TMI Blog2022 (4) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 with retrospective effect from 1.4.1962. The Court held that the Explanation also prohibits the Appellate Authorities to go into the reasons recorded by the concerned Income Tax Authority for directing Search against the assessee or tax payer - Being so, the assessee cannot question the validity of search before this Tribunal. Accordingly these grounds are dismissed. Unexplained cash payments - HELD THAT:- In the present case, there is a valid MoU wherein payment of 5 crores are shown; 4 crores was in cash and 1 crore by way of cheque. The amount of payment of 1 crore by cheque was recorded in books of account and the other part of payment of 4 crores by cash was not recorded in the books of account. When 1 crore cheque payment has been accepted by assessee, why not the other 4 crores of cash payment is not true. The inference by the lower authorities was that both cash and cheque payments were true and on that basis the source of 4 crores has not been explained by assessee and it is unrecorded payment in the books of account and payment of cheque of 1 crore has been paid by assessee and fully recorded, but payment of another 4 crores has not been denied by assessee and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y simply observing that assessee has retracted the same. Retraction is to be made within reasonable time and immediately after such statement has been recorded either by filing a complaint to superior authority or otherwise brought to the notice of higher officials by duly sworn affidavit or statement supporting it. Nothing has been done by before the lower authorities. AR relied on various judgments to say that statement u/s. 132(4) has no evidentiary value. All the judgments relied by the assessee were delivered under different set of facts which cannot be applied to the present case. In the present case, the assessee other than taking a different plea at different stage, he has not brought any material on record to suggest otherwise that physical cash found during the course of search was not belonging to the assessee. There is also no evidence to suggest that cash withdrawn from ETLL was unused and kept with the assessee idle though repeatedly withdrawals were made one after the other. As per the provisions of section 292C, presumption is that cash found during the course of search belongs to assessee and burden is on the assessee to prove otherwise. Being so, we do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits under the facts and circumstances of the case. 6. Without prejudice the addition made is wrong and requires to be made as Nil on the facts of the case. 7. Without prejudice, the authorities below ought to have worked out the peak credit before quantifying the unexplained credits under the facts and circumstances of the case. 8. The orders of the authorities below are bad in law as the mandatory conditions to invoke the jurisdiction did not exist, or having not been complied with an consequently the orders of the authorities below are bad in law for want of requisite jurisdiction. 9. The appellant denies himself liable to be assessed under section 143(3) r.w.s 153/of the Act on the ground that:- i. The search initiated in the case of the appellant is illegal and ultra vires the provisions of section 132(1)(a), (b) (c) of the Act; ii. The search is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action under section 132 of the Act is bad in law and consequent assessment under section 153A of the Act is null and void-ab-initio on the parity of the ratio of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified in not affording an opportunity to cross examine the third parties whose statements were used against the appellant, which is against the principles of natural justice and thus the orders of the authorities below are liable to be quashed in the interest of equity justice. 2.a) The authorities below failed to appreciate that the appellant is merely one of the parties to the agreement with M/s. Shree Shubham Ispat Pvt. Ltd. and thus the entire addition of ₹ 4,00,00,000/- as unexplained cash payment in the hands of the appellant is unjustified under the facts circumstances of the case. b) Without prejudice, out of the transaction amount of ₹ 5,00,00,000/-, the appellant's share of ₹ 1,00,00,000/- was paid through account payee cheque and thus the addition of ₹ 4,00,00,000/- in the hands of the appellant as unexplained cash payment is bad in law and thus the same needs to be deleted under the facts and circumstances of the case. 4. The assessee has filed petition for admission of additional grounds stating that these grounds were not urged in the original grounds and they do not involve investigation of any fact otherwise on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior approval of the Additional Commissioner of Income Tax, Central Range-2, Bangalore was obtained vide letter F. No. 51(3)/Addl. CIT-CR-2/12-13 dated 30.03.2013 before passing the assessment order. The AO pointed out that the assessment order has been passed on 19.03.2013 and thus no approval could have been obtained on 30.03.2013 before passing the assessment order which is factually incorrect. The ld. AR submitted that the copy of the approval obtained from the Additional Commissioner has not been provided to the appellant which is against the settled principles of natural justice and thus the order needs to be cancelled on this count alone. 9. Without prejudice, it is submitted that if the Additional Commissioner had given prior approval, then the assessee has to be heard before giving the approval. The granting of an approval is not an empty formality and in the instant case the appellant has not been heard and hence the order is liable to cancelled even on this count as the principle of audi alteram partem has been violated. Further the copy of the approval has not been given to the appellant. It is of importance to submit that the relevant records may be looked into so as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Officer issued another Notice under section 142(1) of the Act on 15.03.2013 as per which the appellant had to furnish certain details by 21.03.2013. The notice was served on the appellant only on 23.03.2013 and the appellant filed the reply on 26.03.2013 i.e. within a short span of two days. It is clear from the notice dated 15.03.2013 that details had to be filed by 21.03.2013 whereas the AO passed order on 19.03.2013 which is against the settled principles of natural justice. This indicates and proves beyond doubt that the assessment was conducted in an arbitrary manner, without regard to the facts of the case, basic principles of natural justice and it may also be inferred that the officer had made up her mind to make additions in the case of the appellant irrespective of the fact whether the replies are furnished or not. Thus it is prayed that the order of assessment be cancelled on the ground of non-application of mind; being patently opposed to principles of natural justice; highhandedness in the approach to the assessment proceedings and lastly for being against the principles of reasonableness, fair-play and equity. 13. It is further submitted that the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aras Rice [2009] 313 ITR 182, the Punjab and Haryana High Court following the decision of the Delhi High Court in M.B. Lal's case [2005] 279 ITR 298, held that while hearing an appeal against the order of assessment, the Tribunal cannot go into the question of validity or otherwise of any administrative decision for conducting search and seizure. In the matter of Gaya Prasad [2007] 290 ITR 128 (MP), it has been held that the jurisdiction exercised by the statutory authority while hearing an appeal cannot enter into the justifiability of an action under section 132A. Whether the order passed by the Commissioner of Income-tax is without jurisdiction or not cannot be the subject-matter of assessment as the same does not arise in the course of assessment. Therefore, neither the Assessing Officer nor the appellate authority can dwell upon the said facet. One may note with profit, it would not be a jurisdictional fact within the parameters of assessment preceding or an appeal arising there from. It can only partake of the nature and character of adjudicatory fact to the limited extent whether such search and seizure had taken place and what has been found during the search and seizur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that question at all. 18.2. The Hon'ble Jurisdictional High Court in the case of Prathibha Jewellery House Vs. CIT (2017) 88 taxmann.com 94 (Karnataka) dismissed the writ petitions and held that even the law has been amended by insertion of the aforesaid Explanation by Parliament in Section 132 of the Act by the Finance Act, 2017 with retrospective effect from 1.4.1962. The Court held that the Explanation also prohibits the Appellate Authorities to go into the reasons recorded by the concerned Income Tax Authority for directing Search against the assessee or tax payer. The relevant portion of order is reproduced below:- Having heard the counsels for the parties, this court is satisfied that the present writ petitions deserve to be dismissed for the following reasons: (i) That even the law has been amended by insertion of the aforesaid Explanation by Parliament in Section 132 of the Act by the Finance Act, 2017 with retrospective effect from 1.4.1962. That Explanation also prohibits the Appellate Authorities to go into the reasons recorded by the concerned Income Tax Authority for directing Search against the assessee or tax payer. (ii) That this Amendment c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the cancellation of the said MOU does not hold waters because the question here is not income arising out of the said MOU, but the source of cash of ₹ 4,00,00,000/-, considering the fact that the said ₹ 4,00,00,000/- is not reflected in the books of accounts of the assessee. However, by the above submission of the assessee, it is principally agreed by the assessee that ₹ 4,00,00,000/- has been paid in cash. (3) The request for opportunity to cross examine the third parties also does not hold water because the primary evidence in respect of cash payment of ₹ 4,00,00,000/- is the MOU dated 17.08.2009 which is duly signed by the assessee himself, thus confirming that the assessee has paid ₹ 4,00,00,000,/- in cash. 20. The AO, therefore, added ₹ 4 crore as assessee's undisclosed income. The appellant in the course of appellate proceedings reiterated the same and stated that the MOU was cancelled subsequently. According to the CIT(Appeals), the arguments of the appellant is totally misplaced. The moot question is that whether payment in cash was made? The same is evident as the MOU has been seized during the course of search and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no payment in cash was ever made by the appellant to SSIPL. The CIT(A) did not take cognizance of the submissions made by the appellant. Therefore, the addition made by the AO of ₹ 4 crores as unexplained cash payment needs to be deleted under the facts circumstances of the case. 24. Without prejudice, it is submitted that as per the MOU each of the second parties i.e. the appellant, J N Ganesh, Shaju Nair and H M Guruprakash were required to contribute 25% of the contracted amount for making payment to M/s. Shree Shubham Ispat Pvt. Ltd. and therefore the addition of entire amount of ₹ 4 crores in the hands of the appellant is unwarranted under the facts and circumstances of the case. 25. Without prejudice, it is further submitted that the agreement with SSIPL was entered into by a group of individuals consisting of the appellant, Mr. J N Ganesh, Mr. Shaju Nair and Mr. H M Guruprakash which constitute an association of persons (AOP). It is submitted that the common intention of the parties to the agreement was to do the business of mining jointly. Therefore, this arrangement between the parties comes within the purview of unincorporated AOP. 26. It is submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the orders of the authorities below needs to be quashed on this count alone in the interest of equity and justice. Reliance is placed on the decision of the Hon'ble Supreme Court in the case of Kishinchand Chellaram vs. CIT reported in 125 ITR 713. 31. On the other hand, the ld. DR relied on the orders of lower authorities. 32. We have heard both the parties and perused the material on record. In this case, there was a search action on 2.10.2010 u/s. 132 of the Act at the assessee's premises and certain incriminating documents were found. Originally notice u/s. 153A dated 14.11.2011 was served on the assessee, however, assessee did not comply with the notice. Subsequently another notice u/s. 153A r.w.s. 29 dated 27.9.2012 owing to change in incumbency was served on the assessee. In reply, the assessee vide letter dated 4.10.2012 acknowledged the notice dated [27.9.2012] requesting for time till 10.11.2012 to file return of income as required by said notice. AO has given another opportunity vide letter dated 9.10.2012 to file return of income in compliance of notice u/s. 153A of the Act. The assessee vide letter dated 21.11.2012 requested further time till 15.12.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee has paid 4 crores in cash. More so, the presumption u/s. 292C is that where any books of accounts, other documents, money, bullion, jewellery or other valuable article or thing is found in the possession or control of any person in the course of search, it may be presumed that:- i) they belong to such person; ii) the contents of such books of accounts and other documents are true; and iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. 36. It may be noted that the authorities are permitted to draw inference on the basis of books of accounts, documents found in the course of search as it belongs to assessee and the contents therein are true and correct and circumstances justify drawing of inference against the assessee. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on statement from various persons. Being so, there is no question of providing any cross-examination to the assessee in this case. 40. The assessee relied on various case laws. These decisions do not have any relevance at this stage since AO had not solely relied on the statement of parties to make such addition of 4 crores in the case of assessee. Accordingly, these case laws are not considered. 41. Finally considering the totality of facts and circumstances of the case, we are of the opinion that lower authorities are justified in bringing to tax an amount of 4 crores paid by assessee to Kiran Kumar Jain and Mahendra Kumar Jain. This ground of the assessee is dismissed. 42. The next ground is with regard to addition of ₹ 30 lakhs as unexplained cash credit. The facts are that the bank account (Axis Bank) of the appellant reflected a cash deposit of ₹ 30,00,000/- into the bank. The appellant was given an opportunity to explain the source of the above deposit but he failed to explain the same. Therefore, the AO added ₹ 30,00,000/- back to the total income of the appellant as unexplained cash credits. 43. Before the CIT(A), the assessee argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and perused the material on record. The contention of the ld. AR is that the alleged cash deposits were not made in the account assessee, as such it cannot be taxed in the hands of assessee. More so, the remand report by AO dated 28.4.2015 is not furnished to assessee for his comments wherein the AO himself confirmed that cash deposit of ₹ 30 lakhs was found in the Axis Bank account No. 267010100005906, therefore addition of 30 lakhs merely on the basis of assumption and surmises deserves to be deleted. The AO in his remand report stated that assessee has not furnished all his bank accounts tallying with closing balance as on 31.3.2010 at ₹ 11,44,112. However, the details of various bank accounts were not furnished to AO, as such it is not possible to verify the balance account wise. It is also true that copy of the remand report is not furnished to the assessee. In view of this, we are of the opinion that it is appropriate to remit the entire issue in dispute to the file of AO with a direction to AO to furnish copy of remand report to the assessee and direct the assessee to reconcile the closing balance and furnish details of various accounts with bank. Ordered accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the computation of interest was not provided to the appellant as regard to the rate, period and method of calculation of interest under the facts and circumstances of the case. The appellant expressly urges that the period of levy of interest is not in accordance with sections 234A, 234B and 234C of the Act. 11. Without prejudice, the interest levied under sections 234A, 234B and 234C of the Act requires to be waived off under the facts and circumstances of the case. 12. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 13. In view of the above and other grounds that may be urged at the time of the hearing of the appeal, the appellant prays that the appeal may be allowed in the interest of justice and equity. 51. Ground No. 1 is general in nature and requires no adjudication. 52. Ground Nos. 7 to 9 are with regard to validity of assumption of jurisdiction u/s. 132 of the Act. It is submitted that the search u/s. 132 of the Act is conducted not on the basis of any prior information or material inducing any belief but purely on the suspicion and therefore, the action u/s. 132 of the Act is bad in law and consequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be read as 30.3.2013, since the same is only a typographical mistake. The very mention of fact of approval of Addl. CIT, Central Range-2, Bangalore dt. 30.3.2013 and the date of booking of demand in D CR on 30.3.2013 clearly proves that the order has been passed only after prior approval of the Addl. CIT, Central Range-2, Bangalore on 30.3.2013. Hence it is _'inadvertent typographical mistake. 57. In view of the above, it is to be noted that the mistake pointed out by the assessee is a typographical error and prior permission has been taken from the Addl. Commissioner. Hence there is no merit in the grounds of the assessee and accordingly dismissed. 58. Regarding validity of search also, the assessee cannot question before this Tribunal as observed in earlier in AY 2010-11 hereinabove. This ground is rejected. 59. The next ground is with regard to addition of ₹ 16,58,250 on account of unexplained cash. During the course of search, cash of ₹ 15,76,250/- was found from the residential premises of the appellant and ₹ 82,000/- was found from the office of M/s. Suresh Constructions, Vyalikaval, Bangalore, which happens to be his office. Initially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the onus is on him to prove with tangible evidence. It is also important to note that initially he had stated that the money belongs to his father in law in a statement recorded u/s. 132(4) and only subsequently, he changed his statement to suit his convenience. Statement recorded u/s. 132(4) is recorded under oath. It has far more evidentiary value than a letter written by the appellant. The statement recorded under oath u/s. 132(4) cannot be retracted ordinarily unless the appellant conclusively proves that it was a wrong statement on wrong understanding of facts or law or it has been recorded under threat, force or coercion. In the case of B. Kishore Kumar 62 taxmann.com 215 (SC), the SLP was dismissed against High Court's order where it was held that since assessee himself had stated in sworn statement during search and seizure about his undisclosed income, tax was to be levied on basis of admission without scrutinizing documents. This judgement makes it clear that statement u/s. 132(4) is a good piece of evidence to be used against the appellant. The addition made by the AO was, therefore, upheld by the CIT(Appeals). 62. The ld. AR submitted that the cash found during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o suggest that cash withdrawn from ETLL was unused and kept with the assessee idle though repeatedly withdrawals were made one after the other. As per the provisions of section 292C, presumption is that cash found during the course of search belongs to assessee and burden is on the assessee to prove otherwise. Being so, we do not find any infirmity in the lower authorities bringing the cash found during the search to tax in the hands of assessee as unexplained cash. Therefore this ground of the assessee is rejected. 65. The next ground is regarding unexplained jewellery of ₹ 36,03,938. Jewellery weighing 1296.560gms was found in the residential premise of the appellant which was valued at ₹ 36,03,938/-. Though the appellant was reflecting gold jewellery of ₹ 16,79,475/- in the statement of affairs, he failed to explain the source of such an investment, mode of payment, bifurcation of inherited, purchased and gifted jewellery, as called for. Hence, ₹ 36,03,938/- was treated as unexplained investment in the hands of the appellant. The appellant submitted that jewellery worth ₹ 36,03,938/- found during of search had been added as unexplained jewellery ..... X X X X Extracts X X X X X X X X Extracts X X X X
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