DY. CIT CENTRAL CIRCLE-19, DELHI vs. AMARJEET SINGH , DELHI

O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2018-19, arises out of the order of the Commissioner of Income Tax (Appeals)-27, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 37/10407/2017-18, A.Y. 2018-19 dated 21.09.2022 against the order of assessment passed u/s 153A read with Section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 16.07.2021 by the Assessing Officer, DCIT, Central Circle- 19, New Delhi (hereinafter referred to as „ld. AO‟).

2. The revenue has raised the following grounds of appeal:-

1) The Ld. CIT(A) has erred on facts and in law, in not considering the assessee's admission on oath u/s 132(4) of the IT. Act, 1961 as evidence on the basis of which unaccounted income of the assessee has been assessed. 2) The Ld. CIT(A) has erred on facts and in law, in not considering the assessee's admission on oath as evidence in conjunction with a seized document found during the search, which points to application of unaccounted funds for construction of the same immovable property. Page | 1 3) The Ld. CIT(A) has erred in ignoring the fact, that, the assessee in his statement recorded u/s 132(4) of the 1.T. Act, 1961 had accepted the ratios of payments by cheque and cash, which was further corroborated by the evidences found. 4) The Ld. CIT(A) has erred on facts and in law in restricting the addition on account of unexplained money u/s 69C of the IT Act, 1961 from Rs. 3,50,00,000/- to Rs. 16,26,000/- by not considering the statement of Sh. Amarjeet Singh which was recorded on oath u/s 132(4) of the Act? 5)(a) The order of the Ld. CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves to add, alter or amend any/all of the ground of appeal before or during the course of the hearing of the appeal.

“Date 08th August 2019 Assistant Director of Income Tax (Inv.) Unit 1(4), C Block, Room No 119, 1st Floor, Civic Centre, New Delhi Subject: Explanation regarding certain points of my statement recorded during the course of search en 04/01/2019 and 05/01/2019 Reg: Punihani Group Dear Sir, 1. Search action was conducted at the various business as well as residential premises of the self along with family members which lasted for more than three days at a stretch.

3. Besides the above, my statement was also recorded during such action at my residential premises situated at F-5, Radhey Mohan Drive, Mehrauli, New Delhi. It is clarified to the search party that I am a business person and being a graduate, I always restricted my hands only over buyer's Interaction and production in leather business rather than indulging in finance and accounts. Though I had practically no knowledge of the finance or accounts, yet the search team forced me to render certain statement during the course of their action.

7. In respect of property no 203B, Magnolias, Gurgram it is submitted that: a. The said property was purchased by me from M/s DLF Ltd at a price of Rs. 2.72 crore and sale deed for the same was registered with Sub Registrar, Gurgaon on 19/06/2015. b. After a month, the said property was sold to Mrs. Tarini Sharma at a consideration of Rs. 7 crores and sale deed for the same was registered with Sub Registrar, Gurgaon on 21/07/2015 and the entire sale consideration was received through banking channels, c. The capital gain on such sale is duly disclosed in the income tax return filed by me for AY 2016-17.

2) In respect to property situated at F-5, Radhey Mohan Drive, Delhi, I wish to state that I was only having minor undivided share in the said property. All the major expenses for construction of said property were incurred by my brothers i.e. Tarlok Singh Punihani and Narinder Singh Punihani or the firm of which I am a partner i.e. Punihani International, which amount was later charged to our drawings. 3) In respect of image found from my mobile phone, I wish to state that the said image was sent by Mr. Sumit Arora (Dada Partners) showing some rough calculation of bills amount to be raised by them for some construction work done by them at F-5, Radhey Mohan Drive. In the said rough working, Mr Sumi Arora falsely claimed that they had done extra work in relation to F-5, Radhey Mohan Drive, expenses of which were allegedly incurred in cash from the payments provided by us by way of cheque to Mr. Sumit and therefore Mr. Sumit was claiming reimbursement of all such cash expenses which was neither approved by me or by my brothers. The said bogus claims were disputed by us and eventually the same were withdrawn with mutual consent. Therefore, nothing was factually paid over and above the amount recorded in the books of account. 4) In view of the facts as discussed above regarding the impugned questions and answers of my statement, no adverse view may kindly be taken on the basis of the answers to the various questions posed at that time, the narrative of which was dictated and noted by the search party itself. 5) As a matter of fact, neither any other incriminating documents nor any other evidences were either found or seized which could have established the incongruency and inconsistency which were there in my statement recorded under extreme stress. 6) In nutshell, the submission that the statement as given by me on the date of search under pressure and without having access to my records cannot be relied upon as it was based on erroneous misconception of facts and as such, it is prayed that the same may kindly be examined on merits and no adverse inference shall be drawn. Therefore, the incongruency and Inconsistency existing in my statement as recorded at the time of search has to be expunged and no credence should be paid thereon. Thanking You, Amarjeet Singh Punihani”

4. The search party also enquired about a slip extracted from the mobile phone of the assessee wherein it was shown that the assessee has paid an aggregate sum of Rs 32 lacs to Mr Sumit Arora out of which Rs 16.26 lacs was paid in cash without deduction of tax. The assessee replied that the payment made to Dada Partners was 50% by cheque and 50% through cash. This sum of Rs 16.26 lacs paid in cash was added by the ld. CIT(A) in the hands of the assessee, against which there was no appeal preferred by the assessee before us.

5. It was submitted that in the panchanama drawn pursuant to the search, there was no reference to any incriminating material or evidence of undisclosed income. Even in response to RTI application the ld. AO had not provided any details of incriminating material for framing addition of Rs 3.50 crores in the hands of the assessee. It is not in dispute before us that the addition of Rs 3.50 crores was solely made based on the statement given by the assessee u/s 132(4) of the Act without any support from any corroborative material found during the course of search. This statement was later retracted by the assessee before the investigation wing itself though after a gap of 8 months. In the said retraction statement, the assessee had also explained the reason for the delayed retraction that his chartered accountant was severely sick and eventually died in July 2019 and that the retraction was given in Aug 2019. Hence the assessee had satisfactorily explained the delay in retracting the statement in the instant case. In our considered opinion, the ld. AO ought to have considered the retraction statement in the aforesaid factual context in the interest of justice. Further it was submitted that the assessee is only one of the co-owners of the said farm house which is in dispute before us. Even this fact was not considered by the ld. AO while concluding that an alleged payment of Rs 3.50 crores was incurred for construction of the same. There is absolutely no iota of evidence to prove that a payment of Rs 3.50 crores was even incurred towards construction and that the same were paid either by the assessee or by the other co-owners. When there is no incurrence of expenditure of Rs 3.50 crores by the assessee, how can the assessee be expected to prove the fact that he had not incurred the same. How can the assessee be expected to prove the negative? The only seized material was in respect of payment of Rs 32 lacs which has been accepted by the assessee pursuant to the order of the ld. CIT(A) by not preferring further appeal. Even otherwise, when there is no seized material found during the course of search evidencing the payment of Rs 3.50 crores for construction of farm house, why at all the assessee should voluntarily come forward to surrender the income in his statement recorded u/s 132(4) of the Act. Looking the entire circumstances, the reason adduced by the assessee in the retraction statement that the statement u/s 132(4) of the Act was not made voluntarily requires to be accepted.