to make the addition in income, which is in our view, was not sustainable. On this proposition, we rely on the following judicial pronouncements: a. P. R. Metrani v. CIT [2006] 287 ITR 209/157 Taxman 325 (SC) In this judgment, dealing with the provision under Section 132(4A) of the Act, it was held by the Supreme Court:- A presumption is an inference of fact drawn from other known or proved facts. It is a rule of law under which courts are authorized to draw a particular inference from a particular fact. It is of three types, (i) may presume , (ii) shall presume and (iii) conclusive proof . May presume leaves it to the discretion of the Court to make the presumption according to the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made by the A.O. and confirmed by the ld CIT(A) is hereby deleted. 15. Ground No. 3 of the appeal reads as under: 3. The learned A.O. has erred in stating that there were boundary expenses in the AY 2015-16 and the assessee failed to explain about it. The A.O. has also erred in stating that page No. 20-28 of Exhibit-6 were hand written papers containing transaction of construction of shop for ₹ 292867/-. The learned CIT(Appeals) has erred in not considering the mistakes of AO and confirming the additions in hand of assessee. 16. This ground of the appeal raised by the assessee relates to challenging the order of the lower authorities in making additions by stating that there were boundary expenses in the year under consideration and the assessee has failed to explain about it. 17. We have heard the rival contentions of both the parties and perused the material available on record. From the record, we noticed that in the order of the assessment, the A.O. had referred the paves 20-28 of Exhibit NO. 6 as hand written paper containing transactions of construction of shop for ₹ 2,92,867/-. We noticed that these pages are not simple hand written pages ..... X X X X Extracts X X X X X X X X Extracts X X X X
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