SH. MANOJ KUMAR JAIN,KOTA vs. ACIT, CENTRAL CIRCLE, KOTA, KOTA

Dr. Mitha Lal Meena, A.M.:

These appeals are filed by the assessee against the separate order of the Commissioner of Income Tax, Appeal Udaipur-2 [hereinafter referred to as “the CIT(A)”]
even dated 27.02.2025 for the assessment year 2016-17, 2017-18 and 2018-19 challenging therein confirmation of the additions made u/s 69, based on statement recorded u/s 132(4) of the Income Tax Act, 1961. Therefore, these appeals were heard together and disposed off by this consolidated order for convenience and brevity.
2. The grounds of appeal are reproduced as under:
Grounds of Appeal ITA No. 643/JPR/2025
(Assessment Year 2016-17 2019-20)

Grounds of Appeal ITA No. 644/JPR/2025

The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.20 lacs u/s 69 of the Act on account of unaccounted cash payment given to Sh. Jugal Kishore Kaliya on the basis of the statement of assessee recorded during search which was retracted later on by not accepting the contention of assessee that he has advanced Rs.10 lacs only to Sh. Jugal
Kishore Kaliya out of his income.

Grounds of Appeal in ITA No. 645/JPR/2025

The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.68,85,180/- u/s 69A of the Act on account of alleged unexplained investment in jewellery on the basis of the 1 statement of assessee recorded during search which was retracted later on by not accepting the contention of assessee that the jewellery found in search is covered by the jewellery found in earlier search dt. 18.01.2003 by not drawing correct inference from the explanation of assessee.
(Assessment Year 2016-17 2019-20)

Grounds of Appeal ITA No. 643/JPR/2025
3. Briefly the facts of the case are that a search & seizure operation under section 132(1) of the Income-tax Act, 1961 (hereinafter "the Act") was Carried out on 18.04.2018 at the various premises of "Manak Chand Kailash Chand Saraf Group,
Kota" to which the appellant belongs. Cash, jewellery and other documents found and seized from some person's residence and business premise. The case of the appellant was also covered under search proceeding. Consequent to search action, the case of the appellant was centralized to Central Circle-Kota. Notice u/s 153A was issued by the AO on 04.01.2019 which was duly served to the appellant. The appellant filed his income tax return u/s 153A on 10.07.2019 declaring total income of Rs.12,00,580/- and agriculture income of Rs.30,000/-, which is the same as declared in income tax return filed u/s 139 of the Income Tax Act, 1961 on 01.08.2016. There is no-difference. between ITR filed under section 153A and 139 of l.T. Act, 1961. 3.1
The Assessing Officer (in short “the AO”) has observed at Pg 2-11 of the order that in search an agreement dt. 08.07.2015 between Sh. Mahaveer Mewara & Prithvy
Raj Suman and the assessee was found. As per this agreement Sh. Mahaveer Mewara
& Prithvy Raj Suman are in real estate business and to purchase the land & to develop residential colony thereon, they need funds for which they have received Rs.2.55
crores as finance from the assessee out of which Rs.30 lacs was received by cheque and Rs.2.25 lacs in cash. It is further stated in the agreement that on the said land 70 plots
(Assessment Year 2016-17 2019-20) have been developed and they would give all the 70 plots to the assessee and on sale of plots after retaining commission of Rs.50 per sq. ft., the balance amount would be given back to assessee. The scanned copy of agreement is reproduced at Pg 7-8 of the assessment order.
3.2
The AO has noted that during search, the assessee in reply to Q. No.24
admitted that he has given cheque of Rs.30 lacs and remaining Rs.2.25 crores in cash to Sh. Mahaveer Mewara & Prithvy Raj Suman and thus surrendered Rs.2.25 crores for the Tax as per the relevant statement reproduced at Pg. 4 of the assessment order. During post search investigation, the assessee filed a letter along with the affidavit on 21.08.2018 (APB, Pgs. 21-27) where in Para 6 it was stated that the owners of land have offered to sale the land for Rs.2.55 crores for which Rs.30 lacs is to be paid by cheque and Rs.2.25 crores in cash. This was a draft agreement which was for further negotiation but since the negotiation failed no amount either by cheque or in cash was paid. The Ld. AR submitted that subsequently the owners of the land have sold the land after plotting and they have declared the income in their return filed for Assessment Year 2016-17 and 2017-18 (APB, Pgs. 28-55).
3.3
However, the AO held that in the agreement it is clearly stated that Sh.
Mahaveer Mewara & Prithvy Raj Suman had received cash of Rs.2.25 crores from the assessee and this amount was offered for tax in the statement recorded u/s 132(4) of the Act. Accordingly, relying on the decision of Rajasthan High Court in case of CIT Vs.
Ravi Mathur, the AO has made an addition of Rs.2.25 crores u/s 69 of the Act.
(Assessment Year 2016-17 2019-20)

The bench noted that signature on agreement of all the parties to the agreement is very important without which it cannot be treated as executed and enforceable by law. The consent of all parties to an agreement is one of the essential aspect for a valid agreement which is not present in the present case as the appellant has not given her consent by signing the agreement.
An agreement not enforceable by law and is void agreement as per section 2(g) of the Indian Contract Act, 1872. Thus, when there is no inquires conducted to controvert the submission made by the assessee the same cannot be considered as evidence against the assessee. The apex court in the case of Dhakeshwari Cotton Mills Ltd. 26 ITR 775 held that "a suspicion remains a suspicion unless the same is established and can never take place of reality.
Assessment cannot be made on guesswork without any reference to any material on record. "
Accordingly, the ITAT after relying on the decision of Hon'ble ITAT Delhi Bench in case of Anil Bala Goyal in ITA No.1533/Del/2021 held that it sees no reasons to sustain the addition in the hands of the assessee and therefore, the same is directed to be deleted.

a)
Bankey Behari Goyal vs. DCIT ITA No.1535/Del/2021 dated 19.01.2023

b)
Hon 'ble Bombay High Court in the case of PCIT vs. Nexus Builders and Developers (P.) Ltd.
(DEL) (CLPB, Pgs. 36-41).

f)
Mehta Parikh & Co. Vs. CIT 30 ITR 181 (SC)

Mewara & Prithvy Raj Suman for the alleged receipt of cash of Rs.2.25 crores. The lower authorities have not controverted the affidavit filed by the assessee and by Sh.
Mahaveer Mewara & Prithvy Raj Suman. Hon'ble Supreme Court in case of Mehta
Parikh & Co. Vs. CIT 30 ITR 181 at Pg 187 held that the rejection of affidavit filed by assessee is not justified unless the deponent has either been discredited in cross examination or has failed to produce other supporting evidence when called upon to do so.
13. We find that the lower authorities have heavily relied on the statement of the assessee u/s 132(4) of the Act where he offered for tax the alleged investment of Rs.2.25 crores. The assessee in post search investigation before the ADIT filed the affidavit (APB, Pgs. 22-27) retracting the said statement wherein at Para 5 of the affidavit it is specifically stated that the authorised officer has threatened him to obtain surrender on various accounts and threatened that if surrendered is not made they will prolong the search proceedings for some more days and also initiate criminal proceedings under IPC for the jewellery bag found on the roof of residence and thus he was compelled to make the surrender. Despite filing such affidavit, the assessee was not confronted. Therefore, the decisions relied by the lower authorities are not applicable on facts as in those cases retraction was made after a long gap of time. As against this, the assessee relies on the decisions where it is held that only on the basis of statement u/s 132(4) which stands retracted and where no corroborative evidence
(Assessment Year 2016-17 2019-20) in support of the document found in search is brought on record, no addition u/s 69
can be made.
14. From the above, it is evident that the assessee has categorically stated that he has not made any payment by cheque to Sh. Mahaveer Mewara & Prithvy Raj Suman, controverting the facts of the unsigned agreement regarding assesses admission of payment of Rs.30 lacs by cheque. This vital fact has not been denied by the lower authorities. Meaning thereby that when no amount is paid by cheque, it is incorrect to presume that cash of Rs.2.25 crores is paid only because in the agreement it is stated that Sh. Mahaveer Mewara & Prithvy Raj Suman has received Rs.30 lacs by cheque and Rs.2.25 crores in cash. Further, the lower authorities have not brought on record, any other evidence to corroborate the alleged investment of Rs.2.25 crores and therefore, in our considered view, the addition of Rs.2.25 crores made u/s 69
based on merely hypothecation, and presumption is otherwise uncalled for.
15. We understand that sometimes the true fact could not be explained in the statement recorded u/s 132(4) due to peculiar circumstances and mental stress and pressure of the search party seeking surrender of the undisclosed income, and therefore, subsequent facts brought on record by the assessee cannot be overlooked.
The AO has every right to controvert the claim of assessee but while giving a contrary finding he is required to rebut the contention of the assessee in the light of the material brought on record. Therefore, if the AO was not in agreement with the claim of assessee, then necessary enquiry ought to have been conducted to verify the (Assessment Year 2016-17 2019-20) correctness of the claim of assessee instead of relying on the statement recorded u/s 132(4) of the Act and ignoring or brushing aside the evidence filed by the assessee. In our view, the statement u/s 132(4) alone cannot be considered as a conclusive piece of evidence by ignoring the other facts and evidence which may establish the correct facts regarding the transactions in dispute.
16. In view of the above, we hold that the Ld. CIT (A) order is infirm and perverse to the facts on record with respect to the issue of unexplained investment in land u/s 69 of the act. Accordingly, the addition of Rs.2.25 crores made by AO and sustained by Ld. CIT(A) is uncalled for and as such deleted.
17. The next issue is regarding confirmation of the addition of Rs.5 lacs on account of alleged unexplained investment in Dhanwa farmhouse on the basis of the statement of assessee recorded during search which was retracted later but the AO has not accepted the contention of assessee that such investment was made by assessee's wife Smt. Saroj Jain for which advance payment of Rs.3 lacs was made which is duly disclosed in her financial statements.
17.1 The Ld. AR submitted that an advance of Rs.3 lacs was given for Plot No.23 of Dhanwa farmhouse by wife of assessee Smt. Saroj Jain but since assessee was representing his wife, the receipt was issued in the name of assessee. Along with the receipt of Rs. 1 lacs dt. 17.01.2016, the AO has also reproduced a scanned paper at Pg
14 of the assessment order where Rs.5 lacs is shown as 'jama' on 17.01.2016 and Rs.1
lacs as 'name' on 17.01.2017 and below that there is a mention of return of two
(Assessment Year 2016-17 2019-20) receipts on 18.01.2018. Thus, in fact the total investment made by assessee's wife was Rs.3 lacs which is duly shown in the balance sheet of Smt. Saroj Jain as on 31.03.2017 (APB, Pg. 17). The AO has not brought on record any evidence that advance given by Smt. Saroj Jain is other than for the land for which receipt found as above.
17.2 It is noted that although the assessee has surrendered Rs.5 lacs in the statement u/s 132(4) but within 4 months of the date of search, an affidavit was filed retracting from the statement (APB, Pgs. 23-27), during post search proceedings before the ADIT(Inv.). The reason for retraction has been given at Para 5 of the affidavit and the correct facts about the advance given with reference to plot of land at Dhanwa farmhouse was stated at para 11 of the affidavit. Thus, it appears that the retraction letter was filed within a reasonable time.
Further, the fact of duress while recording the statement u/s 132(4) is explained in Para
5 of the affidavit and the link of Rs.5 lacs with Rs.3 lacs declared by Saroj Jain thus stands established. Without prejudice to the above, no contrary material is brought on record to controvert the affidavit filed by the assessee regarding the source of investment of Rs. 5
Lacs made by the assessee and therefore the same cannot be brushed aside as held by Hon'ble Supreme Court ((Supra). In view of that matter, the addition confirmed by Ld. CIT(A) is not justified and as such, it is deleted.
Grounds of Appeal ITA No. 644/JPR/2025

In this appeal the appellant objection was that the Ld. CIT(A) has erred on facts in confirming the addition of Rs.20 lacs u/s 69 of the Act on account of unaccounted
(Assessment Year 2016-17 2019-20) cash payment given to Sh. Jugal Kishore Kaliya on the basis of the statement of assessee recorded during search which was retracted later on but the AO has accepted the contention of assessee that he has advanced Rs.10 lacs only to Sh. Jugal
Kishore Kaliya out of his income.
18. The Ld. contended that the lower authorities have heavily relied on the statement of the assessee u/s 132(4) of the Act where the assessee has offered for tax the alleged advance of Rs.20 lacs. However, in post search investigation before the ADIT, the assessee has filed an affidavit (APB, Pgs. 17-21) retracting the said statement wherein at Para 5 of the affidavit it is specifically stated that the authorised officer has threatened him to obtain surrender on various accounts and threatened that if surrendered is not made they will prolong the search proceedings for some more days and also initiate criminal proceedings under IPC for the jewellery bag found on the roof of residence and thus he was compelled to make the surrender.
Despite filing such affidavit, the assessee was not confronted. Therefore, the decisions relied by the lower authorities are not applicable to facts of the present case as in those cases retraction was made after a long gap of time. The Ld. AR argued that that only on the basis of statement u/s 132(4) which stands retracted and where no corroborative evidence in support of the document found in search is brought on record, no addition u/s 69 can be made. In support, the assessee has placed reliance on various decisions. Some relevant cases are discussed here under.
18.1 Shree Ganesh Trading co. vs. CIT (2013) 214 Taxman 262 (Jharkhand) (HC):
(Assessment Year 2016-17 2019-20)

During the course of search conducted u/s 132 upon assessee-firm, a partner in the statement recorded u/s 132(4) surrendered certain sum as income. While filing the return after search, assessee-firm did not declared the said surrendered income on the plea that declaration made by partner was misconceived and divorced from real facts and that firm or individual has no undisclosed income. The Lower authorities did not accept the assessee's said retraction on the ground that statement given by partner appeared to be voluntarily given statement disclosing undisclosed income and thus added the said amount to its income as undisclosed income. It was held that statement on oath of assessee u/s 132(4) is a piece of evidence and when there is incriminating material admission against himself, then it is required to be examined with due care and caution. In the present case, during the course of search, there was no recovery of assets or cash by department. No specific reason had been given for rejection of assessee's contention by which it had retracted for admission of partner. Therefore, having regard to the facts &
circumstances of case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income of assessee.
19. Before us, the Ld. AR submitted that assessee has accepted that he has advanced only Rs.10 lacs to Sh. Jugal Kishore Kaliya with support of an affidavit. In spite of this the lower authorities have made no effort to controvert the same from Sh. Jugal
Kishore Kaliya. Hon'ble Supreme Court in case of Mehta Parikh & Co. Vs. CIT 30 ITR 181
(Assessment Year 2016-17 2019-20) at Pg 187 held that the rejection of affidavit filed by assessee is not justified unless the deponent has either been discredited in cross examination or has failed to produce other supporting evidence when called upon to do so. Therefore, without controverting the affidavit of assessee that he only advanced Rs.10 lacs to Jugal
Kishore Kaliya.
20. In the given set of facts, in our view, the assessee has given the valid explanation to substantiate its claim and the lower authorities without controverting the affidavit of assessee that he only advanced Rs.10 lacs to Jugal Kishore Kaliya are not justified in making addition of 20 lacs. Accordingly, it would be fair and justified to confirm Rs.10 lacs each as against Rs.20 lacs confirmed by Ld. CIT(A) based on two purchees of each 10 lakh for debit and credit. The Ld. CIT (DR) has also not controverted, this material facts. In our view, thus, the Ld. CIT (A) was not justified in confirming the whole addition of Rs. 20 lacs brushing aside the affidavit of the assessee that he has advanced Rs. 10 lacs only.
21. After considering the peculiar facts of the case, we hold that in the interest of justice, it would be just fair to restrict the addition to Rs. 10 lacs as against 20 lacs confirmed by the Ld. CIT (A). Thus, this ground of appeal of the assessee is patly allowed.
Grounds of Appeal in ITA No. 645/JPR/2025

The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.68,85,180/- u/s 69A of the Act on account of alleged unexplained investment in (Assessment Year 2016-17 2019-20) jewellery on the basis of the 1 statement of assessee recorded during search which was retracted later on but the authorities below have not accepted the contention of assessee that the jewellery found in search is covered by the jewellery found in earlier search dt. 18.01.2003 by not drawing correct inference from the explanation of assessee.
22. Having heard both the sides on the issue and perusal of record, we find that the assessee has been denied relief as the jewellery found in search is covered by the jewellery found in earlier search dt. 18.01.2003 by not appreciating the facts and drawing correct inference from the explanation furnished by the assessee before the lower authorities.
23. The Ld. AR submitted that the family of assessee comprises of his uncle (tauji)
Sh. Kailash Chand Saraf who has no children, his mother Vidya Bai (father of assessee
Sh. Ramesh Chand expired before date of search but after the date of first search) and his two brothers Rajesh Kumar & Vinod Kumar. Sh. Vinod Kumar who was living separately even before the first search and the jewellery found from him in first and second search has no connection with the jewellery found in the present search of the assessee and his brother Rajesh Kumar.
24. It is noted that in earlier search dated 18.01.2003, all the family members were residing at Manak Bhawan, Old Sabji Mandi, Kota and in that search 5609.200 gms of gold jewellery was found from Sh. Kailash Chand Saraf and on his person and on person of his wife Sarasvati Bai, 3842.17 gms from Ramesh Chand & on person of Vidya Bai,
(Assessment Year 2016-17 2019-20)

From the above table it can be noted that the jewellery of Rajesh and Vandana was lying with Kailash Chand Jain in as much as the total jewellery from the first search available with Sh. Kailash Chand Jain and Rajesh Jain was 5706.020 gms
(Assessment Year 2016-17 2019-20)

(3586.300+2119.720) whereas the jewellery found from them in the present search net off mortgage jewellery of 469.600 gms (79.100+2076.500+183.000) is 6228.45
gms (6187.250+510.800-469.600). Similarly, the total jewellery from the first search available with Ramesh Chand Jain and Manoj Jain was 4821.670 gms
(3842.170+979.500) whereas the jewellery found from them in the present search after net-off of mortgage jewellery of 50.900 gms is 4239.946 gms
(1420.100+3329.746-50.900). Thus, the jewellery found from assessee and his mother Vidya Bai is less than the jewellery found in the first search but the jewellery found from the assessee at 3329.476 gms is more than the jewellery found from him in first search at 946.650 gms for two reasons. First is that the jewellery found from Ramesh Chand Jain in the first search to the extent of approximately 1550.000 gms
(out of 3787.170 gms) was inherited by assessee after the death of Sh. Ramesh Chand
Jain and secondly the jewellery found from the assessee includes 859.410 gms of jewellery of M/S Kailash Chand Manoj Kumar Saraf Pvt. Ltd. In the assessment of M/s
Kailash Chand Manoj Kumar Saraf Pvt Ltd, addition for 859.410 gms has been made by the AO. After considering the same as unexplained jewellery is found from the assessee tabulated as under —
Particulars
Gold Jewellery
(found in Gms)
Jewelle found from assessee
3329.746
Less: Jewellery of M/S Kailash Chand Manoj
Kumar SarafPvt Ltd
859.410
Jewelle of assessee
2470.336
(Assessment Year 2016-17 2019-20)

Source of above •ewelle
Reasonable jewellery as per CBDT circular acce tedb AO
950.000
Jewellery inherited from father late Sh. Ramesh
Chand Jain
1520.336
Total
2470.336

Thus, even if we consider on an individual basis no excess jewellery was found and therefore, in our view, merely on the basis of the statement recorded u/s 132(4), the addition made by the AO and confirmed by the CIT(A) is unjustified.
25. We find that even the computation of excess jewellery of 2118.519 gms in question no.32 of the statement on the basis of which surrender of Rs.68.85,180/- was sought from the assessee is incorrect. This is because as per the search party the total jewellery found from the assessee was 3329.746 gms. Admittedly, it is accepted by the search team that it includes 859.400 gms of gold jewellery of M/s Kailash
Chand Manoj Kumar Saraf Pvt Ltd and that 950.000 gms is reasonabley in possession of the assessee and his own family members. Thus, the excess gold jewellery even as per the search party would be 1520.336 gms and not 2118.519 gms for which surrender was sought from the assessee. This proves that the surrender was sought from the assessee as per the sweet will of the search party which has been retracted by the assessee by filing an affidavit before ADIT (Inv.) on 21.08.2018 (APB, Pgs. 69-73) during the post search proceedings retracting from the statement. Despite filing such affidavit, neither the ADIT(Inv.) nor the AO has examined the assessee or controverted the facts stated in (Assessment Year 2016-17 2019-20) the affidavit. Under the circumstances, in the present case, only because assessee offered Rs. 68,85,180/- in the statement u/s 132(4), the addition was confirmed by CIT(A) without deciding all these issues raised before him is certainly unfair and unjustified which can not be approved.
26. It is noted that in another case of Vinod Kumar Jain of the group and co brother of the assessee, the AO made addition of Rs.65,94,073/- on account of the unexplained jewellery without considering the fact that the jewellery found in the search was lower than the jewellery found in previous search dt.17.01.2003 for the reason that assessee has not furnished evidence of conversion of gold jewellery and bills and vouchers of gold jewellery found. The Ld. CIT(A) in his case by considering the fact that jewellery found in the present search is lower to the jewellery found in the previous search deleted the addition made by the AO vide order dt.24.02.2025
which was placed before the bench in ITA No.647/JP/2025 heard on 16.07.2025. In our view, when the Ld. CIT(A) has deleted the addition in case of Vinod Kumar Jain, then considering the principles of consistency on parity of fact, the addition in the present case of the assessee would be unwarranted and liable to be deleted.
Accordingly, we hold that the decision of the Ld. CIT (A) in confirming the addition in the hands of the assessee on almost similar facts is unfair and unjustified.
27. In the above view, we accept the grievance of the assesee as genuine and as such the addition of Rs.68,85,180/- u/s 69A confirmed by the CIT(A) is deleted.
(Assessment Year 2016-17 2019-20)

Order pronounced on 11/09/2025 under Rule 34(4) of Income Tax
(Appellate Tribunal) Rules, 1963. (DR. S. SEETHALAKSHMI)
ACCOUNTANT MEMBER
DOC*
Dated: 11/09/2025

Copies to :
(1) The appellant
(2) The Respondent
(3) CIT
(4) CIT(A)
(5) Departmental Representative
(6) Guard File
By Order