Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, KOLKATA-PATNA ‘e-COURT’, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Dr. Manish Borad
Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax
Assessment Year: 2009-2010 Shashi Bhusan Sinha (Appeals), Patna-3 dated 15.02.2021 passed for Assessment Year 2009-10.
The grounds of appeal taken by the assessee are not in consonance with Rule 8 of Income Tax Appellate Tribunal Rules, rather descriptive and argumentative in nature. We will revert back the point in dispute after taking note of the factual background.
Brief facts are that the assessee is an individual and Director of Company. A search and seizure operation was conducted in M/s. Tirupati Homes Pvt. Limited group of cases, Patna on 28.04.2011 and on subsequent dates. The flagship company of the group M/s. Tirupati Homes Pvt. Limited is a leading construction company of Patna, engaged in construction of residential and commercial complexes as observed by the ld. Assessing Officer. The residential premises of the assessee at 501, Laxmi Hari Niwas, Nageshwar Colony, Patna was also covered under this search operation. Lockers No. 39 and 37 maintained with Syndicate Bank in the name of the assessee as well as in the name of his wife Smt. Kavita Sinha were also searched. In response to the notice under section 153A, the assessee has filed return of income on 01.03.2013 declaring total income at Rs.17,48,798/-.
Assessment Year: 2009-2010 Shashi Bhusan Sinha 4. The major dispute involved in the present appeal relates to the addition of Rs.25,00,000/- on account of undisclosed income, undisclosed receipt and estimation of interest on such undisclosed investment at Rs.1,20,000/-.
Brief background of these additions is during the course of search, a diary inventorised as MKJ-03 was found and seized. On this diary, on pages no. 2 & 3, two entries are relevant for the controversy, which read as under:- These entries are namely- 23rd April, Ompraksh Rs.1,00,000/- 2008 Yadav loan amount 2nd May, Rajeev Ranjan Paid 2008 Prasad Rs.10,000/- interest on Rs.4,00,000/- taken by Ompraksh Yadav These two entries were confronted to the assessee in the statement recorded under section 131 of the Income Tax Act after the search. The statements are in Hindi. The vernacular of these statements in English reads as under:- Question No. 18: What is your commercial relationship with Rajeev Ranjan Prasad and what are your dealings with him? 3
Assessment Year: 2009-2010 Shashi Bhusan Sinha
Reply: He is one of the Directors in my Company, Nesh India Infrastructure Pvt. Limited and I have given cash as well as cheque amounting to 20 to 25 lakh rupees as a loan, which has not been shown by us in the Balance-sheet.
On the strength of these two evidences, ld. Assessing Officer has observed that a sum of Rs.25,00,000/- has been given as a loan to Shri Rajeev Ranjan Prasad, whose source is unexplained. Hence, this addition of Rs.25,00,000/- has to be made in the hands of the assessee. Similarly on a hypothetical calculation, he has estimated the interest income @Rs.10,000/- per month, which has been calculated at Rs.1,20,000/-. The ld. Assessing Officer has made these additions apart from others to the total income of the assessee.
Appeal to the ld. CIT(Appeals) has brought partial relief but on these points, ld. CIT(Appeals) concurred with the ld. Assessing Officer.
Ld. Counsel for the assessee while challenging the finding of the Revenue authorities submitted that perusal of two entries as conceived by the ld. Assessing Officer do not indicate receipt of interest from Shri Rajeev
Assessment Year: 2009-2010 Shashi Bhusan Sinha Ranjan Prasad by the assessee. A simple perusal of the entry dated 2nd May, 2008 would indicate that Shri Rajeev Ranjan Prasad has paid interest of Rs.10,000/- on the loan of Rs.4,00,000/- taken from Ompraksh Yadav, so this interest income has not percolated to the hands of the assessee. Similarly one of the entries available dated 23.04.2008 suggests that Rs.1,00,000/- loan amount was given to Ompraksh Yadav. This entry does not lead to any firm conclusion nor any question is discernable from the assesee regarding this aspect.
On the other hand, ld. D.R. contended that in the statement recorded under section 131, which is taken after administering oath to the assessee. He has admitted about advancement of a loan amounting to Rs.25,00,000/- to Shri Rajeev Ranjan Prasad. Hence, addition on account of unexplained investment is sustainable.
We have duly considered the rival contentions. The sole basis on making the addition of Rs.25,00,000/- on account of unexplained investment in loan given to Shri Rajeev Ranjan Prasad is the reply of the assessee to Question No. 18 asked during a statement recorded on 20.06.2011. It is pertinent to note that though this statement is recorded under section 131, but on oath, at the most, it can be equated with the statement recorded
Assessment Year: 2009-2010 Shashi Bhusan Sinha under section 132(4) of the Income Tax Act during the search. The simple reason for addition is that it is recorded post-search enquiry. Let us for the time being, give weightage to this statement equivalent to the one recorded during search. This observation is simply made for assessing evidentiary value of such statement. No doubt, the disclosure of admission made during the course of a statement given on oath is admissible evidence but not a conclusive one. This presumption of admissibility of evidence is rebuttable one and if an assessee is able to demonstrate with the help of some material, that such admission is either untrue or under some misconception, then, solely on the basis such admission no addition is required to be made. It is true that admission being declaration against an interest are good evidence, but they are not conclusive and a party is always at a liberty to withdraw the admission by proving that they are either mistaken or untrue. In law, retracted confession even made form the legal basis of addition if ld. Assessing Officer is satisfied that it was true and was voluntarily made, but basing the addition on a statement solely would not be safe. It is not strict Rule of Law but only Rule of prudence. As a general law of practice, it is unsafe to rely upon a retracted confession without corroborative evidence. Due to this situation, the Board has issued a Circular 286/2003 which prohibits the department from taking any confession in the search.
Assessment Year: 2009-2010 Shashi Bhusan Sinha The CBDT is of the view that the official used to obtain confession from the assessee and stop further recovery of material. Such confessions have been retracted and then, the addition could not withstand the scrutiny of higher appellate authorities because no material was found supporting such addition. Keeping in view the above Board Circular, let us examine the disclosure made by the assessee. The ld. Counsel for the assessee at the time of hearing submitted that there is no corroborative evidence possessed by the Revenue, which suggest that the assessee has made investment in cash or partially by cheque by giving loan to Shri Rajeev Ranjan Prasad. The assessee has been covered under the search and in a post enquiry of the search, this statement was taken. He also made reference to the decision of the Hon’ble Supreme Court in the case of Pullangode Rubber Produce Company Limited –vs.- State of Kerala [91 ITR 18 (SC), decision of Hon’ble Jharkhand High Court in the case of CIT –vs.- Ravindra Kumar Jain (12 taxmann.com 257), decision of Hon’ble Gujarat High Court in the case of Kailashben Manharlal Choksi –vs.- CIT (174 taxmann 466) etc. According to whom, the unanimous approach of the Hon’ble High Courts in all these decisions is that corroboration of recovery of any asset, bullion and jewellery in support of disclosure made during the course of search is necessary for making addition.
Assessment Year: 2009-2010 Shashi Bhusan Sinha 11. We have taken note of all these facts and circumstances, but one important issue which is missing in the present case that the assessee has not retracted this disclosure to the Officer. In other words, he has not filed any retraction by explaining how this statement was given by him. It is a very specific and candid disclosure while explaining the relationship with Shri Rajeev Ranjan Prasad that a loan of Rs.20-25 lakhs has been given to this person through cheque as well as in cash, which is not recorded in the balance-sheet. This aspect ought to have been rebutted by the assessee himself either by producing some documents showing that part of the sum was paid through account payee cheque and it is discernable from this evidence. If money has been given in cash, there cannot be any evidence available in the entries. It is the assessee, who himself has admitted and never rebutted this statement. Therefore, addition to the extent of Rs.25,00,000/- on the strength of the reply given by the assessee is confirmed.
As far as estimation of interest income is concerned, there is no evidence available with the Revenue. Whatever evidence possessed by the Revenue is related to receipt of some money amounting to Rs.10,000/- on behalf of Ompraksh Yadav, it does not show how this is the income of the assessee. Therefore, this addition is not sustainable and deleted.
Assessment Year: 2009-2010 Shashi Bhusan Sinha
In the result, the appeal of the assessee is partly allowed. Order pronounced in the open Court on 10.07.2023.