Case Law Details
Kailash Radhakrishna Kshirsagar Vs ITO (ITAT Pune)
Survey Statement Not the Last Word: ITAT Pune Sends ₹45 L Addition Back to AO
ITAT Pune Remands ₹45.05 L Survey Addition & ₹5 L u/s 69: One Final Opportunity to Assessee
In Kailash Radhakrishna Kshirsagar vs. ITO, Ward-1, Jalna (ITA No.1175/PUN/2023, AY 2013-14; order dated 29-12-2025), the Pune Bench “A” of ITAT dealt with additions arising out of a survey u/s 133A conducted on a partnership firm where the Assessee was a partner. Based on an impounded non-judicial stamp paper and the Assessee’s statement, the AO treated ₹45,05,000 received under an agreement to sell as undisclosed business income u/s 28, and further added ₹5,00,000 as unexplained investment u/s 69. The Ld. CIT(A) upheld both additions, heavily relying on the evidentiary value of the survey statement and rejecting affidavits filed later as inadmissible additional evidence under Rule 46A.
Before the Tribunal, the Assessee contended that crucial additional evidences going to the root of the matter were not admitted by the Ld. CIT(A) and sought a remand. The Revenue opposed, arguing that such evidences were never produced earlier and were post-assessment. Considering the totality of facts and in the interest of justice, the ITAT held that the issues required fresh examination. The Tribunal set aside the matter to the file of the AO, directing grant of one final opportunity to the Assessee to substantiate the case with requisite details, with a clear caveat that no adjournment be sought. Consequently, the appeal was allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal filed by the assessee is directed against the order dated 14.09.2023 of the Ld. CIT(A), Pune-11 relating to assessment year 2013-14.
2. Facts of the case, in brief, are that the assessee is an individual and engaged in the business of supply of building material, trading in plotting, builder and construction of houses, row-houses etc. He is also a partner in the firm of M/s. Ekdant Developers, Mastgad, Jalna. The assessee filed belated return of income on 25.12.2013 declaring total taxable income of Rs.5,95,779/- after claiming deduction of Rs.1,00,000/- under Chapter VI-A.
3. The Assessing Officer noted that an action u/s 133A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was conducted on 13.03.2015 in the case of M/s. Ekdant Developers, Mastgad, Old Jalna in which there were 4 partners including the assessee. He noted that during the course of this action certain books of account including some incriminating material were impounded and the statement of the assessee was also recorded. He observed on verification of the impounded material that the said impounded material contains a copy of Non-Judicial stamp paper of Rs.100/- bearing No.ER226450 dated 08.02.2012. As per the relevant details it was noticed that the said stamp paper was purchased by the assessee for himself personally on 11.04.2012. The said stamp paper contains certain transactions of purchase of plots. He, therefore, concluded that the assessee has executed an agreement to sell which constitutes the transaction relating to business and receipt of money at Rs.45 lakhs was the adventure in the nature of trade and liable to be taxed in the hands of the assessee as per provisions of section 28 of the Act. The Assessing Officer referred to the contents of the agreement, statement of the assessee recorded during the course of search and cost of purchase of the plot at Rs.5 lakhs which remained unexplained and accordingly made addition of Rs.50,05,000/- to the total income of the assessee by observing as under:
intentionally to avoid the burden of taxes with a malafide intention. Accordingly, an amount of Rs.45,05,000/- is considered as assessee’s undisclosed business income and added to the total income. Since the assessee had concealed the particulars of income, therefore, penalty proceedings under section 271(1)(c) of the Income-tax Act,1961 are hereby initiated separately.
25. In view of the discussion supra, I am also satisfied that, the assessee had admitted during the course el statement recorded on oath that, the assessee had made an investment into the purchase of plot at Rs.5,00,000/-. But the said investment had not been recorded into the books of accounts and also failed to exclain the nature and sources thereof, therefore, an amount of Rs.5,00,000/- in my opinion is the value of investment made in to two plots bearing No.10 and 11 is deemed to be the income of the assessee within the meaning of provisions of section 69 of the Income-tax Act,1961. Accordingly, an amount of Rs.5,00,000/- is added to the total income of the assessee under section 69 of the Income-tax Act,1961. Since the assessee had concealed the particulars of income, therefore, penalty proceedings under section 271(1)(c) of the Income-fax Act• 1961 are hereby initiated separately.
4. In appeal the Ld. CIT(A) dismissed the appeal by observing as under:
Findings:
11. I have considered the facts of the case and the submissions made by the appellant. The first contention raised by the appellant is regarding the evidentiary value of the statement recorded during the survey. The appellant has contended that a statement recorded during the survey does not carry any evidentiary value. The issue of evidentiary value of a statement recorded during the survey operation has been examined by various courts from time to time wherein it has been held that the statement recorded during the survey carries an evidentiary value and can be used while completing the assessment. Some of these decisions are as under:-
11.1 Pebble Investment and Finance Ltd vs ITO (ITA No. 98812014)
(Bombay HC)
9. We note that a statement made under Section 133A of the Act is not bereft of any evidentiary value. The same may not be conclusive but in the absence of any contrary evidence or explanation as to why the statement made under Section 133A of the Act is not credible, it can be acted upon. The decision of Madras High Court in CIT v/s. S. Khader Khan Son reported in 300 ITR 157 as upheld by the Apex Court, is not of any assistance to the Appellant. In the facts before the Court in S. Khader Khan (supra), the person who made the statement under Section 133A of the Act had retracted it before the Assessment Order was passed. Moreover, in the absence of the the Appellant-Assessee offering any explanation as to why the statement cannot be relied upon, no fault can be found on the reliance upon the statement of the Director of M/s. Omega. Further, so far as request for cross examination is concerned, we find that Appellant-Assessee, during the first round of proceedings before the Assessing Officer did not raise any such issue. At that point of time, the person who make the statement, could have been produced by the Assessing Officer. It was only in the second round of proceedings when the Appellant-Assessee was not able to contact the Director of M/s. Omega, that they came up with a request for his cross examination. Therefore, the submission on part of the Appellant that the delay has led to it being unable to produce evidence is of no avail as the delay was in seeking cross examination by it. Further, the documents which were produced were considered along with and/or the facts viz: nonproduction of vital documents. This coupled with the fact that the owner of the Furnace i.e. Appellant did not have any knowledge about its whereabouts at the time of adjudication.
This decision was subsequently upheld by Hon’ble SC in SLP (C) No. 11784/2017 dated 05/07/2017.
11.2 Raj Hans Towers (P) Ltd vs CIT 230 Taxman 567 (Delhi HC)
8. …….. The discretion vested in the Revenue authorities in content and character is not radically different in the case of a survey or in the case of search and seizure operations as is evident from a plain reading of Sections 133A (3) and 132(4). Whereas the latter uses the expression “may examine on oath”, the former says that the authority “may record statement which may be useful for, or relevant to” in proceedings under the Act. This provision, Section 133A (3) had undergone further amendment inasmuch as the Revenue is precluded from taking any action under Section 133A (3) (ia) or Section 133A (3) (ii), i.e., from impounding and taking into custody any books of account, etc. or making an inventory of any cash, stock or other valuable item verified by him while acting under Section 133 (2A) by the Finance Act 2 of 2014. The obvious inference, therefore, is that in respect of statement which fall in Section 133A (3) (iii), the discretion to use it as a relevant material continues.
9. This Court is conscious that in Dhingra Metal (supra) the Division Bench used the expression “conclusive evidence”. Now, that expression has to be understood in its common parlance and not in a legal sense, i.e., it cannot be understood to mean something which is to be proved beyond reasonable doubt. Such burden does not arise and cannot be expected to be discharged by the Revenue. Instead, the reference to the presumption under Section 132 (4A) refers to presumption of fact of the genre Section 114 of the Evidence Act deals with it. Likewise, the relevance and admissibility follow the same train of thought conceptually, when one comes to Section 133A (3) (iii). All that this provision enables to the authority concerned to do is to draw an adverse inference by relying upon materials which are seized, or dealt with in the course of the survey.
10. In the present case, the admitted facts are that during the survey, a Director of the assessee – who was duly authorized to make a statement about the materials and the undisclosed income, did so on 20.11.2007. The Company did not retract it immediately or any time before the show cause was issued to it. For the first time, in reply to the show cause notice it faintly urged that the statement was not voluntary and sought to retract it. The reply, a copy of which has been placed on record, undoubtedly makes reference to some previous letter retracting the statement. Learned counsel urged that that letter was written on 21.12.2007. However, the actual reply to the show cause notice is silent as to the date. This itself casts doubt as to whether the retraction was in fact made or was claimed as an afterthought.
11.3 Navdeep Dhingra 56 taxmann.com 75 (P&H HC)
11. The onus to prove concealment of income lies upon the revenue. Admissions are an integral part of assessments and as they are the best evidence of a fact, within the personal knowledge of an assessee may if the admission is voluntary and not extracted by coercion or force, be read against an assessee. The relevance of an admission admits to another exception namely if the admission is retracted within reasonable time and by assigning valid reasons. A perusal of the impugned orders reveals that the assessee made an admission, on 18.01.2006 and followed it up by a written admission on 19.01.2006 but while filing his return did not retract the admission. At no stage of the survey or assessment proceedings except at its fag end on 4.12.2008 i.e. almost two years after the admissions and a few weeks before finalisation of the assessment, did the assessee raise a plea that he was coerced and forced into making admissions. The belated retracting of the admissions on 04.12.2008, nearly two years after the admissions and then also without any facts to support the allegation of coercion or pressure, cannot enure to the benefit of the assessee. An admission is substantial evidence of a fact, within the special knowledge of an assessee and if not retracted immediately or within reasonable time is substantive evidence of a fact and may be read against an assessee. We, therefore, answer the above questions against the assessee and as we find no reason to hold that the revenue has erred in relying upon admissions made by the assessee, dismiss the appeal.
11.4 Dr. S.C. Gupta 118 Taxman 252 (Allahabad HC)
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 did not even seem to have been attempted to be discharged.
12. The above case laws including the judgment of Hon. Bombay High Court lay down a proposition that the statement recorded during the survey operation does carry evidentiary value unless the same is validly retracted within short period and such retraction is supported by documentary evidences. In the present case, during the survey conducted on 13/03/2015, an ‘agreement to sell’ dated 11/04/2012 pertaining to A.Y. 2013-14 was found. On the basis of said agreement, the appellant admitted unaccounted additional income. The said admission was made after almost three years of the date of the said agreement to sell. Thereafter, the appellant did not file any retraction letter and only when notice97/s 148 of the Act was issued on 08/12/2017, the assessee stated that the proposed transaction was not completed and the amount received was returned to the proposed buyer. These facts clearly suggest that the assessee did not retract from the statement immediately after the survey. It is also important to note that complete facts of the transaction were in the knowledge of the appellant on the date of survey because the survey was conducted after three years of the date on which ‘agreement to sell’ was entered into. Since at that time the appellant did not take a plea that the said transaction was not complete, same cannot be accepted being an afterthought. Moreover, the appellant has not contended that the additional income was disclosed under any threat or coercion. It is also important to note that even till date, the appellant has accepted that such agreement to sell dated 11/04/2012 was signed by him and he received advance of Rs. 45,00,000/-. In view of these facts and the legal position discussed above, the contention of the appellant regarding the retraction of statement cannot be accepted.
13.1 Coming to the merits of the issue, it is not under dispute that the appellant signed the said agreement and received the amount of Rs. 45,00,000/- in cash as mentioned in the said ‘agreement to sell’. This fact has not been disputed by the appellant till date and the only contention of the appellant is that the said transaction did not materialise and he has returned the advance of Rs. 45,00,000/- to Shri Ramesh Kisan Suralkar. However, the appellant could not file any evidence in the form of cancellation deed establishing the reasons of cancellation, date of cancellation, date of refund, mode of refund, source of funds of refund etc. During the assessment proceedings, the appellant was requested to produce Shri Ramesh Kisan Suralkar on multiple occasions but the appellant neither produced Shri Suralkar nor he furnished the present whereabouts of Shri Suralkar. Thus, the appellant has not filed any kind of evidence substantiating that the amount of Rs. 45,00,000/- was refunded to the said buyer.
13.2 It may also be mentioned that as per the agreement, the sale deed was to be registered on or before 25/04/2012 and therefore, if the transaction was cancelled, it must have been cancelled within a reasonable period of time past 25/04/2012 and definitely by the date of survey i.e. 13/03/2013. The very fact that the argument of cancellation of deal was never raised at the time of survey raises serious doubts about the correctness of the appellant’s contention.
14. The appellant has argued that as per the PR Card, these plots were never owned by him. During the survey operation, the appellant has stated that the said plots were purchased by him under an oral agreement wherein he had paid Rs. 5,00,000/- in cash. The said cash payment was also disclosed as an additional income in the statement recorded during the survey. Till date this part of statement has not been retracted by the appellant and in fact since he accepts that the agreement dated 11/04/2012 was entered into by him, meaning thereby, the appellant accepts that he purchased the plots under an oral contract. The Assessing Officer has further noticed that as per this agreement dated 11/04/2012, the registry of the plots could have been done in the name of a third person with consent. Thus, the argument of the appellant that as per PR Card, he was never the owner of the plots does not have any force.
15. The appellant’s claim that the said transaction was never completed cannot be accepted in view of the fact that the survey was conducted much after the date of sale of these plots (after three years) and if the deal was not materialised, the appellant could have informed the same to the survey team at that time itself. The very fact that no such contention was raised at the time of survey clearly suggests that the appellant had earned profit of Rs. 45,05,000/- on sale of these plots. It may not be out of the place to mention that at the time of survey,the appellant did not state that the cash amount of Rs. 45,00,000/- was refunded to the buyer. These facts clearly suggest that the transaction (purchase as well as sale) has been kept completely out of the books wherein the appellant obtained rights over these plots for a cash payment of Rs. 5,00,000/- and the said rights were transferred to Shri Ramesh Kisan Suralkar vide the agreement dated 11/04/2012. The deal was never got registered in order to save taxes including the stamp duty.
16.1 During the appellate proceedings, the appellant has filed two affidavits from Shri Badri Vishal Bansilal Gaur and Shri Shivkumar Bankatlal Jaiswal stating that these two parties have mutually sold and purchased these two plots on 24/12/2012. It is seen that these affidavits are dated 19/02/2019 which is subsequent to the completion of assessment proceedings. Thus, these affidavits are in the nature of additional evidences and the appellant has not filed any application under Rule 46A of I.T. Rules giving the reasons for which same could not be filed with the Assessing Officer. In view of these facts, these additional evidences cannot be accepted by me.
16.2 In any case, these affidavits talk about transaction of sale/purchase completed on 24/12/2012 which is subsequent to the agreement dated 11/04/2012 impounded during the survey. What has happened between 11/04/2012 to 24/12/2012 has not been explained by the appellant. The appellant has also not come forward with the name of the person from whom he acquired rights in these plots under an oral agreement for a consideration of Rs. 5,00,000/-. Thus, the appellant has not come out clean during the appellate proceedings and trying to justify his stand by furnishing incomplete information. Since it is not under dispute that the appellant acquired rights in the said plots, it is essential that the appellant informs the name of the person from whom the said rights were acquired. Considering the totality of facts, the affidavits filed by the appellant cannot be considered as complete and reliable evidence.
17. In view of the above discussion, it is held that the appellant has earned undisclosed business profit of Rs. 45,05,000/-. Therefore, the addition of Rs. 45,05,000/- made by the Assessing Officer is upheld. Ground no. 2 raised by the appellant is DISMISSED.
5. Aggrieved with such order of the Ld. CIT(A) the assessee is in appeal before the Tribunal by raising the following grounds:
1. ADDITION OF ALLEGED BUSINESS RECEIPT OF ₹ 45,05,000/- U/S 28 OF THE ACT
1.1 The Learned Commissioner of Income tax (Appeals) 11, Pune [‘the Ld CIT(A)] has erred confirming the additions made of alleged business receipt of ? 45,05,000/- without considering the submission filed.
1.2 The Ld. CIT erred in rejecting the additional evidence filed as per Rule 46A of the Income Tax Rules, 1962.
1.3 In the facts and circumstances of the case and in law it is humbly submitted that no addition is warranted in the present case and therefore deserves to be deleted.
1.4 Without prejudice to the above, the Ld. CIT(A) as well as the Ld. AO erred in not granting the deduction of the alleged purchase cost against the alleged business receipt.
2. ADDITION OF ALLEGED INVESTMENT OF ? 5,00,000/- U/S 69 OF THE ACT
2.1 The Ld. CIT(A) has erred in confirming the addition made of alleged investment of ? 5,00,000/- without considering the submission filed.
2.2 The Ld. CIT(A) failed to appreciate the documents submitted before him and confirmed the addition. Provision of section 69 of the Act is attracted in the present case.
2.3 On the facts and circumstances of the case and in law the addition deserves to be deleted.
3. LIBERTY
The Appellant craves leave to add, alter, amend, delete or substitute any of the above grounds of appeal.
6. The Ld. Counsel for the assessee at the outset submitted that the Ld. CIT(A), without admitting the additional evidences filed before him, dismissed the appeal which is not justified. He submitted that these additional evidences go to the root of the matter, therefore, the Ld. CIT(A) should have admitted the additional evidences and forwarded the same to the Assessing Officer for obtaining a remand report from the Assessing Officer and then decided the issue as per fact and law. However, he has failed to do so. Therefore, he has no objection if the matter is set aside to the file of the Assessing Officer with a direction to consider the additional evidences and decide the issue as per fact and law.
7. The Ld. DR on the other hand while supporting the order of the Ld. CIT(A) submitted that despite opportunities granted the assessee never produced these details before the Assessing Officer. Further, the so-called affidavit dt 19.02.2019 is subsequent to the completion of the assessment proceedings and in the nature of additional evidence. The assessee has not filed proper application as per Rule 46A of the IT Rules, 1962. He accordingly submitted that the order of the Ld. CIT(A) be upheld.
8. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by both sides. We find the Ld. CIT(A) did not accept the additional evidences filed before him on the ground that the assessee has not filed any application under Rule 46A as per para 16.1 of his order. Since it is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate his case by filing the relevant details before either of the lower authorities justifying his case, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law after providing due opportunity of being heard to the assessee. The assessee is also hereby directed to submit the requisite details before the Assessing Officer on the appointed date without seeking any adjournment under any pretext, failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
9. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 29th December, 2025.
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