ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MYSURU vs. KUDLUR RAMASWAMY SATHYANARAYANA, MYSURU

Assessment Year : 2014-15 ACIT, Vs. Kudlur Ramaswamy Sathyanarayana, Central Circle, 30, Muda Complex, Opp Sub- Mysuru. Registrar Office, Ramakrishna Nagar, Mysuru, Karnataka – 570 023. PAN : AJOPS 2226 B APPELLANT RESPONDENT Respondent by : Shri. V. Sridhar, CA Appellant by : Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru. Date of hearing : 12.09.2024 Date of Pronouncement : 29.11.2024 O R D E R

Per Laxmi Prasad Sahu, Accountant Member

3. Aggrieved from the above Order, assessee filed appeal before the CIT(A). The CIT(A), after considering the detailed written submissions in respect of both the issues, allowed the appeal of the assessee. He noted that the investment made in Chitravana Resorts and Belur Project is recorded in the books of accounts of the assessee and it was paid by Cheque, the relevant part of the CIT (A) order is as under:

4.5 The appellant was asked to produce the copy of agreement pertaining to the transaction with the aforesaid persons and the documentary evidences in support of the claim made above. In response, the appellant submitted as follows.

1. The advance made to Sri Prasanna Murthy Rs.60,00.000/- and Sri Raghavendra Murthy Rs. I 5,00,000/- is towards Chitravana as they are the owners of the land belonging to Chitravana.

2. There is no written Agreement made towards the advance, as it was an oral agreement between me and Sri Prasanna Murthy and Raghavendra Murthy.

4. The above advances are all made by cheque vide detailed as under: a. Raghavendra Murthy Rs. I 5,00,000/- on 06.11.2012 Chq No.460862 Karnataka Bank Ltd b. Prasanna Murthy Rs.50,00,000/- on 13.12.2012 Chq No 460868 Karnataka Bank Ltd c. Prasanna Murthy Rs. 10,00,000/- on 18.12.2013 RTGS No.40732 With regard to advance to Sri Ventures is as per ANN-I enclosed" 4.6 The submissions of the appellant were considered by the AO but found not acceptable for the following reasons.  The admission by the appellant that payment of Rs.90,00,000 for Chitravanais not routed through the books was said by the appellant at the time of beginning of the search.  The appellant once again confirmed the preliminary statement subsequently in the final statement.  The appellant has not made any submission controverting the statement given during the search.  The AO relied uponB. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai the Hon'bIe High Court of Madras in [2014152 taxmann.com 449 (Madras). 4.7 In view of the findings discussed above, the AO rejected the claim of the appellant and the undisclosed income of Rs.1,30,00,000 admitted by the appellant during the course of search but not declared in the return of income filed in response to notice u/s 153A was brought to tax u/s 69 of the I.T. Act.” 4.19 I have considered the rival submissions and the assessment order. It is case where a search was conducted but no evidence or incriminating material was found on the issue of advances made to Chitravana Resorts (Rs. 1.3 crore) and investments made in Sindhur Constructions (Rs.1.5 crore) but based on the statement of the appellant who admitted to the unaccounted income, the additions were made. 4.20 The appellant retracted the statement and did not offer the admitted amount in the return or income. The AO ignored the explanation provided by the appellant and proceeded to make addition based on the admission of the appellant during the search. 4.21 The AO merely relied upon the statement given by the appellant and rejected the retraction riled on the strength of the Hon’ble Madras High Court judgment in the case of M. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1). Chennai. However, in this case, various incriminating material in the form of loose sheets/dairy highlighting the cash loans given to various parties were found during the search but the appellant questioned the assessment on the basis that the AO had not scrutinized the material submitted before him and made addition based on a priori considerations. this judgment cannot be compared or relied upon as the factsare different. The other case law (Sujeet Singh Chhabra v Union of India AIR 1997 SC 2560) relied upon by the AO was also perused. The primary question in this case was on cross examination of witnesses in a violation in contravention of the I; ERA & Customs Duty Act. This case also does not have a direct barring on the issue at hand. They don't come to the rescue of the AO as the statement given by the appellant during the search was without any evidence or incriminating material. Once the appellant retracts the statement with or without an) basis, the AO may reject the retraction but he has to pass theassessment order based on the material evidences or by rejecting the books oraccount and estimating the income based on some reasonable assumptions. 4.22 As against this, the appellant quoted numerous judgments incudingPullangode Rubber Products Co. Ltd., Vs. State of Kerala (SC) (1973) (91 ITR 88), Tribhovandas Bhimji Zaeri (Delhi) (P) Ltd., v Assistant Commissioner of Income tax (2016) 177 TTJ (Mumbai) 306, KailashbenManharlal Chokshi v Aggarwal (2015) 379 ITR 0367 (Delhi), ChetnabenJ Shah Legal Heir of Jagdishchandra K. Shah v Income Tax Officer (2016) 288 CTR 0579 (Guj). Commissioner of Income Tax v Jagdish Narain Ratan Kumar (2015) 373 1 I R 0394 (Raj.) and Gajjam Chinna Yellappa v Income Tax Officer (2015) 370 1TR 0671 (AP) etc. in support of his claim that addition cannot be made merely on the basis of statement recorded, which was retracted later, leaving no evidence to rely upon to sustain the addition. 4.23 In this case, the appellant initially stated that he had made advances to Chitravana Resorts which was not passed through the books of account but later retracted and stated that the advances paid a Rs.75,00,000/- to the owners of the land on which the Chintravana Resorts project was to be constructed,was the same transaction referred to him in the statement and that these were paid through the banking channel and passed through the books of account. Similarly,helater stated that one more advance or Rs.40,00,000/- in BelurProject mentioned in the statement was actually the advance paid to Sri Ventures of Rs.52,72,011/-. The appellant filed the confirmation and the bank statements of the corresponding parties to justify the claim. Since, these transactions were found in the books of account and related to the same project as was referred in the preliminary statement. the AC) was left with no choice but to make addition on the basis of the statement provided by the appellant. It wasthe failure on the part of the department that no independent enquiry or investigation was conducted during the search or post search to verify thequantum of investments made, or to find outthe parties to whom such alleged advances were made. In the absence of any independent evidence, addition made u/s l53A does not sustain and liable to be deleted.

5. Aggrieved from the above deletion by the CIT(A), the Revenue filed appeal before the Tribunal.

6. The learned DR strongly relied on the Order of the AO and she has filed a written synopsis and referred to the statements recorded which are as under :

Q.No.4. Given details of all the movable assets like Fixed Deposits. Term Deposits Vehicles, Investment in Shares, Debentures etc. In your name or in the name of your family member or if you have made investment in any other person name? Ans : All the movable assets are shown in the returns of income, as far I remember. However, an advance of Rs.90 lakhs made to Chitravana Resorts, Mysore and Rs.40 lakhs made to Belur Project have not passed through books of accounts. I declare the total of this, i.e., Rs. 1.3 crores as my additional income for the A.Y. 2014- 15. I have not made any investment in others names.

Q. No.18. Please give details of advances if any received by you or the advance given by you to anybody? Ans : I have already declared the advance of Rs. 1.3 crores as additional income for A.Y. 2014-15 vides my answer to Q.no.4. I have not received any advance from others. I now remember that I have paid a sum of Rs. 50 lakhs this year towards marketing of sites to Krishna (8095101091), which I disclose as my additional income for A. Y. 2015-16. Q.No.19. Have you got anything else to say? Ans: I have already voluntarily disclosed additional income of Rs.1.8 crores for A.Y.2014-15 & 2015-16. I further assure you that if I am not able to explain about anything found during search, I will disclose the income corresponding to such findings. However, the assessee had not offered the above additional income in the return of income filed in response to notice u/s 153A of IT Act, 1961. In view of this, vide this office letter dated 27.10.2016 the assessee was requested to show cause why the sum of Rs.1,30,00,000 should not be assessed as his income for the year. In reply to the said letter, the assessee had filed his response. The relevant portion of the reply of the assessee on this issue was as under: With regard to unexplained advance of Rs.1,30,00,000/- to be offered as additional income. The advances are actually reflecting in my books of accounts as follows: - Prasanrta Murthy ... Rs.60,00,000 - Raghavendra Murthy ... Rs.15,00,000 - Sri Ventures ... Rs.52,73,011 Rs.1,27,76,011 In the course of search, I had mentioned that an advance of Rs. 90,00,000/ - is made to Chitravana Resorts, Mysore. The advance are made to Prasanna Murthy and Ranghavendra Murthy is towards Chitravana Resorts, the total amount of advance comes to Rs. 75,00,000/ - Again, an advance of Rs.40,00,0.90/ - made to Belur Project was also mentioned in the course of search which is reflecting in my books of accounts in the name of Sri Ventures of Rs. 52,76,011/ - As per my mentioning at the time, of search, the total advances comes to Rs. 1,30,00,000/ -, the same was already taken .in my books of accounts of which the total advance comes to Rs. 1,27,76,011/ - As I could not remember property at the time of search it was mentioned as advances not passed through books of accounts, but whereas, the advances are already mentioned in my books as a result, it is not offered to tax. In view of the above, during the assessment proceedings, a letter dated 24.11.2016 was issued drawing his attention to the fact that the declaration of Rs.1,30,00,000/- was made by him in the preliminary statement recorded during the beginning the search and requesting him to furnish the explanation to the following points with documentary evidences:

1. 1. Basis for stating that the advance of Rs.60,00,000 made to Prasanna Murthy and Rs.15,00,000 made to Ragavendra Murthy represents payment to Chitravana which you had claimed as Rs. 90,00,000/- in your statement. Copy of agreement pertaining to the transaction based on which payment of Rs.75,00,000/- is made.

3. Basis for claiming the advance made to Sri Ventures of Rs.52,76,011/-as the payment made to Belur Project on which you had claimed to have made an advance of Rs.40,00,000/- in your statement.

4. Documentary evidence in support of your claim vis-a-vis Sri Ventures and Belur Project. In response to this, the assessee had replied as under: "I am in receipts of the above said letter wherein. I have been asked to submit the explanation which is as under; 1. The advance made to Sri Prasanna Murthy Rs.60,00,000/ - and Sri Raghavendra Murthy Rs. 15,00,000/ - is toward Chitravana as the they are the owners of the land belonging to Chitravana..

2. There is no written Agreement made towards the advance, as it was an oral agreement between me and Sri Prasanna Murthy and Raghavendra Murthy.

3. The advance made to Sri Ventures is debited in my books of accounts which is Rs. 52,76,011/ - is for the Belur Project. As at the time of search, it is mentioned as Rs. 40,00,000/ - is out of the anxiety and difficulty in remembering at the time. The above advances are all made by cheque vide detailed as under: 4. a. Raghavendra Murthy Rs. 15,00,000/ - on 06. 11. 2012 Chq No.460862 Karnataka Bank Ltd. b. Prasanna Murthy Rs. 50,00,000/ - on 13.12.2012 Chq No. 460868 Karnataka Banl Ltd. c. Prasanna Murthy Rs 10,00,000/- on 18.12.2013 RTGS No.40732 During the assessment proceedings, the submissions of the assessee were carefully considered. However, it was not accepted for the following reasons:  The admission by the assessee that payment of Rs. 90,00,000-/- for Chitravana not routed through the books was done by the assessee at the time of beginning of the search.  The assessee had confirmed the preliminary statement subsequently in the final statement.  The assessee had not made any submission controverting the statement given during the search.  The assessee had claimed that the payment of Rs. 75,00,000 was made through cheque was a part of Rs.90,00,000/- that he had admitted. v.,-  The payment through cheques was routed through the books of the assessee and there was no necessity to admit this as being paid outside the books.  The assessee being a seasoned businessman and assessed to tax for several years very well knew what was not routed through the books.  The assessee claims that there was no agreement and the entire amount was paid based on oral agreement defies business prudence and makes the claim of the assessee unverifiable.  Regarding the payment of Rs.40,00,000/- which the assessee had admitted as having paid to Sri Ventures (Belur Project) outside the books, the assessee is now stating that it is recorded in his books and furnishing the ledger extract.  The admission was about payments being made outside the books and not what was recorded in the books. In the case of B. Kishore Kumar vs. Deputy Commissioner of Income-Tax, Central Circle-W(1), Chennai the Hon'ble High Court of Madras in (2014) 52 taxman.com 449 (Madras) held that where assessee himself stated in sworn statement during search and seizure about his undisclosed income, same was to be levied tax on basis of admission even without scrutinizing documents.

The Hon'ble Supreme Court of India upheld the decision of the Hon 'ble Madras High Court and the SLP was dismissed in (2015) 62 taxmann.com 215 (SC)/[2015] 234 Taxman 771 (SC). In view of the facts discussed above, the AO had made the addition on the above issue, as the claim of the assessee that the undisclosed income of Rs. 1,30,00,000/- admitted by the assessee during the course of search but not declared in the return of income filed in response to notice u/s 153A has been brought to tax u/s 69 of the I.T. Act by passing order u/s 143(3) r.w.s 153A of IT Act, 1961.

2. Unexplained 1,50,00,000/- investment in the 2014- construction of 15 Sindhoor Convention Hall Comments of the AO: During the course of search u/s 132, it was seen that the assessee is a partner in M/s Bhagirathi Enterprises which had constructed a Convention 1-lall by name "Sindhur Convention Hall". The investment of the assessee and the sources for the same were questioned and the assessee had replied as under: "Q.No. 7. : It is observed that the built up area of the said convention hall is about 31,000 sq.11. and the construction is of superior quality. As such the amount of Rs. 2.75 crores stated by you appears to he on a lower side. So, please state the correct amount of investment and also explain the sources thereof Ans. : Sir, I have not maintained proper records in respect of construction. Though according to me the amount of investment stated by me above is correct, in the absence of proper records I do not want to get into litigation with the department. Hence I state that the investment may be around Rs. 3.5 crores. As regards sources, loan of Rs.1.5 crores from KSFC has been, utilized for the construction. Later on I took further loan froin Axis bank and ING Vysya Bank, out of which were used for construction. In the absence of books of accounts and non-maintenance of proper records I hereby declare the balance amount of Rs. 1.5 crores as my additional income in my individual capacity for the A. Y. 2014-15 over and above my normal income." As can be seen from the statement, the assessee had admitted Rs. 1.5 crores additional income. However, on perusal of the return of income filed, it was seen that the assessee had not offered the additional income of Rs. 1.5 crores declared u/s 132(4) as additional income in the return of income file'd in response to notice u/s 153A. In view of this, during the assessment proceedings, a letter dated: 27.10.2016 was addressed to the assessee asking him to explain why the above sum should not be assessed as income in addition to the other income. In response to this, the assessee vide his letter had replied as under: "With regard to the Additional income to be offered to tax of Rs. 1,50,00,000/ - towards unexplained investment in the construction of Sindhoor Convention Hall, which is a Partnership Firm under the name M/s. Bhagirathi Enterprises. With regard to the Additional income to be offered to tax of Rs. 1,50, 00, 000/- towards unexplained investment in the construction of Sindhoor Convention Flail, the same has to be assessed in the hands of Sindhoor Comvention Hall, which is a Partnership Firm under the name M/s. Bhagirathi Enterprises. As this income is to be taken in the firm's hand, the same is not offered in my Return of Income". The reply of the assessee was carefully considered. As per the submissions of the assessee on the date of search, no books of accounts were maintained in respect of M/s. Bhagirathi Enterprises with PAN- AAKFB6933D. On perusal of the return of income filed, it was seen that the First return of the firm M/s. Bhagirathi Enterprises had been filed on 30.10:2015. In other words, the assessee had not filed any return of income and it was only after search the assessee had filed the return of income for the first time. As on the date of search, there was no return filed, no books of accounts maintained and in these circumstances, the statement of the assessee stating that he had invested Rs.1.5 crores over and above the bank loans which he had used for the construction of the Convention Hall holds much relevance. The assessee being in the know of things was aware as on the date of search that he had invested Rs.1.5 crores which were routed through his books of accounts as on the date of search. The explanation given by the assessee stating that the same had to be assessed in the hands of Sindhoor Convention Hall which is a Partnership Firm under the name M/s. Bhagirathi Enterprises was not acceptable, as the investment was out of the undisclosed income of the assessee. In the case of B. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai the Hon'ble High Court of Madras in [2014j 52 taxmann.com 449 (Madras) held that where assessee himself stated in sworn statement during search and seizure about his undisclosed income, same was to be levied tax on basis of admission even without scrutinizing documents. The Hon'ble Supreme Court of India has upheld the decision of the Hon'ble Madras High Court and the SLP was dismissed in [2015] 62 taxmann.com 215 (SCY[2015J 234 Taxman 771 (SC). In view of the above, the sum of Rupees One Crore Fifty Lakhs admitted as undisclosed investment during the course search has been brought to tax as unexplained investment under section 69 of IT Act, 1961 by passing order under section 143(3) r.w.s. 153A of IT Act, 1961.

No.04 of the statements. Even the AO has not referred for valuation of the construction of the convention hall without going into the real cost of the construction. The AO has wrongly added in the hands of the partner whereas it should have been added in the hands of the partnership firm. The ld. AR further submitted that the judgemnt relied by the ld. DR is not applicable in the present facts of the case, since, the transactions made of Rs. 1,30,00,000/- towards investments is correctly recorded in the books of the assessee and it has been verified by the AO from the bank statement. The CIT (A) has also distinguished the judgement relied by the assessing officer.

9. In the rejoinder the ld. DR strongly relied on the statements recorded during the course of search . She further submitted that during the search proceedings the assessee was unable to quantify the amount of investments made by the partners, only the name of partners were given. As per question answer No. 05 the partnership Firm was created in the financial year 2014-15 relevant to assessment year 2015-16 which is outside of the disputed assessment year. There was no PAN obtained of the Firm till 04.02.2015. As per Q. & Ans No. 07 the declaration made in the individual capacity. The relevant part is as under: “ In the absence of books of accounts and non maintenance of proper records I hereby declare the balance amount of Rs. 1.5 crores as my additional income in my individual capacity for the AY 2014-15 over and above my normal income.” This declaration was made for the construction of convention hall which was in physical existence. The CIT (A) has wrongly allowed this ground of the assessee raised on this issue without considering the statements recorded. The case laws relied upon by the learned Counsel are distinguishable on the facts.

10. Considering the rival submissions, during the course of search proceedings, the preliminary statements were recorded and assessee had accepted that there is undisclosed investments( additional income) towards Chitravana Resorts, Belur projects and Sindhur Convention Hall to the tune of Rs.1,30,00,000/- and Rs.1,50,00,000/- respectively. The CIT(A) has, after considering the submissions, deleted these two additions. We note from the statements recorded at the preliminary stage of search. It is noted that advance made of Rs.90 lakhs towards Chitravana Resorts, Mysuru, and Rs.40 lakhs made to Belur Project have not been passed through the bank account. However, while filing the return of income, it was not declared as additional income and during the course of assessment proceedings, the CIT(A) noted that these are recorded in the books of accounts of the assessee and paid through cheque but the recipient names are different and assessee submitted that the statements were recorded when the assessee was nervous and anxious. We note from the written submissions and Orders of the AO and CIT(A) that assessee has paid to Prasanna Murthy of Rs.60 lakhs, Raghavendra Murthy Rs.15,00,000/- and to Sri Ventures of Rs.52,76,011/-. Whereas the assessee admitted during the search of Rs. 90,00,000/- advance made to chitravana projects and Rs. 40,00,000/- advance made to Belur Project. The details of payments are in para No. 4.5 of the CIT (A) order. We also gone through on the same and transactions have been carried out through banking channel. The two transactions of Rs. 65,00,000/- ( 50,00,000+15,00,000) have been done on 06.11.2012 and 13.12.2012 which are outside from the disputed financial year. Further the assessee has paid Rs. 10,00,000 on 1812.2013 to Prassana Murty . The AO has also not done cross verification from the recipients and it is clearly reflected in the bank statements and financial statements as was produced by the assessee. Therefore, it cannot be said that it is incriminating statements for confirming the additions made by the AO, therefore we are in agreement in the order of the CIT (A) for deleting to the extent of Rs. 75,00,000/- . Further we gone through the paper Books page No. 76 to 79 we did not find detail of payments of Rs. 52,76,011/- but the assessee has submitted that these are paid and recorded in the books of accounts. The CIT(A) has noted that these amounts are recorded in the books of accounts of the assessee, therefore, it cannot be treated as additional income of the assessee. Since, before us there is no details or reconciliation statement for payment of Rs. 52,76,011 furnished by the assessee, therefore we are remitting back for the purpose of verification from the bank statements and books of account to this issue to the assessing officer for limited purpose. Accordingly, we are partly allowed for statistical purpose.

11. Further, in respect of deletion of Rs.1,50,00,000/- in respect of investment made in Sindhur Convention Hall, even though assessee in his statement has admitted in individual capacity of Rs.1,50,00,000/- as additional income and it was not offered as income. The CIT (A) has noted that it should be taxed in the hand of the Bhagirathi Enterprises and no valuation was done of the construction of Convention Hall. It is clear from the statement recorded at question and answer Nos.6, 7 and 8 which is placed in Paper Book. We are reproducing the statement recorded as under:

“Q. No. 06 Please produce the detail of receipts and booking register of Sindhoor Convention Hal J P Nagar Mysore, whether separate books of accounts are maintained for above mentioned business activities Ans.

12. From the above statements it is clear that the assessee has accepted the over and above investments of Rs. 1,50,00,000 in his individual capacity and there is no any quantification of investments made or capital contribution by the other partners towards construction of convention Hall. The contention of the learned Counsel that this income (Rs.1,50,00,000/-) for construction of the convention hall should be assessed in the hands of the partnership firm is not tenable as per the statements recorded during the course of search noted above. The assessee has accepted in individual capacity that the investments were made towards construction of Hall of Rs. 1.50 crore over and above of Rs. 2.75 crore . There is physical existence of the building which was newly constructed and completed in Oct. 2013 whereas in the statements the assessee stated that the Partnership firm was constituted in the financial year 2014-15 as per question & answer No.

9. Learned counsel argued that the Assessing Officer has not given any reason in the assessment order as to why the explanation given by the assessee in the affidavit was not acceptable. Learned CIT(A) has given detailed reasons in respect of each deletion of the addition made by the Assessing Officer. Learned counsel in support of his arguments relied upon the judgment of the Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 and submitted that the Supreme Court therein 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 & Bros. v. Asstt. CIT [2011] 13 taxmann.com 49/201 Taxman 207 (Mag.)/339 ITR 192 wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. It is argued that additions cannot be made merely on the basis of statements which are subsequently retracted even belatedly as held by Delhi High Court in CIT v. Sunil Aggarwal [2015] 64 taxmann.com 107/[2016] 237 Taxman 512/[2015] 379 ITR 367. Learned counsel relied on the judgment of this Court in Escorts Heart Institute and Research Centre Ltd. v. Dy. CIT (TDS) JP [2017] 87 taxmann.com 184/251 Taxman 401/[2018] 404 ITR 344; CIT v. Vegetable Products Ltd. [1973] 88 ITR 192(SC) and argued that if two views are possible, the view in favour of the assessee should be preferred. Reliance is also placed on the judgments in CIT v. K.Y. Pilliah & Sons [1976] 63 ITR 411 (SC); Dy. CIT v. Ratan Corpn. [2005] 145 Taxman 503/197 CTR 536 (Guj.); Asstt. CIT v. Shri Devendra Kumar Choudhary [IT Appeal No. 828/JP/16, dated 30-6- 2017]; CIT v. Ashok Kumar Soni [2008] 166 Taxman 371/[2007] 291 ITR 172 (Raj.); Kailahben Manharlal Chokshi v. CIT [2008] 174 Taxman 466/[2010] 328 ITR 411 (Guj.); CIT v. Omprakash K. Jain [2009] 178 Taxman 179/[2010] 322 ITR 362 (Bom.); Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC); Shree Ganesh Trading Co. v. CIT [2013] 30 taxmann.com 170/214 Taxman 262/257 CTR 159 (Jhar.); CIT v. Shri Ramdas Motor Transport Ltd. [2015] 55 taxmann.com 176/230 Taxman 187 (A.P.) Chetnaben J. Shah v. ITO [2017] 79 taxmann.com 328/[2016] 288 CTR 579 (Guj.) 10. We have given our anxious consideration to rival submissions and carefully perused the material on record.

14. The Punjab and Haryana High Court in Commissioner of Income- Tax v. Lekh Raj Dhunna, taking note of the fact that the assessee had made a statement under section 132(4) of the IT Act whereby a surrender of Rs. 2 lakh was made and further that the assessee had admitted that he had earned commission from a party, which was not disclosed in the return filed by him and certain documents were seized which bore the signature of the assessee, held in para 16 of the report as under:— "16. Thus, in view of sub-sections (4) and (4A) of Section 132 of the Act, the Assessing Officer was justified in drawing presumption against the assessee and had made addition of Rs. 9 lakhs in his income under section 68 of the Act. The onus was upon the assessee to have produced cogent material to rebut the aforesaid presumption which he had failed to displace. The assessee retracted from the said statement, vide letters dated November 24, 1998, and March 11, 1999, during the course of assessment proceedings. However, no value could be attached thereto in the present case. In case the statement which was made by the assessee at the time of search and seizure was under pressure or due to coercion, the assessee could have retracted from the same at the earliest. No plausible explanation has been furnished as to why the said statement could not be withdrawn earlier. In such a situation, the authenticity of the statement by virtue of which surrender had been made at the time of search cannot be held to be bad. The Tribunal, thus, erred in concluding otherwise. The Tribunal, therefore, was not justified in reversing the order of the Assessing Officer which was affirmed by the Commissioner of Income-tax (Appeals) also."

Subsequently, when the statement under section 132(4) of the IT Act was recorded on 10-10-2014, which was concluded at his residence, Shri Bannalal Jat categorically admitted that the cash amount of Rs. 1,21,43,210/- belonged to his company M/s. Bannalal Jat Construction Private Limited and the same was its undisclosed income. Thereafter another statement under section 132(4) of the IT Act was recorded at his business premises on 11-10-2014. In reply to question No. 8, he was asked to explain the source of cash amounting to Rs. 3,380/- found at his office and Rs. 1,21,43,210/- found at his residence, he submitted regarding the amount of Rs.1,21,43,210/- found at his residence that he was unable to give any explanation and admitted that he was in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and that the income so generated on account of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed income belonged to his company M/s Bannalal Jat Construction Pvt. Ltd. In response to question no. 11 wherein he was asked to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure details have been found and taking all that into consideration, he surrendered Rs. 4,01,43,210/- as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s Bannalal Jat Construction Private Limited in respect of unexplained cash amounting to Rs.1,21,43,210/- and Rs.2,50,00,000 and Rs. 30,00,000/- totalling to Rs. 2,80,00,000 in his individual capacity."

Pronounced in the open court on the date mentioned on the caption page.