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Income Tax Appellate Tribunal, DEHRADUN BENCH, DEHRADUN
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, DEHRADUN Before Dr. B. R. R. Kumar, Accountant Member Sh. Yogesh Kumar US, Judicial Member ITA No. 4845/Del/2016 : Asstt. Year: 2012-13 ITA No. 4846/Del/2016 : Asstt. Year: 2013-14 Rishi Bansal, Vs DCIT, 132, Doon Palm City, Central Circle, Pathri Bagh, Dehradun Dehradun (APPELLANT) (RESPONDENT) PAN No. AKVPB7754R Assessee by : Sh. Vivek Aggarwal, CA Revenue by : Sh. N. S. Jangpangi, CIT DR Date of Hearing: 26.04.2022 Date of Pronouncement: 29.04.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: These appeals have been filed by the assessee against the orders of the ld. CIT(A)-2, Dehradun dated 31.03.2016. 2. In ITA No. 4845/Del/2016, following grounds have been raised by the assessee: “1. That the impugned proceeding initiated u/s 153A and passing the impugned order under that section is bad in law and without jurisdiction & addition are also made without any incriminating material found during the course of search. 2. That having regard to the fact and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the action of AO in making addition of Rs.50 lacs which was made by the AO only on the basis of alleged statement which has even being retracted on 09.07.2012 by the assessee. Thus the addition is not sustainable.
2 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal 3. That in any case and in any view of the matter action of ld. CIT(A) in making addition of Rs.50 lacs is bad in law and against the facts and circumstances of the case.“
In ITA No. 4846/Del/2016, following grounds have been raised by the assessee:
“1. That having regard to the fact and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the action of Rs.75,00,000/- only on the on the basis of alleged statement of assessee which was recorded at the time of search and has even being retracted on 09.07.2012 by the assessee. Thus the addition is not sustainbale. 2. that having regard to the fact and circumstances of the case, ld. CIT(A) has erred in law and on facts in making addition of Rs.4,58,700/- on account of cash found at the time of search. 3. That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in making addition of Rs.5,27,375/- on account of jewellery found but not seized during the search.” 4. The assessee is an individual and deriving income from business, house property and other sources. A search u/s 132 of the Income Tax Act, 1961 took place in the business and residential premises of the assessee on 26.04.2012 in M/s Ganga Realtors Group of cases. The assessee filed return of income on 10.07.2014 declaring income of Rs.4,72,526/-and the assessment u/s 153A was completed on 01.09.2014.
Surrendered amount at the time of search u/s 132(4): (A.Y.2012-13 & A.Y.2013-14)
The Assessing Officer brought to tax, the amounts surrendered u/s 132(4) of the Act at the time of search. For the
3 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal sake of ready reference, the entire portion of the Assessment Order pertaining to the addition under this head is reproduced in verbatim: “During the course of search u/s 132, the assessee in his statement u/s 132(4) on 26.04.2012 had voluntarily disclosed income of Rs.1.25 crores (Rs.50 lacs for A.Y. 2012-13 and Rs.75 lacs for A.Y. 2013-14). There were various discrepancies confronted to him in documents found at the time of search. However, the assessee has failed to disclose the addition income in his return filed for relevant year. Therefore, an amount of Rs.50 lacs unaccounted income is added to his total income during the year”.
Aggrieved the assessee filed appeal before the ld. CIT(A) who has confirmed the addition.
Before us, during the hearing, the ld. AR argued that the addition cannot be made merely based on the surrender statement which was in fact has been retracted subsequently before the ADIT(Inv.). The ld. AR relied on the Circular of the CBDT and various judgments.
On the other hand, the ld. DR argued that the statement has been given without any threat, coercion, pressure or undue influence and hence disclosure made by the assessee has tobe accepted. It was argued that the assessee has surrendered the amount on his own volition and the assessee is the best person to give a statement about his own affairs. With regard to the retraction and validity of the statement, he relied on the judgments in the case of CIT Vs. E. N. Gopa Kumar (HC Kerala), Raj Kumar Arora Vs. CIT (HC Allahabad) and Kesharwani Jarda Bhandar Vs. CIT (HC Allahabad).
4 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal 9. Heard the arguments of both the parties and perused the material on record.
We find that the statement u/s 132(4) has been recorded on 27.04.2012. The assessee has filed letter of retraction on 09.07.2012 before the ADIT(Inv.), Unit-II, Dehradun. The relevant part of the said retraction letter is as under:
“3. What ever income was disclosed by me in my statement at the time o the search & seizure operation was disclosed by me under duress of the circumstances in which I was placed at that moment and in good faith only at your insistence and your advice relying on your considered opinion that that was the amount of leakage indicated from the seized material and your lure that if I surrender it for tax we will be spared the rigor of penalties imposable and liability from prosecution. I have no knowledge of any undisclosed income earned by me or my family members or the business concerns with which we are associated. In retrospect I wonder as to what material you could have found to demand from me a surrender of that magnitude. We are in the process of appreciating the copies of seized material to find it out for ourselves. I further require the copies of my statement and those off my family members and employees, recorded at the time o the search & seizure operations to appreciate the situation for which we have already applied and it will be only after the requisite exercise that I will be in a position to revert on the matter.”
From the retraction letter, it could be observed that the assessee has submitted that the surrender was under duress and he has no knowledge of any undisclosed income earned by him. Further, we have also gone through the circular of CBDT dated 10.03.2003 wherein the CBDT advised that the field authorities should focus and concentrate on collection of evidence and no attempt should be made to obtain confession as to the undisclosed income. For the sake of ready reference,
5 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal the operative part of the Circular dated 10.03.2003 is reproduced below:
“Subject: Confession of additional Income during the course of search & seizure and survey operation-regarding
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 & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessee while filing returns of income In these circumstances, on confessions during the course of search &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 Income Tax Departments. Similarly, while recording statement during the course of search it seizures 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, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders.”
Further, the CBDT vide instruction dated 18.12.2014 reiterated the above said advisory which is as under:
“Subject: Admissions of Undisclosed Income under coercion/ pressure during search/survey-reg.
Ref: 1) CBDT letter F.No. 286/57/2002-IT (Inv. II) dt. 03.07.2002 2) CBDT letter F.No. 286/2/2003-IT(Inv. II) dt. 10.03.2003 3) CBDT letter F.No. 286/98/2013-IT(Inv. II) dt. 09.01.2014
6 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal Sir/Madam,
Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during searches/surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light.
I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence.
In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely.”
The Hon’ble High Court of Delhi in the case of CIT Vs. Best Infrastructure (India) (P.) Ltd. 397 ITR 82 has held “that statements recorded u/s 132(4) of the I.T. Act do not by themselves constitute incriminating material.”
Further, the Hon’ble Andhra Pradesh High Court in the case of CIT Vs. Naresh Kumar Aggarwal 369 ITR 171 wherein it
7 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal is held “that mere confessional statement without there being any documentary proof, shall not be used in evidence against the persons who made such statement.”
With regard to the retraction of the statement, it was held that,
“If the statement is not retracted, the same can constitute the sole basis for the authorities to pass an order of assessment. However, if it is retracted by the person from whom it was recorded, totally different considerations altogether, ensue. The situation resembles the one, which arises on retraction from the statement recorded under Section 164 Cr.P.C. The evidentiary value of a retracted statement becomes diluted and it looses the strength, to stand on its own. Once the statement is retracted, the Assessing Authority has to garner some support to the statement for passing an order of assessment.”
We have endeavoured to examine any material that was found and seized with regard to disclosure of income and we find that no details about the seizure of any documents has been mentioned in the Assessment Order or the order of the ld. CIT(A). The assessment has been concluded solely based on the statement recorded during the search which was also retracted before the authorities. Thus, we find that the assessment has been made solely based on the bare statement of the assessee. The various discrepancies confronted to him in the documents found at the time of search as mentioned in the Assessment Order have not brought to the fore. The revenue record is silent as to what are these documents and what are the discrepancies found and confronted to the assessee. Hence, keeping in view the retraction of the assessee, the circular of the CBDT, non-
8 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal availability of the relevant seized material, judgments of the various Courts with regard to the validity of the statement and validity of the retraction thereof, we hereby hold that the addition made based on the statement u/s 132(4) cannot be sustained. Unexplained cash u/s 69A (A.Y.2013-14) 17. During the course of search, unaccounted cash of Rs.4,58,700/- was found from residence of the assessee for which the assessee stated u/s 132(4), to be belonging to his daughter Smt. Richa Arya and mother late Prem Lata Jain. Later he stated that cash belonged to Sh. Akshat Bansal and Smt. Alka Bansal submitting cash in hand available with them as on 31.03.2013. 18. The AO held that as per the cash in hand available in hands of entire family of the asessee as on 31.03.2013, the cash found physically should have been more than Rs.4,58,700/-. 19. The cash in hand available as on 31.03.2013 as per the AO with the family members of the assessee was as under:
i. Rishi Bansal Rs.1,13,371/- ii. Alka Bansal Rs.1,38,044/- iii. Akshat Bansal Rs.8,74,356/- iv. Meetu Bansal Rs.2,80,753/- 20. The AO held that the total cash in hand was Rs.14,06,524/- as on 31.03.2013. The AO held that the assessee has not furnished any evidence to prove the status of cash flow in the entire family between period 31.03.2013 to
9 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal 26.04.2013 as on the date of search and the amount of Rs.4,58,700/- found at the premises was added as undisclosed income of the assessee. 21. We find that the cash in hand of Rs.14,06,524/- has been determined by the AO who however chose to treat the cash of Rs.4,58,700/- as undisclosed is contradictory as no evidence was found or could be gathered that the amount of Rs.14,06,524/- stands spent or used for incurring any expenditure or for any other purpose. Since, the cash in hand has not been in dispute in the absence of any evidence contra, no addition is called for. Jewellery: (A.Y.2013-14) 22. During the course of search u/s 132 following jewellery was found from the residence and bank lockers of the assessee which is as under: a. Rs.20,59,585/- from residence at 132, Doon Palm City of assessee and his family members. b. Rs.13,06,630/- from locker no. 77 of Federal Bank Rajpur Road, Dehradun of Alka Bansal and Smt. Meetu Bansal. c. Rs.3,96,500/- from locker no. 157 of HDFC Bank Rajpur Road, Dehradun of Smt. Alka Bansal. d. Rs.5,14,460/- from locker no. 76 of Federal Bank Rajpur Road, Dehradun of assessee. In this locker jewellery belonging to Smt. Richa Arya daughter of assessee had been kept and this was stated by her in her statement u/s 132(4) on 25.05.2012 at the time of operating the locker and as a evidence, marriage photos of Richa Arya had been filed with the ADIT(Inv.).
10 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal 23. The AO held that except jewellery found in locker no. 76, the remaining worth Rs.58,22,300/- belongs to both the assessee, his wife Smt. Alka Bansal and daughter-in-law Smt. Meetu Bansal. Sh. Rishi Bansal in his reply filed in explanation of jewellery found at the time of search has given following bifurcation of ownership: i. 523.272 gms gold jewellery, 127.700 gms bullion, 12.16 gms diamond studded gold and 504 gms silver coins owned by Alka Bansal. ii. 448.19 gms gold jewellery and 11.670 gms diamond studded gold owned by Meetu Bansal. iii. 157 gms gold bullion and 1447 gms silver coin owned by Rishi Bansal. 24. The AO held that during the assessment proceedings, the assessee has filed details pertaining to purchase of 60 gms of gold jewellery and 600 gms of silver coins between the period A.Y. 2007-08 to A.Y. 2013-14. However, in proof he has not filed any copy of bills or other documentary evidence. The AO held that in his balance sheet filed with return of income in A.Y. 2007-08 only jewellery worth Rs.60,000/- has been disclosed by him. The assessee and his family members are not filing wealth tax returns. The AO held that the source of 157 gms gold bullion and 1447 gms silver coins stands unexplained and the value of 157 gms of gold bullions is Rs.4,57,650/- and 1447 gms of silver coins is Rs.69,725/- was treated as undisclosed income. 25. We find that the assessee owns jewellery worth Rs.60,000/- in the financial year 2006-07 which could prove that the assessee had jewellery of approximately 85 gms till the
11 ITA Nos. 4845 & 4846/Del/2016 Rishi Bansal year 2007. The remaining 72 gms of jewellery has been acquired in a span of 5 years period which could be by the way of purchases or by the way of customary gifts. The gross total income of the assessee for Financial Year 2011-12 of Rs.10,50,000/- and for the Financial Year 2012-13 of Rs.7,00,000/-. The average price of the 72 gms of gold would be approximately Rs.1,50,000/- over a period of five years. Keeping in view, the returned income and the general financial affairs of the assessee, customs & practices of the geographical area and in the special peculiar circumstances of the case, we hold that the assessee can be deemed to have acquired 72 gms of gold by purchase and customary gifts. The circular of the CBDT and the various judgments of the Courts consider upto 100 gms of gold to a male member. Hence, keeping in view the entire facts and circumstances and in peculiarities of the case, we direct that the addition made on this head is liable to be deleted.
In the result, the appeals of the assessee are allowed. Order Pronounced in the Open Court on 29/04/2022.
Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 29/04/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR