SUNIL SAHU,RAIPUR vs. ACIT(CENTRAL)-2, BHOPAL

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PER Ms. MADHUMITA ROY - JM:

The instant bunch of appeals filed by the assessee and Revenue are directed against the orders dated 15.1.2019 and 21.10.2020 passed by the Commissioner of Income Tax (Appeals)-3, Bhopal (in short ‘CIT(A)’), arising out of the orders dated 30.12.2017 & 29.03.2016 passed by the ACIT(Central)-II, Bhopal under section 143(3) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Years 2010-11 to 2012- 13 & 2013-14, respectively. This bunch of appeals is arising out of orders dated above and passed as above at 1 to 3 filed by the assessee and 4thfiled by the Department.

ITA Nos.156 to 158/Ind/2019 for A.Ys. 2010-11 to 2012-13

For the A.Y. 2010-11, the assessee has raised the following revised grounds of appeals including additional legal grounds: “1. On the facts and circumstances of the case and in law, the mechanical approval granted by the Pr.CIT u/sl51 on 22-3-17 is without application of mind and in absence of 'subjective satisfaction' recorded by the Pr.CIT on such 'reasons recorded', impugned initiation & re-assessment made by the Id AO be treated as invalid, void-ab-initio & without jurisdiction, and hence, is liable to be quashed. 2. (a) On the facts and circumstances of the case and in law, initiation of reassessment proceedings u/s147/148 on 20-3-17 is bad in law in absence of tangible material for escaped income of Rs.20 lakhs, while the alleged document/ transaction is not related/ belonged/ pertain to the assessee; initiation made on 20-3-17 based on irrelevant document merely on presumption and surmises is invalid, hence, initiation of reassessment proceedings u/s147/148 is liable to be quashed. (b) On the facts and circumstances of the case and in law, initiation of reassessment proceedings u/s147/ 148 on 20-3-17 is bad in law in absence of tangible material for escaped income of Rs.10 lakhs, while the alleged transaction dt.16-10-10 is duly recorded in the books of assessee in the relevant AY11-12 and is not related to AY10-11;

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initiation made on 20-3-17 based on irrelevant document, without having any information/ material related to AY10-11, is invalid, hence, initiation of reassessment proceedings u/s!47/ 148 is liable to be quashed. 3. (a) On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the addition of Rs.20 lakhs u/s69A on the count of unexplained cash not recorded in the books, while the alleged transaction is not related/ belonged/ pertain to the assessee and no cash relating to AY10-11 was found on survey u/s!33A on 1-12-12 in the premises of the assessee, and in absence of this, addition made on this count u/s69A is liable to be deleted. (b) On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the addition of Rs.10 lakhs u/s69A on the count of unexplained cash not recorded in the books, while the alleged transaction dt.16-10-10 is duly recorded in the books of the assessee in the relevant AY11-12 and no cash relating to AY10-11 was found on survey u/s!33A on 1-12-12 in the premises of the assessee, and in absence of this, addition made on this count u/s69A is liable to be deleted.”

For the A.Y. 2011-12, the assessee has raised the following revised

grounds of appeals including additional legal grounds:

“Revised Gr.No.l: 1. On the facts and circumstances of the case and in law, initiation of proceedings u/s147/148 is based on documents found (i.e., LPS-1 to LPS-5) in search premises of third party (i.e., Rajesh Kumar Prabhat, Bhopal u/s!32), permissible course of sec153C has not been followed by the Id AO, initiation of proceedings u/s147/ 148 is bad in law, illegal being without jurisdiction, hence, it is liable to be quashed." Revised Gr.No.2: "2. On the facts and circumstances of the case and in law, reasons recorded is only reasons to suspect without having any tangible material; even without application of mind on borrowed satisfaction of his predecessor AO on unverified & vague information; reassessment cannot be initiated unless there is reason to believe rather than suspect; more so, when he has not made addition on the reasons recorded at Sl.No.(ii) & (iii); reassessment u/s147/148 is liable to be quashed." Revised Gr.No.3: "3. On the facts and circumstances of the case and in law, approval granted by PCIT u/s151(l) on 22-3-17 in most mechanical & routine manner without

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application of mind on the reasons recorded on wrong sec147(b) and not even recorded any 'subjective satisfaction' while granting such mechanical approval u/s!51(l); in absence of valid approval as mandated by law u/sl51; reopening of assessment u/s147/148 is invalid, bad in law & without jurisdiction, and hence, is liable to be quashed." Revised Gr.No.4: "4. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining addition of Rs.56,05,230, on the basis of alleged seized documents (i.e., LPS-1 to 5) from premises of third party, copy of which has not been provided to the assessee for its explanation, the order passed without giving proper opportunity to the assessee, is a serious flaw rendering the order a nullity, it amounts to violation of principal of natural justice is liable to be quashed.”

For the A.Y. 2012-13, the assessee has raised the following revised

grounds of appeals including additional legal grounds:

“Revised Gr.No.l: 1. On the facts and circumstances of the case and in law, the reasons recorded on 20-3-17 is only based on survey statement u/s!33A on 1-12-12 (AY13-14) which had retracted; more so, the alleged reasons had been explained in the assessment proceedings of AY13-14 u/s143(3) dt.29-3-16; the alleged reasons are merely reason to suspect without having any tangible material even without application of mind by the AO on borrowed satisfaction of his predecessor AO on his vague information; reopening u/s!48/147 is liable to be quashed." Revised Gr.No.2: "2. On the facts and circumstances of the case and in law, approval granted u/s151(2) dt.21-3-17 by Addl.CIT in mechanical, routine & casual manner without application of mind on the reasons recorded 'on wrong sec!47(b); not even recorded any 'subjective satisfaction'; in absence of a valid approval as mandated by sec!51; reopening of assessment u/s!47/148 is invalid, bad in law & without jurisdiction and is liable to be quashed." Revised Gr.No.3: "3. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the addition of Rs.59 lakhs made u/s69A, only on the basis of survey statement recorded on oath which had duly been retracted, when the alleged sum invested by & shown in the books of M/s.Usha Buildwell P.Ltd, more so, in absence of the assessee is found to be owner of any real money on survey proceedings on 1-12-12, the alleged addition u/s69A is merely on

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presumption & surmises without any corroborative material evidence brought on record, is not tenable as per law and hence, is liable to be deleted." Revised Gr.No.4: "4. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the addition of Rs.1.50 crores made u/s69 on the count of undisclosed investment in transaction with Smt.Khushbu Gandhi, only on the basis of survey statement recorded on oath which had duly been retracted, more so, no such investment has been made by the assessee and the alleged land purchased by & shown in the books of M/s.MS Infraventure on 4-7-12, the alleged addition is merely on presumption & surmises without any corroborative material evidence brought on record, is not tenable as per law and hence, is liable to be deleted. Revised Gr.No.5: "5. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the addition of Rs.25 lakhs made u/s69 on the count of undisclosed investment in hundis, the alleged addition is merely on presumption & surmises without any corroborative material evidence brought on record, is not tenable as per law and hence, is liable to be deleted." Revised Gr.No.6: "6. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the addition of Rs.81,22,250 made u/s69 on the count of undisclosed investment on the basis of loose papers found (i.e., Annex-A-30, Pg.436, 437 & 438) which is dumb document, the alleged addition is merely on presumption & surmises without any corroborative material evidence brought on record, is not tenable as per law and hence, is liable to be deleted."

the first time before us and considering the ratio laid down in the case of

National Thermal Power Co Ltd (1998) 229 ITR 383 (SC) wherein the

Hon'ble Supreme Court held that the assessee is entitled to urge question of

law on the basis of facts already available on record and Tribunal had

jurisdiction to examine a question of law which though not arose before

lower authorities but arose before it from facts as found by lower authorities

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and having a bearing on tax liability of assessee, we admit the same being

legal in nature which goes to the root of the matter.

challenged that the approvals granted by the concerned PCIT u/s 151(l) for

the A.Ys. 2010-11 & 2011-12 and by the concerned Addl. CIT(A) u/s 151(2)

for the A.Y. 2012-13 are in most mechanical & routine manner without

application of mind on the reasons recorded on wrong sec147(b) and not

even recorded any 'subjective satisfaction' while granting such mechanical

approval u/s151(l) & 151(2) and in absence of valid approval as mandated

by law u/sl51, reopening of assessment u/s147/148 is invalid, bad in law &

without jurisdiction, and hence, is liable to be quashed.

3.1 The moot point involved in this matter as to whether the approval

granted by the additional CIT/principal CIT under section 151(2) and 151(1)

of the act is sustainable or not. The assessee before us submitted that the

approval as mentioned hereinabove is product of non-application of mind,

mechanical in nature. In this respect he has drawn attention to the approval

granted by the PCIT dated 22.03.2017 and the satisfaction note of the

DCIT, Bhopal dated 22.03.2017 for assessment years 2010-11 and 2011-

Additional Commissioner of Income Tax, Central Range Bhopal dated

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21.3.2017 and the satisfaction recorded by the Learned Additional

Commissioner of Income Tax, Central Range Bhopal dated 21.03.2017 for

the A.Y. 2012-13. Since the issue involves the very maintainability of the

proceeding initiated by the revenue we would like to address the same at

the very threshold of the matter.

issued by the Additional Commissioner of Income Tax appearing at page 75

of the paper book before us for assessment year 2010-11 wherefrom it

appears that the sanction note of the PCIT, Central Bhopal has also been

annexed. The same is also available at page 76 to page 80 of the paper

book filed before us. It appears that the Learned PCIT had recorded its

submission to this effect that he satisfied on the reasons recorded by the

learned AO that it is a fit case for the issue of notice under section 148 of

the Income Tax Act for Assessment Year 2010-11. Identical approval is also

appearing at page 78 of the paper book filed before us in respect of

assessment year 2011-12 and the identical note written by the PCIT is

available at page 80 thereof. However, we find that the section and the

provision of section applicable to the instant case was mentioned as section

147(b) of the act at page 82 and 79 into separate paper book filed by the

assessee. The same was issued by the Additional Commissioner of Income

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Tax Central II, Bhopal. While recording reasons for initiating proceeding

under section 148 and for obtaining the approval of the

Commissioner/Additional Commissioner of Income Tax. We find that the

said particular section has been omitted from the statute with effect from

01.04.19 89 and therefore there could not be any application of the said

section in the instant case before us. When the very basis is admittedly on a

wrong footing the entire proceeding is, therefore, according to us is vitiated

and thus liable to be quashed. We note that the same provision has also

been relied upon in the A.Y. 2012-13 by the Additional CIT which according

to us is nothing but wrong and non-application of mind. In this regard we

have further considered the judgments relied upon by the learned AR.

4.1 We find that on the same issue, the Kolkata Bench in the case of

Alankar Commodeal P. Ltd. (2022) 216 TTJ 445 (Kol-Trib), order dated

01.2.2022 has held the assessment proceedings as invalid observing as

under: - “14. A perusal of the aforesaid approval granted by the Addl. CIT(A) reveals that the AO had mentioned the relevant section as 147(b) which admittedly has been omitted from the statute w.e.f. 1.4.1989 and further without application of mind to the contents of the aforesaid proposal, the learned Addl. CIT granted approval in a mechanical manner by saying 'Yes', even without application of mind that the approval has been sought under wrong section. The aforesaid contents of the approval clearly shows that the approval has been granted by the Addl. CIT in a

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mechanical manner without application of mind. In the case of Omkam Developers Ltd. (supra) the Co-ordinate Bench of the Tribunal while relying upon the decision of the Hon'ble Delhi High Court in the case of Principal CIT vs. N.C. Cable Ltd. (supra) has held that mere mentioning Yes' for approval without any evidence of application of mind amounts to mechanical approval by CIT. Under the similar circumstances, wherein, the section for invoking reassessment has been recorded as s. 147(b), the Co-ordinate Bench of the Tribunal observed that this showed that the AO had filled proforma in a mechanical manner and the learned CIT(A) has also approved the same mechanically. In view of the proposition of law laid down by the various Co-ordinate Benches of the Tribunal as well as High Courts, since the approval in this case was granted in a mechanical manner without application of mind by the learned Addl. CIT, therefore, the same does not constitute a valid approval under s. 151 of the Act and hence, the assumption of jurisdiction to reopen the assessment by the AO on the basis of invalid approval was bad-in-law. 15. In view of the above discussion, since we have held that reopening of the assessment is bad-in-law, therefore, the assessment order framed under s. 147 of the Act is not sustainable in the eyes of law and the same is hereby quashed. In the result, the appeal of the assessee stands allowed.”

4.2 We find that on the same issue, the Hon’ble Bombay High Court in the case of Kalpana Shantilal Haria (2017) WP No. 3063 of 2017 (Bom), order dated 22.12.2017 has held the assessment proceedings as invalid observing as under: - “7. Mr. Chanderpal, learned Counsel appearing for the Revenue tendered a copy of the letter dated 19th December, 2017 issued to the petitioner wherein the Assessing Officer has stated that the words "147(b)" were inadvertently filled in the prescribed form, instead of Section 147 of the Act while obtaining the sanction from the Joint Commissioner of Income Tax. It is further submitted on behalf of the Revenue that the same is a curable defect under section 292B of the

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Act. Therefore, the impugned notice cannot be held to be bad for mere incorrect mentioning of section on account of the mistake. 8. There can be no dispute with regard to the application of Section 292B of the Act to sustain a notice from being declared invalid merely on the ground of mistake in the notice. However, the issue here is not with regard to the mistake / error committed by the Assessing Officer while taking a sanction from the Joint Commissioner of Income Tax but whether there was due application of mind by the Joint Commissioner of Income Tax while giving the necessary sanction for issuing the impugned notice. It is a settled principle of law that sanction granted by the higher Authority for issuing of a reopening notice has to be on due application of mind. It cannot be an mechanical approval without examining the proposal sent by the Assessing Officer. Prima facie, it appears to us that if the Joint Commissioner of Income Tax would have applied his mind to the application made by the Assessing Officer, then the very first thing which would arise is the basis of the notice, as the provision of law on which it is based is no longer in the statute. Non pointing out the mistake / error by the Joint Commissioner of Income Tax on the part of the Assessing Officer is prima facie evidence of non- application of mind on the part of the sanctioning authority while granting the sanction. 9. In the above view, there shall be interim stay in terms of prayer clause (d). 10. It is made clear that other submissions made by on behalf of the petitioner have not impressed us. The petition is admitted solely on the issue of prima facie non-application of mind by the Joint Commissioner of Income Tax while granting the sanction for issuing the impugned notice. 11. Petition is expedited.”

4.3 We find that on the same issue, the Delhi Bench in the case of VRC Township (P) Ltd. (2020) ITA No.1503/Del/2017 (Del-Trib), order dated 14.10.2020 has held the assessment proceedings as invalid observing as under: -

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“Considering the totality of the facts and circumstances of the case and that wrong Section have been mentioned in the reasons and some of the Columns material for re-assessment are left 'Blank' and that Addl. CIT did not record how he was satisfied on wrong facts and wrong reasons would clearly show that reopening have been done in the matter without application of mind based on wrong facts and as such the reopening of the assessment cannot be justified. It may also be noted here that the Learned Addl. CIT, Range-12, Delhi while granting sanction under section 151 of the I.T. Act has mentioned in the reasons that "Yes, I am satisfied that this is a fit case for reopening under section 147." Such a satisfaction was not found valid by ITAT, Delhi Benches in the cases of Shree Balkishan Agarwal Glass Industries Ltd., Delhi vs., DCIT (supra) and M/s. Behat Holdings Ltd., Delhi vs., ITO, Ward-4(3), New Delhi (supra), based on several decisions of the Hon^ble High Courts. Thus, the issue is covered against the Revenue by the above decisions of the Tribunal as well. The A.O. has thus no justification to assume jurisdiction under section 147 of the I.T. Act, 1961, in a Lawful manner and as such the same are liable to be quashed. In view of the above discussion, we set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. Since we have quashed the reopening of the assessment, therefore, there is nothing to decide the issue of addition on merits. Appeal of the Assessee allowed.”

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ITA No.355/Ind/2020 (A.Y. 2013-14), filed by the Revenue

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addition made toward income declared in the statement recorded under Section 133A of the Act. Relying upon different judgment passed by different authorities in the absence of any positive evidence the addition made by Ld.AO stood deleted. Likewise, three additions of Rs.2,50,00,000/- and Rs.23,00,000/- and Rs.1,35,90,000/- stood deleted.

7.1. The facts emanating from the records, as placed before us, are this that the impugned additions have been made on account of voluntary surrender made by the appellant during the course of survey. Various loose-papers and documents were impounded during the course of survey which were confronted to the assessee by the learned Assessing Officer. Statement of the assessee was also recorded on oath on 04.12.2012 wherein the assessee voluntarily surrendered additional income of Rs.7 Crores on various accounts including unrecorded commission, on-money payment etc... It is relevant to mention that during the course of assessment proceedings, the assessee, vide a letter dated 02.12.2014, had retracted from his voluntary admission made during the course of survey stating that the same was made under force and coercion. However, the Assessing Officer did not find the same to be acceptable and made the addition on the basis of the statement recorded. The learned CIT(A), as it appears from the record, considered the entire aspect of the matter only on two counts i.e. (i) addition made purely on the basis of the statement made by the assessee and (ii) the addition made on the basis of documents found during the course of survey. It further appears from the record, especially from paragraph no. 4.1.1 of the order of the CIT(A), that it has been categorically observed by him that though the learned Assessing Officer solely relied upon the statement made by the assessee despite retraction

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being made, no reference to any incriminating/positive document impounded during the course of survey has been relied upon. Therefore, the admitted position of fact being addition made not on the basis of the incriminating material found during the course of survey but on the basis of the retracted statement of the appellant has been duly considered by the learned CIT(A). In fact, even in post inquiries also no irregularity has been brought on record and the addition has been made only on the basis of the statement declared and recorded under Section 133A of the Act. The learned CIT(A), while dealing this aspect of the matter, considered certain judgments as follows:-

i. Kailashben Mangarlal Chokshi Vs. CIT, (2008) 14 DTR 257 (Guj.)

ii. Shree Ganesh Trading Co. Vs. CIT, Tax Case No. 8 of 1999 order dated 03.01.2013 (Hon’ble Jharkhand High Court)

iii. M/s. Ultimate Builders Vs. ACIT, Bhopal in ITA No.134/Ind/2019 dated 09.08.2019 (Ind. Trib.)

iv. CIT Vs. Jaya Lakshmi Ammal (2017) 390 ITR 189 (Mad.)

v. ACIT Vs. Shri Yogesh Kumar Hotwani, 30 ITJ 353/380 (Ind.Trib.)

7.2 The ratio laid down in the above judgments to this effect that no addition can be made merely on the basis of the statement made under Section 132(4) of the Act without linking to the seized books of accounts, other documents, money, bullion, jewellery, other valuable article or thing has been duly taken care of and in the absence of having any reference to any incriminating material found during the course of assessment and only on the basis of retracted statement made by the assessee, the addition made by the learned Assessing Officer on the basis of statement made by

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the appellant amounting to Rs.1,01,0,000/- in the instant case is found to be not maintainable and thus deleted by the learned CIT(A) which, in our considered opinion, is without any ambiguity so as to warrant interference; hence the same is hereby upheld.

“[B] Addition made on the basis of documents found during survey (Rs. 2,50,00,000/-, Rs. 23,00,000/- & Rs, 1,35,90,900/-:-

This category involves three additions which are not interlinked, however, aire connected with same thread i.e. statement of the appellant. Therefore, the three additions based on various loose papers are discussed and decided under broad headings:

(i) Loose paper page no 17 to 25 (Rs. 2,50,00,000/-):-

The appellant during the curse of appellate proceedings submitted that the addition made by the AO on the basis of page no 17 to 25 is related to M/s Mahamaya Infra Reality Pvt Ltd, Raipur. The appellant, further, submitted that he was working as a commission agent on behalf of M/s.Usha Buildwell Pvt Ltd & M/s.Niveshwel for selling plots in the project of M/s Mahamaya Infra Reality Pvt Ltd i.e. 'Galaxy I-land Project, Amasiwni, Raipur during AY 2012-13 to 2014-15 & onwards. The commission income earned from sale of plots has been shown by M/s.Usha Buildwell Pvt Ltd & M/s.Niveshwel in their return of income for AYs 2012-13 to 2014-15 and onwards. In support appellant has filed copies of return of income, Balance sheet, P&L account statement

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and ledger account of commission income. On perusal of the evidences filed by the appellant the following was observed:-

FY Commission income Commission income Total shown in the books of shown in the books of account of M/s. account of M/s.Usha Niveshwel (f) Buildwell Pvt Ltd FY11-12 3,30,900 3,25,000 6,55,900 FY12-13 Nil Nil Nil FY13-14 20,00,000 15,00,000 35,00,000 FY14-15 3,00,000 5,00,000 8,00,000 FY15-16 26,79,430 11,48,320 38,27,750 FY16-17_ 5,00,000 Nil 5,00,000 FY17-18 Nil Nil Nil FY18-19 Nil Nil Nil Total: 58,10,330 34,73,320 92,83,650

The appellant has also filed details of total lots sold, area of plots and amount of commission received. The details are as under:-

Commission income shown in the books of FY11-12 40 plots 56,1 82 sq. feet Rs.3,30,900 in M/s.Niveshwel & Rs.3,25,000 in M/s.Usha Buildwell Pvt Ltd FY12-13 187 2,5 1,422 sq. Nil plots feet FY13-14 86 plots l,21,294sq. feet Rs.20,00,000 in M/s.Niveshwel & Rs. 15,00,000 in M/s.Usha Buildwell Pvt Ltd FY14-15 27 plots 37,233 sq. feet Rs.3,00,000 in M/s.Niveshwel & Rs.5,00,000 in M7s.Usha Buildwell Pvt Ltd FY15-16 5 plots 6,400 sq. feet Rs.26,79,430 in M/s.Niveshwel & Rs.11,48,320 in M/s.Usha Buildwell Pvt Ltd FY16-17 1 plot 600 sq. feet Rs.5,00,000 in M/s. Niveshwel

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FY1/-18 11 plots 14,450 sq. feet Nil

Total 4,87,581 sq. feet

The appellant moving one more step ahead has filed copies of registered sale deeds, affidavits of the buyers confirming sale of plot by M/s Mahamaya Infra Reality Pvt Ltd. Thus, appellant with sufficient documentary evidences has proved that the commission income received on sale of plots were actually received by his partnership firms and not by appellant in individual capacity. It is worth mentioning here that the evidences furnished by the appellant were also forwarded to AO for remand report. The AO in remand report submitted that the evidences furnished by the appellant were not furnished during assessment proceedings and the affidavits of the customers were received in FY 2019-20, however, assessment was completed in AY 2015-16. Further, the AO evidences on record has only relied on statement of the appellant. Hence, it can be said that the additions has been made on the basis of statement of the appellant. It is now settled legal principle that no addition can be made simply on the basis of statement, the additions ought to be supportive with necessary incriminating material. In view of the above discussion and in the light of evidences filed by the appellant, addition made by the AO amounting to Rs. 2,50,00,000/- is Deleted.

ii) Loose paper page no 32 [Annx A-19] (Rs. 1,35,90,900/-) and Loose paper page no 64 & 65 [Annx A-4] (Rs. 23,00,000/-):-

During the course of survey a loose paper page no 32 of Annexure A- 19 was found and impounded. As per AO the said loose paper contain details of payment of Rs.1,35,90,900/-. Also, the appellant in his statement has accepted entre purchase consideration of land of Rs. 2,34,75,000/-. However, the appellant before me as well as before has taken a plea that the said loose paper does not mentions any date, name of the appellant and is not in the handwriting of the appellant and represents rough jotting7scribbling/notings/calculations. The AO

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after considering reply of the assessee and placing reliance on statement of the appellant made addition to the income of the appellant.

As a matter of fact the impunged land was purchased by M/s.MBS Infraventure at a sale consideration of Rs.34,39,000 & Rs.24,58,500 on 17-10-12 & 17-12-12 respectively from Shri Ram Narayan for which registry has been made by M/s.MBS Infraventure (firm) vide registered agreement dt.17-10-12 & 17-12-12 and also at a consideration of Rs.7.86 lakhs on 17-10-12 from Smt.Man Kunwar and similarly, M/s.MBS Infraventure has purchased the property from Shri Nirmal Kumar Dheemar at a sale consideration of Rs.32 lakhs on 23-10-12. Thus, the total amount of Rs. 98,84,100/- has been shown as stock in trade in balance sheet as on 31.03.2013 by M/s. MBS Infraventure. However, on perusal of impunged loose paper it cannot be said that the same is linked with purchase of the said land. The loose paper does not have name of the appellant, the same is undated, the details figures/amount mentioned on loose papers are missing whether the same represent payment/receipt/balance amount, beneficiary/payee details are missing, loose paper is not signed by appellant, no details of alleged buyer/purchaser are mentioned. The only reason for AO to make addition to the income of the appellant was statement of the appellant taken after the course of survey. The said statement was retracted on 21.11.2014. Thus, the statement has no evidentiary value and that too in absence of any cogent evidence on record. Appellant has argued that the alleged on money was never paid by appellant, further, the impunged land as not purchased by appellant in individual capacity, however, the same was purchased by M/s MBS Infraventures. Neither any of the person/firm/company nor any of the seller/buyer has ever stated that any such transaction actually took place and the entire addition has been made on sheer presumption and assumption basis. The AO has also failed to bring on record any cogent evidence, creating direct nexus of on money paid by appellant when no such land was purchased by appellant in individual capacity. Therefore, in absence of any cogent evidence having direct nexus with the impunged transaction, the said impunged paper i.e. page nos 32 of Annx A-19 cannot be used against the assessee and is to be treated as deaf and dumb documents.

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Another loose paper page no 64 & 65 of Annexure A-4 and page no 48 of Annexure A-5 were found and impounded which as per AO contain details of receipt of commission in cash which has not been shown in return of income by the appellant. On perusal of copy of loose papers i.e. page no 64 & 65 it is seen that the same has been narrated as 'Golden Tower Comm details' and name of various person are mentioned with amount against their names. Further page no 48 is an excel sheet mentioning name of the appellant and details of sale and purchase of shops of City Plaza are mentioned. Here, name of the appellant is mentioned, however, other important details such as date of payment, actual amount, mode of payment, and other details are completely missing. On perusal of the assessment order it is seen that the AO did not made any enquiry from the person whose names are mentioned on the impugned loose paper and mace addition to the income of the appellant on the basis of statement of the appellant and on whims ad fancies of the AO. The total amount jotted dowr. on these loose papers was Rs. 34.8 lakhs, however, the addition has bee-made by the AO only on the amount declared by the appellant and not a.-per actual transaction. It is worth mentioning that the AO neither during assessment proceedings nor during remand proceedings made any enquiry from the person whose names and contact no are mentioned on the loose papers. Also, none of the person whose names are mentioned has admitted to have paid commission of to appellant. The AO has also presumed that the transaction has been carried out in the year under consideration, however there is no mention of the date of transaction, therefore, addition has been made on sheer assumption and presumption basis by the AO. Thus, absence of these key and vital details make the impinged papers as deaf and dumb documents.

........ ........ ........ ........

It is settled legal position that onus of proof is on the person who makes any allegation and not on the person who has to defend. As per legal

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maxim "affairmanti non neganti incumbit probation " means burden of proof lies upon him who affirms and not upon him who denies. Similarly as per doctrine of common law "incumbit probation qui digit non qui negat” i.e. burden lies upon one who alleges and not upon one who deny the existence of the fact. Further, it is most important to mention that nowhere in the said impunged loose paper name of the appellant, details of land or even details of seller/buyer are mentioned. The AO has failed to discharge his onus of proof especially when addition has been made under "deeming fiction". In view of this lacune on the part of AO, impunged addition is legally not sustainable. As held in the case of CIT v/s KP Varghese 131 ITR 574 (SC) by Hon'ble Apex Court in absence of evidence that actually assessee paid more amount than declared in registered deed, no addition can be made. In the case of Bansal Strips (P) Ltd & Ors Vs. ACIT (2006) 99 ITD 177 (Del.), it has been held that:-

“If an income not admitted by assessee is to be assessed in the hands of the assessee, the burden to establish the such income is chargeable to tax is on the AO. In the absence of adequate material as to nature and ownership of the transactions, undisclosed income cannot be assessed in the hands of the assessee merely by arithmetically totally various figures jotted down on loosed document.”

This is an undisputed fact that neither any incriminating material was found or seized during search proceedings nor any person has ever admitted about on money payment by appellant. In absence of any corroborative evidence to prove that there was any on money payment by the appellant, the AO has no locus to assume that appellant has made payment of Rs. 1,35,90,900/- in cash against purchase of land and receipt of commission in cash of Rs. 23,00,000/- by the appellant. It is settled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. v/s CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has

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been held in the case of Umacharan Saha & Bros co. v/s CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal v/s CIT (1954) 26 ITR 736 (SC).

In view of the above discussion, the AO was not justified in making addition on the basis of retracted statement of the appellant. Thus, it can be safely concluded that the addition made by the A.O was not on the basis of the incriminating material found during the course of survey but only on the basis of retracted statement of appellant. Even in post survey enquiries no irregularity has been brought on record and the only addition made is on the basis of statement recorded u/s 133A of the Act. Hon'ble ITAT Indore in the case of ACIT(l) VS. Sudeep Maheshwari ITA No 524/Ind/2013 dated 13.02.2019 has held as under:-

"6. It is the case of the assessee that during the course of search & seizure, no incriminating material or undisclosed income or investments were found It is stated that the assessee -was under mental pressure and tired. Therefore, to buy peace of mind, he accepted and declared Rs. 3 crores in personal name. It is also stated that the case laws as relied by the A. O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain

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corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have given our thoughtful consideration to the rival contentions of the parties. It is undisputed fact that the statement recorded u/s 132(4) of the Act has a better evidentiary value but it is also a settled position of law that the addition cannot be sustained merely on the basis of the statement. There has to be some material corroborating the contents of the statement. In the case in hand, revenue could not point out as what was the material before the A.O., which supported the contents of the statement, hi ihe absence of such material, coupled with the fact that it is recorded by the Ld. C1T(A) that the assessee himself had surrendered a sum of Rs.69,59,000/- and Rs.75,00,000/- in A.Y. 2008-09 and 2009-10 respectively. The A. O. failed to co-relate the disclosures made in the statement with the incriminating material gathered during the search. Therefore, inference is called for in the finding of the Ld CIT (A) and is hereby Ground raised by the revenue is dismissed " Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.) has held that merely on the basis of admission, the assessee could not have been subject to additions, unless and until some corroborative evidence is found in support of such admission. Hon'ble Jharkhand High Court Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No.8 of 1999 order dated 03.01.2013 held as under: "4. We considered the submissions of the learned counsel for the parties and perused the reasons given in the impugned orders as well as reasons given in the case of Kailashben Manharlal Chokshi (supra). 6. It appears from the statement of facts that there was a search in the business premises of the petitioner's firm as well as in the residential premises of its partner, Shri Sheo Kumar Kejriwal, on 24th September, 1987. During the course of search, the statement of Shri Sheo Kumar Kejriwal had been recorded under

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section 132(4) of the Income Tax Act and in the statement, he stated that he was partner in the Ganesh Trading Company, i.e. the present assessee-firm in his individual status and that he surrendered Rs. 20 lacs for the assessment year 1988-89 as income, on which tax would be paid. He further stated that other partners would agree to the same; otherwise it would be his personal liability. However, in the returns filed after search, the income of Rs. 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not declared by the assessee-firm. On being asked to explain the reason for not showing the surrendered amount in the returns, it was submitted by the assessee that declaration made by the partner was misconceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee's said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of Rs. 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 7. We are of the considered opinion that statement recorded under section 132(4) of the Income Tax Act, 1961 is evidence but its reliability depends upon the facts o/ the case and particularly surrounding circumstances. Drawing inference from the facts is a question of law. Here in this case, all the authorities below have merely reached to the conclusion of one conclusion merely on the basis of assumption resulting into fastening of the liability upon the assessee. The statement on oath o" the assessee is a piece of evidence as per section 132(4) of the Income Tax Act and when there is incriminating admission against himself, then it is required to be examined with due care and caution. In the judgment of Kailashben Manharlal Chokshi (supra), the Division

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Bench of Gujarat High Court has considered the issue in the facts of that case and found the explanation given by the assessee to be more convincing and that was not considered by the authorities below. Here in this case also, no specific reason has been given for rejection of the assessee's contention by which the assessee has retracted from his admission. None of the authorities gave any reason as to why Assessing Officer did not proceed further to enquire into the undisclosed income as admitted by the assessee in his statement under section 134(2) in fact situation where during the course of search, there was no recovery of assets or cash by the Department. This fact also has not been taken care of and considered by any of the authorities that in a case where there was search operation, no assets or cash was recovered from the assessee, in that situation what had prompted the assessee to make declaration of undisclosed income of Rs. 20 lacs.

Mere reading of statement of assessee is not the assessment of evidentiary value of the evidence when such statement is self- incriminating. Therefore, we are of the considered opinion that in the present case, a wrong inference had been drawn by the authorities below in holding that there was undisclosed income to the tune of Rs. 20 lacs.

Further, Hon'ble ITAT in the case of M/s Ultimate Builders vs ACIT Central-II, Bhopal ITA No 134/Ind/2019 dated 09.08.2019, wherein it has been held that the statement given by the assessee was without any specific reference to any incriminating material therefore, addition or. account of undisclosed income offered in statement was deleted. Besides this, decision of Hon'ble Gujarat High Court in the case of Kailashtei Manharlal Choksi 328 ITA 411 (2008) also supports the

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contention that merely on the basis of admission, the assessee could not be subjected to addition unless & until some corroborative evidences is found in support of such addition, In the case of CIT vs Jaya Lakshmi Ammal (2017) 390 ITR 189 (Mac Hon'ble Madras High Court ha held as under: "we are of the considered view that, for deciding any issue, against the assessee, the authorities under the IT Act, 1961 have to consider, as to whether there is any corroborative material evidence. If there is no corroborative documentary evidence, then statement recorded under s. 132(4) of the IT Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the IT Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under Judicial review, courts have to exercise due care and caution that no man is condemned due to erroneous or arbitrary exercise of authority conferred. "

The court further held that "if the assessee makes a statement under s. 132(4) of the Act, and if there are any incriminating documents found in his possession-then the case is different. On the contra, if mere statement made under s. 132(4) of the Act, without any corroborative material, has to be given credence, than iti would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterised as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence, should not be treated as conclusive evidence against the maker of the statement. "

Hon'ble Jurisdictional Tribunal Indore in the case of ACIT Vs. Shri Yogesh Kumar Hotwani 30 ITJ 353/380 (Ind-Trib) has held that no addition can be made merely based on statement u/s. 132(4) without linking to the seized books of accounts, other documents, money,

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bullion, jewellery or other valuable articles or things. In para 18 of the order, at page 380, the Tribunal held as under :-

We also find that disclosure was not made by the assessee hence it is not binding on him. We also rely on the decision in the case o/CIT v. Chandra Kumar Jethmal Kochar, (2015) 230 Taxman 78 (Guj), Asstt. CIT v. Kunwarjeet Finance Pvt. Limited, (2015) 61 Taxmann.com 52 (Ahm,-Trib.), CIT v. Jagdish Narayan Ratan Kumar, (2015) 61 taxmann.com 173 (Raj), wherein it was held that when addition of disclosure made by the assessee in statement recorded u/s 132(4), it cannot be sustained despite retraction, when Revenue could not furnish any positive evidence in support of such addition. Therefore, we are unable to uphold the findings of the AO and inclined to agree with Ld. CIT(A). Further, the Hon'ble Rajasthan High Court in the case of Jagdish Narayan Ratan Kumar (supra) has held that statement made during search must be correlated with records, which are found and if there is no ambiguity, explanation given by the assessee should be taken into consideration before making assessment. Thus, based on these decisions, we are of the opinion that the addition made by merely based on statement u/s 132(4) without linking to the seized books of accounts, other documents, money, bullion, jewellery, other valuable articles or things is not sustainable in law. It is now a settled legal proposition that in absence of any incriminating material no addition can be made only on the basis of statement, the case law in support have already been reproduced above. Thus, addition made by the AO amounting to Rs. 1,35,90,900/- & Rs. 23,00,000/- are Deleted.”

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locus standi to assume that the assessee has made payment of Rs. 1,35,90,900/- in cash against purchase of land and receipt of commission to the tune of Rs.23 lakhs. Merely on the basis of suspicion, howsoever it is strong, the Assessing Officer is not justified in presuming certain facts without having anything to corroborate. Further that, the Assessing Officer admittedly has made addition on the basis of the recorded statement of the appellant without making reference to any incriminating material found during the course of survey; thus, the learned CIT(A) once again reiterated his stand in not finding the addition made justifiable in the absence of any incriminating material found during the course of survey and also on the basis of the retracted statement made by the appellant. He, therefore, deleted the impugned addition of Rs.2,50,00,000/-, Rs.1,35,90,000/- and Rs.23 lakhs, which in our considered opinion is just and proper and without any ambiguity so as to warrant interference; and thus the ground preferred by the Revenue on this issue is devoid of any merit and hence dismissed.

This Order pronounced on 30.11.2022

Sd/- Sd/-

(BHAGIRATH MAL BIYANI) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore; Dated 30.11.2022

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