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Income Tax Appellate Tribunal, JAIPUR BENCHES ’A’ JAIPUR
Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA. No. 345/JP/2016
PER BENCH: These are three appeals filed by the respective assessees against the separate orders of ld. CIT(A)-4, Jaipur dated 21.01.2016. Since the common issues are involved, all these appeals were heard together and are disposed off by this consolidated order.
ITA No. 345, 343 & 344/JP/2016 2 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
In ITA No. 345/JP/2016, the assessee has taken the sole ground of appeal as under: “That the learned CIT(Appeals) has erred in sustaining the addition of Rs. 20,00,000/- made by this learned AO as undisclosed investment of the assessee in the mines.”
Briefly the facts of the care are that a search action was conducted on 12.10.2011 in the case of Lila Ram Group, Kota to which the assessee belongs. During the course of search and seizure proceedings, at the assessee’s residence ‘Prem Deep’, 2-A-6, Talwandi, Kota, certain documents identifed as Exhibit- 1 of Annexure AS was found and page 1-3 of this exhibit relates to original Ikaranama dated 17.09.2010 for investment in purchase of mine for Rs. 40,00,000/-. The said agreement was executed by Shri Jagdish Panjwani with Vijay Makhija, Prakash Makhija and Kapil Marwah. On 12.10.2011, shri Prakash Makhija has admitted undisclosed income of Rs 40 lacs on account of investment in mines in his hands and in hands of his brother Shri Vijay Makhija. During post search investigation, Shri Vijay Makhija in his statement recorded u/s 131 has confirmed the admission made by his brother in latter’s statement recorded u/s 132(4) of the Act. However, while filing the return of income on 10.12.2011 which was later stated by the assessee and maintained as return filed in response to notice u/s 153A dated 15.01.2013, the assessee has not disclosed the amount of Rs. 20,00,000/-, as his share of undisclosed investment made in purchase of mine and thereafter during the course of assessment proceedings, the assessee was required to furnish his explanation in this regard.
ITA No. 345, 343 & 344/JP/2016 3 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
In response the assessee vide his reply dated 12.03.2014 referring to the agreement dated 17.09.2010 stated that Shri Jagdish Panjwani is the sole owner of the mines situated at Village Rajpura, District- Bundi and he has purchased the said mine from Devkaran Sharma and he has made the investment of Rs. 40,00,000/- in the said mines. It was submitted that surrender so made by the assessee is completely against the facts mentioned in the agreement and neither the assessee nor his brother Shri Vijay Makhija were the owner of the said mines and they did not make any investments in the said mines. It was further submitted that it was subsequently learned by the assessee that even Shri Jagdish Panjwani who has claimed in the agreement to the owner of the mines was never the owner and Shri Devkaran Sharma continued to be the owner and in such a situation, it was impossible to implement the said agreement and hence, it was never acted upon. It was further submitted that it is a common experience that during the course of search, the assessee would be under great mental stress, tension and fear and the statement given by him at the time of search cannot be accepted as a conclusive or clinching evidence. Therefore, if the assessing authority gives his assertion only to the statement recorded during the course of the search, then the same cannot be used as a conclusive evidence or final accord of the assessee. It is well settled that additions made only on the basis of disclosure statement normally should not be confirmed, in the absence of corroboration.
The submission of the assessee was considered but not found acceptable to the Assessing Officer and his findings are contained at para 8 of the assessment order which is reproduced as under:-
ITA No. 345, 343 & 344/JP/2016 4 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
“8. I have considered the reply of the assessee and not found it tenable. During the course of search proceedings in reply to question No. 12 of the sworn statement recorded u/s 132(4) of the IT Act, 1961 on 12.10.2011, the assessee himself admitted of making undisclosed investment of Rs. 40,00,000/- in purchase of mine with his brother Shri Vijay Makhija. Further, Shri Jagdish Panjwani who has made the Ikararnama in his on oath statement recorded u/s 131 of the I.T. Act, 1961 on 09.11.2011 also admitted that he was only the name lender and actually the investment was made by his relatives i.e. Shri Prakash Makhija and Shri Vijay Makhija. Now the submission of the assessee that shri Jagdish Panjwani was also not the owner of the mine but Shri Devkaran Sharma was the real owner of this mine is without any basis. It is pertinent to mention here that Shri Jagdish Panjwani made the admission in his sworn statement after having full knowledge of the transaction and there was no reason for him to make wrong statement against the assessee and his brother. In fact he is a relative of the assessee and was having real knowledge of the fact as the Ikrarnama was made by him only. In view of this fact, there is no reason to accept the submission of the assessee that he and his brother had not made any undisclosed investment in purchase of mine. It cannot be accepted that the assessee was not having the knowledge of this fact at the time of recording of his sworn statement during the course of search proceedings.”
During the appellate proceedings, the ld. CIT(A) referred to the statement of Shri Prakash Makhija recorded u/s 132(4), statement of
ITA No. 345, 343 & 344/JP/2016 5 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
Shri Vijay Makhija recorded during the post search investigation u/s 131 as well as the statement of Shri Jagdish Panjwani recorded u/s 131 on 09.11.2011. Referring to the Ikaranama dated 17.09.2010 the ld. CIT(A) held that the said document was found and seized from the possession of the assessee at the assessee’s premises, therefore, it cannot be termed as 3rd party document. Further, the ld. CIT(A) stated that the said Ikararnama was duly notarized, registered by the notary Mr. Nand Kishore Saini and it contains valid signature of Shri Prakash Makhija & his brother Shri Vijay Makhija and of executer Shri Jagdish Panjwani and therefore, the onus lies on the assessee to prove that contents recorded therein are not correct and it is a dumb document. The ld. CIT(A) held that the assessee during the search operation has not raised any objection with regard to the correctness of the contents mentioned in the seized Ikaranama dated 17.09.2010. The assessee has not controverted this fact even at the present appellate proceedings. Till date the assessee has also not specified the motive or intent behind this Ikaranama dated 17.09.2010 which is duly notarized and registered. It was held by the ld CIT(A) that in all, 13 questions have been asked and point wise those were answered by the assessee and from the statements so recorded, it is very much clear that Shri Prakash Makhija has made voluntary disclosure and his statement was recorded without any coercion or threat. Shri Prakash Makhija in his sworn statement recorded on oath has admitted to have contributed Rs. 20,00,000/- each by him and his brother Sh. Vijay Makhija for the said mine and this fact has also been endorsed by Sh. Jagdish Punjwani, the executer of the deed. Further referring to the Ikararnama, ld. CIT(A) held that the Ikararnama is not a dumb document as the contents are very clear and there is no ambiguity therein. The ld. CIT(A) further held
ITA No. 345, 343 & 344/JP/2016 6 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
that the assessee has maintained & sticked to his stated position of undisclosed investment in mine even during post search investigation, however, he refused to honour the same while filing his return of income in compliance to notice u/s 153A of the Act. It was further held by the ld. CIT(A) that the search operation were carried out on 12.10.2011 and after considerable period of time i.e. on 12.03.2014, the assessee filed retraction petition before AO where he has challenged authenticity of contents mentioned in Ikaranama dated 17.09.2010. I have perused the contents of the retraction letter where assessee Sh Prakash Makhija has raised only technical issues. Further, Sh Vijay Makhija in his reply dt. 18/3/2014, has simply enclosed a copy of the letter given in case of Sh Prakash Makhija. Further, assessee also failed to clarify as to why he took such a long time to file his retraction. As noted above, though at the close of the statement recorded it was duly verified that the same was made without any pressure but it was so alleged in the impugned retraction. Had there been any pressure or torture as alleged, the assessee would have complained the same to the Commissioner or to any other Authority. No such attempt was ever made. Law in respect of admissibility of a retraction is very well settled. There must be some convincing and effective evidence in the hands of the assessee through which he could demonstrate that the said statement was factually incorrect. An assessee is under strict obligation to demonstrate that the statement recorded earlier was incorrect, therefore, on the basis of those specific evidences later on retracted. Further there should also be some strong evidence to demonstrate that the earlier statement recorded was under coercion. In the present case, the retraction is general in nature and lacking any supportive evidence. Rather assessee took several months to retract the initial statement,
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which by itself created a serious doubt. Further, ld CIT(A) referred to the judgment in the case of K.V.Narasimhan vs. Income Tax Officer (1994) 209 ITR (Mad) wherein the Hon’ble High Court held as under:- “If it is true that confession statements had been obtained under coercion, the accused would not have simply kept quite without immediately or at least within a reasonable time retracting them.” That is, retraction can be made only within a reasonable time.”
The ld CIT(A) accordingly held that in view of the confessional statements and during the post search investigation by the ADIT, which was recorded on the date of search and subsequently, had evidentiary value, therefore, the existence of the undisclosed investment by the assessee as confessed, cannot be ruled out. The confessional statement being recorded u/s 132(4) of the Act and also being corroborated by the sworn statement recorded on oath of Sh Jagdish Panjwani, therefore, rightly relied upon by the AO and correctly made the basis for the impugned addition of undisclosed investment of Rs. 20 lakhs each in the hands of Sh Prakash Makhija and Sh Vijay Makhija. The retraction being general and vague, therefore, deserves to be ignored and was rejected.
During the course of hearing, the ld. AR submitted that a search was conducted at the residence of the assessee on 12.10.2011, during the course of which an agreement dated 17.09.2010 was found and seized. The agreement was executed by Jagdish Panjwani with the assessee, assessee's younger brother Vijay Kumar Makhija and one other person. In the agreement, Jagdish Panjwani has stated that he is the sole owner of mines situated at Village Rajpura, District Bundi,
ITA No. 345, 343 & 344/JP/2016 8 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
purchased by him from Devkaran Sharma and he has made an investment of about Rs 40,00,000 in the said mines. It was subsequently learnt that Jagdish Panjwani was never the owner and Devkaran Sharma continued to be the owner. The assessee in his preliminary statements has stated that he and Vijay Kumar Makhija had made an investment of Rs 40,00,000 in the said mines and surrendered a sum of Rs 20,00,000 each in his and Vijay Kumar Makhija's hands. In the post-search proceedings, the ADI (Investigation), Kota had recorded the Statements of the assessee and Vijay Kumar Makhija on the seized material in a very extensive manner but did not ask anything about the surrender made on account of investment in the mines. The Department never pursued the payment of the tax liability arising out of this surrender. The ld. AO during the course of the assessment proceedings, gave the assessee a copy of the statements of Jagdish Panjwani, which were recorded by the ADI (Investigation), Kota. Jagdish Panjwani has given adverse statements against the two brothers. Surprisingly, the assessee and his brother were neither confronted with his statements by the ADI (Investigation), Kota nor were they given an opportunity to cross-examine him. The assessee, vide reply dated 12.03.2014 made elaborate submissions before the ld. AO contending that the surrender made on the basis of the Agreement was blatantly wrong and was completely against the facts mentioned therein. Several rulings were cited in support of the contentions. However, the ld. AO brushed aside the submissions of the assessee and made an addition of Rs 20,00,000 as undisclosed investment. The submissions of the assessee have been rejected by the ld. CIT (Appeals) too, based on an improper appreciation of facts/ law. A perusal of the material referred to above will show that the addition of
ITA No. 345, 343 & 344/JP/2016 9 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
Rs 20,00,000 as undisclosed investment of the assessee in the mines is wrong. It is, therefore, prayed that the addition of 20,00,000 so made by the ld. AO and confirmed by the ld. CIT (Appeals) may kindly be deleted.
The ld DR is heard who has vehemently argued the matter and has relied on the findings of the Assessing officer as well as ld CIT(A) which we have already noted above.
We have heard the rival contentions and purused the material available on the record. The assessee in his statement recorded u/s 132(4) during the course of search has admitted that he and his brother, Vijay Kumar Makhija had made an investment of Rs 40,00,000 in the said mines and surrendered a sum of Rs 20,00,000 each in his and Vijay Kumar Makhija's hands. The statement of Vijay Kumar Makhija was also recorded during post-search investigation u/s 131 wherein he has confirmed the surrender so made by his brother Prakash Makhija. Further, during the course of search, an original Ikarnama dated 17.09.2010 has been found which has been executed by Shri Jagdish Panjwani with the assessee, his brother Shri Vijay Makhija, and Kapil Marwah wherein the latter three persons have joined hands as partners in running of the mine owned by Shri Jagdish Panjwani and share of their respective profits and losses have been stated therein. The existence and contents of the said agreement found at the premises of the assessee during the course of search remain undisputed. Shri Jagdish Panjwani in his statement recorded u/s 131 of the I.T. Act, 1961 on 09.11.2011 has also admitted that he was only the name lender and actually the investment was made by his
ITA No. 345, 343 & 344/JP/2016 10 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
relatives i.e. Shri Prakash Makhija and Shri Vijay Makhija. The said statement also remains unrebutted before us. Further, the retraction so made during the course of assessment proceedings after a considerable lapse of time is clearly an afterthought and there is nothing which support such retraction so made by the assessee. In light of above, we see no justifiable reasons to disturb the detailed and well-reasoned findings so given by the Assessing officer and the ld CIT(A). In the result, the ground of appeal is dismissed.
In the result, the appeal of the assessee is dismissed.
In ITA No. 343/JP/2016, the assessee has taken the sole ground of appeal as under: “That the learned assessing officer has erred in confirming addition of Rs. 12,25,000/- as undisclosed investment of the assessee in the house.”
Briefly stated the facts of the case are that during the course of search & seizure operation conducted u/s 132 of the Act, an original Ikrarnama dated 16.09.2008 found, inventorized and seized as per identification mark Ann. AS-1 from residence of Shri Vijay Makhija, S/o Sh Govindram Makhija. It is an agreement between Sh Ramesh Kr Jain and Sh Vijay Makhija dt 16.09.2008 for purchase of a house at 8/213, Swami Vivekananda Nagar Yojna, for which Shri Vijay Makhija had advanced Rs. 6 lacs in cash. Further, total purchase consideration mentioned in the said Ikrarnama was Rs. 20,75,000/-. The assessee in his sworn statement recorded u/s 132(4) has surrendered this amount, However, while filing the return of income in compliance to notice 153A
ITA No. 345, 343 & 344/JP/2016 11 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
of the Act, offered only Rs. 8.90 lakhs. The Assessing officer not convinced with the assessee’s explanation has added the balance amount of Rs. 12,25,000/- and his findings are as under:
“I have considered the reply of the assessee and not found it tenable. During the course of search proceedings, certain documents were seized from the residence of Shri Govindram Makhija at 2-A-6, Talwandi, Kota. Page No. 4 to 5 of Exhibit-1 of Annexure-AS is an agreement between Shri Ramesh Kumar Jain and Shri Prakash Makhija made an 16.09.2008 for purchase of house at 8/213, Swami Vivekanand Yojna, Kota. In this agreement the sale consideration of this property is clearly mentioned as Rs. 20,75,000/- and it is also mentioned that advance of Rs. 6,00,000/- given by the assessee. The assessee himself admitted of giving Rs. 6,00,000/- as advance to Shri Ramesh Kumar Jain. Therefore, the assessee has partly admitted this agreement. When the fact of advance is found to be correct then there is no reason to disbelief the remaining fact of this document. Moreover, Shri Ramesh Chand Jain in his statement on oath recorded u/s 131 on 09.11.2011 admitted that he managed the sale of this property from Shri Prahlad Mehra to Shri Vijay Makhija for a consideration of Rs. 20,75,000/- and received the commission of Rs. 8,000/- to Rs. 10,000/-. All these facts clearly prove that the actual sale consideration of this property was Rs. 20,75,000/- and not Rs. 8,90,000/- is taken as undisclosed investment of the assessee in purchase of house No. 8/213, Swami Vivekanand Yojna, Kota. As the assessee has himself declared Rs. 8,50,000/- [Rs. 8,90,000/- - Rs. 40,000/- (cost of
ITA No. 345, 343 & 344/JP/2016 12 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
registry) as cost of purchase of this house, the remaining amount of Rs. 12,25,000/- is treated as undisclosed income of the assessee for the year under consideration and added to the total income of the assessee.”
On appeal, the ld CIT(A) confirmed the findings of the Assessing officer and his findings are as under: “In the light of the above detailed deliberations, I hereby draw a conclusion that in view of the confessional statements (supra) and during the post search investigation by the ADIT, which was recorded on the date of search and subsequently, had evidentiary value, therefore, the existence of the undisclosed investment by the assessee as confessed, not to be ruled out. The confessional statement being recorded u/s 132(4) of the Act and also being corroborated by the sworn statement recorded on oath of Sh Ramesh Chand Jain, therefore, rightly relied upon by the AO and correctly made the basis for the impugned addition of undisclosed investment of Rs. 20,75,000/- as the cost of purchase of house as mentioned in agreement and added the remaining amount of Rs. 12,25,000/- on account of undisclosed investment. The retraction being general and vague therefore, deserves to be ignored.
In view of fact and circumstances of the case as discussed above, I do not find any infirmity in the assessment order passed by the AO, accordingly addition made of Rs. 12,25,000/- is hereby sustained. Assessee’s appeal in ground no. 1 fails.”
During the course of hearing, the ld. AR submitted that a search was conducted at the residence of the assessee on 12.10.2011, during
ITA No. 345, 343 & 344/JP/2016 13 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
the course of which, inter alia, an Agreement, dated 16.09.2008, was found and seized. The said Agreement was for purchase of a house for Rs. 20,75,000/- and an advance of Rs. 6,00,000/- was given by the assessee. This sum of Rs. 6,00,000/- was offered for taxation during the course of search proceedings. In the post search proceedings, the assessee stated that the Registration Deed was executed for Rs. 8,50,000/- and a sum of Rs. 40,000/- was incurred on registration. The assessee disclosed the amount of Rs. 8,90,000/-, being investment made in the purchase of the house. During the course of the assessment proceedings, the assessee was asked to show cause as to why the cost of the purchase of the house may not be taken at Rs. 20,75,000/-, as mentioned in the Agreement and the remaining amount of Rs. 12,25,000/- may not be treated as undisclosed investment. The assessee made elaborate submissions vide letter dated 18.03.2014, which are reproduced at pg Nos. 2 & 3 of the Assessment Order and it was contended that the amount of Rs. 12,25,000/- could not be treated as undisclosed investment. However, the learned assessing officer did not accept the submissions of the assessee and made an addition of Rs. 12,25,000/- as undisclosed investment. The ld. CIT(A) has confirmed the addition of Rs. 12,25,000/-. A perusal of the material referred to above will show that the addition of Rs. 12,25,000/- as undisclosed investment of the assessee is wrong. It is, therefore, prayed that the addition of Rs. 12,25,000/- so made by the ld. AO and confirmed by the ld. CIT (Appeals) may kindly be deleted.
We have heard the rival contentions and perused the material available on record. The assessee’s brother Prakash Makhija in his statement recorded u/s 132(4) during the course of search has
ITA No. 345, 343 & 344/JP/2016 14 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur
admitted that the assessee had executed an agreement dated 16.09.2008 with Shri Ramesh Kumar Jain for purchase of house situated at Swami Vivekanand Yojna, Kota and pursuant to the said agreement, an advance of Rs 6 lacs was paid which was admitted as undisclosed income. The statement of the assessee, Vijay Kumar Makhija was also recorded during post-search investigation u/s 131 wherein he has confirmed the purchase of the house and also confirmed the surrender of Rs 6 lacs so made by his brother Prakash Makhija on his behalf. Shri Ramesh Chand Jain in his statement recorded u/s 131 of the I.T. Act, 1961 on 09.11.2011 has also admitted that he managed the sale of the property to the assessee for a consideration of Rs 20.75 lacs. The existence and contents of the said agreement found at the premises of the assessee during the course of search therefore remain undisputed. Further, the retraction so made during the course of assessment proceedings after a considerable lapse of time is clearly an afterthought and there is nothing which support such retraction so made by the assessee. In light of above, we see no justifiable reasons to disturb the detailed and well-reasoned findings so given by the Assessing officer and the ld CIT(A). In the result, the ground of appeal is dismissed.
In the result, the appeal of the assessee is dismissed.
In ITA No. 344/JP/2016, the assessee has taken the sole ground of appeal as under: “That the learned CIT(Appeals) has erred in sustaining the addition of Rs. 20,00,000/- made by the learned AO as undisclosed investment of the assessee in the mines.”
ITA No. 345, 343 & 344/JP/2016 15 Prakash Makhija, Vijay Makhija vs. ACIT, Jaipur 19. Since facts and circumstances of the case are exactly identical to facts and circumstances of the case in ITA No. 345/JP/16, our findings and directions contained therein shall apply mutatis mutandis to this appeal. In the result, the appeal of the assessee is dismissed.
In the result, the appeals filed by both the assessees are dismissed.
Order pronounced in the open Court on 12/02/2019. Sd/- Sd/- ¼fot; iky 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:- 12/02/2019. *Ganesh Kr. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Prakash Makhija & Shri Vijay Makhija, Kota 2. izR;FkhZ@ The Respondent- ACIT, Circle-3, 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. 345, 343 & 344/JP/2016}
vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत