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Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 613/JP/2016
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; ikWy jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 613/JP/2016 fu/kZkj.k o"kZ@Assessment Years : 2012-13 cuke The Dy. Commissioner of Shri Subhash Gupta Vs. Income-tax Central Circle-2, ¾ SMS Colony, Maharani Jaipur Farm, Durgapura, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACIPG1776H vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Smt. Roli Agarwal (CIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.R.Sharma (CA) lquokbZ dh rkjh[k@ Date of Hearing : 12/03/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 04/04/2018 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the Revenue against the order of ld. CIT(A)-04, Jaipur dated 11.03.2016 for Assessment Year 2012-13 wherein the Revenue has taken the following grounds of appeal:
’’1. “Whether on the facts and the circumstances of the case, ld. CIT(A) was right in deleting the addition of Rs. 25,00,000/- u/s 69 of the Act on account of unexplained investment in property ignoring the fact that assessee himself stated in his statements recorded during the
2 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
course of search proceedings that it was out of income earned from undisclosed sources and subsequently also he failed to furnish the source of the same.”
“Whether on the facts and the circumstances of the case, ld. CIT(A) has erred in deleting the addition of Rs. 1,35,00,000/- u/s 69A of the Act on account of unexplained investment in jewellery ignoring the fact that assessee himself stated in his statements recorded during the course of search proceedings that it was out of income earned from undisclosed sources and subsequently also he failed to furnish the source of the same.”
Briefly stated, the facts of the case are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 was carried out on the members of Upasana Group on 01-12-2011 of which the assessee is one of the members. The assessee, in response to the notice issued u/s 153A, filed his return of income on 21.12.2012 disclosing an amount of Rs. 45,80,500/- as per his regular books of accounts. The assessee was asked to show cause as to why the amount of Rs. 1,60,00,000/- should not be added to the total income in view of specific admissions made in the statement recorded u/s 132(4) of the Act. After considering the submissions of the assessee, the Assessing officer brought the same to tax in the hands of the assessee company which was subsequently deleted by the ld CIT(A) and now, the Revenue is in appeal before us.
The ld CIT DR has vehemently argued the matter and relied upon the order of the Assessing Officer. She submitted that in view of the specific admission made during the course of search in his statement
3 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
recorded u/s 132(4), the AO was right in bringing the undisclosed investment to tax and which has been wrongly deleted by the ld CIT(A).
Per contra, the ld. AR supported the findings of the ld CIT(A). He submitted that from papers and documents at Page No. 1 to 158 placed in paper book and from cash flow statement placed at PB Page-1, it is clearly evident that receipt of cash as unaccounted income by M/s Megha Real Mart P. Ltd and M/s Kiran Upasana Builders was offered to tax before Settlement Commission and the Hon’ble Commission perused all the relevant papers and discussed them with u/r 9 report of CIT and comments thereon of assessee and thereafter Hon’ble Settlement Commission passed an order u/s 245 D (4) determining undisclosed income of both the above concerns which took into account all the unaccounted cash receipts of these concerns. Thus, all unaccounted receipts in cash were taxed as income and assessee from that unaccounted cash, received Rs. 1,06,46,000/- from Kiran Upasana Builders and Rs. 60,00,000/- from Megha Real Mart P. Ltd on different dates in FY 2010-11 & 2011-12.
It was submitted that the payment for investment in property of Rs. 15,00,000/- with date of payment appears in cash flow statement of assessee which clearly explains that the same was made out of withdrawls in cash from Kiran Upasana Builders and payment of advance of Rs. 10,00,000/- (Jaipuria) was also with date of payment shown in cash flow chart also clearly explains that the same was also made out of withdrawals in cash from Kiran Upasana Builders. The remaining receipts of cash from Megha Real Mart P. Ltd and Kiran Upasana Builders on different dates in FY 10-11 & 11-12 was invested
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in acquisition of Jewellery of Rs. 1,35,00,000/-. Thus all the investments are clearly explained with evidence of receipts of cash in seized papers which was duly taken into account by Hon’ble Settlement Commission and assessed to tax. Thus there is no reason to treat these investments as unexplained investment of assessee u/s 69 or 69A of IT Act, 1961.
It was further submitted that the Ld. AO is wrong to hold that the contention of assessee could have been accepted only if it was proved that the unaccounted investment in jewellery, House construction, advances and cash in hand subsequent to the cash receipts from Kiran Upasana Builders & Megha Real Mart. In this connection, it is submitted that cash received was in FY 2010-11 & 2011-12 (From 9-3-10 to 2-11- 11) while the above investments were found in search on 1-12-11 and assessed as undisclosed income in A.Y. 2O12-13 which clearly establishes that investments were made subsequent to cash receipts from Kiran Upasana Builders & Megha Real N4art P. Ltd. Thus contention raised by Ld. A.O. is contrary to facts on record and without properly analyzing the contention of assessee. The contention of Ld. A.O. that there is no evidence found in course of search regarding the precise dates on which investment in jewellery, House construction and advances was made. In this connection, it is submitted that these being unaccounted investments, there could be no precise dates of investments. The law i.e. Section 69 & 69A of I. T. Act, 1961 itself provides that where investments are not recorded in books of accounts or jewellery etc. not recorded in books of accounts or remains unexplained than such investments is deemed to be the income of assessee for such financial year in which these are found. Thus investments are found on the date of search and have been explained
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from the said cash receipts from two concerns (duly declared and taxed in I. T. Act, 1961) before that date, the same is to be treated as properly explained. The contentions of Ld. A.O. are not correct and not tenable in law.
Regarding AO’s contention that the assessee in the statements on oath recorded u/s 132 (4) never stated that money withdrawn in cash from said concerns were utilized towards acquiring jewellery, expenditure of house and advances and specific surrender having been made by assessee in course of search u/s 132 (4). In this connection, it was submitted that the statement made by assessee was under bonafide mistake wherein he also included share of income from two concerns also (which were independent assessee and assessable separately) and without analyzing the withdrawals made from those concern and their utilization. This is only mistake of fact while making statement in course of search u/s 132 (4) which assessee in law can always correct. In case of Rajesh Jain Vs. DCIT [2006] 100 TTJ 929 (Delhi), it was held that "If confession or admission is to be proved to be wrong or unreliable, then assessee can only refer to and prove that no such undisclosed income has been found in the seized material. What is the other method to disprove a statement? The assessee did whatever was possible and it is nobody's plea that there was non- cooperation on the part of the assessee or that entries in the seized documents/material were not explained. It is to be stated that no attempt was made by the Revenue authorities to find or quantify undisclosed income, if any, in the seized record".
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It was further submitted that confessional statement should be corroborated with some material to show that assessment made is just and fair. It is not arbitrary and capricious. As to what would be sufficient corroborative material would depend upon facts and circumstances of the case. The aforesaid conclusion is supported by the following observations of various Courts:
• Pullangode Rubber Produce Co. Ltd, v. State of Kerala 1972 CTR (SC) 253:
“An admission is an extremely important piece of evidence but it can’t be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect.”
• Nagubai Ammalv. B. Sharma Rao AIR 1956 SC 593:
"An admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue."
• Krishan Lal Shiv Chand Rai v. CIT[1973]88 ITR 293 P&H
• Jagdish Narain Ratan Kumar 61 Taxman.com 173 (Raj.)
"It is an established principle of law that a party is entitled to show and prove that the admission made by him probably is in fact not correct and true......"
The other case laws on the issue are:
7 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
ACIT v. Shri Dharam Pal Gulati ITA No. 671/Del/2012 dated 20.6.2013
India Seed House V. ACIT 61 TTJ 145 (Mum Trib.)
Arun Kumar Bhansal V. DCIT 10 SOT 46 (Bang)
The judgements cited by Ld. A.O. are also more or less enunciates the same principle of law that statement can be resiled if assessee can conclusively prove that it was incorrect. The judgement cited by Ld. A.O. are on different facts and are in the context where assessee simply retracts the statement without pointing out conclusively how his statement recorded on oath u/s 132 (4) was incorrect. Thus all the judgements relied on by Ld. A.O. are distinguishable on facts of the case.
It was further submitted that contention of assessee that the payment for investment in property Rs. 15,00,000/- with date of payment appears in cash flow statement of assessee which clearly explains that the same was made out of withdrawals in cash from Kiran Upasana Builders and payment of advance of Rs. 10,00,000/- (Jaipuria) was also with date of payment shown in cash flow chart also clearly explains that the same was also made out of withdrawals in cash from Kiran Upasana Builders. The remaining receipts of cash from Megha Real Mart P. Ltd and Kiran Upasana Builders on different dates in F.Y. 1011 & 11-12 was invested in acquisition of Jewellery of Rs. 1,35,00,000/-. Thus all the investments are clearly explained with evidence of receipts of cash in seized papers which was duly taken into account by Hon'ble Settlement Commission and assessed to tax.
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It was further submitted that the ld. AO in remand report sent to CIT (A) has not given any adverse comment on submissions and documents filed by the assessee and therefore, it is to be taken that contentions made by assessee supported with documents is correct and verifiable from assessment record. The A.O. in remand report simply submitted the facts of the case and action taken by him while framing assessment order. The judicial decisions cited by Ld. A.O. are of no avail as the contention of assessee was based on documents filed by the assessee which are already on record of assessing officer which were required to be verified with respect to contention of assessee made in written submissions filed in which Ld. A.O. found no discrepancy or fallacy.
It was finally submitted that on these facts of the case, it was submitted that the Ld. CIT (A) has rightly deleted the additions of Rs. 25,00,000/ and Rs. 1,35,00,000/- made by Ld. A.O. The appeal order of CIT (A) is just, proper and detailed supported with documents and papers on record and thus has no infirmity which deserves to be confirmed. The appeal filed by department has no merit which deserves to be dismissed.
In order to appreciate the rival contentions, we firstly refer to the relevant parts of the statement of Shri Subhash Gupta recorded during the course of search u/s 132(4) on 11.12.2011 which reads as under:-
iz'u 15 HkkSfrd lR;kiu ds nkSjku vkids ?kj ,oa ykdlZ ds foHkhUu dejksa ls izkIr Lo.kkZHkw"k.k ¼lksuk& pkanh½ dk Regd. Valuer }kjk dh xbZ ewY;kadu ds v/kkj ij dwy dher Rs. 2]26]05]447@& dh fudkyh xbZ gS ¼,oa ykdlZ esa ik;h x;h ToSyjh lfgr½ d`i;k blesa fd;s x;s fuos”k dh L=ksr crk;s ?.
9 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur mŸkj HkkSfrd lR;kiu ds nkSjku ik;h ToSyjh ?kj o ykdlZ ds lacU/k es esjk ;g dguk gS dqN rks esjh nknh ls izkIr esjs ekrkth ,oa esjh iRuh ,oa esjs nksuksa Hkkb;ksa dh iRuh;ksa dh gS tks “kknh;ksa ls izkIr dqN fxQ~V ,oa dqN gekjs }kjk [kjhnh gqbZ gSA
iz”u 16 vk;dj vf/k0 dh /kkjk 132 ¼1½ ds rgr ryk”kh ,oa tCrh dh dk;Zokgh ds nkSjku vkids ?kj ij ik;h x;h udn jkf”k dk HkkSfrd lR;kiu fd;k x;k ,oa Annexure CF-1 ds vuqlkj :Ik;s 807370@& dh udnh ik;h x;h d`Ik;k mDr udn jk”kh dks vkidh Books vuqlkj lR;kiu djk;h gSA
mŸkj mDr jk”kh gekjh Lo;a dh cpr dh gekjh dEiuh;ksa dh gS ftldk [kkrksa vuqlkj ckn esa lR;kiu djk nqaxk ghA vHkh esa bl udnh dk lR;kiu ugh djkokmxkA
iz”u 18 eSa vkidks vkids ?kj ij ryk”kh ds nkSjku ,oa ykdlZ esa ik;h x;h ToSyjh lksus pkanh ds vkHkq’k.k Items dk vf/kd`r ewY;kadu drkZ }kjk ewY;kadu djk;k x;k gS ftldk Annexures JF-1, 2, 3, & 4 dks esa vkidks fn[kk jgk gS D;k vki blls lger gS?
mŸkj th gka mDr tsojkr ds Annexures dks ns[k ,oa le> fy;k gS ,o blesa ewY;kadu drkZ }kjk vkt dh frfFk Hkko fnukad 01-12-2011 ds vuqlkj yxk;s gS tcfd blesa tsojkr iqjkuh frfFk ml le; dh cktkj Hkko ls [kjhns@izkIr fd;s gS eSa mDr eqY;kadu ls iq.kZr;k lger gSa rFkk Lohdkj djrk gS fd ?kj ij ,oa ykWdjks esa ik;s x;s lksus@pkanh ds vkHkw’k.k@Items iq.kZ :i ls blesa “kkfey gSA
iz”u 19 D;k vkidks vius c;kuksa esa dqN vkSj dguk gS? mŸkj th gka] eSa viuh o esjs ifjokj dh eu dh “kkfUr ds fy;s] Nkis dh dk;Zokgh ds nkSjku ik;h x;h fofHkUu deh;ksa o gekjh fofHkUu QeksZ ds }kjk vftZr dh x;h v?kksf’kr vk; dks tks fd : 5]00]00]000@& ¼ikap djksM+½ gS dh vk;dj gsrq fuEu izdkj ls lefiZr djrk gwWaA
1 eSa fdj.k mikluk fcUMlZ esa :i;s 210]00]000@&
¼nks djksM+ nl yk[k ek=½
2- eSa es?kk fj;y ekVZ izk0 fy0 esa :i;s 60]00]000@& ¼: 60]00]000@& lkB yk[k ek=½
3 eSa fdj.k eksMe esa LVkd o vU; ds isVs :Ik;s 70]00]000@&
10 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur ¼:i;s lŸkj yk[k ek=½
4 LUM Di, lefiZr vk; yxHkx : 1]60]00]000@&
¼:Ik;s ,d djksM+ lkB yk[k ek=½
dqy ;ksx : 5]00]00]000@&
tks eSus :i;s 1-60 djksM+ dks Lum Sum jk”kh dk vk;dj gsrq lefiZr dh gS og eSus Nkis dh dk;Zokgh ds nkSjku ik;h x;h deh;ksa ,oa fofHkUu dkxtknksa ds isVs ds lEcU/k esa dh gSA eSa mDr : 5 djksM+ dh lefiZr vk; ij vk;dj pqdkus dks izfrcan gSA eSus bl v/kksf’kr vk; ls vk; dks ToSyjh] edku fuek.kZ bR;kfn esa fuos”k fd;k gS ftldk foLr`r fooj.k eSa vkidks ckn esa izk=qr dj nqaxkA esjk vkils ;g fuosnu gS fd esjs }kjk esjs firkth Jh LorU= dqekj xqIrk] ,oa esjs HkkbZ;ksa Jh v:.k xqIrk ,oa dfiy xqIrk ls fopkj foe”kZ djds ekufld “kkfUr gsrq LosPNk ls vk;dj gsrq lefiZr dh gS mDr v?kksfir vk; geus gekjh ekudj gh lefiZr dh gS vU; yksxksa dk dksbZ ysuk nsuk ugha gS fd eSus mDr v/kksf’kr vk; dks vius [kqn] vius ifjokj ds lnL;ksa ds ,oa vius fofHkUu dEiuh ,oa QeksZ ds isVs lefiZr fd;k gS vr% gekjs mij fdlh izdkj dh “kkfLr dh dk;Zokgh u dh tk;s rFkk bu iq’Bksa ds ckjs esa tks gekjs ;gka ls rFkk gekjs izfrLBkuksa bR;kfn ls tCr fd;s ;k ik;s x;s gS fd ckjs esa lkjh iqNrkt ,oa tkudkjh gels gh yh tk;s rFkk buls vkSj fdlh ikVhZ o O;fDr dk ysunsu ughs ekuk tk;sA mijksDr lefiZr jkf”k;ka yxHkx esa gSA mijksDr c;ku eSus iw.kZ gks”k gokl esa fcuk fdlh ncko ds fn;s gSA mDr c;kuksa ls esjs firkth Jh Lora= dqekj xqIrk o HkkbZ Jh v:.k xqIrk iw.kZr;k lger gSA c;kuksa dks i<+dj gLrk{kj fd;s gSA
We now refer to assessment order passed u/s 143(3) r/w 153B (1)(b) to determine as to how the above disclosure of Rs 5 crores made by the assessee has been read and understood by the Assessing officer which is apparent from para 7 of the assessment order which we deem it appropriate to reproduce in verbatim as under:
“7. Further, during the course of the statement recorded u/s 132(4) of the Act on 01.12.2011 at the time of search, the assessee had
11 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
initially made a total disclosure of Rs. 5,00,00,000/-. The details of such disclosure are as under: i) Share in the receipts of the partnership 2,10,00,000 firm M/s Kiran Upasana Builders ii) Share in the respects of Private Limited 60,00,000 Company M/s Megha Real Mart Pvt. Ltd. iii) On account of stock in case of M/s Kiran 70,00,000 Modes iv) Jewellery house construction and others 1,60,00,000 etc. Total 5,00,00,000
Out of the above disclosure of Rs. 5,00,00,000/-, a sum of Rs. 2,70,00,000/- was covered by the income offered by M/s Kiran Upasana Builder and M/s Megha Real Mart Pvt. Ltd. who had offered the above income in their hands in their petition filed before the Hon’ble ITSC, New Delhi u/s 245D of the Act. A further sum of Rs. 70,00,000/- disclosed on account of excess stock in the case of M/s Kiran Modes had been fully offered for tax in the return of income filed u/s 153A of the Act by M/s Kiran Modes. Accordingly the sum of Rs. 1,60,00,000/- pertained to the undisclosed income surrendered by Shri Subhash Gupta in his statement recorded u/s 132(4) of the Act. Since, this income had not been offered for tax by the assessee in the Return of Income filed u/s 153A of the Act for the year under consideration, the matter was taken up during the course of assessment proceedings. The assessee vide notice dated 19.11.2013 had been specifically required to explain the absence of the surrendered amount in the ROI filed u/s
12 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
153A. In addition to the same, the assessee vide order sheet entry dated 18.03.2014 was further asked to show cause why the amount of Rs. 1,60,00,000/- should not be added to the total income in view of specific admissions and surrender of the same amount made in the statement u/s 132(4) of the Act. In reply to the above, the assessee furnished the written submission which was received in this office on 25.03.2014. The relevant extracts of the same are reproduced here under:- The assessee and his father withdrew in cash a sum of Rs. 10646000/- from the firm M/s Kiran Upasana Builders and Rs. 60,00,000/- from Megha Mart Pvt. Ltd. total Rs. 1,66,46,000/-. The said cash withdrawals were utilized by Shri Subhash Gupta as follows:- i) Investment in jewellery & silver items 13500000 ii) Advance to Sanjay Jaipura, Mahendra Jaipuria & 10,00,000 others iii) Investment in Construction Exp. 15,00,000 iv) Cash in hand 600000 Total 16600000
As per above facts duly supported by the documentary evidences it is verifiable and apparent that a sum of Rs. 1,60,00,000/- included in additional figure of Rs. 5 crore was form the cash withdrawals made from the above said concerns. As submitted already that the said concerns have included the unrecorded cash receipts in the settlement petition filed before the Hon’ble Settlement Commission and as such the said amount is not include again in the income of the assessee. The said investment and expenditure have been incurred out of the said
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cash withdrawals and as such no additional income required to be disclosed on that account. Documentary evidence of the cash withdrawals made are enclosed herewith.”
As we observe from the findings of the Assessing officer, the surrender of Rs 2.10 crores made by the assessee is on account of share in receipts of the partnership Firm M/s Kiran Upasana Builders, Rs 60 lacs is towards share in receipts of Private Limited company M/s Megha Real Mart Pvt Ltd, Rs 70 lacs is on account of stock in case of M/s Kiran Modes and Rs 1.60 crores is on account of Jewellery, House construction, and others. The Assessing officer accepted the fact that Rs 2.70 crores has been offered to tax by M/s Kiran Upasana Builders and M/s Megha Real Mart Pvt Ltd in their respective petitions before the Settlement Commission and the same was thus not brought to tax in the hands of the assessee. Similarly, the AO accepted the fact that Rs 70 lacs has been offered to tax by M/s Kiran Modes and the same was thus not brought to tax in the hands of the assessee. The remaining amount of Rs 1.60 crores was therefore held to pertain to the assessee which was not offered to tax in the return of income filed under section 153A of the Act and thus questioned by the Assessing officer and which is a subject matter of appeal before us.
During the course of assessment proceedings, the assessee submitted that he, along with his father have withdrawn in cash, a sum of Rs. 1,06,46,000/- from their partnership firm M/s Kiran Upasana Builders and Rs. 60,00,000 from M/s Megha Real Mart Pvt. Ltd. totaling
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to Rs. 1,66,46,000/- and the said cash withdrawal was utilized by assessee as follows:- i) Investment in jewellery & silver items 1,35,00,000 ii) Advance to Sanjay Jaipura, Mahendra Jaipuria & others 10,00,000 iii) Investment in Construction Exp. 15,00,000 iv) Cash in hand 600,000 Total 1,66,00,000
It was submitted that the above mentioned two concerns namely, M/s Kiran Upasana Builders and M/s Megha Real Mart Pvt. Ltd have already included the unrecorded cash receipt in their Settlement petitions filed before the Settlement Commission. It was submitted that the abovesaid investment and expenditure have been made/incurred out of the cash withdrawals from these two concerns out of unrecorded cash receipts which has already been offered to tax in their hands and as such, no additional income was required to be disclosed on this account.
The submission so made by the assessee was however not found acceptable to the Assessing Officer for the reason that in the statement recorded u/s 132(4), the assessee never stated that the money withdrawn in cash from two concerns were utilized towards acquiring jewellery, expenditure on House Construction, advances to certain persons etc. It was held by the AO that in absence of such facts in the statement recorded u/s 132(4) wherein the specific surrender of Rs. 1.6 crore was made out, the same has to be given prime importance while dealing with the specific retraction made during the course of assessment proceedings. It was further held by the AO that the contention of the assessee could have been accepted only if it was
15 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
proved that the unaccounted investments in Jewellery, House Construction, advances and cash in hand was made subsequent to the cash receipts from M/s Kiran Upasana Builders and M/s Megha Real Mart Pvt. Ltd. At the same time, it is relevant to note that the AO has stated that the details regarding dates on which cash withdrawals were made by the assessee and his father from these concerns are part of unaccounted transactions. The AO finally held that the assessee has failed to substantively prove that the unaccounted investments in jewellery, house construction, advances and cash in hand were made subsequently to the cash withdrawals and the same were sourced wholly and exclusively from the cash withdrawals stated to have been made on various dates. Accordingly, it was held by the AO that the assessee was found to have made investments of Rs. 15 lacs in House Property, an amount of Rs. 10 lacs was advanced which were not accounted for nor any satisfactory explanation was offered, hence an amount of Rs. 25 lacs was brought to tax as unexplained investments u/s 69 of the Act. Further, an amount of Rs. 1,35,000,00/- was brought to tax as the assessee was found to be owner of unexplained money and jewellery u/s 69A of the Act.
Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) and submitted that unaccounted cash was offered to tax in the hands of M/s Megha Real Mart (P) ltd and M/s Kiran Upasana Builders in their respective petitions before the settlement commission which was accepted and order of the Settlement Commission was placed on record. It was further submitted that out of such unaccounted cash receipts, the assessee withdrew Rs 1,06,46,000 from
16 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
M/s Kiran Upasana Builders and Rs 60,00,000 from M/s Megha Real Mart (P) ltd which was subsequently utilized for investment in property, advances and jewellery. It was further submitted that the statement made u/s 132(4) was under bonafide mistake wherein the assessee also included share of income from these two concerns which were separately assessable and without analyzing the withdrawls made from these two concerns and utlisation thereof. The ld CIT(A) after taking into consideration the assessee’s submission as well as remand report of the AO has deleted the said addition and the relevant findings are contained at para 3.3 of his order which are reproduced as under:
“3.3 I have duly considered assessee’s submission and carefully gone through assessment order passed by the AO. I have also duly considered report from the AO as well as rejoinder filed by the assessee. On careful perusal of written submission, it is seen that the payment for investment in property Rs. 15,00,000/- with date of payment appears in cash flow statement of assessee which clearly explains that the same was made out of withdrawals in cash from Kiran Upasana Builders and payment of advance of Rs. 10,00,000/- (Jaipuria) was also with date of payment shown in cash flow chart also clearly explains that the same was also made out of withdrawals in cash from M/s Kiran Upasana Builders.
According the amounts Rs. 15,00,000/- and Rs. 10,00,000/- cannot be added to the total income u/s 69 of the Act as these investments were made out of withdrawals of Rs. 1,06,00,000/- from M/s Kiran Upasana Builders and Rs. 60,00,000/- from M/s Megha Real Mart P Ltd. In view of facts and circumstances as discussed above and
17 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
in particularly respectfully following Hon’ble Apex Court’s decision in Pullangode Rubber Produce Co. Ltd. v. State of Kerala assessee’s appeal in ground NO. 1 stands allowed. Assessee gets a relief of Rs. 25,00,000/-.
I have also carefully gone through the Hon'ble lncome-tax Settlement Commission's orders (31/12/2014) in case of (i) M/s Megha Realmart Pvt Ltd (ii) M/s Kiran Upasana Builders AY 2007-08 to 2013-14 wherein Hon’ble Settlement Commission has duly taken into cognizance of cash book prepared on the basis of seized documents. Further, cash receipts in form of on-money received against the flats booked have been duly noted in the seized documents, accordingly, receipts of cash (on money) is subjected to tax as per Hon’ble lTSC Delhi Bench. Meaning thereby, assessee was having sufficient cash of Rs. l,35,00,000/- available in his hands as on 02/11/2011.
As on 02/11/2011 assessee was having sufficient fund for purchase of jewellery worth Rs. 1,35,00,000/- therefore, no addition is required to be made u/s 69A of the Act. In view of facts and circumstances of the case, addition of Rs. 1,35,00,000/- is deleted. Assessee’s appeal in Gr No. 2 stands allowed.”
As we have noted above, the reasons why the AO has not accepted the explanation of the assessee is firstly on account of the fact that in the statement recorded u/s 132(4), the assessee never stated that the money withdrawn in cash from two concerns were utilized towards acquiring jewellery, expenditure on House Construction, advances to certain persons etc. At the same time, we find that the AO has shown his inclination to accept the assessee’s explanation provided
18 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
it is proved that the unaccounted investments in Jewellery, House Construction, advances and cash in hand was made subsequent to the cash receipts from M/s Kiran Upasana Builders and M/s Megha Real Mart Pvt. Ltd. Further, we find that the AO has accepted the fact that there are cash withdrawals from these two concerns and the fact that the details regarding dates on which cash withdrawals were made by the assessee and his father from these concerns form part of unaccounted transactions found during the course of search. The nature of cash withdrawls have been stated to be assessee’s share in unrecorded cash receipts which has already been offered to tax in the hands of the two concerns and thus not in dispute before us. Apparently, at the time of passing of the assessment order, cash book and cash flow statement prepared based on seized documents was not available and during the course of appellate proceedings, the ld CIT(A) had an occasion to examine the same. We also note that the AO in his remand report has not made any specific comment or objections regarding the cash flow statement and the explanation so offered by the assessee before the ld CIT(A). The ld CIT(A) has thereafter returned a finding that as per cash book prepared on the basis of seized documents, cash receipts in form of on-money received against the flats booked have been duly noted in the seized documents and subjected to tax as per the order of the Settlement Commission dated 31.12.2014 in hands of M/s Megha Realmart Pvt ltd and M/s Kiran Upasana Builders. The ld CIT(A) thereafter, referring to cash flow statement reflecting transactions pertaining to the assessee, prepared on the basis of the cash books prepared for M/s Megha Real Mart Pvt ltd and M/s Kiran Upasana Builders, held that the assessee was having
19 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur
sufficient cash available in his hands as on 02/11/2011 for purchase of jewellery worth Rs. 1,35,00,000/-. Similar findings have been given regarding investment in property worth Rs 15,00,000 and advance to Jaipuria worth Rs 10,00,000. These findings of the ld CIT(A) which remain uncontroverted before us thus take care of one of the objections so raised by the AO in not accepting the explanation so offered by the assessee that withdrawals from these two concerns were not used for making these subject investments. Now coming back to first objection so raised by the AO that the assessee never stated in the statement recorded u/s 132(4) that the money withdrawn in cash from two concerns were utilized towards acquiring jewellery, expenditure on House Construction, advances to certain persons etc., we find that in the statement recorded u/s 132(4), in response to question no. 19, the assessee has stated that out of the undisclosed income (which is now brought to tax in the hands of the two concerns), the assessee has invested in Jewellery, House construction, etc and we donot see any ambiguity therein. The said explanation of the assessee thus takes care of the first objection of the AO. In light of the above discussions, we are of the view that it is not a case of retraction simplicitier by the assessee of the admission made in statement recorded u/s 132(4) during the course of search, rather it is a case where the AO has shown his inclination to accept the explanation of the assessee and the assessee, in turn, has provided appropriate explanation supported through verifiable entries in the cash books and cash flow statement prepared based on the seized documents that the investment have been made out of the cash withdrawals from the unaccounted receipts which have already suffered taxation in the hands of the two concerns and the
20 ITA No. 613 /JP/2016 DCIT, Jaipur vs. Shri Subhash Gupta, Jaipur same therefore should not suffer taxation. We accordingly confirm the findings of the ld CIT(A) and the grounds of the Revenue are hereby dismissed.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 04/04/2018.
Sd/- Sd/- ¼fot; ikWy jko½ ¼foØe flag ;kno½ (Vijay Pal Rao) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04/04/2018 *Ganesh Kr. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- DCIT, Central Circle-2, Jaipur 2. izR;FkhZ@ The Respondent- Shri Subhash Gupta, Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File { ITA No. 613/JP/2016} vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत