TMI Blog2022 (2) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... e of waste cotton despite search was conducted. Even no substantial assets or cash was found from the assessee to support the claim of the Revenue. It seems that the total unaccounted cash found during the course of search was only ₹ 26,36,572/-, out of which ₹ 20 lakhs belong to Shri Sadiq and it has been accepted by the Settlement Commission. The balance amount ₹ 6,36,572/- remains after the order of CIT(A). This cash cannot be equated with the quantum of addition made by the AO and confirmed by the CIT(A) at ₹ 42 lakhs in each of these six assessment years. Hence, we have no hesitation in stating that the addition made by the AO and confirmed by CIT(A) is just mere on suspicion, conjectures and surmises without any evidence. Assumption of jurisdiction for making addition u/s.69A - We noted that the amount determined by the AO as unaccounted sale of cotton waste is without any basis, without any corroborative documentary evidence or any evidence found from the premises of the assessee during search seizure operation. In the given facts, we are of the view that once there is no money, bullion, jewellery or other valuable article is found from the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds raised reads as under:- 1. The order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case. 2. The Learned Commissioner of Income Tax (Appeals) erred in confirming the addition u/s.69A of the Act of ₹ 42,00,000/- towards alleged unaccounted proceeds out of waste cotton sales. 3. The Learned Commissioner of Income Tax (Appeals) failed to acknowledge the fact that there was no corroborative evidence to support the AO s contention that the proceeds from sale of waste cotton were partially unaccounted. 3. Brief facts are that the assessee is a limited company and is a part of Seyadu group of companies. A search seizure action u/s.132 of the Act was carried out on the assessee group on 28.06.2017. According to the AO, on the basis of material evidences gathered during the course of search, notice u/s.147 of the Act was issued in the assessee s case from AYs 2013-14 to 2018-19. Subsequently, assessee filed return of income and assessment proceedings were started u/s.143(2) of the Act. The first issue is as regards to unaccounted sale of waste cotton. The AO noted that during the course of search operations on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties through RTGS. The balance 50% of sale value is received from the parties by cash which is not accounted in the books of accounts. The AO on the basis of above statement noted that a statement u/s.132(4) of the Act cannot be retracted in the normal course and it can be used as evidence in the assessment. The assessee replied that the sale proceeds from waste cotton have duly and fully been accounted for in the books of accounts and the sale proceeds were received only through banking channel and no cash sale is effected by the assessee company. It was contented that the statement by Shri S. Thirumalai Kumar, AGM (Admin) is retracted and even the AO could not brought on record any incriminating material or seized material to make this addition of unaccounted sale of waste cotton for an amount of ₹ 42 lakhs u/s.69 of the Act. But the AO made this addition. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) noted that the deposition given by Shri S. Thirumalai Kumar, AGM (Admin) is a valuable piece of evidence although retracted that too which was not retracted in real sense, even the presumption casted as per the provisions of section 292C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , conjectures and surmises. 6. Apart from argument on merits, the ld.AR argued that the AO has made addition of unaccounted sale of cotton waste by making estimation u/s.69A of the Act. He took us through the assessment order and shown us that the addition is made as unaccounted income of the assessee u/s.69A of the Act and he read out the relevant provision of section 69A of the Act. He stated that the addition u/s.69Aof the Act can be made only in respect to the article or asset where the assessee is found to be the owner i.e., of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of accounts and further the assessee offers no explanation about the nature and source of acquisition of the same or the explanation offered by him is not in the opinion of AO satisfactory, the money or value of the bullion, jewellery or other valuable article is to be added as income of the assessee for the financial year relevant to the assessment year. According to him, the unaccounted sale of waste cotton does not fall under any of the assets mentioned in section 69A of the Act. 7. On the other hand, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders Further, this notification was again reiterated vide letter F.No.286/98/2018-IT (INV.II) as under:- Section 132, Read with Section 133A of the Income Tax Act, 1961 - Search Seizure Admissions of undisclosed income under coercion/pressure during search/survey Letter [F.No.286/98/2013-IT(INV.II)], Dated 18-12-2014 Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by assessee is incorrect. 7.2 As noted above, the factual situation is very clear that there is no incriminating material for making any estimation of unaccounted sale of waste cotton despite search was conducted. Even no substantial assets or cash was found from the assessee to support the claim of the Revenue. It seems that the total unaccounted cash found during the course of search was only ₹ 26,36,572/-, out of which ₹ 20 lakhs belong to Shri Sadiq and it has been accepted by the Settlement Commission. The balance amount ₹ 6,36,572/- remains after the order of CIT(A). This cash cannot be equated with the quantum of addition made by the AO and confirmed by the CIT(A) at ₹ 42 lakhs in each of these six assessment years. Hence, we have no hesitation in stating that the addition made by the AO and confirmed by CIT(A) is just mere on suspicion, conjectures and surmises without any evidence. 7.3 As regards to assumption of jurisdiction for making addition u/s.69A of the Act, on account of unaccounted sale of cotton waste, we noted from the facts of the case and as per the facts recorded by the AO as well as the CIT(A) the addition is made just on est ..... X X X X Extracts X X X X X X X X Extracts X X X X
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