Case Law Details
Apex Realities Vs ITO (ITAT Indore)
We find that during the course of survey, it was found that assessee had made the cash payment of Rs. 70,00,000/- to the land owners against the purchase of their land. The date of registry was 22/01/2015 and during the course of survey, it was found that there was no cash available on 22/01/2015. A statement of Shri R. C. Mittal, Partner of the Firm was recorded wherein Shri R. C.Mittal admitted an additional income of Rs. 70,00,000/- on this account. During assessment proceedings, a detailed questionnaire was issued u/s 142(1) of the I.T. Act to the assessee on 13.11.2017. The assessee submitted vide reply dated 08.12.2017 that during post survey proceedings, a sum of Rs.70 lakhs was offered and tax due thereon has already been paid and challan already submitted. We find that having discussed facts and circumstances in the light of the judicial pronouncements (supra), Id. CIT(A) discussed the evidentiary value as per Indian Evidence Act and reached to the conclusion that no retraction communicating to the Revenue Authorities was made and it is also evident from the record available that no threat or coercion had been exerted during the confession statement of the assessee. Even before us, the finding of the Id. CIT(A) could not be controverted by the Id. CIT(A) by bringing any contrary material on record, thus, we are in agreement with the Id. CIT(A) in observing that the evidence of testimony cannot be wiped out and does not become non-existent and therefore, this evidence can well be utilized to frame the assessment. Accordingly, we do not find any reason to interfere with the findings of the Id. CIT(A). Hence, the findings recorded by the Id. CIT(A) are confirmed.
FULL TEXT OF THE ORDER OF ITAT INDORE
The above captioned appeals filed at the instance of the assessee and Cross appeal raised by the Revenue for Assessment Year 2015-16 are directed against the orders of Ld. Commissioner of Income Tax(Appeals)-I (in short ‘Ld. CIT], Indore dated 27.09.2018 which are arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 29.12.2017 framed by ITO-3(2), Indore.
The assessee has raised following grounds of appeal:
1. That the Ld. CIT(A) erred on facts of the case and ascended towards the addition made by the AO u/s 69 on account of unexplained investment at Rs.50,000/- without considering the facts and reasoning stated by the assessee.
This action of AO which is further confirmed by CIT(A) is against the principle of just justification.
2. That the Ld. CIT(A) erred on facts of the case and confirmed the addition of Rs.70,00,000/- u/s 69 on account of unexplained investment without considering the facts and reasoning stated by the assessee.
This action of AO which is further confirmed by CIT(A) is incorrect and illegal.
2. Your appellant craves leave to add to and/or to amend and/or to modify and/ to cancel any one or more grounds of appeal at any time before or at the time of hearing.
The Revenue has raised following grounds of appeal:
Whether on the facts and in the circumstances of the case, the Ld. CIT{A} was justified in deleting the addition made by AO u/s 69C of the I. T. Act 1961 of Rs. 70, 73,241/- on account of unexplained expenditure in view of Assessing Officer and even when no appeal was filed by assessee against this addition as is evident from the grounds of appeal.
{i} Whether on the facts and in the circumstances of the case, the Ld. CIT{A} was justified in deleting the addition made by AO u/s 69B of the f. T. Act 1961 of Rs.11,30,80,000/- on account of unexplained and undisclosed investment by ignoring the facts of the case and enquiry made by AO.
(ii) Whether on the facts and in the circumstances of the case, the Ld. ClT{A} was justified in ignoring the fact that assessee failed to prove the creditworthiness and identity of the stamp vendor and also failed to prove that the stamp vendor was a person sufficient means, who can advance stamps of such huge amounts to the assessee firm.
(iii) Whether on the facts and in the circumstances of the case, the Ld. ClT{A} was justified in observing that assessee firm had no connection with Shri Pankaj Upadhyay, the mediator and Shri Nagendra Singh Chouhan S/o Shri Sardar Singh Chouhan as Shri R.C. Mittal, partner of the assessee firm himself stated in his statement that the deal was made through Mediator Shri Pankaj Upadhyay. Further, Shri Nagendra Singh Chouhan is son of Shri Sardar Singh Chouhan one of the farmer who has also sold his land to assessee firm.
(iv) Whether on the facts and in the circumstances of the case, the Ld. ClT{A] was justified in only relying on the facts narrated by the assessee firm and not considering the facts and enquiry made by the AO, which is against the Principle of Natural Justice.
{v} Whether on the facts and in the circumstances of the case, the Ld. ClT{A] was justified in observing that the statement of Shri Nagendra Singh Chouhan have no evidentiary value as Shri Nagendra Singh Chouhan was not related to the transaction. In this regard, the Id. CIT{A] erred in ignoring the fact that Shri Nagendra Singh Chouhan is son of Shri Sardar Singh Chouhan one of the farmer who sold his land to assessee firm.
(vi) Whether on the facts and in the circumstances of the case, the Ld. ClT{A] was justified in deleting the addition by ignoring the fact that tax liability of seller would not have any impact on tax liability of assessee firm by observing that land is a capital asset and the capital gain would be taxable in the hands of the seller. The on-money paid by assessee firm will remain undisclosed and unexplained investment of assessee firm, which will be taxable in the hands of the assessee firm.
(vii) Whether on the facts and in the circumstances of the case, the Ld. ClT(A) was justified in observing that AO neither obtained the report from the OVO or Stamp Valuation Authorities by ignoring the provisions of section 50C(2) of the I. T. Act, 1961 in which it is clearly mentioned that “the Assessing Office may refer the valuation of the capital asset to a valuation officer”. Hence, it is upon the AO and it is not binding on the AO to refer the case to valuation cell.
The appellant craves leave to add to or deduct from or amend the above grounds of appeal.
Assessee’s appeal bearing ITA No.899/Ind/2018
2. First ground raised by the assessee is with regard to the addition made by the AO u/s 69 on account of unexplained investment at Rs.50,000/-. Facts as culled out from the orders of the Revenue Authorities are that during the course of assessment proceedings it was found that the assessee has made the cash payment of Rs. 50,000/- out of the books. During the course of assessment proceedings as well as appellate proceedings, the assessee failed to explain the source of investment. Even before us, the Id. Counsel for the assessee could not bring any contrary material to controvert the findings of the Revenue Authorities. In view of above, the addition made by the AO amounting to Rs. 50,000/- is confirmed. Therefore, the first ground raised in the appeal of the assessee is dismissed.
3. Last ground i.e. ground no.2 raised in the assessee’s appeal relates to confirmation of the addition of Rs.70,00,000/- u/s 69 on account of unexplained investment. Facts as culled out from the orders of the Revenue Authorities are that during the course of assessment proceedings it was found that a survey u/ s 133A of The Act was carried out at the business premises of the assessee on 15/09/2017 and during the course of survey, it was found that assessee had made the cash payment of Rs. 70,00,000/- to the land owners against the purchase of their land. The date of registry was 22/01/2015 and during the course of survey, it was found that there was no cash available on 22/01/2015. A statement of Shri R. C. Mittal, Partner of the Firm was recorded. During the course of statement, Shri R. C.Mittal admitted an additional income of Rs. 70,00,000/- on this account. Therefore, the Assessing Officer made an addition of Rs. 70,00,000/-.
4. Being aggrieved, the assessee went in appeal before the Id. CIT(A) and Id. CIT(A) confirmed the action of the Assessing Officer. The Id. CIT(A) discussed the relevant judicial pronouncements and found that neither the retraction was made nor communicated to the Revenue Authorities and the record suggests that no threat or coercion has been exerted during the confession statement of the assessee. The relevant portion of the order of the Id. CIT(A) is reproduced hereunder:
“As regards to the evidentiary value of the disclosure statement, Sections 17 to 31 of the Indian Evidence Act, 1872 deal with admission as defined in section 17, it is a “statement, (oral or documentary or contained in electronic form) which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the person, and under the circumstances, hereinafter mentioned”, The general rule with regard to admission is that the party or their representative says about the matter in dispute or facts relevant thereto which throw light on the issue in dispute or consideration. It is well settled that a patty’s admission as defined in sections 17 to 20) fulfilling the requirements of s.21, is substantive evidence proprio vigare. An admission, if clearly and unequivocally made, is the best evidence and though not conclusive, shifts the onus on to the maker. Reliance is placed on Thiru Jon v. Returning Officer A 1977 (Se) 1724. Although, in this case there has been no allegation of coercion) the Courts have gone further and held that the confession need not be ruled out merely because of an allegation of use of coercion. Many statutes make use of such ‘Confessional evidence as long as it is proved that’ it was so obtained by operation or under circumstances which indicate an inference of such operation. The confessions are to be considered as a whole and not in any edited form. In the case of the assessee there has been no allegation of any coercion.
4.2.1 Even retracted confession was held to be binding) reference is made to the case of Surjit Singh Chhabra (1997) ISCC 508), S09(SC) wherein petitioner retracted his confession given to the customs officials, yet it was held to be binding. The Indian Law on confession can be understood from the following passage in a decision under criminal law in State of V.P. v. Boota Sinqh, AIR J 978 se 1770.
“As, however, the confession was a retracted one, it could be acted upon only if substantially corroborated by independent circumstances. It is not necessary that a retracted confession should be corroborated in each material particular; it is sufficient that there is a general corroboration of the important incidents mentioned in the confession”. In the instant case the confession was correlated to the material found during the course of Survey.
4.2.2 As held by the Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973 J 91 ITR 1 8 an admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the basis of assessment. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been attempted to be discharged.
4.2.3 Thus, it is a clear and settled law that admission by a person is good piece of evidence though not conclusive and the same can be used against the person who makes it. The reason behind this is a person making a statement stops the opposite party from making further investigation. However, the statement is not conclusive and the person giving the statement can retract the same under certain circumstances:
(i) The first circumstance is where the statement is not given voluntarily but it was obtained under coercion, threat or undue influence. But the burden is upon the person making the statement to prove that the statement given by him was not voluntary. The assessee can discharge this burden by giving a direct evidence of coercion or threat by the Authorised Officer or by circumstantial evidence in this regard. The time gap between the statement and the retraction of statement would also one of the important points to be taken into account while deciding whether the statement was voluntary or not.
(ii) The other circumstance is where the statement was given under the mistaken belief of either fact or law. Here again the burden is upon the person giving the statement to prove that the statement given by him was factually incorrect or was untenable in law.
This view is supported by the decision of the Tribunal Bench of Ahmedabad in the case of Manharlal Kasturchand Chokshi v.ACIT [1997] 61 ITD 55 (Ahd.), and also in the case of Hotel Kiran v. ACIT [1971] 82 ITR 453 (Pune).
Apart from the above legal lacunae, the appellant’s retraction also suffers from other procedural defects. The appellant, being responsible for the functioning of the business, voluntarily gave statement u/ s 133A of the Income Tax Act, 1961 on15/09/2017, which does not indicate any sort of pressure or coercion but alert presence of mind and clarity of thought of the deposing assessee. By this statement, it was categorically and unequivocally stated that the concern was not maintaining proper books of account. These facts were within the exclusive knowledge of the appellant, who voluntarily stated the same. Therefore, with these facts in exclusive knowledge domain, once disclosed voluntarily in full consciousness, were binding on the assessee, as the contrary could not be proved. Further, the Honble IT AT, Pune Bench, in the case of Chander Mohan Mehta v . ACIT(Inv,) [1999J 65 TT) (Pune) 327, has come to the conclusion that seized documents along with the statement recorded under section 133A constituted valid piece of evidence, which could be used in assessing undisclosed income. However, the two taken together have to be read as a whole. In the instant case, the assessee has clearly linked the non availability of cash of concern to undisclosed income in statement u/section 133A of the Income Tax Act, 1961 and hence, such statement is binding on the assessee.
4.2.4 The return filed, before the disclosure made during the course of survey. The appellant has not retracted from his statement given during the course of survey on 15/09/2017.
4.2.5 Claims have to be discarded as the assessee has not produced any evidence in that behalf. Once the statement of the assessee is voluntary and there has been no pressure, the same is binding on the assessee.
4.2.6 In the case of Council of Institute of Chartered Accountants Of India vs. Mukesh R. Shah (2004) 186 CTR [Guj] 579, the .High Court of Gujarat has held that “a retraction, so as to dislodge the admission made, should come about at the earliest point of time. It goes without saying that a retraction made after a considerable length of time, would not have the same efficacy in Jaw as a retraction made at the earliest point of time from the day of admission. A belated retraction would fall in the category of afterthought instead of being retraction. That apart, for a retraction to be effective so as to dislodge the admission made earlier in point of time, the retraction has to be supported by contemporaneous evidence and the onus is 011 the person making such admission and retraction. ” Thus the legal position about the assessee’s belated retraction is clear that it is an afterthought.
Thus, from the above analysis it emerges that:
i. The retraction was never made;
ii. It was never communicated to the Departmental authorities;
iii. From record it is impossible to hold that any threat or coercion has been exerted during the confession statement of the assessee.
iv. Irrespective of the form or validity of the voluntary disclosure statement or of the deposition taken from the assessee on. 15/0912017, the evidence of testimony cannot be wiped out and does not become non-existent and this evidence can well be utilized to frame the assessment on that basis.
4.2.7 Therefore, the addition made by the AO amounting to Rs. 70,00,000/ – is Confirmed. Therefore, this ground of appeal is Dismissed.”
5. Being aggrieved, the assessee is before this Tribunal. Before us, the Id. Counsel for the assessee reiterated the submissions as made before the Revenue Authorities. Per contra, the Id. CIT-DR relied upon the order of the Id. CIT(A} and submitted that Id.CIT(A) made detailed discussion on the facts and circumstances and confirmed the action of the Assessing Officer in the light of the relevant judicial pronouncements as reproduced in the order of the Id. CIT(A).
6. We have heard rival contentions of both the parties and perused material available on record. We find that during the course of survey, it was found that assessee had made the cash payment of Rs. 70,00,000/- to the land owners against the purchase of their land. The date of registry was 22/01/2015 and during the course of survey, it was found that there was no cash available on 22/01/2015. A statement of Shri R. C. Mittal, Partner of the Firm was recorded wherein Shri R. C.Mittal admitted an additional income of Rs. 70,00,000/- on this account. During assessment proceedings, a detailed questionnaire was issued u/s 142(1) of the I.T. Act to the assessee on 13.11.2017. The assessee submitted vide reply dated 08.12.2017 that during post survey proceedings, a sum of Rs.70 lakhs was offered and tax due thereon has already been paid and challan already submitted. We find that having discussed facts and circumstances in the light of the judicial pronouncements (supra), Id. CIT(A) discussed the evidentiary value as per Indian Evidence Act and reached to the conclusion that no retraction communicating to the Revenue Authorities was made and it is also evident from the record available that no threat or coercion had been exerted during the confession statement of the assessee. Even before us, the finding of the Id. CIT(A) could not be controverted by the Id. CIT(A) by bringing any contrary material on record, thus, we are in agreement with the Id. CIT(A) in observing that the evidence of testimony cannot be wiped out and does not become non-existent and therefore, this evidence can well be utilized to frame the assessment. Accordingly, we do not find any reason to interfere with the findings of the Id. CIT(A). Hence, the findings recorded by the Id. CIT(A) are confirmed. Therefore, last ground i.e. ground no.2 raised in the appeal of the assessee is also dismissed.
Revenue’s appeal bearing ITA No.912/Ind/2018
7. The first issue raised by the Revenue is with regard to deletion of the addition made by AO u] s 69C of the I. T. Act 1961 at Rs.70,73,241/- on account of unexplained expenditure. Facts as culled out from the orders of the Revenue Authorities are that the Assessing Officer’ noted that the payment of the stamp was made on 23/01/2015 whereas the stamp was purchased on 22/01/2015. The Assessing Officer made the addition on the ground that no documentary evidence was produced. Being aggrieved, the assessee went in appeal before the Id. CIT(A) and Id. CIT(A) deleted the addition on the ground that when the assessee had made the payment of stamp to the stamp vendor by RTGS and the source of payment and destination is evident from the perusal of the bank statement, there is no question of considering the same as unexplained investment. Even the Assessing Officer issued the summon u/s 131 of the Act to the stamp vendor but failed to gather the information.
8. Being aggrieved, the Revenue is in appeal before this Tribunal. Before us, the Id. CIT-DR relied upon the order of the Assessing Officer. Per contra, the Id. Counsel for the assessee relied on the order of the Id. CIT(A) and reiterated the submissions made before Revenue Authorities.
9. We have heard rival contentions of both the parties and . perused material available on record. We find that due to preoccupied task in hand of the managing partner, the registration of property was required to be preponed and the managing partner Shri R.C. Mittal maintained good financial and personal relations in all walks of life including the persons associated with the work of registration of property like advocates and stamp vendors. Shri Mustaq Khan is one of the vendors who is well acquainted for last several years. It was submitted that the registration’ of documents was compelled to be preponed to 22/01/2015 due to personal reasons and Shri Mustaq Khan extended helping hand by lending stamps on credit on 22/01/2015. The consideration of stamps was repaid on 23/01/2015. However, the Assessing Officer ignored this practical aspect and added Rs. 70,73,241/-. We find that the assessee made the payment by RTGS and the source of payment and destination can be found on the bank statement. Since the assessee purchased the stamp and made the payment through RTGS then there is no question of considering the same has unexplained investment. Further, the AO issued the summon u/s 131 of The Act to the stamp vendor and by issuing the summon, the stamp vendor becomes the witness of the Revenue and thus, it was the duty of the Assessing Officer to collect the information from the stamp vendor and confront to the assessee but the Assessing Officer failed to gather the information. Even before us, the Id. CIT-DR could not controvert the findings of the Id. CIT(A) on this issue. Accordingly, we confirm the findings of the Id. CIT(A) on this issue. Hence, ground no. 1 raised in the appeal filed by the Revenue is dismissed.
10. Now, the last issue raised by the Revenue through ground no.2 is with regard to the addition of Rs.11,30,80,000/- on account of unexplained and undisclosed investment u/s 69B of the Act. Facts as culled out from the orders of the Revenue Authorities are that the Assessing Officer made the addition on the basis of statement of Shri Nagendra Singh Chauhan. During the course of assessment, the Assessing Officer got the inquiry conducted through his inspector whose report indicated that one Shri Nagendra Singh Chouhan had told that he alongwith one Shri Pankaj Upadhyay helped the assessee in acquisition of land at the rate of Rs.60,00,000/ – per beegha. On the basis of which the Assessing Officer made addition of Rs. 11,30,80,000/- in the hands of the assessee on account of on-money paid for purchase of land. Being aggrieved, the assessee went in appeal before the Id. CIT(A) who deleted the addition observing as under:
“4.4 Ground No.4: Through this ground or appeal, the appellant has challenged the addition of Rs.11,30,80,000/- on account of unexplained and undisclosed investment u/ s 69B of The Act. The AO made the addition on the basis of statement of Shri Nagendra Singh Chauhan. The AO in the assessment order mentioned the name the land seller name. On going to the list of the sellers the appellant has not purchased any land from Shri Nagendra Singh Chauhan. The appellant has made the payment as per the value decided by Stamp Valuation Authorities. The AO made the enquiry from the purchasers. The purchasers in the statement mentioned that they have received money from Shri Pankaj Upadhyay. The AO failed to prove that the appellant has made the payment over and above the rate decided by Stamp Valuation Authorities. The AO adopted the rate of the land at Rs. 60,00,000/- per bigha. The AO neither obtained the report from the DVO or Stamp Valuation Authorities which is the competent to ascertain the value of the land. The AO is not justified in adopting the value of land on the basis of Inspector report. Shri Nagendra Singh. Chauhan and Shri Pankaj Upadhyay were not related with the transaction of the land, The AO gather the information from the third persons who are not having any link with the transactions. Since Shri Nagendra Singh Chauhan is nothing to do with the transaction, his statement has no evidentiary value, The department has carried out the survey at the business premises of the appellant on 15/09/2017; The department has used all the means available and verified each and every document related to the land but no evidence of whatsoever regarding the on-money was found. When not evidence regarding payment of on-money was found during the course of survey, the AO is not justified in making the addition during the course of assessment proceedings. The land is the capital asset and the capital gain is taxable in the hands of sellers. The AO has not brought on record that the sellers has paid the capital gain tax as per Rs. 60, 00, 00/ – per big ha. Therefore, the addition made by the AO amounting to Rs. 11,30,80,000/– is Deleted. Therefore, the appeal on this ground is Allowed.”
11. Being aggrieved, the Revenue is in appeal before this Tribunal. Before us, the Id. CIT-DR relied upon the order of the Assessing Officer. Per contra, the Id. Counsel for the assessee relied on the order of the Id. CIT(A) and reiterated the submissions made before Revenue Authorities.
12. We have heard rival contentions of both the parties and perused material available on record. We find that the Assessing Officer got the inquiry conducted through his inspector whose report indicated that one Shri N agendra Singh Chouhan had told that he alongwith one Shri Pankaj Upadhyay helped the assessee in acquisition of land at the rate of Rs.60,00,000/ – per beegha and on the basis of which the Assessing Officer made addition of Rs. 11,30,80,000/- in the hands of the assessee on account of “on-money” paid for purchase of land. However, we find that it was submitted by the assessee that this report is immaterial and is of no consequences in the eyes of law as the information gathered by the inspector has no material value as Shri Nagendra Singh Chouhan and Pankaj Upadhyay are not the persons related to transaction under reference in any manner whatsoever. We find that it is clearly a case of accepting the versions of third persons without any link with the transaction in any manner. The Assessing Officer acted upon on the basis of third parties’ version. Moreover it is not clear as to how the inspector linked the said persons with the case. Even if it is assumed that Shri Nagendra Singh Chouhan uttered something, it cannot be a base for the Assessing Officer to treat that any “on-money” has been paid by the assessee as no any documentary evidence was found during the course of surveyor thereafter during assessment proceedings which could establish that there any such payment of “on-money” by assessee to the land owners. Even at no point of time, the assessee was confronted with the above two persons. Thus, no any incriminating evidence was found during surveyor even after or before to corroborate the allegation of Assessing officer that for purchase of impugned land, the assessee had paid additional consideration to the tune of Rs. 11,30,80,000/- in the form of on-money. Except the statement of one Shri Nagendra Singh Chouhan, there is no other piece of evidence to corroborate the allegation of the Assessing Officer and even that statement was taken behind the assessee and also assessee was not confronted with that person. It is not the case that the Assessing Officer cited any instance where the assessee is found guilty of making payments to sellers over and above the registered value. Further, we find that the assessee had purchased the land on its guideline value and the Assessing Officer did not adversely comment upon, thus, this fact is in front of Assessing Officer since the beginning that the transaction value is equivalent to the guideline value. Further, it is not the case that investment was not fully recorded in the books of account and therefore, the onus of proof is on Revenue to prove that the assessee made some unaccounted investment in purchase of property. Our Observations are supported by the ratio laid down in the following judicial pronouncements:
1. Umacharan Saha & Bros Co. vs CIT 37 ITR 21 (SC)
2. K. P. Varghese vs ITO (1981) 131 ITR 597 (SC)
3. Dhakeshwari Cotton Mills Ltd. vs CIT (1954) 26 ITR 775 (SC)
4. Dhiraj Lal Girdharilal vs CIT (1954) 26 ITR 736 (SC).
13. In view of the above facts in the light of the aforesaid judicial pronouncements, we are of the view that the Assessing Officer failed to discharge his onus and simply on guess work, presumption and suspicion, the addition in this regard had been made. The allegations of the Assessing Officer were merely without having brought any corroborative material on record and Id. CIT-DR also could not bring any contrary material to rebut the findings of the Id. CIT(A), therefore, we do not find any reason to interfere with the finding recorded by the Id. CIT(A). We confirm the same. Accordingly, the ground no.2 raised in the appeal of the Revenue is also dismissed.
14. In the result, the appeal filed by the assessee is dismissed and that by the Revenue is also dismissed.
Order pronounced as per Rule 34 of ITAT Rules, 1963 on 01/09/2021.
