ACIT CC-7(1) , MUMBAI vs. SHRI SHREYAS VASANT PARIKH, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM आयकर अपील सं/ I.T.A. No.1580/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2017-18) ACIT, CC-7(1) बिधम/ Shreyas Vasant Parikh R. No.676B, 6th Floor, 5 Raj Mayur, 19th Road, Vs. Aayakar Bhavan, M. K. Khar (W), Mumbai- Road, Road, Mumbai- 400052. 400020.

Cross Objection No. 30/Mum/2022 Arising out of I.T.A. No.1580/Mum/2021 (निर्धारण वर्ा / Assessment Years: 2017-18) Shreyas Vasant Parikh ACIT, CC-7(1) बिधम/ 5 Raj Mayur, 19th Road, R. No.676B, 6th Floor, Vs. Khar (W), Mumbai-400052. Aayakar Bhavan, M. K. Road, Road, Mumbai- 400020. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AAEPP1118J (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee by: Shri V. R. Choksi Revenue by: Shri Amit Kumar Soni सुनवाई की तारीख / Date of Hearing: 13/07/2022 घोषणा की तारीख /Date of Pronouncement: 10/10/2022 आदेश / O R D E R PER ABY T. VARKEY, JM:

This appeal has been filed by the Revenue and the cross- objection (CO) is preferred by the assessee against the order of the Commissioner of Income Tax (Appeals)-49, Mumbai [hereinafter referred to as the “CIT(A)”] dated 07.06.2021 for A.Y.2017-18.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh 2. At the outset, the Ld. AR of the assessee informs us that he does not press the cross objection (CO) filed by the assessee. Therefore, the CO of the assessee stands dismissed.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh explained that the entries mentioned therein related to Rs.1,00,00,000/- which was paid to the assessee. Shri Tukaram further explained that the name of the assessee was not mentioned in the said sheet, as he had deleted the name of the assessee when he tampered with the pen drive on 27.07.2016. Referring to this statement of Shri Tukaram, the AO proposed to add the aforesaid sum of Rs.1 crores as unexplained credit in the hands of the assessee. Before the AO, the assessee requested for cross examination of Shri Tukaram. According to AO, several opportunities were given to the assessee to cross-examine Shri Tukaram but either the assessee asked for adjournment or Shri Tukaram Patil did not appear, therefore, the cross-examination could not materialize as such. Hence, relying on the statement of Shri Tukaram, the AO made an addition of Rs.1 crores u/s 68 of the Act in the hands of the assessee. Aggrieved by the order of the AO, the assessee preferred appeal before the Ld. CIT(A), who deleted the addition by holding as under: 13. DECISION (Ground No.2) : 13.1. I have considered the facts of the case, the submissions of the assessee, remand report submitted by the Ld.AO and further submissions made by the assessee in this regard. In this case, assessment proceedings u/s. 153C were initiated against the assessee subsequent to a search operation in the case of D.Y. Patil Group of cases. 13.2. The Ld.AO has noted in the assessment order that during the course of search, a pen drive was found from the possession of one Shri Tukaram Pandurang Patil. His statement was recorded on 30/31.07.2016. The AO noted that while explaining the documents found stored in the said pen drive being one excel sheet with name "cheque prints.xls", Shri Patil has accepted the fact that the contents of the said excel sheet was modified on 27.07.2016 and in the said statement he also explained the names and transactions which were originally

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh appearing in the said excel sheet which, as per him, was modified/deleted. The AO has noted that in response to Question no. 38, Shri Tukaram Patil has stated that Rs. 1.00 crore was given to the assessee Shri Shreyas Parikh which was subsequently treated income vide the impugned assessment order. The AO has also noted that the name of the assessee was appearing in the document which has been subsequently deleted as admitted by Shri Tukaram Patil in the said statement. The AO has noted in the assessment order that during the course of assessment proceedings, he has made attempts to provide cross examination of the witness Shri Tukaram Patil to the assessee but that did not materialize as on few occasions the assessee requested for another date whereas Shri Tukaram Patil did not appear on subsequent dates as detailed in the assessment order. Hence, it is an admitted fact that the cross examination of the witness did not materialize. The AO provided opportunity to the assessee during the course of assessment proceedings to explain why Rs. 1.00 crore, admitted by Shri Tukaram Patil as having been given to the assessee, should not be taxed in the hands of the assessee within the meaning of section 68 of the Act. The assessee submitted detailed reply which is reproduced in the assessment order. However, the Ld. AO was not convinced with the reply and has added the said amount to the total income of the assessee within the meaning of section 68 of the Act chargeable to tax as per provisions of section 115BBE of the Act. 13.3. In appeal, the assessee filed detailed submissions as statement of facts and subsequently online through ITBA portal. The assessee emphatically stated in his replies that no material/documentary evidences were found during the course of search which was related to the assessee. The name of the assessee is not appearing in the excel sheet with name 'cheque prints.xls'. The assessee further said that the statement of Shri Tukaram Patil was the sole basis for making addition in his case and even that statement was retracted by Shri Tukaram Patil vide an affidavit filed with the department on 11th August, 2016. The assessee further submitted that in response to question no. 38, which was the sole basis for making addition in his hands, Shri Tukaram Patil has produced a table wherein he has stated that payment of Rs. 1.00 crore was made to the assessee. However, it has not been clarified on what basis this statement was made. The claim of the assessee was that this could at best be considered as an allegation against the assessee by Shri Tukaram Patil which is not even substantiated by any entries on the document found in the form of two pages of the excel sheets with name cheque prints.xls, and that not only that the name of the assessee is not appearing

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh on this document but there is no reference of any transaction pertaining to him in the said document. The assessee further submitted that there was even mismatch in the total of receipt side of table given in answer to question no. 38 which is mentioned as "1515". However, after totaling the individual items mentioned on the receipt side, the total should be "1550". Similarly, the balance available should be 38 instead of 3 as stated in the said table. The contention of the assessee is that even this table reproduced in answer to question no, 38 of the statement of Shri Tukaram Patil is incorrect and the names mentioned in the said table are also wrongly mentioned, as those were not appearing in the seized material. The assessee submitted that this can also be verified from the subsequent affidavit filed by Shri Tukaram Patil. The assessee further claimed that the said affidavit was filed just within 10-15 days of his earlier statement and true nature of the above statement was also clarified.

13.4. In the detailed submissions filed before me, the assessee contended that it is an admitted fact that the assessee was not given an opportunity to cross examine Shri Tukaram Patil and since the whole addition is based on his statement only, the addition does not deserve to sustain when the assessee did not get the opportunity to cross examine. It was also submitted by the assessee that Shri Vijay D. Patil, trustee of D.Y, Patil group has not confirmed the said statement of Shri Tukaram Patil. The assessee also made detailed submissions as to why the provisions of section 68 is not applicable in his case.

13.5. The assessee has also placed reliance on several judicial decision which are referred to in his submissions reproduced previously. 13.6. Considering the facts of the case, a remand report was called for from the Ld. AO on the following issues : " (i) whether the name of the assessee and transaction in question is appearing at any of the documents seized during the course of search. If yes, please forward a copy of the same. (ii) whether any enquiry was made in the case of the assessee in respect of the said transaction or his statement was recorded either during the course of search or during the assessment proceedings. If yes, please forward a copy of the same. (i) whether any of the trustees of the Trust have confirmed this payment to the assessee either during the course of search or assessment proceedings. If yes, please forward a copy of his statement in this regard."

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh 13.7 In response to the same, the AO submitted his remand report which has been reproduced previously. On perusal of the remand report, it is found that the contention of the Ld. AO is that the contents of the pen drive which have been seized with excel sheet with name "Cheque prints.xls" were modified just prior to search and name of the assessee was appearing in the said document which have been admitted to have been deleted/modified by Shri Tukaram Patil as explained in his statement recorded on 30/31.07.2016. The Ld. AO has also forwarded a copy of the statement of Shri Tukaram Patil and the excel sheets with name "Cheque prints.xls" vide Annexure B with the remand report. For the sake of clarity, the contents of the excel sheet is reproduced below:

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh

13.8. On perusal of the above document, it is evident that there is an entry of Rs. 7.02 lakh therein in the name of 'SP1 which has been explained as 'Sandeep Patil' by Shri Tukaram Patil in the statement itself. It is, therefore, evident from the above that the name of the assessee is not appearing in the said documents found and seized during the course of search. Hence, there remains no doubt or ambiguity about the fact that the name of the assessee or any payment made to the assessee was not appearing in the said seized documents. 13.9. I have also given due consideration to the findings of the Ld. AO that the name of the assessee was appearing in the document which was subsequently deleted/modified as accepted by Shri Tukaram Patil in his statement. In order to have clarification on this issue, it is pertinent to reproduce answers to Q.no. 36, 37 and 38 of the said statement of Shri Tukaram Patil, which are as under:

"0.36 Please provide details of deleted names of persons alongwith purpose for which the cash payments were made against the amounts appearing in the modified excel sheet "cheque prints.xls" from the pen drive seized. Ans. The details of cash payments made and to whom the cash payments were made which are deleted from the excel sheet "cheque prints.xls" as appearing in my pen drive are explained as under:

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh

Sr. As appeared in the Name of the person to whom Amount of

No. pen drive cash payment was made payment made in cash (Rs. In lakhs)

1 SP SP (Sandeep Patil) 7.02

2 Mukesh Mukesh (Attender at the 0.18

residence of Vijay Patil)

3 Nitin Nitin (Nitin Kamble - attender at 3.07

Kharghar)

4 Tushar Tushar (Tushar Dodke ~ attender 1.37

to Vijay Patil)

5 (Ramesh Patil - Report to Vijay 64.50

6 'Omar -Pacific Tours & Travels, 53.87

Navi Mumbai)

7 Sushil Sushil (Sushil Kumar - Cook at 0.15

Vijay PatH's residence)

Misc. Misc. 0.07

Santosh driver Santosh driver (Vijay PatH's 0.09

driver)

10 Pingle Pingle (Rajesh Pingle- Vijay 0.19

PatH's attendant)

11 PratapBobate PratapBobate (Driver of Vijay 4.386

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh

Patil)

12 Chougule V. Chougule V. (Vijay Chougule -staff) 0.025

13 Datta Driver Datta Driver (Vijay Patil's Driver) 0.023

14 Amol Amol (Amol Dive - cook) 0.07

15 Sarvesh Sarvesh (SarveshDhamle -sports 1.66 staff)

16 Dr.Nilesh V. Dr.Nilesh V. (Dr.Nilesh 1.74 Vishwanath

17 Sandeep Jadhav Sandeep Jadhav (staff) 0.075

18 Ram Cook Ram Cook 0.90

19 (Refunded to Jay Nandani from whom 45 collected capitation fees)

20 Cannot recollect 7.2

21 'Cash given to Ahluwalia - as per 40 directions of Vijay Patil)

22 'Cash given to unknown person as per 15 directions of Vijay Patil)

23 'Nadeem Menon) 3

24 Cannot recollect 0.6

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh 25 Cash given to Taruna 150 Maheshwari)

26 400.777

All the above mentioned figures in column No. 4 are in rupees lakhs. For example 40 at Sr.No.21 is Rs. 40,00,000/- and 0.6 at Sr.No.24 is Rs.60,000/-. Q.37 Please explain the figures appearing in the modified excel sheet "cheque prints.xls" which has no details/narration :

230.4 2

111 2.5

3.07

910.9 9

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh

What you want to say and explain these figures. Ans. It is true that I have modified certain portion of the excel sheet of "cheque prints.xls", I have recollected the details of the above figures and the narrations of each of these entries are as under:

As per Excel Explanation Sr.no. sheet (amount in lakhs)

230.42 Capitation fees collected from the students mentioned at my answer to Q. No. 35

111 Capitation fees collected from the students mentioned at my answer to Q.No.35

2.5 Capitation fees collected from the students mentioned at my answer to Q.No.35

3.07 Capitation fees collected from the students mentioned at my answer to Q.No.3

250 Received from Mr. D.D.Kolte

Received from Mr. Sunil Gaikwad 205 100 Received Mr. Pratap Patil

9 Capitation fees collected from the students mentioned at my answer to Q.No.35

910.99

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh

0.38 Can you justify the explanation given in answer to Q.No.35, 36 & 37 in detail as regards to the cash handled by you? Ans. The receipt of cash from various persons as stated in my answer to Q.No.35, 36 & 37 are explained as under:

Receipts Amount (Rs. In Payments Amount (Rs. in lakhs) lakhs)

Total capitation fees 645 Paid to Taruna 7000 received from students Maheshwari (answer to Q.No.35)

Amount received from Mr 450 Total refund As explained in 207 Pratap Patil Q.No. 35 (350 +100)

Cash received from 205 Other expenses as 205 Mr.Sunil Gaikwad mentioned (150+40+15) (400 as per Q.No. 36 reduced by 150 paid to Taruna and 45 as refund as per Q.No.36)

Cash received from D D Kolte ftP-la Shreyesh Parekh 700 Tfe- 250

Balance available with me 3

Total 1515 1515

The figures mentioned in the above table are in lakhs. For example 64 lakhs is Rs. 6,45,00,0007-, 100 lakhs is Rs. 7,00,00,0007- and 1515 is Rs. 15,15,00,000/-."

13.10. Vide Q.no.36, Shri Tukaram Patil was asked to produce details of deleted names of persons along with the purpose for which the cash payments were made against the amounts appearing in the modified excel sheet "cheque prints.xls"

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh from the pen drive found and seized during the course of search. In his answer to the said question, Shri Tukaram Patil has explained the names which do not have name of the assessee and this also does not refer any transaction in the name of the assessee. As regards 'SP', the transaction has been clarified as in the name of 'Sandeep Patil' as Rs. 7.02 lakhs. 13.11. Vide Q.no.37, Shri Patil was asked to explain the figure appearing in the modified excel sheet "cheque prints.xls" which has no details/narration. Here also in answer there is no reference of any transaction with the assessee. Subsequently, vide Q.No.38, Shri Patil was asked to justify the explanation given in answers to previous questions as regards to cash handled by him, in response to which he has produced a table in the answer which has been to further elaborate the receipts and payments of cash from and to various persons as stated in his answer to Q.no. 35, 36 and 37 and out of these receipts he has identified payments wherein the name of the assessee is appearing with the figure of TOO which has been explained as Rs. 1.00 crores. It is therefore evident that the contention of the Ld. AO that the name of the assessee was appearing in the pen drive which was subsequently modified is not correct as Shri Tukaram Patil in his statement in answer to Q.no. 36 and 37 has explained the deleted modified entries which did not have reference of assessee and only in subsequent answer while explaining the payment out of those receipts he has taken name of the assessee claiming that Rs. 1.00 crore was paid to him.

13.12. ) have also given due consideration to the fact that even if the retraction of the statement made by Shri Patil through the affidavit is not considered, it is evident that the reference of payment to the assessee in the statement of Shri Patil is very general and non-specific and it is not in respect of any specific entry of transaction appearing in the seized document. In a subsequent statement dated 26.10.2018 he said that the payment to the assessee may be on account of professional services. He was, therefore, not very sure about the payment even in the subsequent statement. Not only that it is a fact that the statement is not corroborated by any evidence found during the course of search, but even in this statement there is no clarification as to why this payment was made to the assessee and what was the nature of the payment or was it paid at the directions of any of the trustees. Shri Tukaram Pati has identified himself as accountant working at D.Y.Patil Sports Academy and D.Y.Patil University, head Office. It is, therefore, obvious that he could not have made such huge payments on his own or

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh discretion. But, he has not even identified the trustee on whose instruction such payments were made. Furthermore, the statement has not even been confirmed by any of the trustees of the trust. Rather, Shri Vijay Patil, one of the trustees, in his statement, had denied to have any knowledge about any such payments^ It is also not the case of the Id.AO that this statement was corroborated by any other evidence by way of any enquiry during the course of search or assessment proceedings. In fact, the Id.AO has not referred to any other such evidence despite of having been asked for the same during the remand proceedings.

13.13. The assessee has relied on various judicial pronouncements stating that statement of Shri Patil has no evidential value in his case, since he was not provided opportunity of cross objection of Shri Tukaram Patil. 13.14. Hon Supreme court in the case of Andaman Timber Industries vs Commissioner of Central Excise, Kolkata-II, 2017 (50) S.T.R. 93 (SC), 2016 (15) SCC 785 has held that when additions are solely based on the statement of third parties, the additions are not sustainable unless their cross examination is granted. The Hon'ble Supreme Court, in this judgement, has held as below: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guesswork as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price-list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price-list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000. order dated 17,03,2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show-Cause Notice." (emphasis added) 13.15. In the case of CIT Vs. SMC Share Broker Ltd. 288 ITR 345, it was held by the Hon'ble Delhi High Court that in absence of witness being made available for cross examination, his statement could not be relied upon to the detriment of the assessee and that the Tribunal was justified in setting aside block assessment. 13.16. Hon'ble Madras High Court in the case of CIT vs. Sint. S. Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras) has held as under: "20. In the case on hand, statement recorded on 29.12.1999 from the son of the assessee under Section 132(4) of the Act is not corroborated by any material document. Admittedly, Revenue has also not confronted the assessee, with the said statement of his son. If that be the case, it can be safely concluded that, there was no material documentary evidence, to substantiate and corroborate the statement of Mr, Natarajan, son of the assessee. If the assessee makes a statement under Section 132(4) of the Act. and if there are any incriminating documents found in his possession, then the case is different On the contra, if mere statement made under Section 132(4) of the Act, without any corroborative material, has to be given credence, than it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterized as undisclosed and, on

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh the facts, and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence, should not be treated as conclusive evidence against the maker of the statement." Further, Hon'ble High Court of Andhra Pradesh in the case of Commissioner of Income-tax v. Naresh Kumar Agarwal ([2015] 53 taxmann.com 306) has held as under: "24 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 section 32(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub-section (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 finding of the Tribunal was based on the above well settled principle." 13.17 In this case, I find that the very basis set out in the order of the Id. AO for coming to the conclusion that the deleted entries in the seized Pen drive had evidence of payment to the assessee is factually incorrect. The whole addition hinges on evidence gathered through a third-party statement. Now the issue is can third party statement in absence of any corroborative evidence result in justified addition. The legal provision relating to presumption u/s 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. Based on the incriminating material found from third party search but not belonging to the appellant, this presumption will not be applicable unless corroborated by other evidence. Presumption available under section 132(4A)can be drawn against the person in whose case search is authorized and from whose possession or control books of account, diary or documents are found in the course of search. Even presumptions regarding correctness of contents of books of account etc. cannot be raised against the third- party. In order to have a presumption against the assessee in respect of a statement given by a third- party, there has to be some corroborative evidence especially when even the said document found from the possession of third- party does not have any transaction pertaining to the assessee under reference.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh 13.18. In the case of Straptex India P Ltd. v Oy. CIT [2003] 84 ITO 320 (Mum), it was held that presumption under section 132(4A) is only against the person in whose possession the search material is found and not against any other person. It is further held that the presumption is rebuttable and not conclusive and it cannot be applied in the absence of corroborative evidence. In the case of Rama traders vs. First ITO [1998] 25 ITO 599 (Pat.) (TM) it was held that no addition could be made, on the basis of presumption raised by section 132(4A), in the hands of the assessee where in the books of another firm, certain figures were found showing the purchase made by the assessee. In Asst. CIT v Kishore Lal Balwani Rai [2007] 17 SOT 380 (Chd.) , it has been held that though the diary seized enable the revenue to presume that its contents are true, such presumptions is available only against the person to whom it belongs and this is a rebuttable Presumption. It was so held in the case of Sheth Akshay Pushpavadan v Dy. CIT [2010] 130 TT J 42 (Ahd. UO) that presumption u/s 132{4A) is not available, when the seized papers is recovered from third party and not from the assessee, whereas it was held in the case of Prarthana Construction (P) Ltd. Vs, Deputy Commissioner Of Income Tax (2001) 118 Taxman 112 {IT AT- Ahmedabad) (Mag) that loose papers and documents seized from premises of third parties and statement recorded at back of assessee without it being afforded opportunity to interrogate said documents and without bringing on record any supporting evidence, could not be made basis for adding undisclosed income in the hands of assessee . 13.19. Considering the facts in totality and also in view of the judicial pronouncements relied upon by the assessee and referred to earlier, I am of the considered view that the evidence which was collected during the course of search in the form of statement of Shri Tukaram Patil was not with reference to any transaction pertaining to the assessee appearing in any of the documents seized during the course of search. Even the deleted entries in the pen Drive, referred to the Id. AO in the assessment order and the remand report did not pertain to the assessee as explained by Shri Tukaram Patil in the said -Statement, itself. It was only after explaining the receipts of the deleted entries that Shri Patil stated that the impugned payment was made to the assessee. The assessee did not get opportunity to cross examine Shri Tukaram Patil, even though the addition in his case was solely based on his statement. It is further found that this statement of Shri Patil was not corroborated by any statement/acceptance by any of the Trustees of the Trust where he worked as an accountant. Furthermore, there are no other evidences on record gathered during the course of Search or assessment to

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh implicate the assessee with the said receipt which was held as taxable in his hands. Hence, I am of the considered view that additions cannot be sustained in the hands of the assessee when it has been made merely on the basis of a third- party statement, and more so when it is not even corroborated by any evidence found during the course of search or assessment proceedings. The addition of Rs. 1.00 crore, made under section 68 of the Act in this case is, therefore, directed to be deleted. The ground is accordingly Allowed.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh further given the names of the persons whose names he had deleted from the pen drive including that of the assessee, who according to him, had received Rs.1 crores. He thus submitted that this statement of Shri Tukaram was sufficient enough to justify the impugned addition made in the hands of the assessee. On the aspect of cross-examination of Shri Tukaram, he submitted that, the AO had made an endeavour to summon Shri Tukaram Patil and facilitate the cross-examination by the assessee. But on some occasion, either the assessee sought adjournment, and in some instances, Shri Tukaram did not turn up. Therefore, according to him, the AO had discharged his burden of providing sufficient opportunity for cross-examination of Shri Tukaram. He further contended that, the retraction-affidavit of Shri Tukaram relied upon by the assessee remained unsubstantiated because Shri Tukaram did not turn up before the AO, and therefore the AO could not examine the veracity of the retraction. Referring to the observations made by the AO in the impugned order, he contended that the AO had rightly made the impugned addition by relying on the statement of Shri Tukaram. He accordingly urged that the order of the Ld. CIT(A) be reversed and the AO’s order be restored.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh took us through the excel sheet -‘cheque-print.xls’ which formed the basis of the statement of Shri Tukaram, which is found placed at Page 50 of PB [reproduced by the Ld CIT(A) order supra]. He pointed out from the excel sheet that, there was no mention of the name of the assessee or any syllable of the assessee’s name (short-form) on the said excel sheet, based on which any prudent person could discern that the figures or amounts mentioned in this sheet pertained to the assessee. According to Ld. AR, therefore, there is nothing to connect the assessee with the said excel-sheet, from which it could be inferred that he had received an amount of Rs. 1,00,00,000/-. He further submitted that, Shri Tukaram had himself admitted that this sheet had been tampered with by him, which was evidenced by the fact that the properties of the Excel Sheet showed that it was last modified on 27.07.2016 at 12.12 hours after the search had commenced. According to him therefore, such tampered evidence ought not have been admitted in the first place itself. He further contended that, the version narrated by Shri Tukaram in his answer to Q No. 38 was based on his own imagination in as much as it was not backed or supported by the excel-sheet (as the name/short form of the assessee did not feature therein as well as Tukaram has stated to a question that short-form of SP referred in the sheet is of Sandeep Patil, which was undisputedly not the name of assessee). To further support his case, the Ld. AR showed us that, even the figures mentioned in the excel sheet suffered from patent infirmities viz., if one totals the receipt side, the aggregate value should be “1550” and not “1515” as mentioned in the excel

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh statement. Similarly, he showed us that, the credit side balance, if computed correctly, would be “38” and not “3” as mentioned in the excel sheet. The Ld. AR further submitted that, Shri Tukaram had later on retracted his statement given on 30/31/07/2016 (within eleven (11) days) stating that it was given under duress, coercion and pressure from the investigation authorities. He submitted that although all these pertinent facts were brought to the notice of the AO, he failed to correctly appreciate the same. However, according to him, the Ld. CIT(A) had rightly taken note of these infirmities and fallacies pointed out by the assessee which discredited the excel-sheet found from the pen-drive of Shri Tukaram, and had thereafter, rightly deleted the impugned addition by holding that, the impugned addition could not have been based solely on a third party statement recorded behind the back of assessee that too which had been subsequently retracted as well; and undisputedly without affording cross-examination of Shri Tukaram by the assessee. Therefore, the Ld. AR does not wants us to interfere with the impugned order of Ld. CIT(A).

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh “(4) The authorised 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 Indian Income-tax Act, 1922 (11 of 1922), or under this Act.

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.”

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh be that it has been given by that person voluntarily. The burden to prove that the statement is not voluntarily obtained, but due to threat, coercion, promise etc., is upon the maker of statement. And such a burden would be discharged, if the maker of the statement is able to create “reasonable doubt” that the admission made in respect of fact- in-issue was not voluntary or was tainted or was obtained by threat or coercion. And once the maker of the statement has successfully discharged the burden by creating “reasonable doubt” as discussed in such an event, the onus shifts on the shoulder of Revenue to prove that the statement was taken voluntarily and that it is relevant evidence. In this context, it is gainful to refer to the decision of the Hon’ble Apex Court in the case of Pullengole Rubber Produce Co. Ltd. v. State of Kerala (91 ITR 18) wherein it has been held that although an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It was held that, it is open to the assessee who made the admission to show that it is incorrect. The same view has been expressed by the Hon’ble Supreme Court in the case of Sarwan Singh Rattan Singh v. State of Punjab AIR 1957 SC 637 where it was observed that admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, and the weight to be attached to it must depend on the circumstances in which it is made. It is open for the assessee to show it to be erroneous or untrue.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh 10. Hence, the position which emerges is that, a statement u/s 132(4) of the Act by itself cannot be reason enough to justify an addition, if the assessee is able to raise a reasonable doubt that it was obtained by threat or coercion or able to prove that the admission made by him was purely based on wrong assumption of facts and able to adduce evidence/material to show that he (maker of the statement) was wrong on the facts he admitted. For that the maker of statement can later explain the circumstances which led him to make the admission and bring out the correct facts and rebut the facts stated in the admission and in that way retract from the admission made by him u/s 132(4) of the Act. The settled position of law on this is that admission legally made by a person u/s 132(4) of the Act is relevant evidence in any proceedings of the Act and if that person later explain the circumstances which led him to make such a statement which raises ‘reasonable doubt’ that the admission was obtained by threat or inducement, or the admission was based on wrong assumption of facts (and able to show/prove that assertion) then it would be unsafe to rely solely on the “retracted admission” without independent corroboration. So when an admission u/s 132(4) of the Act has been retracted on the aforesaid reasons, then the AO should cross-examine the person again to ascertain the correct facts and conduct proper investigation into the affairs of the assessee and gather corroborative material which would negate such retraction and prove that the facts admitted originally is correct facts and thus retraction can be discarded. Otherwise, an addition made solely on the basis of a

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh statement which has been subsequently retracted, and is not backed by corroborative evidence, may not be sustainable. For this, we may gainfully refer to the instructions given by the CBDT in their Circular No. F.NO.286/98/2013-IT (INV.II)], dtd 18-12-2014 which read as follows:

“Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T. Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issues with approval of the Chairperson, CBDT. 11. In light of the above legal position, let us now examine the contents of the statement of Shri Tukaram, which has been reproduced

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh by the Ld. CIT(A) which has been reproduced by us (supra). And from a reading of the statement of Shri Tukaram relied upon by AO it shows that Shri Tukaram has clearly admitted that, he had tampered with the documents found in his control during the search i.e. one excel sheet - ‘cheque-print.xls’ contained in the pen drive retrieved from him, wherein he had deleted names of several persons. This was evidenced by the fact that the pen drive was last modified on 27.07.2016 at 12.12 PM. Having tampered with the contents of the excel sheet, Shri Tukaram while answering the above questions posed by the Investigating Officer re-collected the modifications made by him and gave the names of the purported persons who were supposed to have been originally mentioned in this excel sheet (which he had deleted) and that one of the names was that of the assessee, against whom noting aggregating to Rs.1 crore was mentioned. It is noted that, the Investigating Officer accepted this re-collection/memory of contents deleted by Shri Tukaram as gospel truth. In our considered view however, this approach of the Investigating Officer cannot be countenanced, particularly when the name/initials of the assessee did not feature at all at any place in the confiscated pen-drives of the excel sheet. Undisputedly when the Pen drive in question was seized by the investigation wing and examined it only showed that the same (excel sheet) was modified last on 27.07.2016 at 12.12 hrs. Other than the admission made by Shri Tukaram about tampering with the contents of the pen-drive which was retrieved from his possession, (modified last on 27.07.2016 at 12.12 hrs), no other evidence to show that Shri

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh Tukaram has deleted the name/short form of assessee as recipient of Rs.1 crores. In the absence of any reliable evidence to show that Shri Tukaram has deleted the name of assessee, merely on the basis of the statement recorded u/s 132(4) of the Act, (which was retracted within 11 days) cannot be relied upon to draw adverse inference against the assessee; and therefore, in the facts to circumstances of the case tha statement alone cannot be the sole basis to act against the assessee in this case.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh interrogation. Referring to the questions put to Shri Tukaram he pointed out that leading questions had been put to him and therefore having regard to the prolonged interrogation and surrounding circumstances, this employee had involuntarily given pre-determined answers to these leading questions to get out of the harassment of interrogation. In this context we note that Shri Tukaram had later on retracted his original statement given on 30/31.07.2016 (i.e. within eleven (11) days). Perusal of his retraction affidavit shows that, according to him, his original statement was obtained by the Investigating Officer under duress and coercion. All these facts considered cumulatively according to us, it is unsafe to draw adverse inference against the assessee solely on the basis of un-corroborated statement of Shri Tukaram and therefore AO erred in drawing adverse inference against the assessee only on the statement of Shri Tukaram .

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh with the statement given on 30/31/07.2016. And we also note that the name/short form of the assessee did not feature in the excel sheet when seized by the investigation wing and also we note that Shri Tukaram has stated to a question that short-form of SP referred to in the excel- sheet is of one Sandeep Patil, which was undisputedly not the name of assessee, which is Shreyas Vasant Parikh. Further it is noted that, the assessee had sought cross examination of Shri Tukaram as admittedly his statement was recorded behind the assessee’s back. In this regard, it is noted that although the assessee had sought adjournment before AO (to facilitate cross-examination) and turned up before the AO for availing the cross examination, Shri Tukaram, (Star witness of Revenue on whose statement the entire addition made), did not attend. It is thus noted that the assessee was never properly afforded the opportunity to cross examine Shri Tukaram. In this context it is noted that even when he (Tukaram) did attend (as mentioned in the assessment order by AO), it is noted that the AO never enquired from him on the veracity of his retraction affidavit. In such a factual scenario, we are unable to countenance the Ld. DR’s contention that the retraction-affidavit of Shri Tukaram was inadmissible on the ground that the AO was not able examine/cross him. We thus agree with the Ld. CIT(A) that the impugned addition could not have been made by the AO based solely on Shri Tukaram’s statement without affording cross examination to the assessee.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh 14. In this regard, we may gainfully refer to the decision of the Hon’ble Delhi High Court in the case of CIT vs Sant Lal (118 taxmann.com 432). In the decided case, certain dairy was recovered in the course of search conducted at the premises of ‘BM’. The said diary contained abbreviated/coded notings. The accountant of BM submitted in his statement that these codings were the name of parties with whom BM ran hundi business. He stated that, BM was a broker who arranged hundis for different parties. With reference to this information, the AO of the assessee initiated proceedings u/s 153C of the Act. On appeal, this Tribunal noted that, neither could one infer the name of the assessee from the diary nor any link could be established between the information and the assessee. On these facts, it was held that the AO was unjustified in making the addition solely based on the statement of the accountant of BM. On further appeal by the Revenue, the Hon’ble High Court upheld the order of the Tribunal by observing as under: “11. We have perused the impugned order and notice that the ITAT has given a finding of the fact that the case of the respondent is covered with the decision of the ITAT in the cases of Mahabir Prasad Gupta (supra) and Ashok Prasad (supra). The relevant portion of the impugned order read as under:

"4. In the circumstances and fact of the case, we are of the view that the case is fully covered with the decision of ITAT in the cases of Mahabir Prasad Gupta (supra) and Ashok Prasad Gupta (supra) and further observed that Revenue could lay its hands on the diary of Sh. Brij Mohan Gupta where names of persons were recorded in quoted words and revenue could not establish the name of the assessee from such quoted words. Though the Revenue has placed on record statement of Sh. Brij Mohan Gupta, Ram Avtar Singal and Rajiv Gupta but still Revenue has failed to establish link between the information noted in abbreviated

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh form and the assessee. The diary was neither found from the promises of the assessee nor in the hand writing of the assessee any third person may write the name of any person at his sweet will, in such circumstances assessee cannot be put to any liability on the action of the third person, the same has to be corroborated by the Revenue which has not been done in the present case. In the circumstances and facts of the case, we do not find any infirmity in the order of the Ld. CIT(A) who has rightly deleted the additions so made by the AO. Accordingly, all the grounds of the Revenue are dismissed."

"13. The above submissions fail to persuade this Court to interfere with the matter. Concurrent findings of fact have been rendered by the CIT (A) as well as by the ITAT. Nothing has been pleaded in the memorandum of appeal to persuade the Court to hold that those findings are perverse or contrary to the facts on record. Secondly, there is not a whisper in the order of the AO about any bag recovered from the premises of the Assessee during the search of the Assessee's premises on 22nd March 2006. There is no such averment even in the memorandum of appeal filed before this Court. The material referred to in the order of the AO is that which was recovered from the premises of Mr. Brij Mohan Gupta and nothing else. That material has been discussed threadbare in the order of the CIT (A). Detailed reasons have been given as to why that material was insufficient to link the Assessee with "MP Gupta? whose name finds mention in the diary and the documents seized from the premises of Mr. Brij Mohan Gupta. 14. Consequently, the Court is not persuaded to permit the Revenue, for the first time, before this Court to set up an entirely different case of there having been a bag seized from the premises of the Assessee which according to the Revenue contained incriminating material against the Assessee."

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh examined the assessment record and has observed that the AO did not make any further inquiry/investigation on the information passed on by the DCIT, Central Circle-19, New Delhi. No attempt or effort was made to gather or corroborate evidence in this relation.

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh Shreyas Vasant Parikh. So with these infirmities, among others, it was unsafe to draw adverse finding against the assessee. Thus we note that the AO in this case, even with these glaring infirmities has erred in relying on the un-corroborated statement of Shri Tukaram (ignoring his retraction) and that too without allowing/facilitating the assessee to cross-examine him, which action of AO was bad in law. And for this view of ours, we find support from the decision of the Hon’ble Apex Court in Kishanchand Chellaram V/s CIT (125 ITR 713); and also in case of M/s Andaman Timber Industries V/s CCE (62 taxmann.com 3) wherein it was held by the Hon’ble Supreme Court that, not allowing the assessee to cross-examine the witnesses on whose statements the adjudicating authority wishes to rely upon, is a serious flaw which renders the order impugned to be a nullity. Similar view has been expressed by the Hon'ble jurisdictional Bombay High Court in H.R. Mehta Vs ACIT (387 ITR 561). 16. Thus, on the overall conspectus of facts and circumstances as discussed in the foregoing, we therefore do not find any fault with the order of the Ld. CIT(A) deleting the addition of Rs.1 crore made u/s 68 of the Act by the AO. 17. Before parting, we would like to address the concern of the Ld. DR that by upholding the action of the Ld. CIT(A), it will open the gate for relief for persons/assessee’s against whom actions have been taken by the Department pursuant to the seizure of pen-drive and consequent re-creation of the excel-sheet. In this regard, the department’s anxiety is misplaced because our action of upholding the

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh impugned order of the Ld. CIT(A) was in the facts of the case as discussed (supra). However, the outcome may have been different if there was any corroborative material to show that the person named in the contents of Pen-drive/excel sheet had received the amounts (viz statement of trustees authorizing such payments to those persons, admission made by such persons/assessee’s itself, Shri Tukaram able to withstand the cross-examination in respect of the addition against those persons, undisclosed investments in the hands of those persons which have been traced by the Department vis a vis the amount in question, any other contemporary evidences to support the initial statement u/s 132 of the Act of Shri Tukaram & contents of the excel- sheet). Since there was neither any corroborative evidence nor admission from assessee, solely based on the retracted statement of Shri Tukaram, is not safe to draw adverse inference against assessee as made by AO. Therefore, we uphold the order of Ld. CIT(A). With the aforesaid observation, we dismiss the appeal of the revenue. 18. In the result, the appeal of the revenue as well as cross-objection of the assessee are dismissed. Order pronounced in the open court on this 10/10/2022. Sd/- Sd/- (AMARJIT SINGH) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 10/10/2022. Vijay Pal Singh, (Sr. PS)

ITA No.1580/Mum/2021 C.O. 30/Mum/2022 A.Ys. 2017-18 Shreyas Vasant Parikh आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT ववभागीय प्रवतवनवि, आयकर अपीलीय अविकरण, मुंबई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशधिुसधर/ BY ORDER, सत्यावपत प्रवत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai