Search and seizure: Statement under section 132(4) vs. Evidentiary value

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Search and seizure: Statement under section 132(4) vs. Evidentiary value

Search and seizure operation under section 132 were carried out at residential premises of assessee. AO made addition of certain amount on account of disclosure made during the search under section 132(4). Assessee submitted that the addition was made merely on the basis of statement of his son wherein some additional income on account of loose papers was accepted. However, all those documents were properly recorded in the regular books of account of the persons to which those documents actually pertained. Therefore, the assessee while filing of his return of total income did not consider the amount of additional income, which was accepted by his son at the time of search on account of documents/loose papers. 

It is held that  It was found that the addition was made on the basis of admission of assessee’s son during the course of search. It was contended by the assessee that all those documents were properly recorded in the regular books of account of the persons to which those documents actually pertained. However, it was found that the AO did not establish the fact that any of the documents as found and seized was not recorded in the books of account of the persons to which those documents actually pertained. Thus, there was force in the contention of the assessee that without referring to any of the documents, the same could not be binding on the assessee and the same could not be used against the assessee as evidence and that too in search assessment proceedings. Hence, the AO was directed to delete the impugned addition.

Decision: In assessee’s favour.

Referred: Pullangode Rubber & Produce Company Ltd. v. State of Kerala & Anr. (1973) 91 ITR 18 (SC) : 1973 TaxPub(DT) 0089 (SC), Kailashben Manharlal Chokshi v. CIT (2010) 328 ITR 411 (Guj) : 2010 TaxPub(DT) 0190 (Guj-HC), Ultimate Builders v. ACIT [ITA No.134/Ind/2019 dt. 9-8-2019 (Ind)] : 2019 TaxPub(DT) 6577 (Ind-Trib) and ACIT v. Shri Sudeep Maheshwari & Vice-Versa [ITA No.524/Ind/2013 dt. 13-2-2019 (Ind)].

 

IN THE ITAT, INDORE BENCH

KUL BHARAT, J.M. & MANISH BORAD, A.M.

Ajit Singh Melhotra v. ACIT

IT(SS)A No. 63/Ind/2019

22 October, 2020

Appellant by : S.N. Agrawal, CA

Revenue by : Ashima Gupta, CIT-DR

ORDER

Kul Bharat, J.M.

This appeal by the assessee is directed against the order of learned Commissioner (Appeals) (in short ‘learned CIT (A)’-3, Bhopal, dt. 8-2-2019 pertaining to assessment year 2016-17.

The assessee has raised following grounds of appeal:

“1.That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in maintaining the addition of Rs. 10,00,000 to the total income of the appellant merely on the basis of statement of his son as recorded under section 132(4) of the Act without properly appreciating the facts of the case and submission made before him even when there was no material evidence corroborating such addition to the total income of the appellant. Rs. 3,09,000

2. That on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in maintaining the interest as charged by the assessing officer under section 234A and 234B of the Act. Rs. 1,23,888

3. The appellant reserves his right to add, alter and modify the grounds of appeal as taken by him”.

2. The facts in brief relating to addition of Rs. 10,00,000 are that the assessee is an individual and having income from agricultural activities etc. and various firms. Search and seizure operation under section 132 of the Income Tax Act, 1961 (hereinafter referred as the Act) were carried out on residential premises of assessee on 5-10-2015. In response assessee filed return of income for assessment year 2016-17 on 6-3-2017 declaring total income of Rs. 13,67,670.

The assessing officer made addition of Rs. 10,00,000 on account of disclosure made during search under section 132(4) of the Income Tax Act.

3. Aggrieved against this the assessee preferred an appeal before the learned Commissioner (Appeals) who also confirmed the addition made by the assessing officer on the ground that the retraction from the statement was belated and an after-thought. Now the assessee is in appeal before this Tribunal.

4. Learned counsel for the assessee submitted that the addition was made merely on the basis of statement of assessee’s son wherein additional income at Rs. 10,00,000 on account of loose papers was accepted. However, all these documents were properly recorded in the regular books of accounts of the persons to which these documents actually pertained. Therefore, the assessee while filing of his return of total income did not consider the amount of additional income which was accepted by his son at the time of search on account of documents/loose papers.

5. On the contrary learned Departmental Representative (DR) opposed the submissions of the learned counsel for the assessee and supported the orders of the authorities below.

6. We have heard rival submissions and perused the material available on record and gone through the orders of authorities below. We find that the addition was made on the basis of admission of assessee’s son during the course of search. It was contended before us, that all these documents were properly recorded in the regular books of accounts of the persons to which these documents actually pertained. However, we find that the assessing officer did not establish the fact that any of the documents as found and seized was not recorded in the books of accounts of the persons to which these documents actually pertained.

Therefore, we find force in the contention of the assessee that without referring to any of the documents was not binding on the assessee and the same cannot be used against the assessee as an evidence and that too in search assessment proceedings. Our view is supported by ratio laid down in the following judicial pronouncement:

1. M/s Ultimate Builders v. ACIT, ITA No.134/Ind/2019 dt. 9-8-2019 (Ind) : 2019 TaxPub(DT) 6577 (Ind-Trib);

2. ACIT v. Sudeep Maheshwari, ITA No.524/Ind/2013 dt. 13-2-2019 (Ind);

3. Kailashben Manharlal Chokshi v. CIT (2010)) 328 ITR 411 (Guj) : 2010 TaxPub(DT) 0190 (Guj-HC);

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

7. On consideration of above facts/submissions in the light of judicial pronouncements (supra) and the fact that no adverse material was filed by the revenue to controvert the factual submission advanced before us, we direct the assessing officer to delete the addition of Rs. 10,00,00.

8. In result, appeal filed by the assessee is allowed.

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