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Facts
The assessee preferred an appeal against the order of the CIT(A) which confirmed the addition of Rs. 11,35,00,000/- made by the AO. The addition was related to peak investment without evidence. The AO had initiated action based on documents seized during searches and surveys involving finance brokers and related parties, which allegedly detailed cash loan transactions.
Held
The Tribunal held that the material found during the search of finance brokers, which occurred prior to the relevant assessment year, had no bearing on the assessment. It also noted that the assessee retracted their statement given under survey, and there was no corroborative evidence to support the alleged cash loan transactions.
Key Issues
Whether the additions made by the AO and sustained by the CIT(A) are based on relevant and corroborated material, especially when the search/survey predates the assessment year and the assessee's statement was retracted?
Sections Cited
133A, 132, 143(3), 69A, 147, 153C, 271AAC
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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
This an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals) Kolkata-27, (hereinafter referred to as the “Ld. CIT(A)”] dated 06.04.2025 for the AY 2020-21.
The only issue raised in ground no.1 is against the confirmation of addition of ₹11,35,00,000/- by the ld. CIT (A) as made by the AO in respect of peak investment without there being no evidence of any investment made by the assessee so as to determine and compute the peak investment. The ground no.2 to 10 are in support of ground no.1.
In the appellate proceedings, the ld. CIT (A) after taking into consideration the contention of the assessee enhanced the income to ₹11,35,00,000/- by observing and holding as under: - “7.3.12. The AO has worked out for the AY 2020-21, an addition of Rs.7.47,98,606/-. The AO has not taken into account the entire incriminating material found in the survey for estimating the addition for the AY 2020-21 because of telescoping with previous years as tabulated above. 7.3.13. During the appellate proceedings, the assessee contested by raising appeals against the AO's order for the AY 2016-17, 2017-18 & 2020-21. The assessee raised legal grounds against the reopening u/s 147 of the IT Act with reference to AY 2016-17 & 2017-18. The assessee raised objection for the AO's reopening u/s 147 of the Act and contended that the assessments for the AY 2016-17 & 2017-18 should have been
It is submitted that some jottings were found in the impounded papers but for which there was no corroborative evidences. The Ld. AO stated the name of Shri Gajraj Choraria and Shri Pawan Mundra on the basis of statement recorded u/s 133A. The Ld. AO did not issue any summon to Shri Gajraj Choraria and Shri Pawan Mundra even though phone no of both of them were given to the Survey party as well as to the Ld. AO. The ld. AR argued that they were not examined to corroborate the statement recorded from the assessee. However apart from the statement and jottings in the impounded papers, no other corroborative material was found to show that the assessee made any cash loans to any person and that too through the said brokers Mundra and Choraria. While discussing the modus operandi of i. ACIT Vs. Satyapal Wassan (2007) 295 ITR (AT) 352 (Jabalpur)
ii. CBI Vs. VC Shukla 3 SCC 410 iii. Rakesh Goyal Vs. ACIT (2004) 87 TTJ (Del) 151 iv. Mohan Foods Ltd Vs. DCIT (2010) 123 ITD 590 (Del) v. CIT vs. SM Agarwal [2007]293ITR43(DELHI) vi. Jayanti Lal Patel [1998] 233 ITR 588 (Raj). vii. NK Malhan Vs. DCIT (2004) 91 TTJ (Del) 938. viii. CIT Vs. Chandra Chemouse P. Ltd. (2008) 298 ITR 98 (Raj.) x. Mongra Metals (P) Ltd. Vs. ACIT 67 TTJ 247 (All. Trib) xi. Pooja Bhatt Vs. ACIT (2000) 73 ITD 205 (Mum. Trib) xii. Atual Kumar Jain Vs. CIT (2000) 64 TTJ (Del. Trib) 786 xiii. SK gupta Vs. DCIT (1999) 63 TTJ (del. Trib) 532 xiv. CIT Vs. S. Khader Khan Son-SC 2012 (25) taxmann.com 413
The ld. DR on the other hand relied on the order of the first appellate authority by submitting that the additions were made by the ld. AO and enhanced by the ld. CIT (A) on the basis of material seized during the course of search on ‘Kaseras’, ‘Sanwaria’ the finance brokers and also on the basis of statement recorded during the course of said search. The ld. DR submitted that though the statement recorded of the assessee, which was retracted latter, the assessee admitted to have done these cash transactions in the form of loan transactions and therefore, the appeal of the assessee may kindly be dismissed by upholding the order of the ld. CIT (A).
After hearing the rival contentions and perusing the materials available on record, we find that undisputedly there was search on finance broker ‘Kaseras’ and ‘Sanwaria’ during which certain documents were seized which are stated to have contained the details of cash transactions/ loans by the assessee. The said search took place on 30.11.2018. Thereafter, a survey was conducted on the assessee and M/s Citizen Umbrella Mfg. ltd. during which the
We further find that the revenue has relied on the statement of assessee recorded u/s 133A of the Act by the IO on 19.02.2020 which was retracted on 24.02.20. Thus, the retracted statement cannot be the basis or evidence to make the addition. We also note that after retraction of the statement no further statement of the assessee was recorded by the IO or by the AO in the course of assessment proceedings. The CBDT in its instruction F.286/98/2013 dt. 18.12.2014 has also directed the revenue to avoid obtaining admission of undisclosed income without evidences.
We also note that the ld. AO has noted that the assessee has received and re-invested through Satish but nowhere the ld. AO has stated that from where he has picked up the said name. We note that from the papers impounded from M/s Citizen Umbrella Mfg. ltd. that there is no mention of assessee’s name that there was debit as well as credit entries in the name of Satish on the same day but there was no mentioning about any interest or investments and there was no justification for adding two zeros to the said figures. Therefore, considering the facts and circumstances of the case and the nature of "22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded."
The judgment of Hon'ble Delhi High Court 293 ITR 43 may also be cited wherein the Ld. Court dismissed the revenues appeal. The finding of the Ld. Tribunal in the said case vide para 10 was as under: -
"We have ourselves examined the contents of the document and are unable to draw any clear and positive conclusion on the basis of figures noted on it. The letters 'H.S.', 'T.2' and 'D-Shop' cannot be explained and no material has been collected to explain the same. Likewise, the figures too are totally unexplained and on the basis of nothings and jottings, it cannot be said that these are the transactions carried out by the assessed for advancing money or for taking money. Thus, in our opinion, this is a dumb document."
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 18.09.2025.