DCIT Vs Sudhir Kumar Agarwal (ITAT Indore)
ITAT Indore held that addition on the standalone basis of statement of assessee u/s 132(4) of the Income Tax Act cannot be held as sustainable in absence of collaborative evidence found in support of such addition.
Facts- A search u/s 132 was conducted on 21.10.2011 upon one “Sagar Group” of Bhopal and the assessee is also clubbed as a part of that group. Pursuant to search, assessments of six years from AY 2006-07 to 2011-12 were framed u/s 153A/143(3) and AY 2012-13 was framed u/s 143(3). Present appeal relates to AY 2012-13 for which the AO made assessment u/s 143(3) at a total income of Rs. 5,65,65,450/- after making several additions. The assessee carried matter in appeal, contested those additions and succeeded. Now, the revenue has come in next appeal before us assailing the order of first appellate authority.
Conclusion- The assessee has also placed on record the copy of cash-book of firm which has been verified by Ld. CIT(A) according to which the firm had a total cash balance of Rs. 13,50,334/- on the date of search. This finding given by Ld. CIT(A) could not be controverted by revenue. We find that the balance of Rs. 13,50,334/-shown by cash-book is sufficient to cover the imprest cash of Rs. 4,71,000/. Thus, there is no infirmity in the explanation given by assessee to lower-authorities. Therefore, in our view, the CIT(A) is fully justified in deleting the addition.
Hon’ble High Court of Gujarat in the case of Kailasben Mangarlal Choksh vs. CIT held that merely on the basis of admission of assessee, the assessee could not have been subjected to addition, unless and until some collaborative evidence is found in support of such admission. Meaning thereby addition on the standalone basis of statement of assessee u/s 132(4) of the Act cannot be held as sustainable in absence of collaborative evidence found in support of such addition.
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by appeal-order dated 25.08.2020 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal [“Ld. CIT(A)”], which in turn arises out of a consolidated assessment-order dated 27.02.2014 passed by learned DCIT, Central, Bhopal [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”], to the extent it concerns Assessment-Year [“AY”] 2012-13, the revenue has filed this appeal on following grounds:
“1. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs. 4,71,000/- made by the A.O. on account of unexplained cash.
2. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs. 2,50,00,000/- made by the A.O. on account of retraction from surrendered income.
3. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs. 10,00,000/- made by the A.O. on account of cash loan given to Sh. Vishal Chouhan.
4. On the facts and in the circumstances of the case, the ld. CIT(A) erred in law in deleting the addition of Rs. 3,50,000/-, Rs. 3,50,000/-, Rs. 17,04,000/- & Rs. 8,52,000/- made by the A.O. on account of on money payment against land purchase.”
2. Heard the learned Representatives of both sides at length and case-records perused.
3. The registry has informed that the present appeal is filed after a delay of 151 days and therefore time-barred. Ld. DR prayed that the delay has occurred due to Covid-19 Pandemic. Ld. DR further placed reliance on the order of Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 read with Misc. Applications, by which suo motu extension of the limitation-period for filing of appeals w.e.f. 15.03.2020 under all laws has been granted and hence there is no delay in fact. We confronted Ld. AR who agreed to the submission of Ld. DR. In view of this, the appeal is proceeded for hearing, there being no delay.
4. Brief facts leading to present appeal are such that a search u/s 132 was conducted on 21.10.2011 upon one “Sagar Group” of Bhopal and the assessee is also clubbed as a part of that group. Pursuant to search, assessments of six years from AY 2006-07 to 2011-12 were framed u/s 153A/143(3) and AY 2012-13 was framed u/s 143(3). Present appeal relates to AY 2012-13 for which the AO made assessment u/s 143(3) at a total income of Rs. 5,65,65,450/- after making several additions. The assessee carried matter in appeal, contested those additions and succeeded. Now, the revenue has come in next appeal before us assailing the order of first appellate authority. We shall proceed to decide various grounds in seriatim one by one.
Ground No. 1:
5. In this ground, the revenue claims that the CIT(A) has erred in deleting the addition of Rs. 4,71,000/- made by AO on account of unexplained cash.
6. During the course of search proceeding, the authorities found physical cash of Rs. 4,71,000/- available with the assessee, out of which cash of Rs. 4,00,000/- was seized. Thereafter, during assessment-proceeding, when the AO asked the assessee to explain the source of physical cash, it was submitted that the impugned cash was the residual amount of cash withdrawn from firm against imprest account for expenses. The assessee also filed cash-book of firm. But, however, the AO did not accept reply of assessee for the reason that during the course of search proceeding, no such explanation was given and moreover the cash-book of firm was not produced. During first-appeal, Ld. CIT(A) deleted addition by accepting assessee’s explanation after examination of cash-book produced by assessee which showed available cash balance of Rs. 13,50,334/-.
7.Before us, Ld. DR supported the order of AO as against which the Ld. AR defended the order of CIT(A). On a careful consideration, we find that the assessee has made an identical explanation before both of the lower-authorities i.e. the impugned physical cash was out of withdrawals made from firm for imprest a/c of expenses. Further, the assessee has also placed on record the copy of cash-book of firm which has been verified by Ld. CIT(A) according to which the firm had a total cash balance of Rs. 13,50,334/- on the date of search. This finding given by Ld. CIT(A) could not be controverted by revenue. We find that the balance of Rs. 13,50,334/-shown by cash-book is sufficient to cover the imprest cash of Rs. 4,71,000/. Thus, there is no infirmity in the explanation given by assessee to lower-authorities. Therefore, in our view, the CIT(A) is fully justified in deleting the addition. We do not find anything wrong in the action of CIT(A). This ground is, thus, dismissed.
Ground No. 2:
8. In this ground, the revenue claims that Ld. CIT(A) has erred in deleting the addition of Rs. 2,50,00,000/- made by AO in respect of income surrendered by assessee.
9. Apropos to this ground, Ld. DR submitted that the AO was right in making this addition because in the statement recorded u/s 132(4) on 24.10.2011 and 08.11.2011, the assessee himself admitted/surrendered undisclosed income of Rs. 12.75 crore in the hands of himself/his family members/business concerns and subsequently vide letter dated 08.11.2011, the assessee again confirmed the said surrender of Rs. 12.75 crores. Despite such admission/surrender, the assessee-group declared only Rs. 10.25 crores of income in their returns and did not offer differential of Rs. 2.50 crores. Ld. DR submitted that in the case of ACIT vs. Hukum Chand Jain (2010) 191 com 319 (Chhatisgarh), the Hon’ble High Court has held that the admission is one important piece of evidence but it cannot be said that it is conclusive. Ld. DR submitted that in that case, the Hon’ble High Court considered the judgement of Hon’ble Rajasthan High Court in the case of Ramjas Naval vs. CIT 183 CTR (Raj) 144 where it was held that if the assessee admits undisclosed income at his free will without any threat and expresses his inability to submit any documentary evidence during search- proceeding, then subsequent contention of assessee that the income found during search is genuine, is an afterthought. Therefore, the AO was right in making addition in this regard and the Ld. CIT(A) had deleted the same without any cogent reason. Therefore, the order of first appellate may kindly be set aside by restoring that of the AO.
10. Replying to above. Ld. AR strongly supported the first appellate order and submitted that the AO has made addition which was not sustainable and that is why it was rightly deleted by Ld. CIT(A). Ld. AR drew our attention towards relevant part of the first appellate order and submitted that during the course of search-proceeding itself, the assessee submitted brief details/working of various unexplained investments/assets aggregating to Rs. 10.25 crores, which is mentioned in assessment-order. Ld. AR submitted that in addition to such calculated investments/assets of Rs. 10.25 crore, the assessee also declared an additional sum of Rs. 2.50 crore as “miscellaneous surrender” with a condition that the same shall be confirmed after study of all loose-papers; that is how the revenue authorities are insisting on Rs. 12.75 crore [Rs. 10.25 crore + Rs. 2.50 crore] of undisclosed income. Ld. AR submitted that subsequently while filing returns of assessee-group u/s 153A, on study and examination of loose-papers, the assessee found nothing linking with the said “miscellaneous surrender” of Rs. 2.50 crores and therefore the assessee declared only Rs. 10.25 crores as undisclosed income; the miscellaneous surrender of Rs. 2.50 was deducted and not declared.
11. Ld. AR, supporting the first appellate order, vehemently pointed out that the AO has failed to bring on record any positive or adverse evidence having nexus with the assessee or any asset/investment/transaction carried out by assessee or by pointing out anything incriminating in assessee’s name or otherwise which could be linked with the “miscellaneous surrender” of Rs. 2.50 crore; still the AO has made addition of Rs. 2.50 crore without considering that the surrender by assessee to that extent was purely conditional or contingent. Therefore, it was rightly concluded by Ld. CIT(A) that the addition of Rs. 2.50 crore made by the AO was not on the basis of any incriminating material found during the course of search but only on the basis of statement of assessee. Ld. AR also pointed out that during post-search enquiries no irregularity or adverse material has been brought on record qua the impugned “miscellaneous surrender”. Ld. AR placed reliance on following decisions:
i. ACIT (1) vs. Sudeep Maheshwari ITA No. 524/Ind/2013
ii. Kailasben Mangarlal Chokshi Vs. Commissioner of Income Tax (2008) 14 DTR 257 (Guj.)
iii. Shree Ganesh Trading Co. Vs. Commissioner of Income Tax, Tax Case No. 8 of 1999
iv. M/s Ultimate Builders vs. ACIT Central-II, Bhopal ITA No. 134/Ind/2019 5. Kailashben Manharlal Choksi 328 ITR 411
v. CIT vs. Jaya Lakshmi Ammal (2017) 390 ITR 189 (Mad.)
vi. ACIT vs. Shri Yogesh Kumar Hotwani 30 ITJ 353/380 (Ind-trib)
12. AR submitted that without making any reference to any incriminating material found during search-proceeding suggesting of unaccounted income, Ld. CIT(A) was right in deleting the addition by following the order of ITAT Indore Bench in the case of M/s Ultimate Builders (supra) and other judgments including judgment of Hon’ble Gujarat High Court in the case of Kailash Ben Manharlal Choksi (supra).
13. On careful consideration of the above submissions of both sides, first of all we note that the AO made addition on the basis of statement of assessee recorded on 24.10.2011 and 08.11.2011 and the assessee’s letter dated 08.11.2011. On perusal of letter dated 08.11.2011, which is scanned by AO on Page No. 10 of the assessment-order, we find the submission made by assessee as under:
