Short Overview Addition made merely and solely on the basis of search statement recorded under section 132(4) without any corroborative evidence was not sustainable in law, moreover when confession made was subsequently retracted.

Assessee company was engaged in the business of real estate. AO based on statement of director of assessee-company recorded during search at assessee’s premises made addition towards receipt of on-money on sale of flats. Assessee’s case was that AO simply relied upon sworn statement of director without placing any further corroborative material.

It is held that  Mere admission was not conclusive as to the truth of the matter. It was only a piece of evidence, weight to be attached to which must depend on the circumstances in which it was made. It could be shown to be erroneous or untrue. Therefore, addition made merely and solely on the basis of confession without any corroborative evidence was not sustainable in law, moreover when confession made was subsequently retracted and no statement of any buyer was recorded even in respect of fact that buyers had already submitted their respective affidavits.

Decision: In assessee’s favour.

Supported by: Asstt. CIT v. Thahrayamal Balchand (1980) 124 ITR 111 (Raj-HC) : 1980 TaxPub(DT) 359 (Raj-HC), CIT v. SMS Investment Corporation Pvt. Ltd. (1994) 207 ITR 364 (Raj) : 1994 TaxPub(DT) 652 (Raj-HC) and CIT v. Kishanchand (1993) 45 TTJ (JP-Trib) 20 : 1993 TaxPub(DT) 555 (Jp-Trib)

IN THE ITAT, JAIPUR BENCH

RAMESH C. SHARMA, A.M. & SANDEEP GOSAIN, J.M.

ACIT v. JKD Pearl India Developers (P) Ltd.

I.T.A. Nos. 323, 324/JP/2017

A.Y. 2014-15

9 September, 2020

Revenue by: B.K. Gupta, Addl. CIT

Assessee by: S.L. Poddar, Advocate

ORDER

Sandeep Gosain, J.M.

Both these appeals have been filed by the revenue against the two separate orders of the learned Commissioner (Appeals)-4, Jaipur dated 14-2-2017 and 15-2-2017 respectively for the assessment year 2014-15.

2. The hearing of the appeals was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. In both these appeals common issues are involved, therefore, both the sake of convenience and brevity, a common order is being passed.
3. Since, common issues are involved in the both these appeals, therefore, as a lead case, for the facts and submissions, we takeITA No. 324/JP/2017. In this appeal, the assessee has raised following grounds of appeal :–

“1. Whether on the facts and the circumstances of the case, the learned Commissioner (Appeals) was right in deleting the addition of Rs. 25,86,60,550 ignoring the fact that assessee himself stated in his statements recorded under section 132(4) of the Act during the course of search as well as past search proceedings that he has received on-money in cash from the buyers of various flats and subsequently he failed to show the same in the return of income.

2. Whether on the facts and the circumstances of the case, learned Commissioner (Appeals) was right in deleting the addition of Rs. 2,50,00,000 ignoring the fact that the assessee himself stated in his statements recorded under section 132(4) of the Act during the course of search as well as post search proceedings that there are certain discrepancies in the documents seized from his house and subsequently he failed to show the same in the return of income.”
3. The brief facts of the case are that the assessee is a private limited company engaged in the business of real estate. A search was conducted at the premises of the assessee on 4-9-2013. Subsequently, return was filed on 29-11-2014 declaring loss of Rs. 1,47,63,169 in response to notice under section 153A of the Income Tax Act, 1961 (in short, the Act). The assessing officer (A.O.) completed the assessment on 30-3-2016 determining total income at Rs. 28,36,60,550 thereby making additions under different heads, i.e., addition under section 68 of the Act on account of receipt of on money on sale of flats, addition under section 69C of the Act and also denied the setoff of loss of Rs. 1,47,63,169.
4. Aggrieved by the order of the assessing officer, the assessee preferred appeal before the learned Commissioner (Appeals), who after considering the case of both the parties had deleted the additions made by the assessing officer.
5. Aggrieved by the order of the learned Commissioner (Appeals), the revenue is in further appeal before the ITAT on the grounds mentioned hereinabove.
6. Ground No. 1 of the present appeal raised by the revenue relates to deletion of addition of Rs. 25,86,60,550 by the learned Commissioner (Appeals). In this regard, the learned Addl. CIT-DR Shri B.K. Gupta appearing on behalf of the Revenue has relied upon the order passed by the assessing officer and also submitted that the learned Commissioner (Appeals) had erred in deleting the additions thereby ignoring the fact that the assessee himself stated in his statements recorded under section 132(4) of the Act during the course of search as well as post search proceedings that he has received on-money in cash from the buyers of various flats and subsequently he failed to show the same in the return of income. The learned DR also relied upon the written submissions dated 22-2-2020 filed by him before the ITAT :–

“1. The brief facts of the case are that a search and seizure action was conducted in the case of the assessee on 4-9-2013. During the course of search, in the statement recorded on oath under section 132(4), Shri Vijay Jain, Director of the assessee company made disclosure of Rs. 30.01 Crore, which included a sum of Rs. 27.51 Crore on account of on-money receipts against booking/sale of flats in the various projects undertaken by the assessee company on the basis of seized material from its business premises and Rs. 2.50 Crore on account of other discrepancies. It may be mentioned that, in the post search enquiries, Shri Vijay Jain affirmed the said disclosure of Rs. 30.01 Crore in its statement recorded under section 131 and reaffirmed the same in its undated affidavit (between 6-6-2013 to 18-9-2013), i.e., the surrender was affirmed on two occasions during post search enquiries. However, vide its Letter, dated 30-6-2014, i.e., after more than 9 months from the date of search, the assessee retracted from the said disclosure and consequently, in its return of income for the assessment year 2014-15 filed on 29-11-2014, no such surrender income was shown. In view of the above, the assessing officer has issued show cause notice to the assessee and after considering its reply and dealing with various contentions raised by the assessee, the assessing officer has given detailed findings in the assessment order and has made the addition of Rs. 30.01 Crore to the income of the assessee and for the sake of brevity, the same are not repeated here.

2. Findings of learned Commissioner (Appeals)

Vide the impugned appellate order, the learned Commissioner (Appeals) has deleted the addition of Rs. 25.01 Crore by observing that :–

(i) The assessing officer has solely relied upon the statement of director of the assessee company and has not carried out any enquiries to prove the receipt of on money.

(ii) The seized documents are dumb documents.

(iii) The onus is on the assessing officer to prove the contents of the seized documents are true under section 292C.

(iv) The assessing officer has not brought on record any independent corroborative evidence to support the addition.

(v) No enquiries were made from the buyers of the flats.

(vi) No on money was credited in the books of accounts, so no addition could be made under section 68 as made by the assessing officer.

3. It is humbly submitted that the above findings of the learned Commissioner (Appeals) are not sustainable in the eyes of law. It is an established principle that the statement recorded under section 132(4) has an evidentiary value and is an important piece of evidence. It is true that the said statement can be retracted on the basis of cogent material, if —

(a) It was made by use of any threat or coercion, or

(b) It was made on the basis of incorrect facts.

However, it is to seen that the retraction was made after more than 9 months of the search. In fact, the director of the assessee company also affirmed the same in statement recorded under section 131 and in the affidavit and thus the retraction was nothing but an afterthought. It is humbly submitted that the learned Commissioner (Appeals) has ignored the statement recorded under section 131 as well as the affidavit of the director of the assessee company. It is to be noted that till the filing of the retraction letter, no complaint was made to the senior authorities of the department about the alleged threat or coercion exercised by the departmental officers for making the surrender. Further, it is evident from the statement of Shri Vijay Jain recorded under section 132(4) that he has not only admitted that the seized documents belonged to the assessee company but also has explained them in detail thereof. Further, these documents contained the details of areas of the flats, total consideration, accounted consideration and on-money receipts for the sale/booking of the flats. It may be mentioned that the rates per square feet (for recorded payments) as stated on the seized documents tallied with the rates mentioned in the sale deeds (AO page 26, point ‘a’). The AR has filed various affidavits of the flat owners wherein the sales amount as recorded in the books of accounts were stated. The appellant has also filed copies of ledger accounts of various persons as recorded in its books of accounts. However, it is pertinent to mention that the AR has not filed the complete set of documents for the flats for which affidavits were filed. But on a careful perusal of some of the documents filed by the AR and the assessing officer in their respective paper books, it has been observed that :–

Flat No. 401 JKD Pearl

APB-2	Affidavit of Shri Dinesh Goel stating total payment at Rs. 1,03,33,820
DPB-18	Seized document wherein, accounted payment ‘A’ is stated at 1,02,81,250 and on money stated at Rs. 98,40,625 under “B”
DPB-28	Ledger account, wherein individual payments are tallying with payments stated in the affidavit. Payments upto 25-6-2013 were stated at Rs. 92.50 Lac

Flat No. 501 & 502 JKD Pearl

APB-3	Affidavit of Shri Sudhakar Rao stating total payment at Rs. 2,06,72,190
DPB-18	Seized document wherein, accounted payment ‘A’ is stated at Rs. 2,01,21,875 and on money stated at Rs. 1,93,40,625 (98,40,625 + 95,00,000) under “B”
DPB-30	Ledger account, wherein individual payments are tallying with the payments stated in the affidavit. Payments upto 4-6-2013 were stated at Rs. 81.20 lac and upto 22-10-2013 at Rs. 1.56 lac.

3.1 Thus, it is evident from the above examples that the recorded payments upto the date of search were subset of the ‘A’, i.e., accounted payments stated in the seized document and rightly so, as the sale deeds of the flats were not made till the date of search and thus, no question of making entire ‘A’ payments.

3.2 It is evident from the details submitted by the assessee to the assessing officer in response to show cause notice appearing on page no. 21 to 22 of the assessment order that area of the flats as stated in the seized documents and sale deeds are almost tallying and there are small differences as usually, minor difference occurred as the flats are booked on the basis of drawings whereas, the area in sale deeds is stated on the basis of actual measurement. Further, variation of area in respect of JKD Pearl Styome was on account of car parking. Area of flat no. 701 & 702 in JKD Landmark as per seized document and sale deed were 2856.25 sq. feet and 2865.92 sq. feet respectively, i.e., almost tallied (AO page 26 point (b))

3.3 Thus, in view of the above, it is humbly submitted that the finding no. 1 and 2 of the learned Commissioner (Appeals) are not based on the correct appreciation of facts as neither the seized documents were dumb documents nor the additions were made solely on the basis of statement recorded under section 132(4). Further, the retraction was nothing but an afterthought and no cognizance could be given to it. It may be mentioned that this is not a simple case of relying upon some scribbling and noting, but a case where the entries, which were clear and legible, were taken into consideration by the assessing officer, which were duly explained by the director of the assessee company in its recorded on oath under section 132(4).

Finding No. 3

4. The finding of the learned Commissioner (Appeals) that burden is on the assessing officer to prove the contents of the seized documents under section 292C of the Act is highly misplaced. It would be appropriate to reproduce hereunder the provisions of section 292C as under :–

292C. (1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed —

(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

(ii) that the contents of such books of account and other documents are true; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

4.1 Thus, it is evident from the above that under section 292C of the Act, the presumption is that the content of the documents seized during search are true. The said presumption is rebuttable but the burden is on the assessee to prove that the contents of the seized documents are not true and not on the assessing officer to prove that the contents of the seized documents are true. It may be mentioned that in the instant case under consideration, the assessee has failed miserably to rebut such presumption.

Finding No. 4 & 5

5. It is an undisputed fact that the director of the assessee company made disclosure under consideration in its statement recorded under section 132(4), affirmed the same in statement recorded under section 131 during post search enquiries and reaffirmed in affidavit of the director of the assessee company, which was issued after getting the consent of other directors. So, after that specific surrender, no enquiries were made by the ADIT(Inv). VideLetter, dated 31-3-2015, the AR made a request to make enquiries from the buyers. It is to be noted that in search proceedings,time is the essence of matter and if any enquiries are to be made, these were to be made at the time of search or immediately thereafter as with the lapse of time, evidences can be fabricated, witnesses can be influenced etc. Further, after execution of the sale deeds, no buyer would state the truth. It is again reiterated that the statements recorded under section 132(4), 131 and affidavit as discussed earlier are sufficient evidences to make the impugned addition. It is pertinent to mention that the assessee has retracted from its statement recoded under section 132(4) of the Act but has not stated anything about the statement recorded under section 131 during the post search assessment and affidavit filed before ADIT(Inv.) in the month of September, 2013. It is an established principle that the contents of an affidavit are correct and true unless and until proved otherwise, which the assessee failed miserably in the instant case under consideration.

Finding No. (vi)

6. This finding of the assessing officer are correct as the on money payments were obviously not recorded in the regular books of accounts of the assessee, but it is also a fact that the on-money amount was recorded in the seized documents, which were maintained on the computers used by the assessee company for maintaining its books of accounts. Further, these amounts represents undisclosed receipts of the assessee. It may be mentioned that mentioning a wrong section does not made the addition bad in law.

Besides the above, the reliance is also placed on the findings of the learned assessing officer as recorded in the assessment order. Further, the following judicial pronouncements are being relied upon in support of the additions made in the assessment order:

8. The learned DR has relied on the following judicial pronouncements :–

“I. Video Master v. JCIT (2016) 66 taxmann.com 361 (SC) : 2015 TaxPub(DT) 3763 (SC)

1. Banna Lal Jat Construction (P) Ltd. v. ACIT in ITA No. 720/JP/2017,vide Order, dated 29-12-2017

III. M/s. Bannalal Jat Constructions Pvt. Ltd. v. ACIT, decided on 31-8-2018 : 2019 TaxPub(DT) 2496 (Raj-HC) by the Hon’ble Rajasthan High Court and SLP has been dismissed by the Hon’ble Supreme Court

1. PCIT v. Shri Roshan Lal Sancheti in D.B. ITA No. 47/2018 Judgment, dated 30-10-2018
2. Bhagirath Aggarwal v. CIT (2013) 31 taxmann.com 274 (Delhi) :2013 TaxPub(DT) 0672 (Del-HC)
3. CIT v. Abdul Razak (2012) 20 taxmann.com 48 (Ker.) :2012 TaxPub(DT) 3290 (Ker-HC)

VII. CIT v. Lekh Raj Dhunna (2012) 20 taxmann.com 554 (Punjab & Haryana) : 2010 TaxPub(DT) 2280 (P&H-HC)

VIII. Thiru S. Shyam Kumar v. ACIT (2018) 99 taxmann.com 39 (Madras) : 2018 TaxPub(DT) 7162 (Mad-HC)

1. CFI v. M. S. Aggarwal (2018) 93 taxmann.com 247 (Delhi) :2018 TaxPub(DT) 2537 (Del-HC)
2. Ravindra Kumar Verma v. CIT (2013) 30 taxmann.com 367 (Allahabad)
3. Sudharshan P. Amin v. ACIT (2013) 35 taxmann.com 370 (Gujarat)

XII. Lakhamshi Ladha & Co. v. CIT (2016) 73 taxmann.com 117 (Bombay) : 2016 TaxPub(DT) 3930 (Bom-HC)

XIII. Manmohansingh Vig v. DCIT (2006) 6 SOT 18 (Mum.) : 2006 TaxPub(DT) 0898 (Mum-Trib)

Thus, in view of the above discussion, it was submitted that the impugned appellate order of learned Commissioner (Appeals) may kindly be set aside and the order of assessing officer may be restored.”

9. On the other hand, the learned AR appearing on behalf of the assessee has reiterated the same argument as was raised before the learned Commissioner (Appeals) and also filed written submissions in order to controvert the ground of appeal raised by the revenue, the same is reproduced below :–

The assessee made following submission before the learned Commissioner (Appeals) and who has deleted the entire addition made by the learned assessing officer after considering the submission of the assessee and has given the finding that assessing officer has simply relied upon the sworn statement of Shri Vijay Kumar Jain Director of the appellant company without placing any further corroborative evidence to prove his contention. Therefore, assessing officer has failed to establish the contrary. Following the same principle other addition was also made of Rs. 2.5 Crore without carrying out any enquiry or placing any corroborative evidence in support of his contention is hereby deleted. The submission made before the learned Commissioner (Appeals) is quoted as under :–

“1. Facts of the case:

It is submitted that in this case during the course of search statement of one of the directors of Shri Vijay Kumar Jain was recorded. During the course of statement Shri Vijay Kumar Jain was examined with reference to certain rough papers found during the course of search. These papers are page no. 1 to 4 of annexure-A-2. Copies of these are scanned below. It is simply on the basis of this statement of Shri Vijay Kumar Jain that additions have been made to the tune of Rs. 25,86,60550. The additions have been made on the alleged on money received by the assessee reportedly found noted on these pages on sale of flats. It is relevant to submit that in the department there is a rampant practice of obtaining surrender during search by exerting pressure and coercion. It is so widespread that the CBDT had to issue circulars quoted below to avoid such surrenders. But the revenue authorities have paid least attention to the circulars of the Board and have continued to obtain surrenders of income during the course of search for one reason or another. It is on the basis of such surrender that the addition has been made in this case which is totally unjustified, illegal and unlawful. The learned assessing officer has also not considered the retraction made by the assessee. Such retraction was made by addressing Letter, dated 29-2-2016 to the DGIT(Inv.) Jaipur. A copy of the retraction letter is available on paper book page number 81 to 109. It is further submitted that in the case of Shri Ashok Kumar Jain (2014) 369 ITR 145 (Raj) : 2014 TaxPub(DT) 4500 (Raj-HC) the Jurisdictional High Court of Rajasthan has held that if the assessee does not adhere to the surrender made then it is for the learned assessing officer to bring on record cogent material and other evidences to support the addition rather than simply rely on the statement. In this case the position is exactly the same. The learned assessing officer has just made addition on the basis of statement recorded under section 132(4) which has been retracted by the assessee and without bringing any material on record.

It is further relevant to submit that the learned assessing officer has made additions without making any post search enquiries with reference to contents of pages 1 to 4 of annexure A-2. No material has been brought on record that the assessee company received any on money on sale of flats. During the course of search no receipt of on money was found signed and issued by the assessee to buyers. Although the learned assessing officer has admitted as mentioned in the assessment order on page 24 & 25 that the pages 1 to 4 are undated, that the amount noted on these pages does not exactly tally with the amount of sale as per registered sale deeds and these pages admittedly do not contain name of any buyer yet additions have been made solely on the basis of these papers on presumption and assumption. Further during the course of assessment proceedings affidavits were furnished by the assessee from buyers to the effect of the exact amount of sale and that no on money was paid by them, but these affidavits have been ignored and disregarded without examining the deponents. Thus the contents of these affidavits have remained uncontroverted. Lastly the learned assessing officer has erred in invoking the provisions of section 68 of the Income Tax Act, 1961 which are not applicable even distantly. In view of this the addition made by the learned assessing officer deserves to be deleted.

The addition made by the learned assessing officer is assailed as under:

2. Papers found are rough and dump papers:

It is submitted that the addition has been made exclusively on the pages 1 to 4 of annexure A-2. Copies of these are scanned below. During the course of assessment proceedings it was submitted before the learned assessing officer that the papers were rough and dump because :–

(a) These papers do not have signatures of the assessee/directors.

(b) The originator/writer of these papers is not known.

(c) These papers are undated.

(d) The papers do not contain the name of any buyer.

(e) These papers could not be related with the regular books of accounts.

(f) The contents of these papers in respect of sale of flats are at variance with contents of sale deeds executed in respect of these flats.

(g) Certain flats shown as sold in these papers were actually sold subsequent to the search.

The learned assessing officer in the assessment order on page 24 has admitted that these papers do not have any date but has presumed that these belong to the period when found and seized. This is mere presumption. The learned assessing officer has acted more on suspicion and doubt than on evidence. It is settled principle of that suspicion however strong cannot take the place of evidence. The following case laws are quoted in support :–

(i) Uma Charan Shaw & Brothers (1959) 37 ITR 271 (SC) : 1959 TaxPub(DT) 0184 (SC)

(ii) CIT v. Anupam Kapoor (2008) 299 ITR 179 (P&H) : 2008 TaxPub(DT) 0500 (P&H-HC)

(iii) CIT v. Dhiraj Lal Girdhari Lal (1954) 26 ITR 736 (SC) : 1954 TaxPub(DT) 0120 (SC)

(iv) State v. Guljari Lal Tondon AIR 1979 SC 1382

(v) J.A. Naidu v. State of Maharastra SC 1537 : 1983 TaxPub(EX) 0317 (SC)

(vi) Krishnand v. State of Mandharsinghji P. Jadera (2005) 281 ITR 0019 : AIR 1977 SC 796

(vii) Dhakeshwari Cotton Mills (1954) 26 ITR 775 (SC) : 1954 TaxPub(DT) 0123 (SC)

(viii) Omar Shaa (1959) 37 ITR 151 (SC) : 1959 TaxPub(DT) 0148 (SC)

(ix) Lal Chand Bhagat Ambika Ram (1959) 37 ITR 288 (SC) : 1959 TaxPub(DT) 0181 (SC)

It is further submitted that on page 25 of the assessment order the learned assessing officer has admitted that the amount of sale mentioned in these papers is not verifiable with reference to actual sale consideration. He has also admitted that the name of buyer is also not mentioned. Despite these admitted defects the learned assessing officer has placed reliance and has made the additions. The contents of page 1 to 4 of annexure A-2 are discussed and analyzed below :–

Page No. 1 of annexure A-2

JKD Pearl Landmark (Jaipur)

S. No.	Flat No.	Flat Area in sq. ft.	Rate/sq.ft.	Amount	A @3500 per sq.ft.	B
1	201		6850.00			9500000.0
2	202		6850.00			9500000.0
3	301		6850.00			9500000.0
4	302		6850.00			9500000.0
5	401	2937.50	6850.00	20121875.00	10281250.00	9840625.00
6	402	2937.50	6850.00	20121875.00	10281250.00	9840625.00
7	501	2937.50	6850.00	20121875.00	10281250.00	9840625.00
8	502	2937.50	6850.00			9500000.0
9	601	2937.50	6850.00	20121875.00	10281250.00	9840625.00
10	602	2937.50	6850.00	20121875.00	10281250.00	9840625.00
11	701	2865.25	6850.00	19626962.50	10028375.00	9598587.50
12	702	2865.25	6850.00	19626962.50	10028375.00	9598587.50
13	801	2571.25	6850.00	17613062.50	8999375.00	8613687.50
14	101	493.75	6850.00	3382187.50	1728125.00	1654062.50
						126168050.00

Page No. 2 of annexure A-2

JKD Pearl Aura (Alwar)

S. No.	Flat No.	Flat Area in sq.ft.	Rate/sq.ft.	Amount	A @2500 Per sq.ft.	B
1	101	1648.00	5500.00	9064000.00	4120000.00	4944000.00
2	102		5500.00			405000.00
3	103		5500.00			405000.00
4	201	1648.00	5500.00	9064000.00	4120000.00	4944000.00
5	601	1648.00	5500.00	9064000.00	4120000.00	4944000.00
6	604	1279.00	5500.00	7034500.00	3197500.00	3837000.00
7	703	1279.00	5500.00	7034500.00	3197500.00	3837000.00
8	704	1279.00	5500.00	7034500.00	3197500.00	3837000.00
9	801	1710.00	5500.00	9405000.00	4275000.00	5130000.00
10	802	1710.00	5500.00	9405000.00	4275000.00	5130000.00
						44703000.00

Page No. 3 of annexure A-2

JKD Pearl Stylome (Mahaveer Nagar, Jaipur)

S. No.	Flat No.	Flat Area in sq.ft.	Rate/sq.ft.	Amount	A @2500 Per sq.ft.	B
1	101		5500.00			7,000,000.00
2	102		5500.00			7,000,000.00
3	201		5500.00			7,000,000.00
4	202		5500.00			7,000,000.00
5	301	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
6	302	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
7	401	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
8	501	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
9	502	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
10	602	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
11	801	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
12	802	2491.25	5500.00	13701875.00	6228125.00	7,473,750.00
						87,790,000.00

Page No. 4 of annexure A-2

Pearl Divine Banipark, Jaipur

S. No.	Flat No.	Flat Area in sq.ft.	Rate/Sq.ft	Amount	A @3000 Per sq.ft.	B
1	209	1742.63	6100.00	10630043.00	5227890.00	5402153.00
2	210	1742.63	6100.00	10630043.00	5227890.00	5402153.00
3	302	1795.60	6100.00	10953160.00	5386800.00	5566360.00
						16370666.00

(i) Papers are computer printouts having no date:

The papers were found during the course of search at the office premises located at 401, Pearl Survanshi, A-5, Sardar Patel Marg, Jaipur are nothing but computer printouts. It is not known as to who is the originator/writer of these papers. The surrender was made on the allegation that the amounts noted in column ‘B’ was received in cash against sale of various flats in the aforesaid multi storied buildings located at various places in Jaipur and Alwar. However it is submitted that no effort was made by the authorized officer regarding the genuineness of the transactions noted in these papers. The minimum thing which was expected from the authorized officer was that he should have ascertained the date and the year of transaction and then he should have verified whether the accounted amount shown in column ‘A’ was verifiable or not from the regular books of accounts. This minimum exercise was not done. It appears that the investigation team was in haste in getting the surrender from the assessee by pressing him and by threatening him with dire consequences.

It is settled position of law that if the seized papers and narration thereon do not carry any date then such papers are to be treated as rough papers. It is submitted that in all the transactions on all these four pages dates are nowhere available, hence these are nothing but rough papers not warranting any attention. When the papers do not contain the date of transaction/date of payment then no addition can be made. It has been held by the Hon’ble ITAT Jaipur Bench Jaipur in the case of Moonchand Kumawat & Sons v. DCIT, Ajmer vide Order, dated 20-2-2009 : 42 Taxworld 241 that if a document does not contain any date/and name and only contains numerical figures then such document is vague and dump document. No addition can be made on the basis of such document.

Similarly in the case of Assistant Commissioner of Income Tax v. Satyapal Wassan (2007) 295 ITR 352 (Jp) : 2007 TaxPub(DT) 0938 (Jab-Trib) it was held by Hon’ble ITAT Jabalpur that a document found during search must be a speaking one. Document must reflect all the details about the transaction of the assessee in the relevant assessment year. If there is any gap the same has to be filled by the learned assessing officer through post search enquires and co-relate the material found with the business of the assessee, without this no addition can be made on the basis of a loose paper. Similarly in the case of K.V. Laxmi Savitri Devi v. ACIT (2011) 60 DTR 148 (Hyd) : 2011 TaxPub(DT) 1761 (Hyd-Trib) it was held by the ITAT Hyderabad Bench that “No addition can be made on the basis of a loose paper which does not contain the name and the date of payment. The department is precluded in drawing inferences on the basis of suspicion, conjecture and surmises and no addition can be made on the basis of such dump document or loose sheets.

In view of this it is clear that when the paper is undated and does not contain any name the same has to be treated as a dump document.

(ii) The contents are unverified:

The papers found contain column ‘A’ and ‘B’ respectively reflecting money received on sale accounted and unaccounted. However it is submitted that even the accounted money on alleged sale of flats as shown in these papers is not verifiable from the books of accounts then the natural conclusion is that these papers are rough papers only. The papers contained only projections of the expected sale price of a flat. The same is not at all connected with any real transactions. Therefore the papers are not related to any sale of any flat of any building. The entire surrender obtained is unlawful and illegal. The Revenue has not been able to link the transactions of these papers either with the material seized during the course of search or by way of post search enquiries. In fact the learned assessing officer has not conducted any post search enquiry. The only and the only action the learned assessing officer is taking is sticking to the statement of the assessee recorded under section 132(4) of the Income Tax Act, 1961.

(iii) Flats sold subsequent to search:

We are furnishing a chart in the following paras which discloses that certain flats were not sold upto the date of search as such there was no question of receiving any amount from them. The flat no. 201, 202, 301, 602 of JKD Pearl Landmark and flat no. 101, 102, 302 of JKD Pearl Stylome, i.e., Mahaver Nagar Jaipur and flat no. 102, 604 of JKD Pearl Aura, Alwar were sold much later, i.e., in the year 2014 whereas the search was conducted on 5-9-2013. It is the submission of the assessee that mentioning of receipt of amount against these flats in the seized papers is therefore fake as these have been sold at a later date. In these circumstances the sale amount mentioned against these flats and shown to be have been received by the assessee is not verifiable with reference to the books of accounts.

It is strongly submitted that not a single payment (A) which is alleged to be accounted amount is also not verifiable with reference to the regular books of accounts. This shows that the seized papers were only of rough nature otherwise how it could be so that not a single payment tallies with the regular books of accounts.

(iv) Names of buyers are not mentioned:

It is submitted that all these four pages do not contain name of any person who has purchased the flats. This itself shows that these papers are rough.

(v) No Evidence of on money received:

It is submitted that these papers found during the search can at best be treated as rough estimate having projections of salable value of flats. These do not contain any real transaction. During the assessment proceedings the learned assessing officer has not been able to bring any material on record to establish that on money was received from any particular buyer. In the absence of this no addition could have been made. The entire addition has been based purely on suspicion, conjecture and guess, which is not admissible in law.

(vi) Variation of area mentioned in seized pages with regular books of account:

It is further submitted that not only the pages are undated and do not contain the name of buyers and also do not contain the date of payments, further whatever is noted on these pages such as the area of the flat is also at variance with the actual area of the flat, the same is reflected in the following table. Therefore this further strengthen the submission of the assessee that these paper are only rough papers:–

JKD Pearl Landmark

Flat No.	Area as per Seized Papers (sq.ft.)	Area as per Sale Deed (sq.ft.)
101	493.75	792.3
301*		3033.4
302		3033.4
401	2937.50	2952.5
402	2937.50	2952.5
501 & 502	5875.00	5906.4
601 & 102	2937.50	3033.4+792.3
602*	2937.50	3033.4
701	2865.25	2865.9
702	2865.25	2865.9
801	2571.25	2660.3

JKD Pearl Stylome

Flat No.	Area as per Seized Papers (sq.ft.)	Area as per Sale Deed (sq.ft.)
101 *		2615.6
102*		2615.6
201 & *201		5231.1
301	2491.25	2615.6
302*	2491.25	2615.6
401	2491.25	2615.6
501	2491.25	2586.3
502	2491.25	2586.3
801	2491.25	2586.3
802	2491.25	2586.3

JKD Pearl Aura

Flat No.	Area as per Seized Papers (sq.ft.)	Area as per Sale Deed (sq.ft.)
102*		1734.8
601	1648	1770.2
604*	1279	1365.7
703	1279	1362.2
704	1279	1365.7

The perusal of the aforesaid table discloses that the area mentioned in the seized papers is at variance with the regular records. If the seized papers were true and genuine then the area of flats mentioned in these papers should have tallied with the regular records. The variance in the area establishes the submission of the assessee that these papers are rough and dump.

(vii) Comparison of amount of sales with regular books viz-a-viz seized papers:

It is further submitted that not only the area mentioned in these pages is at variance with the actual area of the flats, even the accounted amount mentioned in column ‘A’ of these pages also does not tally with the consideration shown in the registered sale deeds. Therefore the papers are rough and dump and deserve to be ignored :–

JKD Pearl Landmark

Flat No.	Sale Price as per Seized Papers	Sale Price as per Sale Deed
101	1728125	2242209
301*	10616900	10616900
302	10616900	10616900
401	10281250	10333820
402	10281250	10333820
501 & 502	20562500	20672190
601 & 102	10281250	12201500
602*	10281250	10616900
701	10028375	10030720
702	10028375	10030720
801	8999375	9310980

JKD Pearl Stylome

Flat No.	Sale Price as per Seized Papers	Sale Price as per Sale Deed
101*		6538925
102*		9572985
201 & *201		13077850
301	6228125	6538925
302*	6228125	6538925
401	6228125	6538925
501	6228125	6465675
502	6228125	6465675
801	6228125	6465675
802	6228125	6465675

JKD Pearl Aura

Flat No.	Sale Price as per Seized Papers	Sale Price as per Sale Deed
102*		6071940
601	4120000	6195665
604*	3197500	4780055
703	3197500	4767735
704	3197500	4780020

The perusal of the aforesaid table discloses that the sale amount (A) mentioned in the seized papers is at variance with the regular records. If the seized papers were true and genuine then the amount of sale mentioned in these papers should have tallied with the regular records. The variance in the amount establishes the submission of the assessee that these papers are rough and dump.

(viii) Details of Buyers:

It is submitted that all these four pages do not contain name of any person who has purchased the flats. This itself shows that these papers are rough. It is further submitted that the assessee has submitted complete name and address of the buyers of the flats so as to facilitate any enquiry by the learned assessing officer with respect to the submission of the assessee of the sale amount etc. The assessee also furnished affidavits of buyers to the effect of sale price and date of sale. These are available on paper book page no. 1 to 28. Further copies of ledger accounts of these buyers are also available on paper book page no. 29 to 80. These ledger accounts disclose the date of payment received and also the amount. Copies of sale deeds in respect of certain facts were also made available before the learned assessing officer. During the course of assessment proceedings the learned assessing officer issued summons under section 131 as well as notices under section 133(6). Certain buyers were examined under section 131 and in respect of some information was collected under section 133(6) the persons examined have not spoken anything adverse. They have denied to have paid any on money. The assessee vide Letter, dated 2-11-2016 requested the learned assessing officer to furnish copies of statements of buyers recorded under section 131 and also information collected under section 133(6). It was submitted before the learned assessing officer that these papers were required as the case was being contested before the learned Commissioner (Appeals). However the learned assessing officer has not furnished the information. Your honour is humbly requested to call for the records of the learned assessing officer and peruse the statement recorded under section 131 and also the information collected under section 133(6). A copy of the Letter, dated 2-11-2016 submitted to the learned assessing officer is scanned below :–

The buyers have stated that whatever has been paid for purchase of flat has been paid by cheque which is fully verifiable from the records. The position being so there was no case with the learned assessing officer for making any addition on the basis of alleged on money receipts on sale of flats. The learned assessing officer has not been able to bring any material on record either to controvert the affidavits of these persons or otherwise. The addition therefore deserves to be deleted.

The aforesaid facts established that these pages are rough and dump. No addition is warranted on the basis of these papers. The following case laws are quoted in support :–

(i) DCIT v. Rajendra Kumar Sancheti (ITAT-Jaipur) 42 Taxworld 152, dated 27-3-2009

(ii) Mahaan Foods Ltd. v. DCIT (2009) 27 DTR 185 (ITAT-Delhi) : 2009 TaxPub(DT) 0452 (Del-Trib)

(iii) Moolchand Kumawat & Sons v. DCIT (Ajmer) ITAT Jaipur Bench 42 Taxworld 241 in M.A. No. 93/JP/2008 arising out of ITSSA No. 24/JP/2005, Order, dated 20-2-2009

(iv) Assistant Commissioner of Income Tax v. Satya Pal Wassan (2007) 295 ITR (AT) 352 (Jabalpur) : 2007 TaxPub(DT) 0938 (Jab-Trib)

(v) It was held in the following cases that addition could not be made on the basis of uncorroborated noting on loose sheets and papers —

(1) S.P. Goyal v. DCIT (2002) 77 TTJ 1 (Mum) : 2002 TaxPub(DT) 1322 (Mum-Trib)

(2) Chandra Mohan Mehta v. ACIT (1999) 65 TTJ 327 (Pune) : 1999 TaxPub(DT) 1129 (Pune-Trib)

(3) Bansal Strips Pvt. Ltd. v. ACIT (2006) 100 TTJ 665 (Del) : 2006 TaxPub(DT) 1290 (Del-Trib)

(4) Kishan Chand Sobhraj Mal (1991) 42 TTJ 423 (Jp) : 1992 TaxPub(DT) 0886 (Jp-Trib)

(5) CIT v. Naresh Khattar (HUF) (2003) 261 ITR 664 (Del) : 2003 TaxPub(DT) 0987 (Del-HC)

(6) Lal Chand Agarwal v. ACIT 21 TW 213 (ITAT-Jaipur)

(7) CIT v. S.M. Agarwal (2007) 293 ITR 43 (Del) : 2007 TaxPub(DT) 1120 (Del-HC)

(8) CIT v. Girish Choudhary (2008) 296 ITR 619 (Del) : 2008 TaxPub(DT) 0692 (Del-HC)

(9) Jayanti Lal Patel v. ACIT (1998) 233 ITR 588 (Raj) : 1998 TaxPub(DT) 0901 (Raj-HC)

(10) Rakesh Goyal v. ACIT (2004) 87 TTJ 151 (Del) : 2004 TaxPub(DT) 1177 (Del-Trib)

(11) ITO v. Manna Lal Jhalani 22 TW 551 (ITAT-Jaipur)

(12) Hissaria Brother v. ACIT 22 TW 684 (ITAT-Jaipur)

(13) DCIT v. Countrywide Buildestate Pvt. Ltd. (2012) 48 TW 50 (Jaipur-ITAT) : 2013 TaxPub(DT) 0921 (Jp-Trib) Order, dated 29-6-2012, ITA No. 961/JP/2011

It is submitted that the ratio of the aforesaid cases is fully applicable to the facts of the case.

3. Retraction not considered by the learned assessing officer/Addition not warranted solely on the basis of statement:

It is submitted that the above facts make it crystal clear that the surrender obtained on the basis of dump papers no. 1 to 4 of annexure A-2 has no legs. The papers which have been referred to in the statement contain fake noting and these have no nexus with the business affairs of the assessee. The alleged flats which have been shown as sold in these papers were not sold at the like amount. The sales of some of these flats was done much earlier to the date of search and the sales proceeds stands accounted for in the books of accounts. Since the sale already stood completed there was no occasion for showing outstanding amount against the sale of flats. Certain flats have been sold much after the date of search details of which have been furnished in the forgoing paras. There was no question of receiving any amount against these flats before the date of search when these have been sold almost a year after. In view of this the contents of these papers is far from truth and has no relevance with the business of the assessee. There is no evidence or material regarding receipt of money by the assessee as per these papers so as to consider the same for purposes of surrender. Amount either mentioned in column ‘A’ or in column ‘B’ is not all verifiable from the regular books of accounts of the assessee even in the case of a single flat. This is enough to establish that these papers are rough and deserve no consideration. Therefore the surrender made on the basis of these papers is retracted. Therefore the surrender was illegal and unlawful. Hence the assessee retracted from the surrender vide Letter, dated 29-2-2016 addressed to DGIT(Inv) Jaipur copy of which is available on paper book cited supra. It is submitted that the learned assessing officer has failed to take into consideration the retraction made by the assessee. No reasons have been given for the same. It is settled position of law that if there is evidence then assessee has a right to retract. During the course of search amidst a number of officers, the poor assessee is brow-beaten and on account of undue pressure exerted there remains no option but to surrender. It was a case like this and the assessee was forced to surrender income of Rs. 27,50,31,216 with reference to pages 1 to 4 of annexure A-2 whereas these papers are rough papers and have no relevance with the business of the assessee. The retraction of the assessee was fully justified and substantiated with adequate evidence. However ignoring and disregarding the retraction made by the assessee the learned assessing officer has stuck to surrender obtained from the assessee under coercion in statement recorded under section 132(4) of the Income Tax Act, 1961. It is settled position of law that no addition can be made simply and simply only and only on the basis of a naked statement having no clothing. The learned assessing officer has not brought any material to establish the truthfulness of the contents of pages 1 to 4 on the basis of which surrender was obtained. On the other hand the assessee has established that these pages 1 to 4 are dump papers. In the case of Shri Ashok Kumar Jain (2014) 369 ITR 145 (Raj) : 2014 TaxPub(DT) 4500 (Raj-HC) the Jurisdictional High Court of Rajasthan has held that if the assessee does not adhere to the surrender made then it is for the learned assessing officer to bring on record cogent material and other evidences to support the addition rather than simply rely on the statement. In this case the position is exactly the same. The following case laws are cited in support :–

(a) Contech Transport Service (P) Ltd. & Ors. v. ACIT (2009) 19 DTR 191 (Mumbai) : 2009 TaxPub(DT) 1114 (Mum-Trib), 28-11-2008

(b) Chitra Devi v. ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 : 2002 TaxPub(DT) 1657 (Jod-Trib)

(c) Kailashhen Manharlal Chokshi v. CIT (2008) 14 DTR 257 (Guj) : 2010 TaxPub(DT) 0190 (Guj-HC)

(d) Pullanguegode Rubber & Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) : 1973 TaxPub(DT) 0089 (SC)

(e) Kailash Ben Mohanlal Choksi v. CIT (2008) 14 DTR (Guj) 257 : 2010 TaxPub(DT) 0190 (Guj-HC)

(f) Hukum Chand Jain v. Income Tax Officer (2011) 334 ITR 197 (Rajasthan-HC) : 2011 TaxPub(DT) 1708 (Raj-HC)

(g) Ajit Chintaman Karve v. ITO (2009) 311 ITR (AT) 66 (Pune) : 2009 TaxPub(DT) 0049 (Pune-Trib)

The following facts further established that the exercise of surrender by the Revenue Authority was under duress. No effort was made at the time search and seizure to verify the genuineness of these rough papers. The revenue authorities just got hold of these papers and pressed the assessee for surrender. The assessee at that stage of search had no option but to agree with the authorities so as to escape further harassment. In the normal course if the surrender was genuine the revenue authorities should have and would have crossed checked the details and facts of amount mentioned in these pages. They should have verified at least a few entries of the accounted amount mentioned in these pages. No such exercise was done neither during the search nor during the course of assessment proceedings the post search enquiries do not reveal anything against the assessee. Merely harping on the rough pages and on the statement of the assessee under section 132(4) wont help in making additions. Further during the course of assessment proceedings parties have been called under section 131 who have purchased the flats and they have stated that no on money was paid by them. The learned assessing officer also called for information under section 133(6). Despite a written request the learned assessing officer has not furnished copies of statement recorded under section 131 and information collected under section 133(6) as these go in favour of the assessee. The assessee humbly requests that the records of the learned assessing officer may be called for the purpose and verified. Further a number of affidavits were furnished by the assessee from persons who had purchased the flats and in these affidavits it has been stated that no on money was paid. These affidavits have remained uncontroverted. Considering all these facts the addition made deserves to be deleted.

In view of the aforesaid facts it is submitted that the retraction of the assessee of surrender made of income of Rs. 27,50,31,216 is in order and is well substantiated with facts and documentary evidence. The same deserves to be accepted. No addition is warranted on the basis of the statement under section 132(4) of the Income Tax Act, 1961. The case of the assessee is further strengthened by the following circulars of the board wherein the revenue authorities have been advised not to obtain surrender of income during search proceedings.

4. Surrender against the circulars and instruction of the Board — unlawful addition:

The following instructions issued by the Board are quoted wherein stress has been laid that no surrender should be obtained and assessment should be completed not on the basis of such surrender but on the basis of material gathered during search. However in the case of the assessee in clear cut violation of the circulars/instructions the income tax authorities exerted pressure and obtained surrender of income in statement recorded under section 132(4). The same is therefore unlawful and illegal and addition made on such confessional statement automatically becomes unlawful and deserves to be deleted. In the case of CWT v. Sanwarmal Shivkumar (1988) 171 ITR 337 (Raj) : 1988 TaxPub(DT) 0589 (Raj-HC) the Jurisdictional High Court of Rajasthan held that the officers of the Department are bound by the circulars of the board. Further in the following cases the Courts have held that circulars issued by the Board are binding :–

(i) Navnit Lal C Javeri v. Sen (1965) 56 ITR 198 (SC) : 1965 TaxPub(DT) 0212 (SC)

(ii) K.P. Varghese v. ITO (1981) 131 ITR 597 (SC) : 1981 TaxPub(DT) 0972 (SC)

(iii) UCO Bank v. CIT (1999) 237 ITR 889 (SC) : 1999 TaxPub(DT) 1303 (SC)

(iv) Union of India v. Azadi Bachoo Andolan (2003) 263 ITR 706(SC) : 2003 TaxPub(DT) 1429 (SC)

In the above decisions the Apex Court of the Country has reiterated that wherever CBDT has issued instructions/circulars to relieve hardships the same are of binding nature. In view of this it is submitted that the surrender of income obtained in confessional statement goes against the spirit of the circulars issued by the Board quoted below. The addition made on the basis of such confessional statement deserves to be deleted. Board Circulars, dated 10-3-2003 and 18-12-2014 are quoted below :–

(i) F.No. 286/2/2003-IT (Inv), dated 10-3-2003

No confessional statement in the course of search, seizure and survey.

10-3-2003

Confession of additional Income during the course of search &seizure and survey operation

GOVERNMENT OF INDIA MINISTRY OF FINANCE & COMPANY AFFAIRS DEPARTMENT OF Revenue CENTRAL BOARD OF DIRECT TAXES Room No. 254/North Block, New Delhi, the 10-3-2003

To,

All Chief Commissioners of Income Tax, (Cadre Contra)

&

All Directors General of Income Tax (Inv.)

Sir

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 assessees 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

Yours faithfully,

Sd/-

S.R. Mahapatra

Under Secretary (Inv. II)

(ii) F.No. 286/98/2013-IT (Inv.II), dated 18-12-2014

Admissions of Undisclosed Income under coercion/pressure during Search/Survey

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes, dated 18-12-2014 To 1. All Principal Chief Commissioners of Income Tax 2. All Chief Commissioners of Income Tax 3. All Directors General of Income Tax (Inv.) 4. Director General of Income Tax (I & CI), New Delhi

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. 3-7-2002 (2) CBDT Letter F.No. 286/2/2003-IT(Inv.II), dt. 10-3-2003 (3) CBDT letter F.No. 286/98/2013-IT(Inv.II), dt. 9-1-2014

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.

2. 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.
3. 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 Income Tax Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely.
4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance.
5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard.
6. This issues with approval of the Chairperson, CBDT (K. Ravi Ramchandran) Director (Inv.)-II, CBDT.

It is submitted that the action of the I.T. authorities in obtaining surrender of income that too under duress is against the circulars of the CBDT which are binding upon them. Hence the surrender obtained from the assessee was illegal and addition made on the basis of such surrender is unlawful and deserves to be deleted.

5. Presumption under section 132(4) and section 292C is rebuttable:

In the assessment order the learned assessing officer has mentioned that the pages 1 to 4 of annexure A-2 were found and seized during the course of search as such these belong to the assessee in view of the presumption available under section 132(4A) and section 292C. In the view of the learned assessing officer in view of the such presumption available under section 132(4A) and 292C the assessee cannot claim these papers as dump papers.

In this regard it is submitted that the presumption available under section 132(4A) is limited to search period and is not available in the assessment proceedings. P.R. Metrani v. Commissioner of Income Tax (Supreme Court of India) (2006) 287 ITR 209 (SC) : 2006 TaxPub(DT) 1868 (SC). Further any presumption available under the Act is always rebuttable. In the case of the assessee the pages 1 to 4 found during search have been established by the assessee as fake/dump, as such the learned assessing officer was precluded in making additions simply invoking presumption. What was required on his part was to establish that the contents of these papers related to the business of the assessee and were true. This has not been done. Addition cannot be made simply on the basis of presumption. The following case laws of the Jurisdictional High Court of Rajasthan and ITAT Jaipur Bench are quoted in support :–

(i) ACIT v. Thahrayamal Balchand (1980) 124 ITR 111 (Raj) : 1980 TaxPub(DT) 0359 (Raj-HC)

(ii) CIT v. SMS Investment Corporation Pvt. Ltd. (1994) 207 ITR 364 (Raj) : 1994 TaxPub(DT) 0652 (Raj-HC)

(iii) CIT v. Kishanchand (1993) 45 TTJ (Jp) 20 : 1993 TaxPub(DT) 0555 (Jp-Trib)

6. Affidavits furnished remain uncontroverted:

During the course of assessment proceedings the assessee furnished affidavits from 28 persons who had purchased flats in order to establish that the contents of pages 1 to 4 were not true and were not related with the actual business transaction of the assessee. Copies of these affidavits are available on paper book page number cited supra. Along with the affidavits copies of the ledger account of these parties have also been furnished. These are also available on paper book page number cited supra. In these affidavits the buyers have stated that no on money was paid. These affidavits contain complete addresses of the buyers and details of payment made by them. Most of these affidavits have remained uncontroverted as the learned assessing officer did not prefer to examine the and during the course of examination under section 131 of certain parties have confirmed the contents of the affidavits. Nothing adverse was found. In the circumstances when the contents of the affidavits remained uncontroverted there was no case with the learned assessing officer for making addition on account of alleged on money on sale of facts. The following case laws are quoted in support :–

(i) Mehta Parikh & Co. v. CIT (1956) 30 ITR 181 (SC) : 1956 TaxPub(DT) 0171 (SC)

(ii) Rajshree Synthetics (P) Ltd. v. CIT (2002) 256 ITR 331 (Raj) : 2002 TaxPub(DT) 0880 (Raj-HC)

(iii) Dilip Kumar Roy v. CIT (1974) 94 ITR 1 (Bom) : 1974 TaxPub(DT) 0244 (Bom-HC)

(iv) L. Sohan Lal Gupta v. CIT (1958) 33 ITR 786 (All) : 1958 TaxPub(DT) 0020 (All-HC)

7. Addition made under section 68 is invalid:

The learned assessing officer has made the addition by giving the following finding in para 9(a) on page 28 of the assessment order that —

“Therefore, amount of Rs. 25,86,60,550 received as unaccounted on money for three projects is treated as assessee’s undisclosed/untaxed income and added to total income under section 68 of the Income Tax Act, 1961 for the year under consideration.”

The perusal of the aforesaid para reveals that the learned assessing officer has made the additions under section 68 of the Income Tax Act, 1961. It is submitted that no addition could be made under section 68 of the Income Tax Act, 1961. The provisions of section 68 are quoted below :–

Section 68. Cash credits.

“Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.”

The perusal of the aforesaid provision reveals that the first and foremost condition of making addition under this section is that the sum is required to be credited in the books of the assessee maintained for the previous year. In the instant case admittedly the on money amount was not credited in the books maintained by the assessee. Therefore the provisions could not be ignored and no addition could be made under this section. Therefore the addition so made by the learned assessing officer deserves to be deleted.

The primary condition for invoking the provisions of section 68 is that there should be books of accounts and the sum should be found credited in such books of accounts. In the case of the assessee there is nothing so. Only a few pages were found which do not constitute books of accounts. The courts have gone to the extent of holding that a bank account, or a balance sheet or a profit & loss account alone also do not constitute books of accounts not the speak of the pages found in the case of the assessee. It is therefore submitted that addition has been wrongly made and the same deserved to be deleted. The provisions of section 68 are not applicable even distantly. The Supreme Court in the case Baladi Ram v. CIT (1969) 71 ITR 427 (SC) : 1969 TaxPub(DT) 0155 (SC) laid down the following conditions for the applicability of section 68 :–

(i) The matter and the event should take place after 1-4-1962.

(ii) The assessee maintains the books of accounts for the relevant previous year.

(iii) The cash credit entry appears in such books of accounts.

Apparently the conditions are not fulfilled in the case as the amount of entries of page 1 to 4 of annexure A-2 which have been considered the learned assessing officer for making addition are not appearing in the books of accounts. Therefore the learned assessing officer was not justified in invoking the provisions of section 68. The addition therefore deserves to be deleted.

The following case laws are further quoted in support :–

(i) Damodar Hansraj v. CIT (1979) 118 ITR 999 (Cal) : 1979 TaxPub(DT) 0529 (Cal-HC)

(ii) Laxminarain Gupta (1980) 124 ITR 94 (Pat) : 1980 TaxPub(DT) 0796 (Pat-HC)

(iv) Shanta Devi v. CIT (1988) 171 ITR 532 (P&H) : 1988 TaxPub(DT) 0658 (P&H-HC)

(v) Anand Ram Raitani v. CIT (1997) 223 ITR 544 (Gau) : 1997 TaxPub(DT) 0638 (Gau-HC)

(vi) CIT v. Bhai Chand S. Gaudhi (1983)141 ITR 67 (Mum) : 1983 TaxPub(DT) 0582 (Bom-HC)

In view of these facts the addition deserves to be deleted on this ground also.

8. Crux of the matter:

In view of the aforesaid submission it is clear that the addition made by the learned assessing officer deserves to be deleted :–

(i) Because the addition has been made with reference to page no. 1 to 4 which are dump papers.

(ii) Because the addition has been made simply and simply on the basis of statement under section 132(4) which stands retracted by the assessee with supporting evidences.

(iii) Because the addition has been made on the basis of presumption under section 292C which has been rebutted by the assessee.

(iv) Because the addition has been made on the basis of confessional statement recorded in violation of board circulars cited above.

(vii) Because the addition has been made without examining the affidavits furnished by the assessee.

(viii) Because the addition has been made invoking provisions of section 68 which are not applicable.”

The learned Commissioner (Appeals) has considered the submission, evidences and subsequent retraction letter filed by the assessee dated 30-3-2015 and has given his finding in para 4.1.2 on page 28 of the order. The learned Commissioner (Appeals) further on page 35 in last three lines has analyzed the situation with regard to the retraction which is as under :–

The assessee’s contention with regard to the retraction as reiterated vide Letters, (dt. 27-6-2014, 30-3-2015, 22-1-2016 & 13-2-2016) submitted during assessment proceedings can be summarized as under :–

(a) The voluntary surrender made by Shri Vijay Kumar Jain was on the basis of seized documents which is computer printout taken from assessee’s hard dish found during the search operation from his premises located at 401, Pearl Survanshi, A-5, Sardar Patel Marg, Jaipur.

(b) No money trail or cash seizure evidencing receipt of on-money was found during the search operation.

(c) The area as per seized documents (in sq. ft.) does not match with the area mentioned in the Sale Deed. The Sale Deed in respect of flats mentioned had not been executed by the date of search; accordingly, the amount mentioned in these papers is not verifiable vis-a-vis total sales consideration.

(d) The seize paper are Computer printouts having no date and also unverifiable contents. The seized papers don’t contain (i) Mate of transactions, (ii) name of buyers, (iii) details of the cheque payments vide which accounted money was given, and (iv) name of the person receiving such on-money from buyers. Even the amounts shown on “column A” which is alleged to be the accounted part of sale price is also not verifiable for books of accounts, meaning thereby the details mentioned in the Seized documents cannot be corroborated with the transactions recorded in the regular books of accounts.

(e) The assessee company recognizes the sale of flats only when the flats are fully ready to be sold and title is transferred to the purchaser and the possession is give. But during the year under consideration the fiats were not fully developed and also the title of property was not transferred and no possession was given. Hence there was no sale of flats. There was only booking of flats in advance. The person who made the advance payment against purchase of property deduct TDS as per provision of section 192(1A) of the Act. So the amount received on which TDS was deducted is shown in advance received and not in the sales of the assessee Company. Therefore the sale consideration of property in ITR is less than consideration. The fiats are fully prepared in assessment year 2015-16 and then they are sold.

On perusal of assessment record, it is seen that assessing officer has not carried out any investigation/enquiry to prove his contention with regard to receipt of on- money as mentioned in the seized documents (supra). Assessing officer has simply relied upon the admission based on the recorded sworn statement under section 132(4) of the Act of Shri Vijay Kumar Jain and added the receipt of on-money of Rs. 25,86,60,550 from the three projects.

The Hon’ble Bombay High Court in the case of Surendra M. Khandhar v. ACIT (2010) 321 ITR 254 (Bom) : 2010 TaxPub(DT) 0320 (Bom-HC) held as under :–

“The language of section 132(4A) of the Income Tax Act, 1961, is similar to the language used in section 292C. The provisions raise a presumption that the contents of a document found during search proceedings are due.

The presumption can be rebuffed.”

Here would like to quote the decision of Hon’ble ITAT Jabalpur in the case of ACIT v. Satyapal Wassan (2007) 295 ITR 352 (Jp) : 2007 TaxPub(DT) 0938 (Jab-Trib) wherein elucidating with respect to the same issue, the Hon ‘ble the Tribunal has held as under :–

“The crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation must reflect the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income Tax Act must be filled up by the assessing officer through investigations and correlations with the other material found either during the course of the search or on Investigation……”

From above decision of Hon’ble ITAT Jabalpur Bench it is pertinent to note that charge can be levied on the basis of document only when the document is a speaking one. The document should speak either out of itself or in the company of other material found on investigation and/or in the search. The document should be clear and unambiguous in respect of all four components of charge of tax. If it is not so, the document is only dumb document and no charge of tax can be levied on the assessee on the basis of a dumb document.

The search action at the appellant’s premises has yielded materials which justify such inference. It is so, in my opinion, even after presumption applied to the facts under section 292C of the Act there are not adequate materials to conclude that the transactions in the seized documents are the transactions of the appellant which remained undisclosed. The appellant, under the principles of natural justice, has the right to rebut the presumption. This is very important since the presumption under section 292C is permitted only in respect of the documents in ‘Possession or control” of the assessee. Therefore, onus is on the assessing officer to prove that what was stated in the seized document, are true. Such an interpretation would render the deeming provisions of section 292C otiose and presumption as to the correctness of seized documents is automatic under section 292C of the Act unless the contrary is proved and as such, the assessee was legally required to substantiate the seized documents with supporting evidence.

Here I would also like to quote decision in case of ACIT v. Vatika Greenfield (P) Ltd. (2009) 121 TTJ (Del) 208 : 2009 TaxPub(DT) 1353 (Del-Trib), wherein Hon’ble Delhi High Court has held that unless some evidence or material is brought on record by the assessee to show that what is stated in the seized document is not correct state of affairs and the state of affairs stated in the seized document has to be presumed to be true as mandated by section 292C of the Act. In this regard, assessing officer has also not brought out any further corroborative evidence to support his contention. However, appellant submits that even there are other corroborative evidences to suggest and confirm its contention. Therefore, in view of the facts and circumstances of the case itself would be sufficient to rebut the presumption under section 292C of the Act.

When no independent material or evidence had been brought on record by the assessing officer to establish that the noting as appearing in the computer prints out (Reference Seized Documents Annexure-A-2 Pg. 1 to 4) which according to him, represented an unaccounted transaction; then assessing officer has no option but to accept the explanation of the assessee. The legal provision relating to presumption under section 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. It is further held that the presumption is rebuttable and not conclusive and various courts including the Hon’ble Apex Court have held that it cannot be applied in the absence of corroborative evidence. In case of Straplex India (P) Ltd. v DCIT (2003) 84 ITD 320 (Mum) : 2003 TaxPub(DT) 0240 (Mum-Trib), Hon’ble ITAT Mumbai Bench has held inter alia as under :–

“…..It follows that, if a statement taken merely confessing to some income without any to support same, it have no validity even according to Board Circular apart from general law……”

It is an established principle of law that a party is entitled to show and prove that the statement made by it is in fact no correct and true. In Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) : 1973 TaxPub(DT) 0089 (SC), Hon’ble Apex Court has been held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect.

The Hon’ble Apex Court again in Nagubai Armal v. B. Sharma Rao AIR 1956 SC 100, has laid down that an admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue.

According to Govindram M. Oberoi v. ITO (1996) 58 ITD 73 (Pune-Trib) : 1996 TaxPub(DT) 1085 (Pune-Trib), statement given under section 132(4) con be used as evidence against the assessee. Presumption can be drawn on the basis of such evidence. But, this gives rise to presumption, which can be rebutted; statement given at the time of search cannot be treated as sacrosanct. Hon’ble Madras High Court in case of M. Narayanan & Bros. v. ACIT (2011) 339 ITR 192 (Mad) : 2011 TaxPub(DT) 1610 (Mad-HC) has held as under :–

“…..While statement rendered by assessee at time of search under section 132(4) may be used in evidence in any proceeding, yet that, by itself, does not become sole material to rest assessment, more so when assessee seeks to withdraw same by producing material in support of such retraction.”

On similar facts, Hon’ble Ranchi High Court in case of CIT v. Ravindra Kumar Jain (2011) 201 Taxman 95 (Jharkhand) in retraction case has held as under :–

“…..Assessee retracted his Statement–Surrender was not corroborated by independent evidence–Assessing officer teas duty bound to collect more evidence in respect of undisclosed income of to justify the addition…..”

Now, facts of the case are that during the post search investigation and also during assessment proceeding, no effort was made to investigate from buyers of the flats about alleged on-money payment made to the assessee.

During the search no other evidence including money trail evidencing on- money payment by the buyers of the flats to assessee has been found.

Even during the appellate proceeding, the assessing officer vide Letter, dt. 7-12-2016 has been asked to carry out necessary enquiry under section 250(4) of the Act to substantiate his contention. Copies of the affidavits of 28 buyers as submitted by the assessee has also been provided to the assessing officer. However, assessing officer has reiterated the same facts as mentioned in the assessment order. It is also a fact that on the day of search flats were not sold and on y booking amounts were received from the customers. Meaning thereby facts (contention of the assessee as well as those buyers who filed affidavits has not been controverted by the assessing officer.

Therefore, ultimate addition to be made in a case would depend on facts and circumstances of case and not purely on the disclosure made under section 132(4) which also stood retracted subsequently, and also when there was no supportive material or evidence to justify such addition. Now coming to the question of addition of Rs. 25,86,60,550 made under section 68 of the Act, on plain reading it is seen that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source there of or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The perusal of the aforesaid provision reveals that the first and foremost condition of making addition under this section is that the sum reached to be credited in the books of the assessee maintained for the previous year. In the instant case admittedly the on money amount was not credited in the books maintained by the assessee. Therefore, the provisions could not be ignored and no addition could be made under this section.

From the aforementioned judgments, it is seen that an admission is not conclusive as to the truth of the matters stated therein. If is only a piece of evidence, the weight to be attached to which must depend on the circumstances in which it is made. If can be shown to be erroneous or untrue.

Therefore, addition made on the basis of confessional made before DDIT (Inv.), which was subsequently retracted, and as the additions which are not supported by corroborative evidence cannot be sustained.

In view of facts and circumstances of the case as discussed above and most respectfully relying on the above decisions (supra), addition made of Rs. 25,86,60,550 is hereby deleted. Assessee’s appeal in Ground No. 1 stands allowed.

Therefore the learned Commissioner (Appeals) has deleted the addition after considering the overall circumstances and facts and relevant case laws and decision of the Jurisdictional High Court. In view of the above facts and circumstances your honor is requested to confirm the action of the learned Commissioner (Appeals) in deleting the addition and appeal filed by the revenue may deserves to be knocked down.

10. The learned AR has also placed on record paper book containing page from 1 to 158, which contains copies of affidavits of buyers, copies of ledger account to buyers from the books of assessee copy of retraction letter filed before the DGIT(Inv.), Jaipur, copy of acknowledgement of return and computation of total income and the copy of submissions made before the learned Commissioner (Appeals).
11. We have heard the rival contentions of both the parties and have perused the material placed on record. We have also deliberated upon the judicial pronouncements referred by the lower authorities in their respective orders as well as before us with reference to factual matrix of the instant case, the judgments cited by both the parties, as well as the orders passed by the revenue authorities. Before we decide merits of this ground, it is necessary and imperative to evaluate the orders passed by the learned Commissioner (Appeals) while disposing of this ground. The learned Commissioner (Appeals) has discussed the ground raised by the revenue in detail in para Nos. 2 to 4 of its order. The operative portion of the order is contained in para 4.1.2 and the same is reproduced below :–

“4.1.2 I have duly considered assessee’s submission and carefully cone through assessment order passed by the assessing officer. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. I have also carefully perused the assessment record. On careful perusal of the seized documents (supra), on which during the search assessment Shri Vijay Kumar Jain in his sworn statement on oath under section 132(4) of the Act recorded on 5-9-2013, had admitted to have received on-money of Rs. 27,50,31,216 and Rs. 2.5 crore on a/c of other discrepancies, the gist of head wise & entry wise break up of admission of undisclosed income is mentioned as under :–

S. No.	Amount admitted (in Rs.)	Basis of admission of undisclosed income	Relevant question No. of the sworn statement	Remark
1.	27,50,31,216	Unaccounted receipts in cash on sale of flats	Q. No. 1 & 12 of statements of Shri Vijay Jain director of M/s. JKD Pearl India Developers Pvt. Ltd. dt. 4-9-2013	Shri Vijay Jain director of M/s. JKD Pearl India Developers Pvt. Ltd. had admitted the undisclosed income of Rs. 30,00,31,216 in the hands of the company
2.	2,50,00,000	Other discrepancies	Q. No. 13 of statements of Shri Vijay Jain director of M/s. JKD Pearl India Developers Pvt. Ltd. dated 4-9-2013	Shri Vijay Kumar Jain has also furnished affidavit dated 18-9-2013 for confirming the admission of on-money of Rs. 27,50,31,216 and for other discrepancies of Rs. 2.5 crore.

On perusal of assessment record, it is also seen that the assessee vide Letter, dt. 27-6-2014 has filed retraction letter with the assessing officer. Scanned copies of the relevant pages of the letter are reproduced as under :–

However, in the return income filed pursuant to notice issued under section 153A of the assessee has not offered the surrendered amount of on-money in its return. Instead assessee declared total income at a loss of Rs. 1,47,63,169 on 29-11-2014 in view of these, the assessing officer vide Letter, dt. 26-3-2015 relying on following decisions has asked the assessee why an addition of Rs. 30,00,31,216 should not be made to the total income of the assessee. Vide Letter, dt. 30-3-2015 (received on 31-3-2015 in the office of assessing officer) assessee has reiterated its earlier stand taken in the retraction Letter, dt. 27-6-2014 (received in the office of assessing officer on 1-7-2014). In the said letter, assessee has also requested the assessing officer for conducting enquiries regarding alleged on-money receipts, scanned copy of the relevant portion of the said letter is reproduced here as under :–

The assessee’s contention with regard to the retraction as reiterated vide Letters, (dt. 27-6-2014, 30-3-2015, 22-1-2016 & 13-2-2016) submitted during assessment proceeding can be summarized as under :–

(a) The voluntary surrender made by Shri Vijay Kumar Jain was on the basis of seized documents which is computer printout taken from assessee’s hard disc found during the search operation from his premises located at 401, Pearl Survanshi, A-5, Sardar Patel Marg, Jaipur.

(b) No money trail or cash seizure evidencing receipt of on-money was found during the search operation.

(c) The area as per seized documents (in sq. ft.) does not match with the area mentioned in the Sale Deed. The Sale Deed in respect of flats mentioned had not been executed by the date of search; accordingly, the amount mentioned in these papers is not verifiable vis-a-vis total sales consideration.

(d) The seize paper are computer printouts having no date and also unverifiable contents. The seized papers don’t contain (i) date of transactions, (ii) name of buyers, (iii) details of the cheque payments vide which accounted money was given, and (iv) name of the person receiving such on-money from buyers. Even the amounts shown on “column A” which is alleged to be the accounted part of sale price is also not verifiable for books of accounts, meaning thereby the details mentioned in the seized documents cannot be corroborated with the transactions recorded in the regular books of accounts.

(e) The assessee company recognizes the sale of flats only when the flats are fully ready to be sold and title is transferred to the purchaser and the possession is give. But during the year under consideration the flats were not fully developed and also the title of property was not transferred and no possession was given. Hence there was no sale of flats. There was only booking of flats in advance. The person who made the advance payment against purchase of property deduct TDS as per provision of section 192(1A) of the Act. So the amount received on which TDS was deducted is shown in advance received and not in the sales of the assessee company. Therefore the sale consideration of property in ITR is less than consideration. The flats are fully prepared in assessment year 2015-16 and then they are sold.

On perusal of assessment record, it is seen that assessing officer has not carried out any investigation/enquiry to prove his contention with regard to receipt of on-money as mentioned in the seized documents (supra). Assessing officer has simply relied upon the admission based on the recorded sworn statement under section 132(2) of Act of Shri Vijay Kumar Jain & added the receipt of on-money of Rs. 25,86,60,550 from the three projects.

The Hon’ble Bombay High Court in the case of Surendra M. Khandhar v. ACIT (2010) 321 ITR 254 (Bom) : 2010 TaxPub(DT) 0320 (Bom-HC) held as under :–

“The language of section 132(4A) of the Income Tax Act, 1961, is similar to the language used in section 292C. The provisions raise a presumption that the contents of a document found during search proceedings are true. The presumption can be rebutted.”

Here I would like to quote the decision of Hon’ble ITAT Jabalpur in the case of ACIT v. Satyapal Wassan (2007) 295 ITR 352 (Jp) : 2007 TaxPub(DT) 0938 (Jab-Trib) wherein elucidating with respect to the same issue, the Hon’ble the Tribunal has held as under :–

“The crux of these decisions is that a document found during the course of search must be a speaking one and without any second interpretation, must reflect all the details about the transactions of the assessee in the relevant assessment year. Any gap in the various components as mentioned in section 4 of the Income Tax Act must be filled up by the assessing officer through Investigations and correlations with the other material found either during the course of the search or on investigation…………”

From above decision of Hon’ble ITAT Jabalpur Bench it is pertinent to note that a charge can be levied on the basis of document only when the document is a speaking one. The document should speak either out of itself or the company of other material found on investigation and/or in the search. The document should be clear and unambiguous in respect of all four components of charge of tax. If it is not so, the document is only a dumb document and no charge of tax can be levied on the assessee on the basis of a dumb document.

The search action at the appellant’s premises has yielded materials which justify such inference. It is so, in my opinion, even after presumption applied to the facts under section 292C of the Act, there are not adequate materials to conclude that the transactions in the seized documents are the transactions of the appellant which remained undisclosed. The appellant, under the principles of natural justice, has the right to rebut the presumption. This is very important since the presumption under section 292C is permitted only in respect of the documents in “possession or control” of the assessee. Therefore, onus is on the assessing officer to prove that what was stated in the seized document, are true. Such an interpretation would render the deeming provisions of section 292C otiose and presumption as to the correctness of seized documents is automatic under section 292C of the Act unless the contrary is proved and as such, the assessee was legally required to substantiate the seized documents with supporting evidence.

Here I would also like to quote decision in case of ACIT v. Vatika Greenfield (P) Ltd. (2009) 121 TTJ (Del) 208 : 2009 TaxPub(DT) 1353 (Del-Trib), wherein Hon’ble Delhi High Court has held that unless some evidence or material is brought on record by the assessee to show that what is stated in the seized document is not correct state of affairs and the state of affairs stated in the seized document has to be presumed to be true as mandated by section 292C of the Act. In this regard, assessing officer has also not brought out any further corroborative evidence to support his contention. However, appellant submits that even there are other corroborative evidences to suggest and confirm its contention. Therefore, in view of the facts and circumstances of the case itself would be sufficient to rebut the presumption under section 292C of the Act.

When no independent material or evidence had been brought or record by the assessing officer to establish that the noting as appearing in the computer prints out (Reference Seized Documents Annexure-A-2 Pg. 1 to 4) which according to him, represented an unaccounted transaction; then assessing officer has no option but to accept the explanation of the assessee. The legal provision relating to presumption under section 132(4A) is applicable to the person from whose possession or control the incriminating material is found & seized. It is further held that the presumption is rebuttable and not conclusive and various courts including the Hon’ble Apex Court have held that it cannot be applied in the absence of corroborative evidence. In case of Straptex India (P) Ltd. v DCIT (2003) 84 ITD 320 (Mum) : 2003 TaxPub(DT) 0240 (Mum-Trib), Hon’ble ITAT Mumbai Bench has held inter alia as under :–

“…..It follows that, if a statement was taken merely confessing to some income without any information to support same, it will have no validity even according to Board Circular apart from general law……”

It is an established principle of law that a party is entitled to show and prove that the statement made by it is in fact not correct and true in Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) : 1973 TaxPub(DT) 0089 (SC), Hon’ble Apex Court has been held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect.

The Hon’ble Apex Court again in Nagubai Armal v. B. Sharma Rao AIR 1956 SC 100, has laid down that an admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue.

According to Govindram M. Oberoi v. ITO (1996) 58 ITD 73 (Pune-Trib) : 1996 TaxPub(DT) 1085 (Pune-Trib), statement given under section 132(4) can be used as evidence against the assessee. Presumption can be drawn on the basis of such evidence. But, this gives to rise to presumption, which can be rebutted; statement given at the time of search cannot be treated as sacrosanct. Hon’ble Madras High Court in case of M. Narayanan & Bros. v. ACIT (2011) 339 ITR 192 (Mad) : 2011 TaxPub(DT) 1610 (Mad-HC) has held as under :–

“…….While statement rendered by assessee at time of search under section 132(4) may be used in evidence in any proceeding, yet that, by itself, does not become sole material to rest assessment, more so when assessee seeks to withdraw same by producing material in support of such retraction.”

Or similar facts, Hon’ble Ranchi High Court in case of CIT v. Ravindra Kumar Jain (2011) 201 Taxman 95 (Jharkhand) in retraction case has held as under :–

“…..Assessee retracted his statement–Surrender was not corroborated by independence–Assessing officer was duty bound to collect more evidence in respect of r disclosed income of assessee to justify the addition…..”

Now, facts of the case are that during the post search investigation and also during assessment proceeding, no effort was made to investigate from buyers of the flats about alleged on-money payment made to the assessee. During the search no other evidence including money trail evidencing on-payment by the buyers of the flats to assessee has been found.

Even during the appellate proceeding, the assessing officer vide Letter, dt. 7-12-2016 has been asked to carry out necessary enquiry under section 250(4) of the Act to substantiate his contention. Copies of the affidavits of 28 buyers as submitted by the assessee has also been provided to the assessing officer. However, assessing officer has reiterated same facts as mentioned in the assessment order. It is also a fact that on the day of search flats were not sold and only booking amounts were received from the customers. Meaning thereby facts/contention of the assessee as well as those buyers who filed affidavits has not been controverted by the assessing officer. Therefore, ultimate addition to be made in a case would depend on facts and circumstances of case and not purely on the disclosure made under section 132(4) which also stood retracted subsequently, and also when there was no material or evidence to justify such addition. Now coming to the of addition of Rs. 25,86,60,550 made under section 68 of the Act, on plain is seen that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by his is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The perusal of the aforesaid provision reveals that the first and foremost condition of making addition under this section is that the sum is required to be credited in the books of the assessee maintained for the previous year. In the instant case admittedly the on-money amount was not credited in the books maintained by the assessee. Therefore, the provisions could not be ignored and no addition could be made under this section.

From the aforementioned judgments, it is seen that an admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances in which it is made. It can be shown to be erroneous or untrue. Therefore, addition made on the basis of confessional made before DDIT (Inv), which was subsequently retracted, and as the additions which are not supported by corroborative evidence cannot be sustained.

In view of facts and circumstances of the case as discussed above and most respectfully relying on the above decisions (supra), addition made of Rs. 25,86,60,550 is hereby deleted. Assessee’s appeal in Ground No. 1 stands allowed.”

12. After having heard the learned Counsels at length and after appreciating the facts contained in the present case, we found that the addition in the present case was made by the assessing officer by simply relying upon the sworn statement made under section 132(4) of the Act by Shri Vijay Kumar Jain Director, of the assessee company without placing any further corroborative evidence to prove his contentions. The learned Commissioner (Appeals) after going through the facts of the case, had passed a detailed order discussing entire facts and circumstances and also controverted all the findings and observation of the assessing officer. As per the factual position during the course of search, statement of one of the directors of Shri Vijay Kumar Jain was recorded. During the course of statement Shri Vijay Kumar Jain was examined with reference to certain rough papers found during the course of search. These papers have already been placed on record as page no. 1 to 4 of Annexure A-2. We have also perused the scanned copies of those page Nos. 1 to 4 put up as Annexure-A2. However, the assessing officer has made additions without making any post search enquiries with reference to contents of pages 1 to 4 of annexure A-2. We have also perused the copies of affidavits of the buyers which have been placed on record by the assessee in paper book page No. 1 to 28 but in the entire assessment proceedings, we noted that the assessing officer has not carried out any investigation or verification in respect of those affidavits of the buyers. Even no material has been brought on record that the assessee company received any on-money on sale of flats. It is an admitted fact that during the course of search no receipt of on money containing signatures of the assessee which was ever issued by the assessee to buyers. The assessing officer also admitted in the assessment order at page 24 & 25 that the pages 1 to 4 of Annexure-A2 are undated and do not contain the name of the buyers, signatures of the assessee or the buyers and even the amount noted in those pages do not exactly tally with the amount of sale as per registered sale deeds. This fact has also been brought before us that the sale deeds in respect of some of the flats have already been got executed but no such enquiry has been carried out by the assessing officer in respect of those registered sale deeds. The assessee had also placed on record the detailed affidavits of the buyers which specifically contains the name and addresses of the purchases wherein the buyers have categorically mentioned that the amount paid by them to the assessee and it was also admitted in their affidavits that no on-money amount was ever paid by them to the assessee. But all those affidavits which contains relevant details have been ignored and disregarded by the assessing officer without examining the deponents of the said affidavits. Therefore, the contents of those affidavits remained uncontroverted. As per the assessee, the papers, i.e., page No. 1 to 4 of Annexure-A2 are rough and dump papers because these papers do not have any signature of the assessee/directors, even the originator/writer of these papers are not found and these papers are undated. On the analysis of page Nos. 1 to 4 of Annexure-A2, we also found that the allegations levelled by the assessee are correct and apart from that these papers do not contain the name of any buyer and the assessing officer was not in a position to correlate these papers with regular books of account. As per the assessee, certain flats shown as sold in these papers were actually sold subsequent to the search and in this respect they have also submitted documents with the assessing officer. It is an admitted fact that the assessing officer himself in the order of assessment at page No. 24 has categorically admitted that these papers do not have any date but he still presumed that these belong to the period when found and seized. In our view, no liability can be fastened on the basis of assumptions and presumptions and it is a settled law that the presumption whosoever strong may be but it cannot take place of proof and thus the assessing officer has acted more on suspicion and doubt than on evidence. It is settled principle of law that suspicion however strong cannot take the place of evidence. We also drawn our attentions from the decisions in different cases wherein it has been time and again held that suspicion howsoever cannot take place of evidence. In this respect we relied upon the following decisions :–

(i) Uma Charan Shaw & Brothers (1959) 37 ITR 271 (SC) : 1959 TaxPub(DT) 0184 (SC)

(ii) CIT v. Anupam Kapoor (2008) 299 ITR 179 (P&H) : 2008 TaxPub(DT) 0500 (P&H-HC)

(iii) CIT v. Dhiraj Lal Girdhari Lal (1954) 26 ITR 736 (SC) : 1954 TaxPub(DT) 0120 (SC)

(iv) State v. Guljari Lal Tondon AIR 1979 SC 1382

(v) J.A. Naidu v. State of Maharastra SC 1537 : 1983 TaxPub(EX) 0317 (SC)

(vi) Krishnand v. State of Mandharsinghji P. Jadera (2005) 281 ITR 0019 : AIR 1977 SC 796

(vii) Dhakeshwari Cotton Mills (1954) 26 ITR 775 (SC) : 1954 TaxPub(DT) 0123 (SC)

(viii) Omar Shaa (1959) 37 ITR 151 (SC) : 1959 TaxPub(DT) 0148 (SC)

(ix) Lal Chand Bhagat Ambika Ram (1959) 37 ITR 288 (SC) : 1959 TaxPub(DT) 0181 (SC)

The assessing officer at page 25 of the assessment order has admitted that the amount of sale mentioned in these papers, i.e., page No. 1 to 4 of Annexure-A2 was not verifiable with reference to actual sale consideration.

13. We have noticed that those papers which are now in dispute, i.e., page Nos. 1 to 4 of Annexure-A2 are computer printouts having no dates. As per the assessing officer surrender was made by the assessee by admitting that the amounts noted in column B was received in cash against the sale of various flats in the multi storied buildings located at various places in Jaipur and Alwar. However, no effort was made by the assessing officer to prove the genuineness of transactions noted in these papers. The assessing officer was expected during the course of verifications to find out and ascertain the “date and year of transaction” and thereafter should have verified whether the accounted amount shown in the Column-A was verifiable or not from the regular books of account but even this exercise was not carried out by the assessing officer. It is a settled proposition of law that if the seized papers mentioned do not carry any date and particulars then such papers are to be treated as rough papers. Admittedly in the present case, all those four pages do not contain any date, signature, person from whom received etc. We have also gone through the decision of the Coordinate Bench of ITAT Jaipur in the case ofMoolchand Kumawat & Sons v. DCIT 42 TaxWorld 241 wherein it was held that if a document does not contain any date and name and only contains numerical figures then such document is vague and dump document and no addition can be made on the basis of such document. Similarly, in the case of ACIT v. Satyapal Wassan, it was also held by the Coordinate Bench of the ITAT, Jabalpur (2007) 295 ITR 352 (Jp) : 2007 TaxPub(DT) 0938 (Jab-Trib) wherein it was held that the document found during search must be a speaking one. Document must reflect all the details about the transaction of the assessee in the relevant Assessment Year and in case if there is any gap then in that eventuality the same has to be filled by the assessing officer through post search enquires and co-relate the material found with the business of the assessee, without which no addition can be made on the basis of a loose paper. The Coordinate Bench of ITAT, Hyderabad, in the case of K.V. Laxmi Savitri Devi v. ACIT (2011) 60 DTR 148 (Hyd) : 2011 TaxPub(DT) 1761 (Hyd-Trib) has held that no addition can be made on the basis of a loose paper which does not contain the name and the date of payment. The department is precluded in drawing inferences on the basis of suspicion, conjecture and surmises and no addition can be made on the basis of such dump document or loose sheets. The learned AR also invited our attention to the chart which was also filed before lower authorities, which discloses certain flats were not sold upto the date of search as such there was no question of receiving any amount on account of on-money. Even in the written submissions filed before lower authorities, it has categorically mentioned by the assessee that flat no. 201, 202, 301, 602 of JKD Pearl Landmark and flat no. 101, 102, 302 of JKD Pearl Stylome, i.e., Mahaver Nagar Jaipur and flat no. 102, 604 of JKD Pearl Aura, Alwar were sold much later, i.e., in the year 2014 whereas the search was conducted on 5-9-2013.The assessee had also specifically submitted that mentioning of receipt of amount against these flats in the seized papers is therefore fake as these have been sold at a later date. Therefore, in these circumstances the sale amount mentioned against these flats and shown to be have been received by the assessee was not verifiable with reference to the books of account.
14. We noticed that the assessing officer has not brought on record any independent material to establish that any on-money was received from any of the buyer. Since admittedly, no statement of any buyer was recorded even in respect of fact that buyers have already submitted their respective affidavits which are at page No. 1 to 28 of the paper book, but still the assessing officer has not carried out any post search verifications and have not confronted with such buyers. The assessing officer was not expected to make any addition merely on the basis of suspicion, conjecture and guess, which is not admissible in law. While drawing our attention towards the pages found during the search, the assessee had pointed out that these pages also do not contain date of payments and whatever is noted on these pages such as the area of the flat is also at variance with the actual area of the flat. In this respect, the learned AR also invited our attention to a chart submitted before the lower authorities reflecting the area as per the seized paper as well as the area as per the sale deed executed by the assessee and the same is reproduced below :–

JKD Pearl Landmark

Flat No.	Area as per Seized Papers (sq.ft.)	Area as per Sale Deed (sq.ft.)
101	493.75	792.3
301 *		3033.4
302		3033.4
401	2937.50	2952.5
402	2937.50	2952.5
501 & 502	5875.00	5906.4
601 & 102	2937.50	3033.4+792.3
602 *	2937.50	3033.4
701	2865.25	2865.9
702	2865.25	2865.9
801	2571.25	2660.3

JKD Pearl Stylome

Flat No.	Area as per Seized Papers (sq.ft.)	Area as per Sale Deed (sq.ft.)
101 *		2615.6
102 *		2615.6
201 & * 201		5231.1
301	2491.25	2615.6
302 *	2491.25	2615.6
401	2491.25	2615.6
501	2491.25	2586.3
502	2491.25	2586.3
801	2491.25	2586.3
802	2491.25	2586.3

JKD Pearl Aura

Flat No.	Area as per Seized Papers (sq.ft.)	Area as per Sale Deed (sq.ft.)
102*		1734.8
601	1648	1770.2
604*	1279	1365.7
703	1279	1362.2
704	1279	1365.7

15. On the scrutiny of those documents in detail, we also found that the area mentioned in the seized paper is at variance with the regular records. The assessee had also drawn our attention to the comparison made by him with respect to amount of sale with regular books vis-a-vis seized papers. The assessee had also drawn our attention to the fact that even the accounted amount mentioned in column ‘A’ of these pages, i.e., page Nos. 1 to 4 of Annexure-A2 also do not tally with the consideration shown in the registered sale deeds and in this respect, following chart has been placed on record, which is reproduced below :–

JKD Pearl Landmark

Flat No.	Sale Price as per Seized Papers	Sale Price as per Sale Deed
101	1728125	2242209
301*	10616900	10616900
302	10616900	10616900
401	10281250	10333820
402	10281250	10333820
501 & 502	20562500	20672190
601 & 102	10281250	12201500
602*	10281250	10616900
701	10028375	10030720
702	10028375	10030720
801	8999375	9310980

JKD Pearl Stylome

Flat No.	Sale Price as per Seized Papers	Sale Price as per Sale Deed
101*		6538925
102*		9572985
201 & *201		13077850
301	6228125	6538925
302*	6228125	6538925
401	6228125	6538925
501	6228125	6465675
502	6228125	6465675
801	6228125	6465675
802	6228125	6465675

JKD Pearl Aura

Flat No.	Sale Price as per Seized Papers	Sale Price as per Sale Deed
102*		6071940
601	4120000	6195665
604 *	3197500	4780055
703	3197500	4767735
704	3197500	4780020

16. From perusal of the said table discloses that the sale amount (A) mentioned in the seized papers is at variance with the regular records. In some of the cases, sale deeds were executed post search by the assessee. The learned AR has also submitted before us that although no detail of buyers was drawn in these papers but even then the buyers had submitted respective affidavits and the assessee had sought information from the assessing officer with regard to statement if any recorded on the said buyers under section 131 of the Act or under section 133(6) of the Act but the assessing officer has not supplied any such statement to the assessee in this respect. Our attention was also drawn to theLetter, dated 28-10-2016 filed by the assessee with the DCIT, Central Circle-2, Jaipur, it was specifically stated before us that the buyers have specifically stated in their affidavits that whatever has been paid for purchase of flat has been paid by them through cheque which is fully verifiable from the records and the position being so there was no case with the assessing officer for making any addition on the basis of alleged on-money receipts on sale of flats. We have also gone through the judgments relied upon by the assessee wherein it has specifically held that no addition is warranted on the basis of incomplete information and thus those pages are liable to be declared as rough and dump. In this respect, we relied on the following judicial pronouncements :–

(i) DCIT v. Rajendra Kumar Sancheti (ITAT Jaipur) 42 TaxWorld 152, dated 27-3-2009

Addition cannot be made on the basis of seized paper which is not prepared by the assessee and which appears to be a deaf and dumb document.

(ii) Mahaan Foods Ltd. v. DCIT (2009) 27 DTR 185 (ITAT-Delhi) : 2009 TaxPub(DT) 0452 (Del-Trib)

In the absence of any other evidence found during the course of search or brought on record by the assessing officer to show that the expenditure found noted on seized documents was actually incurred by the assessee, the same cannot be added to the undisclosed income of the assessee.

No inference could be drawn against the assessee much less any inference of unexplained expenses on the basis of a dumb document found at the residence of its director as there is no proof to show that the amount mentioned in the said document was paid by the company.

(iii) Moolchand Kumawat & Sons v. DCIT (Ajmer) ITAT Jaipur Bench 42 Taxworld 241 in M.A. No. 93/JP/2008 arising out of ITSSA No. 24/JP/2005 Order, dated 20-2-2009

Addition cannot be made on the basis of a dumb document or on the basis of entries found recorded on a paper seized during search without conducting any enquiry from the concerned party.

(iv) Assistant Commissioner of Income Tax v. Satya Pal Wassan (2007) 295 ITR (AT) 352 (Jabalpur) : 2007 TaxPub(DT) 0938 (Jab-Trib)

A document found during the course of a search must be a speaking one and without any second interpretation, must reflect all the details about the transaction of the assessee in the relevant assessment year. Any gap in the various components for the charge of tax must be filled up by the assessing officer through investigation and correlation with the other material found either during the course of the search or on investigation. Without this no addition can be made on the basis of a loose sheet.

(v) It was held in the following cases that addition could not be made on the basis of uncorroborated noting on loose sheets and papers —

(1) S.P. Goyal v. DCIT (2002) 77 TTJ 1 (Mum) : 2002 TaxPub(DT) 1322 (Mum-Trib)

(2) Chandra Mohan Mehta v. ACIT (1999) 65 TTJ 327 (Pune) : 1999 TaxPub(DT) 1129 (Pune-Trib)

(3) Bansal Strips Pvt. Ltd. v. ACIT (2006) 100 TTJ 665 (Del) : 2006 TaxPub(DT) 1290 (Del-Trib)

(4) Kishan Chand Sobhraj Mal (1991) 42 TTJ 423 (Jp) : 1992 TaxPub(DT) 0886 (Jp-Trib)

(5) CIT v. Naresh Khattar (HUF) (2003) 261 ITR 664 (Del) : 2003 TaxPub(DT) 0987 (Del-HC)

(6) Lal Chand Agarwal v. ACIT 21 TW 213 (ITAT Jaipur)

(7) CIT v. S.M. Agarwal (2007) 293 ITR 43 (Del) : 2007 TaxPub(DT) 1120 (Del-HC)

(8) CIT v. Girish Choudhary (2008) 296 ITR 619 (Del) : 2008 TaxPub(DT) 0692 (Del-HC)

(9) Jayanti Lal Patel v. ACIT (1998) 233 ITR 588 (Raj) : 1998 TaxPub(DT) 0901 (Raj-HC)

(10) Rakesh Goyal v. ACIT (2004) 87 TTJ 151 (Del) : 2004 TaxPub(DT) 1177 (Del-Trib)

(11) ITO v. Manna Lal Jhalani 22 TW 551 (ITAT-Jaipur)

(12) Hissaria Brother v. ACIT 22 TW 684 (ITAT-Jaipur)

(13) DCIT v. Countrywide Buildestate Pvt. Ltd. (2012) 48 TW 50 (Jaipur-ITAT) : 2013 TaxPub(DT) 0921 (Jp-Trib) Order, dated 29-6-2012, ITA No. 961/JP/2011

17. The learned DR has specifically pointed out that the retraction made by the Director of the assessee company is of no consequence as the statement was made under section 132(4) of the Act. He has also submitted that once the admission has been made by the assessee, the same cannot be retracted unless and until establishes the reasons for retraction and it was also submitted by the learned CIT-DR that the retraction in the present case made by the assessee is an afterthought. The learned CIT-DR has drawn our attention to the following judicial pronouncements :–

“I. In the case of Video Master v. JCIT (2016) 66 taxmann.com 361 (SC) : 2015 TaxPub(DT) 3763 (SC), it has been held by the Hon’ble Apex Court that :–

“3. In the second round, the assessment Order, dated 29-3-2000, gave detailed reasons for arriving at the conclusion that the figures stated in the statement recorded were corroborated, in particular, by various loose sheets found at the premises of the assessee as well as vouchers, some of which related to the two films in question. In an appeal filed to the Tribunal, the Tribunal framed three issues, two of which were unnecessary for the reason that the statement recorded on 25-8-1995, was said to be relevant but not conclusive. Therefore, whether the statement was made under duress and whether it was retracted lawfully would have no relevance at this stage. However, the Tribunal went into these issues as well and ultimately, found that the statement could be used as evidence. Further, it examined other corroborative evidence referred to in the assessment order and arrived at a finding that the added income would be income which can be added under section 158BC for the block assessment period in question. In an appeal filed under section 260A to the Bombay High Court, the High Court found, after narrating the facts, that no substantial question of law arises.

4. We are of the view, in accordance with the view of the High Court, that no substantial question of law arises. Further, though it was vehemently argued by Shri Devansh A. Mohta, learned counsel appearing for the assessee, that this was a case both of perversity and of there being no evidence at all. We find that not only are the findings of fact recorded in some detail but that it is not possible to say that this is a case of no evidence at all inasmuch as evidence in the form of the statement made by the assessee himself and other corroborative material are there on record.
5. In view thereof, we find no substance in the present appeal which is accordingly, dismissed.”
6. In the case ofBanna Lal Jat Construction (P) Ltd. v. ACIT in ITA No. 720/JP/2017,vide Order, dated 29-12-2017, the Hon’ble ITAT, Jaipur has held as under :–

“20. The said admission has been reiterated in not just one statement but two subsequent statements – one recorded under section 132(4) and second recorded under section 131 during post search proceedings. We therefore do not see any inconsistency in assessee’s statements, rather the latter statements have been made more clearly and given that these subsequent statements have been recorded on oath under section 132(4) will thus have a great evidentiary value.

21. Thereafter, the assessee company filed its return of income on 30-9-2015 wherein such surrender was not honoured by the assessee company and the undisclosed income in form of cash found at the residence was not offered to tax, effectively retracting from the statement recorded on oath under section 132(4) of the Act. It is relevant to note that during the intervening period, i.e., the day the statement was recorded under section 132(4) on 10-10-2014 and day the return of income was filed on 30-9-2015, almost a period of 11 months, there is no communication from the assessee company to the Revenue authorities retracting from the statement so made and recorded during the course of search proceedings. In fact, during the post search proceedings, the assessee again got an opportunity wherein he was called and his statement was recorded under section 131 on 4-12-2014 and therein, as well, he maintained his earlier stand and didn’t retract from the statement so recorded during the course of search. This also proves that the contention of the assessee company that the earlier surrender during the course of search was under pressure is totally unfounded.
22. Here, we refer to the decision of the Hon’ble Rajasthan High Court in case ofRavi Mathur & Ors. (D.B Appeal No. 67/2002 & others)vide its Order, dated 13-5-2016 where Hon’ble High Court has laid down the following proposition in law in respect of retraction of statement recorded under section 132(4) of the Act :–

“14. Having noticed the arguments of the learned counsel for the parties, we deem it proper at the outset to take into consideration the finding of the Tribunal about retraction/resiling of the statements recorded under section 132(4) as the Tribunal has primarily come to a finding that retraction is proper. We would also deal with the judgments relied on by the learned counsel which has a bearing on the issues and would then give our own view on questions posed by the Revenue.

15. In our view, the statements recorded under section 132(4) have great evidentiary value and it cannot be discarded as in the instant case by the Tribunal in a summary or in a cryptic manner. Statements recorded under section 132(4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the statements were recorded at the time of search on 9-11-1995 and onwards but retraction, is almost after an year and that too when the assessment proceedings were being taken up in November, 1996. We may observe that retraction should be made as soon as possible and immediately after such a statement has been recorded, either by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials, either by way of a duly sworn affidavit or statements supported by convincing evidence through which an assessee could demonstrate that the statements initially recorded were under pressure/coercion and factually incorrect. In our view, retraction after a sufficient long gap or point of time, as in the instant case, loses its significance and is an afterthought. Once statements have been recorded on oath, duly signed, it has a great evidentiary value and it is normally presumed that whatever stated at the time of recording of statements under section 132(4), are true and correct and brings out the correct picture, as by that time the assessee is uninfluenced by external agencies. Thus, whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence which we have observed hereinbefore. Once a statement is recorded under section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time and in the instant case we notice that the assessing officer in the Assessment Order observes :–

“Regarding the amount of Rs. 44.285 lakhs, it is now contended that the statement under section 132(4) was not correct and these amounts are in thousands, not lakhs, i.e., it is now attempted to retract from the statements made at the time of S & S operations.”

Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized, i.e., almost after a gap of more than a year. Such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material.

15.1 Thus, in our view, the Tribunal in a summary manner has held that retraction is proper, without going in detail and manner, time of retraction, the addition deleted, is wholly on a perverse finding.

15.2 This Court in Raj Kumar Sodhani v. The CIT (D.B. ITA No. 15/2015, decided on 28-4-2016) has taken this very view that retraction after a sufficient long gap loses its sanctity.”

24. In light of legal proposition laid down by the Hon’ble Rajasthan High Court, there is clearly an inordinate delay in retraction and no justifiable explanation has been given by the assessee company for such delay. It is clearly an afterthought and loses its significance. The statement recorded under section 132(4) has great evidentiary value and there is no material which has been brought on record that such statement has been recorded and obtained forcefully/by coercion/undue influence. Further, the assessee has been consistent in his statements so recorded even during the post search proceedings when his statement was recorded under section 131. Hence, in light of above discussions, the retraction of the statement recorded under section 132(4) cannot be accepted in the instant case.”

III. It may be mentioned that in D.B. ITA No. 140/2018 : 2019 TaxPub(DT) 2496 (Raj-HC) in the case of M/s. Bannalal Jat Constructions Pvt. Ltd. v. ACIT, the Hon’ble High Court of Rajasthan vide its Judgment, dated 31-8-2018 has upheld the order of Hon’ble ITAT, Jaipur and has observed that :–

“This Court in CIT, Bikaner v. Ravi Mathur, supra, which was relied by the ITAT in the present case, after considering catena of previous decisions, held that the statements recorded under section 132(4) of the Income Tax Act have great evidentiary value and it cannot be discarded in a summary and cryptic manner, by simply observing that the assessee retracted from his statement. One has to come to a definite finding as to the manner in which the retraction takes place. Such retraction should be made as soon as possible and immediately after such statement has been recorded by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials by way of duly sworn affidavit or statement supported by convincing evidence, stating that the earlier statement was recorded under pressure, coercion or compulsion. We deem it appropriate to reproduce para 15 of the said judgment, which reads thus….”

It may be mentioned that the Hon’ble High Court has discussed a number of judicial pronouncements in the above referred judgment and after discussing them, it has been held by the Hon’ble High Court in the case of Banna Lal Jat that :–

“Reverting back to the present case, the ITAT, on the basis of such statement of Shri Bannalal Jat, concluded that he was managing his business affairs of both his proprietary concern as well as appellant-company from his residence and that in the absence of individual cash-book of respective concerns and other details maintained by him, it is not possible to identify whether the cash so found belongs to the proprietary concern or to the assessee company. Subsequently, when the statement under section 132(4) of the IT Act was recorded on 10-10-2014, which was concluded at his residence, Shri Bannalal Jat categorically admitted that the cash amount of Rs. 1,21,43,210 belonged to his company M/s. Bannalal Jat Construction Private Limited and the same was its undisclosed income. Thereafter another statement under section 132(4) of the Income Tax Act was recorded at his business premises on 11-10-2014. In reply to question No. 8, he was asked to explain the source of cash amounting to Rs. 3,380 found at his office and Rs. 1,21,43,210 found at his residence, he submitted regarding the amount of Rs. 1,21,43,210 found at his residence that he was unable to give any explanation and admitted that he was in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and that the income so generated on account of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed income belonged to his company M/s. Bannalal Jat Construction Pvt. Ltd. In response to question no.11 wherein he was asked to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure details have been found and taking all that into consideration, he surrendered Rs. 4,01,43,210 as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s. Bannalal Jat Construction Private Limited in respect of unexplained cash amounting to Rs. 1,21,43,210 and Rs. 2,50,00,000 and Rs. 30,00,000 totalling to Rs. 2,80,00,000 in his individual capacity.

Subsequently, on 4-12-2014 during the post-search proceedings, statement of Shri Bannalal fat was again recorded under section 131 of the Income Tax Act, wherein he was again confronted with the various documents seized and cash found during the course of search and the consequent surrender made by him in respect of his two concerns and in response thereto, he again confirmed the surrender of undisclosed income amounting to Rs. 1,21,43,210 and Rs. 1,35,00,000. It is in this background that we have to view his reply to the show-cause notice submitted on 2-12-2016. This show-cause notice was issued to him by the assessing officer when the appellant-company offered the said undisclosed income to tax. The reliability, importance and sanctity of admission made during search could be refuted only by cogent and convincing evidence. We may in this connection refer to earliest judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd., supra, wherein it was held that admission is an extremely important piece of evidence but it can’t be said that it is conclusive. It is open to the person, who made admission to show that it is incorrect. The assessee should be given proper opportunity to show the correct state of affairs. The law with regard to this has developed much thereafter. There is no gainsay the fact that admission made during the search can be disputed by the assessee and at the same time however it is equally well settled that the statement made voluntarily by the assessee could form the basis of assessment. Mere fact that the assessee retracted the statement at later point of time could not make the statement unacceptable. The burden lay on the assessee to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for assessee to make such statement. However, a bald assertion to this effect at much belated stage cannot be accepted. The assessee indulged in maintaining transaction on diaries and loose papers which was not permissible in any of the method of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surrender without having evidence or proof of retraction is not permissible in the eyes of law. The statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction.

In view of the above discussion, the question formulated vide Order, dated 9-5-2018 is answered in favour of the revenue and against the assessee.”

II-A. It may be mentioned that the SLP filed by the assessee in the above case has been dismissed by the Hon’ble Apex Court as reported in Bannalal Jat Constructions (P.) Ltd. v. CIT (2019) 106 taxmann.com 128 (SC).

III-A. In the case of PCIT v. Shri Roshan Lal Sancheti, in D. B. ITA No. 47/2018 vide its Judgment, dated 30-10-2018, the Hon’ble Rajasthan High Court has affirmed its above referred earlier judgment in the case of Banna Lal Jat and held as under :–

“In view of the law discussed above, it must be held that statement recorded under section 132(4) of the Act and later confirmed in statement recorded under section 131 of the Act, cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessee in a belatedly filed affidavit has retracted from his statement. Such retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days.

In view of above discussion, we are persuaded to allow the appeal of the revenue which is accordingly allowed. The substantial question of law formulated by this Court vide Order, dated 10-4-2018 is answered in favour of the revenue and against the assessee in the aforesaid terms.”

1. In the case ofBhagirath Aggarwal v. CIT (2013) 31 taxmann.com 274 (Delhi) :2013 TaxPub(DT) 0672 (Del-HC), it has been held by the Hon’ble High Court of Delhi that :–

“11. Before us the learned counsel for the appellant contended that the statement made by an assess could always be subsequently retracted. He further submitted that it was open to the person who made an admission to show that the admission was incorrect. For this proposition he placed reliance on a Division Bench decision of this Court titled Ester Industries Ltd. v. CIT (2009) 316 ITR 260 (Del) : (2009) 185 Taxman 266 (Delhi) : 2009 TaxPub(DT) 1535 (Del-HC). However, that case was not one of search and seizure under section 132 of the said Act. Furthermore, in the present case no material has been produced by the appellant/assessee to show that the admission made by him was incorrect in any way. On the other hand, it is the assessee who is insisting that it is for the department to corroborate the statement of admission made by him and until and unless the department corroborates the same, the statement cannot be relied upon. We are afraid that is not the correct position of law. The admission once made can certainly be retracted, if the circumstances permit, and it can also be shown to have been made under some mistake or to be otherwise incorrect. But, the onus would be on the maker of that admission. In this case it is the appellant/assessee who has admitted and surrendered a sum of Rs. 1.75 crore as his undisclosed income. It was incumbent upon him to show that he had made a mistake in making that admission and that the said admission was incorrect. He had access to all the documents which has been seized inasmuch as the copies had been supplied to him. However, he did not produce anything to establish that the admission was incorrect in any way. That being the position, the appellant/assessee cannot resile from his earlier statement made on 10 & 11-11-2005 and 21-11-2005.

12. The learned counsel for the appellant/assessee also referred to the Supreme Court decision in the case ofPullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) :1973 TaxPub(DT) 0089 (SC) for the proposition that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It was contended that it was open to the person who made the statement to show that it was incorrect. There cannot be any doubt about this position in law, but, in the present case the appellant/assessee has not produced any material to show that the admissions made by him were incorrect. The statements recorded under section 132(4) of the said Act are clearly relevant and admissible and they can be used as evidence. In fact, once there is a clear admission, voluntarily made, on the part of the assessee, that would constitute a good piece of evidence at the hands of the Revenue.
13. The learned counsel for the appellant also referred to theCircular, dated 11-3-2003issued by the Central Board of Direct Taxes on the subject of Additional Income during the course of Search and Seizure Operation. As per the circular, there is an observation of the Board that the focus of the search party should be 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 Department. There is a further observation that, while recording statements during the course of search, seizure and survey operations, no attempt should be made to obtain confessions as to undisclosed income and that any action to the contrary would be viewed adversely.
14. We do not see how this circular would, in anyway, come to the aid and assistance of the appellant. All that it shows is that the Income Tax Officers should not try to force a confession from an assessee. However, if an assessee voluntarily makes a surrender, the officials of the income tax department are bound to record that statement under section 132(4) and such a statement, voluntarily made, is relevant and admissible and is liable to be used as evidence.”
15. In the case ofCIT v. O. Abdul Razak (2012) 20 taxmann.com 48 (Ker.) :2012 TaxPub(DT) 3290 (Ker-HC), it has been held by the Hon’ble High Court of Kerala that :–

“In the instant case on the clear admission of the assessee corroborated by the documents the burden on the department ceases to exist. On the retraction being filed by the assessee, there is a burden cast on the assessee to prove the detraction or rather disprove the admissions made. It is not a shifting of the onus but a new burden cast on the assessee to disprove the earlier admissions having evidentiary value. As noticed earlier, retraction made by the assessee can only be considered as a self serving afterthought and no reliance can be placed on the same to disbelieve the clear admissions made in the statement recorded under section 132(4). Deletion of the additions vis-a-vis the property transactions on the reasoning that the department cannot do so on the basis of the admission made under section 132(4) and on the premise that the Department ought to have proved retraction to be untrue cannot be countenanced in view of the specific words employed in section 132(4).”

1. In the case ofCIT v. Lekh Raj Dhunna (2012) 20 taxmann.com 554 (Punjab & Haryana) :2010 TaxPub(DT) 2280 (P&H-HC), it has been held by the Hon’ble High Court that :–

“17. Thus, in view of sub-sections (4) and (4A) of section 132 of the Act, the assessing officer was justified in drawing presumption against the assessee and had made addition of Rs. 9,00,000 in his income under section 68 of the Act. The onus was upon the assessee to have produced cogent material to rebut the aforesaid presumption which he had failed to displace. The assessee retracted from the said statement vide Letters, dt. 24-11-1998 and 11-3-1999 during the course of assessment proceedings. However, no value could be attached thereto in the present case. In case the statement which was made by the assessee at the time of search and seizure was under pressure or due to coercion, the assessee could have retracted from the same at the earliest. No plausible explanation has been furnished as to why the said statement could not be withdrawn earlier. In such a situation, the authenticity of the statement by virtue of which surrender had been made at the time of search cannot be held to be bad. The Tribunal, thus, erred in concluding otherwise. The Tribunal, therefore, was not justified in reversing the order of the assessing officer which was affirmed by the Commissioner (Appeals) also.”

VII. In the case of Thiru S. Shyam Kumar v. ACIT (2018) 99 taxmann.com 39 (Madras) : 2018 TaxPub(DT) 7162 (Mad-HC), it has been held by the Hon’ble Madras High Court that :–

“7. After elaborately hearing the learned counsels for the parties and carefully perusing the materials placed on record, we find that the decision arrived at by the Commissioner (Appeals) as well as by the Tribunal are cogent and clear. The entire issue revolves around the factual matrix as to whether the slips, which contain certain details, were pertaining to payments made by the assessee, not brought into the books of account. Before the assessing officer, the assessee has given more than one statement accepting the on-money payment. For the first time, before the Commissioner (Appeals), the assessee took a stand that the slips are only dumb sheets and there was no connection with the purchasing of residential property and further, the assessee sought to explain the notings to mean as monthly instalments and arranging of funds and not for payment. The Commissioner (Appeals), after considering the said statement, has given reasons as to why the statements of the assessee are not tenable. In fact, the assessee in no uncertain terms has accepted in his statement that the slip represents payment made for the purchase of property in question. The retraction is vague and a clear afterthought. Therefore, the Commissioner (Appeals) rightly considered the effect of the notings as well as the statement given by the assessee, wherein he had accepted the on-money payment. Once again before the Tribunal, the attempt of the assessee was to wriggle out of the entries in the slips by stating that they have no corroboration with that of the purchase of the immovable property.

8. The argument of the learned Counsel for the assessee is that there should be corroborative evidence to sustain the entries to link the same and treat it as an un-explained investment to bring the case under section 69 of the Act. In our considered view nothing more is required than the facts, which were considered by the assessing officer as well as the Commissioner (Appeals) and the Tribunal. The notings are clear and it is not any scribbling, which shows the figures and also shows whether the payments were in cash or in cheque. The retraction made by the assessee, after a period of two years, was rightly rejected as an afterthought.”
9. Whereas on the contrary, the assessee has relied upon the following decisions :–

(a) Contech Transport Service (P) Ltd. & Ors. v. ACIT (2009) 19 DTR 191 (Mumbai) : 2009 TaxPub(DT) 1114 (Mum-Trib) 28-11-2008

No addition can be made only on the basis of admission in statement under section 132(4).

(b) Chitra Devi v. ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 : 2002 TaxPub(DT) 1657 (Jod-Trib)

Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone.

(c) Kailashhen Manharlal Chokshi v. CIT (2008) 14 DTR 257 (Guj) : 2010 TaxPub(DT) 0190 (Guj-HC)

It is also to be seen as to whether an addition made is merely based on the statement recorded by the assessing officer under section 132(4) and whether any cognizance may be taken of the retracted statement. So far as case on hand is concerned, the glaring fact required to be noted is that the statement of the assessee was recorded under section 132(4) at midnight. In normal circumstances, it is too much to give any credit to the statement recorded at such odd hours. The person may not be in a position to make any correct or conscious disclosure in a statement if such statement is recorded at such odd hours. Moreover, this statement was retracted after two months. The main grievance of the assessing officer was that the statement was not retracted immediately and it was done after two months. It was an afterthought and made under legal advise. However, if such retraction is to be viewed in light of the evidence furnished along with the affidavit, it would immediately be clear that the assessee has given proper explanation for all the items under which disclosure was sought to be obtained from the assessee.

(d) Pullanguegode Rubber & Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) : 1973 TaxPub(DT) 0089 (SC)

An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect.

(e) Kailash Ben Mohanlal Choksi v. CIT (2008) 14 DTR (Guj) 257 : 2010 TaxPub(DT) 0190 (Guj-HC)

It is too much to give credit to a statement recorded at midnight where a person may not be in a position to make any correct and conscious discloses. Disclosure statement recorded at odd hours cannot be considered to be a voluntary statement.

(f) Hukum Chand Jain v. Income Tax Officer (2011) 334 ITR 197 (Rajasthan-HC) : 2011 TaxPub(DT) 1708 (Raj-HC)

Admission despite being an important piece of evidence was not conclusive and it was open to the assessee to show that it was not correct.

(g) Ajit Chintaman Karve v. ITO (2009) 311 ITR (AT) 66 (Pune) : 2009 TaxPub(DT) 0049 (Pune-Trib)

That merely because an offer was made having no cogent basis or approval of law that should not stop a taxpayer from correcting his mistake. It was the duly of the assessing officer to tax only the legitimate amount from a taxpayer.

The following facts further established that the exercise of surrender by the Revenue Authority was under duress. No effort was made at the time search and seizure to verify the genuineness of these rough papers. The revenue authorities just got hold of these papers and pressed the assessee for surrender. The assessee at that stage of search had no option but to agree with the authorities so as to escape further harassment. In the normal course if the surrender was genuine the revenue authorities should have and would have crossed checked the details and facts of amount mentioned in these pages. They should have verified at least a few entries of the accounted amount mentioned in these pages. No such exercise was done neither during the search nor during the course of assessment proceedings the post search enquiries do not reveal anything against the assessee. Merely harping on the rough pages and on the statement of the assessee under section 132(4) wont help in making additions. Further during the course of assessment proceedings parties have been called under section 131 who have purchased the flats and they have stated that no on money was paid by them. The learned assessing officer also called for information under section 133(6). Despite a written request the learned assessing officer has not furnished copies of statement recorded under section 131 and information collected under section 133(6) as these go in favour of the assessee. The assessee humbly requests that the records of the learned assessing officer may be called for the purpose and verified. Further a number of affidavits were furnished by the assessee from persons who had purchased the flats and in these affidavits it has been stated that no on money was paid. These affidavits have remained uncontroverted. Considering all these facts the addition made deserves to be deleted.

In view of the aforesaid facts it is submitted that the retraction of the assessee of surrender made of income of Rs. 27,50,31,216 is in order and is well substantiated with facts and documentary evidence. The same deserves to be accepted. No addition is warranted on the basis of the statement under section 132(4) of the Income Tax Act, 1961. The case of the assessee is further strengthened by the following circulars of the board wherein the revenue authorities have been advised not to obtain surrender of income during search proceedings.

19. We have gone through the decisions referred by both the parties but after analyzing the facts of the present case, we are of the opinion that no efforts were made by the assessing officer to find out the genuineness of the transactions noted in these papers. The minimum thing which was expected from the authorized officer was that he should have ascertained the date and the year of transaction and then he should have verified whether the accounted amount should in column ‘A’ was verifiable or not from the regular books of account. Even, this minimum exercise was not done by the assessing officer If the accounted money on alleged sale of flats as shown in these papers is not verifiable from the books of account then the natural conclusion which can be drawn by the prudent persons is that these papers are rough papers only. The papers contained only projections of imaginary sale value of the flats. Thus, these papers taken out from the computer are nothing but a part of the business strategy of the assessee. The revenue has not been able to link the transactions of these papers either with the material seized during the course of search or by way of post search enquiries. Since, all the controversy is revolving around these seized papers and admittedly these papers do not contain name of the buyers and also do not contain the date of transactions. It is an admitted fact that the assessee has executed certain sale deeds post search and in this respect, details have also been placed on record. The buyers have also filed their respective affidavits with the revenue authorities. The paper of surrender made do not contain requisite minimum details of transactions and it is a settled proposition of law that if a document does not contain any date and name and only contains numerical figures then such document is vague and dump document and no addition can be made on the basis of such document. In order to avoid any repetition, we would like to confine ourselves to the glaring errors in the investigation/verifications carried out by the revenue authorities. The learned Commissioner (Appeals) has already mentioned in detail the deficiencies/discrepancies in the verifications carried out by the revenue department and even according to the assessee, since the sale already stood completed, there was no occasion for the assessee to have shown outstanding amount against the sale of flats and apart from the above certain flats have been sold much after the date of search details of which have also been supplied by the assessee to the revenue authorities. Therefore, according to the assessee, it was all enough to establish that the papers were rough and deserves no consideration, therefore, surrender made on the basis of these papers was correctly retracted. The assessee had retracted on the surrender videLetter, dated 29-2-2016 to the DGIT(Inv.) Jaipur, copy of which has already been placed on record. The judgment cited by the learned CIT-DR are not applicable to the facts and circumstances of the present case as para materia contained in those judgments are altogether different from the facts of the present case. Since we have already discussed in detail the discrepancies pointed out in the investigation carried out by the assessing officer as well as the discrepancies in the papers at page No. 1 to 4 of Annexure-A2 and we are also conscious of the fact that it is a settled proposition of law that no addition can be made simply on the basis of solitary statement having no corroborative evidence. The assessing officer at the same time has not been able to brought on record any material to establish the truthfulness of the contents of pages 1 to 4 of Annexure-A2 on the basis of which surrender was made. In the case of Shri Ashok Kumar Jain (2014) 369 ITR 145 (Raj) : 2014 TaxPub(DT) 4500 (Raj-HC), the Hon’ble Jurisdictional High Court of Rajasthan has categorically held that if the assessee does not adhere to the surrender made then it is for the assessing officer to bring on record cogent material and other evidences to support the addition rather than simply rely on the statement.
20. The CBDT is an apex authority of the revenue and in this regard, the CBDT it had issuedInstructions/Circulars, dated 10-3-2003 and 18-12-2014, wherein it has categorically been directed that focus and concentration should be on collection of evidence of income instead of merely rely upon the statements made during search, for ready reference the same are reproduced below :–

(i) F.No. 286/2/2003-IT (Inv), dated 10-3-2003

No confessional statement in the course of search, seizure and survey.

10-3-2003

Confession of additional Income during the course of search & seizure and survey operation

GOVERNMENT OF INDIA MINISTRY OF FINANCE &COMPANY AFFAIRS DEPARTMENT OF Revenue CENTRAL BOARD OF DIRECT TAXES Room No. 254/North Block, New Delhi, the 10-3-2003

To

All Chief Commissioners of Income Tax, (Cadre Contra)

&

All Directors General of Income Tax (Inv.)

Sir

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 assessees 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

Yours faithfully,

Sd/-

S.R. Mahapatra

Under Secretary (Inv. II)

(ix) F.No. 286/98/2013-IT (Inv.II), dated 18-12-2014

Admissions of Undisclosed Income under coercion/pressure during Search/Survey

Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes, dated 18-12-2014 To 1. All Principal Chief Commissioners of Income Tax 2. All Chief Commissioners of Income Tax 3. All Directors General of Income Tax (Inv.) 4. Director General of Income Tax (I & CI), New Delhi

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. 3-7-2002 (2) CBDT Letter F.No. 286/2/2003-IT(Inv.II), dt. 10-3-2003 (3) CBDT Letter F.No. 286/98/2013-IT(Inv.II), dt. 9-1-2014

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.

2. 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.
3. 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 Income Tax Act, 1961 and/or recording a disclosure of undisclosed income under undue pressure/coercion shall be viewed by the Board adversely.
4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance.
5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard.
6. This issues with approval of the Chairperson, CBDT (K. Ravi Ramchandran) Director (Inv.)-II, CBDT.
7. The CBDT had issued instructions wherein it has been instructed that no surrender should be obtained and assessment should be completed not on the basis of such surrender but on the basis of material gathered during search. However, in the present case, the assessing officer had made additions solely on the basis of solitary statement made by the Director of the assessee. Even the Hon’ble Jurisdictional High Court of Rajasthan in the case ofCWT v. Sanwarmal Shivkumar (1988) 171 ITR 337 (Raj) : 1988 TaxPub(DT) 0589 (Raj-HC) has held that the officers of the Department are bound by the circulars of the board. Further in the following cases the Courts have held that circulars issued by the Board are binding :–

(i) Navnit Lal C Javeri v. Sen (1965) 56 ITR 198 (SC) : 1965 TaxPub(DT) 0212 (SC)

(ii) K.P. Varghese v. ITO (1981) 131 ITR 597 (SC) : 1981 TaxPub(DT) 0972 (SC)

(iii) UCO Bank v. CIT (1999) 237 ITR 889 (SC) : 1999 TaxPub(DT) 1303 (SC)

(iv) Union of India v. Azadi Bachoo Andolan (2003) 263 ITR 706(SC) : 2003 TaxPub(DT) 1429 (SC)

22. Although, learned CIT-DR has stressed on the fact that the presumption of correctness is attached to the statement recorded under section 132(4) of the Act and even the assessing officer has categorically mentioned that page No. 1 to 4 of Annexure-A2 were found and seized during the course of search, therefore, the assessee cannot claim these documents as dump documents. However, on the contrary, we found that the presumption available under section 132(4A) of the Act is limited to search period and is not available in the assessment proceedings. In the case ofP.R. Metrani v. Commissioner of Income Tax (2006) 287 ITR 209 (SC) : 2006 TaxPub(DT) 1868 (SC), it was held that any presumption available under the Act is always rebuttable. In the case of the assessee pages 1 to 4 of Annexure-A2, found during search have been established by the assessee as defective and even the assessing officer could not establish that the contents of these papers related to the business of the assessee and were true. In this respect, we draw strength from the decision of the Hon’ble Jurisdictional High Court and the Coordinate Bench of the ITAT as follows :–

(i) ACIT v. Thahrayamal Balchand (1980) 124 ITR 111 (Raj) : 1980 TaxPub(DT) 0359 (Raj-HC)

(ii) CIT v. SMS Investment Corporation Pvt. Ltd. (1994) 207 ITR 364 (Raj) : 1994 TaxPub(DT) 0652 (Raj-HC)

(ii) CIT v. Kishanchand (1993) 45 TTJ (Jp) 20 : 1993 TaxPub(DT) 0555 (Jp-Trib)

23. From the totality of the facts and circumstances of the case as narrated and discussed, we are of the considered view that the mere admission is not conclusive as to the truth of the matter. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances in which it is made. It can be shown to be erroneous or untrue. Therefore, addition made merely and solely on the basis of confession without any corroborative evidence was not sustainable in law and moreover the said confession made by the assessee was subsequently retracted and since the addition was not supported by any cogent, convincing independent documentary evidence, therefore, the same was correctly found to be not sustainable by the learned Commissioner (Appeals).
24. No new facts and circumstances have been brought before us in order to controvert or rebut the findings so recorded by the learned Commissioner (Appeals), therefore, we see no reason to interfere or deviate from the findings so recorded by the learned Commissioner (Appeals). Therefore, we uphold the order passed by the learned Commissioner (Appeals)qua this issue.
25. Ground No. 2 of the appeal is regarding deletion of addition of Rs. 2,50,00,000 by the learned Commissioner (Appeals). The learned CIT-DR has relied on the order of the assessing officer.
26. Learned DR relied upon the orders passed by the assessing officer and learned AR of the assessee has reiterated the same argument as were raised before the learned Commissioner (Appeals) and also filed written submissions in order to controvert the ground of appeal raised by the revenue, the same is reproduced below :–

“The assessee made following submission before the learned Commissioner (Appeals) and who has deleted the entire addition made by the learned assessing officer after considering the submission of the assessee and has given the finding that assessing officer has simply relied upon the sworn statement of Shri Vijay Kumar Jain Director of the appellant company without placing any further corroborative evidence to prove his contention. Therefore, assessing officer has failed to establish the contrary. Following the same principle other addition was also made of Rs. 2.5 Crore without carrying out any enquiry or placing any corroborative evidence in support of his contention is hereby deleted. The submission made before the learned Commissioner (Appeals) is quoted as under :–

“The learned assessing officer has made addition of Rs. 2,50,00,000 as per para 9(b) of the assessment order appearing on page 28. The same is reproduced as under :–

“It is worthwhile to mention here that vide show cause notice referred in above paras of this order assessee was asked to state its case in respect of surrender of undisclosed income of Rs. 2.50 Cr. on account of any discrepancy in the papers seized during the course of search proceedings and same was confirmed in the statements recorded under section 132(4) of the Income Tax Act, 1961. But nowhere in the reply furnished by the assessee the matter of Rs. 2.50 Cr. has been discussed/mentioned. Therefore assessee has nothing to say on this issue and therefore it is considered that same is acceptable to it.

Considering the above facts undisclosed income of Rs. 2.50 Cr. surrendered by the assessee on account of any discrepancy in the papers seized during the course of search proceedings is treated as unexplained expenditure under section 69C of the Income Tax Act, 1961 and same is added to the total income of the assessee. Therefore, as per section 115BBE(1)(a) the income of Rs. 2,50,00,000 liable for tax @ 30%. As per sub-section 2 of section 115BBE of the Income Tax Act, 1961 no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of this Act.”

The perusal of the aforesaid para of the assessment order reveals that the learned assessing officer has made addition with reference to the statement recorded under section 132(4) wherein he reportedly deposed that for any other discrepancy in the papers seized surrender of Rs. 2,50,00,000 was made. Obviously, the surrender was made conditionally and subject to discovery of any discrepancy in the seized papers. Now the learned assessing officer has not pointed out any paper in which any discrepancy has been found. The addition is totally opaque. Only the learned assessing officer knows why the addition has been made. It has no legs and no basis. Further the relevant statement of the assessee is also quoted to support the contention that the surrender was totally conditional.

The perusal of the statement reveals that the assessee has stated that in case any discrepancy is found in the papers seized with reference to books of accounts in that case the surrender of Rs. 2,50,00,000 shall be valid. Now the learned assessing officer has not pointed out any such discrepancy, hence the addition made is totally misplaced.

Provisions of section 69C have been invoked by the learned assessing officer while making the aforesaid addition. These provisions are not applicable at all. The same are quoted below :–

“69C. Unexplained expenditure, etc.–Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the assessing officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year:

Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.”

The perusal of the aforesaid provisions reveals that it is applicable in the following conditions :–

(i) When the assessee has incurred any expenditure.

(ii) When assessee fails to offer no explanation about the source of such expenditure.

It is submitted that in the case of the assessee no such conditions exist. The learned assessing officer has not pointed out any expenditure incurred by the assessee of which the source could not be explained. In view of this it submitted that the addition has been made by the learned assessing officer without any basis and just for the sake of addition. The same deserves to be deleted.”

The learned Commissioner (Appeals) on the basis of finding given in the ground no. 2 has also deleted the addition of Rs. 2,50,00,000 that no corroborative evidence is there to sustain this addition and it was made only on the basis of statement and nothing is on record to suggest that the assessee has earned this much of income which is not recorded in the books of accounts. Therefore the finding of the learned Commissioner (Appeals) deserves to be upheld.”

27. We have heard the rival contentions of both the parties and have perused the material placed on record. Before we decide merits of this ground, it is necessary and imperative to evaluate the orders passed by the learned Commissioner (Appeals) while disposing of this ground. The learned Commissioner (Appeals) has dealt with this ground in para 4.2.1 of its order and the same is reproduced below :–

“4.2.1 I have duly considered assessee’s submissions and also carefully gone through the assessee order. Here on this issue, assessing officer has simply relied upon the sworn statement of Shri Vijay Kumar Jain Director of the appellant company without placing any further corroborative evidences to prove his contention. Therefore, assessing officer has failed to establish the contrary. Following the same principle as elaborated in Ground No. 1, addition made of Rs. 2.5 crore, without carrying out any enquiry or placing any corroborative evidence in support of his contention, is hereby deleted. Assessee’s appeal stands allowed in Ground No. 2.”

After hearing both the parties at length and after gone through the facts of the present case, we are of the opinion that the assessing officer had made addition by simply relying on the statement of Shri Vijay Kumar Jain, Director of the assessee without placing any further corroborative evidence to prove this contention. Since, we have already upheld the order of the learned Commissioner (Appeals) with regard to ground No. 1 raised by the revenue, therefore, we do not find any reason to interfere in the finding so recorded by the learned Commissioner (Appeals) with regard to ground No. 2 raised by revenue before us. Hence, we uphold the same.

28. Now we take revenue appeal beingITA No. 323/JP/2017.

In this appeal, the revenue has raised only one effective ground. This ground of appeal is common to the ground No. 1 raised by the revenue in ITA No. 324/JP/2017. Since the facts and circumstances, submissions made by both the parties as well as judicial pronouncements referred by both the parties are pari materia to the facts and submissions made in the ground No. 1 raised by the revenue in ITA No. 324/JP/2017. Therefore, we do not find any reason to interfere in the finding so recorded by the learned Commissioner (Appeals) and hence, we uphold the same.

29. In the result, both the appeals of the revenue are dismissed.