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TMI Blog2024 (6) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... pposed to law and facts of the case 2. The CIT(A) erred in deleting the addition of Rs. 2,00,00,000/- made by the assessing officer ignoring the fact that the additions made are based on admission of income in the statement given during the course of search u/s. 132(4) of the Act. 3. The CIT(A) erred in deleting the addition ignoring the fact that the additions made was based on estimate slips found during the course of search which means that there was material found during the search proceedings. 4. The CIT(A) erred in deleting the addition ignoring the fact that the assessee offered the additional income of Rs. 2,00,00,000/- to tax in the statement u/s. 132(4) only after being confronted with the evidences found during the course of search. 5. The CIT(A) erred in giving relief to the assessee without going into the merits of the case. 6. For these and other grounds that may be urged upon, the order of the CIT(A) may be reversed and that assessment order to be restored. 2.1 Thus, the revenue challenged the deletion of addition in these three assessment years as follows on the basis of judgement of Hon'ble Supreme Court in the case of PCIT Vs. Abhisar Buildwell Pvt. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 69A of the act was at 30% upto that date and under the circumstances in respect of unaccounted investments quantified as on 24.06.2016 the taxes payable were at 30% and not at 60% as determined by the Assessing Officer. 5. First, we adjudicate the revenue appeals in ITA Nos. 1163 to 1166/Bang/2023. We will consider the facts in ITA No.1163/Bang/2023 which are follows: 6. The ld. D.R. submitted that for the A.Y.2013-14 to A.Y. 201516, the of Ld. CIT(A) decided the appeal "ONLY ON QUESTION OF LAW" and "NOT ON MERITS" Reliance placed by ld. CIT(A) on the decision of Hon'ble Supreme Court in the case of Pr. CIT, Central-3, Vs. Abhisar Buildwell (P) Ltd. (2023) is patently wrong as erroneous facts are stated in his orders in para 4.7 (AY 2013-14), para 4.8 (AY 2014-15) & para 4.8. (AY 2015-16). The Ld. CIT(A) has made similar erroneous statements in para 4.7 (AY 2013-14), para 4.8 (AY 2014-15) & para 4.8. (AY 2015-16) and the same is reproduced below: "In view of the fact above, the claim of the appellant is accepted because in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassess taking into consideration the other material in respect completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." (Emphasis supplied) (iv) Whereas, in the case of the appellant, from A.Y.2013-14 to A.Y. 2015-16, no assessment was done. All original ROIs from A.Y.2013-14 to A.Y. 2015-16 WERE ONLY PROCESSED u/s 143(1). (v) PROCESSING OF ROI u/s143(1) IS HELD NOT TO BE ASSESSMENT AS IT IS ONLY "AN INTIMATION". In this regard, reliance is placed on the decision of Hon'ble Supreme Court of India in the case of Assistant Commissioner Of Income Tax vs Rajesh Jhaveri Stock Brokers Pvt. Ltd on 23 May, 2007 291 ITR 500, (2007). The relevant Para 13 from the decision of Hon'ble Supreme Court is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, Managing Partner of the firm under the provisions of section 132(4) of the Act. Though there were no evidences relevant to A.Y.2013-14, the search party has taken a statement u/s. 132(4) of the Act, wherein a declaration of Rs. 2,00,00,000/- was recorded as undisclosed sales for the A.Y.2013-14, even though no incriminating material was found. The assessee, however has retracted his statement, vide letter dated 09.10.2018 filed on 12.10.2018 during the course of assessment proceedings for the reason that, there were no evidences or incriminating material in support of the declaration and hence no such income accrued for the A.Y. 2013-14. Further, the legal position in regard to the reliability of statement u/s. 132(4) of the Act and also the justification for retraction have been brought out in a letter dated 02.11.2018 filed before the Assessing Officer. 7.1 The ld. A.R. for the assessee further submitted that, though the statement was recorded during the course of search on 24.06.2016, the retraction was only on 09.10.2018 during the course of the assessment proceedings for the reason that, the statement itself was recorded under pressure and coercion and declaration was quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has been confirmed by several judicial decisions highlighted by the appellant. The above position has been re-affirmed by the Hon'ble Supreme Court of India in the case of Principal Commissioner of Income Tax, Central-3, V. Abhisar Buildwell (P) Ltd (2023) 149 Taxmann.com 399 (SC), the conclusion of which is reproduced as under: As per the provisions of Section 153A, in case of a search under section 132 or requisition under section 132A, the AO gets the jurisdiction to assess or reassess the 'total income' in respect of each assessment year falling within six assessment years. However, it is required to be noted that as per the second proviso to Section 153A, the assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate. As per sub-section (2) of Section 153A, if any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in subsection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the law. In case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under sections 147/148 of the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved." 7.4 He submitted that the ld. Commissioner of Income Tax (Appeals) has basically highlighted the fact that, for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings on verification of the copies of the VAT assessment order for the financial year submitted by the VAT authorities u/s. 133(6) the additional turnover assessed for the month of July as per VAT order dated 24.04.2014 was determined at Rs. 1,74,49,842/- as against Rs. 1,52,97,186/-. According to the assessee the addition was an estimated addition on account of discrepancy in stock. Which means that there existed a discrepancy. Though the assessee has objected to the proposal to include the aforesaid amount as undisclosed turnover for A.Y 201314 without prejudice to the findings detected during search, it is noteworthy to mention that the partner Mr.Ravish was well aware of this order passed by the VAT authority on 29/04/2104 and he himself agreed to the discrepancy detected during search proceedings. Hence the declaration has been made on sound footing and the retraction is therefore totally baseless. On the basis of the above discussion on the modus operandi observed to be followed by the said assessee's and discovery of authentic evidences as mentioned in the preceding paragraphs, a substantial amount of undisclosed/unaccounted income has been detected. The ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof has been discussed elaborately above. Accordingly, the income of Rs. 2,00,00,000/- unaccounted sales - is treated as the assessee's undisclosed income from business as per the findings during search and as declared u/s. 132(4). Addition : 2,00,00,000/- Similarly the income of Rs. 1,50,00,000/- being unaccounted URD purchases is treated as the assessee's undisclosed income from business as per the findings during search and as declared u/s. 132(4). Addition: Rs. 1,50,00,000/-" 8.2 As seen from the above, the above addition is not based on any cogent material other than the statement recorded u/s 132(4) of the Act. The placing reliance by ld. AO on the VAT records is misplaced without verifying the above figures independently. 8.3 At this stage, it is appropriate to analyse the scope of section 153A of the Act. The scope of provisions of section 153A of the Act could be summarized as follows as per the order of the Mumbai Special Bench in the case of All Cargo Global Logistics Ltd. Vs. Deputy Commissioner of Income-tax (23 taxmann.com 103):- Scenario Scope of Section 153A 1. No return of income is filed by the assessee (whether or not time limit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be restricted to incriminating material found during the course of search. 7. Proceedings u/s 147 pending where: (a) Assessment originally completed u/s 143(3) OR (b) No assessment earlier completed u/s 143(3) Pending assessment/reassessment proceedings u/s 147 would abate and would converge/merge in proceedings u/s 153A. Accordingly, the powers of the AO, in both the cases, shall extent to: (a) Assess income that would validly be assessed in the pending proceedings u/s 147, and 8.4 In the light of above, it is to be noted that these two assessment years falls under category (4) in the above chart. Thus, it is appropriate to observe the facts of present case. As seen from the assessment order, the seized materials found during the course of search do not reflect any undisclosed income made by ld. AO and it is solely based on the statement recorded u/s 132(4) of the Act and unverified VAT records. In the case of assessment u/s 153A of the Act, the completed assessment can be tinkered if there is incriminating material found during the course of search. Therefore, in these two assessment years i.e. 2013-14 & 2014-15, there was no incriminating material sugge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other person. Otherwise, a concluded assessment would be disturbed without there being any basis for doing so which is impermissible in law. Even in case of a searched person, the same reason would hold good as in case of any other person as observed by us, detection or the existence of incriminating material is a must for disturbing the assessment already made and concluded. But, at the same time, such can be at three stages: one, at the stage when. the reassessment is initiated, the second, at the stage during the course of reassessment and third, at u stage where the reassessment is altered by a different assessment in respect of searched person or in respect of third party. In this regard, reference may be made to the decision of Apex Court in case of M/ s. Calcutta Knitwear (supra) and based on the said decision, the CJ3DT has also issued circular dated 31.12.2015 vide No. 24/ 2015.The relevant extract of the circular for ready reference can be extracted as under: "......................."" As regards the pending assessments are concerned only one assessment shall be made separately for each assessment year on the basis of the income unearthed during search and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion conferred on him u/s 153A of the Act for which assessment shall be made for each of 2 assessment years separately if there is seized/incriminating material, if any. In other cases, in addition to the income that has already been assessed, the assessment u/s 153A of the Act will be made on the basis of incriminating material, which in the context of relevant provisions means (i) books of accounts, other documents, found in the course of search but not produced in the course of original assessment, and (ii) undisclosed income or property discovered in the course of search. The argument of the Ld. Counsel is that in this assessment year, notice to issue u/s 143(2) was already lapsed as on the date of search, no assessment could be made without basis of incriminating material found during the course of search. We find force in the argument of Ld. Counsel for the assessee in this AY 2013-14 & AY 2014-15, the addition made by AO is not based on any seized material and the AO made additions in a routine manner which were disclosed to the department by way of regular return of income filed by the assessee and no incriminating material was found during the course of search and to come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the incriminating materials. 3. The CIT(A) erred in deleting the addition of Rs. 4,00,00,000/- made by the assessing officer ignoring the fact that the additions made are based on undisclosed income admitted by the assessee when confronted with the incriminating material found during the course of search. 4. The CIT(A) erred in deleting the addition ignoring the fact that the assessee has offered additional income of Rs. 4,00,00,000/- to tax in his sworn statement recorded u/s. 132(4) of the Act after seeing the incriminating material found during the course of search which was shown and confronted to him. 5. The CIT(A) has placed reliance on decision of the Hon'ble Supreme Court in the case of Principal Commissioner of Income-tax Central-3 vs. Abhisar Buildwell (P) Ltd (2023) 149 Taxmann.com 399 (SC), wherein it is held that in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, that no addition can be made in the absence of any incriminating material found during the search. Additions have been made in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chases 2014-2015 Rs. 1,50,00,000/- 2015-2016 Rs. 1,00,00,000/- TOTAL Rs. 2,50,00,000/- 10.2 In the Statement recorded u/s. 132(4), the assessee admitted that a part of the sales is made through the estimate slips without a proper bill and corresponding entry into the sales register and voluntarily offered the undisclosed sales to tax. The assessee, however, retracted from the declaration made u/s. 132(4) and no income was offered to tax on account of either undisclosed sales or unaccounted URD purchases in the Return of Income filed 22.10.2017. The retraction was rejected on the ground that the assessee had confirmed the declaration on three occasions vide statements recorded u/s. 131 on 27.6.2016, 25.7.2016 and on 03.08.2016. The Assessing Officer proceeded to treat the undisclosed sales of Rs. 3.0 crores and unaccounted URD purchases of Rs. 1.0 crores as business income of the assessee as per findings during the search and as declared u/s. 132(4). 10.3 She submitted that the assessee challenged the addition in appeal and the CIT(Appeals) has allowed the assessee's appeal. The CIT (Appeals) has held that the return for assessment year 20152016 falls under the category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or evidences is also not acceptable. The retraction is totally an afterthought as the declaration given was confirmed on three different occasions by Sri Ravish, before the DDIT(Inv), Unit-I, Mangalore vide statement recorded u/s. 1312 on 27.06.2016, 25.07.2016 and again on 03.08.2016. (d) The incriminating material found in the form of estimate slips was the basis on which the assessee voluntarily declared income on account of undisclosed sales. The estimates slips were also the basis on which the declaration on accounted purchases was made by the assessee. (e) Section 153A empowers the Assessing Officer to assess or reassess the total income of six assessment years in question in separate assessment orders. (f) Once the assessment is reopened, the Assessing Officer can take note of the income disclosed in the earlier returns, any undisclosed income found during search or any other income which is not disclosed in the earlier return which is not unearthed during the search, in order to find out the total income of each of the six assessment years and then pass the assessment order. 11. Further, she submitted that the assessment is pending and not completed as on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.R. submitted that the Assessing Officer has concluded the assessment u/s. 143(3) r.w.s 153A of the act on 21.12.2018 wherein a total addition of Rs. 4,00,00,000/- has been made to the income declared. The Assessing Officer has made this addition relying solely on the statement recorded u/s. 132(4) of the act and without any supporting evidence to corroborate or any incriminating material such quantification. 12.3 The ld. A.R. submitted that the ld. CIT(A) has deleted the addition with the following finding in paras 4.7 & 4.8 of the order which is extracted hereunder: - "4.7 The rival submissions have been considered. It is a fact that the return for assessment year 2015-16 falls under the category of unabated assessment case as there were no pending assessment proceedings when the search was initiated on 24.06.2016. It is also a fact that there were no incriminating material relevant to A.Y.2015-16 found during the course of search. All the seized materials belong to A.Y.2017-18 based on which the admission was made by the appellant for A.Y.2015-16 on account of unaccounted sales. However, this statement was retracted later. 4.8 In view of the fact above, the claim of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, in case of a search under section 132 or requisition under section 132A and during the search any incriminating material is found, even in case of unabated/completed assessment, the AO would have the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material collected during the search and other material which would include income declared in the returns, if any, furnished by the assessee as well as the undisclosed income. However, in case during the search no incriminating material is found, in case of completed/unabated assessment, the only remedy available to the Revenue would be to initiate the reassessment proceedings under sections 147/48 of the Act, subject to fulfilment of the conditions mentioned in sections 147/148, as in such a situation, the Revenue cannot be left with no remedy. Therefore, even in case of block assessment under section 153A and in case of unabated/completed assessment and in case no incriminating material is found during the search, the power of the Revenue to have the reassessment under sections 147/148 of the Act has to be saved, otherwise the Revenue would be left without remedy. If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) has relied on the decision of Hon'ble Supreme Court in the case of Pr. Commissioner of Income Tax, Central-3 V. Abhisar Buildwell (P) Ltd (2023) 149 Taxmann.com 399 (SC). Hence, the ground that, the order is opposed to law and facts of the case does not sustain. In addition to the above, he requested to consider their submissions on the other grounds of appeal also. GROUND No. 2 OF THE GROUNDS OF APPEAL (b) The CIT(A) erred in deleting the addition of Rs. 4,00,00,000/- made by the assessing officer ignoring the fact that the additions made are based on admission of income in the statement given during the course of search u/s. 132(4) of the Act. 12.5.2 He submitted that the revenue has taken up a ground that, the additions of Rs. 4,00,00,000/- to the income declared was made solely on the basis of a statement given during the course of search and therefore the said addition could not have been deleted. He submitted that that, under law the statement given during the course of search u/s. 132(4) of the act is to be corroborated on the basis of evidences and in the absence of such evidence no additions can be made. 12.5.3 The ld. A.R. further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S/04 containing loose sheets 113 in number. Serially numbered loose sheets from page 104 to page 113 contains estimates of sales figures. However, the same are not in your sales register. Please comment on the same. Ans: A part of our sales is made through the above said format without a proper bill and corresponding entry into sales register as a lot of expenditure has to be incurred in cash for regular running of the business since the economy is semi-urban in nature. However, I understand the grave nature of the offence and hereby voluntarily offer the following amounts under undisclosed sales. Sl. No. Asst. Year Undisclosed sales 01 2013-14 2,00,00,000 02 2014-15 2,00,00,000 03 2015-16 3,00,00,000 Total 7,00,00,000 I request your learned self that since I have offered the said income voluntarily after understanding the nature of offence, I may be given immunity from penal proceeding." Basis for Alleged unaccounted URD purchases "Q.17: I am showing you exhibit marked A/SRS/04. Please take a look at the exhibit and explain the contents recorded in pages 98 to 101. Ans: I have gone through the exhibit marked A/SRS/04 pages 98 to 101 contai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentation of facts and hence the ground would not sustain. GROUND No. 4 OF THE GROUNDS OF APPEAL (d) The CIT(A) erred in deleting the addition ignoring the fact that the assessee offered the additional income of Rs. 4,00,00,000/- to tax in the statement u/s. 132(4) only after being confronted with the evidences found during the course of search. 12.5.10 The ld A.R. relied on his submissions to Ground No. 2 & 3 above. GROUND No. 5 OF THE GROUNDS OF APPEAL (e) The CIT(A) erred in giving relief to the assessee without going into the merits of the case. 12.5.11 The ld. A.R. requested to consider his submissions to ground No. 1 above wherein he has extracted the justification of the CIT(A) for allowing the relief. He submitted that the ld. CIT(A) has relied on a decision in the case of Pr. Commissioner of Income Tax, Central - 3, V. Abhisar Buildwell (P) Ltd of Hon'ble Supreme Court cited (supra) and hence the ground taken up by the revenue does not sustain. 12.5.12 He further relied on the following decisions made before the ld. Commissioner of Income Tax (Appeals) which have been considered by the said authority for allowing relief. Relevant portions of the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its order. The said paragraph is extracted hereunder: - "3.4.5 In the case on hand, the assessment for Assessment Year 2005-06 has been completed as the time limit for issue of notice had expired on 30-9-2006; before the date of search on 28-9-2010. Therefore, since no assessment was pending, there was no question of abatement of assessment. Respectfully, following the decisions of the Hon'ble Karnataka High Court in the case of IBC Knowledge Park (P.) Ltd. (supra), we hold that for Assessment Year 2005-06 no assessment had abated and therefore the assessment under Section 143(3) r.w.s. 153A of the Act could have been made based only on incriminating documents / material found and seized in the course of search. That clearly not being the factual matrix in the case on hand, since no incriminating material was found / seized the order of assessment for Assessment Year 2005-06 passed under Section 143(3) r.w.s. 153A of the Act vide order dt.14-3-2013 is cancelled. Consequently, the original assessment and income returned as per the original return of income filed on 19-09-2005 at Rs. 2,66,06,899 stands restored. Assessee's appeal is allowed in terms of Grounds 1, 2, 4, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons wherein similar ratio has been laid down. i) Pr. CIT V. Desai Construction (P) Ltd (2016) 387 ITR 552/(2017) 81 Taxmann.com 271 (Guj) ii) CIT V. Deepak Kumar Agarwal (2017) 86 Taxmann.com 3/251 Taxman 22/398 ITR 586 (Bom) iii) CIT V. Gurinder Singh Bawa (2016) 386 ITR 483/(2017) 79 Taxmann.com 398 (Bom) iv) CIT V. Kabul Chawla (2016) 380 ITR 573/234 Taxmann 300/61 Taxmann.com 412. 8. We also rely on the decision of Hon'ble High Court of Delhi in the case of Pr.CIT V. Dharmpal Premchand Ltd (2018) 408 ITR 170 (Delhi), wherein it is held that, in the absence of any incriminating material found during the course of search no addition can be made in a proceedings initiated under the provisions of section 153A of the act." 12.5.13 The ld. A.R. submitted that the Commissioner of Income Tax (Appeals) rightly deleted the addition of Rs. 4,00,00,000/- made by the Assessing Officer considering the legal facts of the case. He relied on Commissioner of Income Tax (Appeals) findings and decision; hence he requested us to consider the submissions above and dismiss the grounds of appeal by the revenue. 13. We have heard the rival submissions and perused the materials available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the aforesaid sub-section on the date of initiation of the search under Section 132, the said proceeding shall abate. If such proceedings are already concluded by the Assessing Officer by initiation of proceedings under Section 153A, the legal effect is the assessment gets reopened. The block assessment roped in only the undisclosed income and the regular assessment proceedings were preserved; resulting in multiple assessments. Under Section 153A, however, the Assessing Officer has been given the power to assess or reassess the total income of the six assessment years in question in separate assessment orders. The Assessing Officer is empowered to reopen those proceedings and reassess the total, income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters. This means that there can be only one assessment order in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed u/s 143(1) of the Act on 5.5.2016 there was a time limit to issue notice u/s 143(2) of the Act up to 30.9.2016. Hence, on the date of search i.e. 24.6.2016 there is a time limit to issue notice u/s 143(2) so as to complete the assessment u/s 143(3) of the Act. Hence, this assessment cannot be said that assessment has not been pending on this date and the assessment is not abated. As discussed earlier, in the table clause (3) mentioned in para 8.3 of this order is applicable to the facts of the case, which reads as follows: 3. Return of Income filed by the assessee - return processed and intimation issued u/s 143(1) - Time limit for issue of notice u/s 143(2) not expired. Since intimation is not akin to assessment and time limit for notice u/s 143(2) hs not expired, even though return has been processed, it will be case where return has not attained finality. Consequently, AO would have authority/jurisdiction to assess the entire income, similar to jurisdiction in regular assessment u/s 143(3). 13.3 Being the assessment year 2015-16 falls under the above clause the assessment cannot be cancelled by applying the judgement in the case of Abhisara Buildwell Pvt. Ltd. cit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition is based on statement recorded u/s 132(4) of the Act supported by the unsubstantiated loose slips, which do not have no evidentiary value. 13.9 Moreover, the statements of Mr. R. Ravish have been recorded post search. They do not have any evidentiary value. Reliance is placed on the decision of the Hon'ble Bombay High Court in Commissioner of Income-tax v. Shankarlal Bhagwatiprasad Jalan [2017] 84 taxmann.com 275 (Bombay) wherein it was held as under: -"A bare reading of Section 132(4) of the Act indicates that an authorized officer is entitled to examine a person on oath during the course of search and any statement made during such examination by the such person (the person being examined on oath) would have evidentiary value under Section 132(4) of the Act. The Karnataka High Court in Chief CIT v. Pampapathi [20081 175 Taxman 318/ [20091 310 ITR 64 in the context of facts before it viz. the search on the Assessee therein was completed on 13th December, 1994. On 25th January, 1995, a letter was written by the Assessee therein making certain self-incriminating statement which the Revenue sought to rely upon as being a statement made under Section 132(4) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 & 11 of the assessment order, he offered an amount of Rs. 1 crore towards unaccounted purchases. It is not known who has written in these loose slips and what details it contains. It was mentioned therein that estimate with some random figures. These details therein cannot be presumed as unaccounted sales or unaccounted purchases. These are dumb sheets which have no relevance and its authenticity to rely upon on its face value. Such loose sheets and scribblings cannot be the primary evidence to base the assessment upon. These sheets also cannot be relied upon to hold that the assessee has earned any undisclosed income by way of unaccounted sales or unaccounted investments in the form of unaccounted purchases. 13.14 Further, in reading the above, it cannot be inferred that the unaccounted transactions have taken place in the hands of assessee and it's not in good faith to presume it to be the unaccounted transaction. From this sheet of seized material, it can also be seen there are various figures mentioning that it is estimate and in such scenario it would not be prudent to assume as per the whims and fancy of the AO that the said figures mentioned therein is the undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. AO has merely relied upon the loose papers, obscure notings made in certain note books, statement of Mr. R. Ravish and has come to the above conclusion. The conclusions drawn by him are not forthcoming from the documents and statements. The AO has made his own analysis below each extract of the seized material. The analysis is not supported by any corroborative evidence. 13.17 The Tribunal in the case of Sri Y. Siddaiah Naidu, Tirupathi vs. Asst. Commissioner of Income-Tax 2015 {2} TMI 403 - ITAT HYDERABAD held that it is very much clear that from such notings, it cannot be deduced whether they are receipt or payments nor it can be concluded whether they are in relation to any particular transaction. In these circumstances, no addition can be made on the basis of such document. 13.18 In the case of CIT v. M/S Khosla Ice & General Mills 2013 (1) TMI 451 - Punjab & Haryana High Court, the Hon'ble Court held that assessee rightly contended that the impugned document was a non-speaking document in as much as it does not contain any intelligible narration in support of the inference drawn by the Assessing Officer that it reflected unaccounted transactions carried out by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d scribbling on loose sheets made by some person have no evidentiary value and is unsustainable and bad in law. 13.22 The Hon'ble Supreme Court in Common Cause (A Registered Society) v. UOI [2017] 394 ITR 220 (SC) observed with regard to evidentiary value that entries in books of account are not by themselves sufficient to charge any person with liability, the reason being that a man cannot be allowed to make evidence for himself by what he chooses to write in his own books behind the back of the parties. There must be independent evidence of the transaction to which the entries relate and in absence of such evidence no relief can be given to the party who relies upon such entries to support his claim against another. In Hira Lal v. Ram Rakha the High Court, while negativing a contention that it having been proved that the books of account were regularly kept in the ordinary course of business and that, therefore, all entries therein should be considered to be relevant and to have been proved, said that the rule as laid down in Section 34 of the Act that entries in the books of account regularly kept in the course of business are relevant whenever they refer to a matter in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt material on record to substantiate that the assessee was engaged in the business of gold and jewellery and the AO had not brought any material on record to substantiate that the denial of the assessee was false. Unless the burden of proving that the materials and cash belong to the assessee, is discharged those materials can neither be seized under section 132 nor relied upon to make assessment under section 153A. Therefore, the seizure of such material is illegal. The AO cannot rely upon such material whose seizure is illegal and the hence, assessment is void ab initio. Therefore, addition made on account of such seized material is not sustainable, 13.25 The Hon'ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise, 281 CTR 241 (SC) held as follows: - "Not allowing the assessee to cross-examine the witness by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided copy of such statements to assessee, thus, denying opportunity of cross examination to assessee, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by assessee was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (Appeals) and Tribunal being concurrent factual findings - Whether no substantial question of law arose from impugned order of Tribunal - Held, yes [Para 4] [In favour of assessee]" 13.28. The Hon'ble High Court of Karnataka in Kothari Metals v. ITO, 377 ITR 581 (Karn) held as under: - "Held, allowing the appeal, that the non-furnishing the reasons for re-opening an already concluded assessment goes to the very root of the matter. Since such reasons had not been furnished to the assessee, even though a request for them had been made, proceedings for the re-assessment could not have been taken further on this gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve also examined the records and we find that this Shri Sukla was examined by a number of officers. The Assistant Director of Investigation examined him on August 4, 1987, and in reply to question No. 2 in that deposition he confirmed that he was a dealer in lubricating oil since 1977. In reply to question No. 3, he confirmed having been assessed to income-tax. Again, in reply to question No. 4, he explained that he used to purchase lubricating oil from different garages as well as through various brokers. Such lubricating oil was processed by him in his factory for sale. All payments were received by him through account payee cheques. In reply to question No. 5, he stated that he had seven full-time employees whose names are mentioned by him. He also claimed to have maintained books of account like sales books, purchase books, cash books and sale bills. In reply to question No. 18, he, on his own, stated that his big customers were the Reliance Oil Mills and Eastern Commercial Enterprises, the assessee, in the present reference. As for his cash withdrawals, he explained that his business required ready cash for purchase of raw materials which explained his large drawings of cash f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed income is found by the AO. The unbounded loose sheets having jottings are not speaking either by itself or in the company of others and not corroborated by enquiry, cannot be the basis of any inference so as to sustain the addition. 13.31. The unsubstantiated and uncorroborated seized material alone cannot be considered as conclusive evidence to frame these assessments. The words "may be presumed" in section 132(4) of the Act given an option to the AO concerned to presume these things, but it is rebuttable and it does not give a definite authority and conclusive evidence. The assessee is having every right to rebut the same. The entire case depends upon the rule of evidence. There is no conclusive presumption with regard to unsubstantiated seized material to come to the conclusion that assessee has unaccounted transactions. In the present case, the assessee categorically denied unaccounted transactions. The AO cannot draw inference on the basis of suspicion, conjectures and surmises. Suspicion, however strong, cannot take place the material in place of evidence brought on record. The AO should act in a judicial manner, proceed in a judicial spirit and come to the judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents cannot bring assessee into tax net by merely pressing to service the provision of Sec 132(4A) r.w.s Sec 292C of the IT act, which creates deeming fiction on the assessee subject to search wherein it may be presumed that any such document found during the course of search from the possession and control of such document are true. What has to be noted here is that deemed presumption cannot bring such a document in the tax net and the presumption is rebuttable one and the deemed provisions have no help to the department. Therefore, in these cases addition is made by AO on arbitrary basis relying on the loose papers, containing scribbling, rough and vague noting's in the absence of any corroborative material and this material cannot be considered as transactions carried on by assessee giving rise to income which are not disclosed in the regular books of accounts by assessee. We place reliance on the following judgements in support of our above findings: (i) CIT vs D.K.Gupta 174 Taxman 476 (Delhi) (ii) Ashwini Kumar vs ITO 39 ITD 183 (Delhi) (iii) S.P.Goyal vs DCIT (Mum) (TM) 82 ITD 85 (MUM) (iv) D.A.Patel vs DCIT 72 ITD 340 (Mum) (v) Amarjeet Singh Bakshi (HUF) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble conclusion, admission bind the maker when these are not rebutted or retracted. An admission is an extremely important piece of evidence but it cannot be said that it is conclusive and the maker can show that it was incorrect. In our opinion admission made by the assessee will constitute a relevant piece of evidence but if the assessee contends that in making the admission, he had proceeded on a mistaken understanding or on misconception of facts or untrue facts, such admission cannot be relied upon without considering the aforesaid contention. In our opinion, the voluntary admission are not conclusive proof of the facts admitted and may be explained or shown to be wrong but they do raise an estoppel and shift the burden of proof to the person making the admission. It is to be noted that, unless shown or explained to be wrong, they are an efficacious proof of the facts admitted. Thus, the burden to prove "admission" as incorrect is on the maker and in case of failure of the maker to prove that the earlier stated facts were wrong, these earlier statements are suffice to conclude the matter. If retraction or proved sufficiently, the earlier stated facts lose their effect and relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...................................................................................... ................................................................................................ 13.38 At this stage, it is pertinent to refer to the judgment of the Supreme Court in the case of Vinod Solanki (2009) (233) ELT 157 observed as under : "22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the Court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded. [see Pon Adithan vs. Dy. Director, Narcotics Control Bureau (1999) 6 SCC 1] ................... 13.39 In case of Romesh Chandra Mehta vs. State of West Bengal (1969) 2 SCR 461 although Hon'ble Court held that any statement made under ss. 107 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Roshan Beevi vs. Jt. Secretary to the Government of Tamil Nadu, Public Deptt. etc. (1983) Mad LW (Crl.) 289 : (1984) 15 ELT 289 : AIR 1984 NOC 103, to which one of us (S. Ratnavel Pandian, J.) was a party." 13.41 In our opinion, the above additions cannot be made solely based on the statements recorded u/s 132(4) of the Act. Reliance is placed on following decisions: * The Hon'ble Delhi High Court in Commissioner of Income-tax v. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi) held as under: "21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made the basis for addition." 13.43 We also rely on the decision of the Hon'ble Tribunal in the case of Kamla Devi S. Doshi v. Income-tax Officer [2017] 88 taxmann.com 773 (Mumbai - Trib.) / [2017] 57 ITR(T) 1 (Mumbai - Trib.) held as under: - "We however are unable to persuade ourselves to subscribe to the view that such information arrived at on the basis of the stand-alone statement of the aforesaid person, viz. Sh. Mukesh Chokshi (supra), falling short of any corroborative evidence would however justify drawing of adverse inferences as regards the genuineness of the share transactions in the hands of the assessee. We though are also not oblivious of the settled position of law, as per which a very heavy onus is cast upon the assessee to substantiate the LTCG on sale of shares, as projected by her in the return of income for the year under consideration. Thus, to be brief and explicit, though the reopening of the case of the assessee in the backdrop of the aforesaid factual matrix cannot be faulted with, however such stand-alone information, i.e., the statement of Sh, Mukesh Chokshi (supra), cannot be allowed to form the sole basis for dislodging the claim of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances that cash payments are made outside the books of accounts in effecting money lending transactions and therefore, the statement made by Mr, R. Ravish can be relied and the addition sustainable. However, we do not subscribe to this view of the AO. In order to establish that the assessee had paid amount outside the books of accounts for effecting money lending transactions substantial evidence has to be placed on record which is absent in this case. It would be unjust if an addition is made on the assessee based on a statement made by third party without further making inquiries and collecting evidence. Therefore, we hereby request to delete the additions made by the Ld. AO in the concerned AY's. This entire question is based on facts and therefore, no interference is necessary." 13.45 Thus, it is settled position of law that onus lies upon the Department to collect cogent evidence to corroborate the notings on the loose sheets. The additions cannot be made merely on the basis of notings on the loose sheet papers which are in the nature of "dumb documents" having no evidentiary value. The onus lies on the Department to collect the evidence to corroborate the notings on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailing in trade circles. At page 299 of the report, it was observed as follows: "Adverting to the various probabilities which weighed with the Income-tax Officer we may observe that the notoriety for smuggling food grains and other commodities to Bengal by country boats acquired by Sahibgunj and the notoriety achieved by Dhulian as a great receiving centre for such commodities were merely a background of suspicion and the appellant could not be tarred with the same brush as every arhatdar and grain merchant who might have been indulging in smuggling operations, without an iota of evidence in that behalf." 15. This takes care of the argument of Mr. Sabharwal that judicial notice can be taken of the practice prevailing in the property market of not disclosing the full consideration for transfer of properties". 13.48. The Hon'ble Supreme Court in the case of K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) held that the capital gains is intended to tax the gains of assessee not what an assessee might have gained and what is not gained cannot be computed as gain and the assessee cannot fastened with the liability on a fictional income. Similarly, the Hon'ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary state ment, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve the retrac tion made by the Assessing Officer and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the Assessing Officer under section 132(4) of the Act. The Tribunal has com mitted an error in ignoring the retraction made by the assessee. [Emphasis supplied] 22. Further, the position with respect to whether a statement recorded under Section 132(4) of the Act could be a standalone basis for making assessment was clarified by this Court in the case of CIT v. Harjeev Aggarwal2, wherein, it was held that merely because an admission has been made by the assessee during the search operation, the same co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded in satisfaction note which is missing here. Therefore, the proceedings drawn u/s 143(3) as against 153C are invalid for want of any incriminating material found for the impugned assessment year. 19. In view of the above, the additional grounds raised by the assessee in the case of M/s Pavitra Realcon Pvt. Ltd. And M/s Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned." 25. Also, the Supreme Court in the case of CIT v. Abhisar Buildwell (P) Ltd.4, has clarified that in case no incriminating material is found during the search conducted under Section 132 of the Act, the AO will have no jurisdiction to make an assessment. The relevant paragraph is reproduced herein below: - "36.4. In case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on material that may have been unearthed in the course of the search or on the basis of material requisitioned. The statute thus creates a persistent and enduring connect between the material discovered and the assessment that may be ultimately made. The provision while speaking of AYs' falling within the block of six AYs' or for that matter all years forming part of the block of ten AYs', appears to have been put in place to cover all possible contingencies. The aforesaid provisions clearly appear to have been incorporated and made applicable both with respect to Section 153A as well as Section 153C ex abundanti cautela. Which however takes us back to what had been observed earlier, namely, the existence of the power being merely enabling as opposed to a statutory compulsion or an inevitable consequence which was advocated ***** 56. We also bear in mind the pertinent observations made in RRJ Securities when the Court held that merely because an article or thing may have been recovered in the course of a search would not mean that concluded assessments have to "necessarily" be reopened under Section 153C and that those assessments are not liable to be revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stante clauses and are in express terms ordained to override Sections 139, 147 to 149, 151 and 153 of the Act. By virtue of the 2017 Amending Act, significant amendments came to be introduced in Section 153A. These included, inter alia, the search assessment block being enlarged to ten AYs' consequent to the addition of the stipulation of "relevant assessment year" and which was defined to mean those years which would fall beyond the six year block period but not later than ten AYs'. The block period for search assessment thus came to be enlarged to stretch up to ten AYs'. The 2017 Amending Act also put in place certain prerequisite conditions which would have to inevitably be shown to be satisfied before the search assessment could stretch to the "relevant assessment year". The preconditions include the prescription of income having escaped assessment and represented in the form of an asset amounting to or "likely to amount to" INR 50 lakhs or more in the "relevant assessment year" or in aggregate in the "relevant assessment years". C. Section 153C, on the other hand, pertains to the non-searched entity and in respect of whom any material, books of accounts or docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vious year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs' hinges upon the phrase "immediately preceding the assessment year relevant to the previous year" of search, the ten year period would have to be reckoned from the 31st day of March of the AY relevant to the year of search. This, since undisputedly, Explanation 1 of Section 153A requires us to reckon it "from the end of the assessment year". This distinction would have to necessarily be acknowledged in light of the statute having consciously adopted the phraseology "immediately preceding" when it be in relation to the six year period and employing the expression "from the end of the assessment year" while speaking of the ten year block." [Emphasis supplied] 29. It is thus seen that in order to determine block of six AYs, one must first identify the FY in which the search occurred, leading to the identification of the AY relevant to the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cross examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross- examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33. Further, the argument of learned counsel for the Revenue that this mistake is curable under Section 292B of the Act lacks merit as the plain language of the said Section makes it abundantly clear that this provision condones the invalidity which may arise merely by mistake, defect or omission in notice. The said Section reads as under: - 292-B. Return of income, etc., not to be invalid on certain grounds.-No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 34. Reliance can also be placed upon the decision in the case of CIT v. Micron Steels P. Ltd.11, whereby, it was held that the jurisdictional defects cannot be cured under Section 292B of the Act and they render th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of search various incriminating documents and material were found and seized. The material found and seized related to various business concerns and investments made by the family members who are partners in the assessee-firm. The search and seizure operation unearthed large scale suppression in the income generated and investments. The assessee, when *confronted with the evidence found, voluntarily admitted the discrepancies and offered Rs. 5,48,60,039/- as undisclosed stock, unaccounted investments and unaccounted sales. The CIT(A), while upholding that the additions of Rs. 1,36,73,613/-, being undisclosed investments, are to be taxed u/s. 115BBE has erred in holding that the balance of Rs. 4,11,86,426/- is to be taxed at normal rates. 4. The CIT(A) erred in holding that the investments of Rs. 1,36,73,613/- only are to be taxed u/s. 115BBE and the balance of Rs. 4,11,86,426/- should be taxed at normal rates, despite the fact that the entire amount of declaration of Rs. 5,48,60,039/- has been generated using the same modus operandi and invested in gold. 5. The CIT(A) erred in holding that the investments of Rs. 1,36,73,613/- only are to be taxed u/s. 115BBE and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee made declaration of undisclosed income under the provisions of section 132(4) of the act. A return of income was filed on 22.10.2017, declaring total income of Rs. 6,59,91,240/- as business income wherein the following income which was quantified and declared in the statements recorded u/s. 132(4) of the act during the course of search has been declared in the profit & loss account. Stock with gold smith 1,59,69,750/- Business Stock at residence 93,63,957/- Excess stock in shop 1,52,07,375/- Business stock at residence seized 1,36,73,614/- Sale of silver (Deficit stock) 6,45,344/- Gross profit on URD purchases 8,37,297/- Sale of gold 89,600/- 5,57,86,937/- 16.1 Assessment has been concluded u/s. 143(3) of the act on 21.12.2018 accepting the income declared in the return filed. The income quantified during the course of search for the current year was declared in the return filed and accepted in the assessment also. Though the Assessing Officer has accepted the income declared, as far as the following income declared is concerned, provisions of section 115BBE of the act has been invoked and taxes have been levied at 60%. The Assessing Officer has held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized 1,36,73,614/- Aggrieved by the order of the ld. CIT(A) both the revenue and also the respondent are in appeal. Revenue Appeal in ITA/1166/Bang/2023 16.4 The ld. A.R. submitted that the revenue had filed certain grounds of appeal originally on which submissions have been made in AR's letter dated 21.02.2024. The revenue has now been filed revised grounds of appeal and the ld. A.R. submitted his written submissions on each of the revised grounds of appeal in the following paragraphs. GROUND No. 1 OF THE REVISED GROUNDS OF APPEAL (a) The order of the Learned CIT(A) is opposed to law and facts of the case. 16.4.1 He submitted to kindly consider his submissions on the other grounds of appeal filed hereunder. GROUND No. 2 OF THE REVISED GROUNDS OF APPEAL (b) The CIT(A) erred in holding that the additions/adjustments made with regard to undisclosed stock admitted by the assessee to the extent of Rs. 4,11,86,426/- should be considered as undisclosed business income, to be taxed at normal rates and not u/s. 115BBE. 16.4.2 The ld. A.R. submitted that as explained while elaborating on facts, the Assessing Officer has brought to tax the following items of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in acquiring such bullion, jewellery and other valuables exceeds the amount recorded in the books of account maintained by the assessee for any source of income, and the assessee offers no explanations about such excess amount or the explanation offered by him, in the opinion of the AO, is not satisfactory. Therefore, it appears that the power of the AO u/s. 69B is not an absolute one. It is subject to the satisfaction of the AO where explanation is offered. It therefore, provides for an opportunity to the assessee to explain the source of such investment. Once an explanation is offered, it is incumbent upon the AO to consider the same and form an opinion whether the explanation is satisfactory or not. The opinion so found must be reasonable and based on the material found and shall not be perverse. The AO is empowered to examine the materials found or produce by the assessee and conduct necessary enquiries to arrive at an opinion. But the assessee has the right to question the findings and counter the conclusions arrived at by the AO. The assessee may point out the perversity in the finding. It may point out that particular material was not considered or the enquiry made was not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted stock detected were part of the business activity and are intrinsically linked. Treating such unaccounted stock as unexplained investment requires some investigation or finding on the part of the AO to prove that there is no direct nexus nor connection between the investment made and the source of such investment i.e., the business activity of the appellant or distinguish the excess stock from the accounted stock of the business. However, the AO had not brought on record any evidence or material to establish that the appellant had generated income outside its reported business activity and made investments therefrom. 5.8 The following judgments cited below are also referred to and relied upon to arrive at the conclusion. * ACIT, Central Circle-2(1) Karsangiribuddhgiri Goswami (2021) 127 Taxmann.com 699 (Ahmedabad-Trib) * Jain Plywood and another V. DCIT and another (Hon'ble ITAT, Chandigarh) (2023) 68 CCH 0287 Chd Trib. * Principal Commissioner of Income Tax V Deccan Jewellera (P) Ltd (2021) 132 Taxmann.com 73 (Andhra Pradesh) * CIT V. S.K.Srigiri & Bros (2008) 171 Taxman 264 (Karnataka) * Overseas Leathers V. DCIT (2023) 152 Taxmann.com 595 (Chennai-Trib) 5.9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Jewellers V. Dy. CIT (IT Appeal No. 375 (Chd) of 2022, dated 22.08.2022, wherein the Tribunal has held as under in the context of the provisions of section 115BBE of the act "10.17 Ground Nos. 8 & 9 challenge the action of the lower authorities in applying the provisions of section 115BBE and thereby charging tax at the rate of 60%. The main thrust of the arguments of the Ld. AR has been that all the additions made or sustained relate only to the business income of the assessee and that nowhere in the assessment order has it been alleged that some other source of income had been detected which gave rise to additional income. It is seen that during the course of assessment proceedings, the various explanations submitted by the assessee have duly mentioned that the surrendered income was derived from the business. A perusal of the assessment order would also show that nowhere in the body of the assessment order, the AO has even contradicted this explanation of the assessee. The AO has not brought on record any iota of evidence to demonstrate that the assessee had any other source of income except income from business and, therefore, it is our considered view that deeming such inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of investment or expenditure is clearly identifiable and the alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment or expenditure, then, first, what is to be taxed is the undisclosed business receipt invested in unidentifiable unaccounted asset and only on failure can it be considered to be taxed u/s 69 of the Act and further where once such investment or expenditure is brought within the purview of tax as undeclared business receipt, then taxing it further as deemed income u/s 69 would be completely out of place. 10.21 Similar view was taken by the Coordinate Bench of ITAT Ahmedabad in the case of Chokshi Hiralal Maganlal Vs. DCIT reported in 131 TTJ 1 (Ahd.) 10.22 It is also seen that the Ld. CIT(A) has relied on the judgement of the Hon'ble Punjab & Haryana High Court in the case of Kim Pharma Ltd. Vs. CIT in ITA No. 106 of 2011 (O&M) and the Ld. CIT DR has also quoted the same in his arguments before us. However, after going through the aforesaid judgement of the Hon'ble Punjab & Haryana High Court, it is seen that in that particular case, the only issue was with regard to the cash surrendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m business activities and honoured in return of income filed also. Hence the income quantified on account of excess stock cannot be brought to tax under deeming provisions of section 69 of the act r.w.s 115BBE of the act. Unaccounted sale of silver - Rs. 6,45,344/- 16.4.12 The ld. A.R. submitted that during the course of search there was shortage of stock of silver to the extent of Rs. 6,45,344/-. On a presumption that, such stock has been sold without bills, a declaration u/s. 132(4) of the act has been obtained wherein the amount of Rs. 6,45,344/- has been admitted as undisclosed income. Primarily the declaration is wrong for the reason that, the whole of unaccounted sale of silver would not become income but only a percentage of such sale being gross profit should have been taxed as income. The respondent however with a view to avoid litigation declared the whole of the amount of Rs. 6,45,344/- as income and paid taxes under the regular provisions of the act. The Assessing Officer in the order of assessment has held that, this income is assessable under the provisions of section 115BBE of the act and taxes are to paid at higher rates. On appeal the ld. CIT(A) has held that, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded u/s. 132(4) of the act. The quantum remains the same in the return filed with reference to the quantum declared in the statement recorded. However, it is the respondent's submission that, out of the total amount of Rs. 5,48,60,039/- declared as undisclosed income, income to the extent of Rs. 4,11,86,426/- is to be taxed at normal rates for the reason that, such amounts are not taxable as per the provisions of section 115BBE of the act. He requested us to consider its submission to Ground No. 2 above. GROUND No. 4 OF THE REVISED GROUNDS OF APPEAL (d) The CIT(A) erred in holding that the investments of Rs. 1,36,73,613/- only are to be taxed u/s. 115BBE and the balance of Rs. 4,11,86,426/- should be taxed at normal rates, despite the fact that the entire amount of declaration of Rs. 5,48,60,039/- has been generated using the same modus operandi and invested in gold. 16.4.15 He requested us to consider its submission to Ground No. 2 above. GROUND No. 5 OF THE REVISED GROUNDS OF APPEAL (e) The CIT(A) erred in holding that the investments of Rs. 1,36,73,613/- only are to be taxed u/s. 115BBE and the balance of Rs. 4,11,86,426/- should be taxed at normal rates, ignoring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm u/s. 69B of the act and taxed u/s. 115BE of the act at 60%. The ld. Commissioner of Income Tax (Appeals) has held that, the excess jewellery of Rs. 1,36,73,613/- found at the residence of the partners is to be taxed u/s. 69 of the act and accordingly taxes have to be levied at 60% as contemplated under the provisions of section 115BBE of the act. 16.5.3 The ld. A.R. submitted that, the major source of income to the group is from the jewellery business activity and the excess stock represents income generated from such activity. The appellant has offered the excess stock found in the (1) Business premises is Rs. 1,52,07,375/- & at residence is Rs. 1,36,73,614/-, (2) stock with Gold Smith, at shop Rs. 1,59,69,750/- & at their residence is Rs. 93,63,957/-, shown in the Profit & Loss account of the firm. The Assessing Officer has accepted the returned income and taxed the whole of excess stock of jewellery found u/s. 69B of the act. He referred to para 6.1 and 6.3 of the assessment order. The Assessing Officer held jewellery stock found at residence as undisclosed investment and added u/s. 69B of the act and levied tax u/s. 115BBE of the act. Under the circumstances, it cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69A of the act was at 30% upto that date and under the circumstances in respect of unaccounted investments quantified as on 24.06.2016 the taxes payable were at 30% and not at 60% as determined by the Assessing Officer. 16.5.5 The ld. A.R. submitted that, the unaccounted jewellery of Rs. 1,36,73,613/- was quantified as undisclosed income in the search conducted on 24.06.2016. If the income was assessable under the provisions of section 69 of the act and taxes were payable under the provisions of section 115BBE of the act. The said provisions as it stood on 24.06.2016 reads as under: - "115BBE (1) Where the total income of an assessee includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, the income tax payable shall be the aggregate of: - (a) The amount of income tax calculated on income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, at the rate of thirty percent, and (b) The amount of income tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (a)." 16.5.6 He submitted that, since the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... draws such benefit and imposes a new condition which the citizen at that stage is incapable of complying whereas if such promise was not there, the citizen could arrange his affairs in a different way to get similar or at least some benefit, such amendment must be held to be arbitrary and if not, an ingenious artifice opposed to law...." The above decision is confirmed by Hon'ble Supreme Court in Commissioner of Income Tax V. Avani Exports (2015) 58 Taxmann.com 100 (SC). iii) Utsav Cold Storage (P) Ltd Vs. Income Tax Officer, Ward - 3(2), Jaipur (2019) 107 Taxmann.com 184 (Jaipur-Trib). The Hon'ble Tribunal has held as under in the last paragraph of its decision. "Thus it is a cardinal principle of tax law as propounded by the Courts that law to be applied which is in force in the relevant assessment year unless and otherwise provided expressly or by necessary implication a clarificatory amendment by insertion of an explanation can be read into the main provision but if a change is brought in the existing law by insertion of a new provision then the same cannot be applied in the case when no such law was in force at the relevant point of time and, therefore, a new tax liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence and seized at Rs. 1,36,73,614/- as income u/s 69B r.w.s. 115BBE of the Act. Now the contention of the ld. A.R. is that the entire stock belongs to the business of the assessee and this stock of 4990.37 gms of jewellery relating to assessee's business found at Mr. Ravish's residence kept for safety purpose and it cannot be treated as unexplained investment u/s 69B r.w.s. 115BBE of the Act and entire excess jewellery both found at the business premises of the assessee as well as residence of Mr. Ravish to be considered as business income of the assessee and it cannot be treated as income from other sources u/s 69B r.w.s. 115BBE of the Act. 18.2 We note that assessee is in jewellery business. The assessee had admitted excess stock found in the business premises of the assessee as well as residence of the assessee as business income and offered the same for taxation by bringing the same to P&L account of the assessee. The ld. AO accepted the returned income and taxed the whole excess stock of jewellery. The assessee has been explaining before the lower authorities that excess stock found during the course of search action had emanated from the stock of earlier years and it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, during the course of survey except stock difference, no other investment with any other asset was found. Therefore, from the above it is very clear that explanation offered by the assessee that source for excess stock is out of income generated from business activity of the current year appears to be plausible explanation. Therefore, we are of the considered view that when the assessee has explained the source for acquisition of stock out of business income, the AO ought to have accepted the explanation of the assessee and assessed the income under the head profits and gains of business or profession, but not under the head unexplained investment u/s. 69B of the Act. This is because, excess stock found during the course of survey does not have any independent identity as the asset is a mixed part of overall stock found in the business premises of the assessee, which in our considered view represents business income." 18.3 Being so, under the facts and circumstances of the case, we note that the assessee has declared additional income towards excess stock found during the course of search action both at the business premises of the assessee as well as partner of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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