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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HONBLE KUL BHARAT & HONBLE MANISH BORAD
O R D E R PER MANISH BORAD, AM.
The above captioned appeal pertaining to the Assessment Year 2014-15 filed at the instance of the assessee is directed against the order of Ld. CIT(Appeals)-3 (in short ‘CIT(A)’), Bhopal dated 31.12.2018 which is arising out of the order u/s 143(3) of the Ultimate Builders Income Tax Act 1961 (In short the ‘Act’) dated 21.03.2016 framed by ACIT Central-II, Bhopal.
2. Assessee has raised following ground of appeal;
“1. That on the facts and circumstances of the case of the assessee the Ld. CIT(A) was not justified in confirming additions of Rs.2,25,00,000/- made solely on the basis of a so called declaration made during the course of search.”
Brief facts of the case as culled out from the records are that the assessee is a partnership firm carrying on the business of Real Estate as Builder and Developer. A search u/s 132 of the Act was initiated on Signature Group as well as the business associates on 29.1.2014. Assessee firm being part of Signature Group was also covered under the search action. In the case of the assessee search action commenced on 29.1.2014 and was concluded on 31.1.2014.
However search u/s 132 of the Act in the case of Signature Group and other concerns concluded on a later date. Subsequent to search, notice u/s 153A of the Act was served upon the assessee.
Return of income declaring Rs.1,10,38,030/- was filed on 29.9.2014. In order to scrutinize the records notices u/s 143(2) and 142(1) of the Act was served upon the assessee. After 2 Ultimate Builders Signature Group, Ld. Assessing Officer (In short ‘Ld.A.O’) came to know that one of the partner of the assessee firm Mr. Vipin Chauhan gave a statement on 2.2.2014 u/s 132(4) of the Act. In this statement he surrendered undisclosed income of Rs.2,25,00,000/- on behalf of the firm. On perusal of the return income Ld. A.O found that the assessee has not offered the surrendered undisclosed income of Rs.2,25,00,000/- for tax. During the course of hearing the assessee retracted from the addition of income stating that no unaccounted income has been earned by the firm and also it has not incurred any unrecorded/unexplained expenses therefore is not required to offer any undisclosed income.
However, Ld. A.O after considering the assessee’s statement was not convinced and he after referring to the incriminating material found during the course of search in the Signature Group and statement given by the partner of the firm made the addition for undisclosed income amounting to Rs.2,25,00,000/- observing as follows; Ultimate Builders Counsel thoughtfully considered and are of the view that there is no merit in his explanation. It is well settled that admissions constitute best piece of evidence because admissions are self-harming statement made by the maker believing it to be based on truth. It i-s well known that no one will tell a lie especially harming one's own interest unless such a statement is true. Section 17 of the 1872 Act defines admission to be a statement, oral or docun~91tary, which suggests an inference as to any fact in issue or relevant fact which has been made by a·· party to proceedings or his agent and others as per details given in Sections 19,20,21,22 and 23 of the 1872.Act. If an admission has been made by a party to proceedings under Sections 17 and 18 of the 1872 Act, suggesting an inference that the income was unexplained then such an admission is an admissible piece of evidence. Admissions have also been regarded as substantive evidence because it sustains their veracity from the fact that maker has said something against his own interest”
Accordingly after making addition for the undisclosed income of Rs.2,25,00,000/- to the income of Rs.1,10,38,030/- shown by the assessee, income was assessed at Rs.3,35,38,030/-. Aggrieved assessee preferred appeal before Ld. CIT(A) but failed to succeed as Ld. CIT(A) confirmed the addition by observing as follows; Ultimate Builders “4.2 Ground No.2:.:Through this ground of appeal the appellant has challenged the addition of Rs. 2,25,00,000/- on account of admission of undisclosed income. During the course of search, various incriminating documents were found and seized from various premises of Signature Group. These documents were confronted to the partners of various concerns of the group, however, no satisfactory explanation was offered. In absence of any satisfactory explanation, the main persons of the group admitted additional income of the group in the hands of various concerns during statement recorded on oath. The additional income was declared after consulting the other partners and related persons of various concerns of the group. The brief detail of additional income admitted by the assessee is as under:-
(Rupees in Lakhs)
Sr.No Concern/F. Y. 2011-12 2012-13 2013-14 Total l. Signature Infrastructure 50 300 350 2. Signature Builders 25 300 325 3. Signature Builders and 25 300 325 Colonizers 4. Signature Developers 100 100 TOTAL liDO 5. Om Builders 275 275 6. Om Construction 50 750 800 7. Sainath Infrastructure P Ltd 25 25 TOTAL 1100 Ultimate Builders 8. 225 225 9. Virasha Infrastructure 225 225 1 TOTAL 450 10. Mls Sainath Colonizers Pvt. Ltd. 110 110 1l. Shri Anil Khilwani 40 40 TOTAL 150
Assessee during assessment proceedings before AO retracted from the disclosure made during the search by stating that he has not earned any unaccounted income and has not incurred any unrecorded/unexplained expenses.
4.3 Submission filed by appellant along with the details / material brought on record have been duly considered inter alia case laws relied upon by the appellant. During the course of search, Shri Vipin Chauhan, 5 Ultimate Builders Rs. 2,25,00,0001- of the appellant firm. The appellant firm filed return of income uls 139(1) on 29.09.2014 declaring income of Rs. 1,10,38,0301-. As the appellant firm had not offered the income disclosed uls 132(4) in the return filed uls 153A the Assessing' officer has treated Rs. 2,25,00,0001- in A.Y 2014-15 as undisclosed income of the appellant and has made addition to the total income of the appellant in respective assessment year, The Assessing Officer has made entire addition of Rs. 2,25,00,0001- on the basis of statement recorded uls 13 2( 4) of Shri Vipin Chauhan. In this case one of the partner of the appellant firm Vip in Chauhan during search proceedings has offered the additional income after making discussion with other partners of the appellant film on the basis of incriminating documents found during the course of search.
Ld AR of the appellant during appellate proceedings has placed reliance on the following decisions:- a) Nathu vis State of Ut tar Pradesh AIR 1956 SC 56 b) Kailashben Manharlal Chokshi vis CIT(2010) 328 ITR 411 Guj c) CIT vis Naresh Kumar Agarwal (2014) 369 ITR 017 d) DCIT vis Ghanshyam M Tamakuwala (2017) 153 DTR (Guj) 99
During the course of search, incriminating documents found were confronted to Shri Vipin Chauhan and was asked to explain and verify through regular books of account. The appellant failed to explain and getting verified from his regular books of account. It is obligatory on the part of the appellant to quantify and explain the discrepancies at the later stage. But he failed to furnish and explain it. Photocopy of seized documents was also provided to the appellant. Inspite of this, the appellant failed to furnish the explanation. The appellant was given proper and meaningful opportunity to explain and justify the statement given u/s 132(4) of the IT Act, which is a piece of evidence in view of the Indian Evidence Act.
Section 110 of the Evidence Act is material in this respect which stipulates that when the question is. whether any person is owner of anything of which he is shown to be in possession, the onus of proving that he is not the owner is on the person who affirms that he is not the, owner. In other words, it follows from the well-settled principle of law that normally, unless contrary is established, title always follows possession. It is evident from above discussion that the assessee has to discharge onus for retraction of surrendered income. The assessee failed to do so. Retraction without having reasonable cause and without any supporting evidences is not acceptable.
Ultimate Builders The question of evidentiary value of a statement recorded u/s.132 (4) of the Act is no more res integra. When an assessee had made a statement of facts, he can have no grievance if he is taxed in accordance with that statement. The reasonableness of the AO's approach may be appreciated that he had not made any enhancement or substitution in the amounts as offered/disclosed in the said statement. It was a statement pertaining to certain facts which were in the exclusive knowledge of the assessee. Those facts were disclosed to the Revenue Deptt. Thereupon those were accepted by the Revenue Department. Those facts were of such nature that there was no scope of existence of any other evidence. Affirmation of facts at best can only be done by the assessee in his own volition. If the assessee wanted to correct the said statement, then it was open for him to show the evidences to retract those facts. But no such evidence was furnished though an another chance was granted while explaining the entire issues at search proceeding stage which means that the assessee had no evidence at all in his possession. It is here to clarify that the statute prescribes the power of the Revenue Authorities for recording a statement on the day of search operation. In this context, case law cited few decisions wherein there was a discussion of retraction of a statement or the legal sanctity of statement in the eyes of Income-tax Laws. It is to clarify that there is a difference in a statement recorded under the proceedings carried out u/s. 132 of the Act of the Act. The Income-tax Act, wherever thought fit and necessary has conferred such powers to examine a person on oath. Those powers are therefore has been expressly provided. In this context Section 132(4) of the Act enables an authorized officer to examine a person on oath. Such a sworn statement made u/s.132 (4) of the Act, thus can be used as evidence under the Act. A statement recorded u/s. 132(4) of the Act has a far reaching consequence because if it is proved to be false which the assessee only knows or believes to be false or the assessee does not believe it to be true, it is assessee's liability to explain and prove it.
If any coercion or force are not alleged and proved, and assessee has voluntary declared undisclosed income and has not made retraction within three month of the statement recorded, onus lies with the assessee to prove that the declaration is made out of misconception. The assessee has not made such efforts. The learned Ahmedabad Bench in the case of DCIT v. Bhogilal Moolchand 96 ITD 344 held that statement given under section 13 2(4) is not conclusive and person can retract under certain circumstances. However, time gap between statement and retraction of statement is one of the important points to be taken into account to decide as to whether the statement was given under mistaken belief of either fact or law. However when assessee retracted statement made under section 13 2( 4) after three and a half months of disclosure and there was not an iota of evidence to support retraction then AO was justified in not accepting assessee's retraction The decision held in the case of Carpenters Classics 7 Ultimate Builders (Exim) (P) Ltd. Vs DCIT ( ITAT, Bang) 108 ITD 142 squarely applicable in the case .It is held that :-
"When statement was made voluntary and was not alleged to have been obtained urider threat or coercion, onus was on assessee to prove that said declaration was made under any misconception of facts - Since assessee had not taken any steps to rectify its declaration before authorities before whom such declaration was made, there was no valid reason for retraction of same after a gap of about two and a half months."
As regards to the evidentiary value of the disclosure statement, Sections 17 to 31 of the Indian Evidence Act, 1872 deal with admission. As defined in section 17, it is a "statement, (oral or documentary or contained in electronic form) which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the person, and under the circumstances, hereinafter mentioned". The general rule with regard to admission is that the party or their representative says about the matter in dispute or facts relevant thereto which throw light on the issue in dispute or consideration. It is well settled that a party's admission as defined in sections 17 to 20, fulfilling the requirements of s.21, is substantive evidence proprio vigare. An admission, if clearly and unequivocally made, is the best evidence and though not conclusive, shifts the onus on to the maker. Reliance is placed on Thiru Ion v. Returning Ojfier, A 1977 (SC) 1724. Although, in this case there has been no allegation of coercion, the Courts have gone further and held that the confession need not be ruled out merely because of an allegation of use of coercion. Many statutes make use of such confessional evidence as long as it is proved that it was so obtained by operation or under circumstances which indicate an inference of such operation. The confessions are to be considered as a whole and not in any edited form. In the case of the assessee there has been no allegation of any coercion. a)Even retracted confession was held to be binding, reference is made to the case of Surjit Singh Chhabra (1997) ISCC 508, 509(SC) wherein petitioner retracted his confession given to the customs officials, yet it was held to be binding. The Indian Law on confession can be understood from the following passage in a decision under criminal law in State of UP. v. Boota Singh, AIR 1978 SC 1770. b)`"As, however, the confession was a retracted one, it could be acted upon only if substantially corroborated by independent circumstances. It is not necessary that a retracted confession should be corroborated in each material particular; it is sufficient that there is a general corroboration of the important incidents mentioned in the confession". In the instant case the confession was correlated to the material found during the course of Survey. 8 Ultimate Builders As held by the Supreme Court in Pullangode Rubber Produce Co. Ltd v. State of Kerala (1973) 91 ITR 18 an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could from the basis of assessment. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been attempted to be discharged. d)Thus, it is a clear and settled law that admission by a person is good piece of evidence though not conclusive and the same can be used against the person who makes it. The reason behind this is a person making a statement stops the opposite party from making further investigation. However, the statement is not conclusive and the person giving the statement can retract the same under certain circumstances:
(i) The first circumstance is where the statement is not given voluntarily but it was obtained under coercion, threat or undue influence. But the burden is upon the person making the statement to prove that the statement given by him was not voluntary. The assessee can discharge this burden by giving a direct evidence of coercion or threat by the Authorized Officer or by circumstantial evidence in this regard. The time gap between the statement and the retraction of statement would also one of the important points to be taken into account while deciding whether the statement was voluntary or not.
(ii) The other circumstance is where the statement was given under the mistaken belief of either fact or law. Here again the burden is upon the person giving the statement to prove that the statement given by him was factually incorrect or was untenable in law. e)This view is supported by the decision of the Tribunal Bench of Ahmedabad in the case of Manharlal Kasturchand Chokshi v. ACIT [1997] 61 ITD 55 (Ahd.), and also in the case of Hotel Kiran v. ACIT [1971] 82 ITR 453 (Pune). f) Apart from the above legal lacunae, the appellant's retraction also suffers from other procedural defects. The appellant, being responsible for the functioning of the firm, voluntarily gave statement u/s 132(4) of the Income Tax Act, 1961 on 02.02.2014, which does not indicate any sort of pressure or coercion but alert presence of mind and clarity of thought of the deposing assessee. By this statement, it was categorically and unequivocally stated that the concern was not 9 Ultimate Builders maintaining proper books of account. These facts were within the exclusive knowledge of the appellant, who voluntarily stated the same. Therefore, with these facts in exclusive knowledge domain, once disclosed voluntarily in full consciousness, were binding on the assessee, as the contrary could not be proved. Further, the Hon'ble ITAT, Pune Bench, in the case of Chander Mohan lvIehta v. ACIT(Inv.) [1999] 65 TTJ (Pune) 327, has come to the conclusion that seized documents along with the statement recorded under section 133A constituted valid piece of evidence, which could be used in assessing undisclosed income. However, the two taken together have to be read as a whole. In the instant case, the assessee has clearly linked the unaccounted income of concern to undisclosed income in statement u/s 132(4) of the Income Tax Act, 1961 and hence, such statement is, binding on the assessee. g)Subsequently, the return filed, without showing the full disclosure made during the course of search. This is the first time the appellant has retracted from his statement given during the course of search on 02.02.2014, after a gap of nearly eight months. h)These claims are baseless as no efforts were made by the assessee to inform of any such stance during post survey inquiries. This shows that the assessee is taking a plea to get away from his voluntary statement as an after-thonght. Claims have to be discarded as the assessee has not produced any evidence in that behalf. Once the statement of the assessee is voluntary and there has been no pressure,the same is binding on the assessee. i)In the case of council of Institute of Chartered Accountants of India vs. Mukesh R. Shah (2004) 186 CTR (Guj) 579, the High Court of Gujarat has held that "a retraction, so as to dislodge the admission made, should come about at the earliest point of time. It goes without saying that a retraction made after a considerable length of time, would not have the same efficacy in law as a retraction made at the earliest point of time from the day of admission. A belated retraction would fall in the category of afterthought instead of being retraction. That apart, for a retraction to be effective so as to dislodge the admission made earlier in point of time, the retraction has to be supported by contemporaneous evidence and the onus is on the person making such admission and retraction." Thus the legal position about the assessee's belated retraction is clear that it is an after - thought. j) Thus, from the above analysis it emerges that: i. The retraction was made after a period of eight months. ii. It was never communicated to the Departmental authorities, merely 10 Ultimate Builders not disclosed with the return of income; iii. From record it is impossible to hold that any threat or coercion has been exerted during the confession statement of the assessee. iv, Irrespective of the form or validity of the voluntary disclosure statement or of the deposition taken from the assessee on 02.02.2014, the evidence of testimony cannot be wiped out and does not become non-existent and this evidence can well be utilized to frame the assessment on that basis. v. Shri Vipin Chauhan in his sworn statement recorded on oath 2.02.2014 has admitted undisclosed income of Rs. 2,25,00,000/of the appellant after making discussion with other partners.
In view of the above position, the appellant's unsuccessful attempt to retract from the disclosure is untenable being an after-thought and is rejected. Therefore, the additions made by the AO amounting to Rs. 2,25,00,000/- is Confirmed. Therefore, the appeal on this ground is Dismissed.”
6. Now the assessee is in appeal before the Tribunal.
7. Ld. Counsel for the assessee argued referring to the following written submissions;
A search was conducted at the premises of the assessee on 27.01.2014 and were closed on 31.01.2014 at 3:45 p.m.(Pg.62 of the PB) at Kamdhenu Towers Arera Colony, Bhopal. The papers and the hard disk from the said premises were inventorised and seized on 31.01.2014. The statements of the working partner Shri Bhupendra Kumar Vishwakarma was recorded on 29th, 30th and 31st January, 2014 (Pg.46 & 53 of PB). On 29.01.2014 the statement of marketing manager Shri Manvendra Upadhyay was also recorded.
After the close of the search the statement of Shri Vipin Chouhan one of the partners was recorded at 18-19 Kolar Road, Chuna Bhatti, Bhopal. 11 Ultimate Builders In the statement he surrendered an amount of Rs.2,25,00,000/- as undisclosed income. He did not surrender this amount on the basis of any particular paper or document but merely surrendered in general for the discrepancies in the books in respect of booking, investments and sales. However, while filing the return the assessee retracted from the statement of the partner and did not offer this amount in the return.
1. During the course of the assessment proceedings the Ld. A.O. examined the books of accounts which were checked with the seized documents (Para2 of the Asst. order). Necessary details which were asked were furnished with the supporting documents which were perused by the Ld. A.O. (para 2 of the Asst. order). The Ld. A.O. discussed at length about the incriminating documents in para 5 from Pg.3 to Pg.9. At Pg.10 he mentioned the various documents which according to him were incriminating. This list of document has been reproduced in more than 10 cases (Pg.87-117). The details of these documents have also been mentioned in the list which were found at different premises and were not pertaining to the assessee. The Ld. A.O. raised a specific query about the cash receipts which were answered with all necessary details on 18.02.2016 (Pg.78-86 of PB). While passing the order the Ld. A.O. did not refer to any of the incriminating material but made the addition only on the basis of the statement made after the search with the remark that the retraction made from the confession is not acceptable as the statement recorded u/s 132(4) is an evidence and the confession has been made without any coercion and force. He therefore, made the addition of Rs. 2,25,00,000/- as undisclosed income on the basis of admission made by the assessee.
2. In appeal it was submitted before the Ld. CIT(A) that without finding any incriminating material no addition can be made in the assessment. It was submitted before the Ld. CIT(A) as under: 12 Ultimate Builders The issues with regards to the addition which are requested to be adjudicated in the case of the assessee are summarized hereunder:
1. Whether the statement based on which the addition under consideration is made can be called a statement made u/s 132(4) which can be used as evidence against the assessee.
2. Whether the addition under reference is made on the basis of any relevant paper or entry. 3. Whether any addition can be made solely on the statement recorded u/s 132(4).
The submissions of the assessee on the aforesaid points are being given hereunder for your honors kind consideration and adjudication.
Whether the statement based on which the addition under consideration is made can be called a statement made u/s 132(4) which can be used as evidence against the assessee. a. A search was conducted in the premises of the Signature Group on 29.01.2014 during the course of which action was also taken against the assessee firm. Statement u/s 132(4) of the person found in charge of the books and the records (Mr. Manvendra Upadhyay) and of the partner found in charge of the business premises (Mr. Bhupendra Vishwakarma) were recorded on 29.01.14 and 30.01.2014 respectively in which specific questions were made with regards to various loose papers found and the books of accounts maintained by the assessee firm. Entire records found were seized and a panchnama was prepared on 31.01.2014 which was the last panchnama drawn in the case of the assessee and no further panchnama was drawn. Subsequently statement of Mr. Vipin Chouhan one of the partners was recorded on 02.02.2014 in which he stated that the said firm Ultimate Builders JV, unrecorded sales consideration has been received and expenses have been inflated and have made an surrender of income of Rs. 225 Lakh. The same was not offered as income in the return filed. b. The addition in the case of the assessee was made solely on the basis of the so called declaration made by the assessee u/s 132(4) of the Act. Provision of section 132(4) provides that:
“The authorized officer may during the course of the search or seizure examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion jewellery or other valuable article or thing and any statement made by such person during such examination, may thereafter be used in evidence in any proceeding under the Income Tax act.
It may be appreciated that as per provisions of section 132(4), a statement u/s 132(4) is valid and can be used as evidence only if all the conditions mentioned herein below are cumulatively satisfied. a. the statement is recorded by the authorized officer AND b. the statement is recorded during the course of search or seizure AND c. the statement is made by the person who is found to be in the possession or control of the books of account, documents.
(It may be mentioned that the assessee has not been found to be in possession of any cash or other valuable and accordingly the requirement of the section to this effect has no relevance in the case of the assessee)
Thus in the case of the assessee it needs to be adjudicated that:
Ultimate Builders i. whether the statement is recorded by the authorized officer ii. whether the statement is recorded during the course of search iii. Whether the statement is of the person who is found to be in possession of the books of account and other records. iv. Whether the statement was made voluntarily v. Whether the statement is based on any unrecorded transactions and documents found during the course of search. vi. Whether the assessee has made any surrender of income in the statement claimed to have been made u/s 132(4). c. The submission of the assessee on the above parameters are as under: i. Whether the statement is recorded by the authorized officer
It may be mentioned that in the case of the assessee the search was conducted and seizure was made at the office of the assessee premises at E-2/21 Arera Colony, Bhopal on 29.01.2014 and was closed on 31.01.14 at 03.45 PM wherein the authorized officer was Shri. P.S. Chouhan DCIT & Shri. C.N Rao ITO. However the statement under reference dated 02.02.14 is recorded before the authorized officer (who has not put his name and designation on the statement and has only put his signatures, however the signatures on the statement are different from the signatures appearing in the panchnama prepared in the case of the assessee) on 02.02.2014 by Mr. Vipin Chouhan at the office of Signature Group at 18-19 Kolar Castle, Chuna Bhatti Square where no specific questions have been asked no reference what so ever is made to any seized paper or books.
Thus it would be appreciated that the officer in front of whom the statement under consideration was recorded was not an authorized officer in the action u/s 132 in the case of the assessee. Thus the Ultimate Builders statement recorded by an officer other than the authorized officer cannot be called a statement recorded by the authorized officer and accordingly is not covered by the provisions of section 132(4) and consequently does not constitute any evidence in itself.
Thus as the statement was not recorded by the authorized officer in the case of the assessee the same does not constitute an admissible evidence and no cognizance can be given to such statement and addition cannot be made on the basis of such non admissible statement. ii. whether the statement is recorded during the course of search
The statement under reference is recorded on 02.02.2014 and that too in the premises which are different from the premises which were searched in the case of the assessee. The witnesses in the case of the statement were also different from the persons who have attended the search in the case of the assessee. Thus the statement recorded is after the completion of the search and seizure at the premises of the assessee. The said statement was recorded on 02.02.2014 during search and seizure operation at 18- 19 Kolar Castle, Chuna Bhatti Square, Kolar Road, Bhopal in the case of Signature group, as such it can be concluded that the said statement was not in connection with the search operation carried on in the case of the assessee at E-2/21, Arera Colony Bhopal from where the entire seizure in the case of the assessee was made. Thus the statement under consideration cannot be said to have been recorded during the course of search in the case of the assessee. iii. Whether the statement is of the person who is found to be in possession of the books of account and other records During the course of search the books of accounts were found to be in possession of Mr. Manvendra Singh who was the in-charge of the accounts department of the assessee, and his statement u/s 132(4) 16 Ultimate Builders 29.01.2014. During the course of statement specific questions regarding the papers found in the premises were made from the said person. A copy of statement is enclosed for ready reference. The business premises of the assessee were under the control of Mr. Bhupendra Vishwakarma, the partner of the firm and his statement was recorded u/s 132(4) on 30.01.2014. During the course of statement specific questions regarding the papers found in the premises were made from the said person. A copy of statement is enclosed for ready reference. Thus the statement of the person who was in possession of the books and the person who was in control of the affairs of the business of the assessee including its books were duly recorded u/s 132(4) on 29.01.2014 and 30.01.2014 respectively and none of them made any surrender of income. Thus no surrender was made in the statements of these persons recorded u/s 132(4) by the authorized person during the course of search from these persons. The statement referred to in the assessment order was given by Mr. Vipin Chouhan who was one of the partners in the firm having 33.33% share in the partnership firm who was neither found to be in the possession of the books or assets of the assessee nor was found to be in control of the firm. Thus the statement was made by a person who is not covered by the provisions of section 132(4) and consequently the statement under consideration cannot be called to be a statement u/s 132(4). The sequence of events itself establishes that the statement was recorded under mental stress. iv. Whether the statement is based on any unrecorded transactions and documents found during the course of search.
Ultimate Builders It may be mentioned that the declaration made was not with reference to any specific incriminating paper/papers or documents and was neither with reference to any undisclosed asset or income found during the course of search. It was a vague declaration made under duress. In this regards it may be mentioned that It is held by the Hon’ble Andhra Pradesh High Court in the case of CIT V Shri. Ramdas Motor Transport (2000) 163 CTR 0403 wherein it was observed and held in Para 7 by the court that “A plain reading of sub-s. (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such person under the Act. Thus, question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under s. 132(4) of the Act, does not arise. Therefore, the statement of the 18 Ultimate Builders managing director of the assessee, recorded patently under s. 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-s. (4) is 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 Hon’ble Andhra Pradesh High Court in the case of CIT V Naresh Kumar Agarwal (2014) 369 ITR 0171 again reiterated the above judgment and held that “the recording of statement even during the search is not a matter of course. It is only when the material such as, books of account, documents, money, bullion, jewellery and the like are found or discovered during search, that the statement can be recorded. If the search did not lead to the discovery of any matters, referred to above, there would not be any occasion to record the statement at all. In this case, admittedly, nothing was recovered from the respondent during the search. Hence, there was no occasion or basis to record the statement, even if it is done when the search was in progress. Hence, there is a basic infirmity in the very foundation of the case, upon which the appellant sought to rest their block assessment vis-à- vis the respondent.”
The Hon’ble Mumbai High Court in the case of R.R.Gavit V Smt Sherbanoo Hasan Daya (1986), 161 ITR 793 has also held similarly.
It would be appreciated that the AO has verified the seized records and the books of accounts and have not found any specific irregularity. He has not brought on record any specific transaction recorded in the seized records which the assessee may not have been able to get reconciled with the books of accounts or from where any unaccounted income can be deduced. The AO also have not 19 Ultimate Builders brought on record any specific document based on which the declaration was made by the partner and on which addition has been sustained by him.
The AO has provided an illustrative list of 14 cases in page 10-11 of the order contending that those papers are incriminating documents seized based on which the additional income was disclosed by the assessee.
In this regards it may be mentioned that none of the papers referred to by the AO were seized from the assessee and none of them related to the assessee and none of them had any mention from which any inference could be drawn that the assessee might have earned some undisclosed income. The details of the illustrative cases mentioned by the AO are given hereunder for ready reference: Sr. Paper Seized from Relates to No reference (i) (ii) (iii) (iv) A LPS 3 Office Signature premises of Colonisers signature group at 18-19 kolar castle Chuna Bhatti Square B LPS 72 …….do……. Signature Colonisers Page 43- 68 C LPS …….do……. RajkumarKhilwani/Palash 65/41-43 Associates D LPS Residence of P P.Raju, Nitin Agarwal, Shri. 1/85-87 Raju Lilwani E LPS Office of Lilwani family 3/28-41 Swadesh Group F LPS Residence of P Golden City, P.Raju, 2/24-26 Raju Amarjeet Singh Ultimate Builders G Statement Project office Om Builders of Raipur P. Singh H LPS Office Cash receipt in various 11/34 premises of projects signature Group at Chuna Bhatti I LPS Project office Cash receipt in various 6/39-41 of Saphire projects Green Raipur J LPS 71 Office at Diff in price of flats in Chuna Bhatti different project K Valuation NA Does not relate to the of 5 assessee firm properties Or any of its partner L Huge Various Relates to individuals from Jewellery residential whom premises It was seized. M Post NA P. Raju, Shiv Narayan search Rajput, Aradhya enquiry Bhoomika Construction N Post NA Signature Infrastructure, search Motilal, Thakur Prasad enquiry
All the above details are readily verifiable from the assessment order itself. From a brief perusal of Column (iii) it would be observed that the papers under reference are seized from the premises of Signature Group at Chuna Bhatti, from project offices of some firms at Raipur, from the residence of P.Raju etc. The office of the assessee is situated at E-2/21, Arera Colony, Kamdhenu Tower, Bhopal and all the books and records of the assessee were seized from the said premises as would be obvious from the panchnama prepared. No business activity of the assessee has ever been carried on from the premises of Signature Group at Chuna Bhatti, Bhopal. The only relation the assessee firm has with the Signature Group is that one of the partner Mr. Vipin Chouhan(holding 33% share in the assessee firm) is partner/director of some of firms/companies of the Signature Group, 21 Ultimate Builders E-2/21 Arera Colony Bhopal and no part of business of the assessee firm was ever executed from the premises at Chuna Bhatti. No evidence has been found during the course of search or after words to negate this fact.
Whether any addition can be made solely on the statement recorded u/s 132(4).
i. As detailed above the statement recorded cannot be used against the assessee as it is not recorded in accordance with the provisions of section 132(4). The AO has failed to bring on record any specific instance of the assessee having earned any undisclosed income or having made any unexplained investment.
The sole basis for making the addition is the statement made by one of the partners. ii. The AO had observed that the addition can be made solely on the basis of the statement and in this regards have drawn support from section 17 & section 110 of the Evidence Act 1872. He also placed reliance on the judgments rendered in the case of Rakesh Mahajan v CIT 214 CTR 218 as well as other decisions reported in DCIT v Bhogilal Moolchand 96 ITD 344 and Carpenters Classic p ltd v DCIT 108 ITD 142.
In this regards it may be mentioned that the reliance of the AO on section 110 & 17 of the Evidence Act 1872 are totally misplaced and out of context.
Ultimate Builders Section 17 relates to any admission in a statement which suggests any inference to any fact in issue or relevant fact. Thus the said section is with reference to any facts or issue and the inference on the issue. In the case of the assessee in the statement recorded no reference was made to any specific paper or asset and as such section 17had no applicability.
Section 110 of the evidence act states that unless proved otherwise the person in possession of the thing is presumed to be its owner. Thus the provisions of this section also have no relevance to the issue under consideration as there is no dispute regarding the ownership or possession of anything.
The AO had also placed reliance on various decisions which are totally irrelevant and out of place. iii. It has been held by various courts that the addition is not permissible solely on the basis of a retracted statement without finding any collaborative evidence.
Reliance in this regard is placed on the judgment of the (i) Very recently the Hon’ble Indore Tribunal in the case of ACIT(1) vs. Sudeep Maheshwari in vide order dated 13.02.2019 held in para 6 that during the course of the search and seizure no incriminating material or undisclosed income or investments were found. Under the mental pressure the assessee declared 3 crores but retracted from the admission. It is a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating contents of the statements. The A.O. failed to correlate the disclosure made in the statement with the incriminating 23 Ultimate Builders material gathered during the search. Therefore, no addition can be made on this account.
In view of the above it is submitted that the additions made are bad in law since they have been made without finding any incriminating material solely on the basis of the statement recorded after the conclusion of the search. It is thus submitted that the additions upheld may please be deleted.
(ii) Honble Jharkhand High Court in the case of Shree Ganesh Trading Co V CIT (2013), 257 CTR 0159. (iii) The Madras High Court in the case of M.Narayanan & Bros V ACIT reported at (2011), 243 CTR 588. (iv) In the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.). (v) CIT vs. Kabul Chawla 281 CTR 85 (Delhi)
(vi) PCIT vs. Meeta Gutgutia 395 ITR 296 (Delhi) (vii) PCIT vs. Soumya Construction 387 ITR 529 (Guj.) (viii) CIT vs. Deepak Agrawal 251 Taxmann Pg.22 (Bom.) (ix) PCIT vs. Lata Jain 384 ITR 543 (Del.) (x) The Hon’ble Indore Tribunal in the case of Shri Omprakash Dhanwani vs. ACIT in IT(SS) No.237 (xi) Similar view was taken in the case of Anant Steel reported in 28 ITJ 47 and in the case of Shri Omprakash Gupta in ITA (SS) 277 to 282/IND/2017 order dated 28.02.2019
Per contra Ld. Departmental Representative vehemently argued and supporting the orders of both the lower authorities.
She also submitted that the assessee firm is part of the Signature 24 Ultimate Builders Group and the search u/s 132 of the Act was in process. Mr. Vipin Chouhan is the partner of Ultimate Builders and gave the statement for surrendering the undisclosed income of Rs.2,25,00,000/-. She placed reliance on following judgments contending that the statement given u/s 132(4) of the Act is conclusive evidence and the additions can be made on the basis of such statement given during the course of search.
(i) Hon’ble High Court of Madras in the case of Kishore Kumar V/s DCIT(2014)52 taxmann.com 449 (Madras). (ii) Hon’ble Supreme Court of India in the case of B. Kishore Kumar V/s DCIT (2015) 62 taxmann.com 215 (SC) (iii) Hon’ble Supreme Court of India in the case of CIT-II V/s Continental Warehousing Corporation (Nhava Sheva) Ltd (2015) 64 taxmann.com 34 (SC) (iv) Hon’ble Delhi High Court in the case of Smt. Dayawanti V/s Commissioner of Income Tax (2016) 75 taxmann.com 308(Delhi) 9. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of Rs.2,25,00,000/- made by the Ultimate Builders Ld. A.O on account of undisclosed income surrendered during the course of search by the partner of the assessee firm.
At the cost of repetition we would like to recite and recapitulate the facts once more. The assessee is a partnership firm engaged in real estate business. It is the part of Signature Group.
Search action was initiated in the Signature Group and its associates on 29.1.2014. The assessee’s association with the Signature group is on account of the common partners in various concerns. Assessee is separately assessed to tax. Search u/s 132(4) of the Act was initiated in the case of the assessee on 29.1.2014 and was concluded on 31.1.2014. This fact is proved on the basis of “panchanama” prepared by the officer of the search team which is placed at page 62-64. No surrender was made in the statements taken by the search team during the course of search from 29.1.2014 to 31.1.2014. There is no mention of any incriminating material referred by the Ld. A.O on the basis of which additions have been made.
The search action in the case of Signature Group continued ever after 31.1.2014. On 02.02.2014, Mr. Vipin Chouhan who is Ultimate Builders the partner of the assessee firm gave a statement before the search team wherein he made surrender of Rs.2,25,00,000/- on behalf of the appellant firm and agreed to offer it to tax. In the very same statement he also made surrender on behalf of another firm M/s.
Virasha Infrastructure in the capacity of a partner. In the very same statement he also made surrender on behalf of other companies of Signature Group. Ld. A.O during the course of assessment proceedings observed that the assessee has not offered surrendered income of Rs.2,25,00,000/- for tax and confronted the assessee. During the assessment proceedings u/s 143(3) of the Act, assessee made the retraction by submitting that no such undisclosed income was earned and therefore no such income was required to be offered to tax. However, Ld. A.O giving reference to the statement of Mr. Vipin Chouhan, partner of Ultimate Builders and also giving reference to the seized documents found during the search at Signature Group made addition for undisclosed income.
When the matter came up before Ld. CIT(A) addition was confirmed.
However the basis of addition was accepted to have been made only on the basis of the statement of Mr. Vipin Chouhan. No reference was made to any incriminating material having its bearing on the 27 Ultimate Builders surrendered income. During the course of hearing before us Ld. Counsel for the assessee contended that during the course of search i.e. between 29.1.14 to 31.1.2014 no cash or unrecorded assets was found, no incriminating material was found and no income was offered to tax in the statement recorded u/s 132(4) of the Act of the person found to be in the possession and control of the books of premises. Relevant questions asked about the loose paper found were duly replied in the statement.
Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon’ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that “no addition was called for which has been made merely on the basis of the statement without correlating the Ultimate Builders disclosure made in the statement with the incriminating material gathered during the course of search”.
So the contention of the Ld. Counsel for the assessee can be summarised that the addition cannot be made merely on the basis of statement which too was taken after conclusion of the search and no correlation has been made with the incriminating material found during the course of search.
On the other hand Departmental Representative gave reference to various judgements referred above. She mainly placed emphasis on the judgment of Hon’ble High Court of Madras in the case of Kishore Kumar V/s DCIT (supra) holding that “when there was a clear admission of undisclosed income in the statement sworn in u/s 132(4) of the Act there is no necessity to scrutinise the documents”.
Now so far as the first contention of the assessee that the statement relied on by the revenue authorities cannot be construed as a statement given u/s 132(4) of the Act, we will like to first reproduce the provisions of Section 132(4) of the Act; Ultimate Builders The authorised officer may, during the course of the search or seizure, examine on oath any person who is fond to be in possession or control of any books of account, documents, money, bullion, jewellery to other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act.
1 Explanation.- For the removal of doubts, it is hereby declared that the examination of any person under this sub- section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income- tax Act, 1922 (11 of 1922 ), or under this Act.”
The above sub Section 4 of Section 132 of the Act starts with reference to “authorised officer”, which means that the Officer who is authorised to conduct search on the assessee. In the instant case it is stated before us that the authorised officer of the assessee and that of the other concerns of Signature Group are different.
After the word the authorised officer it reads “during the course of search or seizure, examination of both the person”.
During the course of search is a period during which the search is initiated and concluded. In the instant case the search was initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised Ultimate Builders Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is after the conclusion of the search in the case of the assessee on 30.01.2014.
There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee’s premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s.
Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee’s business premises.
As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender for various group concerns and not specifically for the assessee M/s. Ultimate Builders. Reference was also given to other business concerns namely M/s. Virasha Infrastructure, Signature 31 Ultimate Builders Infrastructure, Signature Builders and Signature Builders and Colonisers. Certainly the search in the case of concerns other than the Ultimate Builders did not conclude on 02.02.2014 but at that point of time on 02.02.2014 the search in the case of Ultimate Builders stood concluded two days before on 31.1.2014.
We therefore are of the considered view that the alleged statement given by Mr. Vipin Chouhan on 02.02.2014 may be construed as the Section 132(4) of the Act for all the other concerns named above except for the assessee i.e. M/s. Ultimate Builders.
Therefore the statement referred to by the Ld. A.O on the basis of which the addition have been made in the hands of the assessee in our view cannot be construed as the statement u/s 132(4) of the Act.
Coming to the issue of addition made by the Ld. A.O on the basis of the statement but no reference been given to the incriminating material, we find that in the assessment order Ld. A.O has referred to various seized documents but none of them is directly related to the assessee. These seized documents are of the Signature Group and Ld. A.O has only mentioned the details of the seized document without uttering a word about their nexus with the 32 Ultimate Builders business transaction carried out by the assessee or by pointing out assessee’s connection with the seized document in name or otherwise. Thus it can be safely concluded that the addition made by the Ld. A.O was not on the basis on the incriminating material found during the course of search but only on the basis of statement of Mr. Vipin Chouhan given on 02.02.2014.
Recently the Co-ordinate Bench in the case of ACIT(1) VS. Sudeep Maheshwari (supra) in which the undersigned was also a co-author while adjudicating the issue that “whether addition can be made merely on the basis of statement given during the course of search without correlating the statement with incriminating material”, we have decided the issue observing as follows:-
“6. It is the case of the assessee that during the course of search & seizure, no incriminating material or undisclosed income or investments were found. It is stated that the assessee was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared Rs.3 crores in personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, Ultimate Builders Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have given our thoughtful consideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before the A.O., which supported the contents of the statement. In the absence of such material, coupled with the fact that it is recorded by the Ld. CIT(A) that the assessee himself had surrendered a sum of Rs.69,59,000/- and Rs.75,00,000/- in A.Y. 2008-09 and 2009-10 respectively. The A.O. failed to co-relate the disclosures made in the statement with the incriminating material gathered during the search. Therefore, no inference is called for in the finding of the Ld. CIT(A) and is hereby affirmed. Ground raised by the revenue is dismissed.”
Hon’ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.), held that merely on the basis of admission, the assessee could not have been Ultimate Builders subject to additions, unless and until some corroborative evidence is found in support of such admission.
Hon'ble Jharkhand High Court Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No.8 of 1999 order dated 03.01.2013 held as under; “4. We considered the submissions of the learned counsel for the parties and perused the reasons given in the impugned orders as well as reasons given in the case of Kailashben Manharlal Chokshi (supra). 5. It appears from the statement of facts that there was a search in the business premises of the petitioner’s firm as well as in the residential premises of its partner, Shri Sheo Kumar Kejriwal, on 24th September, 1987. During the course of search, the statement of Shri Sheo Kumar Kejriwal had been recorded under section 132(4) of the Income Tax Act and in the statement, he stated that he was partner in the Ganesh Trading Company, i.e. the present assessee-firm in his individual status and that he surrendered Rs. 20 lacs for the assessment year 1988-89 as income, on which tax would be paid. He further stated that other partners would agree to the same; otherwise it would be his personal liability. However, in the returns filed after search, the income of Rs. 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not declared by the assessee-firm. On being asked to explain the reason for not showing the surrendered amount in the returns, it was submitted by the assessee that declaration made by the partner was misconceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee’s said retraction was not accepted by any of the authorities 35 Ultimate Builders below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of Rs. 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee.
We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts of the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath of the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee’s contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by the assessee in his statement under section 134(2) in fact situation where during the course of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of Rs. 20 lacs. 36 Ultimate Builders Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self- incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs. 20 lacs.
In view of the above reasons, without answering the question about retrospective operation of the proviso to section 134(4), we are holding that the authorities below have committed error of law in drawing inference from the materials placed on record, i.e. admission of the assessee coupled with its retraction by the assessee. The Revenue may now proceed accordingly”.
In the light of ratio laid down in various judgments referred above including one in the case of ACIT(1) Vs. Sudeep Maheshwari (supra) decided by us wherein also we, after referred various judgments of Hon'ble High Courts have held that additions cannot be sustained merely on the basis of statement given during the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 37
In the given facts and circumstances of the case and respectfully following the judgements and decisions referred above we find that firstly the statement given by Mr. Vipin Chouhan u/s 132(4) of the Act on 02.02.2014 cannot be considered as the statement given u/s 132(4) of the Act in the instant case of the assessee firm since the search action in case of assessee was concluded on 31.1.2014 by the Authorised Officer. Secondly as regards to other business concerns referred by Mr. Vipin Chouhan in his statement given on 02.02.2014 and in case of such business concern wherein search action u/s 132 of the Act was continuing the said statement dated 02.02.2014 will be considered as the statement u/s 132(4) of the Act. Thirdly, no reference has been given by the Revenue Authorities to any incriminating material found during the course of search at the business premises of the assessee, which could be correlated to the alleged surrendered income earned by the assessee from undisclosed sources.
We therefore are of the considered view that the finding of Ld. CIT(A) needs to be set aside and the addition of Rs.2,25,00,000/- deserves to be deleted since it has been made on the basis of a 38 Ultimate Builders 132(4) of the Act and without referring to any incriminating material found during the course of search.
Addition for undisclosed income of Rs.2,25,00,000/- is deleted.
Accordingly Ground No.1 raised in the appeal by the assessee is allowed.
In the result appeal of the assessee stands allowed.
The order pronounced in the open Court on 09.08.2019.