DEPUTY COMMISSIONER OF INCOME TAX, MUMBAI vs. MGN AGRO PROPERTIES PRIVATE LIMITED, MUMBAI

10. Ground No. 4 pertains to the addition of Rs. 22,00,00,000/- made by the AO on account of unexplained money u/s. 69A of the Act in respect of alleged cash received by the appellant during the previous year in lieu of an upcoming land sale transaction. 10.1 In the course of assessment proceedings, the AO observed that in view of the statement of Mr. L.T. Hotwani, a key person of the Welspun Group, and findings of the search it was revealed that Welspun Group and Alok Industries were having a joint venture partnership in Alspun Infrastructure Ltd (now known as MGN Agro Properties Pvt Ltd). A land situated at Vapi was supposed to be sold and on sale of this land both the groups were to receive cash of Rs. 50 Crores. The AO found that out of the same, a sum of Rs. 22 Crores had been received by the assessee till the date of search as stated by Shri Lalchand Hotwani in reply to Q. No. 17 of his statement and treating the same as unexplained money u/s. 69A, the AO added the said amount u/s 69A of the Act. 10.2 The appellant on the other hand has argued that the assessee had neither sold the land at Vapi nor received any advance or consideration during the previous year in respect of the purported negotiations for the transfer or sale of such land. The land appeared in the Balance Sheet as on 31.03.2018 as a fixed asset. Also, inspite of a search (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. having been conducted, no document or any other evidence was found indicating sale of land or suggesting receipt of any such advance or amount against sale of such land at Vapi. According to the appellant, the AO could neither point out the name of the person from whom such cash was received nor could the date of any such receipt of cash be pointed out. The addition was based only on guess work or suspicion on the basis of a standalone statement of Sh. L.T Hotwani recorded under pressure and coercion and the statement was also later retracted vide an affidavit dated 15.07.2017. 10.3 I have considered the facts of the case and reasons recorded by the AO in making an addition of Rs. 22,00,00,000/- to the income of the appellant on account of unexplained money u/s. 69A representing cash received by the appellant in lieu of an upcoming transaction of sale of Land at Vapi together with written submissions and oral arguments of the appellant. 10.4 It is seen that the root of the addition is based on the searches carried out in the case of Welspun Group on 30.06.2017 in which an admission was made by Shri L. T. Hotwani, one of the key persons of the group in his statement recorded u/s. 132(4) of the Act on 2.07.2017. It is also seen that except such standalone admission, the AO has not been able to bring on record any corroborative evidence to support this statement, which has also later been retracted. It is seen that no document or any other record/evidence has been found either during the search or in post-search inquiry to corroborate the findings of the AO. Thus, addition in respect of cash worth Rs. 22 crore against sale of Land at Vapi is based only on the standalone statement recorded u/s.132(4) without any corroborating material or evidence. 10.5 One needs to make an analysis of the relevant question No.17 and its answer given by Shri L. T. Hotwani in his statement recorded u/s.132(4) on 2.07.2017 which reads as under:- “17. Please state what are all the unaccounted cash receivables and payables which are yet to be completed as on today and also state such transactions which you can recollect. Ans. The details are as follows: a. We had to receive Rs.25 crore cash against the sale of Vapi Land of which Rs.22 crores cash is received till now and cash of Rs.3 crore is yet to be received. The total cash deal for sale of Vapi Land was Rs.50 crore in cash and Rs.49.5 crore in cheque. Out of Rs.50 crore cash, share of Welspun group is Rs.25 crore and remaining 25 crore is share of other shareholder. …………….

10.6 It is seen that the search u/s. 132 was carried out on 30.06.2017 in the case of Welspun group where Shri L. T. Hotwani admitted in his statement u/s.132(4) recorded on 2.07.2017 certain facts, which are:-

(A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. (i) We had to receive cash worth Rs.25 crore against sale of Vapi Land out of which cash worth Rs. 22 crore was received till that time; (ii) Cash worth Rs. 3 crore was yet to be received at that time; (iii) Total cash deal for sale of Vapi Land was for Rs. 50 crore in cash and Rs. 49.50 crore in cheque; and (iv) Out of cash worth Rs. 50 crore share of Welspun group was Rs. 25 crore and remaining Rs. 25 crore was the share of other share holder i.e. Alok group. 10.7 On analysis of this statement, the following points emerge: i) No independent corroborative evidence like any document, agreement, MoU etc has been brought on record by the AO to substantiate the relevant statement, which has in any case been retracted; ii) If cash worth Rs. 22 crore was received on sale of Vapi Land than it should have been found in the search or at least some evidence of expenditure incurred or investment in cash should have been found. However, in the present case nothing to this effect has been brought on record by the AO; iii) While the statement talks about a cheque component of Rs. 49.50 crore, no details of any such cheque received by the assessee has been brought on record by the AO; iv) Apparently, if no such cheque has been received, then it is difficult to understand how the associated alleged cash component can be said to have been received by the assessee; v) It is well established that one has to rely on the statement u/s.132(4) as a whole in its entirety and the AO has no power to pick and choose part of the statement as correct which is favourable to revenue and ignoring the rest of the part of the statement in the same answer and which is favourable to the assessee (Indore Malwa United Ltd. V. Statee of Madya Pradesh 60 ITR 41-SC). vi) In my opinion if the information of receipt of cheque of Rs. 49.50 crore remains unproved, it is difficult to believe the receipt of the associated alleged cash component also; vii) It is also a matter of fact that that the impugned land was not sold in the relevant previous year and continued to figure in the Balance Sheet as on 31.03.2018. 10.8 It is also seen that while an admission is important piece of evidence, it cannot be said that it is conclusive. It is always open to the assessee who made the admission to show that it is incorrect (Nagubai Armmal v. B. Sharma Rao AIR 1956 SC 100). An admission is not conclusive as to truth of matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances in which it is made. It can be shown to be erroneous or untrue (Sarwan Singh Rattan Singh v. State of Punjab AIR 1957 SC 637).

(A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. 10.9 In my opinion, once the appellant has demonstrated that no such cheque was received as admitted in the same statement then it is difficult to presume that the alleged associated cash was received more particularly when it is stated to one consolidated transaction and nothing was found in the search regarding the receipt of cash or even regarding the sale of the impugned land. The so-called disclosure/confession/ admission made at the time of search can therefore not be the sole basis of drawing any adverse inference in the hands of any assessee, unless it is corroborated by independent evidence. 10.10 The ld. AR invited my attention to the judgment of the Hon’ble AP High Court in the case of CIT vs. Ramdas Motor Transport [238 ITR 177 at 183] with regard to the power of recording statement by the Authorised Officer u/s.132(4). It was held therein as follows:- “Form the above, it is clear that the question of examining any person by the authorized officer arises only when he found such person in possession of any undisclosed money or books of account, Thus, where a person is found to be not in possession of any incriminating material, question of examining him by the authorised officer during the course of search and recording any statement from him by invoking the power under section 132(4), does not arise. Therefore, the statement of such a person, recorded patently under section 132(4), does not have any evidentiary value, This provision embedded in section 132(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. Where the finding of the Tribunal is based on the above well-settled principle, such finding cannot give rise to a question of law.” 10.11 The observation of Hon’ble ITAT, Ahmedabad Bench in the case of Mrs. Sushila Devi Agarwal [50 ITD 524] at 526, as below, also needs to be perused: “All that is stated by any deponent on the search day should not be taken as truth, the whole truth and nothing but truth. Such statements undoubtedly have evidentiary value and credibility in law, but the same should be viewed with great caution, particularly when, the same is denied, varied or retracted or established by the defendant to have been obtained or given under mental stress, coercion, undue influence or due to any other abnormal condition and circumstances when such statement was given.” 10.12 My attention has also been invited to the decision of Hon’ble Jodhpur Bench of ITAT in the case of Maheswari Industries v. ACIT 81 TTJ 914 (Jodh.) wherein it has been held by the Hon’ble ITAT that :

“it was open to the assessee at the stage of assessment to establish that surrender made at the time of search proceedings was the compulsion and not with free mind or that the addition is not warranted on the basis of available material. Considering the facts and circumstances of the case, I am of the opinion that the (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. addition made by the assessing officer should be considered on merits rather than the surrender made by the assessee in the search proceedings. Coming to the merits of the addition, it is seen that the assessee has been able to substantiate that the difference as found out is the result of rate difference and this fact has not been refuted either by the assessing officer or by the Commissioner (Appeals) who have gone only on the sole ground of surrender made during the search proceedings. Therefore, keeping in view the entirety of facts and circumstances, I do not find any justification in making the addition, which is directed to be deleted.” 10.13 The ld. AR also argued that it is for this reason that CBDT, in its wisdom to curb such erroneous practices of seeking involuntary forced confession of undisclosed income, issued a new instruction in F.No.286/2/2603-IT(Inv-II) dated 10.03.2003 directing its officials to refrain from making such attempts to obtain confession of undisclosed income without corroborative evidences. In the said circular, again, the CBDT expressed its opinion about the lack of reliability of such so-called confessions and directed its officials to solely rely upon the evidences/materials gathered during the course of search or thereafter instead of such so-called confessions. 10.14 The ld. AR also brought to my notice that no addition can be made merely on the basis of surrender without existence of any corroborative evidence found against the assessee as held in the following case laws :- (i) Kailashben Mangarlal Chokshi Vs CIT (2008) 174 Taxmann 466 (Guj.) Merely on the basis admission, the assessee could not have been subjected to additions, unless and until some corroborative evidence was found in support of such admission. Further statement recorded at such odd hours (at midnight) could not be considered to be voluntary statement, it was subsequently retracted and necessary evidence was led contrary to such admission. Addition was deleted. (ii) Arun Kumar Bhansali Vs DCIT (2006) 10 SOT 46 (Bang) (URO) Whether while computing undisclosed income of assessee, Assessing Officer should take cognizance of such correct income as depicted in books of account as well as in seized material, and should not adopt a figure merely as per admission of assessee – Held, yes. (iii) Shree Chand Soni Vs DCIT (2006) 101 TTJ (JD) 1028 Search and seizure – Block assessment – consumption of undisclosed income – Addition based on the assessee’s statement under s. 132 (4) – Admittedly, no incriminating document was found to support the impugned addition regarding bogus capital – Statement recorded under s. 132(4) does not tantamount to unearthing any incriminating evidence during the course of search – Therefore, no addition could be made only on the basis of such statement. (iv) Rajesh Jain Vs DCIT (2006) 100 TTJ (Del) 929 Search and seizure – Block assessment – Retraction of statement – Addition of Rs.25 Lakhs made solely on the basis of confessional statement of assessee that he earned the (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. said amount in the last Ten years was not justified – Confessional statement should be corroborated with some material to show that assessment made is just and fair – Conduct of affairs by the revenue authorities shows that good amount of psychological pressure was built on the assessee to make the said statement, which was retracted – Further, the addition was illegal as while the assessee spoke of earning the said income over a period of 10 years, total addition was made in two asst. yrs. 1999-2000 and 2000- 200 1 – All material found during search was duly explained by assessee on which no adverse comment was made by AO – Assessee to be assessed on the income returned by him for the block period. 10.15 Further reliance was also placed on Court decisions where it has been held that no addition can be made simply on the basis of surrender without any cogent and valid reasons and which the assessee has subsequently retracted. For this proposition, the reliance was placed on the following case laws :- (i) India Seed House V s Asstt. CIT (2000) 69 TTJ (Delhi) (TM) 241 In case of block assessment no addition can be made merely on the basis of statement recorded at the time of search which stands fully proved to be incorrect in view of the material itself which was seized at the time of search. (ii) Pranav Construction Co. Vs Asstt. CIT (1998) 61 TTJ (Mum.-Trib) 145 It was held that the admission cannot be read as an Act of Parliament and that it has to be read in the context fairly and reasonably. The burden of incurring the expenditure can be discharged either by direct evidence or if such evidence is not available the assessee can always point out to circumstantial evidence supporting the claim. Thus, statement recorded under section 132(4) cannot be made use for purpose of precluding assessee from claiming expenditure for earning income which assessee forgot to claim while making statement disclosing income. 10.16 In this regard it is seen the AO has made the addition of Rs. 22 crore on the ground that the appellant received on-money in cash in lieu of an upcoming Land sale transaction inspite of the fact that no evidence could be brought on record to prove the sale of such Land during the previous year. The AO has not been able to bring on record any evidence regarding the purported sale of land in the previous year. If the impugned Land has not been sold during the previous year than the question of the appellant having received “on-money” in cash does not arise. It is well accepted practice that “on-money” is usually paid alongwith the payment through banking channel at the time of executing sale agreement and to assume such “on-money” being paid in advance is difficult to believe in the absence of any other supporting evidence. It is pertinent to point out that no agreement, MoU or any other evidence relating to the alleged sale of land could be brought on record by the AO. 10.17 In the case of Pr. CIT v. Nishant Construction (P.) Ltd. 101 taxmann.com 179 (Guj) had deleted the addition of unexplained money (on-money) made by the AO on the basis of confessional statement on ground that there was no reliable or independent evidence to come to conclusion that assessee had accepted on money for sale of property (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. and SLP filed against the decision of High Court is dismissed by the Supreme Court (101 taxmann.com 180 - SC). 10.18 In the case of Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi), the Hon’ble Delhi High Court, while denying the Revenue’s contention that a statement recorded on oath u/s 132(4) of the I T Act can be solely relied upon for making an addition, observed that: 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 10.19 In the case of PCIT v. Kunvarji Commodities Brokers P Ltd. [2020] [118 taxmann.com 374] (Guj.), during the course of search action, Mr. Nayan Thakkar, promoter of the company gave a statement disclosing Rs. 12 crores in the nature of unaccounted money. Out of the disclosed amount, Rs. 8 crores belonged to Kunvarji Finance P Ltd and Rs. 2 crores belonged to the assessee for providing such client code modifications. Subsequent to that, Mr. Nayan Thakkar retracted the statement. The Hon’ble Gujrat High Court held that a statement at midnight could not be voluntary. It further observed that the addition is sought to be made solely on the basis of the statement recorded under section 132(4) of the Act which has been subsequently retracted, without such statement being corroborated by any material on record. The observations of the Court are: “10. While it is true that the Assessing Officer has held that Rs. 2 crore was received by the assessee for providing the client code modification and he has attributed this amount year-wise in the ratio of client code modifications, such addition is not based on any material other than the disclosure made by Shri Nayan Thakkar. The Assessing Officer has merely held that an amount of Rs. 2 crore out of the amount disclosed by Shri Nayan Thakkar has been received by the assessee from the clients by aiding them by suppressing their profits by way of diversion of profits through the methodology of client code modifications.” 10.20 In the case of Kailasben Manharlal Chokshiv [2008] 174 taxmann 466 (Guj), during search proceedings, in his statement u/s 132(4) of the Act, a disclosure of unaccounted investment worth Rs. 7 lakhs was made. Subsequently, the disclosure was retracted, alleging coercion and force. The AO made an addition of Rs 7 lakh. The Hon’ble Gujrat High Court upheld the retraction and rejected the view that retraction was an afterthought. The Court held that:

(A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. “26. In view of what has been stated hereinabove we are of the view that this explanation seems to be more convincing, has not been considered by the authorities below and additions were made and/or confirmed merely on the basis of statement recorded under section 132(4) of the Act. Despite the fact that the said statement was later on retracted no evidence has been led by the Revenue authority. We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission…..” 10.21 The Hon’ble Delhi High Court in the case of PCIT v. Best City Projects India P. Ltd. dated 1st August, 2017 [ITA No. 13/2017] held that statements recorded under section 132(4) of the Act do not solely by themselves constitute incriminating material. 10.22 In the case CIT v. Radhe Associates [2013] [37 taxmann.com 336] (Guj.), one of the working partners admitted a concealment of Rs. 18.19 crores on account of on- money while recording his statement which was subsequently retracted. The AO made an addition to the income of the assessee as undisclosed income by stating that there was clinching documentary evidence while concluding the assessment proceedings. While adjudicating the matter, the Hon’ble Gujrat High Court held that the AO had no clinching documentary evidence to prove that the assessee was involved in on money transactions and has solely relied on the statements recorded for making an addition. The relevant extract of the decision has been reproduced as under for the sake of ready reference: “3. …. By making the aforesaid addition, nowhere it is mentioned by the AO that what was the nature of clinching documentary evidence on the basis of which the AO has come to the conclusion that the assessee has received Rs.1,45,37,500/- as "on-money" with respect to the office-cum-shop as well as the shops in 'Ganesh Plaza'. It appears that while passing the order of assessment, the AO has solely relied upon the statement of the assessee which has been subsequently retracted and the question answers recorded while recording the statement of the working partner on 01.05.1996.” 10.23 The above decisions show that sole reliance on even the statements of promoters has been held by the Hon’ble Courts as insufficient to make the additions in the absence of credible corroborative evidences. Ordinarily, a statement on oath given u/s 132(4) of the Act given by a person creates a rebuttable presumption against that person and will need to be accepted as true unless he is able to controvert the statement through acceptable evidences. However, bland statements have not been accepted unless supported by some corroborative evidence. Thus, in the present case, solely relying on a statement, which has been later retracted, cannot be permitted in the absence of any corroborative evidence. The AO has not been able to bring on record any evidence to prove the sale of land like any agreement, MoU etc. Even the name of the party to whom the land has been purportedly sold does not find mention anywhere. Also, while making a reference to a cheque payment associated with the alleged cash payment, no details of such a cheque like the date, name of the payer etc find mention anywhere.

(A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. 10.24 In this regard it is also important to go through the provisions of section 69A of the Act which reads as under:- “Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.” 10.25 Thus, the provisions of section 69A can be invoked only if- (i) In any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article, (ii) Such money, bullion, Jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income. (iii) The assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory. 10.26 The above circumstances are cumulative. If all these circumstances exist, the amount may be deemed to be the income of the assessee for the financial year in which such investment has been made or the assessee became the owner of such money, bullion, etc. Thus, the legal fiction enacted in section 69A comes into effect only where all the above circumstances do factually exist. The onus to prove the existence of all these circumstances lies on the AO. Thus, there is no room or scope for making any presumption about existence of any of the requisite circumstances more particularly when the AO could not bring on record any corroborative evidence to prove that the appellant was the owner of such unexplained money. The crucial and relevant date for the purpose of assessment u/s. 69A is the date on which the assessee is physically found to be possession of money. The unexplained money which are outside the books and the assessee is found to be owner thereof will attract section 69A in the financial year in which the assessee is found to be its owner. Again, section 69A does not bring on the statute book any artificial rule of evidence, presumption or legal fiction. In order to make any addition u/s. 69A there ought to be definite material to show that it was available to the assessee and the same is missing in the present case.

10.27 As regard decision of CIT v. Hotel Meriya 332 ITR 537 (Ker.) relied upon by the AO observing that the court had considered scope of a statement recorded u/s.132(4) and found that such statement recorded by the officer as well as the documents seized (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. would come within the preview of evidence under the Income Tax Act r.w.s. 3 of the Evidence Act, it is seen that the court had also observed that the Assessing Officer was authorised and empowered to make block assessment in a judicious manner on the basis of the materials disclosed during the search under section 132 of the Income tax Act. Further in that case, statements of the managing partner and the employees were supported by “the sale slips, copy of the same and the cash book.” However, in the case of appellant there is no material seized in the search in the nature of corroborative evidence. Therefore, to my mind it appears that the decision of CIT v. Hotel Meriya (supra) is not useful since the facts are totally different and distinguishable from the appellant’s case. 10.28 In view of the above discussion and after consideration of facts of the case, I am of the view that in the absence of any corroborative evidence, the appellant cannot not be said to be the owner of any cash worth Rs. 22,00,00,000/- out of sale of Land at Vapi which is otherwise appearing in the Balance Sheet at the year end. Therefore, the addition of Rs. 22,00,00,000/- made by the AO on account of unexplained money u/s. 69A cannot be sustained and is hereby deleted. In the result this ground of appeal is allowed.”

5. Since the appeal of assessee is allowed by the Ld. CIT(A) on merits and deleted the addition u/s 69A, treating the same as not sustainable, the department being aggrieved had filed the present appeal raising the issue that the addition made by the Ld. AO, was wrongly deleted by the CIT(A), without fully appreciating the facts of the case.

6. Apropos, the addition u/s. 69A in the present case, the brief facts are that a search and seizure action u/s. 132 of the Act was conducted on 30.06.2017, in the case of Welspun Group. During the course of search action statement u/s. 132(4) of the Act of Shri Lalchand Tejchand Hotwani, the Accounts Head of Welspun Group was recorded at his residence at 1602/1603, B-Wing Sai Teerth Tower, Siddharth Nagar, Kopri, Thane. Going through the statement of Mr. Lalchand Hotwani, it is revealed that Welspun Group and Alok Industries were having joint venture partnership in M/s. Alspun (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. Infrastructure Limited, and on sale of land of M/s. Alspun Infrastructure Limited, both the groups were to receive cash amounting to Rs. 50 crores. It is further stated in the statement that out of these Rs. 50 crores, Rs. 22 crores have been received till date of search i.e., 30.06.2017 and that the said unaccounted cash receipts are not accounted for in the books of account of the assessee i.e. MGN Agro Properties Pvt. Ltd. (formerly known as M/s Alspun Infrastructure Ld.). Based on aforesaid information, the ld. AO invoking the provisions of Section 148A of the Act, had initiated reopening assessment of the assessee by issuance of notice u/s. 148, dated 31.03.2022. In the assessment order, ld. AO recorded details of the alleged transaction, findings during the search, role of Mr. Lalchand Tejchand Hotwani in the transaction as well as in the group, findings against the assessee as per statement of Mr. Lalchand Hotwani during the search, submissions made by the assessee during the assessment proceedings and had finally concluded that the reply of assessee is untenable, dislodging the plea of assessee vthat the availability of land situated at Vapi in the books of assessee till the end of assessment year does not mean that the cash transaction did not happen. The cash component was received in advance as compared to the actual sale agreement. There is no reference of any MOU/agreement in the statement of Mr. Hotwani because till the date of search those documents had not been drawn. Ld. AO mentioned that Mr. Hotwani was asked to collect the alleged amount and the name of purchaser was not communicated to him by the management of the assessee company. Assessee’s argument that the deponent had clarified before the Investigation Authorities that the deposition was recorded under the compelling circumstances, was not accepted by the (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. ld. AO as no such document was produced by the assessee before him. It is noted by the ld. AO that no retraction of the statement of Mr. L. T. Hotwani has been submitted by the assessee. Therefore, the statement of Mr. Hotwani recorded u/s. 132 (4) of the Act on 2.07.2017 are conclusive and accordingly the transaction of unaccounted income has been construed to be completed. Ld. AO observed that the statement u/s. 132(4) are recorded under oath which is presumed to be carrying truth in view of provisions of Section 181 and Section 193 of Indian Penal Code which provide for imprisonment if a false statement is given. Therefore, the statement carries evidentiary value, which is clear from the intent of legislature as it thought fit to include a separate sub section 132 (4) for recording of a statement during a search operation. Reliance was placed on the decision of Division Bench of Kerala High Court in CIT vs. Hotel Meriya (2011) 332 ITR 537 (2010), wherein the scope of statement recorded u/s. 132(4) was considered and found that such a statement recorded by the Officer as well as the documents seized would come within the purview of evidence under the Income Tax Act read with section 3 of the Evidence Act. With such observations the addition of Rs. 22 crores cash received by the assessee in view of upcoming land sale transaction has been treated as unexplained money u/s. 69A of the Act and added to the total income of the assessee.

7. While reiterating the facts from the assessment, ld. CIT DR representing the revenue submitted that the decision of ld. CIT(A) was based on certain observations which cannot be the sole basis for deleting the disallowance, such as ld. CIT(A) observed that the statements refer about a cheque component of Rs. 49.5 crores but no such details of (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. cheque received by the assessee, such observations are not found to be justified as it was a preliminary stage of transaction and issuance of cheque and transaction through bank was to be followed in future. It is submitted that, Ld. CIT(A) also observed that there was no proof of the transactions, the addition was made only based on statement u/s. 132(4), is not the correct appreciation of law as the statement u/s. 132(4) also holds evidentiary value as clarified by the Ld. Ao in his order. Ld. CIT(A) also relied on the fact that the subject land was not sold in the relevant previous year, whereas such transaction could have taken place in the future years and for that reason only the transaction of cash cannot be neglected. Ld. CIT(A) DR drew our attention to show cause notice dated 22.03.2023, wherein it is clearly stated by the ld. AO about the role of Mr. Lalchand Hotwani, the person who is dealing in all unaccounted cash transactions of the group; therefore, his statements have a significance. Ld. CIT(A) DR also read from the show cause notice that, in the depositions Mr. Hotwani has categorically admitted that he is handling cash since 1996 and maintaining the parallel records of unaccounted cash expenses, however, the relating papers have been destroyed periodically after reconciliation, some of the instances which are evident from seized material and the person involved in handling of the unaccounted cash are also discussed in the show cause notice, in view of such facts, it cannot be said that there was no justification for the impugned cash transactions, as such transactions are recorded by Mr. Hotwani from time to time. Ld. CIT(A) DR also further referred to lose paper folder - Annexure A2 in the show cause notice and said that there were incriminating materials available about the land transaction with Alspun Infrastructure (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. limited presently known as M/s. MGN Agro Properties Private Limited, the assessee. Ld. CIT(A) DR further took us to the letter of retraction submitted by Mr. Hotwani before the Investigation Authorities dated 09.11.2017 submitted on 01.01.2018 stating that such retraction was after a lapse of exorbitant time and therefore the same has no credible value. Ld. CIT(A) DR further referred to the affidavit submitted by Mr. Hotwani and stated that the stamp paper of the affidavit was purchased on 23.06.2017, whereas the search took place in the premises of Mr. Hotwani on 30.06.2017, this shows that the document has a substantial lack of credibility and cannot be relied upon. It is also submitted by Ld. CIT(A) DR that the affidavit was filed after 6 months from the date of search that too before the Investigation Authority and the same was never furnished before the ld. AO. Under such circumstances, such retraction of Mr. Hotwani should not be considered to support the case of the assessee. It is further submitted by ld. CIT(A) DR that once there was a self-admission by Mr. Hotwani about the transaction of cash of Rs. 22 crores, the same cannot be dislodged later on, only by way of such retraction without any substantive evidence to the facts.

8. Per contra, the ld. AR representing the assessee submitted that as per provisions of section 69A, the addition could be made in case of an assessee, only where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, all the explanation offered by him (A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. is not in opinion of the ld. AO satisfactory, the money and the value of bullion, jewellery or other valuable article may be deemed to be the income of assessee for such year.

9. Referring to the aforesaid provision of Section 69A, it was the submission by ld. AR that since the search has taken place in the premises of some other assessee and not in the premises of the assessee concern i.e., M/s. MGN Agro Properties Private Limited, therefore in absence of the prerequisite conditions which has to be looked into while making the addition u/s. 69A, the addition made itself was bad in law and has no legal standing in the eyes of law. It is argued that, the question of any money, cash, bullion or jewellery to be found from the premises of assessee, does not arises, as there was no search in the premises of the assessee. Ld. AR placed his reliance on the order of ld. CIT(A) and mentioned the following points: i. The subject piece of land is a still in assessee’s possession, the same has not been sold. To substantiate such contentions, ld. AR shown us the copy of audited balance sheet of the assessee having the value of land appearing a schedule of assets as on 31.03.2018. ii. Ld. AR further submitted that the ld. AO has totally relied upon the statements recorded u/s. 132(4) which are later retracted by the concerned person i.e., Mr. Hotwani, and the revenue was unable to corroborate such retracted bare statements, with the support of any documentary evidence to substantiate.

(A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. iii. It is submitted by the ld. AR that, it is the settled position of law that the statement alone cannot be the sole basis for addition. To this aspect, the ld. AR placed his reliance on the judgement of Hon'ble Jurisdictional High Court of Bombay in the case of PCIT vs. M/s. Gahlot Construction, of 2017, dated 22.07.2019, wherein at para 5, the Hon'ble High Court held as under:

5. Under the circumstances, the addition made by the Assessing Officer merely on a statement made by one of the partners of the firm recorded under section 132 (4) of the Income Tax Act, 1961 without there being any independent additional evidence, was rightly deleted by the Tribunal. No question of law arises. Appeal is dismissed.

(i) Pre-requisite conditions for invoking provisions of Section 69A are not in existence in the present case, as the assessee is not found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account.

(ii) The addition was made on the basis of standalone admission of Mr. L. T. Hotwani in his statement u/s 132(4), without any supporting corroborative evidence on record, whereas such statements are also later retracted by him.

(iii) There was a reference of cheque component of Rs. 49.5 crore, however such information could not be substantiated by way of any supporting evidence.

(iv) If there was a presumption, that transaction of cash of Rs. 22 crores had took place, at least some evidence of expenditure incurred or investment in cash by the assessee should have been brought on record, however, in the present case nothing to this effect has been brought on record by the ld. AO.

(A.Y. 2018-19) MGN Agro Properties Pvt. Ltd. (v) Ld. AO placed his reliance on part of the statement by choosing the portion of it as correct which favour the revenue and the remaining part of the statement having declaration favoring the assessee has been ignored.

(vi) It is also the fact that the impugned land was not sold in the relevant previous year till 31.03.2018, as the value was appearing the Balance Sheet.

(vii) The admission of certain fact may be an important piece of evidence, but the same cannot be treated as conclusive, until unless the weight of a piece of evidence is attached to it. Reliance placed on Sarwan Singh Ratan Singh vs. State of Punjab AIR 1957 SC 637.

(viii) Regarding retraction, it is observed by the ld. CIT(A) that it is open for the assessee at the stage of assessment to establish that the surrender made at the time of search proceeding was a compulsion and not with free mind or that the addition is not warranted on the basis of available material. Reliance placed on Maheshwari Industries v. ACIT (Supra).

(ix) Ld. CIT(A) also referred to CBDT's instruction F No. 286/2/2603-IT(INV- II), dated 10.03.2003, directing the officials to refrain from making such attempt to obtain confession of undisclosed income without corroborative evidence. In the said circular CBDT expressed its opinion about the lack of reliability of such so-called confession and directed the officials to solely rely