TMI Blog2024 (2) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... on made in the hands of the assessee. Treatment to income u/s 115BBE - We find that he assessee is private limited company. Though a disclosure has been made in the statement made to offer Rs. 75 Lakhs for tax but there is no reference to any incriminating material found during the course of search. The assessee has disclosed Rs. 75 Lakhs as extraordinary item in the profit and loss account and offered it as income. The said income cannot be treated as unexplained unless any seized material has been referred by the revenue authorities. In absence thereof and also considering the fact that the assessee is into the regular business, the alleged sum of Rs. 75 Lakhs can be considered only as a business income and, therefore, the ld. Assessing Officer erred in treating it as an income u/s 115BBE of the Act liable to be taxed. This action of the ld. Assessing Officer is not justified. We accordingly, allow the cross-objection raised by the assessee. - Dr. Manish Borad, Hon ble Accountant Member And Shri Sonjoy Sarma, Hon ble Judicial Member For the Assessee : Shri Ramesh Goenka, Advocate For the Revenue : Shri Arun Bhowmick, JCIT, D/R ORDER PER DR. MANISH BO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax U/s.115BBE of the Income Tax act, 1961 on the aforesaid income, nor the ld. Commissioner of Income Tax (Appeals) was justified in not adjudicating the Ground No.5 raised by the respondent before him in respect of the above issue in the Memorandum of Appeal 2.2. The revenue has raised the following grounds of appeal in I.T.A. No. 21/GTY/2023 in the case of Leade Liquor Manufacturing Pvt. Ltd.: - (i) For that the Ld. CIT(Appeal) has erred in law in not using the statement under section 132(4) of the Act as an evidence in the proceedings of the Income Tax Act, 1961 in view of judicial pronouncements in the following cases: - a. C.I.T. Vs. MAC Public Charitable Trust (2022) 144 taxmann.com 54 (Madras) b. Thiru. A.J. Ramesh Kumar Vs. D.C.I.T. (2022) 139 taxmann.com 190 (Madras) (ii) For that the Ld. CIT(Appeal) had erred to in law in accepting the retraction ignoring the fact that the assessee did not do so for the period from 26.02.2019 to 06.12.2019, which is clearly an afterthought. (iii) For that the Ld. CIT(Appeal) has erred to allow the assessee in estimating an income of Rs. 4,08,856/- only (disclosed amount of Rs. 75,00,000/- shown in return U/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re being the shortfall in surrender amount should not be included in its total income in view of the disclosure given during the course of search in the statement recorded u/s. 132(4) of the Act. In reply, the assessee gave a detailed submission along with reference to the retractions statement stating that the statement recorded during the course of search u/s 132(4) of the Act on 26/27-02-2019 was made under pressure at late hours and that too was on an adhoc/estimate basis, having no access to the seized/impounded material and the directors, Shri Amit Kumar Jain, was not able to give any detailed breakup of the aforesaid so disclosure. It was submitted that on receipt of the photocopy of the seized documents at a later date, the same were analyzed and its was noticed that the disclosure of higher amount has been made and since the statement given u/s 132(4) of the Act were neither voluntary nor correct, therefore, the same has been retracted and the additional income of Rs. 1,00,00,000/- has been offered as additional income. The Chart depicting the amount of disclosure made during the course of search and after retracting the statement are reproduced below:- Given along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Rs. 10 Crores and completed the assessment on 18.09.2021 u/s.143(3) of the Income Tax Act, 1961 at a total income of Rs. 11,21,84,530/-. While making the assessment, the assessing officer has made the following additions/ disallowances: - (i) On account of income disclosed during the search u/s.132(4) (which was retracted subsequently) - Rs. 10,00,00,000/- (ii) Disallowance of deduction under Chapter VIA on the additional business income shown in the Income Tax return and treating it as Income from other sources Rs. 1,00,00,000/- 7. Aggrieved, the assessee preferred appeal before the ld. CIT(A) challenging the additions and partly succeeded. The ld. CIT(A) deleted the addition of Rs. 10 Crores. 8. The learned CIT(A), while disposing the appeal has delineated the following conspicuous and material facts at pages 53 to 59 of his order: - a. That, from a perusal of the impugned Assessment Order and the Submissions filed by the Appellant, it is seen that no enquiry appears to have been conducted by the Assessing Officer (during the assessment proceedings) regarding any Undisclosed Assets, Money, Bullion, Jewelry or other Valuable Article or Thing or any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , during the course of Search or Survey conducted in the case of such other person pertaining to the S.K. Jain Group . h. That, from a perusal of the impugned Assessment Order and the Submissions filed by the Appellant, it is seen that the impugned addition of Rs. 10,00,00,000/- is not ascribed to any Undisclosed Asset owned by the Appellant which was found during the course of Search in the case of the Appellant or even from the premises of any other person , during the course of Search or Survey conducted in the case of such other person pertaining to the S.K. Jain Group . i. That, from a perusal of the impugned Assessment Order and the Submissions filed by the Appellant, it is seen that the impugned addition of Rs. 10,00,00,000/- is not ascribed to any Unexplained Investment found during the course of search in the case of the Appellant or even from the premises of any other person , during the course of the Search or Survey conducted in the case of such Other Person pertaining to the S.K. Jain Group . j. That, from a perusal of the impugned Assessment Order and the Submissions filed by the Appellant, it is seen that the impugned addition of Rs. 10,00,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estigations. o. That, by not offering the aforesaid impugned Income of Rs. 10,00,00,000/- in his Return of Income for the impugned Assessment Year filed in compliance with the Notice issued under Section 153A of the Act, the Appellant had impliedly retracted from the admission of Additional/Undisclosed Income to the extent of the impugned amount of Rs. 10,00,00,000/-. Thus, in the present case, the Assessing Officer has placed sole reliance on a confessional Statement of the Appellant for making the significant addition. The said addition is not supported by any evidence or corroborative material or incriminating evidence discovered either during the course of the Search on the Appellant or any Other Person of the S.K. Jain Group or during any consequential Survey on the Appellant or any Other Person of the S.K. Jain Group or during the course of post-Search Investigations on the Appellant or any Other Person of the S.K. Jain Group or during the course of assessment proceedings. As per the explicit Instructions issued by the Hon ble CBDT vide circulars no. 286/2/2003 IT (Inv-1) dated 10.03.2003 and No. 286/98/2013/IT (Inv-II) dated 18.12.2014, additions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, ensue. The situation resembles the one, which arises on retraction from the statement recorded under section 164 of the Code of Criminal Procedure. The evidentiary value of a retracted statement becomes diluted and it loses the strength, to stand on its own. Once the statement is retracted, the assessing authority has to garner some support, to the statement for passing an order of assessment. 11. In I. T. A. No. 112 of 2003 (see CIT v. Naresh Kumar Agarwal [2014] 369 ITR 171/[2015] 53 taxmann.com 306 (AP) this court dealt with the very aspect and held that a retracted statement cannot constitute the sole basis for fastening liability upon the assessee. (iv) In the case of CIT v. Radha Kishan Goel [(2005) 278 ITR 454], it was held/averred, as follows, by the Hon ble Allahabad High Court: 10. It is a matter of common knowledge, which can not be ignored that the search is being conducted with the complete team of the officers consisting of several officers with the police force. Usually telephone and all other connection are disconnected and all ingrace and outgrace are blocked. During the course of search person is so tortured, harassed and put to a mental agon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Wallendorfer (Assam) Pvt Ltd t) M/s Supertech Conbrit Industries A large number of incriminating documents and other material has been either seized or impounded from the various spots where these companies operated from. Also, incriminating personal data pertaining to the directors and partners of your businesses have being either impounded or seized. Many of such documents and records have been shown to you for your reference and information. Please give your comments on seeing those documents and records. Ans. Yes, I agree that, as informed by you, many records and documents have been found and either seized or impounded from the places where the following businesses operated from. a) M/s Aroma India Pvt. Ltd. b) M/s Bhairavi Infrastructure Pvt. Ltd. c) M/s M.S. Concrete Pvt. Ltd. d) M/s Milestone Beverages Pvt. Ltd e) M/s Milestone Concretes Pvt. Ltd. f) M/s Sunshine Aromatic Pvt. Ltd g) M/s Welcos Insurer Consultant Pvt. Ltd. h) M/s Conpro Industries i) M/s Jalshakti Plastic Industries j) M/s Lifeline Clean Technology k) M/s M.S. Aromatics l) M/s Madhushree m) M/s Milestone Coke n) M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going through the assessment order held as follows: - (a) The assessing officer in the impugned assessment order has not referred any thing about the many incriminating documents and other material of the S.K. Jain Group claimed to have been found and impounded or seized. (b) The assessing officer has not even given minutest description or details of the many incriminating documents and records in the impugned assessment order on the basis of which addition of Rs. 10,00,00,000/- was made. (c) Further, not even the minutest enquiry has been conducted by the assessing officer and referred to in the assessment order about the so-called many incriminating documents and records of the S.K. Jain Group on the basis of which the on-the-spot surrender of Rs. 25 crore was made for various group assessees out of which surrender of Rs. 11 crore pertained to the appellant. 11. Aggrieved, the revenue is in appeal before us. 12. The ld. D/R vehemently argued supporting the order of the ld. Assessing Officer and also referring to various decision referred in the assessment order and stated that there was no undue coercion or influence on the key person of the assessee and othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently with support of the letter dt. 25/03/2019 made disclosure of Rs. 25,00,00,000/- in the name of six assessees of which three were private limited companies and three individuals. One of the group concern i.e., the assessee, amount of Rs. 11 Crore was disclosed for FY 2018-19. Thereafter on 06/12/2019, the statement given on 26/27-02-2019 was retracted on an affidavit wherein it has been stated that the disclosure at the time of search was under pressure and coercion and at late hours and survey and seized documents were not provided. Subsequently, on getting the photocopies of the seized documents, it was noticed that a higher amount of disclosure has been made and so far as the present assessee is concerned, no incriminating material was found during the course of search. However, an additional income of Rs. 1 Crore was surrendered as against Rs. 11 Crore was surrendered during the course of search. Though the assessee had filed a detailed retraction statement, along with an affidavit, following content of the said retraction statement needs to be taken into consideration:- 2. That the search at the residence of our director, Shri Amit Kumar Jain was concluded in the mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... azar, Guwahati. Shri. Amit Kumar Jain had no access to the documents seized/impounded from various places when he was compelled to make the disclosure of Rs. 25.00 crores by the Authorized officer on 26.02.2019 at my residence at Guwahati. Thus, he was compelled to make the aforesaid disclosure of Rs. 25.00 crores totally on adhoc and estimate basis without having any link/nexus with the seized/impounded material. 5. That since the aforesaid disclosure of Rs. 25.00 crores was made on ad-hoc/estimate basis without having any link/nexus with seized/impounded documents/material found during the course of search/survey, our director Shri Amit Kumar Jain was not able to give any detailed breakup of the aforesaid so called disclosure. Moreover, the said disclosure was made presuming that the seized/impounded documents may have substantial tax effect. This clearly shows that the disclosure was not based on any document/material found during the course of search. 6. That subsequently, our director Shri. Amit Kumar Jain vide his letter dated 25.03.2019, addressed to the Dy. Director of Income Tax (Inv.), Unit-2(1), Guwahati gave the following breakup of the disclosure of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d disclosure of Rs. 25,00,00,000/- which he was compelled to make by the Authorized Officer is ex-facie incorrect and contrary to the materials on record. 10. That since his aforesaid statements dated 26.02.2019, 02.04.2019 and 22.04.2019 made U/s.132(4) of the Income Tax Act, 1961 given by him were neither voluntary nor correct so far as these relate to the disclosure of Rs. 25,00,00,000/- those were substantially retracted from by him. 11. That as stated in para 8 above, after taking of photo copies of seized documents these were analyzed and there was nothing to support/corelate/ corroborate such a huge disclosure of Rs. 25,00,00,000/- which he was compelled to make. However, in order to cover omissions and commissions, if any, or any other discrepancy, the following additional incomes have been/are being surrendered by the persons mentioned in para 6 above in their respective returns of income filed for the F.Y. 2018-19: - Sl. No. Name of the person Additional income surrendered Financial year 1. Aroma India Pvt. Ltd Rs.1,00,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the Appellant had already offered for taxation. In that event, the Assessing Officer was not justified in making the addition of the remaining/additional amount of Rs. 10,00,00,000/-. .. General references by way of unsubstantiated statements about incriminating material (i.e. the material evidence against the Appellant) having been present cannot lead to the assumption that incriminating material (i.e. the material evidence against the Appellant) was indeed present and the Appellant had unaccounted income as per the imaginary incriminating material. The inferences drawn on the basis of imaginary incriminating material are, thus, perverse. If indeed there was incriminating material present, it ought to have been specifically brought out in the body of the impugned Assessment Order or at- least references to specific incriminating material (i.e. the material evidence against the Appellant) ought to have been made in the body of the impugned Assessment Order. 16. Before us, it is submitted by the learned A/R of the appellant that the reliance on page no. 5 of seized material marked AKJ-1 was wrongly placed by the Assessing Officer wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seized documents only in May 2019. Thereafter, it took some time to analyze the seized documents. The assessee retracted the disclosure on 06-12- 2019 by filing an affidavit. 18.1. It has been held that delay in retraction of a statement may not be of much consequence in the light of uncontroverted facts regarding absence of any corroborative material. (Kailashben Manharlal Chokshi (supra). The two Board Circulars dated 10.03.2003 and 18.12.2014 relied upon by the assessee also provides that if confessions are not based upon credible evidence these are later retracted while filing returns of income or in subsequent proceedings. 19. In the case of Binit Agarwal vs. DCIT [2022 (9) TMI 243; I.T.A. No. 1447/Kol/2018, Order dated 30/08/2022], which has been referred above, Hon ble Kolkata Tribunal has taken the same view. 20. In the case of Pullangode Rubber Produce Co. Ltd. V/s State of Kerala (1973) 91 ITR 18 (SC), it was held as follows:- An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect . (iv) In the case of Satinder Kumar (HUF) V/s. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure that ensued on account of survey or search. The Assessing Officer can very well support his findings on the basis of other material. If he did not have any other material, in a way, it reflects upon the very perfunctory nature of the survey. We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support from the Circular dated 10.03.2003 issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements. 14. Therefore, I.T.A Nos.268, 273 and 308 of 2003 are allowed and the orders of assessment dated 01.12.1998 are set aside. Since the orders of assessment are set aside, I.T.A. Nos. 287, 291 and 294 of 2006 have virtually become infructuous and they are accordingly closed. There shall be no order as to costs. 20.1. We find that similar issue regarding addition made solely on the basis of statement given during the course of search u/s 132(4) of the Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,000/- for tax and confronted the assessee. During the assessment proceedings u/s 143(3) of the Act, assessee made the retraction by submitting that no such undisclosed income was earned and therefore no such income was required to be offered to tax. However, Ld. A.O giving reference to the statement of Mr. Vipin Chouhan, partner of Ultimate Builders and also giving reference to the seized documents found during the search at Signature Group made addition for undisclosed income. When the matter came up before Ld. CIT(A) addition was confirmed. However the basis of addition was accepted to have been made only on the basis of the statement of Mr. Vipin Chouhan. No reference was made to any incriminating material having its bearing on the Ultimate Builders surrendered income. During the course of hearing before us Ld. Counsel for the assessee contended that during the course of search i.e. between 29.1.14 to 31.1.2014 no cash or unrecorded assets was found, no incriminating material was found and no income was offered to tax in the statement recorded u/s 132(4) of the Act of the person found to be in the possession and control of the books of premises. Relevant questions ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Incometax Act, 1922 (11 of 1922), or under this Act. 16. The above sub Section 4 of Section 132 of the Act starts with reference to authorised officer , which means that the Officer who is authorised to conduct search on the assessee. In the instant case it is stated before us that the authorised officer of the assessee and that of the other concerns of Signature Group are different. 17. After the word the authorised officer it reads during the course of search or seizure, examination of both the person . During the course of search is a period during which the search is initiated and concluded. In the instant case the search was initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised Ultimate Builders officer for the assessee which is verifiable from the Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name or otherwise. Thus it can be safely concluded that the addition made by the Ld. A.O was not on the basis on the incriminating material found during the course of search but only on the basis of statement of Mr. Vipin Chouhan given on 02.02.2014. 22. Recently the Co-ordinate Bench in the case of ACIT(1) VS. Sudeep Maheshwari (supra) in which the undersigned was also a co-author while adjudicating the issue that whether addition can be made merely on the basis of statement given during the course of search without correlating the statement with incriminating material , we have decided the issue observing as follows:- 6. It is the case of the assessee that during the course of search seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared Rs. 3 crores in personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Jharkhand High Court Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No.8 of 1999 order dated 03.01.2013 held as under; 4. We considered the submissions of the learned counsel for the parties and perused the reasons given in the impugned orders as well as reasons given in the case of Kailashben Manharlal Chokshi (supra). 5. It appears from the statement of facts that there was a search in the business premises of the petitioner's firm as well as in the residential premises of its partner, Shri Sheo Kumar Kejriwal, on 24th September, 1987. During the course of search, the statement of Shri Sheo Kumar Kejriwal had been recorded under section 132(4) of the Income Tax Act and in the statement, he stated that he was partner in the Ganesh Trading Company, i.e. the present assessee-firm in his individual status and that he surrendered Rs. 20 lacs for the assessment year 1988-89 as income, on which tax would be paid. He further stated that other partners would agree to the same; otherwise it would be his personal liability. However, in the returns filed after search, the income of Rs. 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of Rs. 20 lacs. Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self-incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs. 20 lacs. 7. In view of the above reasons, without answering the question about retrospective operation of the proviso to section 134(4), we are holding that the authorities below have committed error of law in drawing inference from the materials placed on record, i.e. admission of the assessee coupled with its retraction by the assessee. The Revenue may now proceed accordingly . 25. In the light of ratio laid down in various judgments referred above including one in the case of ACIT(1) V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in making addition only on the basis of statement recorded during the course of search u/s 132(4) of the Act which has subsequently been retracted and no other incriminating material was found during the course of search which could have a live link with the alleged addition made in the hands of the assessee. We thus, uphold the findings of the ld. CIT(A) deleting the additions made by the Assessing Officer and dismiss all the grounds of appeals raised by the revenue. 21. Now, we take up I.T.A. No. 21/GTY/2023; Assessment Year: 2019-20 in Leade Liquor Manufacturing Pvt. Ltd.. The facts in this appeal are identical except for variance in quantum. From perusal of the records we notice that at the time of search and survey operation in the statement u/s 132(4) of the Act, the total disclosure of Rs. 25 Crores was made which included the disclosure of Rs. 8.50 Crore in the case of the assessee i.e., Leade Liquor Manufacturing Pvt. Ltd. for Assessment Year 2018-19 and subsequently in the retraction statement filed on 06/12/2019, the surrendered amount was revised to Rs. 75 Lakhs only. The ld. Assessing Officer had made the addition for difference amount of Rs. 7.75 Crores referrin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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