SURYA SINGHAL,KOTA vs. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, JAIPUR, JAIPUR

vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal filed by the assessee against the order of Ld. Commissioner of Income Tax, Jaipur (Appeals), Jaipur-4, [ for short ld. CIT(A)] in the order dated 27.05.2025 passed u/s 250 of Income Tax Act for assessment year 2019-20 which in turn arises from the assessment order dated 07.04.2021 passed u/s 143(3) of the Act, by the ACIT, Central Cirlce-2, Jaipur.

“1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in confirming the addition of Rs.11,00,000/- made by the Ld. AO u/s 69 of the Act on account of alleged unaccounted investment in agricultural land by ignoring the fact that the investment made by the assessee and other co-owners of the land was duly recorded in the books of accounts of respective persons, which was produced before Ld. A.O. during assessment proceedings. Further Ld. CIT(A) also erred in not appreciating the fact that the appellant share in agricultural land purchased was 11.89% only and therefore his share in purchase only Rs.1,30,770/- (11.89 percent of Rs.11,00,000/-). and also erred taxing Rs. 11,00,000 by applying the provisions of section 115BBE of the Act.

2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in confirming the addition of Rs.11,24,424/- made by the Ld. AO u/s 69 of the Act on account of alleged unaccounted construction on Plot No. B157, Shri Gopal Vihar by ignoring the fact that the investment was duly recorded in the books of accounts, which was produced before Ld. A.O. during assessment proceedings and also erred taxing Rs. 11,24,424 by applying the provisions of section 115BBE of the Act.

on or before the hearing of appeal.

4. In grounds No. 1 of the appeal the assessee has challenged to the addition of Rs. 11,00,000/-made by the Ld. AO u/s 69 of the Act on account of alleged unaccounted investment in agricultural land and taxing the same by applying the provisions of section 115BBE of the Act.

4.1 The finding of Ld. A.O., in the light of which the addition was made in at Para-8 at Page-3 of the assessment order, which is as under: - “8. The submission of the assessee is considered but not found tenable because there is no denial to the fact that Rs. 11,00,000/- was paid in cash during the purchase of Surya Singhal, Kota. above lands. Shri Surya Singhal accepted the payment of cash of Rs. 11,00,000/- for purchase of above lands and surrendered the amount of Rs. 11,00,000/- as investment from his undisclosed income for the F.Y. 2018-19. Also his submission that he was feeling unconformable during the search does not hold merit because he was given proper rest during recording of the statement whenever he desired. He had given his statement in his full consciousness. Further assessee is an individual and has been filing ITR-1 only, the so-called books of accounts i.e. cash book, Balance Sheet etc. has been prepared by assessee just to cover his undisclosed investment. The said copy of balance sheet had also not been filed while filing ITR online. It is just an afterthought to substantiate his undisclosed investment unearthed during the search proceedings. Further provisions of section 69 of the Act are also very explicit which reads as under: “Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee offered no explanation about the nature and source of the investments or the explanation offered by his is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.”

4.2 The CIT (A) confirmed the addition in the light of finding given at para 4.2 at page 19-20 of his order, which is as under: - “The fact is that during the course of search proceedings on Annexure A, Exhibit 03 containing pages 1 to 16 was seized. On page no. 16 it clearly mentions of payment made for purchase of land and details of cash payment for the same. The land in question is at Khasra Nos. 495 and 169 at Village Aktasa, Tehsil Taleda, District Bundi, Rajasthan. The narration of the entry in the papers and the subsequent statement of Mr. Surya Singhal on these documents makes it clear without any doubt that the unexplained investment of Rs. 11,00,000/- was made by Sh. Surya Singhal only. The single narration in the books of accounts and the reply to the query on the same regarding this entry in the papers makes it abundantly clear that this undisclosed investment was made by Mr. Surya Singhal only. In reply to Question No. 17 during the course of search, the appellant has categorically admitted that the amount of Rs. 11,00,000/- was paid by him in cash to Ratan Bai, Ganga Surya Singhal, Kota. Bai and Manni Bai and the same was not recorded in his books of accounts. He has stated therein that the deal to buy this piece of land was done on June, 01, 2018 and then offered this undisclosed investment to tax in his statement. It is noteworthy to highlight here that in the narration in the papers this is a single entry of Rs. 11,00,000/- and not divided in three parts, though cheque amount is segregated in three parts. This coupled with the fact that the appellant admitted this entry in his hands and offered it for taxation as undisclosed investment.

From the above factual matrix and discussion thereon, it is abundantly clear that it is an undisclosed investment in the agriculture land purchased under discussion by the appellant to the tune of undisclosed investment of Rs. 11,00,000/-. Though the registration amount has been paid by him, his wife Mrs. Sadhna Singhal and his son Mrs. Charchit Singhal but the cash amount of Rs. 11,00,000/- as written in the documents and as admitted during the statements recorded during the search was paid by Mr. Surya Singhal only. It is clearly a case of afterthought to attribute this unexplained cash paid amount of Rs. 11,00,000/- in three hands instead of only in the hands of the appellant as narrated in the seized documents and as admitted by him in his statements recorded during the search and therein offered for taxation. So, this ground of appeal on this sum of Rs. 11,00,000/- paid as unexplained investment towards purchase of agricultural land and added back by the ld. Assessing Officer u/s 69C has no merits and deserves to be rejected. Therefore, this ground of appeal is rejected.” 4.3 The Ld. AR of the assessee filed detailed written submissions and Paper Book containing Page 1-140 and during the course of hearing also filed the copy of some relied upon case law. The Ld. A.R. vehemently argued the case. The written submission filed by ld AR. is as under : - “(a) Brief Background of the addition and contention raised by the assessee. a.1. During the course of search at assessee's residence, some loose papers were found which were inventoried as Annexure “A” exhibit 03 having total pages 1 to 16. On the Page No. 16 (PB page 18) which have details of cash payment of Rs 11,00,000/- as advance was mentioned and during the course of search such payment was admitted to be made by the assessee out of his undisclosed income (copy of relevant statement is at PB page 13 and 15-16 ). a.2. During the course of assessment proceedings, the assessee did not deny about the payment of Rs 11,00,000/- for the purchase of the land. However, the assessee submitted Surya Singhal, Kota. that his share in such land was 11.89% and accordingly the cash payment attributable to the share of the assessee comes Rs. 1,30,770/- and such cash payment was made out of the cash balance available with him and duly recorded in his cash book. To substantiate to this the assessee also submitted his books of accounts before Ld. A.O. including cash book and cash flow statement. During the course of assessment proceeding, the assessee has submitted cash flow statement (Copy at PB Page No. 63) , cash book (Copy at PB Page No. 64-75), journal book (Copy at PB Page No. 76-81), all ledger A/c (Copy at PB Page No. 82-120) balance sheet of assessee (Copy at PB Page No. 34-35) and other joint owner of the properties wherein assessee have duly explained the source of cash payment of Rs 11,00,000/- which was written in the document found. The bifurcation of cash of Rs 11,00,000/- paid by joint owner of property is mentioned as under: - S. No. Name of Owner Amount of Cash paid 1 Charchit Singhal (Son of assessee) Copy of Rs 4,84,615/- ITR, Capital A/c& Balance Sheet at Pg 36-39 2 Surya Singhal (Assessee) Copy of ITR, Rs 1,30,770/- Capital A/c& Balance Sheet at Pg 31-35 3 Sadhna Singhal (Wife of assessee) Copy of Rs 4,84,615/- ITR, Capital A/c& Balance Sheet at Pg 40-43 Total Rs 11,00,000/- a.3. However, no heed was given by Ld. A.O. to the submission of the assessee and the documents filed in support of the same. The Ld. A.O. summerly rejected the same and made the addition of Rs. 11,00,000/- for the following brief reasons: - i) The payment of Rs. 11,00,000/- was surrendered by the assessee as his income. ii) The books of accounts etc. has been prepared just to cover his undisclosed investment and the balance sheet has not been filed while filing ITR. The ld CIT(A) confirmed the findings of ld AO. b. The addition cannot be made solely on the basis of statement recorded during search. b.1. In Assessment order an addition of Rs. 11,00,000/- has been made to the appellant's income on the basis of a statement recorded during search proceedings under section 132 of the Act. During the search, a slip was found indicating a cash payment of Rs. 11,00,000/- towards the purchase of Surya Singhal, Kota. land, which was initially perceived as unaccounted. In the statement recorded under section 132(4) of the Act during the search, the appellant, under the pressure and circumstances of the search, surrendered Rs. 11,00,000/- as undisclosed income, stating that the payment was made out of undisclosed sources. Subsequently, upon verification of the books of account, the appellant realized that sufficient cash balance was available in the regular books of account to cover the said payment. The payment was, therefore, not from undisclosed income but from accounted sources. Accordingly, the appellant did not include the amount of Rs. 11,00,000/- as income in the return of income filed for the relevant assessment year, effectively retracting the earlier surrender made under a mistaken belief. However, the learned AO disregarded the explanation and made an addition of Rs. 11,00,000/- solely on the basis of the search statement, without any corroborative incriminating material or evidence to support that the payment was indeed from undisclosed sources. The statement recorded under section 132(4) during search proceedings, while admissible as evidence, is not conclusive or binding on the assessee. It can be retracted if it was made under a mistaken belief of facts or law, or under the stressful circumstances of the search, provided the retraction is supported by cogent evidence. In the present case, the surrender was made hastily during the search without verifying the books of account. Upon subsequent verification, it was found that sufficient cash balance existed in the books to explain the payment, rendering the initial surrender erroneous. The appellant retracted the statement by not including the amount in the return of income and has substantiated the retraction with the books of account, which demonstrate adequate cash availability. No incriminating material was found during the search to contradict this explanation. Admittedly, during the course of search the assessee admitted the investment to be made out of his income but such admission was not wilful and not correct. As submitted to Ld. A.O. the during the course of search, the assessee was feeling uncomfortable, therefore he could not understand the question properly. He was in very tense and in fear atmosphere of search. Further, it is a fact that the statement during search proceeding are given extempore and under the tense and fear atmosphere and also not having in possession the sufficient material to state facts correctly, so the assessee could not spell out the correct facts to the search team. b.2. No material was found to show that the assessee had any source of undisclosed income The department has carried out intensive search operations and all the corners of his premises were searched and no material was found to show that the assessee had any source of undisclosed income. No any unaccounted receipts were found. The assessee is salaried person and he could not earn any undisclosed income. Except to search statement, there is no other Surya Singhal, Kota. material with the department, which may show that the assessee has earned the undisclosed income. It is well settled principal of law that no addition can be made merely on the basis of search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. b.3. It is submitted that the action of the I.T. authorities in obtaining surrender of income is against the circulars of the CBDT which are binding upon them. Hence the surrender obtained from the assessee was illegal and addition made to tax such surrendered income is unlawful and deserves to be deleted. The Board of direct taxes issued instruction to the All-Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. vide letter F. No. 286/2/2003-IT (Inv) dated 10.03.2003 in regard of confiscatory statement in the course of search and seizer as under: “Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders”. The Board has again issued a Circular dated 18th December, 2014 and advised the taxing authorities to avoid obtaining admission of undisclosed income under coercion/undue influence. Except the statement under section 132(4) there is no material with the department to show the source of undisclosed income in the case of the assessee. The assessee surrendered the income in the statement recorded under section 132(4) as he was in tense and fear atmosphere.

Circulars are bindings to revenue authorities In the case of CWT vs. SanwarmalShivkumar 171 ITR 337 the Jurisdictional High Court of Rajasthan held that the officers of the Department are bound by the circulars of the board. The Hon'ble Supreme Court in case of Tanna And Modi vs. CIT, 292 ITR 209 (SC) has held that a fortiori, clarificatory circulars issued by the Central Board of Direct Taxes may also be taken into consideration for the purpose of construction of the statute. The Hon'ble Supreme Court in case of Kerala State Industrial Dev. Corporation Ltd., 259 ITR 51 (SC) has also held that Finance Minister's speech before Parliament while introducing bill can be relied on to throw light on object and purpose of provisions. In case of Durgesh Oil Mills, 273 ITR 305 (All.), the Hon'ble Allahabad High Court has held that it is well settled that the circular issued by the Central Board of Direct Taxes is binding on authorities. The reliance is also placed on following judgement wherein it was held that circulars issued by the Board are binding: - (i) NavnitLal C Javeri Vs. Sen (1965) 56 ITR 198 (SC) (ii) K.P. Varghese vs. ITO (1981) 131 ITR 597 (SC) (iii) UCO Bank vs. CIT (1999) 237 ITR 889 (SC) (iv) Union of India vs. Azadi BachooAndolan (2003) 263 ITR 706 (SC) Thus, in the above case laws including the decision of Hon’ble Supreme Court has reiterated that wherever CBDT has issued instructions/circulars to relieve hardships the same are binding nature. In view of this it is submitted that the surrender of income obtained in confessional statement goes against the spirit of the circulars issued by the Board. The addition made on the basis of such confessional statement deserves to be deleted. b.4. Search statement alone is not sufficient for addition:- Regarding to our contention that no addition can be made merely on the basis of search statement by brushing aside the submission and evidences filed by assessee during the course of assessment proceeding. We place reliance on following judgements: - i) Hon’ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala &Anothers (1973) 91 ITR 18 (SC) has held that admission is an extremely important piece of evidence but it can’t be said that it is conclusive. It is upon to the assessee to show that it is incorrect. ii) Hon’ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.) has held that admission in Surya Singhal, Kota. statement during search is not conclusive proof of fact and can always be explained. iii) CIT vs. Bhanwar Lal Murwatiya (Rajasthan High Court, Jodhpur) 39 TW 214 whether department has to bring on record sufficient evidence before making an addition u/s 69 of the Act? - Held yes. Whether a retracted statement can be made the sole basis for addition? - Held no, since it cannot be said to be conclusive. iv) Hon'ble ITAT Jaipur Bench in the case of Kiran Fine Jewellers Pvt Ltd Vs DCIT Central Circle-2, Jaipur order dated 26/02/2025 {2025(3) TMI 806-ITAT Jaipur. The findings of Hon'ble ITAT is in para 2.4 as under:- 2.4 We have heard both the parties and perused the materials available on record including the case laws cited by the respective parties. In this case it is noted that the assessee is aggrieved as to the addition of Rs. 11,76,838/- which has been confirmed by the ld. CIT(A) for the reason that :- (a) That during the course of search, total cash amounting to Rs. 16,03,210/- was found and as per the cash book, the alleged cash in hand was Rs. 4,26,372/-. Hence, alleged excess cash Rs. 11,76,838/- was found. (b) Relied upon the statement recorded during the course of search of the Director Shri Narendra Singh Laxman Singh Rathore in which he “did not raise (para 7.4 of the assessment order) any question or objection” in reply to the cash in hand Rs. 4,26,372/-. The relevant para of the statement of Director has also been reproduced in the impugned assessment order as follows :- �� : आपकी क�नी के �वसाियक प�रसर पर आयकर काय�वाई के दौरान भौितक स�ापन करने पर 16,03,210 /- �पये का cash पाया गया है। एवं बही खातों के अनुसार Cash in hand Rs.4,26,372/- �पयेहै।इस�कारआपकेयहांपर cash 11,76,838/- �पयेअिधकपायागया, कृपयाइसअिधकपायेगये cash केबारेम�अपना��ीकरणदेवे। उ�र : जो�ॉककमपायागयाहैवोिबनािबलकटेसेलहोगयीहै।औरइसीवजहसे�ॉक कमपायागयाहै, और cash अिधकपायागयाहै।" (c) The learned AO and the learned CIT(A) both are also of the view that the assessee failed to furnish details i.e. name, full address Surya Singhal, Kota. of the persons from whom a sum of Rs. 6,68,893/- were received and as such, the claim made during the course of assessment proceedings by the assessee is in contradiction to the supra statement of the Director of the appellant company. It is also noted from the records that the learned CIT(A) discussed the issue in para No. 4.2 to 4.4 of the appellate order. In this regard, the appellant submitted that during the course of assessment proceedings, the appellant submitted complete and correct books of accounts including cash book had been maintained. It is submitted that as per the said cash book, the cash in hand as on date of search was Rs. 9,34,327/- and not Rs. 4,26,372/- as alleged and considered by the learned AO / learned CIT(A).The ld. AR further submitted that the appellant also made a request to the AO to provide a copy of the working details or any evidence based on the same, the cash in hand amount was worked out by the AO at Rs. 4,26,772/- as referred in the supra statement of the Director but the AO did not supply the required details and the ld CIT(A) also did not consider request of the appellant. It is further submitted that after considering the advance payments from customers Rs. 6,68,893/-, the total cash in hand as on the date of search was Rs. 16,03,220/-. The appellant also submitted before the learned CIT(A) that the learned AO did not point out any error or mistake in maintenance of cash book which is till date lying seized with the IT Department. However, the, AO and the ld CIT(A) solely relied upon the no objection raised by the Director of the appellant company in his statement and turned down the claim of the appellant backed by documentary evidence in making the supra addition of Rs. 11,76,838/-. Further, the AO has also not taken into consideration the submission of the Director made in his supra statement. “The excess cash if any represents the cash sales made for which bills are to be made” and there is a no requirement of mentioning IT PAN Number and address, etc. in the cash sales up to Rs. 2,00,000/-. It is noted that as per above facts, it is crystal clear that the learned CIT(A) has solely relied upon the statement of the Director of the appellant company without appreciating the complete facts of the statement and also ignoring the facts that no working details of alleged cash in hand Rs. 4,26,372/- as per IT department’s findings / working as on date of search have been supplied. The ld. AR of the assessed also submitted that no defect or deficiency had been pointed out either by the AO or by the learned CIT(A) in maintenance of the daily regular cash book and other books of accounts. Thus, the action of the AO as well as CIT(A) appears one sided and not supported by legal legs. We noted that ld. CIT(A) relied upon the following judgments :-

Surya Singhal, Kota. A. Commissioner of Income-tax v. Hotel Meriya [2010] 195 Taxman 459 (Kerala) / [2011] 332 ITR 537 (Kerala) [26.05.2010] – In this case, the issue decided was regarding evidence of the statement as per definition given in Section 3 of the Evidence Act and additions made have been confirmed on the basis of the statement. In appellant’s case, the appellant has not denied and / or objected the statement of the Director but the objections have been made on the calculation of alleged excess cash in hand. Thus, the facts of the said case are in applicable in appellant’s case. B. Principal Commissioner of Income-Tax Vs Roshan Lal Sancheti [2023] 150 taxmann.com 227 (Rajasthan) – In this case the statement recorded during the course of search u/s 132(4) of the IT Act, 1961, the Hon’ble High Court held that when a statement is recorded at two stages and the assessee had categorically admitted in clear terms additional income, could not be discarded simply in satiric manner. In appellant’s case, no second statement was recorded and in the statement recorded u/s 132(4), the appellant has submitted that presently he is unable to got verify from the books of accounts. Thus, the ratio decided in the said judgment are inapplicable in the appellant’s case. C. BannalalJat Constructions (P) Ltd. Vs ACIT [2019] 106 taxmann.com 128 (SC) – The facts of this case were that during the course of search cash was found at the residential premises of Shri Banna Lal Jat one of the Directors of above referred Pvt. Ltd. company. In the statement recorded u/s 132(4) of the IT Act, 1961, Shri Banna Lal Jat disclosed the said cash found as undisclosed income of the Private Limited company and he further reconfirmed in the statement recorded in the second statement recorded u/s 131 of the IT Act, 1961. Thereafter, Shri Banna Lal Jat informed that the said cash belongs to his proprietorship concern. In applicant’s case as evident from the assessment order that its facts are all together different and as such the ratio decided in the said case relied upon by the learned CIT(A) are inapplicable. D. CIT, Bikaner Vs Ravi Mathur in D.B. Income Tax Appeal No. 67/2002, Hon’ble Rajasthan High Court – In this case, the Hon’ble Court held that burden lies on the assessee to establish that admission made in the statements are incorrect to which, Shri Ravi Surya Singhal, Kota. Mathur failed to do so. In appellant’s case, the Director submitted explanation of the cash found during the course of search. It is also noted that appellant company with reference to the case laws relied upon by the ld CIT(A) submits that as of now, it is a settled position of law that the statement of the assessee is an extremely important piece of evident but it cannot be conclusive and later on the same may be amended. In support of this argument, the appellant relies upon the judgment of the Hon’ble Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. State of Kerala & Another, (1973) 91 ITR 0018 (SC), Hon’ble Court there in held that the admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made admission to show that it is incorrect and the assessee should be given proper opportunity to show the correct state of affairs. Reliance is also placed on the judgment of Madras High Court in M. Narayan and Bros. Vs. Assistant Commissioner of Income Tax, Special Investigation Circle, Salem, (2011) 13 Taxmann.com 49 (Madras) wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. Further, Hon’ble Delhi High Court in CIT vs. Sunil Aggarwal, 64 Taxmann.com 107 held that addition cannot be made merely on the basis of the statement which is subsequently retracted even belatedly. It is also noted that The appellant also placed reliance on the following judgments to support his submission :- (a) Escorts Heart Institute and Research Centre Limited Vs DCIT (TDS) JP (2017) 87 taxmann.com 184 (Rajasthan) and CIT Vs Vegetable Products Ltd. (1973) 88 ITR 192(SC) – The Hon’ble Court held that if, two views are possible, the view in favour of the assessee should be preferred. (b) Shree Ganesh Trading Co. Vs CIT, Dhanbad (2013) 257 CTR 159 (Jharkhand) (c) CIT, Karnataka Vs Shri Ramdas Motor Transport Ltd. (2015) 230 Taxman 187 (Andhra Pradesh) (d) Chetnaben J. Shah Vs Income Tax Officer, Ward 10(3) (2016) 288 CTR 579 (Gujarat). (e) Mantri Share Broker P Ltd. (96) Taxmann.com 279 (Rajasthan)

Surya Singhal, Kota. Hence taking into consideration entire facts of the case and the case law as mentioned, the Bench does not concur with the findings of the ld. CIT(A) and the impugned addition of Rs. 11,76,838/- made on account of alleged excess cash in hand is wrong and against the fact of the case. Thus the Ground No. 1 of the assessee is allowed v) Shri Jaipal Singh Versus DCIT, Central Circle- 2, Jaipur to 120/JP/2024 order dated 11-03-2025 (2025(5) TMI 862-ITAT Jaipur) Findings are in para 18 to 20 of the order. vi) Hon'ble ITAT Jaipur Bench in the case of Nirmal Kumar Kedia vs DCIT to 126/JP/2019 {2019 (6) TMI 467 - ITAT JAIPUR}order dated 03-06-2019 has held as under:- "90. We also found that except to search statement which was later on retracted by assessee by filing affidavit there is nothing with the department to visualize that the assessee made undisclosed investment in jewellery. It is well settled principal of law that no addition can be made only on the basis of survey/search statement more so when there is no supporting evidence with department to prove that the surrender made in the statement was correct. The department has no evidence/documents which prove that surrender in statement by assessee is correct, therefore the same cannot be relied upon. For this purpose, reliance may be placed on the decision of Hon’ble Apex Court in the case of Pullangode Rubber Produce Co Ltd v/s State of Kerala & Another (1973) 91 ITR 18 (SC) wherein it was held that admission is an extremely important piece of evidence but it can’t be said that it is conclusive. It is upon to the assessee to show that it is incorrect. Further reliance may be placed on the decision of Hon’ble Rajasthan High Court in the case of CIT v/s Ashok Kumar Soni 291 ITR 172 (Raj.) wherein it was held that admission in statement during search is not conclusive proof of fact and can always be explained." vi) Hon’ble ITAT Jaipur Bench in the case of DCIT Vs Ashok Kumar Agarwal in 2015 order dated 3/10/2016 that:- “16. We have heard the rival contentions of both the parties and perused the material available on the record. During the course of the first appellant proceedings, the assessee has contended that no incriminating document was found during the search operation showing payment of Rs. 1.50 crore to Ghulam Farooq Ansari. Further, no document was found from assessee's premises, showing generation of undisclosed income which could be said as utilized in the payment to Ansari. The crux of the issue is whether based on Surya Singhal, Kota. the statement of the assessee recorded u/s “An admission is an extremely piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of accounts donot disclose the correct state of facts.” In the instant case, the Revenue has made the addition based on the statement of the assessee and also on the fact that the entry of payment of Rs 150,00,000 was not found recorded in the cash book/books of accounts at the time of Search. What is therefore relevant to examine is whether the assessee has discharged its onus to the effect that the books of accounts do not disclose the correct state of facts and the statement made during the search was not correct as some entries were not incorporated in the seized cash book and the cash book was not upto date as on the date of search. In this regard, it is noted that at the time of search, the surrender of income on behalf of the entire group was made by the assessee and his statement were recorded where he has mentioned about impunged cash payment to Mr Ansari. The ld CIT(A) has stated that the seized cash books of the assessee’s group was showing cash balance of Rs 1,88,10,450 and which were incomplete at the time of search. Subsequent to the search, the assessee completed the cash books incorporating all the inflow and outflow of cash and re-casted cash books were produced before the Auditors as well as before the AO and no discrepancies were pointed out by either of them especially in terms of inflating the inflow of cash or by deflating the outflow of cash to cover up the situation of unavailability of disclosed cash. The assessee has also reconciled the cash balance as per the seized cash books and the audited cash books and the same was submitted to the AO who has not controverted the same by pointing out any discrepancies therein. Based on his detailed examination, the ld CIT(A) has held in his order that “the assessee has successfully shown that the statement made before the search party was not correct as some entries were not incorporated in the seized cash book, therefore, it can be said that the cash book was not upto date as on the date of search. Assessee had produced the re-casted audited cash book after incorporating all entries before the AO. There were sufficient cash balance available with assessee and his family members/group concern to cover the payment of Rs. 1,50,00,000/- to Ansari.” During the course of the arguments, the Revenue has not brought anything further to our notice and the findings of ld CIT(A) remain uncontroverted before us. The assessee has successfully demonstrated through its explanation and documentation in terms of re-casted books of accounts that the statement made during the course of the search cannot be made the sole basis for making the Surya Singhal, Kota. addition of Rs 1,50,00,000 in his hands as there was sufficient cash balance in the books of accounts to make the said payment and discharged its onus as laid down by the decision of Hon’ble Supreme Court in case of Pullangode Rubber Produce Co (supra) and Rajasthan High Court in case of Ashok Kumar Soni (supra). We therefore do not find any infirmity in the findings of the ld CIT(A). Accordingly, we uphold the order of the ld. CIT(A) and the appeal of the Revenue in this ground is dismissed.” Therefore, in view of the aforesaid order of Hon’ble Tribunal the addition made by the ld AO in the case of this assessee, on the basis of the similar type of statement, and on the same facts and circumstances, deserves to be deleted. Hon’ble MP High Court in the case of Agarwal Warehousing & Leasing Limited Vs CIT(2002) 257 ITR 235 (MP) has held that the orders passed by the Tribunal are binding on all revenue authorities functioning under the jurisdiction of the Tribunal. vii) Hon’ble ITAT Jaipur Bench in the case of Shri Pawan Lashkary dated 06.01.2012has held that income cannot be assessed merely on the basis of statement. Hon’ble ITAT has observed in Para 2.37 to 2.38 as under: - “2.37 The revenue has relied upon the statement of the assessee recorded during the course of search in which the assessee surrendered the amount on account of revaluation of land as undisclosed income. Kelkar Panel studied the problem of confessions and surrenders during its studies and deliberations in para 3.27 and the same is reproduced as under: ‘’A cross section of people cutting across 4trade and industry complained of a high-handed behaviour of raiding parties particularly while recording a statement. It was pointed out that overenthusiastic aiding parties would often coerce a ‘surrender’. As a result, all follow up investigations are distracted and generally brought to a standstill. Since the surrender is not backed by adequate evidence, the tax evader invariably retracts from the statement of surrender by which time it is too late for the Department to resume investigations. Similarly, where adequate evidence is indeed found, a surrender is not necessary to establish tax evasion. Therefore, the Task Force recommends that the CBDT must issue immediate instructions to the effect that no raiding party should obtain any surrender whatsoever. Where a tax payable desires to voluntarily make a disclosure, he should be advised to make so after the search. As a result, the taxpayer will not Surya Singhal, Kota. be able to allege coercion and successfully distract investigations. All cases where surrender is obtained during the course of the search in violation of the instructions of the CBDT, the leader of the raiding party should be subjected to ‘vigilance enquiry. Further the task force also recommends that statements recorded during the search should be video recorded. This will indeed add to the confidence of the taxpayer in the impartiality of the system.’’ 2.38 The finance minister in the budget speech for the year 2003 stated that no confession shall be obtained during search and seizure operation. The instructions were followed by CBDT by issue of a circular on the lines desired by the finance minister. There can be an estoppel on the issue of the facts but there cannot be estoppel on the principle of law. It is not the case of the revenue that the assessee was not disclosing the amount received as a result of retirement from the firm. The assessee obtained the legal advice and was of the opinion that such revaluation is capital receipt which is not liable to tax. Hence, we feel that income cannot be added simply on the basis of surrender. The statement recorded u/s 132(4) can be rebutted by the assessee and the case of the assessee is that the amount is not liable to tax.” viii) Jagdish Narain Ratan Kumar V/s ACIT 22 TW 209 (JP) Statement recorded during search are generally influenced by extraneous circumstances & cannot be termed as free from all ambiguity. b.5 The following decisions of Hon’ble Rajasthan High Court is distinguishable on facts. Therefore, the addition cannot be sustained on the basis of the following decisions:- a) 2018 (11) TMI 953 - Rajasthan High Court Pr. Commissioner Of Income Tax (Central) , Jaipur Versus Shri Roshan Lal Sancheti, Prateek-13 In this case in the search, on the basis of seven loose papers were seized on which the assessee had written various amounts showing undisclosed investment in construction, purchase and advances the assessee agreed to surrender amount of Rs. 2,28,44,545/-. Thereafter, the statement of the assessee on these seven papers was recorded on 27.09.2012 where surrender of the aforesaid amount was made by the assessee. But in the case of the assessee, the surrender is erroneous as the assessee was not sole owner of the land and he had only 11.89% share in the property and cheque amount and registration Surya Singhal, Kota. fees stamp duty etc were paid by the three owners in proportionate share of ownership. Further, the cash paid by the respective co-owners has been disclosed in their books of account. The assessee produced his books of account before the ld AO and no defect has been pointed out by the ld AO in the books of account which deserves to be accepted b) 2016 (5) TMI 1304 - RAJASTHAN HIGH COURT CIT, Bikaner Versus Ravi Mathur and others In this case the assessee agreed to surrender certain amount on the basis of incriminating documents, cash, jewellery etc., in statements recorded under Section 132(4) on 9.11.1995 and later, however, it was contended by the assessee that the statements under Section 132(4) of the Act was not correct and the amounts which were taken into lakhs are in thousands and attempted to retract from the statements made at the time of search and seizure operation. In this case, the Hon’ble Court held that burden lies on the assessee to establish that admission made in the statements are incorrect to which, Shri Ravi Mathur failed to do so. In appellant’s case, the assessee submitted explanation of the cash payment made against purchase of land. In the case of the assessee, the assessee proved that surrender is erroneous as the assessee was not sole owner of the land and he had only 11.89% share in the property and cheque amount and registration fees stamp duty etc were paid by the three owners in proportionate share of ownership. Further, the cash paid by the respective co- owners has been disclosed in their books of account. The assessee produced his books of account before the ld AO and no defect has been pointed out by the ld AO in the books of account which deserves to be accepted. c) 2019 (4) TMI 1120 - Rajasthan High Court in the case of M/S BannalalJat Constructions Pvt. Ltd. Versus ACIT, Central Circle-2, Ajmer In this case a search was conducted at the business/residential premises of Shri Banna Lal Jat, the Director of appellant company - M/s. BannalalJat Constructions Private Limited, on 10.10.2014, in which he was also operating his proprietary concern in the name of M/s. BannalalJat Contractor. During the search proceedings at residential premises of Shri BannalalJat, a cash worth of ₹ 1,21,43,210/- was found and inventorised as per Annexure CF of Panchnama dated 11.10.2014. He, in his Surya Singhal, Kota. statement, recorded under Section 132(4) of the Income Tax Act, 1961 (for short ‘the IT Act’) during the course of search and even subsequent statement recorded under Section 131 of the IT Act, admitted the same as undisclosed income of the appellant- company. However, subsequently while filing the return of income for the relevant assessment year, the appellant-company did not offer the said undisclosed income to tax. Therefore, in this case, surrender was backed by cash found during the search. But in the case of the assessee, the surrender is erroneous as the assessee was not sole owner of the land and he had only 11.89% share in the property and cheque amount and registration fees stamp duty etc were paid by the three owners in proportionate share of ownership. Further, the cash paid by the respective co-owners has been disclosed in their books of account. The assessee produced his books of account before the ld AO and no defect has been pointed out by the ld AO in the books of account which deserves to be accepted c. The Books of accounts produced during assessment proceeding cannot be rejected merely on the basis of surmises and conjecture and without pointing out any defects therein:- c.1. During the course of assessment proceeding the assessee submitted the complete books of accounts along with the cash book. On perusal of such cash book, it is apparent that the investment in agriculture land of the sharing of the assessee was duly reflecting in the books of accounts and source of such payment was also available in such cash book. Further when statements of assessee were recorded, he was not aware about the sufficiency of recoded cash available with his for making the payment. When he consulted his accountant then this fact came to his knowledge that sufficient recorded cash balance was available with him and the same was utilised for making cash payments. Since, the entire payment is recorded in the books of account, the copy of which was produced before ld AO and AO did not point out any defect in the books of account maintained by the assessee, therefore, no addition was warranted u/s 69 of the Income Tax Act, 1961. c.2. The ld. AO has not point out any discrepancies and defect in the books of accounts submitted by the assessee which was prepared on the basis of bank statement as well as other documents. The Ld. AO has not considered the books of account though as per the admitted position of law the books of accounts always carry a great evidentiary value.

Surya Singhal, Kota. c.3. The Ld. A.O. did not accept the books of accounts by giving the perverse finding that the books of accounts have been prepared by assessee just to cover his undisclosed investment. As per settled position of law after the search the books of account can be prepared on the basis of bank statement and seized documents. No defect was pointed out by the ld. AO in the books of account therefore, the entries made in books of accounts should be accepted and no addition on account of alleged undisclosed investment in purchase of agriculture land should be made. For this purpose, we draw your kind attention towards the following decisions: - i) Hon’ble ITAT Jaipur bench in ITSSA No.103/JP/2002 dt. 4.4.2003 in the case of Shri Tarachand Jain. In this order, the Hon’ble ITAT has observed as under on page 2 para 5: “The first grievance of the department is pertaining to the deletion of addition of Rs.1,20,240/- which was found from the bedroom of Shri Tarachand and his wife Smt. Anita Jain during the course of search. At the time of search, the books of accounts were not complete and day to day balancing of cash was not made. In the books of account, the cash balance of Rs.80,291/- in the books of Shri Tarachand; and Rs.51,335/- in the books of Smt. Anita Jain were shown by the assessee as per the explanation letter dated 12.1.2001. Thus in both the books of account the total comes to Rs.1,31,626/-. According to assessee, the said amount was sufficient to meet the recovered amount, but the AO observed in his order that self-prepared books produced after the date of search cannot be relied upon. But the ld. CIT (A) observed in his order that the books which were completed later on were duly submitted by relevant material to support the income and out- going cash. So he deleted the said addition. With this background, we heard both the parties and perused the material available on record from which it appears that at the time of search books of account were found but the same were incomplete. The assessee later on prepared the books of account, which were duly audited by the Chartered Accountant. The books alongwith the certificates were submitted before the A.O. No defect/mistake was found. The AO has not raised doubt about the genuineness of preparation his books of accounts. Therefore, we do not agree with the observations made by the AO that the books were self-prepared. The CIT (A) has discussed in his order the ratio laid down by the ITAT Jaipur in the case of Rajendra Kumar Kedia vs. DCIT, 22 Tax World 506 where it was observed that the books of account of assessee, which are not properly maintained, can be subsequently prepared and re-casted on the basis of bank statement, vouchers, and other related documents of sales and Surya Singhal, Kota. purchase, then also be relied upon for the purpose of income-tax assessment. In the instant case, the re-casted books of account were properly audited and the same were produced before the AO along with the certificates but the AO did not find any defect or mistake in the said books of account. He has not bothered to verify the entries with the primary evidence i.e. vouchers, bills etc. Therefore, we accept the order of the CIT (A) who has rightly deleted the said addition. The order of the CIT (A) is here Brief Facts: by upheld regarding deletion of addition of Rs.1,20,240/- which was found in cash in the bedroom of the assessee and his wife. The said cash was reflected in the books of account, hence the addition is unwarranted.” The above finding of the Hon’ble ITAT is fully and squarely applicable to the facts of the assessee’s case. i) Further Hon’ble ITAT in another case of Shri Rajendra Kr. Kedia Vs. DCIT, 22 Tax World, 506 have observed that where the books of account are not properly maintained, the same could be subsequently prepared and re-casted on the basis of his bank statement, vouchers and other related documents of sales and purchase which could be relied upon for the purpose of making the income tax assessments. iii) Hon’ble ITAT Jaipur Bench in the case of DCIT Vs Ashok Kumar Agarwal in 2015 order dated 3/10/2016 that:- “16. We have heard the rival contentions of both the parties and perused the material available on the record. During the course of the first appellant proceedings, the assessee has contended that no incriminating document was found during the search operation showing payment of Rs. 1.50 crore to Ghulam Farooq Ansari. Further, no document was found from assessee's premises, showing generation of undisclosed income which could be said as utilized in the payment to Ansari. The crux of the issue is whether based on the statement of the assessee recorded u/s 132(4) of the Act, an addition towards undisclosed income can be made in the hands of the appellant. Both the Revenue as well as the assessee have relied on the decision of the Hon’ble Supreme Court in case of Pullangode Rubber Produce Co. Ltd vs State of Kerala (91 ITR 18) wherein the Hon’ble Supreme Court has laid down the following proposition in law:

Surya Singhal, Kota. “An admission is an extremely piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of accounts donot disclose the correct state of facts.” In the instant case, the Revenue has made the addition based on the statement of the assessee and also on the fact that the entry of payment of Rs 150,00,000 was not found recorded in the cash book/books of accounts at the time of Search. What is therefore relevant to examine is whether the assessee has discharged its onus to the effect that the books of accounts do not disclose the correct state of facts and the statement made during the search was not correct as some entries were not incorporated in the seized cash book and the cash book was not upto date as on the date of search. In this regard, it is noted that at the time of search, the surrender of income on behalf of the entire group was made by the assessee and his statement were recorded where he has mentioned about impunged cash payment to Mr Ansari. The ld CIT(A) has stated that the seized cash books of the assessee’s group was showing cash balance of Rs 1,88,10,450 and which were incomplete at the time of search. Subsequent to the search, the assessee completed the cash books incorporating all the inflow and outflow of cash and recasted cash books were produced before the Auditors as well as before the AO and no discrepancies were pointed out by either of them especially in terms of inflating the inflow of cash or by deflating the outflow of cash to cover up the situation of unavailability of disclosed cash. The assessee has also reconciled the cash balance as per the seized cash books and the audited cash books and the same was submitted to the AO who has not controverted the same by pointing out any discrepancies therein. Based on his detailed examination, the ld CIT(A) has held in his order that “the assessee has successfully shown that the statement made before the search party was not correct as some entries were not incorporated in the seized cash book, therefore, it can be said that the cash book was not upto date as on the date of search. Assessee had produced the re-casted audited cash book after incorporating all entries before the AO. There were sufficient cash balance available with assessee and his family members/group concern to cover the payment of Rs. 1,50,00,000/- to Ansari.” During the course of the arguments, the Revenue has not brought anything further to our notice and the findings of ld CIT(A) remain uncontroverted before us. The assessee has successfully demonstrated through its explanation Surya Singhal, Kota. and documentation in terms of re-casted books of accounts that the statement made during the course of the search cannot be made the sole basis for making the addition of Rs 1,50,00,000 in his hands as there was sufficient cash balance in the books of accounts to make the said payment and discharged its onus as laid down by the decision of Hon’ble Supreme Court in case of Pullangode Rubber Produce Co (supra) and Rajasthan High Court in case of Ashok Kumar Soni (supra). We therefore do not find any infirmity in the findings of the ld CIT(A). Accordingly, we uphold the order of the ld. CIT(A) and the appeal of the Revenue in this ground is dismissed.” c.4. For not accepting the books of accounts produced by the assessee the Ld. A.O. gave another perverse finding that the assessee did not submit the balance sheet along with his online ITR. In this regard that the ITR was filed by assessee in form 2 (PB page 26) and such form does not contain any column of filing of figures of Balance Sheet. Further, along with online ITR no balance sheet can be attached therewith as an attachment. Thus, the ITR has to be filed as per the scheme designed by the Income Tax department and if such scheme is not having any prescribed column for feeding the figures of balance sheet or has no option to attach the balance sheet with such ITR, then the assessee should not be penalized for that. It the version of the Ld. A.O. is presume to be correct, then in case of every individual, who was not required by IT Rules to submit the balance sheet along with ITR but otherwise he is maintaining the books of accounts would not be able to explain his recorded transactions with the help of books of accounts. The genuineness of the accounts has not been challenged by ld AO, the accounts are relevant prima facie proof of the entries and the correctness thereof under section 34 of the Evidence Act – TolaramDaga v. CIT [1966] 59 ITR 632 (Assam); DhansiramAgarwalla v. CIT [1996] 217 ITR 4 (Gau.) c.5. The Ld. AO failed to examine and considered the books of accounts produced during the course of assessment proceeding and rejected the same by solely relying of the statement recorded. Though the assessee was not liable to maintain the books of account as he was not carrying out any business in his own capacity, however he prepared and produced the same to work out the source of investment with him and in such a case the Ld. A.O. in the interest of justice, must have examined the same and in absence of any defects therein he was supposed to accept the same. d. Department cannot take benefit of mistake/ignorance of the assessee:- The ld AO and CIT(A) held that the assessee has admitted in search statement that the payment of Rs. 11,00,000/- against the purchase of land was made out of his undisclosed income. In this regard we submit that in his Surya Singhal, Kota. statement recorded under section 132(4) of the Act during the search, the appellant, under the pressure and circumstances of the search, mistakenly surrendered Rs. 11,00,000/- as undisclosed income, stating that the payment was made out of undisclosed sources. Subsequently, upon verification of the books of account, the appellant realized that sufficient cash balance was available in the regular books of account of the assessee and also in the books of account of other co-owners of the land to cover the said payment. The payment was, therefore, not from undisclosed income but from accounted sources. Accordingly, the appellant did not include the amount of Rs. 11,00,000/- as income in the return of income filed for the relevant assessment year, effectively retracting the earlier surrender made under a mistaken belief. The department cannot take the benefit of this mistake of the assessee. In this regard it is relevant to refer the Article 265 of the constitution of India which says that "No tax shall be levied or collected except by authority of law". The CBDT circular No. 14 (XL-35) dated 11.04.1955 is also relevant to be mention here, which says that: - “para-3 ------- department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him.” “Para 6 ------- The purpose of this circular is merely to emphasise that we should not take advantage of an assessee’s ignorance to collect more tax out of him than is legitimately due from him.” Thus, as per well settled principal of law that the department cannot take the advantage of mistakes or ignorance of the taxpayers. In this regard the reliance is placed on findings made by Hon’ble ITAT Jaipur Bench in the case of Madhu Sudan Agarwal v/s Deputy Commissioner of Income Tax, Central Cirlce-1, Jaipur in order dated 19.06.2009 wherein Hon’ble ITAT at page 21- 22 of its order has mentioned as under: -“The tax payable has to be worked out in accordance with the law enforce and for this purpose correct income on the basis of documents is required to be calculated to leavy the correct tax. In circular No. 14 (XL-35) dated 11.04.55, which has been taken note of by Hon’ble Mumbai High Court in the case of Dattatray Gopal Bhotte V/s CIT (1984) 41 CTR (Bom) 393, (1984) 150 ITR 460 (Bom), the Board has advised to field officers by saying that officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist tax payers in very reasonable way particularly in the matter of claiming and securing any relief and in this regard the officers should take initiative in guiding the tax payer where proceedings or other particulars before them indicate Surya Singhal, Kota. that some refund or relief is due to him. The admission in statement during search is not conclusive proof of fact and can always be explained. It may be mentioned that person cannot be charged even a paisa more than what is due.” Similar finding was also given in the flowing cases: - i) In the case of S.R. Koshti Vs. Commissioner of Income Tax- (2005) 276 ITR 165, it has been held by Gujarat High Court as under: “A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over- assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of Vinay ChandulalSatia v. Shri N.O.Parekh., the Commissioner of Income Tax, Special Civil Application No. 622/1981, rendered on 20-8-1981, has laid down the approach that the authorities must adopt in such matters in the following terms : "The Supreme Court has observed in numerous decisions, including Ramlal and Ors. v. Rewa Coalfields Ltd., AIR 1962 SC 361; The State of West Bengal v. The Administrator, Howrah Municipality and Ors., AIR 1972 SC 749, and BabutmalRaichandOswal v. Laxmibai R. Tarte, AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt." ii) In the case of Commissioner of Income Tax Vs. Bharat General Reinsurance Co. Ltd. (1971) 081 ITR 0303, Delhi High Court has held as under: “It is true that the assessed itself had included that dividend income in its return for the year in question but there is no estoppel in the Income-tax Act and the assessed having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resoled from the position which it had wrongly taken while filing the return. Quite apart from it, it is incumbent on the income-tax department to find out whether a particular income was assessable in the Surya Singhal, Kota. particular year or not. Merely because the assessed wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. We are, therefore, of the view that the income from dividend was not assessable during the assessment year 1958-59 but* it was assessable in the assessment year 1953-54. It cannot, therefore, be taxed in the assessment year 1958-59.” iii) In the case of M/s Kalindee Rail Nirman (Engineers) Limited Versus The Commissioner of Income Tax-I, Jaipur, The Dy. Commissioner of Income Tax, The Jt. Commissioner of Income Tax, Jaipur 2017 (2) TMI 37 - RAJASTHAN HIGH COURT. it has been held that: - Refunds of tax due to regular assessment proceedings - assessed tax is lower than returned tax - amount of tax recovered without any authority of law - Held that:- The contention raised by the appellant that on acceptance of the scrutiny, if he is entitled for other benefits which he has not claimed, the same be refunded to him i.e. after the proceeding if it is found that assessee is entitled for refund, the same should be refunded as the State cannot recover the tax more than what is due to it. iv) Hon'ble Bombay High Court in the case of Fort properties Pvt. Ltd., Vs. CIT reported in 208 ITR 233 he submitted that the way in which the entries are recorded by the assessee in the books of account is not determinative for deciding the issue. He accordingly submitted that merely because the assessee has wrongly mentioned the asset as stock in trade, the same cannot be held against the assessee. v) Sanchit Software and Solutions Pvt. Ltd vs. CIT (2012) 349 ITR 404 (Mumbai High Court) In any civilized system, the assessee is bound to pay the tax which he liable under the law to the Government. The Government on the other hand is obliged to collect only that amount of tax which is legally payable by an assessee. The entire object of administration of tax is to secure the revenue for the development of the Country and not to charge assessee more tax than that which is due and payable by the assessee. It is in ITA 678/JP/2018_ Birma Devi Vs. ITO 13 aforesaid circumstances that as far back as in 11/04/1955 the Central Board of Direct Tax had issued a circular directing AO not to take advantage of assessee's ignorance and/or mistake.

Surya Singhal, Kota. Therefore, the Circular should always be borne in mind by the officers of the respondent- revenue while administering the said Act. vi) Stream International Services Private Limited (2013) 023 ITR 0070/2013 (9) TMI 339 - ITAT MUMBAI Having heard the rival submissions and perused the relevant material on record, we find that the purpose of income tax assessment is to determine correct income of the assessee. As the Revenue cannot allow an assessee to depress his income, in the same manner, it is not permissible to the Revenue to take advantage of the ignorance or mistake of the assessee in offering more than due income. It is trite that no tax can be collected except as per law. Circular No. 14(XI-35) of 1955 dated 1.4.1955 cautions the Officers of the Department from taking advantage of ignorance of an assessee as to his rights. The Hon’ble Bombay High Court in court in the case of Nirmala L. Mehta v. A. Balasubramaniam, CIT (2004) 269 ITR 1 has held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India clearly provides that no tax shall be levied or collected except by authority of law. Similar view has been taken recently by the Hon’ble jurisdictional High Court in Sancheti Software and Solutions P. Ltd. VS. CIT (2012) 349 ITR 404 (Bom). In our considered opinion there can be no escape from the proposition that the assessee is entitled to argue at least before the appellate authorities that a wrong stand taken at the time of filing the return of income should be allowed to be modified. The ld. AR has rightly relied on order passed by the Mumbai bench of the Tribunal in the case of M/s. A. M. Tod Company India Pvt. Ltd. v. ITO (ITA No.492/Mum/2006). Vide order dated 24.06.2009, the Tribunal accepted the assessee’s contention for exclusion of certain cases which were ITA 678/JP/2018_ Birma Devi Vs. ITO 14 wrongly included in the Transfer pricing study but were actually not comparable. It is observed that the Special Bench of the Tribunal in the case of DCIT v. Quark Systems (P) Ltd. [(2010) 132 TTJ (Chd.) (SB) 1] also allowed the assessee to claim exclusion of certain cases from the list of comparable which were inadvertently included by it in its transfer pricing study. In view of the afore-noted discussion and the ratio of the these precedents, we direct the AO / TPO to examine the correctness of the figures placed on record by the assessee in support of its contention that the case of Goldstone Teleservices Limited was wrongly included by it in the list of comparables, which is actually not comparable. We want to make it clear that the above discussion made by us considering the figures given by the learned AR is only for a prima facie ascertainment as to whether Surya Singhal, Kota. this case is passing through the filter chosen by the TPO. The AO / TPO in the fresh proceedings will decide the question of inclusion or exclusion of this case afresh independent of our above observations, albeit keeping in mind the afore-quoted filter of 'Companies whose export revenues are more than 25 percent of the revenues. Therefore department should not take advantage of ignorance of assessee to collect more tax than what is legitimately due by relying on erroneous search statement. e. The onus u/s 69 of the Act was on the department which was not discharged e.1. The Ld. A.O. made the addition u/s 69 by treating the payment made by the assessee as made from undisclosed income, however, the onus lied under section 69 of the Act was not discharged. The ld AO erred in taxing the investment by applying the provision of section 69 which is not applicable as the assessee has properly explained source of cash by furnishing cash flow statement (Copy at PB Page No. 63), cash book (Copy at PB Page No. 64-75), All Ledger A/c (Copy at PB Page No. 82-120), balance sheet before the ld AO during the assessment proceedings and which were not proved to be incorrect. e.2. Thus, in the case the assessee In the instant matter, assessee has duly discharged his initial burden of substantiating the genuineness of source of payment of cash for making the investment and the same is duly recorded in cash flow statement, cash book, bank book, ledger, balance sheet etc. submitted by assessee, wherein Ld. A.O. did not pointed out any defects. Thus, the assessee has proved his onus by submitting documents thereafter the onus shifted to Ld. AO. The Ld. AO has only relied upon statement of assessee recorded before search party without considering the documents and books submitted by assessee and without pointing out any defects therein. f. No independent inquiries were made by Ld. A.O. During the course of assessment proceeding, the Ld. A.O. issued the show cause notice u/s 142(1) of the Act on 23.01.2021 (Copy at PB Page 44 to 47). The reply of the same was filed by the assessee vide letter dated 11.02.2021 vide PB page 53-59 and along with such reply the documents/information were filed to substantiate the source of investment in land. However, thereafter the Ld. A.O. did not issue any show cause notice or did not issue any notice asking any further detail or made any further inquiry, which felt necessary to examine the source of investment and straight away proceed to pass the assessment order. In such order the Ld. A.O. arbitrarily Surya Singhal, Kota. and wrongly mentioned that the assessee filed ITR in Form No 1 whereas the assessee filed ITR in Form No 2 (Copy PB 26 and 31) which has no column to put figures against Balance Sheet. However, the facts remains that the assessee has filed sufficient details and discharged his onus to prove the source of investment which has not been controverted by the ld AO on the basis of inquiries or material. The lower authorities, without considering the submission of the assessee in right perspective, without contradicting the same and making the due inquiry, rejected the same on surmises and conjecture basis by holding the same as afterthought. In the case of ITO vs. Daya Chand Jain Vaidya (1975) 98 ITR 280 the Allahabad High Court held that “When a particular explanation furnished by the assessee and evidence in support thereof is adduced, the onus shifts on the Assessing Officer to falsify the said material or bring new material on record. Mere rejection of good explanation does not convert good proof into no proof”. g. The share of the assessee can only be added as income of the assessee Further from seized page at 16 (Copy at PB Page No. 18) it not mentioned regarding the cash of Rs 11,00,000/- was entirely paid by the assessee because the land was purchased in joint ownership and share of the assessee in such land was 11.89% and accordingly the cash payment attributable to the share of the assessee comes Rs. 1,30,770/-, which was duly recorded in the books of accounts submitted to Ld. A.O. The cheque amount and stamp duty and registration fees was paid in proportionate to share of ownership in the property then cash amount must have been paid in same proportionate. The Ld. A.O. erred in treating the entire cash payment of Rs 11,00,000/- as made by the assessee. h. Addition u/s 69 and levy of higher tax by applying the provisions of section 115BBE without issuing show cause notice and where source of cash was explained. h.1 The Ld. AO has issued show cause notice dated 23/01/2021 (Copy at PB 44 to 47), wherein the Ld. AO did not issue specific show cause for applying the section 115BBE but the same was applied in the assessment order addition was made and income was computed by applying the provision of section 115BBE, therefore this is clear violation of Principle of Natural Justice. It is also pertinent to mention here before applying the provisions of section 115BBE of the Act the specific show caused notice was not given to the assessee and in absence of specific show cause notice the provisions of this section cannot be applied automatically and mechanically. In this regard the reliance is place on following decisions:- i) Hon’ble ITAT Jaipur Bench in the ARVIND KUMAR NEHRA, JAIPUR VS ITO, WARD 7(1), JAIPUR held: - It may be worthwhile to mention that when in the Act for every additions, the provisions or section has been provided by the legislature, otherwise there shall be no meaning of the Act. Hence the addition is wrongly made against the Act . It is also noted that when the AO has not invoked any provisions of the Act then how he can charge the tax by referring the Sec. 115BBE which is invalid , illegal and liable to be deleted in the eyes of law. ii) Hon’ble Jodhpur bench of ITAT in the case of Suraj Kanwar Devra v/s ITO 2(2), Udaipur in dated 23.11.2021 In view of above submission, the humble assessee prays your honour kindly to delete the impugned addition of Rs. 11,00,000/- made by Ld. A.O. and confirmed by ld CIT(A).

4.4 The ld DR relied upon the order of AO and CIT(A) and submitted that during the course of search statement of the assessee were recorded wherein he clearly admitted that he has paid Rs. 11,00,000/- against the purchase of land in cash out of his undisclosed income. The search statement u/s 132(4) of the Act has evidentiary value, therefore, the addition made by the ld AO deserves to be sustained.

6.1 The finding of Ld. A.O., in the light of which the addition was made in at Para-12 & 13 at Page-4 of the assessment order, which is as under: - “12. The submission of the assessee is considered and not found tenable because there us no denial to the fact that Rs. 13,84,424/- have been incurred on purchases and construction of the plot No bills and vouchers have been produced during the course of assessment proceedings. When during the search proceeding Shri Surya Singhal was asked about the source of expenses incurred for construction of above plot. Shri Surya Singhal in Surya Singhal, Kota. his statements recorded during the search proceedings, submitted that Rs. 2,60,000/- the cost of purchases of plot has been shown in books of accounts and remaining expenses of Rs. 11,24,424/- were incurred from his unaccounted income and surrendered such expenses from his unaccounted income for the F.Y. 2018-19. Also, Shri Surya Singhal has accepted that he has incurred Rs. 11,24,424/- in construction of Plot No. B-157, Gopal Vihar, Kota, which is exactly the same amount evidence from the part found during the course of search. Also his submission that he was feeling unconformable during the search does not hold merit because he was given proper rest during recording of the statement whenever he desired. He had given his statement in his full consciousness. Further assessee is an individual and has been filing ITR-1 only, the so-called books of accounts i.e. cash book, Balance Sheet etc. has been prepared by assessee just to cover his undisclosed investment. The said copy of balance sheet had also not been filed while filing ITR online. It is just an afterthought to substantiate his undisclosed investment unearthed during the search proceedings. Further provisions of section 69 of the Act are also very explicit which reads as under: “Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee offered no explanation about the nature and source of the investments or the explanation offered by his is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.”

The fact is that during the course of search at the residence of the appellant, certain loose papers were seized and inventorised as Annexure AS, Exhibit-11 containing total pages 1 to Surya Singhal, Kota.

7. Page Nos. 1 to 6 of this annexure contain details of expenses incurred for construction at Plot No. B-157, Shri Gopal Vihar, Village Dewali Arab, Tehsil Ladpura, District Kota. As per the nature of the details mentioned in the diary total expenses of Rs. 13,84,424/- were incurred on purchase and construction of this plot.

During the search proceedings when Sh. Surya Singhal was confronted with these sources of expenses incurred for the construction of the above plot, in his statements recorded during search, Sh. Surya Singhal submitted that the cost of purchase of plot was shown in the books of accounts at Rs. 2,60,000/- and the remaining expenses of Rs. 11,24,424/- were incurred from his unaccounted income and offered to surrender such expenses from his unaccounted income for the FY 2018-19.

It is noted that the ld. Assessing Officer had asked the appellant that why not this sum of Rs. 2,60,000/- on account of purchase of plot and sum of Rs. 11,24,424/- on account of expenses thereon totaling to Rs. 13,84,424/- be considered as his expenses from his unaccounted income for the FY 2018-19.

In reply to Question No. 16 regarding Exhibit-11 the appellant had categorically accepted the sum of Rs. 11,24,424/- out of the total investment on this account of Rs. 13,84,424/- as his unexplained expenses as detailed on 07 pages of this exhibit and offered the same for taxation as investment out of his unexplained income. From the perusal of these pages and entries made therein it is clear that these are datewise entries of payments towards building material, architect, cement , labour, freight, marble, bricks, etc. The appellant could give no justification of the same during the search. Later on, during the assessment proceedings and at appellate stage the appellant has made a claim to justify it with the cash in hand but could not substantiate it with any evidence and books. Hence, this ground of appeal of addition of Rs. 11,24,424/- u/s 69 has no merits and in view of the above factual matrix deserves to be rejected. Hence, this ground of appeal is rejected.

6.3 The Ld. AR of the assessee filed detailed written submissions and Paper Book containing Page 1-140 and during the course of hearing also filed the copy of some relied upon case law. The Ld. AR. vehemently argued the case. The written submission filed by AR. is as under: - “(a) Brief Background of the addition and contention raised by the assessee.

Surya Singhal, Kota. a.1. In Assessment order an addition of Rs. 11,24,424/- has been made to the appellant's income on the basis of a statement recorded during search proceedings under section 132 of the Act. During the course of search, the department seized some of the loose papers at Page no. 1 to 7 were found which were inventoried as Annexure “AS” of exhibit 11 (Copy at PB Page No.19-25) which have details of construction expenses of Rs 11,24,424/- incurred for construction over Plot No B-157, Shri Gopal Vihar, Dewali Arab, Tehsil Ladpura, Kota, which was initially perceived as unaccounted. In the statement recorded under section 132(4) of the Act during the search, the appellant, under the pressure and circumstances of the search, surrendered Rs. 11,24,424/- as undisclosed income, stating that the payment was made out of undisclosed sources. Subsequently, upon verification of the books of account, the appellant realized that sufficient cash balance was available in the regular books of account to cover the said payment. The payment was, therefore, not from undisclosed income but from accounted sources. Accordingly, the appellant did not include the amount of Rs. 11,24,424/- as income in the return of income filed for the relevant assessment year, effectively retracting the earlier surrender made under a mistaken belief. However, the learned AO disregarded the explanation and made an addition of Rs. 11,24,424/- solely on the basis of the search statement, without any corroborative incriminating material or evidence to support that the payment was indeed from undisclosed sources. The statement recorded under section 132(4) during search proceedings, while admissible as evidence, is not conclusive or binding on the assessee. It can be retracted if it was made under a mistaken belief of facts or law, or under the stressful circumstances of the search, provided the retraction is supported by cogent evidence. In the present case, the surrender was made hastily during the search without verifying the books of account. Upon subsequent verification, it was found that sufficient cash balance existed in the books to explain the payment, rendering the initial surrender erroneous. The appellant retracted the statement by not including the amount in the return of income and has substantiated the retraction with the books of account, which demonstrate adequate cash availability. No incriminating material was found during the search to contradict this explanation. Admittedly, during the course of search the assessee admitted the investment was made out of his income but such admission was not wilful and not correct. As submitted to Ld. A.O. the during the course of search, the assessee was feeling uncomfortable, therefore he could not understand the question properly. He was in very tense and in fear Surya Singhal, Kota. atmosphere of search. Further, it is a fact that the statement during search proceeding are given extempore and under the tense and fear atmosphere and also not having in possession the sufficient material to state facts correctly, so the assessee could not spell out the correct facts to the search team. a.2. During the course of search as well as assessment proceedings, the assessee did not deny about the payment of Rs 11,24,424/- for the construction over the plot. However, the assessee submitted that the payment was made out of the recorded sources and cannot be held as out of undisclosed source. In order to substantiate to this the assessee also submitted his books of account before Ld. AO including cash book and cash flow statement. During the course of assessment proceeding, the assessee has submitted cash flow statement (Copy at PB Page No. 63), cash book (Copy at PB Page No. 64- 75), journal book (Copy at PB Page No. 76-81), all ledger A/c (Copy at PB Page No. 82-120) balance sheet of assessee (Copy at PB Page No. 34-35) wherein assessee have duly explained the source of cash payment of Rs 11,24,424/-. The ledger account of the construction is at PB 92-98 which was repeated in the above said document seized by department. Since, the payment was itself found noted in the seized record, therefore producing the bills & vouchers separately was not necessary. Further, there is no dispute over the quantum of the expenses. a.3. However, no heed was given by Ld. A.O. to the submission of the assessee and the documents filed in support of the same. The Ld. A.O. summerly rejected the same and made the addition of Rs. 11,24,424/- for the following brief reasons: - i) The payment of Rs. 11,24,424/- was surrendered by the assessee as his income. ii) The books of accounts etc. has been prepared just to cover his undisclosed investment and the balance sheet has not been filed while filing ITR. The ld CIT(A) confirmed the findings of ld AO in his order. a.4. During the course of assessment proceedings, the assessee submitted the complete books of accounts along with the cash book. On perusal of such cash book, it is apparent that the investment in construction was duly Surya Singhal, Kota. reflecting in the books of accounts and source of such payment was also available in such cash book and part payment is reflected in bank book. Further when statements of assessee were recorded, he was not aware about the sufficiency of recorded cash available with him for making the payment or part payments were made by him through banking channel. When he consulted his accountant then this fact came to his knowledge that sufficient recorded cash balance was available with him and the same was utilised for making cash payments and part payment was also made through banking channel. Since, the entire payment is recorded in the books of account, the copy of which was submitted before Ld AO and AO did not point out any defect in the books of account maintained by the assessee, therefore, no addition was warranted u/s 69 of the Income Tax Act, 1961. The ld. AO has not point out any discrepancies and defect in the books of accounts submitted by the assessee which was prepared on the basis of bank statement as well as other documents. The Ld. AO has not considered the books of account though as per the admitted position of law the books of accounts always carry a great evidentiary value. a.5. The Ld. AO failed to examine and considered the books of accounts produced during the course of assessment proceeding and rejected the same by solely relying of the statement recorded. Though the assessee was not liable to maintain the books of account as he was not carrying out any business in his own capacity, however he prepared and produced the same to work out the source of investment available with him and in such a case the onus was on Ld. A.O. to examine the same and in absence of any defects therein he was supposed to accept the same. In this regard it is submitted that on the Page No. 6 of Annexure “AS” of exhibit 11 (PB page 24), there is an entry of Rs 2,70,000/- in name Contractor 05/08. This entry is against the construction bill raised by the contractor so this amount was credited in the account of Jitendra (PB page 107) and debited to construction account PB page 98. The payment of Rs. 1,80,000/- against this Bill amount Rs. 2,70,000/- was made through banking Channel as under: - S. No. Date Particular Amount 1 13/02/2019 NEFT through HDFC A/c Rs 30,000/- 50100123335724 2 22/02/2019 NEFT through HDFC A/c Rs 25,000/- 50100123335724 Surya Singhal, Kota. 3 01/03/2019 NEFT through HDFC A/c Rs 25,000/- 50100123335724 4 01/03/2019 NEFT through HDFC A/c Rs 25,000/- 50100123335724 5 18/03/2019 NEFT through HDFC A/c Rs 25,000/- 50100123335724 6 20/03/2019 NEFT through HDFC A/c Rs 25,000/- 50100123335724 7 29/03/2019 NEFT through HDFC A/c Rs 25,000/- 50100123335724 Total Rs 1,80,000/- Similarly there is an entry of Rs. 87000/- and 32000/- in name of Lakehri Bricks(PB page 19), the payments of Rs. 31707/- + Rs. 6431/- + Rs.9608/- + Rs.10953/- + Rs.100000/- against these entries were made through Banking channels (PB page 108-109) Thus, the part payment of Rs 1,80,000/-+1,58,699/- out of total amount of Rs 11,24,424/- was incurred through banking mode which is sufficient to prove that the statement of the assessee in search is wrong which says that the entire payment of Rs. 11,24,424/- was made from undisclosed source. a.

6. Apart from the above, the submission given in Ground No 1 as regard taking benefit from mistake and ignorance of the assessee, making addition merely on the basis of search statements, applicability of section 69 and section 115BBE, no defect found in the books of account of assessee produced before AO, various case laws etc shall apply mutatis mutandis for ground no 2 and in order the brevity the same are not being repeated here. In view of above submission, the humble assessee prays your honour kindly to delete the impugned addition of Rs. 11,24,424/- made by Ld. A.O. and confirmed by ld CIT(A)”

6.4 The ld DR relied upon the order of AO and CIT(A) and submitted that during the course of search statement of the assessee were recorded wherein he Surya Singhal, Kota. clearly admitted that he incurred expenses against house construction out of his undisclosed income. The search statement u/s 132(4) of the Act has evidentiary value, therefore, the addition made by the ld AO deserves to be sustained.

Order pronounced in the open court on 17/09/2025.