THE DCIT, (CENTRAL)-1, INDORE vs. SHRI DIPAK KALANI, INDORE

Pankaj and Deepak Kalani 3 (SS) 99 of 2016 and others The above captioned appeals filed at the instance of Revenue pertaining to Assessment Year (in short ‘AY’) 2008-09 to 2010-11 and 2012-13 and Cross Objections as filed by the assessee pertaining to AY 2012-13 are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-III, Indore [in short ‘Ld. CIT (A)’] which are arising out of the order passed u/s 153A r.w.s. 143(3) of the Income Tax Act 1961 (in short the ‘Act’) for AY 2006- 07 to 2011-12 and u/s 143(3) of the Act for AY 2012-13 dated 12.03.2014 framed by DCIT, Central Circle, Indore.

Ground of appeal in IT(SS)A 99/Ind/2016-AY 2008-09-Departmental Appeal- Pankaj Kalani:

1. On the facts and in the circumstances of the case the Ld. CIT (Appeals) erred in deleting the addition made by the AO of Rs. 1,67,63,500/-, Rs. 1,43,000/- & Rs. 5,01,500/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. Ground of appeal in IT(SS)A 100/Ind/2016-AY 2009-10-Departmental Appeal-Pankaj Kalani:

1. On the facts and in the circumstances of the case the Ld. CIT (Appeals) erred in deleting the addition made by the AO of Rs. 3,47,41,500/-, Rs. 3,33,70,000/-, Rs. 18,000/-, Rs. 12,50,000/- & Rs. 12,71,500/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. Ground of appeal in IT(SS)A 101/Ind/2016-AY 2010-11-Departmental Appeal-Pankaj Kalani:

1. On the facts and in the circumstances of the case the Ld. CIT (Appeals) erred in deleting the addition made by the AO of Rs. 35,00,000/-, Rs. 15,75,000/-, Rs. 3,75,79,500/-, Rs. 6,76,500/- & Rs.

Pankaj and Deepak Kalani 4 (SS) 99 of 2016 and others 80,68,000/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. Grounds of appeal in ITA 1044/Ind/2016-AY 2012-13-Departmental Appeal- Pankaj Kalani:

1. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in giving relief to the assessee by deleting the additions of Rs. 10,22,882/- by admitting additional documentary evidences without calling remand report.

2. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs. 27,19,608/- made as unexplained investment as assessee has failed to explain the source of jewellery.

3. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs. 32,044/- made by the AO as unexplained investment in silver utensils without any documentary evidences given by the assessee.

4. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition made by the AO of Rs. 1,96,58,000/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the AO during assessment proceedings.

5. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs. 1,49,75,466/- by holding that the addition made on the basis of statement recorded under section 132(4) has no relevance. Grounds of appeal in CO 25/Ind/2017-AY 2012-13-Assessee’s Cross Objection-Pankaj Kalani:

1. That on the facts and in the circumstances of the case the Ld CIT[A] erred in maintaining the additional income as declared and incorporated in the return of total income even when the correct amount of total income was less than what was actually offered by the assessee in his return of total income. It is settled position of law, the correct amount of total income has to be assessed in the hand of the assessee.

2. That on the facts and in the circumstances of the case the Ld Assessing officer erred in maintaining the additional income as offered by the assessee to the tune of Rs 62,50,000/- whereas correct amount of income calculated comes to Rs 33,89,582/- only.

3. The assessee reserves his right to add, alter and modify the ground of appeal. Ground of appeal in IT(SS)A 104/Ind/2016-AY 2008-09-Departmental Appeal-Deepak Kalani:

Pankaj and Deepak Kalani 5 (SS) 99 of 2016 and others 1. On the facts and in the circumstances of the case the Ld. CIT (Appeals) erred in deleting the addition made by the AO of Rs. 1,67,63,500/-, Rs. 1,43,000/- & Rs. 5,01,500/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. Ground of appeal in IT(SS)A 105/Ind/2016-AY 2009-10-Departmental Appeal-Deepak Kalani:

1. On the facts and in the circumstances of the case the Ld. CIT (Appeals) erred in deleting the addition made by the AO of Rs. 3,47,41,500/-, Rs. 3,33,70,000/-, Rs. 18,000/-, Rs. 12,50,000/- & Rs. 12,71,500/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. Ground of appeal in IT(SS)A 106/Ind/2016-AY 2010-11-Departmental Appeal-Deepak Kalani:

1. On the facts and in the circumstances of the case the Ld. CIT (Appeals) erred in deleting the addition made by the AO of Rs. 35,00,000/-, Rs. 15,75,000/-, Rs. 3,75,79,500/-, Rs. 6,76,500/- & Rs. 80,68,000/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the A.O. during assessment proceedings. Grounds of appeal in ITA 1045/Ind/2016-AY 2012-13-Departmental Appeal- Deepak Kalani:

1. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in giving relief to the assessee by deleting the additions of Rs. 10,22,882/- by admitting additional documentary evidences without calling remand report.

2. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs. 27,19,608/- made as unexplained investment as assessee has failed to explain the source of jewellery.

3. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs. 32,044/- made by the AO as unexplained investment in silver utensils without any documentary evidences given by the assessee.

4. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition made by the AO of Rs. 1,96,58,000/- on account of unexplained receipt on protective basis without appreciating the facts and evidences brought into light by the AO during assessment proceedings.

Pankaj and Deepak Kalani 6 (SS) 99 of 2016 and others 5. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in deleting the addition of Rs. 1,49,75,466/- by holding that the addition made on the basis of statement recorded under section 132(4) has no relevance. Grounds of appeal in CO 26/Ind/2017-AY 2012-13-Assessee’s Cross Objection-Deepak Kalani:

1. That on the facts and in the circumstances of the case the Ld CIT[A] erred in maintaining the additional income as declared and incorporated in the return of total income even when the correct amount of total income was less than what was actually offered by the assessee in his return of total income. It is settled position of law, the correct amount of total income has to be assessed in the hand of the assessee.

2. That on the facts and in the circumstances of the case the Ld Assessing officer erred in maintaining the additional income as offered by the assessee to the tune of Rs 62,50,000/- whereas correct amount of income calculated comes to Rs 33,89,582/- only.

3. The assessee reserves his right to add, alter and modify the ground of appeal.

Pankaj and Deepak Kalani 8 (SS) 99 of 2016 and others and Diamond jewellery, Bullion and Silver Utensils were also found. Subsequently, during the course of assessment proceedings, as regards the nature of entries contained in LPS-10 and LPS-11 was concerned, the assessee filed a letter dated 12.03.2014 along with his affidavit wherein he submitted that he received entire professional fees through account payee cheque only and that he did not receive cash from any of the parties whose names were mentioned in LPS-11. The assessee further submitted that information related to the same might also be collected directly from Shri Manish Kalani Group. However, the Ld. AO did not accept the contentions of the assessee but instead he opined that the amounts mentioned in Column No. 3 of LPS-11 represented undisclosed income of various persons. The Ld. AO while passing the assessment order himself stated that the amounts mentioned in LPS-11 represented undisclosed income of M/s Flexituff International Ltd. and M/s Kalani Industries Ltd. but on the other hand, he opined that the assessee failed to explain the nature of those receipts and accordingly, he made addition of those amounts on protective basis in the hands of the assessees’ i.e. in the hands of Deepak Kalani (50%) and in the hands of Pankaj Kalani (50%) in Pankaj and Deepak Kalani 9 (SS) 99 of 2016 and others the respective years’. Further, the assessee also explained the source of Gold and Diamond jewellery, Bullion and Silver Utensils found during the course of search. However, the Ld. AO was not satisfied with the explanations of the assessee and he made additions to the total income of the assessee in the AY 2012-13. The Ld. AO completed assessment u/s 153A r.w.s. 143(3) of the Act for AY 2006-07 to 2011-12 and u/s 143(3) of the Act for AY 2012-13 after making the additions as challenged in the grounds of appeals.

Pankaj and Deepak Kalani 10 (SS) 99 of 2016 and others together since the grounds of appeal taken in all these appeals are common and are exactly similar to the grounds of appeal taken in the case of IT(SS)A 99 to 101/Ind/2016 in the case of Pankaj Kalani.

7. The sole ground raised by the Revenue in all these appeals pertains to challenging the action of the Ld. CIT(A) in deleting the additions made by the Ld. AO on account of unexplained receipts on protective basis. Brief facts relating to this issue are that during the course of search at the office premises of the assessee, it was observed that loose papers LPS-10 and LPS-11 contained details which were exactly tallied with the details appearing on Page 254 of LPS 2/14 which had been found and seized during the course of search at Signet Group. It was observed on perusal of LPS-11 that it contained transactions with the names “Flexituff”, “KIL”, “KIL (EWDPL)”, “Sharmaji”, “Chousya”, “Kalani T/I”, “Matkawalaji” and “Pawan Jain” in respect of which the assessee clarified in his statement recorded during the course of post search proceedings on 23.12.2011 that these persons were related to M/s Kalani Industries Ltd and M/s Flexituff International Ltd (Shri Manish

Pankaj and Deepak Kalani 11 (SS) 99 of 2016 and others Kalani and Shri P.S. Kalani Group). The assessee also filed a letter dated 12.03.2014 along with his affidavit during the course of assessment proceedings wherein he submitted that he received entire professional fees through account payee cheque only and that he did not receive cash from any of the parties whose names were mentioned in LPS-11. The assessee further submitted that information related to the same might also be collected directly from Shri Manish Kalani Group. However, the Ld. AO did not accept the contentions of the assessee but instead he opined that the amounts mentioned in Column No. 3 of LPS-11 represented undisclosed income of various persons. The Ld. AO while passing the assessment order himself stated that the amounts mentioned in LPS-11 represented undisclosed income of M/s Flexituff International Ltd. and M/s Kalani Industries Ltd. but on the other hand, he opined that the assessee failed to explain the nature of those receipts and accordingly, he made addition of those amounts on protective basis in the hands of the assessee.

Pankaj and Deepak Kalani 12 (SS) 99 of 2016 and others 9. Per contra, the learned Counsel for the assessee challenged the additions made by the Ld. AO on account of unexplained receipts on protective basis on various counts. Firstly, the Ld. Counsel vehemently submitted that no addition was justifiable to the total income of the assessee even on protective basis when the Ld. AO himself while passing the assessment order observed that the amounts mentioned in LPS-11 represented undisclosed income of M/s Flexituff International Ltd. and M/s Kalani Industries Ltd. The Ld. Counsel contended that protective addition is made to protect the interest of revenue and that too only in those cases when the Assessing Officer is unable to determine as to whether a particular income belongs to which assessee or is to be taxed in which year. The Ld. Counsel submitted that in the facts of the present case, the Ld. AO categorically stated that amounts mentioned in LPS-11 represented undisclosed income of M/s Flexituff International Ltd. and M/s Kalani Industries Ltd. and therefore, there arose no occasion for making any addition whatsoever to the total income of the assessee even on protective basis. The Ld. Counsel also made us go through the relevant extracts from the assessment order wherein the Ld. AO himself

Pankaj and Deepak Kalani 13 (SS) 99 of 2016 and others stated time and again that the amounts mentioned therein represented undisclosed income of M/s Flexituff International Ltd. and M/s Kalani Industries Ltd. Accordingly, the Ld. Counsel submitted that no addition was warranted to the total income of the assessee even on protective basis. Secondly, the Ld. Counsel emphasized on the fact that the Ld. AO adopted pick and choose theory while making addition to the total income of the assessee on the basis of amounts mentioned in LPS-11 which is legally unjustifiable. The Ld. Counsel submitted that the Ld. AO did not make any addition to the total income of the assessee in respect of the amounts mentioned in such loose paper which pertained to M/s Signet Industries Limited and also to various other persons which in itself proved that the Ld. AO was satisfied that those amounts did not represent undisclosed income of the assessee. In the backdrop, the Ld. Counsel submitted that there was no justification for adding the other amounts mentioned on such loose paper to the total income of the assessee which pertained to M/s Flexituff International Ltd. and M/s Kalani Industries Ltd. The Ld. Counsel also referred to the decision of this Tribunal in the case of M/s Signet Industries Limited wherein this Tribunal categorically

Pankaj and Deepak Kalani 14 (SS) 99 of 2016 and others analysed the nature of alleged cash sheet found during the course of search from the premises of the assessee and inventorized as LPS-11 and reached to a conclusion that the transactions mentioned therein belonged to the Signet Group and were not related to the assessee. The Ld. Counsel therefore submitted that once this Tribunal in the case of M/s Signet Industries Limited reached to a conclusion that the amounts mentioned in the name of M/s Signet Industries Limited in LPS-11 actually belonged to that party, as a corollary, the amounts mentioned in LPS-11 against the names of other parties also belonged to those parties and did not represent undisclosed income of the assessee. Thirdly, the Ld. Counsel also referred to the affidavits of Shri Prem Swarup Kalani, president of M/s Kalani Industries Ltd. and Shri Narendra Kumar Malviya, Senior General Manager (Finance) of M/s Flexituff International Ltd. wherein these persons categorically submitted on oath that no amount was received by their companies from the assessee on account of unsecured loan or share capital in cash and the only transaction entered into with the assessee was related to payment of professional fees to the assessee in respect of project financing work assigned to him which was duly accounted for in the Pankaj and Deepak Kalani 15 (SS) 99 of 2016 and others books of accounts of these companies. The Ld. Counsel therefore submitted that no addition was justifiable to the total income of the assessee since the assessee as well as the authorized person of M/s Kalani Industries Ltd. and M/s Flexituff International Ltd. categorically denied of having entered into any transactions in cash. Fourthly, the Ld. Counsel submitted that there was no negative cash balance in the alleged cash sheet inventorized as LPS-11 which in any case implied that the assessee initially received amounts from the persons whose names were mentioned therein and the amount was thereafter returned back to them on the very same day or on the next day. The Ld. Counsel further submitted that the assessee vide letter dated 10.03.2014 filed before the Ld. AO categorically explained the nature of entries contained in the alleged cash sheets that it represented amounts written by staff of the assessee for their memory purposes and that the amount of cash received, if any, in the office of the assessee was returned back to the respective parties on the very same day or on the next day. Hence, the Ld. Counsel submitted that the onus to explain the source of amounts advanced to the assessee lay on the person whose names were mentioned in LPS-11 and not on the assessee

Pankaj and Deepak Kalani 16 (SS) 99 of 2016 and others and that such amount could not have been treated as unexplained receipts of the assessee by any stretch of imagination. Fifthly, the Ld. Counsel also highlighted the fact that the Ld. AO considered only credits in the alleged cash sheet inventorized as LPS-11 which was grossly unjustifiable. The Ld. Counsel submitted that any document is to be looked into in totality and the Ld. AO could not have merely considered the credit side and ignored the debit side of the alleged cash sheets. Lastly, the Ld. Counsel further submitted that no unrecorded/ undisclosed assets were found during the course of search except those assets in respect of which additional income was offered by the assessee in his income-tax return and consequently, there was no basis whatsoever for making such exorbitant additions in the case of the assessee. In view of the above-stated contentions, the Ld. Counsel submitted that the Ld. CIT(A) rightly deleted the additions made by the Ld. AO on account of unexplained receipts on protective basis. The Ld. Counsel for the assessee also relied upon the written submission filed before us.

Pankaj and Deepak Kalani 17 (SS) 99 of 2016 and others by both the sides. Through this ground, Revenue has challenged the finding of the Ld. CIT(A) in deleting the additions made on account of unexplained receipts on protective basis. We find that the Ld. CIT(A) deleted the impugned additions by observing as follows:

“4.3 I have gone through the assessment order and the appellant’s contentions. The key points to be considered are as under: a. In Para 12.1 of the assessment order the Assessing Officer has observed that the details appearing in the loose paper i.e. LPS-10 and LPS-11 exactly match with the details appearing on the page 254 of LPS 2/14. Page no. 254 of LPS-2/14 had been taken from the file A/3, seized during the search by the Excise Department on Signet Group. LPS-2/14 was found and seized during the Income Tax search at the office of M/s Signet Industries Ltd., Dewas Naka, Indore. Page no. 254 of LPS-2/14 contains details of transaction with Shri Pankaj Kalani and prepared by Shri Mukesh Sangla. b. The Assessing Officer has accepted the transactions as executed with M/s Signet Industries Ltd. noted in the Cash Sheet found form the system of the staff and no addition has been made in the hands of the appellant and his brother on protective basis on these entries. c. The Hon’ble ITAT, Indore Bench, Indore in the case of M/s Signet Industries Limited [Appeal No IT(SS)A Nos 115 to 120/Ind/2015 & for the Asst Years 2006-07 to 2011-12 and 2012-13 had an occasion to discuss the amount as found recorded in the Cash Sheet of the assessee and also papers as found from the possession of Signet Group. The Hon’ble ITAT has accepted that the amount as shown received in the Cash Sheet relates to the group whose name is mentioned in the Cash Sheet and does not relate to the appellant. d. The Assessing Officer in the assessment order has clearly stated that the amounts in column 3 of LPS-11 denote the amounts in lacs received by the appellant in cash from M/s Kalani Industries Ltd. and M/s Flexituff International Ltd. e. LPS-10 and LPS-11 are print outs taken at the time of the revocation of the Prohibitory Order which contain the details of cash as received from different clients of the appellant and his brother which is returned back to them as per their instructions. The staff members of the appellant and his brother had for their record noted the name of the person from whom the cash was received and to whom the cash was given. f. The Assessing Officer has made the addition on protective basis in the hands of the appellant and his brother holding that the appellant had failed to explain the nature of the entries recorded in LPS-

Pankaj and Deepak Kalani 18 (SS) 99 of 2016 and others 10 and LPS-11. The appellant in a statement dated 23.12.2011 recorded during the post search proceedings had stated that the various transactions with the name “Flexituff”, “KIL”, “KIL (EWDPL)”, “Sharmaji”, “Chousya”, “Kalani T/I”, “Matkawalaji”, “Pawan Jain” in respect of which the Assessing Officer has made the protective additions are persons or companies related to M/s Kalani Industries Ltd./ M/s Flexituff International Ltd. belonging to Shri Manish Kalani and P.S. Kalani Group. g. During the assessment proceedings the appellant had furnished an Affidavit from Manish Kalani Group of Companies where in it was categorically accepted that no amount of cash was received on account of loans or investments from the appellant. 4.4 The Assessing Officer has himself categorically accepted in Paras 13.2, 14.2, 15.2, 16.2, 17.2 and 18.2 that the amount of cash as shown in the Cash Sheet which has been added on protective basis in the hands of the appellant actually belongs to M/s Kalani Industries Ltd. or M/s Flexituff International Ltd. The protective addition can be made when the Assessing Officer is not in a position to confirmed whether a particular income belongs to A or B and therefore, the amount is added to the income of both the persons, in one hand on substantive basis and in the other on protective basis. In this case when the Assessing Officer is of the view that the amount as found recorded in the Cash Sheet belongs to M/s Kalani Industries Ltd. or M/s Flexituff International Ltd. there is no justification in adding the same on protective basis in the hands of the appellant and his brother. It is also pertinent to note that on basis of identical entries in the said Cash Sheets pertaining to the Signet Group no addition has been made on protective basis in the case of the appellant and his brother. In view of the facts and circumstances of the case, Ground No. 2 for A.Ys 2007-08 to 2010-11 and Ground no. 3 for A.Y. 2011-12 is decided as under. A.Y. 2007-08 Amount of Rs 47,22,500/- [½th share of Rs 94,45,000/-] and Rs 2,80,000/- [½th share of Rs 5,60,000/- ] totaling to Rs 50,02,500/- added to the total income of the appellant on protective basis is deleted. Ground No. 2 is allowed. A.Y. 2008-09 Amount of Rs 1,67,63,500/- [½ the share of Rs 3,35,27,000/-], Rs 1,43,000/- [½ the share of Rs 2,86,000/-] and Rs 5,01,500/- [½th share of Rs 10,03,000/-] totaling to Rs 1,74,08,000/- added to the total income of the appellant on protective basis is deleted. Ground No. 2 is allowed. A.Y. 2009-10 Amount of Rs 3,47,41,500/- [½ the share of Rs 6,94,83,000/-], Rs 3,33,70,000/- [½ the share of Rs 6,67,40,000/-], Rs 18000/- [½ the share of Rs 36,000/-], Rs 12,50,000/- [½ the share of Rs 25,00,000/- ] and Rs 12,71,500/- [½th share of Rs 25,43,000/-] totaling to Rs 7,06,51,000/- added to the total income of the appellant on protective basis is deleted. Ground No. 2 is allowed.

Pankaj and Deepak Kalani 19 (SS) 99 of 2016 and others A.Y. 2010-11 Amount of Rs 35,00,000/- [½ the share of Rs 70,00,000/-], Rs 15,75,000/- [½ the share of Rs 31,50,000/-], Rs 3,75,79,500/- [½ the share of Rs 7,51,59,000/-], Rs 6,76,500/- [½ the share of Rs 13,53,000/-] and Rs 80,68,500/- [½th share of Rs 1,61,36,000/-] totaling to Rs 5,13,99,000/- added to the total income of the appellant on protective basis is deleted. Ground No. 2 is allowed.

A.Y. 2011-12 Amount of Rs 813000/- [½ the share of Rs 1626000/-], Rs 150000/- [½ the share of Rs 300000/-] and Rs 100000/- [½th share of Rs 200000/-] totaling to Rs 1063000/- added to the total income of the appellant on protective basis is deleted. Ground No. 3 is allowed.”

“13.2 The contention of the assessee is not acceptable. Since, it has been proved that amount in column 3 of the LPS-I1 denotes amount in lacs and payment received from M/s Flexituff International Ltd in cash, it is clear that these amounts are undisclosed incomes of M/s Flexituff International Ltd. However, since, Shri Dipak Kalani and Pankaj Kalani has failed to explain the nature of these receipts, additions of Rs. 6,94,83,000/- and Rs. 70,00,000/- are hereby made on protective basis in the hands of Shri Dipak Kalani and Shri Pankaj Kalani for A.Ys.2009-10 and 2010-11 respectively

Pankaj and Deepak Kalani 20 (SS) 99 of 2016 and others (Rs.3,47,41,500/- and Rs.35,00,000/- in each assessee for A.Ys. 2009-10 and 2010-11 respectively) as unexplained receipts.” (Emphasis Supplied)

Pankaj and Deepak Kalani 23 (SS) 99 of 2016 and others Kalani Industries Ltd. and Shri Narendra Kumar Malviya, Senior General Manager (Finance) of M/s Flexituff International Ltd. which have been placed on Page No. 462-465 of the paper book. On perusal of these affidavits, we observe that these persons categorically denied the receipt of any amount by their companies from the assessee on account of unsecured loan or share capital in cash and the only transaction entered into with the assessee was related to payment of professional fees to the assessee in respect of project financing work assigned to him which was duly accounted for in the books of accounts of these companies. Accordingly, we are of the considered view that once the authorized persons of M/s Kalani Industries Ltd. and M/s Flexituff International Ltd. denied the fact of entering into any such cash transactions with the assessee, no addition could have been made to the total income of the assessee. Hence, even on this count, addition made by the Ld. AO seems unsustainable. We also find force in the contentions of the Ld. Counsel for the assessee that the assessee categorically explained the nature of alleged cash sheets inventorized as LPS-11 before the Ld. AO vide letter dated 10.03.2014 and the Ld. AO failed to controvert the submission made by the assessee. We find

Pankaj and Deepak Kalani 24 (SS) 99 of 2016 and others that the contention of the assessee was also accepted by this Tribunal while adjudicating the appeals in the case of M/s Signet Industries Ltd. (supra). Thus, we find that the Ld. AO made additions to the total income of the assessee merely on the basis of surmises and conjectures and that too, without bringing any cogent and corroborative material or contrary evidence on record. Therefore, we do not find any reason to interfere with the findings of the Ld. CIT(A) and we hold that the Ld. CIT(A) rightly deleted the additions made by the Ld. A.O. Accordingly, the action of the Ld. CIT(A) in deleting the additions is confirmed. Thus, the appeals of the Revenue in IT(SS)A 104 to 106/Ind/2016 in the case of Deepak Kalani for the AY 2008-09, 2009-10 and 2010-11 are dismissed. Similarly, appeals of the Revenue in IT(SS)A 99 to 101/Ind/2016 in the case of Pankaj Kalani for the AY 2008-09, 2009-10 and 2010-11 having identical set of facts and circumstances also stand dismissed.

Pankaj and Deepak Kalani 26 (SS) 99 of 2016 and others banking channels which further established the source of payments made for purchase of bullion. The Ld. Counsel categorically submitted that the Ld. AO did not bring out correct facts in the assessment order and even wrongly mentioned in the grounds of appeal taken before this Hon’ble Bench that the Ld. CIT(A) deleted the aforesaid addition by admitting additional documentary evidences without calling remand report. The Ld. Counsel for the assessee also relied upon the written submission filed before us.

3.3 I have gone through the assessment order and the appellant's submissions as filed before the Assessing Officer and also as filed during the course of appellate proceedings along with copy of bills in respect of 700 gms of Bullion. It is an undisputed facts that total 2458 gms of Bullion was found during the course of the search out of which the appellant has provided copy of bills in respect of 700 gms of bullion and the balance has been offered as additional income. 3.4 The appellant has referred to the letter dtd 18-l0-2013 filed before the Assessing officer wherein in Para b.1, the appellant had filed copies of the bills related to the purchase of 700 gms of Bullion. The Assessing Officer has stated in Para 10.3 of the assessment order as under:- “So far as remaining 700 gms. Bullion is concerned, the reply of the assessee is not acceptable as the same is not supported with documentary evidence.”

Pankaj and Deepak Kalani 27 (SS) 99 of 2016 and others 3.5 The appellant had discharged the onus of explaining 700 gms of bullion by filing the copy of the bills. The Assessing Officer has simply rejected the claim of the assessee without bringing any corroborative evidence on record. In view of the bills furnished by the appellant in respect of purchase of bullion in the name of different family members, the addition of Rs 10,22,882/- made on account of 700 gms of bullion [1/2 share of Rs 2045763/- is hereby deleted. Ground Nos. 1.1 and 1.2 are allowed.

Pankaj and Deepak Kalani 28 (SS) 99 of 2016 and others

Pankaj and Deepak Kalani 29 (SS) 99 of 2016 and others settled over the years by the decisions of various Courts that source of jewellery to the extent specified in CBDT Instruction ought to be treated as explained and should not be questioned. The Ld. Counsel further submitted that the assessee together with his family members was entitled to possess gold jewellery to the extent of 3,150 grams whereas gold jewellery only to the extent of 2,059.440 grams was found during the course of search and hence, no addition was justifiable to his total income account of unexplained investment in gold jewellery. The Ld. Counsel for the assessee also relied upon the written submission filed before us.

4.3 I have gone through the assessment order and submissions made by the appellant during the course of assessment proceedings and also during the course of appellate proceeding. The appellant has claimed credit in respect of Gold Jewellery as found during the course of search on the basis of CBDT Instruction No 1916 dtd 11-05-1994. The said instruction was issued primarily for non-seizure of jewellery during the course of a search to the extent of 50O gms. per married lady, 250 gms. per

Pankaj and Deepak Kalani 30 (SS) 99 of 2016 and others unmarried lady and 100 gms. per male member of the family. The Assessing Officer has not allowed any credit for the jewellery found during the search. Even though the above instruction was issued in respect of guidelines for seizure of jewellery during the course of the search, the various courts have held that credit to the above extent has to be given to the assessee unless the revenue shows anything to the contrary. Reliance is placed on the following decisions:- a) CIT Alwar, vs. Satya Narayan Patni, (2014) 366 ITR 325 (Rajasthan) b) CIT (Central), Kanpur vs. Ghanshyam Johri (2014) 41 taxman.com 295 (Allahabad) c) CIT vs. M.S Agrawal (HUF) & Ors. (2010) 236 CTR 0538 (M.P.)

4.4 The approach adopted by the various courts in interpreting the said Instruction and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in India whereby jewellery is gifted by relatives and friends at the time of social functions depending upon the social status of the family.

4.5 The jewellery as found from the possession of the appellant and the other family members weighs 2059.44 Gms. As per the limits prescribed vide CBDT Instruction No. 1916 the appellant and his family members can be allowed credit for 3150 Gms. of jewellery. As the jewellery found from the possession of the appellant and the other family members is less than the limits prescribed vide CBDT Instruction No. 1916 and following the approach adopted by the various Courts in interpreting the said Instruction the addition of Rs 27,19,6081- made to the income of the appellant on account of Gold jewellery (1/2 share of Rs. 54,39,216/-) is deleted. Ground No. 2 is allowed.

Pankaj and Deepak Kalani 31 (SS) 99 of 2016 and others as explained and its source shall not be questioned. In this regard, we would like to place reliance on the decisions in the case of CIT Alwar, vs. Satya Narayan Patni, (2014) 366 ITR 325 (Rajasthan), CIT (Central), Kanpur vs. Ghanshyam Johri (2014) 41 taxman.com 295 (Allahabad) and CIT vs. M.S Agrawal (HUF) & Ors. (2010) 236 CTR 0538 (M.P.). It is also an undisputed fact that the assessee together with his family members was entitled to possess gold jewellery to the extent of 3,150 grams whereas gold jewellery to the extent of 2,059.440 grams was found during the course of search. In light of the facts discussed hereinabove and after going through the decisions rendered by various courts while interpreting the said Instruction, we are of the considered view that no addition was justifiable to the total income of the assessee on account of gold jewellery found during the course of search since the quantity of such gold jewellery was well within the permissible limits laid down in the CBDT Instruction No. 1916 dated 11.05.1994 and therefore source of gold jewellery to the extent of 2,059.440 grams found during the course of search ought to have been treated as explained. Accordingly, we do not find any infirmity in the findings of Ld. CIT(A) in deleting the addition of Rs.27,19,608/- and the Pankaj and Deepak Kalani 32 (SS) 99 of 2016 and others same needs to be confirmed. In the result, Ground No. 2 of the revenue’s appeal stands dismissed.

25. Per contra Ld. Counsel for the assessee supported the findings of Ld. CIT(A).

Pankaj and Deepak Kalani 33 (SS) 99 of 2016 and others in deleting the addition of Rs.32,044/- made by the Ld. AO on account of unexplained investment in silver articles/ utensils. We find that the impugned addition was deleted by Ld. CIT(A) observing as follows:

5.3 I have gone through the assessment order and submissions filed by the appellant during the course of assessment and also in the appellate proceeding. It is correct that no documentary evidence was produced by the appellant in respect of the silver articles/utensils weighing 1.161 Kgs but at the same time it also cannot be denied that silver items are usually received at the time of different family occasions viz, at the time of marriage, birthday and anniversary. Considering the overall facts of the case, status of the appellant's family and the quantum of silver found in the possession of the appellant I find that there is no justification for making the addition on this account. The addition of Rs 32,044/- made on account of silver articles/utensils weighing 1.161 Kgs. (1/2 share of Rs. 64087/-) is deleted. Ground No. 3 is allowed.

Pankaj and Deepak Kalani 34 (SS) 99 of 2016 and others during the course of search was reasonable and no addition should have been made to the total income of the assessee on this count. Accordingly, we do not find any infirmity in the findings of Ld. CIT(A) in deleting the addition of Rs.32,044/- and the same needs to be confirmed. In the result, Ground No. 3 of the revenue’s appeal stands dismissed.

29 Ground No. 5 raised by the Revenue challenges the action of the Ld. CIT(A) in deleting the addition of Rs.1,49,75,466/- made by Pankaj and Deepak Kalani 35 (SS) 99 of 2016 and others the Ld. AO by computing the difference between additional income accepted during search in the statement recorded u/s 132(4) of the Act and additional income as offered in the return of income after reducing the amount of additions made separately in the assessment order. Brief facts relevant to this issue are that the assessee, Deepak Kalani in his statement recorded u/s 132(4) of the Act on 04.11.2011 offered additional income of Rs.5,00,00,000/- on his behalf and on behalf of his family members. However, while filing the return of total income, the assessee declared an amount of Rs. 1,25,00,000/- jointly with his brother, Pankaj Kalani i.e. Rs.62,50,000/- in the hands of the assessee and Rs.62,50,000/- in the case of his brother. The Ld. AO however did not accept retraction of the assessee by contending that the assessee made voluntary disclosure of income u/s 132(4) of the Act on the basis of incriminating documents unearthed during search and seizure action. The Ld. AO further observed that the disclosure made by the assessee was duly confirmed by him through his A.R. more than 3 months after making the original disclosure and that there was no logical reason for not informing about the retraction of income until the fag end of the assessment proceedings which was about 28

Pankaj and Deepak Kalani 36 (SS) 99 of 2016 and others months after the date of original disclosure. The Ld. AO therefore added the balance amount of Rs.1,49,75,466/- in the case of the assessee and similar amount in the case of his brother which was computed as under:

(i) ½ share of Income surrendered at the time of search 2,50,00,000 Less:- Income as accepted in the return of total income 62,50,000 Addition made to the income on the basis of statement 1,87,50,000 Less:- Addition made on following heads:- (i) On account of Bullion 10,22,882 (ii) On account of Gold Jewellery 27,19,608 (iii) On account of Silver Articles/ Utensils 32,044 37,74,534 Net addition made to the income 1,49,75,466

31. Per contra, Ld. Counsel for the assessee supported the findings of Ld. CIT(A). The Ld. Counsel submitted that search was conducted in the case of the assessee consequent to search carried out in the case of Signet Group. The Ld. Counsel further submitted that Department obtained surrender of Rs.45,00,00,000/- from Signet Group and obtained an ad-hoc surrender of Pankaj and Deepak Kalani 37 (SS) 99 of 2016 and others Rs.5,00,00,000/- from the assessee just to make sure that the amount of surrender obtained during search came to Rs.50,00,00,000/-. The Ld. Counsel further contended that neither there was any basis for obtaining the amount of surrender of Rs.5,00,00,000/- nor were any incriminating documents found from the premises of the assessee so as to justify the amount of surrender. The Ld. Counsel thereafter submitted that letter dated 13.02.2012 referred to by the Ld. AO in the assessment order in respect of which the Ld. AO observed that “disclosure made by the assessee was duly confirmed by him through his A.R. more than 3 months after making the original disclosure” was a letter which was not filed voluntarily but was filed on the instruction of the authorized officer and that too prior to obtaining the copies of documents found and seized during the course of search. Hence, the Ld. Counsel vehemently argued that reliance placed by the Ld. AO on the aforesaid letter was misplaced. The Ld. Counsel thereafter stated that the Ld. AO was also not correct in stating that no retraction was filed prior to 30.09.2013 more so when the return of income of the assessee for the AY 2012-13 was filed on 30.09.2012 wherein the additional income offered was of Pankaj and Deepak Kalani 38 (SS) 99 of 2016 and others Rs.62,50,000/- only in place of Rs.2,50,00,000/-. The Ld. Counsel also drew our attention to various notes which were annexed to the computation of income for the AY 2012-13 retracting the additional income offered during the course of search. The Ld. Counsel further drew our attention to letters dated 22.07.2013 and 18.10.2013 which were filed before the Ld. AO during the course of assessment proceedings which have also been placed on Page No. 134-155 of the paper book so as to justify that the additional income offered during the course of search was retracted much prior to the fag end of the assessment proceedings. The Ld. Counsel also stated that incriminating documents/ material found and seized during the course of search were handed over to the assessee only during 2013 and thereafter, the assessee was in a position to compute the correct amount of additional income to be offered on the basis of such incriminating documents/ material which came to Rs.33,89,582/- only as against additional income of Rs.62,50,000/- declared in the return of income or as against additional income of Rs.2,50,00,000/- (1/2 share of Rs.5,00,00,000/-) accepted during the course of search in the statement recorded u/s 132(4) of the Act. The Ld. Counsel thereafter placed reliance on CBDT Circular

Pankaj and Deepak Kalani 39 (SS) 99 of 2016 and others dated 10.03.2003 and various other judicial precedents including the decision of this Tribunal in the case of ACIT-1(1), Bhopal Vs. Shri Sudeep Maheshwari (ITA No. 524/Ind/2013) and in the case of M/s Ultimate Builders Vs. ACIT, Central-II, Bhopal (ITA No. 134/Ind/2019) in support of his contention that no addition can be made merely on the basis of statement given during the course of search u/s 132(4) of the Act without correlating the statement with incriminating material unearthed during search. The Ld. Counsel for the assessee also relied upon the written submission filed before us.

Pankaj and Deepak Kalani 40 (SS) 99 of 2016 and others We find that the impugned addition was deleted by Ld. CIT(A) by observing as under:

7.6 On perusal of the statement of the appellant Shri Dipak Kalani it is evident that while admitting additional income of Rs 5,00,00,000/- no documents were referred. It is also seen that a letter was filed accepting the same amount of additional income after the search proceedings were over. However, at the time of filing of the letter also the documents as seized during the course of search were not provided to the appellant. The appellant has claimed that the Assessing Officer is not right in stating that no retraction was filed by the appellant prior to 30.09.2013. The appellant had filed the return of income on 30.09.2012 wherein the additional income offered was Rs 62,50,000/- only in place of Rs 2,50,00,000/-. The appellant with the return of income also put various notes retracting the additional income as accepted during the course of search. The notes as given with the return of income are reproduced for sake of clarity as under:- 1] This return is subject to all other claims and deductions allowable as per law. 2] That a search U/s 132 of the Income Tax act was executed on the residential and business premises of the assessee on 03-11-2011. 3.1] That during the course of search, additional income of Rs 6250000/- was declared by the assessee and Rs.6250000/- by his brother totaling to Rs 12500000/-. 3.2] The income as surrendered by the assessee includes excess jewellery found from the residence and lockers of the assessee, cash and other investments if any actually found but not recorded in the regular books of account. 3.3] The assessee claims that in case of search what can be taxed is the total assets found less assets already disclosed in the regular books of account. 4.1] The assessee during the course of search agreed to pay tox on the amount of Rs 5 crores as suggested by the authorised officer without examining the details and loose papers as found and seized from the residence and office and prior to operation of the lockers. The assessee claim that the said amount was declared as suggested by the authorised officer without referring the same with any documents / evidence. Hence, the said amount was not representing the undisclosed income of the assessee. The amount of additional income as considered by the assessee was of Rs 12500000/- which was offered by the assessee voluntarily in his return of total income with his brother. 4.2] The assessee further claims that income was declared by the assessee with his brother on the basis of assets found but not found recorded in the books of account of the assessee. The income was accepted on the basis of its application and not on the basis of source.

Pankaj and Deepak Kalani 41 (SS) 99 of 2016 and others 4.3] The assessee further claims that if during the course of search assessment, if any income was found as liable to tax in any earlier year on the basis of its source. In that case, the income declared in this year liable to be reduced by that amount. Since, whatever income earned by the assessee irrespective of the year was invested in jewellery and the assessee has declared the additional amount of jewellery and other assets found and not recorded in the regular books of account in the year of search as per presumption u/s 132(4A) of the Income Tax Act. 5] The assessee by way of this notes further claims that if the income as finally assessed was less than what was offered in the return of income. In that case excess income as offered in the return of income may be please be treated as withdrawn and return as filed may please be treated as revised to that extent. 6l The enclosures as attached with the original return of income may please be treated as filed with this return also.

7.7 During the assessment proceedings the appellant had furnished detailed explanation for offering the additional income of Rs. 62,50,000/- (1/2 share of Rs. 1,25,00,000/-) in the return of income as against the additional income of Rs. 2,50,00,000/- (1/2 share of Rs. 5,00,00,000/-) offered in the statement u/s 132(4). After the appellant perused the documents and assets and seized during the course of the search it was found that except some part of jewellery and cash found from the lockers and residence everything else was properly disclosed. The break up of the additional income offered is as under:- S. Description of additional income In the case of In the case of Amount [Rs] No the appellant his brother 1 On account of Bullion 25,68,900 25,68,900 51,37,800 2 On account of Diamond Jewellery 2,77,500 2,77,500 5,55,000 3 On account of excess cash 5,43,182 5,43,183 10,86,365 33,89,582 33,89,583 67,79,165

7.8 The appellant has offered additional income of Rs. 62,50,000/- instead of additional assets found in the possession of the appellant of Rs. 33,89,582/- to cover anything incriminating found in his case or his other family members. The Assessing Officer has failed to bring on record any documents and assets which were not found recorded in the books of the appellant and his other family members other than those offered by the appellant. The Assessing Officer simply on the basis of the statement made by the appellant added an amount of Rs 1,87,50,000/- to the income of the appellant being the difference of Rs 2,50,00,000/- minus income as offered in the return of income.

7.9 The decision as referred by the assessing officer of Hon'ble Chattisgarh High Court in the case of ACIT vs Hukum Chand Jain as reported in 191 Taxman 319 rather supports the case of the appellant.

Pankaj and Deepak Kalani 42 (SS) 99 of 2016 and others In this case the assessee Shri Hukum Chand Jain could not explain several loose papers found during the search, cash and jewellery and had made a disclosure in the statement recorded u/s 132(4) which he later retracted. However, in the appellant's case the additional income had been offered in the statement recorded u/s 132(4) without any reference to any seized document or assets. Hon’ble CBDT vide its circular dated 10-03-2003 explained the confession of additional income during the course of search and seizure. The relevant circular dt 10th March, 2003 reads as follows:-

"........Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the IT Department. Similarly, while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, AOs should rely upon the evidences/ materials gathered during the course of search/ survey operations or thereafter while framing the relevant assessment orders."

7.10 In the above-said circular Board has clarified that no surrender is to be taken during the course of search but it was advised to focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the IT department. The Assessing Officer simply on the basis of statement as recorded during the course of search added the difference to the income of the appellant which is against the letter and spirit of the circular of CBDT. Statement as recorded during the course of search is having evidentiary value but the same is rebuttable and not conclusive for making addition to the income of the appellant. The appellant in the present case has retracted the same and also explained the source of entire assets as found in his possession and also in possession of his other family members. The amount of Bullion, Diamond Jewellery and Cash as found which was not properly explained was voluntarily offered by the appellant in his return of income along with his brother.

7.11 Reliance is placed on the following decisions:- a) Hon'ble Gujrat High Court in the case of Kailashben Manharlal Chokshi as reported in 328 ITR 0411 has clearly held that merely on the basis of admission the assessee could not have been Pankaj and Deepak Kalani 43 (SS) 99 of 2016 and others subjected to such additions unless and until some corroborative evidence is found in support of such admission. b) Hon'ble Madras High Court in the case of M Narayanan & Bros vs ACIT as reported in 339 ITR 0192 following the CBDT Circular dt 10th March, 2003 and also referring to the decision of the Hon'ble Apex Court in the case of Pullangode Rubber & Produce Co Ltd vs State of Kerala has held that it is always open to a person who made the admission, to show that the statement to offer income is incorrect and had material to substantiate so, we hold that the Tribunal is not justified in placing undue emphasis on the confession statements made by the assessee. c) Hon'ble Supreme Court in the case of Krishnan vs Kurushetra University (AIR 1976 SC 377) has held that mere admission cannot be bedrock or foundation of an assessment and it is always open to the assessee who made the admission to show that what he admitted was not correct. The Hon'ble Supreme Court also observed that the effect of an alleged admission depends upon the circumstances in which it was made. A statement made in ignorance of legal rights or under duress cannot bind the maker of the admission. d) The decision of Hon'ble Jharkhand High Court in the case of Shree Ganesh Trading Co Vs CIT as reported in 30 taxmann.com 170, Hon’ble Rajasthan High Court in the case of CIT vs Banwarilal as reported in 225 ITR 870, Hon'ble Allahabad High Court in the case of CIT vs Radhakishan Goyal as reported in 278 ITR 454, Hon’ble ITAT Ahmedabad Bench in the case of ACIT vs Sushil Devi S Agrawal as reported in 50 ITD 524, Hon'ble Mumbai Bench of ITAT in the case of Ms Aishwarya K Rai vs DCIT as reported in 104 ITD 166 and Hon'ble Jaipur Bench of ITAT in the case of Chandesh Kumar Maheshwari vs ACIT also support the case of the appellant.

7.12 Considering the overall facts of the case when the addition has been made merely on the basis of statement as recorded U/s l32[4] of the Act in the absence of any incriminating material or assets to link with the said disclosure, the said addition is not justifiable. Therefore, the addition of Rs. 1,87,50,000/- being the difference in the income declared in the statement recorded u/s 132(4) of Rs. 2,50,00,000/- (1/2 share of Rs. 5,00,00,000/-) and as actually declared in the return of income of Rs. 62,50,000/- is hereby deleted. Ground no. 5 is allowed.

Pankaj and Deepak Kalani 45 (SS) 99 of 2016 and others retracted additional income accepted in the statement recorded u/s 132(4) of the Act on several occasions and that too much before the fag end of the assessment proceedings. We also observe that the Ld. AO has failed to bring on record any incriminating material so as to substantiate his contention that retraction made by the assessee was not bona fide. Rather, we find force in the contentions of the Ld. Counsel that surrender of Rs.5,00,00,000/- was obtained from the assessee merely to obtain a total surrender of Rs.50,00,00,000/- from the search conducted on Signet Group and Kalani Group. In view of the factual matrix of the case and after going through all the relevant material placed before us, we are of the considered opinion that there was no basis to justify the ad-hoc amount of surrender of Rs.5,00,00,000/- obtained from the assessee during the course of search. We further observe that the Ld. AO made addition of Rs. 1,49,75,466/- to the total income of the assessee by merely computing the difference between additional income accepted during search in the statement recorded u/s 132(4) of the Act and additional income as offered in the return of income after reducing the amount of additions made separately in the assessment order in absence of any incriminating material

Pankaj and Deepak Kalani 46 (SS) 99 of 2016 and others found during the course of search which could justify the aforesaid addition. Further, it is a well settled proposition of law that no addition can be made merely on the basis of statement given during the course of search u/s 132(4) of the Act without correlating the statement with incriminating material unearthed during search. In respect of this proposition, reliance placed by the Ld. CIT(A) on the circular issued by the Hon’ble CBDT dated 10.03.2003 and on various other judicial precedents was appropriate and duly supported the case of the assessee. In addition to the judicial precedents relied upon by the Ld. CIT(A), we would also like to refer to the judgment of this Tribunal in the case of ACIT-1(1), Bhopal Vs. Shri Sudeep Maheshwari (ITA No. 524/Ind/2013) wherein similar issue came up for consideration before the Hon’ble Tribunal and the Hon’ble Tribunal after going through various other judicial precedents reached to a conclusion and held that:

“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 Pankaj and Deepak Kalani 47 (SS) 99 of 2016 and others 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 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. In the absence of such material, coupled with the fact that it is recorded by the Ld. CIT(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, no inference is called for in the finding of the Ld. CIT(A) and is hereby affirmed. Ground raised by the revenue is dismissed.”

Pankaj and Deepak Kalani 48 (SS) 99 of 2016 and others down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case.

Pankaj and Deepak Kalani 50 (SS) 99 of 2016 and others 37. Before us, Ld. Counsel for the assessee emphasized heavily on the fact that incriminating documents/ material found and seized during the course of search were handed over to the assessee only during 2013 and thereafter, the assessee was in a position to compute the correct amount of additional income to be offered on the basis of such incriminating documents/ material which came to Rs.33,89,582/- only as against additional income of Rs.62,50,000/- declared in the return of income. The Ld. Counsel further submitted that additional income of Rs.62,50,000/- offered in the return of income was also on the basis of some estimation and could not be precisely computed since the incriminating documents/ material found and seized during the course of search were handed over to the assessee only during 2013. The Ld. Counsel also drew our attention to various notes which were annexed to the computation of income for the AY 2012-13 and also to letters dated 22.07.2013 and 18.10.2013 which were filed before the Ld. AO during the course of assessment proceedings so as to justify that the claim for reducing the additional income was lodged during the course of assessment proceedings itself. The Ld. Counsel thereafter referred

Pankaj and Deepak Kalani 51 (SS) 99 of 2016 and others to the following table wherein the correct amount of additional income of Rs.33,89,582/- was computed as under: S. Description of additional income In the file of In the file of Amount [Rs] No the assessee his brother 1 On account of Bullion 25,68,900 25,68,900 51,37,800 2 On account of Diamond Jewellery 2,77,500 2,77,500 5,55,000 3 On account of excess cash 5,43,182 5,43,183 10,86,365 33,89,582 33,89,583 67,79,165

 CIT v. Shelly Products reported in [2003] 261 ITR 367 (SC)  CIT v. K.N. Oil Industries reported in [1983] 142 ITR 13 (Madhya Pradesh)  Deep Chand Jain v. ITO reported in [1984] 145 ITR 676 (Punjab & Haryana)

Accordingly, the Ld. Counsel submitted that correct amount of additional income which should have been taxed was of Rs. 33,89,582/- instead of Rs.62,50,000/- originally offered in the return of income for the AY 2012-13 and therefore, excess amount of Rs.28,60,418/- offered in the return of income was required to be excluded from the total income of the assessee. The Ld. Counsel for the assessee also relied upon the written submission filed before us.

Pankaj and Deepak Kalani 53 (SS) 99 of 2016 and others

Pankaj and Deepak Kalani 54 (SS) 99 of 2016 and others no loose papers found and seized during the course of search were incriminating in nature having a bearing on total income of the assessee. This factual position has also not been controverted by the Ld. AO in the assessment order by bringing any such incriminating material on record which could have an impact on the total income of the assessee. We have also gone through Circular No. 14 dated 11.04.1955 issued by the Hon’ble CBDT and various other judicial precedents relied upon by the Ld. Counsel for the assessee. We notice that Circular No. 14 dated 11.04.1955 issued by the Hon’ble CBDT and relied upon by the Ld. Counsel duly supports the case of the assessee since the Hon’ble CBDT in the said circular categorically emphasized on the fact that Officers of the Department must not take advantage of ignorance of an assessee as to his right and that it is their duty to assist a taxpayer in every reasonable way. The relevant extract from the said circular is as under:

“(3) Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department

Pankaj and Deepak Kalani 55 (SS) 99 of 2016 and others for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should— (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.

Pankaj and Deepak Kalani 57 (SS) 99 of 2016 and others could not be below the income as declared in the return of income is a finding relevant for assessment proceedings but is not relevant for appellate proceedings. The aforesaid position has been affirmed by the Hon’ble Bombay High Court in the case of CIT, Central-I, Mumbai v. Pruthvi Brokers & Shareholders reported in [2012] 349 ITR 336 (Bombay) and by the Hon’ble Gujarat High Court in the case of CIT v. Mitesh Impex reported in [2014] 367 ITR 85 (Gujarat). We, therefore, set aside the findings of Ld. CIT(A) on these grounds and conclude that additional income offered by the assessee in his return of income requires to be reduced to Rs.33,89,582/- as against the amount of additional income of Rs.62,50,000/- originally offered in the return of income of the assessee for the AY 2012-13. Accordingly, Ground Nos. 1 & 2 of the assessee’s cross objections are allowed.

Pankaj and Deepak Kalani 58 (SS) 99 of 2016 and others 44. In the result, revenue’s appeals in IT(SS)A 104 to 106/Ind/2016 for AY 2008-09, 2009-10 and 2010-11 and in ITA 1045/Ind/2016 for AY 2012-13 in the case of Deepak Kalani stand dismissed and assessee’s cross objections in CO 26/Ind/2017 for AY 2012-13 in the case of Deepak Kalani stand allowed. Similarly, revenue’s appeals in IT(SS)A 99 to 101/Ind/2016 for AY 2008-09, 2009-10 and 2010-11 and in ITA 1044/Ind/2016 for AY 2012-13 in the case of Pankaj Kalani stand dismissed and assessee’s cross objections in CO 25/Ind/2017 for AY 2012-13 in the case of Pankaj Kalani stand allowed.

Order pronounced as per Rule 34 of ITAT Rules, 1963 on 20.01.2022.