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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI B.P. JAIN, & SHRI SUDHANSHU SRIVASTAVA
PER B.P. JAIN, ACCOUNTANT MEMBER, This appeal of the Revenue arises from the order of the ld. CIT(A), Noida vide order dated 10.02.2014 for A.Y. 2010-11.
The Revenue has raised the following grounds of appeal: “
1. That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 50 lakhs made by the Assessing Officer on account of disclosure made by the Director of the assessee company on its behalf, vide letter dated 15.10.2010 addressed to ADIT (Inv.) without appreciating that the disclosure was made after a search and seizure operation in a healthy state of mind.
2. That CIT (A) has erred in law and facts in ignoring the statement given in writing by the assessee which read as “Please refer to the proceedings which I along with our chartered accountant have been attending pertaining to digital data seized; during search & seizure operations at our premises on 24.02.2010. Keeping in view j the overall data shown to us, I hereby offer an additional income in case of Assotech Reality Private Limited and group amounting to Rs. 50 Lakhs (Rs. Fifty Lakhs Only) for taxation, which is over and above the regular income of the company for the year 2009-10 (A.Y. 2010-11).
I will not retract from the disclosure and I am doing this just to buy peace of mind and on the condition that no penalty/prosecution proceedings shall be initiated against me/us. To discharge this tax liability I am presenting the following post dated cheques Ch. No. 625271 doted 30.10.2010 amounting Rs. 8,00,000/- &, Ch. I No. 625272 dated 30.11.2010 for Rs. 7,50,000/-.''
3. That CIT(A) has erred in law and facts in holding that merely because amount of J income has been surrendered through a letter and it not being a. part of income disclosed U/s 132(4), cannot be assessed.
4. That CIT(A) has erred in law and facts in ignoring the facts that letter dated j 15.10.2010 was itself a document to be dealt with by the AO, and accordingly the j AO was not required to further corroborate it.
5. That CIT(A) has erred in law and facts in coming to conclusion that despite a letter of surrender given to ADIT (Inv.), Noida the AO was required to produce evidence to assess the income. Once the assessee has made a statement in a letter to ADIT (Inv.) this was itself an evidence.
That the order of the Ld. CIT (A) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored.”
Briefly stated, the facts of the case as emanating from the order of the ld. CIT(A) are that the assessee company is engaged in the business of real estate development. During the previous year 2009-10 relevant to A.Y. under reference a search and seizure operation was conducted in this case on 24/2/2010. As per the facts presented by the appellant in appeal, the assessee filed its return of income declaring income of Rs 52,79,750/- vide acknowledgement number 170205001131010 on 13/10/2010. Later on, a notice u/s 153A was issued to the assessee on 27/6/2011. In response to the notice u/s 153A the assessee company filed its return of income declaring an income of Rs. 52,79,750/- on 19/07/2011. The assessment in this case was completed by the A.O. by making an addition of Rs. 50 Lakhs (the surrender amount) and assessed income was worked out at Rs. 1,02,79,750/- vide order dated 30/12/2011 passed u/s 143(3)/153 of the Act. Aggrieved with above assessment order, the assessee is in appeal before me.
The ld. CIT(A) confirmed the action of the Assessing Officer.
We have heard the rival submissions and have perused the relevant material on record. The issue raised is, in fact, addition made by the Assessing Officer on the basis of letter of surrender made by the assessee company on 15.10.2010. As mentioned hereinabove, search and seizure operation was conducted on 24.02.2010. During post search investigation, the assessee furnished a letter dated 15.10.2010 making a surrender of Rs. 50 lakhs over and above the regular income of the assessee. Accordingly, two cheques of Rs. 8 Lakhs and Rs. 7.50 Lakhs were handed over to the ADIT(Inv.), Unit-1, Noida towards discharge of tax liability in this regard. It was also stated in the surrender letter that the assessee will not retract from this disclosure and that the said disclosure was being made to buy peace of mind and on the condition that no penalty/prosecution proceedings shall be initiated against the assessee company. However, the letter of surrender did not point out any specific point of concealment in the hands of a particular assessee of the group as also head of income etc. in which concealment had been detected, if any. The two cheques given by the assessee towards discharge of tax liability arising out of above surrender were never encashed by the Department and according to assessee, on enquiry, it was informed that surrender could not be accepted at this juncture, as no immunity from penalty could be given to the assessee and hence the cheques were not encashed by the Department and that the case would be decided on merit. On the basis of above facts ascertained by the assessee company, the assessee went to believe about non- acceptance of the surrender by the department.
6. It was submitted before the ld. CIT(A) as well as before us that the said surrender was made almost after eight months of the search and just two days after filing of the return, which, according to the assessee was only on account of temporary relief of pressure and to buy peace of mind, which was done without due thought about the consequences. It was also claimed that the impugned letter of surrender was hand-written by the Director himself on a plain piece of paper which shows the pressure on the director during the surrender. It was argued that no incriminating document/evidence were found during the course of search against the assessee company and also since the Income tax department did not encash the cheques given to ADIT [INV], Unit I, Noida and on the basis of information to the assessee by the department that no surrender could be accepted as emanating from the penalty could be granted at this stage of surrender and that is why the cheques were not presented and the case would be decided on merits on the basis of available documents. It was argued vehemently by the ld. counsel for the assessee of the assessee that there was no surrender at all and, therefore, question of retraction, as alleged by the Assessing Officer does not arise at all. The returned income u/s 153A of the Act was also filed at an income of Rs. 52,79,750/- which is equal to the original return filed on 13.10.2010. The cheques were not got enchased for more than six months. It was also alleged that the impugned surrender was made under pressure and without any corroborative and undisclosed income in the hands of the assessee and accordingly, the ld. counsel for the assessee prayed that the said surrender on the basis of surrender letter dated 15.10.2010 should be treated as null and void.
Also, it was brought to our notice that a copy of written submissions dated 07.02.2013 was filed by the assessee which was forwarded to the Assessing Officer where remand report dated 08.04.2013 was sent and the Assessing Officer has merely stated what has already been stated in the assessment order. Copy of remand report was sent to the assessee for rejoinder which was submitted vide letter dated 05.06.2013 where the assessee also repeated his arguments as made in the original submissions. The Assessing Officer was further given an opportunity to justify the addition on account of surrender made by the assessee and in response to the same, the Assessing Officer sent the earlier remand report vide communication dated 25.11.2013 without stating anything extra. Under the facts and circumstances of the case, the Assessing Officer has failed to controvert the contentions made by the assessee during the assessment as well as before the ld. CIT(A).
It is evident that the letter of surrender which was handed over only after 8 months was his letter only, which, in fact, was not statement of oath u/s 132(4) of the Act and the same, therefore, cannot be used as evidence against the assessee company. Non encashment of cheques towards payments of tax liability against alleged surrender also support the assessee’s contention that the surrender was not acceptable to the department. In that view of the matter, the Assessing Officer has failed to bring evidence or any instance of concealment of income in the hands of the assessee. In the absence of corroborative evidence and incriminating material brought on record during the course of search, addition made is not justified and the ld. CIT(A) has rightly deleted the addition. Accordingly, we find no infirmity in the order of the ld. CIT(A). Thus, the grounds raised by the Revenue are dismissed.
In the result, the appeal of the Revenue in is dismissed. The order is pronounced in the open court on 14.12.2017.