ARUN KUMAR KHEMKA,KOLKATA vs. DCIT, KOLKATA

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ITSSA 54/KOL/2023Status: DisposedITAT Kolkata16 June 2023AY 2013-145 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no addition can be made solely on the basis of a statement recorded during a search unless there is corroborating evidence. In this case, the statement recorded under section 132(4) was not supported by any corroborating material found during the search. Furthermore, the assessee had retracted the statement through sworn affidavits, claiming it was obtained under duress and coercion. The Tribunal also noted that the assessee was not provided with copies of the recorded statements, hindering their ability to file a rebuttal. The Tribunal relied on the ratio laid down in the cited judicial precedents, particularly the co-ordinate bench's decision in the case of M/s Mapsa Tapes Pvt. Ltd., which also dealt with a retracted statement and found no investment in share capital. Consequently, the Tribunal found merit in the assessee's contentions and decided to delete the addition. The orders of the CIT(A) were set aside, and the appeals were allowed. The decision for AY 2008-09 was applied mutatis mutandis to the other assessment years.

What were the facts?

The assessee, Arun Kumar Khemka, filed appeals against the orders of the CIT(A) for assessment years (AYs) 2008-09 to 2015-16. For AY 2008-09, the sole issue was the confirmation of an addition of Rs. 97,500/- made by the Assessing Officer (AO) on an estimated basis. This addition was based on a statement recorded under section 132(4) of the Income Tax Act, 1961, without corroborating material. The assessee's return for AY 2008-09 was filed on 26.03.2009. A search operation was conducted on 20.01.2014. A notice under section 153A was issued on 15.02.2016. The AO alleged the assessee acted as an entry operator, providing accommodation entries. The addition was made based on a statement given under section 132(4) admitting to a profit margin of 15 paisa on transactions totaling Rs. 6,50,00,000/-. The CIT(A) dismissed the appeal ex-parte, noting the assessee's death on 27.05.2022.

What were the issues?

1. Whether the addition of Rs. 97,500/- made by the AO and confirmed by the CIT(A) on the basis of a statement recorded under section 132(4) of the Income Tax Act, 1961, without corroborating material, is sustainable? Assessee's Contentions: - The addition was made solely on the basis of a statement recorded under section 132(4) without any corroborating material found during the search. - The statement recorded on 20.01.2014 was retracted via sworn affidavits dated 24.01.2014 and 11.08.2014, alleging it was obtained under duress and coercion. - Copies of the recorded statements were not supplied to the assessee, preventing them from filing a rebuttal. - Relied on CBDT instructions and judicial pronouncements, including ACIT vs. K Raheja Corporate Services Pvt. Ltd., Gajjam Chinna Yellappa vs. ITO, PCIT vs. D.K. Basak Jewellers (P) Ltd., and DCIT vs. M/s Mapsa Tapes Pvt. Ltd. - Specifically, the deletion of addition in the case of M/s Mapsa Tapes Pvt. Ltd. by a co-ordinate bench, which held that the statement was retracted and no investment was made in share capital, was highlighted. Revenue's Contentions: - The judgment records no specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 132(4),Section 153A,Section 139(1),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH: KOLKATA

Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]

आयकर अपील�य अ�धकरण, कोलकाता पीठ “बी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA �ी राजेश कुमार, लेखा सद�य एवं �ी संजय शमा� �या�यक सद�य के सम� [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T. (SS).A. Nos. 49 to 56/Kol/2023 Assessment Year: 2008-09 to 2015-16 Arun Kumar Khemka Vs. DCIT, Central Circle-1(3), Kolkata (PAN: AFQPK 8449 A)

Appellant / (अपीलाथ�) Respondent / ( !यथ�)

Date of Hearing / सुनवाई 25.05.2023 क$ �त&थ Date of Pronouncement/ 16.06.2023 आदेश उ)घोषणा क$ �त&थ For the Appellant/ Shri Akkal Dudhwewala, A.R �नधा�/रती क$ ओर से For the Respondent/ Shri Abhijit Kundu, CITDR राज�व क$ ओर से ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-20, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 23.01.2023 for the AYs2008-09 to 2015-16.

2.

First we shall adjudicate in IT(SS)A No. 49/Kol/2023 for Ay 2008-09.

The only issue raised by the assessee is against the confirmation of addition by Ld. CIT(A) as made by the AO of Rs. 97,500/- on estimated basis based on the statement recorded u/s 132(4) of the Act without any corroborating material.

3.

Facts in brief are that the assessee furnished its return of income on 26.03.2009 disclosing total income at Rs. 2,41,280/-. A search operation was conducted in the residence cum business premises of the assessee on 20.01.2014 in connection of search and seizure operation in Sharp group of cases. Accordingly a notice u/s 153A

2 I.T.(SS)A. Nos.49 to 56/Kol/2023 Assessment Years: 2008-09 to 2015-16 Arun Kumar Khemka of the Act was issued on 15.02.2016 which was complied with by the assessee vide letter dated 09.03.2016 submitting that original return filed u/s 139(1) of the Act may kindly be treated as return filed in response to notice u/s 153A of the Act. The AO observed that the assessee was acting as entry operator and has provided accommodation entries in the form of bogus share capital to MAPSA group of companies through paper/jamakharchi companies controlled by him. The AO also noted that subsequently MAPSA group companies provided other accommodation entries to Sharp Group of companies. The AO also referred to the statement recorded on 20.01.2014 u/s 132(4) of the Act wherein the assessee admitted that he used to collect cash and gift cheque in return and used to charge profit margin of 15 paisa. The AO accordingly on the basis of said statement u/s 132(4) of the Act noted that the assessee during the year has provided Rs. 4,50,00,000/- to M/s Empee Global Pvt. Ltd. and Rs. 2,00,00,000/- to M/s MAPSA Tapes Pvt . Ltd. and applied 0.15% on Rs. 6,50,00,000/- thereby estimating Rs. 97,500/- and added the same to the income of the assessee in the assessment framed u/s 153A r.w.s 143(3) of the Act vide order dated 29.03.2016.

4.

In the appellate proceedings the Ld. CIT(A) dismissed the appeal ex-parte when the assessee has failed to file written submissions or appear in person on the four occasions. The Ld. CIT(A) also noted that in response to notice dated 03.01.2023, a dealth certificate of the assesse was uploaded on ITBA which showed thatthe assessee expired on 27.05.2022. Finally the Ld. CIT(A), by reiterating the facts on the basis of which the AO made addition , upheld the assessment order by dismissing the appeal of the assessee.

5.

After hearing the rival contentions and perusing the material on record, we find that in the present case the assessee was searched u/s 132(1) of the Act during which the statement was recorded u/s 132(4) of the Act in which the assesse agreed to have provided accommodation entries in consideration of 10 to 15 paisa. We note that there was no corroborating material to the statement recorded u/s 132(1) of the Act nor any incriminating material was found during the course of search. We note that

3 I.T.(SS)A. Nos.49 to 56/Kol/2023 Assessment Years: 2008-09 to 2015-16 Arun Kumar Khemka the search was conducted on 20.01.2014 which was connected to the search operation on the Sharp Group of cases. The AO noted that the assessee has provided accommodation entries to M/s Empee Global Pvt. Ltd. of Rs. 4,50,00,000/- and Rs. 2,00,00,000/- to M/s MAPSA Tapes Pvt. Ltd. We also note that the statement given on 20.01.2014 has been retracted vide sworn affidavit dated 24.01.2014, 11.08. 2014 on the ground that statement was obtained under duress and coercion on 20.01.2014 and 7.8.2014. We also note that the assessee has requested through written communications to the AO to supply a copies of statements recorded however the same were not supplied to the assesse and therefore rebuttal could not be filed. In our considered opinion no addition can be made on the basis of statement recorded during search unless corroborating evidences are there to back the statement but in present case we observe that there are no corroborating materisld/revidences found during searchThe Ld. A.R referred to CBDT instruction F. No. 286/2/2003-IT(INV.II) dated 10.03.2003 and CBDT Letter (F. No. 286/98/2013-IT(INV.II)] dated 18.12.2014 and relied on the decisions of various judicial forums:

i) ACIT vs. K Raheja Corporate Services Pvt. Ltd. (ITAT-Mum) in ITA Nos. 2521 to 2527/MUM/2021)

ii) Gajjam Chinna Yellappa vs. ITO [Telengana and Andhra Pradesh HC] in 59 taxmann.com 69

iii) PCIT vs. D.K. Basak Jewellers (P) Ltd. (Cal-HC) (138 taxmann.com 171).

iv) DCIT vs. M/s Mapsa Tapes Pvt. Ltd. (ITAT-New Delhi) (ITA No. 3539/Del/2017)

We also note that the deletion of addition made in the case of M/s Mapsa Tapes Pvt. Ltd. (supra) was challenged before the Tribunal by the revenue but the appeal of the revenue was dismissed by the Tribunal and copy of order is filed at page 60-78 of PB. The appeal was allowed legal issue as well as on merit by the co-ordinate bench which has held that the assessee has filed sufficient evidences to proving the source, identity, creditworthiness and genuineness of the transactions. It was also noted by the

4 I.T.(SS)A. Nos.49 to 56/Kol/2023 Assessment Years: 2008-09 to 2015-16 Arun Kumar Khemka Co-ordinate bench in para 12.cof the order that Shri Arun Kumar Khemka had retracted his aforesaid statement given on 20.01.2014 and therefore cannot be relied and in para 12.d. no investment was made by Shri Arun Kumar Khemka in the form of share capital/share premium of assessee company. The only sum of money received by the assessee company from Mr. Arun Kumar Khemka/ any of his companies was in the form of unsecured loan which was duly returned by the assessee company through normal banking channels after payment of TDS on interest accrued on such loans from time to time. Under the circumstances, we find merits in the contention of the assesse. Therefore, considering the ratio laid down in the above decisions , circulars of the CBDT vis-à-vis facts before us, we are inclined to delete the addition by setting aside the order of Ld. CIT(A). Accordingly the appeal of the assessee is allowed.

6.

Issue raised in all these appeals i.e. IT(SS)A NO. 50 to 56/Kol/2023 for AY 2009-10 to 2015-16 is similar to one as decided by us in IT(SS)A No. 49/Kol/2023 for AY 2008-09(supra) and therefore our decision in IT(SS)A No. 49/Kol/2023 for AY 2008-09 would, mutatis mutandis, apply to these appeals as well. Consequently all the appeals of the assessee are allowed.

7.

In the result, all the appeals of the assessee are allowed.

Order is pronounced in the open court on 16th June, 2023

Sd/- Sd/-

(Sonjoy Sarma /संजय शमा�) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य Dated: 16th June, 2023 SB, Sr. PS

5 I.T.(SS)A. Nos.49 to 56/Kol/2023 Assessment Years: 2008-09 to 2015-16 Arun Kumar Khemka

Copy of the order forwarded to:

1.

Appellant- Arun Kumar Khemka, 136, Jessore Road, Flat 3E, Avani Oxford, Phase-1, Lobby 1, Kolkata-700055 2. Respondent – DCIT, Central Circle-1(3), Kolkata 3. Ld. CIT(A)-20, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)

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