TMI Blog2023 (11) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... h to the appellant, the AO ought to have verified the admission of third party by exercising power provided under the Act. Since, the AO does not believed the claim of the assessee, in our considered view, he cannot make addition only on the basis of admission in the statement recorded u/s. 132(4) of the Act and therefore, we are of the considered view there is no error in the reasons given by the ld. CIT(A) to delete additions made towards cash found and seized during the course of search. Unexplained jewellery u/s 69B - assessee has declared jewellery in wealth tax returns filed for relevant assessment years and there is an excess jewellery - HELD THAT:- As in the present case, no such exercise was carried out by the Department. Further, during the course of assessment proceedings, the assessee has filed details of jewellery belongs to his wife and other family members and also reconciled jewellery found during the course of search with wealth tax returns filed by his wife Smt. B. Kusuma kala, for assessment year 2012-13. As per the details filed by the assessee, the family members of the appellant including his married daughter and un-married daughter are having jeweller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment records. It was further observed that, the AO inadvertently mentioned in the assessment order that notice u/s. 153A of the Act was issued instead of notice u/s. 142(1) of the Act. In our considered view, the observation of the AO in para 3 of assessment order appears to be typographical error in so far as the pre-assessment notice issued for taking up the case for scrutiny assessment. Therefore, we are of the considered view that, when the substantive issue of assessment is subject matter of search operation conducted u/s. 132 of the Act and also the impugned assessment year is the year of search, which falls outside the scope of provisions of section 153A /153C of the Act, in our considered view, the question of issue of notice u/s. 153A of the Act does not arise. Thus when the assessment records clearly shows that no such notice was issued u/s. 153A, then mere reference to section in the assessment order does not nullify the whole assessment proceedings. Therefore, we are of the considered view that, there is no merit in the ground taken by the assessee challenging the validity of assessment order. - SHRI V. DURGA RAO, HON BLE JUDICIAL MEMBER AND SHRI MANJU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The learned CIT(A) ought to have noted that the retraction made after a lapse of more than one and half years is only an after thought and therefore the admission made u/s. 132(4) of the IT Act is valid and binding. 9. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of Id. CIT(A) may be set aside and that of the Assessing Officer be restored. 3. The brief facts of the case are that, the appellant is the Vice President (Finance) of M/s. Apollo Hospitals Enterprises Ltd., Hyderabad and Joint Secretary of M/s. Apollo Hospital Education and Research Foundation. A search and seizure operation u/s. 132 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) was conducted in the case of Apollo group on 05.01.2016 and during the course of search, the residence of the appellant was also covered. During the course of search, cash of Rs. 6,32,340/-, unexplained jewellery over and above what was disclosed in wealth tax returns filed by the assessee and certain loose sheets containing various investments was found and seized. A statement u/s. 132(4) of the Act, was recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer and explained cash found and seized during the course of search including unexplained jewellery. The appellant had also explained additions made towards voluntary admission of undisclosed income in the statement recorded u/s. 132(4) of the Act. The ld. CIT(A), after considering relevant submissions of the assessee and also by following certain judicial precedents, deleted additions made by the Assessing Officer towards cash found and seized during the course of search and also additions made towards unexplained jewellery. The ld. CIT(A), had also deleted additions made by the Assessing Officer towards voluntary admission of undisclosed income by holding that without any corroborative evidence admission of statement u/s. 132(4) of the Act, cannot be taken as a conclusive and thus, directed the Assessing Officer to delete additions made towards admission of undisclosed income. In so far as legal ground taken by the assessee in light of observation of the Assessing Officer in the assessment order, on the issue of notice u/s. 153A of the Act, the ld. CIT(A) observed that said observation is only a typographical error and as per records available on record, it was observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Smt. Padmavathamma, through e-mail where she had stated that she kept a sum of Rs. 5 lakhs with appellant for safe keeping as he was proceeding to USA. The Ld. Counsel for the assessee, further submitted that the assessee had also furnished necessary bank statement of Smt. Padmavathamma, to prove withdrawal of cash from bank. The ld. CIT(A), after considering relevant facts as rightly deleted additions made by the Assessing Officer and their order should be upheld. 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. As regards a sum of Rs. 1,32,340/-, during the course of search itself the assessee explained that it is out of past savings from salary income. The assessee being a highly paid employee, the possibility of keeping cash to the extent of Rs. 1,32,340/- out of his declared income cannot be ruled out. Therefore, we cannot find fault with reasons given by the ld. CIT(A) to delete additions made towards cash found to the extent of Rs. 1,32,340/-. As regards the balance amount of Rs 5 lakhs, although the assessee could not explain source for cash found and seized during the course of search, but subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not produce any bills for purchase of jewellery and also explained source. The ld. CIT(A), without appreciating admission of the assessee deleted additions on the basis of statement of the assessee that excess jewellery found during the course of search belongs to his family members. 12. The Ld. Counsel for the assessee, Shri. G. Baskar, Advocate, supporting the order of the ld. CIT(A) submitted that, at the time of search, due to confused state of mind, the assessee could not explain excess jewellery found over and above what was disclosed in the wealth tax returns filed for relevant assessment year. During the course of assessment proceedings, the assessee explained with necessary details that excess jewellery belongs to his married daughter and unmarried daughter and also reconciled excess jewellery quantified by the Department. The ld. CIT(A), after considering relevant submissions of the assessee and also by taking note of CBDT Circular, fairly estimated jewellery of other family members and observed that addition is not warranted towards excess jewellery quantified during the course of search. 13. We have heard both the parties, perused materials available on record an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction or investment and in fact, those papers related to Shri GR Reddy, who happened to be one of the patients in Apollo Hospital. Loose sheet page no. 30 to 35 contains investment in M/s. BBR Securities Pvt Ltd. During the course of assessment proceedings, the assessee explained contents of seized loose papers and argued that investment in SSV Chit Fund Pvt Ltd and share capital with M/s. BBR Securities Pvt Ltd, is made out of salary income and payment is through bank account. The Assessing Officer, did not accept the explanation of the assessee and according to the Assessing Officer, when the assessee has made admission towards undisclosed income in the statement u/s. 132(4) of the Act, any subsequent averments without corroborative evidence can only be considered as an afterthought and thus, rejected arguments of the assessee and made additions towards voluntary admission of undisclosed income of Rs. 2.70 crores. 15. The ld. CIT-DR, Shri R. Clement Ramesh Kumar, submitted that the ld. CIT(A) erred in deleting the addition of Rs. 2.70 crores made towards unexplained investment and admitted by the assessee in the statement recorded u/s. 132(4) of the Act, without appreciating f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income of the appellant. From the contents of loose sheet and statement recorded from the appellant during the course of search, it is abundantly clear that the admission of undisclosed income of Rs. 2.70 crores is not on the basis of any material found during the course of search, which satisfies any kind of investment in assets. Further, there is no classification of any investment in asset or any expenditure which is outside the books of accounts of the assessee. Therefore, we are of the considered view that additions of Rs. 2.70 crores towards voluntary disclosure of undisclosed income is only on the basis of statement recorded u/s. 132(4) of the Act, but not based on any material found during the course of search. It is a well established principle of law from the decision of Hon ble Supreme Court in the case of Kashmira Singh vs State of MP (AIR 1952 SC 159), where it has been clearly held that, the admission should not be the foundation of assessment, instead, independent evidence should form the basis of assessment, while admission supplements it. The CBDT has very clearly emphasized the need to focus on gathering evidences during the course of search/survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 2.3 The CIT(A) has rightly deleted the addition of Rs. 6,32,340/- being cash found during the course of search. 3.1. The CIT(A) has rightly deleted the addition of Rs. 2.7 crore on the ground that the sworn statements without any corroborative evidences cannot be relied to make addition. 3.2. The CIT(A) has rightly deleted the addition on the ground that there is no corroborative incriminating material seized during search. 4. Any other ground of Cross Objection that may be taken up at the time of hearing. Dated at Hyderabad on this the 07 day of February, 2023. 20. The solitary legal issue that came up for our consideration from ground no. 1.1 to 1.3 of assessee s cross objection is validity of assessment order passed by the Assessing Officer u/s. 143(3) r.w.s. 153(1)(b) of the Act. The Ld. Counsel for the assessee, referring to para 3 of assessment order submitted that. the Assessing Officer has issued notice u/s. 153A of the Act. dated 27.03.2017 for the assessment year 2016-17, although the impugned assessment year is the year of search which falls outside the scope of provisions of section 153A of the Act. He further submitted that, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g up the case for scrutiny assessment. Therefore, we are of the considered view that, when the substantive issue of assessment is subject matter of search operation conducted u/s. 132 of the Act and also the impugned assessment year is the year of search, which falls outside the scope of provisions of section 153A /153C of the Act, in our considered view, the question of issue of notice u/s. 153A of the Act does not arise. Further, when the assessment records clearly shows that no such notice was issued u/s. 153A, then mere reference to section in the assessment order does not nullify the whole assessment proceedings. Therefore, we are of the considered view that, there is no merit in the ground taken by the assessee challenging the validity of assessment order and thus, we reject ground of cross objection filed by the assessee on this issue. 23. The next issue that came up for our consideration from ground 2.1 to 3.2 of cross objection filed by the assessee is towards addition made by the Assessing Officer for cash found during the course of search, unexplained jewellery and addition towards admission of undisclosed income. Since, the appeal filed by the revenue on these issues ..... X X X X Extracts X X X X X X X X Extracts X X X X
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