THE ACIT, 1(1), BHOPAL vs. SHRI SUDEEP MAHESHWARI, BHOPAL

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ITA 524/IND/2013Status: DisposedITAT Indore13 February 2019AY 2010-1113 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that while a statement under Section 132(4) has evidentiary value, additions cannot be sustained solely on the basis of such a statement without corroborating material. Since the revenue failed to provide such material, the deletion by the CIT(A) was affirmed.

What were the facts?

During a search, the assessee surrendered income based on a statement recorded under Section 132(4). The Assessing Officer (AO) made an addition based on this surrender, but the CIT(A) deleted it. The revenue appealed this deletion.

What were the issues?

Whether an addition can be made solely on the basis of a statement recorded under Section 132(4) without corroborating evidence. Whether penalty proceedings initiated without assigning specific reasons are vitiated.

Which sections of the Income-tax Act were involved?

Section 132(4),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI KUL BHARAT & SHRI MANISH BORAD

For Appellant: Smt. Ashima Gupta, D.R
For Respondent: Shri Ashish Goyal &, Shri N.D. Patwa, A.Rs
Hearing: 15.01.2019Pronounced: 13.02.2019

Heard together (2 matters)

ITA 524/Ind/2013
ITA No.299/Ind/2017

Read from the judgment's own cause title. This page is filed under one of them.

disposed of by way of consolidated order. First we take up revenue’s appeal in , where in the revenue has raised following grounds of appeal:

“On the facts and in the circumstances of the case, the CIT(A) has erred in 1. Deleting the addition of Rs.2,25,00,000/- made by the A.O. on account of income surrendered by the Assessee as per statement recorded u/s 132(4) of Income Tax Act, 1961.” 2. The facts in brief are that a search action was carried out at the premises of the assessee. During the course of search, certain documents were seized. A statement of the assessee was recorded in which the assessee admitted and surrendered income on behalf of self and others. The A.O. therefore made addition of Rs.2,25,00,000/-. Against this, 2

[ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] the assessee preferred an appeal before Ld. CIT(A), who after considering submissions deleted the addition. Now the revenue is in appeal.

3.

Ld. D.R. vehemently argued that Ld. CIT(A) was not justified in deleting the additions. Ld. D.R. relied upon the decision of the Hon'ble Delhi High Court in the case of Hans Towers (P) Ltd. Vs. CIT-V (2015) 56 taxmann.com 67 (Delhi).

4.

On the contrary, Ld. Counsel for the assessee supported the order of the Ld. CIT(A) deleting the addition and relied upon various case laws and he also reiterated the submissions as made in the written synopsis.

5.

We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. The Ld. CIT(A) deleted the addition by observing as under:

“7. The A.O. has placed his reliance on the decision of the Hon'ble High Court of Chattisgarh in ACIT Vs. Hukum Chand Jain & Ors. (2011) 337 ITR 238. I have carefully gone through the said decision, I find that in the said case during the course of search, cash, gold ornaments and certain loose papers were seized and assessee could not explain the recovery of cash and jewellery and in his statement under s. 132(4), he surrendered Rs.30 lakhs as his undisclosed income for the block period. I am of the considered opinion that the facts in the instant case are clearly distinguishable from the facts in the said decision of the Hon'ble High Court of Chhattisgarh in as much as in the instant case, no disproportionate asset has been brought on record.”

[ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] [ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] [ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] [ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal]

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

[ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] 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, reliance is placed on the judgement of the 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 [ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] 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

[ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] 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.

7.

In the result, the appeal filed by the revenue is dismissed.

8.

Now we take up appeal of the assessee in ITA No.299/Ind/2017. The assessee has raised following grounds of appeal:

[ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal]

9.

The assessee has taken a legal plea that the notice initiating the penalty is bad in law. Therefore, the proceedings initiating penalty are vitiated. Ld. Counsel for the assessee has drawn our attention to the notice. Notices are enclosed along with synopsis. For the sake of clarity, contents of the written synopsis are reproduced as under:

[ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal]

10.

Ld. D.R. opposed the submissions and submitted that the penalty proceedings have been validly initiated.

11.

We have heard the rival submissions, perused the materials available on records and gone through the orders of the authorities below. We find that the notices issued by the A.O. are contrary to the laws laid down by the Hon'ble

[ITA 524/Ind/2013 & [Shri Sudip Maheshwari, Bhopal] jurisdictional High Court in the case of PCIT-I Vs. Kulwant Singh Bhatia in of 2018 (M.P.) dated 9.5.2018.

12.

Ld. D.R. could not controvert the fact that notice issued by the A.O. for initiating penalty proceedings u/s 271(1)(c) of the Act does not assign any reason for initiating the penalty. Hence, it can be inferred that no specific charge is made for initiating the penalty. In the absence of the specific charge, the proceedings initiated for imposing penalty are vitiated in the light of the judgement of the Hon'ble jurisdictional High Court. We therefore, quash the penalty order being bad in law.

13.

In the result, the appeal filed by the assessee is allowed.

Order was pronounced in the open court on 13 .02.2019.

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