Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”: HYDERABAD
Before: SHRI SATBEER SINGH GODARA & LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER and LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA No. 786/H/2020 & CO No. 03/H/2021 Assessment Year: 2017-18 Ajaz Farooqi, Vs. Dy. Commissioner of Secunderabad. Income-tax, Central Circle – 3(4), PAN – AAFPF 5292G Hyderabad. (Appellant) (Respondent/ Cross Objector) Assessee by: Shri P. Murali Mohana Rao Revenue by Shri YVST Sai Date of hearing: 18/03/2021 Date of pronouncement: 29/04/2021
O R D E R PER L.P. SAHU, A.M.: This appeal filed by the assessee is directed against CIT(A) - 11, Hyderabad’s order dated 04/09/2020 involving proceedings u/s 143(3) rws 153A of the Income- Tax Act, 1961 ; in short “the Act. The Revenue also filed its C.O. No. 3/Hyd/2021 against the very same order of CIT(A).
1.1 We notice at the outset that assessee’s instant appeal suffers from 03 days delay in filing and to this effect, the
:- 2 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
assessee filed petition for condonation along with an affidavit averring therein, inter-alia that due to Covid – 19 pandemic caused the impugned delay in filing of the instant appeal. Case law Collector Land Acquisition vs Mst. Katiji & Ors, 1987 AIR 1353 (SC) and University of Delhi Vs. Union of India, Civil Appeal No. 9488 & 9489/2019 dated 17 December, 2019, hold that such a delay; supported by cogent reasons, deserves to be condoned so as to make way for the cause of substantial justice. We accordingly hold that assessee’s impugned delay of 3 days is neither intentional nor deliberate but due to the circumstances beyond its control. The same stands condoned. Case is now taken up for adjudication on merits.
The assessee has raised the following grounds in his appeal: “1. On the facts and the circumstances of the case, the appellate order passed by the Ld. CIT(A) on 04-09-2019 is erroneous to the extent the order is prejudicial to the interest of the appellant. 2. On the facts and in the circumstances of the case, the Ld. CIT (A) has grossly erred in upholding the invocation of provisions of sec 153A of the LT. Act by the Assessing Officer, without there being any incriminating material found during the course of search at the premises. 3. On the facts and in the circumstances of the case, Ld. CIT(A) has erred in upholding the assessment order which was passed by the AO ul s 153A of the Act., without obtaining the prior approval of the competent
:- 3 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
authority JCIT I Additional commissioner of income tax vi] s 153D of the Act. 4. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred by not taking into consideration the affidavit filed by the appellant withdrawing the admission made ul s 132(4) of Act., which is against the principles of natural justice. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have considered the affidavit filed by the appellant, withdrawing the admission made u] s 132(4) of Act., and decided the appeal by not following principles of natural justice and not following the latest judicial pronouncements on the issue. 6. On the facts and in the circumstances of the case, the ld. CIT (A) has grossly erred by not taking into account the revised computation of income filed in the course of assessment proceedings, not following the principles of natural justice and erred in not giving a fair decision. 7. On the facts and in the circumstances of the case, the Ld. CIT (A) ought to have followed the principles of natural justice and admitted the ! revised computation and given fair decision on the appeal. 8. The Ld. CIT (A) erred in not deleting the additional income of Rs. 26,00,00,000 without appreciating the facts of the case. I Rs.17,99,61 ,600/- 9. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have well appreciated that the additional income admitted of Rs. 26,00,00,000/ - u/s 132(4) in the course of search and seizure operation is in-correct and that after reconciling the accounts, the appellant has filed a revised computation in the course of appeal, which is admissible.
:- 4 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have appreciated the fact that, there is no basis for addition of Rs. 26,00,00,000 as there was no incriminating material document which forms basis for making addition. 11. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have well appreciated the legal position that the Revenue has to collect due taxes from the assessee and no undue tax liability has to be created that therefore, the revised computation filed ought to have been admitted and appeal decided. 12. The Ld. CIT(A) erred in not telescoping the cash deposits of Rs. 2,39,00,000/- to the opening cash balance and withdrawals made from his bank account. 13. The Ld. CIT(A) erred in not adjudicating the grounds on addition of Rs. 2,39,00,000 was based on the bank statements which is not an incriminating material for making addition u/s 68 of the Act in the search assessment proceedings u/ s 153A of the Act. 14. The appellant craves leave for addition/ revision/ deletion/ rescinding of any ground of appeal either before or at the time of hearing of the appeal.” 2.1 The revenue has raised the following Cross Objections in its appeal:
“1. The order of the Ld cIT(A) is erroneous in law and on facts of the case. 2. The Ld. CIT(A) erred in deleting the addition of Rs.2,39,OO,OOO/- made towards unexplained cash deposits on the ground that the additional income of Rs.26,OO,OO,OOO/- offered to tax is more than the cash deposits, ignoring the fact that the assessee did not furnish the details of the additional income.
:- 5 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
The Ld. CIT(A) erred in deleting the addition of Rs.2,39,00,OOO/- by giving credit for the additional income of Rs. 26,00,000/- when the assessee had filed an additional ground seeking to withdraw the admission of additional income. 4. Any other cross objection that may be filed at the time of hearing.”
Brief facts of the case are that the assessee is an individual and one of the promoters of KVR Rail Infra Projects Ltd and direction in M/s Zainab Investments Pvt. Ltd., M/s Asma Estates & Investments Pvt. Ltd., M/s Shoeb Estates Pvt. Ltd, M/s Aijax Investments & Estates Pvt. Ltd., M/s Zara Investments Pvt. Ltd. and M/s Surabhi Mercantile Pvt. Ltd. He filed return of income for the impugned AY on 06/02/2018 by admitting total income of Rs. 31,52,080/-, which was processed u/s 14391) of the Act on 21/02/2018.
3.1 A search and seizure operation was conducted in his case and his related concerns on 04/07/2017. Consequent upon search and seizure operation, a notice was issued to the assessee for AY 2017-18 on 19/02/2018, in response to which the assessee his return of income on 25/09/2018 by admitting a total income of Rs. 26,31,52,080/-, Thereafter other statutory notices were issued to the assessee by the Assessing Officer for calling certain information/ documents etc.
:- 6 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
3.2 As per the assessment order, during the course of search and seizure operation, assessee filed an affidavit admitting additional income of Rs. 26 crores without filing any details of head of income/assessment year or whose hands the additional income is admitted. However, the return of income filed in response to notice issued u/s 153A for AY 2017-18, the assessee had admitted the same as income from other sources in his individual return of income. During the course of assessment proceedings, the assessee was asked to furnish the nature and purpose of additional income admitted. However, the assessee did not file any information in this regards. A statement was also recorded on 1st September, 2017 of Shri Ajaz Farooqi, which is placed in the paper book at pages 49 to 86 filed by the Ld. DR, in which the assessee has declared 26 crores which is at page No. 86 of paper book without giving any details. The contents of the declaration are as under: “I have filed a letter before the Pr. DIT (Inv.), Hyderabad admitting additional income of Rs. 26 crores. I hereby confirm the declaration. I will furnish headwise and assessment year wise details of the declaration for this amount of Rs. 26 crores in due course”
The AO observed that in absence of any such details forthcoming from the assessee, no benefit can be given to the assessee of the above disclosed income in the return u/s 153A.
:- 7 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
3.3 The AO observed that during the year, the assessee had deposited an amount of Rs. 2,39,00,000/- in his Axis Bank Account No. 02710100446525 during the demonetization period form 09/11/2016 to 31/12/2016. Further, the AO observed that during the course of search and seizure operation, assessee had submitted that he offered income of Rs. 4,70,28,830/- for the AY 2012-13 and paid tax of Rs. 2.10 crores for the same and submitted that the balance cash of Rs. 2.60 crore was stated to have been held as cash on hand since 2013. The details of cash deposits during the demonetization period is as under: Particulars Amount in Rs. 15/11/2016 30,00,000 16/11/2016 30,00,000 17/11/2016 30,00,000 18/11/2016 30,00,000 19/11/2016 1,19,00,000 Total 2,39,00,000
3.4 The AO observed from the cash book submitted by the assessee that for AY 2015-16, there was a cash balance of Rs. 5,29,36,571/- as on March, 2015 whereas in the return of income filed by the assessee cash on hand was shown of Rs. 1,53,795/-. The AO therefore was not satisfied and noted that there was a rule of inconsistency and never supplemented by any supporting evidence and mismatching of few entries between cash book and bank statement. In view of the above observations, the AO rejected the cash book submitted by the AO and held that the assessee failed
:- 8 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
in explaining the source of the cash deposit found in his bank account and the cash deposited in to his bank account during the demonetization period, hence, treated the deposited amount of Rs. 2.39 crores during the demonetization period as unexplained cash credits u/s 68 of the Act and assessed the total income of the assessee at Rs. 28,70,52,080/-.
When the assessee filed an appeal against the order of AO before the CIT(A), the CIT(A) deleted the addition of Rs. 2.39 crores made in the hands of the assessee as unexplained cash credits u/s 68 of the Act and confirmed the amount of Rs. 26 crores which was admitted by the assessee in the return filed in response to the notice u/s 153A rejecting the additional ground filed seeking withdrawal of the declaration made of Rs. 26 crores. For the sake of clarity, the findings of the CIT(A) in his order as extracted below: “6.2 I have considered the assessment order and submissions of the appellant. It is seen that the appellant has admitted Rs. 26 crores as additional income during the course of Search and offered the same to tax in the return filed in response to notice u/s.153A of the Act. The AO made addition of Rs. without giving credit to the income so offered as the appellant ed details of 'Income offered to tax'. But once the Income is offered to tax, the credit for the same cannot be denied. As the appellant has offered more than the cash deposits made during the demonetization period, no further addition is warranted and the same is deleted.”
:- 9 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
7.1 I have considered the assessment order and submissions of the appellant. It is seen that the appellant has admitted additional income during the course of Search ujs.132(4) of the I.T. Act, 1961. The appellant retracted the statement given under sec. 132(4) by way of affidavit on 10/04/2018 citing the reason that on verification of records the declaration was found not to be correct. In the meanwhile the AO issued notice u/s.153A calling for the Return of Income. The appellant filed Return of Income on 25.09.2018 admitting income of Rs.26,31,52,080/- which included the income of Rs.26,00,00,000/- admitted during the course of Search. Now, during the course of appellate proceedings, the appellant by way of Additional grounds filed on 11.08.2020 seeks withdrawal of declaration made. The appellant himself has filed Return of Income after retracting the declaration made ujs.132(4) of I.T Act by way of affidavit. The appellant now raised the ground for accepting "Revised Computation of Income' allegedly filed during the course of assessment proceedings. The appellant has not adduced any reasons for 'Revising the Computation'. The Return of Income was filed way after the Search was concluded and the appellant has verified his records as mentioned in the affidavit. In view of the above, the contentions of the appellant are without any acceptable reasons. The conduct of the appellant has been 'inconsistent' throughout. As the appellant has not come out with any reason for filing alleged 'Revised Computation', the grounds raised by the appellant are not acceptable and the same are rejected.”
Aggrieved by the order of CIT(A) the assessee is in appeal before us against the action of the CIT(A) in confirming the admission of additional income of Rs. 26
:- 10 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
crores rejecting the additional ground of the assessee seeking to withdraw the declaration of the said income in the return of income filed in response to the notice u/s 153A issued by the AO.
5.1 The revenue raised cross objections against the action of CIT(A) in deleting the addition of Rs. 2.39 crores made by the AO as unexplained cash credits u/s 68 of the Act.
Before us, the ld. AR of the assessee relying on the order of the CIT(A) in deleting the addition of Rs. 2.39 crores made by the AO towards unexplained cash credits and opposing the action of the CIT(A) in confirming the amount of Rs. 26 crores declared by the assessee in search and seizure operation, filed written submissions in support of assessee’s case, which are as under:
“3. The Assessing Officer and the CIT(A) erred in not considering the Affidavit filed withdrawing the declaration made u/s 132(4) of the Act . After due verification of Books of Account, the appellant has admitted the total income of only Rs.31,25,080/- in the original return of income filed on 06.02.2018, which date is also after the search date i.e., 04.07.2017 and declaration made on 01.09.2017. This fact also makes it clear that the income admitted of Rs.26,31,52,080/ - in the subsequent return filed on 25.09.2018 in response to the notice u/s 153A of the Act is not a real income. The fact remains that the admission made u/s 132(4) of the Act during the search proceedings is without any basis.
:- 11 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
As has been submitted in the brief facts above, it is to submit that because of the attachment made u] s 281B of the Act on 26.02.2018, the appellant had no other go except to get it lifted. Thus, the appellant was forced to admit the additional income offered of Rs.26 crores in the return of income filed on 25.09.2018 in response to the notice issued u/s 153A of the Act dated 19.02.2018. 4. Mere declaration made during the search cannot be made basis for additional income as the same is not conclusive: In this regard we would like to submit that though the assessee has initially declared an amount of Rs. 26 crores during the search proceedings on 01.09.2017, no details of the declaration with respect to head of income and assessment year was 'Submitted by the assessee. The same fact can also be evidenced from the Assessment order, extract of which is as under: 3.0 During the course of search and seizure operation, assessee filed an affidavit admitting additional income of Rs. 26,00,00,000/- without filing any details of head of income/assessment year or whose hands the additional is admitted. However, in the ROI filed in response to notice u/s 153A for AY 2017-18, the assessee had admitted the same as income from other sources in the individual ROI. During the course of assessment proceedings assessee was asked to furnish the nature and purpose of additional income admitted. However, assessee did not file any information in this regard. In absence of any such details forthcoming from the assessee, no benefit can be given to the assessee of the above disclosed income in the return u/s 153A against any further addition being made as per the subsequent paras.
:- 12 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
It is very clear that the AO himself has written in the order that declaration made has not mentioned anything about assessment year, assessee name and head of income declared. In those circumstances, in accordance with the CBDT circular in F.No. 286/2/2003-IT(INV.II) Dated 10.03.2003 and F.No. 286/98/2013-IT (Inv.!l) dated 18th December, 2014, no addition is warranted. Further, the AO only on the basis that, the assessee has admitted in ROI, made addition of Rs. 26 crores while finalizing the assessment which is erroneous. The admission made by assessee is not a conclusive evidence to make addition. Mere statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self-incriminating. Reliance is placed on • HIGH COURT OF TELANGANA AND ANDHRA PRADESH in the case of Gajjam Chinna Yellappa in 59 taxmann.com 69 13....... We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support from the Circular dated March 10,2003, issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements. • High Court of Andhra Pradesh in case of Naresh Kumar Agarwal in 53 taxmann.com 306 24 ..... Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in subsection (4) is
:- 13 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle. • Hon'ble Supreme Court of India in case of Pullangode Rubber Produce Co. Ltd in [1973] 91 ITR 18 (SC), wherein it has held that "An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. " • High Court of Jharkhand in case of Shree Ganesh Trading Co. In [2013] 30 taxmann.com 170 (Jharkhand), wherein it has held that Statement on oath of an assessee under section 132(4) is a piece of evidence and when there is incriminating admission against himself, then it is required to be examined with due care and caution • In this regard we place our reliance in the case of [2012] 25 taxmann.com 413 (SC), CIT vs S Khader Khan Son wherein Supreme Court Held that: "Section 133A of the Income Act, 1961 - Survey - Whether Section 133A does not empower any ITO to examine any person on oath; so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition - Held, yes [In favour of assessee)" 5. Only real income to be taxed In this regard, it is submitted that only real income should be brought to tax. Once the income has not accrued to the assessee, no tax can be charged on the notional income. In this regard, reliance is placed on
:- 14 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
• Hon'ble Supreme Court of India in case of Lok Housing Construction Ltd in [2016] 70 taxmann.com 2 (SC) "Where assessee-company filed revised return claiming that income declared in original return in respect of sale of land/FSI stood withdrawn due to cancellation of sale agreements and High Court by impugned order held that no hypothetical income of assessee in respect of said sale could have been brought to tax, SLP filed was to be granted" • Hon'ble Hyderabad ITAT in case of BS Limited in ITA No. 2187/Hyd/2017 "18.2 By considering the facts on record, we notice that this addition of Rs. 60 crores by AO is not real income or additional income. Assessee withdrew the additional income declared by it during search proceedings. Since assessee has increased the turnover in order to declare the additional income and the same was withdrawn subsequently. Assessee should have modified the turnover and filed the return of income, but, assessee chose to keep the turnover intact as per P&L and tried to reduce the profit by showing this additional turnover as other deduction. In our considered view, it is not additional or real income and also not a deduction in real sense. Hence, the same is deleted. Accordingly ground raised y the assessee is allowed. " 6. Not Considering the revised computation of income Further, during the assessment proceedings, the assessee has submitted that, it is under immense pressure that the assessee has agreed the admission of income of Rs. 26 crores by way of affidavit. Subsequently, assessee has also submitted the revised computation of income declaring the correct income of the assessee at Rs. 31,62,080, copy of which is enclosed in Page 21-24 of Paper book. The Ld. CIT (A) ought to have considered the revised computation of income and
:- 15 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
allowed the grounds of appeal. In support of this claim, the appellant relies on the following case laws: • High Court of Bombay in case of Pruthvi Brokers & Shareholders in 23 taxmann.com 23. • Decision of Madras High Court in the case of CIT v. Indian Express (Madurai) Pvt., [1983] 140 ITR 705 (Mad.) 7. Cross objections Further, it is humbly submitted that, the fact that the assessee has withdrawn the admission of additional income of Rs. 26 crores is also agreed by the AO which fact can be evidenced from the cross objections filed in Ground 3. "3. The Ld. CIT(A) erred in deleting the addition of Rs. 2,39,00,000/- by giving credit for the additional income of Rs. 26,00,00.000/- when the assessee had filed additional ground seeking to withdraw the admission of additional income" Addition cannot be made as the admission was retracted by the assessee: In this regard we would like to submit that the assessee during the course of search was under undue pressure and accordingly admitted an additional income of Rs 26 crores on 01.09.2017. It is pertinent to consider that assessee has filed its return of income only for an amount of Rs, 31,62,080 on 21.02.2018. Pursuant to the search proceedings, all the bank accounts, FD and other assets were attached by the Department. After the search proceeding, assessee was not well and hospitalized for some time. Since, all the bank accounts of assessee were attached; the assessee paid an amount of Rs. 5 crores on 31.03.2018. Only
:- 16 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
after which, lifting of attachment was done on 27.04.2018. Subsequently, assessee has retracted the admissions of addition income of Rs. 26 crores on 10.04.2018 by way of affidavit. The above facts clearly brings out the fact that even after search proceedings, assessee has only admitted an amount of Rs.31,62,080 and has not disclosed an amount of Rs. 26 crores. We would like to further submit that, if any confession of income made during the search and seizure operation under the influence of officers, without any corroborative and credible evidence and later withdrawn by the assessee in his return of income filed then such confession made is not of any use. Without placing any reliance on the material evidence gathered during the search and only relying on the confession is not sufficient to make an addition as Undisclosed income.
In this regard we place our reliance on the Instruction No. EN o. 286 2003-IT(IV.II) dated 10/03/2003, issued by the CBDT wherein it is clearly instructed that: "Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during the course of search & seizure and survey operations no attempt should be made to obtain
:- 17 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, Assessing Officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders. • High Court of Delhi in case of Sunil Aggarwal 2015] 64 taxmann.com 107 (Delhi) "15. In the present case, the Assessee had an explanation for not retracting the statement earlier. He also furnished an explanation for the cash that was found in the hands of his employee and this was verifiable from the books of accounts. In the circumstances, it was unsafe for the AD to proceed to make additions solely on the basis of the statement made under Section 132(4) of the Act, which was subsequently retracted." • HIGH COURT OF CHHATTISGARH in case of Vijay Kumar Kesar in [2010] 231 CTR 165 (Chhattisgarh) 17 ..... The substantial questions of law on which the appeal has been admitted are basically the questions of fact. It is settled law that confession made by the assessee during survey proceedings is not conclusive and it is open to the assessee to establish by filing cogent evidence that the same was not true and correct. 9. Addition of Rs. 2,39,00,000 towards unexplained income In this regard, it is submitted that the assessee has admitted Rs 4.7 Cr as additional income for AY 2012-13 and paid tax of Rs 2.1 Cr and kept remaining cash on hand. It is to submit that the assessee has cash balance of 2.6 Cr since from the A Y 2012-13 and in mean while
:- 18 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
he deposited Rs. 1.32 Cr during the month of May in FY 2012 from the available balances of Rs. 2.6 Cr. Further he withdrawn the amount from his bank account and he deposited the following amounts in the bank account of the assessee. It is to submit that the cash deposits of Rs. 2,39,00,000/- in the bank account are from the opening balances and additional income offered. The same fact can be evidenced from opening cash balance of Rs. 4,72,52,000 as on 01.04.2016. Enclosed in Page 34 of Paper book. In this regard, reliance is placed on Chennai IT AT ruling in case of N. Sasikala in 151 TAXMAN53 Further, it is humbly submitted that the revenue has raised this ground against the deletion of the addition of Rs.2.39 crores. In support of the ground, the Revenuer has relied on the decision of Andhra Pradesh High Court in the case of Kermex Micro Systems (India) Limited v. DCIT [2014] 47 taxmann.com 375 (A.P.) which is totally distinguishable on facts. In that case the addition made was towards unexplained expenditure u/s 69C of the Act where as in the appellant's case, the addition of Rs.2.39 crores had been made towards unexplained cash deposits u/s 68/69A of the Act. It is not out of place to submit here that the Assessing Officer himself is not clear as to the correct section under which the addition has been made, because he has mentioned both the sections of 68 and 69A of the Act for the single addition in para 7.0 of the assessment order. Further, in the case of Kermix Micro Systems (India) Limited (Supra), there was no retraction from the admission made, where as in the appellant's case, there is a retraction-affidavit filed. Thus the revenue's reliance on the above said case cannot come to their rescue.
:- 19 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
Prayer: On the above facts and in the circumstances of the case, as also on the basis of settled position of law on the contentions issues, it is humbly prayed to quash the assessment order as null and Void and also to delete the addition made for the assessment year under consideration.”
6.1 The ld. AR of the assessee filed two paper books containing pages 1 to 445 consisting of following case law in support of assessee’s case: 1. All Cargo Global Logistics Ltd., [2012] 23 taxmann.com 103 (Mum.) 2. Midwest Gold Ltd., ITA Nos. 1062, 1063 & 1064/Hyd/2014 3. Sri Laxmi Narayan Agarwal, ITA No. 787/Hyd/2016 4. Dr. N. Pawan Kumar, ITA Nos. 1568 & 1569/Hyd/2013 5. PACL India Ltd., ITA No. 2637/Del/2010 6. Gajjam Chinna Yellappa, [2015] 59 taxmann.com 69 (AP & Telangama) 7. Krishan Lal Shiv Chand Rai, [1973] 88 ITR 293 (P&H) 8. Naresh Kumar Agarwal, [2015] 53 taxmann.com 306 (AP) 9. Pullangode Rubber Produce Co. Ltd., [1973) 91 ITR 18(SC) 10. Shree Ganesh Trading Co., [2013] 30 taxmann.com 170 (Jharkand) 11. Sunil Aggarwal, [2015] 64 taxmann.com 107(Delhi) 12. Vijay Kumar Kesar, [2010] 231 CTR 165 (Chattisgarh) 13. Bhaiyalal Shyam Behari, [2005] 276 ITR 38 (AH) 14. Shri Raj Kumar Harwani, IT(SS) A. No. 11/Hyd/2005
:- 20 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
M/s Midas Polymer Compounds Pvt. Ltd., ITA No. 288/Coch/2017 16. M/s RPK Estates (India) Pvt. Ltd., ITA No. 1025/Hyd/2015 17. Divya Jyothi Steels Ltd., ITA No. 1176 & 29/Hyd/Hyd/2016 18. Concord Drugs Ltd., ITA No. 1901 to 1903/hyd/2017 19. KSP Shanmugavel Nadar, [1987] 30 Taxman 133 (Mad.) 20. N. Balakrishnan Vs. M. Krishnamurthy, Judgment dated 03/09/1998 (SC) 21. Collector Land Acquisition Vs. Mst. Katiji, 1987 AIR 1353 22. M/s BS Ltd., ITA No. 2187/Hyd/2017 23. Shri P. Madhusudan Reddy, ITA Nos. 1373 to 1375/Hyd/12 24. Maruti Securities Ltd., 468/Hyd/2009 25. H.M. Kashiparekh & Co Ltd., 379 ITR 706 (Bom.) 26. Hind Construction Ltd., 83 ITR 211 27. Sanjeev Woolen Mills, 149 Taxman 431 28. Lok Housing & Construction ltd., 58 taxmann.com 179. (Bom) 29. Lok Housing & Construction ltd., 27 taxmann.com 15 (Mumbai ITAT) 30. Lok Housing & Construction ltd., 70 taxmann.com 2 (SC) 31. Shoorji Vallabhdas & CO., [1962] 46 ITR 144 (SC) 32. Excel Industries Ltd., 358 ITR 295 33. Pruthvi Brokers & Shareholders, [2012] 23 Taxmann.com 23 34. Indian Express (Madurai) Pvt. Ltd., 140 ITR 705 (Mad.) 35. C. Radhakrishna Kumar, ITA No. 295/Hyd/2012 36. Industrial Roadways, [2008] 112 ITD 293 (Mum.) 37. N. Sasikala, 151 Taxman 42 (Chennai ITAT) 38. Lokesh Agarwal, ITA No. 1021/Hyd/2013 39. M. Prabhakar, ITA No. 1727/Hyd/2014.
:- 21 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
The ld. DR, on the other hand, filed written submissions against the action of CIT(A) in deleting the addition of Rs. 2.39 crores made by the AO towards unexplained cash credits u/s 68 of the Act, which are as under: 2. It is humbly submitted that the AR argued at length on the point that the assessee was forced to file a return of income, pay the taxes and then only attachment was lifted. It is humbly submitted that the argument does not emanate from the grounds of appeal filed by the assessee before the Hon'ble ITAT or Ld. CIT(A). Therefore, these arguments being extraneous to the case and in the nature of wild allegations, may kindly be not taken on record. The following facts will also indicate that the return of income was filed by the assessee on his own volition and there is incriminating material, which the assessee was not in a position to substantiate with regard to unaccounted cash transactions discovered during the search. 3. A search action u/s 132 was conducted on 4.7.2017 on the assessee. The assessee filed ~ return of income on 6.2.2018 wherein any unaccounted income was not disclosed. The alleged affidavit of retraction which was dated 10.4.2018 which is at page 20 of paper book dated 18.2.2021 filed by the assessee before the Hon'ble ITAT was not filed before the AO and not brought to the notice of the AO. Also, there is no basis for such retraction. 4. Also, the alleged letter of retraction filed before Hon'ble ITAT at page 19 of the above referred paper book was also not filed before the AO. It is also humbly submitted that in the second paper book dated 15.3.2021 filed by the assessee, a letter identical to page no-19 referred above is available at page no.37.
:- 22 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
The contents of both the letters are identical, but date is added in the second letter in hand as 2.12.2019. It is humbly submitted that none of the above documents were filed before the AO and it is nothing but an attempt to create evidence after appeal is decided by the CIT(A). It is submitted that only an additional ground was taken on the issue of retraction and the revised computation filed before CIT(A) without any basis. 5. It is humbly submitted that while the AR relied on the letter dated 27.4.2018 lifting attachment u/s 281B on mutual fund investments worth Rs.8 Cr(available in the Paper Book dated 15.3.2021 at page 35), the return of income declaring the unaccounted income was filed much later on 25.9.2018 and again on 21.11.2019, which clearly shows that the allegation of force is only an argument of convenience to gain unfair advantage. 6. It is also submitted that the assessee certified that copy of cash ledger at page numbers 12 to 18 of paper book dated 18.2.2021 and revised computation available at pages 21 to 24 of the same paper book were filed before AO but none of them were filed before the AO. Also the return of income was not contested before the AO. It is humbly submitted that there is wrong certification regarding above documents which were not filed before the AO. 7. It is humbly submitted that the AR relied on several decisions which are on the points of forcible admission and confession without any basis. It is humbly submitted that none of the decisions are applicable to the facts of the present case because it is a case of returned income, more so when returns of income were filed after a period of more than one year and more than two years after the search respectively. It is humbly submitted that the AO accepted the returns of income filed by the assessee and this is not a case where
:- 23 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
addition was made by the AO on any issue related to the returned income. 8. It is humbly submitted that the statement ujs 132(4) recorded from the assessee on 1.9.2017 contains ample evidence of the fact that the assessee indulged in large scale unaccounted transactions on his own and also by directing Sri Amit Bansal and Sri Jayant Kumar Dutta. Such unaccounted transactions are in the nature of bringing in huge cash into the firms and companies managed by the assessee and his associates. Following are some of the specific details: - At Question No.9, the assessee was asked to explain the details of Rs.13.21 Cr credited on 2.12.2016 & 5.12.2016 into account of M/ s Zainab Investments Pvt Ltd. These transactions pertain to FY 2016-07 relevant to Asst Year 2017-18. The assessee could not provide satisfactory answer. - At Question Nos.10&11, details of ten shell companies were shown to assessee through which money was brought into M/s Zainab Investments Pvt Ltd. The assessee could not provide satisfactory answer. - At Question No.16, details of Rs.34 Cr brought into another company managed by the assessee by name M/s Zara Investments Pvt Ltd on 3.10.2016, 5.10.2016, 7.10.2016 & 10.10.2016 were shown to the assessee. The assessee could not give any satisfactory explanation. - At Question No.18, it was specifically shown to the assessee that there is transfer of Rs.11.27 Cr to assessee from M/s Zara Investments Pvt Ltd on 3.4.2017. The assessee could not give any satisfactory explanation.
:- 24 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
- At Question Nos.19 & 20, the details of money brought into M/s Shebaz Investments Pvt Ltd of about Rs.38.58 Cr on 3.10.2016, 5.10.2016, 7.10.2016, 10.10.2016 & 27.3.2017. The assessee could not give any satisfactory explanation. It is submitted that the modus operandi of assessee is apparently to bring unaccounted money into concerns running by him and transfer the same to other companies and concerns under the control of the assessee. - At Question No.32, the assessee was confronted with cash payment of Rs.85,07,500j- for land purchase as admitted by the Jayanta Kumar Dutta. The assessee could not give any satisfactory explanation. - At Question No.35, details of amount brought into M/s SV Multi Logitech Pvt Ltd to the tune of 22.855 Cr during FY 2016-17 were shown to the assessee. Assessee could not give any satisfactory explanation. - At Question Nos.46 to 48, details of 13 shell companies used to bring-in money into the companies managed by the assessee were shown to the assessee and it was told to the assessee that said the companies do not exist at the given addresses. The assessee could not give any satisfactory explanation. - At Question No.49, details of Rs.1.99 Cr credited to the account of assessee on 1.12.2016 was shown to the assessee. The assessee could not give any satisfactory explanation. - At Question No.61, the admission of Sri Amit Bansal stating that he does not know the source of deposits in the a/c of M/s Ankaa Realtors and the entire transactions were done as per the directions of Ajaz Farooqi. Sri Ambit Bansal stated that wherever the assessee wanted him to sign, he has signed and only the assessee can explain the source of deposits. To this, the assessee could not give any satisfactory explanation.
:- 25 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
- At Question No.63, cash deposits of Rs.2.861 Cr in the a/c of M/s Orbit Venture run by the assessee was shown. The assessee could not give any satisfactory explanation. - At Question No.65, it was pointed out that Sri Jayant Kumar Dutta admitted that he issued cheque from Mis Orbit Ventures at the directions of the assessee and all the transactions of M/s Orbit Ventures are maintained by the assessee. The assessee could not give any satisfactory explanation. - At Question No.69, cash deposit of Rs.2.3567 Cr made during the period from 8.11.2016 to 31.12.2016 in Mis Ace Constructions was shown and the assessee could not give any satisfactory explanation. - At Question No.71, cash deposit of Rs.2.2311 Cr in the Ale of Mis Royal Engineering during the period from 8.11.2016 to 31.12.2016 was shown to the assessee. The assessee could not give any satisfactory explanation except stating that Sri Amit Bansal will explain the transaction. It is submitted that Sri Amit Bansal stated that he acted only on the direction of the assessee. - At Question No.74, the statement of Sri Amit Bansal was shown to the assessee regarding cash deposits in M/s Ankaa Realtors, MI s Orbit Venture, M/s GVK Enterprises and Mis Royal Engineering wherein it was stated by Sri Amit Bansal that the cash deposits were as per directions of assessee and the source is known only to the assessee. The assessee could not give any satisfactory explanation. - At Question No.75, the statement of Sri Jayat Kumar Dutta was shown to the assessee regarding cash deposits in M/s Ankaa Realtors, Mis Orbit Venture, Mis GVK Enterprises, Mis Royal Engineering and MI s Ace Constructions wherein it was stated by Sri Jayant
:- 26 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
Kumar Dutta that the cash deposits were made as per directions of assessee. To this, the assessee could not give any satisfactory explanation. - At Question Nos. 81 & 82, it was shown that the above referred five firms received advances in crores of rupees but did not have even PAN number before 29.4.2016 - At Question No.91, it was shown to the assessee cash deposits of Rs.58,81,43,800/- were made into accounts of five firms and the cash deposits are to be treated as assets held by the assessee. Assessee could not give any satisfactory explanation. - At Question No.92, it was stated that in spite of several opportunities, Sri Amit Bansal has not offered any explanation with regard to source of cash deposits in the five firms. Assessee could not give any satisfactory explanation. 9. It is humbly submitted that the assessee has disclosed an amount of Rs.26 Cr vide statement recorded uj s 132(4) only to cover up the unaccounted transactions wherein cash deposits from unknown sources brought into the concerns of the assessee and the same were in tum invested in the companies and firms of the assessee. With mounting evidence on record, the claim of the assessee that there is no incriminating material and there is no basis for return of income falls flat. The retraction before the CIT(A) is without any basis whereas there is mounting evidence for the unaccounted transactions. 10. It is humbly submitted that as per the scheme of the Act, when the assessee files return of income pays tax on self assessment, there is no provision in the Act to claim that the return of income does not exist or the return of income is bad in law. The return of income is filed as per the statutory compliance mandated by the I.T. Act on the assessee. It is humbly submitted that
:- 27 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
there is no provision to reduce or delete the returned income unless there is an error in the return. In this case, there is no error. With regard to allegation of force, as seen from the above facts, there was no force by anyone as lifting of attachments is much prior to date of filing of return and also two returns of income were filed by the assessee out of which one return is filed one year after the search and the other return was after two years after the search. 11. As seen from above mounting evidence in the form of incriminating material, it is humbly submitted that the so called retraction letters (which were never filed before the AO) do not stand. Even at the first appeal stage, the issue was raised as additional ground. On one hand, the assessee prevented further investigation by Department by disclosing unaccounted income and filing return of income with payment of taxes. Now he wants to gain undue advantage by filing mere computation without any basis. It is submitted that this is a clear cut case of afterthought. In the case of Mis Kermex Micro Systems Ltd [(2014) 47 taxmann.com 375 (Andhra Pradesh)] the jurisdictional High Court held that an admission cannot be retracted as Revenue was prevented in causing further enquiry. The present case is not only of admission but filing of returns on two occasions and paying taxes. 12. As the appeal of the assessee has no merit, the same may kindly be dismissed. 13. With regard to addition of Rs.2.39 Cr made by the AO in the assessment, a cross objection is filed by the Revenue on deletion of the said addition by the CIT(A). It is humbly submitted that the return of income admitting Rs.26 Cr income is distinct from Rs.2.39 Cr and the CIT(A) is not correct in deleting the addition. 14. Therefore, the addition of Rs.2.39 Cr made by the AO may kindly be restored.”
:- 28 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
We have considered the written submissions filed by both the parties and perused the material on record as well as gone through the orders of revenue authorities. The case law relied upon by the ld. AR of the assessee also perused.
8.1 Ground Nos. 1 & 14 are general in nature, hence need no adjudication.
8.2 As regards ground Nos. 2 & 3 regarding invocation of provisions of section 153A of the Act, the CIT(A) rejected this ground by observing as under: “5.1 I have considered the assessment order and submissions of the appellant. A Search was conducted in case of the appellant on 05.07.2017. The appellant filed original Return of Income on 06.02.2018 returning income of Rs.31,52,080/- Notice u/s.153A was issued on 19.02.2018 and Return of Income in response to notice u/s153A was filed on 25.09.2018 admitting income of Rs.26,31,52,080/-. The appellant included Rs. 26,OO,OO,OOO/- 1which is additional income admitted during the course of Search. Since this is not a concluded assessment, the contentions raised by the appellant as to 'absence of incriminating material' are not relevant to facts of the case. Accordingly, the grounds raised is rejected.” We do not find any reason to interfere with the order of the CIT(A) and upholding the same, we dismiss ground No. 2 & 3 raised by the assessee on this issue.
:- 29 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
8.3 As regards ground Nos. 4 to 11 regarding the affidavit filed by the assessee withdrawing the admission additional income of Rs. 26 crores made u/s 132(4) of the Act, the assessee retracted the statement given u/s 132(4) by way of affidavit on 10/04/2018 citing the reason that on verification of records the declaration wound not be correct. In this regard, the observations of the CIT(A) are that the appellant filed Return of Income on 25.09.2018 admitting income of Rs.26,31,52,080/- which included the income of Rs.26,00,00,000/- admitted during the course of Search. Now, during the course of appellate proceedings, the appellant by way of Additional grounds filed on 11.08.2020 seeks withdrawal of declaration made. The appellant himself has filed Return of Income after retracting the declaration made ujs.132(4) of I.T Act by way of affidavit. The appellant now raised the ground for accepting "Revised Computation of Income' allegedly filed during the course of assessment proceedings. The appellant has not adduced any reasons for 'Revising the Computation'. He therefore held that the conduct of the appellant has been 'inconsistent' throughout. As the appellant has not come out with any reason for filing alleged 'Revised Computation', the grounds raised by the appellant are not acceptable and the same are rejected.
8.4 On the other hand, the submission of the ld. AR of the assessee is that the assessee has only admitted an amount
:- 30 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
of Rs.31,62,080/- and has not disclosed an amount of Rs. 26 crores. It was submitted that if any confession of income made during the search and seizure operation under the influence of officers, without any corroborative and credible evidence and later withdrawn by the assessee in his return of income filed then such confession made is not of any use. Without placing any reliance on the material evidence gathered during the search and only relying on the confession is not sufficient to make an addition as Undisclosed income.
8.5 During the course of search and seizure operation, assessee filed an affidavit admitting additional income of Rs. 26 crores without filing any details of head of income/assessment year or whose hands the additional income is admitted. However, in the return filed in response to notice issued u/s 153A for AY 2017-18, the assessee had admitted the same as income from other sources in his individual return of income. Since the assessee did not file any information regarding the additional income admitted, when asked by the AO, the assessee added the same to the returned income.
8.6 We observe that the AO himself has written in the order that declaration made has not mentioned anything about assessment year, assessee name and head of income declared. In those circumstances, in accordance with the
:- 31 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
CBDT circular in F.No. 286/2/2003-IT(INV.II) Dated 10.03.2003 and F.No. 286/98/2013-IT (Inv.!l) dated 18th December, 2014, no addition is warranted.
8.7 Further, since the assessee has admitted in ROI, the AO made addition of Rs. 26 crores while finalizing the assessment which is erroneous. The admission made by assessee is not a conclusive evidence to make addition. Mere statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self-incriminating. The HIGH COURT OF TELANGANA AND ANDHRA PRADESH in the case of Gajjam Chinna Yellappa in 59 taxmann.com 69 held as under:
“13....... We find that the appellate authority and the Tribunal did not apply the correct parameters, while adjudicating the appeals filed before them. On the undisputed facts of the case, there was absolutely no basis for the Assessing Officer to fasten the liability upon the appellants. Our conclusion find support from the Circular dated March 10,2003, issued by the Central Board of Direct Taxes, which took exception to the initiation of the proceedings on the basis of retracted statements.” 8.8 The High Court of Andhra Pradesh in case of Naresh Kumar Agarwal in 53 taxmann.com 306, held as under:
“24 ..... Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in subsection (4) is
:- 32 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle.”
8.9 The Hon'ble Supreme Court of India in case of Pullangode Rubber Produce Co. Ltd in [1973] 91 ITR 18 (SC), wherein it has held that "An admission is an extremely important piece of evidence but it cannot be said that it is conclusive."
8.10 The High Court of Jharkhand in case of Shree Ganesh Trading Co. In [2013] 30 taxmann.com 170 (Jharkhand), wherein it has held that Statement on oath of an assessee under section 132(4) is a piece of evidence and when there is incriminating admission against himself, then it is required to be examined with due care and caution.
8.11 In the case of CIT vs S Khader Khan Son[2012] 25 taxmann.com 413 (SC), wherein Supreme Court Held as under:
"Section 133A of the Income Act, 1961 - Survey - Whether Section 133A does not empower any ITO to examine any person on oath; so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition - Held, yes [In favour of assessee)"
:- 33 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
8.12 We are of the view that only real income should be brought to tax. Once the income has not accrued to the assessee, no tax can be charged on the notional income. In this regard, reliance is placed on the decision of the Hon'ble Supreme Court of India in case of Lok Housing Construction Ltd in [2016] 70 taxmann.com 2 (SC), wherein the Apex Court held as under:
"Where assessee-company filed revised return claiming that income declared in original return in respect of sale of land/FSI stood withdrawn due to cancellation of sale agreements and High Court by impugned order held that no hypothetical income of assessee in respect of said sale could have been brought to tax, SLP filed was to be granted"
8.13 The Hon'ble Hyderabad ITAT in case of BS Limited in ITA No. 2187/Hyd/2017, held as under:
"18.2 By considering the facts on record, we notice that this addition of Rs. 60 crores by AO is not real income or additional income. Assessee withdrew the additional income declared by it during search proceedings. Since assessee has increased the turnover in order to declare the additional income and the same was withdrawn subsequently. Assessee should have modified the turnover and filed the return of income, but, assessee chose to keep the turnover intact as per P&L and tried to reduce the profit by showing this additional turnover as other deduction. In our considered view, it is not additional or real income and also not a deduction in real sense. Hence, the same is deleted. Accordingly ground raised y the assessee is allowed. "
:- 34 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
8.14 The ld. AR of the assessee submitted before us that under immense pressure the assessee has agreed the admission of income of Rs. 26 crores by way of affidavit. Subsequently, assessee has also submitted the revised computation of income declaring the correct income of the assessee at Rs. 31,62,080, copy of which is enclosed in Page 21-24 of Paper book. In support of this claim, the appellant relies on the following case laws:
• High Court of Bombay in case of Pruthvi Brokers & Shareholders in 23 taxmann.com 23. • Decision of Madras High Court in the case of CIT v. Indian Express (Madurai) Pvt., [1983] 140 ITR 705 (Mad.)
8.15 Following the ratios laid down by the Hon’ble Courts, we are of the view that there is no basis for addition of Rs. 26 crores as there was no separate declaration in detail i.e., year-wise, head-wise, group concern-wise and quantities etc. during the course of search and seizure operation, which forms the basis for making addition. From the statements of the assessee as quoted above, there is no real income accrued in the hands of the assessee. Therefore, we set aside the order of the CIT(A) and allow the grounds raised by the assessee on this issue.
:- 35 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
As regards ground No. 12 & 13 regarding Rs. 2,39,00,000/-, since the CIT(A) has deleted the addition made by the AO, these grounds become infructuous and dismissed as infructuous. And more so, in view of our foregoing detailed discussion as real income principle.
As regards the cross objections filed by the Revenue against the action of CIT(A) in deleting the addition of Rs. 2.39 crores, it is observed that while examining the books of account produced before us i.e. copy of ledger and the cash book, we find that the assessee has sufficient cash balances, which has not been rejected by the lower authorities and also on the date of deposit of the cash into bank, there was sufficient cash balance available, therefore the explanation of the assessee was accepted on this issue. Accordingly, we uphold the order of the CIT(A) in deleting the addition Rs. 2.39 crores made by the AO towards unexplained cash deposits u/s 68 of the Act and dismiss the Cross objections raised by the revenue on this issue. 11. In the result, appeal of the assessee in ITA No. 786/Hyd/2020 is partly allowed and the CO filed by the revenue is dismissed in above terms. A copy of this common order be placed in the respective files. Pronounced in the open court on 29thApril, 2021. Sd/- Sd/- (S. S. GODARA) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 29th April, 2021.
:- 36 -: ITA No. 786/Hyd/2020 & CO No. 3/H/2021 Ajaz Farroqi, Sec’bad.
kv
copy to : 1 Sri Ajaz Faroo1i, C/o P. Murali & Co., CAs, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad – 82 2 DCIT, Central Circle – 3(4), Hyderabad. 3 CIT(A) - 11, Hyderabad 4 Pr. CIT(Central), Hyderabad. 5 ITAT, DR, Hyderabad 6 Guard File.