MR. CHANDRAKANT K. KARKARE,MUMBAI vs. THE DCIT, CC 1(2), MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

1 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in making the addition to the salary income to the tune of Rs.21,22,060/- which is not reflected in the Form 16 issued by the company nor received by the appellant in his bank statement.

2. The appellant craves, leave to add, alters, amends or deletes any grounds of appeal at the time of hearing.”

4. The brief facts of the case are that the assessee was appointed as „Vice President Bank and Finance‟ with M/s. Geetanjali Gems Limited, w.e.f. 1st August, 2011. According to the appointment letter dated 1st Aug, 2011, a monthly salary of Rs.2,00,000/- and Annual Salary of Rs.24,00,000/- was fixed. The salary of 2015-16 was of Rs.31,86,040/- due to the yearly increments. On 1st June, 2014, a company had issued a promotional letter and had offered him the post of Chief Financial Officer (CFO) of the company, Gitanjali Gems Limited on salary of Rs.4,50,000/- per month. A search & seizure action u/s 132(1) of the Act was conducted on assessee‟s place of residence along with search action on Geetanjali Group of cases on 20.02.2018. During the course of search action conducted u/s 132(1) of the Act, the assessee made the statement on oath that he was drawing a monthly salary of Rs.4,50,000/-. Again during the course of survey conducted u/s 133A on Gitanjali Group for which he was an employee, the assessee has admitted that his salary was Rs.50,00,000/- per annum. Notice u/s 153A was issued and in response to the notice, the assessee filed the return of income on ITA Nos. 379 & 378/M/2021 A.Ys.2017-18 & 2018-19 20.12.2019 declaring total income to the tune of Rs.28,66,940/-. The assessment was completed u/s 153A, raising the addition an amount of Rs.21,58,060/-. Initially the assessment was completed assessing the income to the tune of Rs.50,25,000/-. The assessee was not satisfied, therefore, filed the appeal before the CIT(A) who dismissed the appeal of the assessee. Feeling Aggrieved, the assessee has filed the present appeal before us.

ISSUE NO.1 5. Under these issues the assessee has challenged the addition of the salary income to the tune of Rs. 21,22,060/-. The Ld. Representative of the assessee has argued that the statement of assessee was recorded u/s 131 which was retracted subsequently. The document i,e promotion letter was found with the employer M/s. Gitanjali Gems Ltd. which was never acted upon but the AO has wrongly raised the addition, therefore, the finding of the AO as well as CIT(A) is not justifiable, hence, is liable to be set aside. However, on the other hand, the Ld. Representative of the revenue has strongly relied upon the order passed by the CIT(A) in question. On appraisal of the order of the AO, we noticed that the AO raised the addition on the basis of the statement recorded on 15.01.2017. during the survey conducted u/s 133A on Gitanjali Group. The statement was recorded u/s 131 of the Act. However, the statement was retracted while filing the return u/s 153A of the Act. The promotion letter dated 01.06.2014 was found in which the assessee was promoted the Chief Financial Officer and his salary was revised @ 4.50% which works out of 54 lakh. In brief, the statement of the assessee as well as the letter dated 01.06.2014 found during search, was the basis of assessing the income to the tune of Rs.50,25,000/-. The assessee has retracted from his & 378/M/2021 A.Ys.2017-18 & 2018-19 statement and the assessee has also contended that he was never promoted to the post of Chief Financial Officer in the pay of Rs.4,50,000/- per month. No doubt, the statement was made and the letter was found during search but the assessee denied this fact and produced the evidence in support of his claim which was not taken into consideration. The assessee filed the Form-16 for the A.Y.2017-18 lies at page no. 4 to 7 of the paper book which speak about this facts that the assessee was getting his salary income to the tune of Rs.33,15,390/- per annum. The assessee was paying the quarterly tax as mentioned in Form-16. The bank statement of the assessee for the A.Y. 1.04.2016 to 31.03.2017 was also produced which lies at page no. 8 to 18 of the paper book. The said bank statement speaks about the credit of salary to the tune of Rs.2,15,220/- and so on till at the end of the year. All these documents with the AO as well as before the CIT(A). The statement of the assessee nowhere supported by any incriminating evidence on record even the promotion letter for the promotion of Chief Financial Officer w.e.f. 30.05.2014 lies at page no. 30 of the paper book never acted upon. Anyhow, addition merely on the basis of the statement as well as on the basis of the letter recovered during survey which was never acted upon nowhere seems justifiable to raise the addition, therefore, we set aside the finding of the CIT(A) on this issue and delete the addition.

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