TMI Blog2023 (6) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, merely on the basis of admission in the statement recorded u/s 132(4)/131 of the Act, no addition could be made by AO. The AO failed to bring on record any materials to support his view to make an addition and there was no reason as to why AO did not proceed further to enquire into the unaccounted income as admitted by assessee in statement recorded u/s 132(4) of the Act. This fact was also not taken care of and also no corresponding assets with reference to unaccounted cash receipt was brought on record. In such circumstances, we are not in a position to sustain this addition. Addition made by AO on the basis of contents in loose slips/scribbling pad is not based on any cogent evidence or unaccounted assets or unaccounted investments unearthed during the course of search, but solely on the basis of assumption and presumptions. In our opinion, suspicion however strong cannot takes place of evidence, which can be used against the assessee. In the present case, the AO has not made any effort to verify the entries recorded in the loose slips/scribbling pads by making further enquiries and examination/cross examination of the alleged persons or payee of said amount. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 983/Bang/2022 for the AYs 2014-15 to 2018-19 . 2.1 In this case, there was a search action u/s 132 of the Act in the case of Mr. Ibrahim Khaleel and others and simultaneously survey has been conducted on the premises of various entities including that of Emkay Hindustan Infrastructure (present assessee). During the course of search, various books of accounts, documents, etc., have been seized evidencing contract receipt in cash sales by cheque/RTGS/DD by M/s. Emkay Hindustan Infrastructure from Mr. Ali Kutti, Managing Partner of Creek Developers and Builders for the contract works done for the Creek Galaxy project. The information contained therein pertain to M/s. Emkay Hindustann Infrastructure present assessee and having a bearing on the determination of total income of the assessee. Seized material A/IK/07 pages 145 to 150 which was found and seized during the course of search u/s 132 of the Act as the premises of Ibrahim Khaleel at Dr.No.20-6-363/1, Mannar, 2nd Cross, Kandak, Mangalore contains the following details:- 2.2 This was confronted to Shri Ibrahim Khaleel who said that he has received an amount of Rs.4,93,05,000/- in cash up to 3.1.2017. This amount is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work onwards till 5/7/2017. This note books starts with the entry dtd. 31/10/2014 with the opening balance of Rs. 8,99,033/-. This opening balance is taken from page 153 of the seized record A/IK/7. The details of the expenditures incurred till reaching Rs. 8,99,033/- is available in the previous pages of this file. The total expenditure incurred till 18/3/2016, as per the seized record: A/IK/8, page 17 amounts to Rs. 1,24,04,897/-. According to AO, the total expenditure up to 22/3/2016 as mentioned in the income expenditure account, as per which 'expenses Rs. 1,24,11,897/- tallies and supported with proper supporting evidences. Further, most of the above expenses are liable for disallowance u/s. 40A(3) or 40(a)(ia). Even without considering any such aspects, the net profit ratio is about 28% of the total contract receipts. As per the accounted balance sheet, the assessee has got only very limited liabilities for the above period. If there exists any unaccounted liability, it is for the assessee to include all receipts and liabilities in the return filed u/s. 153C and to prove the same as when several opportunities were given. However, the assessee had not done this. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer is purely on assumptions and presumptions based on the oath statements made under section 132(4), which was later retracted by the Appellant. 6. The learned CIT (A)-2, Panaji has failed to comprehend the fact that, in the absence of corresponding entry in the account of the opposite party precludes the alleged transaction in the hands of appellant. 7. The learned CIT(A)-2, Panaji has grossly ignored the CBDT Instructions F.No.286/2/2003-IT(Inv.) dated March 23, 2003 and various case laws, in respect of retractions on the ground of coercion and threat in the course of Search and Survey operations, as well as the various case laws on the loose sheets found during the course of search, additions made deleted. 8. The 14rned CIT(A)-2, Panaji has failed to appreciate the alternative plea of the appellant that, the learned Assessing Officer ought to have estimated the profit at 2 percent of the alleged additions made, as undisclosed income of the Appellant. 9. The leaned CIT(A)-2, Panaji has erred in relying on various case laws, which are not at all applicable to the Appellant's case. 10. The Appellant craves leave to add, amend or alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments did not bear signature of assessee and seized material also did not suggest that assessee had paid any on-money , impugned order passed by Assessing Officer was not sustainable. 2.14 Further, she relied on the order of Chennai Tribunal in the case of Saveetha Institute of Medical Technical Sciences vs. ACIT 12 ITR (T) 376, wherein held as under: Held that the admission made under section 132(4) by the concerned officer could not be treated even as a valid piece of evidence. There being no incriminating document having been found or seized during search and the statement also being abstruse, the addition in question had no legs to stand on. 2.15 Further, she relied on the judgement of Karnataka High Court in the case of Shri Dinakar Suvarna Vs. DCIT 143 taxmann.com 362 page 11 of the case law book Where Assessing Officer on basis of search conducted at premises of A reopened assessment of assessee, since no proceedings were initiated against assessee under section 153C and Assessing Officer did not record his satisfaction with regard to escapement of income, impugned reassessment proceeding was not sustainable Where Assessing Officer, on basis of searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2 From the above statement, the AO came to the conclusion that since the books are maintained by Mr. Ibrahim Khaleel, who is the partner of the assessee firm and the said amount of cash of Rs.4,93,05,000/- reflected in seized material A/IK/07 at pages 145 to 147 shows that the receipt of unaccounted cash up to 3.1.2017. Accordingly, he appropriated this amount of Rs.4,93,05,000/- to four assessment years as above. Now the contention of ld. A.R. is that these loose slips cannot be basis for any addition as unaccounted cash receipts in these assessment years since Mr. Ibrahim Khaleel has bee marketing the flats and collecting the consideration from clients with the consent of Mr. Ali Kutty who is an NRI who lives most of the time abroad. Mr. Ibrahim Khaleel had received this amount on behalf of Mr. Ali Kutty and this amount even Mr. Ibrahim Khaleel admitted to be received the said amount cannot be taxed in the hands of the present assessee who has no element of income on this count. Now the question before us is whether above incriminating material was found during the course of search, which is being scribbling in loose pad is suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m various parties and which is not reflected in the books of accounts maintained by the assessee. However, when the statement recorded by searched team from Mr. Ibrahim Khaleel, partner of assessee s firm clearly mentioned that he has been marketing the flats, collecting the consideration from the clients with the consent of Mr. Ali Kutty. Mr. Ali Kutty is an NRI who lives most of the time abroad. Mr. Ibrahim Khaleel received the amount on his behalf and this statement has been reproduced in the earlier para of this order. He also stated that an amount of Rs. 4 lakhs has been received from Roshan Shameer and this amount was towards the instalment of flat booked by him in Creek Galaxy, Pumpwell and also Mr. Ibrahim Khaleel stated that this amount has been received on behalf of Mr. Ali Kutty of Creek builder. Regarding page 181 he has stated that it is an estimate given to customer for flat No.304 in Creek Galaxy. Page 180 is a receipt given to Mr. Sk. Nizamuddin for the same flat for Rs.7 lakhs and signed by Mr. Ali Kutty for flat no.304 and the amount received in cash. Page 179 was the total receipt of Rs.35 lakhs up to 14.9.2015 for the same flat signed by Mr. Ali Kutty. To the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO had made any attempt to corroborate the entries mentioned in alleged scribbling pad or brought on record the details of name and address of payee. In the absence of any specific reference to the parties, from whom the monies have been received and also nature of receipt for which cash has been paid, it is very difficult to accept the noting in scribbling pad as undisclosed income of the assessee outside the books of accounts. 3.7 Further, on going through the answer to question no.47, it is abundantly clear that answer to question no.47 purport the statement of assessee and his declaration obtained by search team towards undisclosed income for the period covering the assessment year 2017-18 only and it looks like this is an obtained statement without bringing any material on record to support the same. It is well settled principle of law that when any document like present scribbling pad/loose slips are recovered during the course of search action and the revenue wants to make use of it, the onus is on the revenue to collect cogent evidence to corroborate the noting in alleged documents. In this case, revenue has failed to bring on record any cogent evidence to prove conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g no evidentiary value was unsustainable and bad in law . 3.10 Being so, in our opinion, the addition made by AO on the basis of contents in loose slips/scribbling pad is not based on any cogent evidence or unaccounted assets or unaccounted investments unearthed during the course of search, but solely on the basis of assumption and presumptions. In our opinion, suspicion however strong cannot takes place of evidence, which can be used against the assessee. Had it been the case of the AO that the alleged entries in loose slips/scribbling pads and its contents was tested by examination and by cross examining the parties, then obviously it would give rise to an occasion to the AO to rely on said documents to make additions. In the present case, the AO has not made any effort to verify the entries recorded in the loose slips/scribbling pads by making further enquiries and examination/cross examination of the alleged persons or payee of said amount. Further, on perusal of entries in the loose slips/scribbling pads as recorded by AO in the assessment order, we find that nothing was emanating regarding name and address of persons through whom the said amount was received and the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals)-2, Panaji. The Commissioner of Income tax (Appeals) vide his order dated 24.5.2022 in Appeal No. CIT(A)- 2/PNJ/10238/2019-20 has dismissed the appeal filed by the assessee, upholding the additions Made by the Assessing Officer. 4.4 Similarly, for the assessment year 2017-18, the AO has made additions as follows: 1. Cash receipts based on the Oath statement Rs.24,77,120 2. Cheques receipts based on the oath Statement, being 8 percent of Rs.35,32,000 Rs.2,82,560 3 Sezied cash under section 69A Rs.50,60,000 4.5 Similarly, for the assessment year 2018-19, the AO has made additions as follows: 1. Seized cash under section 69A on Protective basis Rs.50,60,000 2. Unexplained investment u/s 69, being Purchase of foreign currency Rs.50,79,325 4.6 Against this assessee went in appeal before ld. CIT(A) who has confirmed the additions. Again, the assessee is in appeal before us challenging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of law that unless the statement is tested under the cross examination, the same cannot be considered as evidence against the assessee. The AO used the admission made in the statement recorded under section 132(4) of the Act. But, the assessing officer failed to note that, admission itself cannot be considered as conclusive evidence against the assessee, unless there is corroborative evidence on record. There is no other evidence on record to prove that, on money received. The AO, without brining on record any evidence to prove that, on money is exchanged between the parties, merely harping upon the loose sheet, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The assessing officer is required to bring further evidence on record to show that, actual on money is exchanged between the parties, but literally failed to do so. The assessing officer did not conduct any independent inquiry relating to the value of the property instead, merely relied upon the statement, which is not correct. Further, there is no proof of origin and destination of on money To tax any particular payments/receipts, primary evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g addition of Rs.50.60 lakhs u/s 69A of the Act, it was submitted that only income to be estimated at 8% and entire amount cannot be considered as income of the assessee as the assessee has already declared income on it at Rs.4,40,000/-. Hence, she prayed that the addition of Rs.50.60 lakhs is to be deleted. 7. The ld. D.R. relied on the order of lower authorities. 8. We have heard the rival submissions and perused the materials available on record. In the first ground for the assessment year 2016-17, the assessee herein challenged the addition of Rs.15 lakhs towards unaccounted cash and challenged the computation of income on cheque receipts at 8% i.e. Rs.88,000/- and also challenged the offered income of Rs.5 lakhs from plywood business in ground No.2. 8.1 As discussed earlier, the answer to the question no.47 is the basis of addition 8.2 On the basis of above answer to question no.47, AO made addition of Rs.15 lakhs towards unaccounted cash receipts. As discussed in the case of Emkay Hindustan Infrastructure in ITA Nos.979 to 983/Bang/2022 in para Nos.3 to 3.10 of this order, this addition is deleted. 8.3 With regard to addition of Rs.88,000/- i.e. the profit esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x assessee from year to year. This is the accumulated cash balance in the hands of the assessee and the credit to be given. She also submitted that the assessee has received an amount from his partner (1) Mr. B.A. Ibrahim (2) Mr. Mohammad Mohideen. 9.5 The ld. D.R. submitted that the assessee has not filed the necessary evidence to prove the availability of cash balance in the books of accounts of the assessee. 9.6 We have heard the rival submissions and perused the materials available on record. In our opinion, the assessee has to place necessary evidence to show the availability of cash balance as on the date of search i.e. 30.8.2017. Once the assessee produce the books of accounts of the entities owned by the assessee as a proprietor, the AO has to give the credit to the extent of cash balance available in the books of accounts of the assessee as on the date of search. Further, the claim of the ld. A.R. before us was that the assessee received certain amount of cash from his partners Mr. B. A. Ibrahim Mr. Mohammad Mohideen for which the assessee required to furnish necessary evidence to prove the cash availability on this count. Accordingly, we direct the assessee to p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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