9911796707
Advanced Search 
TMI Blog2024 (11) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... /disallowances u/s 153A can be made for the assessment year under questions, without the corroborative evidence unearthed and the original assessment has not abated as on the date of search. 4. The learned CIT(A), has erred in not considering the decision, which are squarely applicable to the appellant's case, i) CIT vs. Lancy constructions (237 taxmann 728) (kar), ii) CIT (central) III vs. Kabul Chawla (234 taxmann 300) (Delhi), iii) Canara Housing Development co. vs. DCIT, CC1(1), Bangalore (49 taxmqaann.com 98) (kar) 5. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. ITA 463/Bang/2024 (2014-15) 1. The learned CIT(A), erred in passing the order in the manner he did. 2. The learned CIT(A), is not justified in law in making additions u/s 69B amounting to Rs. 22,00,000/- purely on assumptions and presumptions based on the loose sheet found at the time of search. 3. The learned CIT(A), has overlooked the facts that, no additions/disallowances u/s 153A can be made for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A), has erred in making an addition against the appellant on the basis of a piece of paper found during the course of search wherein certain figures were written 5. Without prejudice, the impugned additions are excessively arbitrary and unreasonable and liable to be deleted in full. 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed ITA 486/Bang/2024 (2014-15) 1. The learned CIT(A), erred in passing the order in the manner he did. 2. The learned CIT(A), is not justified in law in concluding assessment under section 144 of the Income Tax Act, 1961 by order 27.12.2019, when the assessment is not time barred. 3. The learned CIT(A), is not justified in law in making additions amounting to Rs. 9,63,350/- as undisclosed business income purely on assumptions and presumptions based on the loose sheets found at the time of search by an ex-parte order u/s 144. 4. The learned CIT(A), is not justified in law in making additions u/s 69B amounting to Rs. 85,00,000/- purely on assumptions and presumptions based on the loose sheet found at the time of search. 5. The learned CIT(A), ought to have appreciated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee on 6.3.2019 to file a return of income. The assessee has filed the return of income on 30.3.2019 and assessment was completed u/s 153A r.w.s. 144 of the Act on 27.12.2019. Against this assessee went in appeal before ld. CIT9A) who has dismissed the appeal of the assessee. Once again assessee is in appeal before us. Now we will deal with each assessment year-wise. ITA No.485/Bang/2024 AY 2013-14: 3. First ground for our consideration is that no addition could be made in the assessment year under consideration without any corroborative evidence unearthed as the original assessment has been concluded on the date of search on 30.8.2017. The ld. A.R. submitted that this is the assessment year 2013-14 on the date of search, the time limit to issue a notice u/s 143(2) of the Act has been already lapsed as such for the assessment year 2013-14, the assessee has already filed return of income on 30.3.2015. The said return was already been processed u/s 143(1) of the Act. Later, the assessment was completed u/s 143(3) of the Act on 30.3.2016. A search action was conducted in the case of assessee on 30.8.2017 and thereafter to frame the assessment u/s 153A of the Act, there should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment cannot be reopened. However, we find that at the time of issuing of notice for reopening u/s 153A of the Act to concluded assessment there should be a prima facie material to do so. In the present case, there is a seized material marked as A/IK/3 at pages 67 to 70 and A/MI/4 pages 1 to 24, A/IK/3 pages 67 to 70 represent an agreement by assessee Smt. Praphulla Shetty for purchase of Rs. 1.67 acres of land at Manjeshwara for a total consideration of Rs. 1,70,34,000/-. This agreement was duly signed by both the parties. As such, he has paid Rs. 40 lakhs in cash and Rs. 10 lakhs by cheque. According to the ld. AO, this agreement was subsequently changed and revised, which is seized document A/IK/71 & 72. As per revised agreement, the sale consideration was Rs. 2,08,75,000/-. According to the ld.AO, out of this assessee paid Rs. 95 lakhs, which was reproduced in earlier para. On this count, ld. AO made addition of Rs.80 lakhs which on the basis of another agreement A/M14/pages 1 to 24. On questioning the same recorded u/s 132(4) of the Act on 31.8.2017 assessee admitted payment of Rs. 4 lakhs in cash. On this basis, the ld. AO issued notice u/s 153A of the Act. In our opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orative material other than statement recorded u/s 132(4) of the Act. 4.2 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. 4.3 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. 4.4 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 Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eged payment made simply on the basis of uncorroborated noting and scribbling on loose sheets made by some person have no evidentiary value and is unsustainable and bad in law. 4.8 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of surmises and conjecture without bringing any cogent 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, 4.11 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further verification by Assessing Officer and he had not provided 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]" 4.14 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of any inference against the adverse parties. We have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion." 4.16 No assets commensurate with the alleged 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. 4.17. 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 manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seller or buyer of unaccounted transactions. These 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst admitted proof. In the absence of rebuttable 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 ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome was earned by the assessee. ................................................................................................ ................................................................................................ 4.24 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] ................... 4.25 In case of Romesh Chandra Mehta vs. State of West Bengal (1969) 2 SCR 461 although Hon'ble Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a decision of the Full Bench of the Madras 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." 4.27 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring such statement cannot, by itself, be made the basis for addition." 4.29 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the opinion that there are ample instances 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." 4.31 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 evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the notorious practices prevailing 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". 4.34 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 Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority. We are, therefore, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise are recorded 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have to be 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 liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53C embody non-obstante 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be that the previous 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the assessee 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 themselve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Emphasis supplied] 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng return of income. 4.36 In our opinion, as discussed in earlier para, this addition is based on only unsubstantiated statement recorded u/s 132(4) of the Act and 131 of the Act without any supporting evidence as discussed in earlier paras. 4.38 In view of the above discussion, we are of the opinion that addition cannot be made on the basis of statement recorded u/s 132(4) of the Act supported by the unsubstantiated loose slips. Accordingly, the addition of Rs. 84 lakhs is deleted. 5. In the result, appeal of the assessee in 485/Bang/2024 is allowed. ITA 463/Bang/2024 AY 2014-15 6. In this case, the assessee filed original return on 31.3.2016 and return was processed u/s 143(1) of the Act. Later consequent to search action notice u/s 153A of the Act was issued. The assessee filed return of income on 6.3.2019 declaring income of Rs. 6,06,430/-. While framing assessment u/s 144 of the Act, the ld. AO made addition as follows: a) Payment by cash - Rs. 10 lakhs b) Payment by self-cheque - Rs. 12 lakhs Total unexplained investment u/s 69B - Rs. 22 lakhs 6.1 The contention of the ld. A.R. is that the seized material relied by the AO vide A/IK/7 pages 145 & 147 were the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount on behalf of Mr. Ali Kutty of Creek Builders as I was present at the building premises. Page No. 181 is an estimate given to a customer for flat No. 304 in Creek Galaxy. Page No. 180 is a receipt given to Mr. Sheik Nizamuddin for the same flat for Rs. 7 lakhs and signed Mr. Ali Kutty for Flat No. 304 and the amount received in cash. Page No. 179 shows total receipt of Rs. 25 lakhs upto 14.9.2015 for the same flat and is signed by Mr. Alikutty. Q5: Please explain your business relationship with Mr. All Kutty of M/s Creek Builders 8.6 Here are the scanned copies of some of the evidences for Mr. Ibrahim Khaleel having collected cash from the buyers of the flat. The documents serially numbered from 178 to 181 found and seized from the residence of Mr. Ibrahim Khaleel at 20-6-363/1, Badriya, 2nd Cross, Kandak, Mangalore as folder 'A/IK/07' which clearly establishes the same. 8.7 It is also seen that on some occasion Mr. Ali Kutty himself had also collected the sale consideration of the flat either personally or through his accomplice and subsequently paid towards the cost of construction. (180) 8.8 As per the above cash receipt of Rs. 7 Lakhs on 3/9/2014 it is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CASH outside the accounts have been cross verified by Mr. Ibrahim Kaleel. Mr. Ibrahim Kaleel had given the voluntary statements on oath u/s. 132(4) on 31/8/2017 and u/s. 131 on 6/9/2017, admitting the unaccounted cash receipts as the income of the assessee firm. The scanned copy of the sworn statements are attached here under: 3.2 From the above statement, the AO came to the conclusion that since the books are maintained by Mr. Ibrahim Khaleel, who is the partner of the assessee firm and the said amount of cash of Rs. 4,93,05,000/- reflected in seized material A/IK/07 at pages 145 to 147 shows that the receipt of unaccounted cash up to 3.1.2017. Accordingly, he appropriated this amount of Rs. 4,93,05,000/- to four assessment years as above. Now the contention of ld. A.R. is that these loose slips cannot be basis for any addition as unaccounted cash receipts in these assessment years since Mr. Ibrahim Khaleel has bee marketing the flats and collecting the consideration from clients with the consent of Mr. Ali Kutty who is an NRI who lives most of the time abroad. Mr. Ibrahim Khaleel had received this amount on behalf of Mr. Ali Kutty and this amount even Mr. Ibrahim Khaleel ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought on record that who has written the said document. It also does not contain any narrations with reference to who has paid the said amount, on what date, it has been paid and the purpose for which it has been paid. According to the A.O., the assessee has recorded the cash receipts from various parties and which is not reflected in the books of accounts maintained by the assessee. However, when the statement recorded by searched team from Mr. Ibrahim Khaleel, partner of assessee's firm clearly mentioned that he has been marketing the flats, collecting the consideration from the clients with the consent of Mr. Ali Kutty. Mr. Ali Kutty is an NRI who lives most of the time abroad. Mr. Ibrahim Khaleel received the amount on his behalf and this statement has been reproduced in the earlier para of this order. He also stated that an amount of Rs. 4 lakhs has been received from Roshan Shameer and this amount was towards the instalment of flat booked by him in Creek Galaxy, Pumpwell and also Mr. Ibrahim Khaleel stated that this amount has been received on behalf of Mr. Ali Kutty of Creek builder. Regarding page 181 he has stated that it is an estimate given to customer for flat No.304 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Mr. Ibrahim Khaleel was with totally confused state of mind. The ld. A.R. also submitted that while recording the statement Mr. Ibrahim Khaleel clearly mentioned in his answer to question no.47 that he has incurred cash expenses also and which has to be considered while calculating the tax liability as per law. In our opinion, even the statement recorded to be considered as true, it has to be considered in its entirety and there shall not be any cherry picking and the AO cannot consider only the portion which is favourable to revenue. 3.6 The ld. D.R. stated that the assessee has entered only the receipt of cash and not recorded any expenses details. Hence, there is no question of giving any deduction towards expenses. The ld. A.R. also submitted that in the question no.47, it was stated by Mr. Ibrahim Khaleel that unaccounted cash collection was Rs. 4,93,05,000/- relating to assessment year 2017-18. Contrary to this, the AO spread it to 4 assessment years, which is contrary to the statement recorded on 31.8.2017. In our opinion, there is no correlation between the seized material and answer to question No.33 & 47 and the addition made by AO in this assessment years. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion, reliability of these statements depends upon the facts of each case and particularly surrounding circumstances and in this case, the lower authorities reached to the conclusion on the basis of assumption resulting into fostering liability on the assessee on the basis of in-advocate material coupled with statement recorded during the course of search since there is no corroborative material to support the contention of the AO. In the absence of corroborative evidence, merely on the basis of admission in the statement recorded u/s 132(4)/131 of the Act, no addition could be made by AO. The AO failed to bring on record any materials to support his view to make an addition and there was no reason as to why AO did not proceed further to enquire into the unaccounted income as admitted by assessee in statement recorded u/s 132(4) of the Act. This fact was also not taken care of and also no corresponding assets with reference to unaccounted cash receipt of Rs. 4,93,05,000/- was brought on record. In such circumstances, we are not in a position to sustain this addition. For this proposition, we rely on the following judgement: a) Sri Ganesh Trading Company Vs. CIT 257 CTR 159 (Jha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure is squarely applicable to the assessee's case and the addition based on that seized material in the case of Emkay Hindusthan Infrastructure to be deleted. 6.3 In our opinion, there is a force in the argument of ld. A.R. Being so, applying the same principles, reliance placed by seized material A/IK/7 pages 145 & 147 is devoid of merits as in the case of Emkay Hindusthan Infrastructure cited (supra). Accordingly, the addition is deleted in this case of assessee also. 6.4 In the result, assessee appeal in ITA No.463/Bang/2024 is allowed. ITA No.464/Bang/2024 (AY 2015-16): 7. In this assessment year ld. AO made addition of Rs. 5 lakhs u/s 69 of the Act placing reliance on the seized material marked as A/MI/06 pages 49 to 53 at the residence of assessee, which is in the agreement dated 6.12.2014 for purchase of non-agricultural property measuring of 10 cents at Kottekar Village, Bangalore entered with Smt. Gulzara Banu. As per agreement, total consideration was Rs. 20 lakhs and the assessee has paid Rs. 5 lakhs on the date of agreement. The assessee has confirmed the payment vide statement u/s 132(4) of the Act and also statement recorded u/s 131 of the Act. 8. We have he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the residence of Ibrahim Khaleel in the case of Emkay Hindusthan Infrastructure cited (supra). According to the ld. AO, as per this seized material assessee has paid a sum of Rs. 29.5 lakhs to Mr. Ibrahim Khaleel in cash towards the cost of construction as contract receipt. This evidence mainly contains the details of amount received from Ali Kutty, the promoter of the Greek Galaxy Project. The amount collected by Ibrahim Khaleel from the buyer of the flat on behalf of Ali Kutty and this payment has been received from one "Mr. Puttu Monu". According to the ld. AO, Puttu means known other than the present assessee. The assessee outrightly rejected this payment and stated that these loose slips cannot be based for addition in the hands of the assessee. 10.1 As discussed in assessment year 2014-15, this seized material has been considered by this Tribunal in the case of Emkay Hindusthan Infrastructure in ITA Nos.979 to 983/Bang/2022 for the assessment years 2014-15 to 2018-19 dated 16.6.2023 and held that this seized material being loose sheets not sufficient to hold that any unaccounted receipts or payments to make any addition in this count as extracted in earlier para of this o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount in cash. He was only developer in said project. It is not yet been completed and the ld. AO made addition only on the basis of statement recorded u/s 132(4) of the Act on 31.3.2017, statement recorded u/s 131 of the Act on 5.9.2017 without properly verifying the disclosure of profit arose from this transaction as soon as the project was completed. 14. We have heard the rival submissions and perused the material available on record. In our opinion, there is a sale agreement dated 17.9.2016 which shows the payment. However, the contention of the assessee is that the assessee has offered the profit arose from this transaction in subsequent assessment years as soon as the project is completed, which is required examination. Accordingly, the issue is remitted to the file of ld. AO for fresh consideration to verify whether this income is subject to tax in any subsequent assessment year. 15. Next ground in this appeal is with regard to addition of Rs. 10 lakhs towards bogus loan based on the seized material marked as A/M16/pages 92 to 94. This is an agreement signed on 10.1.2017 for a business loan of Rs.10 lakhs taken by present Mohammed Ibrahim from Abdul Saleel GH. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he source for the same, which was not explaioned. 17.1 Before us, the ld. A.R. submitted that this amount has been deposited by the firm not by the assessee and the assessee being individual not required to explain the source of the firm account. At best, the ld. AO can examine the same in the hands of the firm only not in the hands of the assessee. 18. We have heard the rival submissions and perused the materials available on record. As contended by the ld. A.R., if the amount of Rs. 12 lakhs deposited to the account of M/s. Hindusthan Greek Developers to their bank account No.00073510000606 with SCDCC Bank, Maidan Cross Road Branch, Mangalore, the assessee not required to explain the same. Hence, if it is so, the addition cannot be made in the hands of the assessee and if the deposit made in the firm's bank account, the addition to be deleted. However, if it is contributed by Md. Ibrahim as stated by latter filed before ITO Ward-2(2), Central Revenue Building, Hathavara, Mangalore vide dated 4.7.2019, it has been contributed by present assessee out of his agricultural income, then due credit to be given towards the sources explained by the assessee. Since this required verifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hammed Ibrahim entitled to agreement for purchase of 2.67 acres of property from Mr. PA Mohammed. According to the ld.AO, Pavoor Mohammed was son of present Mohammed Ibrahim. Hence, the addition was to be made in the hands of present assessee. To support his view, he took the benefit of the statement recorded u/s 132(4) of the Act from Jhansi Dinu and also loose slips A/THI/8 page 7 as reproduced in earlier para. As discussed in earlier para of the order, first of all, the assessee is not having a son by name Pavoor Mohammed. He had 3 sons that fact also recorded by ld. AO namely Mousin, Mufeev and Muyneeb. More so, the agreement was not signed by seller PA Mohammed. According to the ld.AO, since the document was retained by PA Mohammed, he could sign at any time. As such, he took the face value of that agreement. But the fact is that he has not verified with the PA Mohammed whether there was actual payment of money by Pavoor Mohammed to PA Mohammed. It is also recorded in the agreement in the 4th page of the agreement that even though this agreement does not have any legal backup, it is signed based on the mutual trust in front of the witness. The ld. AO totally ignored this fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Mohammed Ibrahim Khaleel in cash towards the cost of construction as contract receipt. The evidence mainly contains the amount received from Mr. Ali Kutti, Promoter of Greek Galaxy Project. The amount collected by Ibrahim Khaleel from the buyers of the flat on behalf of Mr. Ali Kutty as admitted and the amount collected by Mr. Ibrahim Khaleel; from one person written in the seized records as Puttu Monu. In the beginning it was written by Ibrahim Khalee, the amount in thousands. For example, Rs. 1,000/- means Rs. 10,00,000/-, which is very much evident since the total is to be in the full form. Later on Mr. Ibrahim Khaleel stated writing the amount in full form. As per the seized record, the total contract amount received either from Ali Kutty or from the buyer or from Mr. Puttu Monu, amounted in total to Rs. 4,93,05,000/- from the financial year 2013-14 to financial year 2016-17. This seized material resulted in addition of Rs. 7.70 lakhs in the assessment year 2017-18. 24. After hearing both the parties, we are of the opinion that this impugned seized material has been considered in the case of M.K. Hindusthan Infrastructure in ITA Nos.979 to 983/Bang/2022 vide order dated 16.6 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
