ACIT, CEN. CIR-VI, KOLKATA, KOLKATA vs. SMT. USHA AGARWAL, KOLKATA

3 & CO No.16/K/2016 Usha Agarwal. AY 2010-11 even otherwise, the declaration made by Sri Sambhunath Agrawal in his statement recorded at the time of the search or subsequently in his disclosure petition was unsubstantiated as it was not based on or corroborated by any material on record. And, above all, no incriminating material representing undisclosed income or undisclosed asset of the assessee was found in the search. In view of the above, the assessee was justified in not including the alleged disclosure of Rs.l crore in her return of income. The Ld AR has argued that the AO has made irrelevant observations for making the addition. For, the AO has mentioned that undisclosed cash deposit in bank account was found in consequence to the search; but then, the same has been considered separately. Secondly, there is no finding of the AO in his assessment order that the cash deposit was unexplained in the hands of the assessee. It was explained at the assessment stage that the ITS data showing cash deposit of Rs.51 lakhs was factually incorrect in as much as the assessee had made cash deposit of Rs.6.50 lakhs only which was duly recorded in the books of account. The AO has not disputed or disproved the contention of the assessee. The AO has made the addition on the ground that he had no time for verifying the contention of the assessee. The AO has also mentioned that introduction of unaccounted money in the guise of loan or gift or capital gain was detected in the cases of the assessee group; but then, the same has been considered separately in the case(s) of the concerned assessees. The issue regarding cash deposit in the bank account or introduction of money in the guise of loan or gift or capital gain is in the way related to the disclosure of Rs.1 crore in the assessment year 2010-11.

4 & CO No.16/K/2016 Usha Agarwal. AY 2010-11 vide its Circular dated 10.3.2003 has clearly instructed that the Learned AO should rely on credible evidence and that the material gathered in search should form the basis for framing the assessment. He further held that specific issues relating to cash deposit in bank account or introduction of undisclosed money in the guise of loan or gift or capital gain, if any , has to be considered separately in the case of the concerned assessees and that it cannot be made the basis for making ad hoc addition of Rs 1 crore in the hands of the assessee. Accordingly he held that the addition of Rs 1 corre made solely on the basis of the disclosure made at the time of search is neither sustainable in law nor on facts.

5.1. With regard to the information obtained in ITS data towards cash deposit in bank to the tune of Rs. 51 lacs, he held that though the assessee had denied the same at the assessment stage and had stated that only Rs 6.50 lacs was deposited in the bank account which is already disclosed in the returns , no separate ground was raised by the assessee contesting such addition. He finally held that the Learned AO had held that cash deposit of Rs 51 lacs in bank account of the assessee has to be treated as unexplained income, however, no separate addition was being made in view of the addition of Rs 1 crore on the basis of the disclosure. As the addition of Rs 1 crore made on the basis of the disclosure has been deleted, the addition of Rs 51 lacs on account of cash deposit in bank account is sustained. In effect, the addition made by the Learned AO was restricted to Rs 51 lacs after granting relief to the assessee to the tune of Rs 49 lacs.

The assessee has also preferred cross objection by raising the following ground: - “That the CITA has erred in sustaining addition of Rs 51 lakh towards deposit of cash in bank account when no such transaction had actually taken place.”

7. The Learned AR relied on the order of the Learned CITA with regard to the addition deleted in the sum of Rs. 1 crore. With regard to the addition sustained in the sum of Rs. 51 lakhs, he argued that there was no cash deposit to the tune of Rs 51 lacs as stated by the Learned AO which fact was never verified by the lower authorities and 5 & CO No.16/K/2016 Usha Agarwal. AY 2010-11 the fact of non-verification is also mentioned in the orders of the lower authorities. Accordingly he prayed that this fact may kindly be verified by the Learned AO to ascertain the truth and prayed for specific direction to be given in this regard. In response to this, the Learned DR vehemently relied on the order of the Learned AO.

(i) Pullangode Rubber Produce Co. vs State of Kerala and Anr (1973) 91 ITR 18 (SC)

The Hon’ble SC has observed that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect.

(ii) CIT vs Ravindar Kumar Jain (2011) 201 taxman 95 (Jharkhand HC) “6. We have considered the submissions made by the learned counsel for the appellant and perused the reasons given in the orders passed by the CIT(A).

(iii) Kailashben Manoharlal Chokshi vs CIT (2010) 328 ITR 411 (Guj)

“Held, that the statement of the assessee was recorded under section 132(4) of the Act at midnight. In normal circumstances, it was too much to give any credit to the statement recorded at such odd hours. The person would not be in a position to make any correct or conscious disclosure in a statement if such statement was recorded at such odd hours. The assessee had given proper explanation for all the items under which disclosure was sought to be obtained from the assessee. With regard to the investment in house property he had stated that he took the plot in 1964 from the housing society which was constructing the bungalow for which the assessee made contribution from time to time and took possession in 1974 when only one ground floor was constructed. He had been living there and during 1986 to 1988 he had constructed the first floor and had incurred expenses of Rs. 2,03,185.65 and this amount had been withdrawn from the account of the firm which he was a partner. The Departmental Valuer had accepted the cost of construction and there was no reason to make addition of Rs. 4 lakhs on the basis of the disclosure made by the assessee. The Revenue had not brought any evidence to establish that the assessee had in fact incurred Rs. 4 lakhs and that amount was invested out of undisclosed income. The addition on account of gold ornaments could not be sustained since looking into the quantum of holding and the assessee’s explanation this was a normal holding which could be found in any middle class Indian family. The furniture on the ground floor was 15 years old and the assessee had spent Rs. 25,000 for renovation after making withdrawal from the firm’s account. With respect to furniture in the first floor a detailed source of investment of furniture purchased with due confirmation from the party concerned had been filed by the assessee before the Assessing Officer. Since no payment for this additional furniture was made by the assessee till the date of search, no addition could be made on this count. The explanation of the assessee was convincing but not been considered by the authorities below. Merely on the basis of the admission of the assessee the additions could not be made unless and until some corroborative evidence was found in support of such admission. The statement recorded at such odd hours could not be considered to be a voluntary statement, if it was subsequently retracted and necessary evidence was led contrary to such admission. The Tribunal was not justified in making addition of Rs. 6 lakhs.”

(iv) Similar views were expressed by the Hon’ble Courts in the following cases:- CIT vs Chandrakumar Jethmal Kochar reported in (2015) 230 Taxman 78 (Gujarat)

M.Narayanan & Bros vs ACIT reported in (2011) 339 ITR 192 (Mad)

Bachittar Singh vs CIT reported in (2010) 328 ITR 400 (P&H)

In view of the aforesaid facts and circumstances and judicial precedents relied upon hereinabove, we hold that the Learned CITA had rightly deleted the addition made in the sum of Rs 1 crore.

8.1. Apropos the alleged cash deposit of Rs 51 lacs made by the assessee in the bank account, we find that the assessee had claimed that no such cash deposits to that extent was made in her bank accounts. We also find that this claim of the assessee was never verified by the Learned AO for want of time which is not disputed by the revenue before us. We find that the Learned AR had fairly agreed for setting aside of this issue to the file of the Learned AO to enable him to make a detailed verification of this factual aspect for which the Learned DR before us agreed for the same. We direct accordingly.