TMI Blog2022 (5) TMI 1402X X X X Extracts X X X X X X X X Extracts X X X X ..... see got engaged and using same practice of following under-reporting of income in past year and based on the mistake found the assessee has already offered the additional income while complying the notice u/s. 153A of the Act wherein the AO has not found any fault that the said additional income offered is incorrect or under-reported, even the ld DR has not pointed that the past year addition made is based on the evidence found in the course of search. Thus, looking to these facts the addition merely based on the statement and that too for all the years at same rate @ 25 % as suppressed receipt proposed by AO is unwarranted and the same is not survived based on the finding and reasoning placed before us. Even the contention of the ld. CIT(A) sustaining the balance addition from the income already disclosed by the assessee will also not survive as there is no contrary arguments placed by the Ld. DR but mainly repeated the contentions of the AO and Ld. CIT(A). Based on the above finding, addition confirmed by the CIT(A) is deleted for A. Y. 2011-2012 and thus the ground raised by the assessee are allowed. Addition of expenditure from undisclosed source - revised capital accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of this credit the addition of credit already reflected in the original return of income can not be made in proceeding-initiated u/s. 153A of the Act considering the various decision relied upon. This addition has no merit and is required to be deleted. Thus, the Ground no. 3 raised by the assessee in this appeal is allowed. Jewellery as unaccounted purchase chargeable to tax u/s. 69C - HELD THAT:- DR has not disputed the fact that of the AR of the assessee that these ornaments are not found in the course of search in the absence of the assets it self at the time of purchase there is no case rest with the department that the assessee has made purchase and invested the said amount in the jewellery as unaccounted purchase chargeable to tax u/s. 69C of the Act. Not only that there is no details mentioned about the terms of the payment received, receivable or details of payment and its mode to be executed on this paper heavily relied upon by the department. Thus, in absence of the impugned asset being not available at the time of search the contention of the department has no force and there is no reasons so as to believe the arguments placed by the AR of the assessee tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be adjudicated upon for technical purpose and the same is allowed. - ITA No. 198/JP/2021 TO 203/JP/2021 - - - Dated:- 6-4-2022 - Shri Sandeep Gosain, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri P.C. Parwal, CA For the Revenue : Shri Sanjay Dhariwal, CIT ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This bunch of six appeals have been filed by the assessee against different orders of the Commissioner of Income Tax, Appeals-4, Jaipur [ Hereinafter referred as Ld. CIT(A) ] which are tabulated as under: ITA No. Assessment Year Date of Order of the CIT(A) Issue/Nature of addition** 198/JPR/2021 2011-12 17.09.2021 See Note 1 below table 199/JPR/2021 2012-13 25.08.2021 See Note 1 below table 200/JPR/2021 2013-14 25.08.2021 See Note 2 below table 201/JPR/2021 2014-15 25.08.2021 See Note 1 below table ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed back for all the 6 years. When the assessee found that the statement taken has been misconstrued than she filed a clarificatory retraction statement vide here letter dated 14.03.2017. In that letter she has also stated that if required she may give another statement on oath. 4. In respect of these appeals the issue and facts are similar. It has been agreed by the parties that to take assessment year 2011-12 as lead year for deciding all these bunch of appeals. Therefore, facts and arguments before the lower authorities relating thereto were adverted by them for this year and we have also extracted the same for the sake of convenience from the said folder. 5. The grounds of appeal of the assessee in ITA No 198/JPR/2021 for the A. Y. 2011-12 are as under : 1. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 2,74,080/- [ 3,51,415 less 77,335 ] on account of alleged suppressed receipt only on the basis of statement recorded u/s. 132(4) dt. 12.11.2016 by not appreciating the fact that :- (i) except the statement u/s. 132(4), no evidence of suppression of alleged receipt of Rs. 3,51,415 is found. (ii) the evidence of suppressed receipt fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this default. Furthermore, the claim of salary of Rs. 59,446/- was disallowed and added to the income of the assessee. The AO has also made an addition of Rs. 3,51,415/- being the amount of the suppressed receipt based on the statement recorded under section 132(4) of the Act. 6.4 In the search proceeding one bill book for the period 11.09.2016 to 07.11.2016 along with patient register was found. On verification of these documents, the search party noted that there is some difference in the amount of bill and receipt amount recorded in patient register. On these differences, statement of the assessee was recorded u/s 132(4). The relevant extract of statement of the assessee is reproduced in assessment order on page no. 4 to 11. 6.5 In this statement, the assessee in reply to Q. No.12 (PB 6-11) admitted that she has shown receipt less by 20% to 25% approx. in the daily patient register. However, in the OPD fees actual receipt is recorded. In respect of indoor patients, in doing procedures (Normal delivery, Caesarean, D C, MTP etc.) services of other specialist doctors, i.e. anaesthetists, paediatrician, surgeon are required to be taken for which they were paid in cash. Many ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and not under any pressure. (ii) In search evidence of unaccounted receipts were found in Exhibit 6- the patient register when compared with the bill book in Exhibit 5. In search only one bill book for the period 11.09.2016 to 07.11.2016 was found. The total of this bill book is Rs.4,26,480/- whereas in the patient register the receipts shown from the same patients was only Rs.1,72,050/- which is 40% of the actual receipt recorded in the books. Therefore, after allowing the assessee s claim in respect of payment to outside doctors, unaccounted income from suppression of receipts has been considered at 25% though assessee has not produced any evidence that outside doctors were actually paid or not. Accordingly, the AO after relying on the decision of Hon'ble Rajasthan High Court in case of Roshan Lal Sancheti rejected the retraction letter filed by the assessee as afterthought and made addition of Rs.3,51,415/- on account of suppression of receipt for the year under consideration based on the statement recorded. 8 Aggrieved from the said order, assessee filed an appeal before the ld. CIT(A) where in the ld. CIT(A) after allowing the set off of unrecorded receipt of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in her statement has explained the modus operandi of suppression of receipts by her and has also admitted the unaccounted income for the year under consideration. Further the appellant has not been able to furnish any cogent evidence in support of her contention of retraction. (v) The evidence does not mean only documentary evidence but the statement recorded u/s132(4) has also been judicially held as an important piece of evidence collected as a result of search and seizure operation. In the present case, it is not only the statement of the appellant but also documents found and seized during the course of search which were relied upon by the AO. 9. The ld. AR of the assessee during the course of hearing argued the various points based on the written submission filed, are reproduced herein below; 1. From the facts stated above it can be noted that the lower authorities have made the addition on account of alleged suppressed receipt only on the basis of the statement of assessee recorded u/s 132(4) in search. Except for this statement no other evidence is available with them to make the addition. The evidence of suppressed receipt of Rs.77,335/- only was found which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 220/263 Taxman 30 (All.) (HC) Addition can only be made if there is incriminating material or the surrounding circumstances reveal that there is any material to justify the addition. If the person can explain with supportive evidence, material or otherwise that the admission by him earlier is not correct or contain a wrong statement or that a true state of affairs is different from that represented therein, addition cannot be made solely relying on statement under sec. 132(4). PCIT Vs. Best Infrastructure India Pvt. Ltd. (2017) 397 ITR 82/ 159 DTR 257 (Del.) (HC) Statements recorded u/s 132(4) do not by themselves constitute incriminating material. A copy of the statement together with the opportunity to cross-examine the deponent has to provided to the assessee. If the statement is retracted and/or if cross-examination is not provided, the statement has to be discarded. The onus of ensuring the presence of the deponent cannot be shifted to the assessees. The onus is on the Revenue to ensure his presence. CIT VS. SKS Ispat and Power Ltd. [2017] 398 ITR 584 (Bom.) (HC) In this case the learned counsel for the Department contended that the Tribunal was not justified in deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that flat for which evidence of 'on money' receipt was found and deleted the addition made for other flats holding that on the basis of guess work and extrapolation, no addition can be sustained. Reliance is also placed on the following cases: Ashoka Infrastructure Ltd. Vs. ACIT (2017) 189 TTJ 0749 (Pune) It was held that evidence found during the course of search indicating that full toll receipts were not recorded in the books of account for certain period can be utilised for extrapolation of income for the relevant financial year(s); however, the said material cannot be made the basis for working out the income for other years for which no incriminating documents or entries in any cash book or note books were found during the course of search. Thakkar PopatlalVelji Sales Ltd. Vs. ACIT (2013) ITA No. 4845/M/2010 (Mum.) (Trib.) In its order, the ITAT held that Considering the above, we are of the opinion that it is a reasonably settled issue that no estimation can be made by the AO for which no incriminating material were discovered and no estimations were made based on the theories of extrapolation and multiplication. In the absence of any material of evidence f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case the search has resulted into material showing suppressed sales for A.Y.2004-05 but there was no material for 2001-02 to 2003-04. The AO had however estimated suppressed sales for A.Y.2001-02 to 2003-04 based on the material for A.Y.2004-05 in assessments made under section 153A. The tribunal held that there was no material found for the earlier years and there was also no defect in the books and therefore addition in the earlier years was not justified and in absence of any material being found during the search relevant to the aforesaid assessment years, in our considered opinion, the learned CIT(A) was justified in deleting the addition made for these years only on the basis of assumption and surmises. 3. The AO in making the addition on the basis of statement has observed that the statement of assessee who is a qualified professional given on 12.11.2016 after proper rest in presence of two independent witness is voluntary and not under any pressure. Further Ld. CIT(A) also held that there was no coercion, inducement or threat while recording the statement. In this connection it may be noted that statement of assessee was first recorded at 7:30 PM on 11.11.2016 which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of use of pressure tactics. It is to be gathered from the evidence, mostly circumstantial. Grandhi Narendra Vs. ACIT (2010) 41 DTR 227 (Visakha) (Trib.) The very fact that the assessee agreed to disclose an amount of Rs. 12 lakhs, despite the fact that the Department did not unearth any material against him, would only suggest that there might have been some mental pressure upon the assessee to make such a confession. Surinder Pal Verma Vs. ACIT (2004) 89 ITD 129 (Chd) (TM) Confessional statement made during search are often venerable on ground that person giving such statement remain under a great mental stress and strain. They also do not have the availability of relevant details, documents and books of accounts at the time of giving statement in the absence of which precise information as to utilization of such income and year of investment cannot be correctly furnished. Harshad L. Thakker Vs. ACIT (2005) 3 SOT 277 (Mum.) (Trib.) In the course of search/survey, every assessee is under mental pressure and factual errors may be committed. Hence simply on the basis of statement which is retracted later on, addition can't be made. 4. It is a settled law that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chandra K. Shah Vs. ITO (2016) 140 DTR 235 (Guj.) (HC) CIT(A) has rightly appreciated the case based on the sound principles of law and has also considered the statement made by the assessee at the relevant point of time. He clearly found that there is no evidence to support the very existence of the income except the so called statement u/s 132(4). Mere speculation cannot be a ground for addition of income. There must be some material substance either in the form of documents or the like to arrive at a ground for addition of income. Federal Bank Ltd. Vs. State of Kerala 124 CTR 355 (Ker.) (HC) While an admission made by an assessee is relevant, it is not conclusive. It is open to the assessee to explain or clarify under what circumstances it was made or to prove that what was stated did not reflect the true state of affairs. CIT VS. Ashok Kumar Soni 291 ITR 172 (Raj.) (HC) Admissions are relevant strong piece of evidence that may be used against the person making such admission but they are not conclusive proof of the statement contained in the admission can always be explained. Ashok Kumar Vs. ITO 201 CTR 178 (J K) (HC) It is true that an admission is no doubt a relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption w/s 134(2) of the Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the search... 126. In view of the above discussion vis a vis finding of the ld. CIT(A), which has not been controverted by the ld DR by bringing any positive material on record, we do not find any reason to interfere with the findings so recorded by the ld. CIT(A) for deleting the addition of 5,93,76,213/-made by the A.O. 127. In the result, appeals of the revenue are dismissed whereas the appeals of the assessee are allowed in part in terms indicated hereinabove. 5. The case laws relied by the Ld. CIT(A) are not applicable on facts. In the present case, no variation in the bill book for earlier period was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own hand writing. She has categorically admitted that the fact that receipt to the extent of the other doctors is not recorded in the books. Filling of mere retraction letter without any other corroborative evidence the retraction based on the merely retraction letter has no relevance. She has accepted the practice being followed up. As regards the recording of statement under pressure he has stated that the assessee was given proper rest and the statement was recorded one day after the search. He has also stated that the CBDT s instructions squarely covers as there are evidence found based upon which the disclosure is obtained. Based on this argument he has strongly relied upon the order of the lower authorities and supported his arguments on the contentions stated as above and recommended to confirm the finding of the lower authorities. 11. We have heard the rival contentions and perused the material available on record and relied upon judicial decisions. It is not disputed about the understanding or misunderstanding about the ratio of the fees paid to doctors @ 25 % of the receipt. The AR of the assessee vehemently argued that the evidence that has been found in the search is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, no separate addition merely based on the statement is called for in the absence of any clear incriminating evidences. Not only that if the total of all the additions for past year as proposed based on the statement recorded as per reply to question no. 12 [ AO s page no. 9 ] amounts to Rs. 25,72,465/-, whereas the disclosure under PMGKY is Rs. 29,44,800/- which covers the any error or omission on the part of the assessee and based on this observation also no addition is sustainable as disclosure covers the amount for which the tax has been paid at higher rate in the year of the search by filing a separate declaration under PMGKY. The ld. AR thus, argued that considering this information, the grievance of the assessing officer covers the amount for which assessee has suffered the tax and therefore, he has prayed to give the relief to the assessee considering her statement being not considered in the right perspective and in the absence of any clear-cut finding or evidence by applying the same ratio for all the past years, the benefit of doubt rests with the assessee. The ld. AR also argued that while filling the return of income of each year and whatever mistake assessee has obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO and Ld. CIT(A). Based on the above finding, addition of Rs. 3,51,415/- confirmed by the CIT(A) to the extent of Rs. 2,74,080/- is deleted for A. Y. 2011-2012 and thus the ground raised by the assessee in ITA No. 198/JPR/2021 are allowed. 12. As regards the appeals of the assessee for the Assessment Years 2012- 13, 2014-15 and 2016-17, we find that the issue as observed in ITA No. 198/JPR/2021 is similar in ITA No. 199/JPR/2021, for Assessment year 2012- 2013, ITA No. 201/JPR/2021 for Assessment year 2014-2015 and ITA No. 203/JPR/21, for Assessment year 2016-2017.Hence, the decision taken in ITA No. 198/JPR/2021 shall apply mutatis mutandis in these appeals of the assessee. Thus, the appeals of the assessee for the Assessment Years 2012- 2013, 2014-2015 and 2016-2017 are also allowed. 13. Now we take up the appeal of the assessee in assessment year 2013- 2014 in ITA No. 200/JPR/21 where in the assessee has taken following grounds 1. The Ld. CIT(A) has erred in law as well as on facts in confirming addition of Rs. 2,85,206/- [ 3,87,921-1,02,715/- ] for alleged suppression of receipts only on the basis of statement recorded u/s. 132(4) dt. 12.11.2016 by not appreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld. CIT(A) and she has given her finding in para 5.2(iii) which is extracted for the sake of brevity. I have considered the facts of the case and it is observed that the appellant has not filed any cogent evidence in this regard to justify his claim. On perusal of the capital account, it is observed that it is a revised capital account filed with the return of income filed in pursuant to notice u/s.153A. In the capital account filed with the original return of income no such amount is reflected and therefore, the claim of the appellant is not found acceptable and the addition of Rs. 27,500/- made by the AO is confirmed. 14.3 The ld. AR of the assessee has argued before us that the seized material is to be read together when the assessee has already disclosed additional income of Rs. 1,02,715/- for the year under consideration and the expenses incurred is covered that such investment no separate addition is required to be made in the case of the assessee as she is having the additional income for her disposal to meet such investment in the capital asset and prayed to consider this aspect which the AO and Ld. CIT(A) failed to consider that the assessee has already sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) contended only the same is not disclosed in the original return and assessee cannot take benefit of that additional income merely by filing the revised capital account. This view is not correct as the additional income disclosed by the assessee has already suffered the tax and the said additional income is available with the assessee and the investment made in AC is not exceeding that income thus, the income and expenses both cannot be taxed and benefit of set off of income with that of the expenses of the same can be given and the thus the addition made to the extent of Rs. 27,500/- for purchase of AC is deleted. Thus the ground no 2 raised by the assessee in this appeal is allowed. 15.1 Apropos Ground No. 3 of the assessee, the AO observed that during the year, there is increase in the capital of assessee by Rs.75,000/-, source of which has neither been explained nor any evidence in this regard is produced. Accordingly, the AO made addition of Rs.75,000/- u/s 69A of the IT Act, 1961. 15.2 Before Ld. CIT(A), the assessee submitted that the source of capital of Rs.75,000/- is sale proceeds of plot of land at Bagru which was purchased in earlier years. Accordingly, the cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016) 380 ITR 573 (Del.) (HC) Completed assessments can be interfered with by the AO while making the assessment under s. 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. The ld.AR of the assessee further submitted that the Ld. CIT(A) has incorrectly held that the said amount is not found in the original capital account. Further she wrongly held that assessee has made a fresh claim before her ignoring that there is no fresh claim but only an explanation about the credit in the capital account which was never asked by the AO in course of assessment proceedings. Her further observation that cost of the land as stated by the assessee as debited in the capital account is not found recorded is by not correctly appreciating the explanation of assessee in as much as the assessee only stated that in earlier years when the land was acquired it was debited in the capital account and not in the year under consideration.In view of above, addition confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs.3,93,000/- on the basis of Page 19 of 2. Annexure AS 3 on account of unexplained investment in jewellery which is only an estimate slip and for which no evidence of payment is found. 3. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.1,29,000/- on account of unexplained investment in purchase of fridge on the basis of Page 16 3. 17 of Annexure AS 3 by not correctly appreciating that such investment is only of Rs.80,000/- which is duly recorded in the revised capital account filed with the return of income filed in response to notice u/s 153A. 4. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.30,800/- on account of unexplained expenditure in construction of house on the basis f Page 2 of Annexure AS 1 ignoring that the same is duly recorded in the revised capital account filed with return of income filed in response to notice u/s 153A. 5. The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 2,27,741/- on account of unexplained expenditure by allowing set off against the supressed receipt confirmed during the year but not of previous year. 17. Apropos Ground no. 1, this grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is simply a slip for order item as mentioned on the paper itself which did not materialize. Even in search no statement was recorded on this paper. The lower authorities have rejected the explanation of assessee on the ground that this paper was found and seized from the premises of assessee, found kept with proper care and the paper contains the detailed working and specific details. Thus, merely other than this suspicion, they have no other corroborative material to presume that assessee has made any payment in respect of purchase of the said jewellery item. The conclusion of the lower authorities is thus, purely based on suspicion and surmises. It is a settled law that suspicion howsoever may be strong could not take place of legal proof. Therefore, in the absence of any document suggesting purchase of jewellery as per this slip or any payment there against, addition on the basis of this paper is not justified. In view of above submission, the addition confirmed by Ld. CIT(A) be directed to be deleted. 18.3 The ld. DR submitted that the slip is found very safely wherein the date, mobile number weight and items purchased is clearly mentioned and therefore the ld. DR has reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the AO. 19.2 During the course of hearing, the learned AR of the assessee drew our attention to page 16 17 of Annexure AS-3 which indicate purchase of fridge by the assessee. The bill is reflected at page 16 and is dated 30.07.2015 of M/s Ghiya's for purchase of siemens side by side refrigerator at Rs.49,000/ and the said bill is cash memo, whereas as per page 17 it appears the actual cost of this fridge is Rs.80,000/- for which payment is also made on 30.07.2015 same day when cash memo is prepared. Thus, lower authorities have incorrectly made addition both for Rs.80,000/- and Rs.49,000/- ignoring that the actual cost of purchase of fridge for which payment is made is only Rs.80,000/-. Thus, the addition of Rs.49,000/- is unwarranted because the 80,000/- includes that 49,000/- invoice value. So far as source of payment of Rs.80,000/- plus freight of Rs.500/- as noted on the paper is concerned, same is duly reflected in the capital account of assessee (PB page 42). Thus, the source of payment is also verifiable from the revised capital account prepared. In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. 19.3 The ld. DR has vehemently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, it is observed that the outstanding amount of Rs.30,800/- has been paid on 01.05.2015 in cash to Ratna Constructions. Further during the assessment proceedings, the appellant claimed it to be incurred from the housing loan towards the construction of house on Plot No. 52/181, V.T. Road Mansarovar, Jaipur. It is observed that the aforesaid loan pertained to FY 2010-11. As per the bank statement, the first amount of Rs.5,00,000/- was deposited on 01.01.2010 and withdrawals were made on various dates thereafter. It was further observed that the second amount of Rs.4,00,000/- was credited on 15.04.2010 and thereafter Rs.98,900/- was credited on 01.10.2010 and that the last balance available in that account on 30.10.2010 was Rs. Nil as observed in the appellate proceedings for the AY 2011-12. Therefore, the contention of the appellant before the AO that the amount has been paid out of the housing loan is not correct. Further the contention of the appellant that this payment is duly verified from the capital account and therefore, source of payment is explained is not found acceptable as on perusal of the capital account, no such amount is discernible. Accordingly, he confirmed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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