Income Tax Appellate Tribunal - Indore
Dcit Central-2, Bhopal vs M/S. Ramani Infrastructure , Bhopal on 20 July, 2021
आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE HON'BLE RAJPAL YADAV, VICE PRESIDENT
AND
HON'BLE MANISH BORAD, ACCOUNTANT MEMBER
VIRTUAL HEARING
IT(SS)A No.211/Ind/2019
Assessment Year 2017-18
DCIT(Central)-II
Bhopal : Appellant
V/s
M/s. Ramani Infrastructure
61B, Kasturba Nagar,
Bhopal
PAN No.AAGPH6331R : Respondent
IT(SS)A No.212/Ind/2019
Assessment Year 2017-18
DCIT(Central)-II
Bhopal : Appellant
V/s
M/s. Aaditya Food Products
61B, Kasturba Nagar,
Bhopal
PAN No.AANFA4951D : Respondent
Ramani Infrastructure & others
IT(SS)A No.211/Ind/2019, & others
IT(SS)A No.213/Ind/2019
Assessment Year 2017-18
DCIT(Central)-II
Bhopal : Appellant
V/s
Smt. Seema Hariramani
E-7/653, Arera Colony,
Bhopal
PAN No.AAUPH8769H : Respondent
IT(SS)A No.214/Ind/2019
Assessment Year 2017-18
DCIT(Central)-II
Bhopal : Appellant
V/s
Shri Harish Hariramani
C/o Madhu Enterprises,
61B, Kasturba Nagar,
Bhopal
PAN No.AAGPH6334L : Respondent
IT(SS)A No.216/Ind/2019
Assessment Year 2017-18
DCIT(Central)-II
Bhopal : Appellant
V/s
Shri Arun Hariramani
2
Ramani Infrastructure & others
IT(SS)A No.211/Ind/2019, & others
C/o Top-N-Town,
11, New Market,
Bhopal
PAN No.AAGPH6331R : Respondent
Revenue by Shri S.S. Mantri, CIT-DR
Assessee by Shri Girish Agrawal, Shri Vijay
Bansal & Miss Nisha Lahoti, ARs
Date of Hearing 28.05.2021
Date of Pronouncement 20.07.2021
ORDER
PER MANISH BORAD, A.M
The above captioned appeals filed at the instance of the assessee(s) are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-3 (in short 'Ld. CIT], Bhopal dated 04.07.2019 and 31.08.2020 which are arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the 'Act') dated 26.12.2018, 29.12.2018, 21.12.2018 framed by ACIT-(Central)-II, Bhopal.
2. As the issues raised in these appeals are common and all the assessees relate to same group, at the request of all the parties these appeals were heard together and are being disposed of by this common order for sake of convenience 3 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others and brevity.
Following common grounds of appeal have been raised in ITA No.211,212,213 & 214,/Ind/2019 On the facts and circumstances of the cases, the Ld. CIT(A) erred in deleting the addition of Rs.2,00,00,000/- made by the assessing officer on account of undisclosed income admitted in the statement made u/s 132(4) of the Income Tax Act 1961.
Following Grounds of appeal have been raised in ITA No.216/Ind/2019 On the facts and circumstances of the cases, the Ld. CIT(A) erred in deleting the addition of Rs.1,50,00,000/- made by the assessing officer on account of undisclosed income admitted in the statement made u/s 132(4) of the Income Tax Act 1961.
3. From perusal of the above grounds we observe that the common grievance of the revenue is against the finding of Ld. CIT(A) deleting the addition made by the ld. AO on account of undisclosed income admitted in the statement made u/s 132(4) of the Act. As agreed by all the parties we will adjudicate this common issue on the basis of the facts of assessee namely Ramani Infrastructure and our decision shall apply mutatis mutandis on the remaining appeals of the revenue in case of other assessee(s).
4Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
4. Brief facts of the case as culled out from the records are that a search action u/s 132 of the Act was carried out on 30.08.2016 at the business premises of various concerns and business associates of M/s. Ramani Group and also at the residential premises of the directors/partners/associates. M/s. Ramani group is engaged in various activities including manufacturing and distributing of ice cream, civil construction, developer and builder. During the course of search statement of Mr. Arun Hariramani was recorded on oath u/s 132(4) of the Act, on 03.09.2016 and was required to furnish the explanation/clarification regarding the incriminating documents & discrepancies found during the course of search on various premises of the group. In reply and after discussing with other directors/promoters and with their consent, he admitted total undisclosed & additional income of Rs.25,00,00,000/-. He also stated that he will give the breakup of the surrender income on a near date. Thereafter on 27.10.2016 during the post search proceedings, the statement of Shri Vijay Hariramani, who is also said to be one of the key person of the group, was recorded on oath on 27.10.2016 and he also confirmed the disclosure of unaccounted 5 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others income of Rs.25,00,00,000/- and also submitted bifurcation of Rs.25,00,00,000/- under the name of 17 assessees. In this statement Mr. Vijay Hariramani has not referred to any assessment year for which the income has been offered nor any source of such surrendered income nor any specific asset/investigation/expenditure were made. The bifurcation of surrendered amount was more in the nature of tentative/estimated/ projected bifurcation.
5. Subsequently, an application was filed before Income Tax Settlement Commission by some of the concerns/individuals of the M/s. Ramani Group( not including the assessees in the instant appeal). The Income Tax Settlement Commission passed an order on 24.12.2018 u/s 245D(4) of the Act and accepted the surrendered income at Rs.24,27,91,005/- and taxes due already stand paid. In respect of remaining assessees no undisclosed income was offered to tax on the ground that no incriminating material was found in their case during the course of search.
6. Subsequently, Ld. AO issued and served notice u/s 153A of the Act for A.Y. 2011-12 to 2016-17 of the assessee and notices u/s 6 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others 143(2) & 142(1) of the Act for A.Y.2017-18. The instant appeal relates to A.Y.2017-18. This was the year during which search was carried out. Return was filed on 04.11.2017 declaring income of Rs.7,23,390/-. Necessary information called was duly supplied. Ld. AO confronted the assessee with regard to the surrender of Rs.25,00,00,000/- made for by the group for various concerns/individual and in the breakup of the surrender amount Rs.2,00,00,000/- was stated to be surrendered in the concerns M/s. Ramani Infrastructure. In reply, it was submitted that the alleged surrender of Rs.25,00,00,000/- was an estimated/projected figure and after analyzing the documents seized and other incriminating material, undisclosed income of Rs.24,27,91,005/-
was offered to tax in the application made before the Income Tax Settlement Commission and the same was accepted vide order dated 24.12.2018. Further it was submitted that since no incriminating material during search was found with regard to the assessee firm namely Ramani Infrastructure additional income of Rs.2,00,00,000/- was not offered to tax. However, Ld. AO was not satisfied and he was of the view that since the key person of the 7 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others M/s. Ramani Group specifically stated the surrender of Rs.2,00,00,000/- as undisclosed income during the statement given u/s 132(4) of the Act, the said amount is liable to be taxed in the hands of assessee. He, accordingly made the addition of Rs.2,00,00,000/- and assessed the income at Rs.2,07,23,390/-.
7. Aggrieved assessee preferred an appeal before the ld. CIT(A) and succeeded as the Ld. CIT(A) deleted the addition after appreciating the fact that the alleged surrender of Rs.25,00,00,000 by the key person of the M/s. Ramani Group was in the nature of tentative /estimated surrender and M/s. M/s. Ramani Group has offered undisclosed income of Rs.24,27,91,005/- to tax and has filed the application before Income Tax Settlement Commission in the names of those assessees for which the incriminating material were related and thus honoured the surrender. The ld. CIT(A) further referring to various judicial decisions held in favour of the assessee stating that since no incriminating material pertaining to assessee was found during the course of search nor any reference was made to any seized document before making the impugned addition, in the assessment order, addition for Rs.2 cr. was not 8 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others called for, merely on the basis of statement given u/s 132(4) of the Act. Reference was also made to circular No.286/2/2003/IT(Investigation) dated 10.03.2003 and circular No.286/98/2013-IT(Investigation-II) dated 18th December, 2014.
8. Aggrieved revenue is in appeal before the Tribunal. Ld. Departmental Representative (DR) vehemently argued supporting the orders of Ld.AO and also submitted that the assessee had made the surrender on oath u/s 132(4) of the Act during the search proceedings on 03.09.2016 and again confirmed the same surrendered amount in another statement recorded on 20.07.2016.
Complete bifurcation of the amount of Rs.25,00,00,000/- given in this declaration. The assessee has not made any retraction from surrender so made in the various concerns/individuals. Ld. DR further referred to the following finding of Ld. AO in support of the contentions of setting aside the finding of Ld. CIT(A):
6.4 The submission of the assessee has been considered carefully but not found to be acceptable for following reason:-
(i) On perusal of the copies of statements as scanned above, it is seen that statement of Shri Arun Ramani was recorded on Oath uls 132(4) of the Act, at the Head Office ofRICL on 03109/2016 as well as during the course of revocation of prohibitory order at the Factory 9 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others premise of RIeL on 27/10/2016 wherein the assessee has Shri Arun ram ani himself declared in his own hand writing that statement was given without fear and without coercion and he js in sound state of mind. The statement was further read, understood and accepted by key persons of the group i.e. Shri Prakash Hariramani, Shri Vijay Hariramani which proves that there was no coercion and assessee wilfully offered the voluntary disclosure.
II. It is also important to mention ether that the assessee firm had time to file its objections if any, in case of voluntary disclosure of income in front of Department before the notices u/s 153A has been sent to the assessee. But the assessee failed to do so and assessee is only raising its objection in the last submission dated 17/12/18.
(iii) The disclosure of additional income is based on the vanous incriminating documents found, seized and confronted to Hariramani brothers, during the course of search action from various premises. The documents / facts/incriminating material clearly indicates that the assessee firm is involved in businesses of the Ramani group of companies and firms and is earning unaccounted income from the same which is admitted after due consultation from partners.
(iv) The assessee firm should have retracted before initiating assessment proceedings with explanation and evidences. It has not been done by firm. The assessee firm was given enough time and opportunity to explain and justify it as the statement under section 132(4). It is assessee's liability to explain that the statement admitted during search is untrue.
(v) The statement recorded under section 132(4) of the act is not simply a confession of the assessee in context with issue enumerated during the course of proceedings. It is piece of evidences in terms of Indian Evidence Act. It is not retraction from the commitment but it is deviation and avoidance of evidence gathered by the department. Reliance is placed on -.e-. the decision of the Punjab and Haryana High Court in the case of Rakesh Mahajan vs. CIT cited at 642 of 2007 (Taxpert) and 214 CTR 218 wherein it has been held that "It is well settled that admissions constitute best price of evidence because admission are self-harming statements made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one's own interest unless such a 10 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others statement is true."
The statement recorded under section 132(4) is an evidence to be used by the department and declaration made by the assessee is itself evidence in its possession. The statement recorded before the authority is assessee's confession to discrepancies and irregularities, hence if any retraction is made it is assessee's liability to discharge onus.
Section 110 of the Evidence Act is material in this respect which stipulates that when the question is whether any person is owner of anything of which he is shown to be in possession, the onus of proving that he is not the owner is on the person who affirms that he is not the owner. In other words, it follows from the well-settled principle of law that normally, unless contrary is established, title always follows possession. It is evident from above discussion that the assessee has to discharge onus for retraction of surrendered income. The assessee failed to do so. Retraction without having reasonable cause and without any supporting evidences is not acceptable.
The question of evidentiary value of a statement recorded uls.I32 (4) of the Act is no more res integra. When an assessee had made a statement of facts, he can have no grievance ifit is taxed in accordance with that statement. The reasonableness of the AO's approach may be appreciated that he had not made any enhancement or substitution in the amounts as offered/disclosed in the said statement. It was a statement pertaining to certain facts which were in the exclusive knowledge of the assessee. Those facts were disclosed to the Revenue Department. Thereupon those were accepted by the Revenue Department. Those facts were of such nature that there was no scope of existence of any other evidence. Affirmation of facts at best can only be done by the assessee in its own volition. If the assessee wanted to correct the said statement, then it was open for it to -=show the evidences to retract those facts. But no such evidence was furnished though an another chance was granted while explaining the entire issues at search proceeding stage which means that the assessee had no evidence at all in its possession. It is here to clarify that the statute prescribes the power of the Revenue Authorities for recording a statement on the day of search operation. In this context, case law cited few decisions 11 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others wherein there was a discussion of retraction of a statement or the legal sanctity of statement in the eyes of Income-tax Laws. It is to clarify that then is a difference in a statement recorded under the proceedings carried out u/s. 132 of the Act of the Act. The Income-tax Act, wherever thought fit and necessary has conferred such powers to examine a person on oath. Those powers are therefore has been expressly provided. In this context Section 132(4) of the Act enables an authorized officer to examine a person on oath. Such a Sworn statement _ made uJs.132 (4) of the Act, thus can be used as evidence under the Act. A statement recorded uJs. 132(4) of the Act has a far reaching consequell(;e because if it is proved to be false which the assessee only knows or believes to be false or the assessee does not believe it to be true, it is assessee's liability to explain and prove it. If any coercion or force are not proved, and assessee has voluntary declared undisclosed income and has-not made retraction within three month of the statement recorded, onus lies with the assessee to prove that the declaration is made out of misconception. The assessee has not made such efforts. The learned Ahmadabad Bench in the case of DCIT v. Bhogilal Moolchand 96 lTD 344 held that statement given under section 132(4) is not conclusive and person can retract under certain circumstances. However, time gap between statement and retraction of statement is one of the important points to be taken into account to decide as to whether the statement was given under mistaken belief of either fact or law. However when assessee retracted statement made under section 132(4) after three and a half months of disclosure and there was not an iota of evidence to support retraction then AO was justified in not accepting assessee's retraction The decision held in the case of Carpenters Classics (Exim) (P) Ltd. V s DClT ( ITA T, Bang) 108 lTD 142 squarely applicable in the case .It is held that :
When statement was made voluntary and was not alleged to have been obtained under threat or coercion, onus was on assessee to prove that said declaration was made under any misconception of facts ;;- Since assessee had not taken any steps to rectify its declaration before authorities before whom such declaration was made, there was no valid reason for retraction of same after a gap of about two and a half months."
The submissions made by the learned Counsel thoughtfully considered and are of the view that there is no merit in his 12 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others explanation. It is well settled that admissions constitute best piece of evidence because admissions are self-harming statement made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one's own interest unless such a statement is true. Section 17 of the 1872 Act defines admission to be a statement, oral or documentary, which suggests an inference as to any fact in issue or relevant fact which has been made by a party to proceedings or its agent and others as per details given in section 19, 20, 21, 22 and 23 of the 1872 Act. If ad admission has been made by a party to proceedings under section 17 and 18 of the 1872 Act, suggesting an inference that the income was unexplained then such an admission is an admissible piece of evidence. Admissions have also been regarded as substantive evidence because it sustains their veracity from the fact that maker has said something against its own interest.
9. Ld. DR also referred to the paper book filed on 04.01.2021 (page no.1 to 26) which contains the copy of application made by the M/s. Ramani Group before the Income Tax Settlement Commission.
10. Per contra, Ld. counsel for the assessee submitted that in view of the settled judicial precedence no addition was called for in the hands of assessee merely on the basis of statement given u/s 132(4) of the Act without having reference to any incriminating material found during the course of search. Ld. counsel for the assessee further submitted that M/s. Ramani Group duly honoured the 13 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others surrender of Rs.25,00,00,000/- made during the course of search but offered it only name of those concerns/assessees for which incriminating material was found. Hon'ble Income Tax Settlement Commission has duly accepted the surrender of Rs.24,27,91,005/-
and the tax paid thereon. Copy of the order of Hon'ble Income Tax Settlement Commission is enclosed in the paper book filed on 10.02.2021. Further Ld. counsel for the assessee referred to following written submissions filed on 18.12.2020:
A. Statements on the basis of which addition of Rs. 2 crores has been made are vague, bald and adhoc without having any nexus to incriminating material found during the course of search
1.During the search proceedings, statement of Shri Arun Hariramani (assessee) was recorded u/s 132(4) at the business premises of Ramani Ice-cream Company Private Limited which commenced on 03.09.2016 and was concluded on 04.09.2016. Various questions were raised by the authorized officer relating to the documents seized both from the residential and business premises. Shri Arun Hariramani (assessee) explained these seized documents.
In response to question number 25, Shri Arun Hariramani made a lump sum disclosure of additional income of Rs. 25 crores for himself and on behalf of his family members, proprietorship concerns, companies and partnership firms comprised in the group. It was also stated that by him that he would provide assessee-wise and assessment year-wise breakup of the amount surrendered for himself and on behalf of other family members, proprietorship concerns and partnership firms comprised in the group.
2.Reference may please be made to the reply of Shri Arun Hariramani (assessee) in response to question number 25 at PB 3 reproduced as under -
14Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others मे एवं मेरे प रवार के सद य, "........मे सद य bhagidar, directors एवं proprietor असमथ रहे इनम दज एवं उनके आधार पर अघोिषत आय एवं िनवेश का मेने आकलन "कया एवं इस आकलन के अनुसार मे, मेरे प रवार एवं group क# सारी firms एवं companies तथा proprietorship firm (Ishaan Builders and Developers को छोड़कर) मे रािश Rs. 25 करोड़ (Rs.( Twenty five crores) ki अघोिषत आय िनयिमत आय के अित र$ करारोपन हेतु सम&पत कर रहा 'ं। म( िनधा रत एवं कर िनधा रण वष वार breakup "दनांक तक िवभाग के सम* + तुत कर दूग ं ा।...."
ा।
3.From the above following is evidently clear -
a. Disclosure made on behalf of other family members, proprietorship concerns, companies and partnership firms comprised in the group b. Lump sum disclosure of additional income of Rs. 25 crores which is vague, bald and adhoc c. No reference to any seized document/incriminating material on the basis of which disclosure of additional income has been made d. He shall provide assessee-wise and assessment year-wise breakup for the amount disclosed as additional income for himself and on behalf of other family members, proprietorship concerns, companies and partnership firms comprised in the group e. Disclosure made does not relate to any specific assessment year f. Disclosure made was acknowledged by Shri Prakash Hariramani, Shri Harish Hariramani and Shri Kishore Hariramani on 04.09.2016 as tentative and without reference to any breakup of Rs. 25 crores as to each assessee, each year and respective head of income any of the other family members/group concerns
4.Thus, disclosure of additional income made by Shri Arun Hariramani (assessee) is vague, bald and adhoc without reference to any incriminating material/seized document, money, bullion, jewellery or other valuable article or things.
5.In the post search proceedings, statement of Shri Vijay Hariramani was recorded u/s 132(4) at his residence on 27.10.2016. In question number 2, it has been mentioned by the authorized officer that Shri Arun Hariramani and other family members, partners, proprietors and directors of the companies could not explain the seized documents. This is an incorrect fact.
The correct facts are - On reference to the statement of Shri Arun Hariramani recorded u/s 132(4) at the factory premise on 03.09.2016, 15 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others from question no. 1 to 24 authorized officer enquired about the seized documents which were duly explained by him.
1. The authorized officer grossly erred in stating that Shri Arun Hariramani failed to explain the seized documents.
6.The fact that declaration of additional income has been made by one person on behalf of others is corroborated from the question number 2 raised by the authorized officer to Shri Vijay Hariramani. Relevant extract of this question is reproduced as under -
"....../ी/ी अ1ण ह ररामनी ने आपके प रवार एवं group क# सम त firms, Companies और proprietorship concerns (M/s Ishaan Builders & developers ko छोड़कर) rs 25.00 करोड़ (प4ीस करोड़ 5पये) क# अघोिषत आय को िनयिमत आय के अित र$ उपरो$ सम त Firms, Companies और proprietorship concerns (M/s Ishaan Builders & developers ko छोड़कर) क# अघोिषत आय के 1प म करारोपण हेतु सम&पत "कया....."
"कया
2. The authorized officer in the question itself has stated that additional income was declared by Shri Arun Hariramani on behalf of other family members, partnership firms, companies and proprietorship concerns.
7.In response to the question number 2 raised in the statement recorded at his residence, Shri Vijay Hariramani stated that -
".......In the course of search a lump sum disclosure of the income of the group Rs. 25.00 Crores (rupees twenty five crores) as a whole was however made...............However, subject to rough analysis and memory, based on seized records I herewith accept and I am giving a chart therein tentative figures of the income of the various assessee in the group which may constitute a tentative break up of the disclosed income. The tentative figures of income are subjected to modification/correction/revision with respect to individual assessee, quantum of income....." [AO page 10]
8.From the above following is evidently made out -
a. Lump sum disclosure of income for group - The Income Tax Act, 1961 defines the term 'person' u/s 2(31). This definition does not mention any taxable entity as "group". Thus, there is nothing as "income for group"
which is chargeable to tax.
b. Breakup of the amount disclosed is subject to rough analysis, memory and seized records c. Tentative figures of the various assesses of the group 16 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others d. Tentative figures are subject to modification/correction/revision with respect to individual assessee and the quantum of income
9.The addition made on the basis of such tentative figures and rough analysis and which was subject to modification/correction/revision has no legal sanctity and factual basis.
10. Statement of Shri Prakash Hariramani was recorded u/s 132(4) on 30.08.2016 at his residence E-1/193, Arera Colony, Bhopal. In response to question number 31 he has stated that -
".......संसंपूण search & seizure क# काय वाही के दौरान हमारा रवैया सहयोगा:मक एवं सौहादीपूण रहा। म( आपको आ; त करना चा'ंगा "क रमानी =ुप िजसमे मु>य 1प से RICL, आ"द:य फू @स, @स Aिनटी सं था, था अCय पाट नरिशप नरिशप फाम , पाट नस , डायरे Eटस , +ोपराइटर, +ोपराइटर समूह म हम प4ीस (25) ( करोड़ 5 आपनी अघोिषत आय 1प म संबिं धत वष म िनण य िलया है। िजसका शीष वार (head ( wise) एवं िवत वष िनण य िलया जाना हमारे Gारा शेष है िजसका िववरण म अगले 24--48 घंटे म म( िवभाग को उपलIध करा दूगं ा।
ा।......"
11. From the above the reply of Shri Prakash Hariramani following is evidently made out-
a. Disclosure made on behalf of others namely RICL, Aaditya Foods, Trinity Organization, partnership firms, partners, directors, proprietors and group.
b. Lump sum disclosure of additional income of Rs. 25 crores which is vague, bald and adhoc c. No reference to any seized document/incriminating material on the basis of which disclosure of additional income has been made d. He shall provide assessee-wise, head-wise and assessment year- wise breakup for the amount disclosed as additional income on behalf of other namely RICL, Aaditya Foods, Trinity Organization, partnership firms, partners, directors, proprietors and group e. Disclosure made does not relate to any specific assessment year
12. Summary of the above mentioned statements is as under -
Particulars Statement of Shri Arun Hariramani Statement of Shri Vijay Statement of Shri Prakash (assessee) Hariramani Hariramani 17 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Disclosure of Statement recorded on 03.09.2016 at Statement recorded on Statement recorded on additional the factory premise E-1/200, Arera 27.10.2016 at his 03.09.2016 at his residence income of Rs. Colony, Bhopal [PB 102-103] residence E-1/95-96, Arera E-1/193, Arera Colony, 25 crores Colony, Bhopal [AO page Bhopal [ ] Made a lump sum disclosure for himself 10] and on behalf of other family members, He stated that the group has proprietorship concerns, companies and Tentative figures for decided to make a disclosure partnership firms comprised in the breakup of the additional of Rs. 25 crores towards group. It was also stated by him that he income were based on undisclosed income for which would provide assessee-wise and year rough analysis and details will be provided later wise breakup of the amount so memory, based on seized on, with assessee-wise and disclosed. records subject to year-wise breakup.
modification/correction/rev
ision with respect to
individual assessee and
quantum of income
From the above table it is clear that -
a. Shri Arun Hariramani - Made a lump sum disclosure of Rs. 25 crores for himself and on behalf of other family members, proprietorship concerns, partnership firms and companies comprised in the group.
b. Shri Vijay Hariramani - Gave a tentative breakup of the disclosure mentioned in point (a) above based on memory, rough analysis, seized records which was subject to modification/correction/revision with respect to individual assessee and quantum of income.
c. Shri Prakash Hariramani - Stated that the group has decided to make a lump sum disclosure of Rs. 25 crores for which head-wise, assessee- wise and year-wise details shall be submitted later on.
13. During the search operations, nothing was found to establish that assessee is having any source of income other than the reported sources. The loose papers, hard disks, mobile data and books of accounts were duly explained to the authorized officer. Ld. AO made an allegation without bringing on record any cogent material that assessee has earned income other than the reported sources of income. Neither could Ld. AO bring on record any specific instance of the assessee having earned any undisclosed income or unexplained investment.
18Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
14. While passing the impugned order, Ld. AO did not make reference to any incriminating material but the addition was made by referring to the disclosure made in the statement recorded during search operations. There is no nexus with the seized material and the declaration made in the statement recorded during the search operations. No reference has been made to any incriminating material found during the course of search which could be correlated to the alleged surrender of income earned by the assessee from undisclosed sources.
15. Reliance is placed on the following judicial precedents wherein it is held that mere admission is not conclusive piece of evidence.
a. Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC): Para 4 - [CLPB 01 ] b. Satinder Kumar (HUF) v. CIT [1977] 106 ITR 64 (Hon'ble High Court of Himachal Pradesh): It was held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the assessee contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention.
c. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Ultimate Builders - ITA No. 134/Ind/2019 - order dtd 09.08.2019 - Para 21, 25, 26, 27 [CLPB 34]39-40 ] While arriving at the above decision, Hon'ble ITAT Bench referred to its own decision in the case of Sudeep Maheshwari ITA No. 524/Ind/2013 order dtd 13.02.2019. For relevant portion refer Para 6 - [CLPB 49 ]
16. The declaration was not made with reference to any specific incriminating paper/papers or documents and was neither with reference to any undisclosed asset or income found during the course of search. It was a vague declaration made under duress. In this respect reliance was placed on the decisions of -
i. CIT v. Shri Ramdas Motor Transport [2000] 163 ITR 403 (AP) ii. CIT v. Naresh Kumar Agarwal [2014] 369 ITR 171 (AP) iii. R.R. Gavit v. Smt. Sherbanoo Hasan Daya [1986] 161 ITR 793 (Bom)
17. It is a settled law that charge has to be clear and it cannot be presumed on the basis of evidence. Reliance is placed on the decision of 19 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Hon'ble Apex Court in the case of Dilip Kumar and Company & Ors - Civil Appeal no. 3327 of 2007 - order pronounced on 30.07.2018 - Para 43 [CLPB ] Hon'ble Mumbai Bench (SB) of ITAT in the case of GTC Industries Limited
- [2017] 80 taxmann.com 284 - order dtd on 07.03.2017 - Para 46 [CLPB ]
18. Considering the above facts and circumstances of the case, applicable law and the judicial precedents relied upon, addition of Rs. 1.50 crores has been made merely on the basis of vague, bald and adhoc statements of Shri Arun Hariramani, Shri Vijay Hariramani and Shri Prakash Hariramani, more particularly when the break up given was tentative subject to correction/revision/modification.
B. No reference to any incriminating material, addition made merely on the basis of disclosure made in the statement and no nexus with the documents seized/incriminating material
1. Assessee challenges the validity of addition being made without reference to any incriminating material found during the course of search operations.
2. During the search operations, in the statement of Shri Arun Hariramani at question number 25, it was asked - [AO page 3] कृ पया बताये "क Eया उपरोEK के अित र$ आप कु छ और कहना चाहते ह(?"
"कृ All the questions prior to question no. 25 raised by the authorized officer relate to the documents seized during the search operations. Shri Arun Hariramani has duly explained these documents. From question no. 25, as reproduced above, it is clear that no reference to any seized document/incriminating material has been made by the authorized officer. [PB 88-101] In response to question no. 25, Shri Arun Hariramani replied (relevant extract) - [AO page 4] अघोिषत आय के 1प म वीकार करता 'ं एवं िनयमानुसार देय आयकर का भुगतान करने का ".....अघोिषत वचन करता 'ं चू"ं क मैने उपरो$ आय वेMछा से वीकार क# है एवं मानिसक शािCत के िलए उपरो$ रािश वीकार कर रहा 'ं।....."20
Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others From the above it is clear that no reference to any incriminating material/seized document has been made on the basis of which lump sum disclosure of Rs. 25 crores has been made by Shri Arun Hariramani for himself and on behalf of other family members, partnership firms, partners, proprietorship concerns and companies comprised in the group. Thus there is no nexus between the incriminating material/documents seized and the addition made.
3. In the post search proceedings, statement of Shri Vijay Hariramani was recorded at his residence on 27.10.2016. In this statement he gave tentative breakup for the disclosure made by Shri Arun Hariramani. [AO page 10] From the reply of Shri Vijay Hariramani, it is evidently clear that no reference to any incriminating material/seized documents has been made on the basis of which tentative breakup has been given. It is pertinent to mention here that the break up given is -
a. Subject to rough analysis and memory, based on seized documents b. Breakup is tentative c. Subject to modification/correction/revision with respect to individual assessee, quantum of income
4. In the statement of Shri Prakash Hariramani in response to question number 31 he has stated as reproduced above, it is clear that no reference to any incriminating material/seized documents has been made on the basis of which disclosure of additional income of Rs.25 crores has been made.
5. From all the three statements referred above at point no. 2 to 4, it is evidently clear that no reference to any incriminating material has been made on the basis of which addition has been made in the impugned year.
6. No reference has been made to any specific document seized during the course of search has been made which has a direct nexus with the additions so made.
7. In the assessment of assessee for the six years i.e. AY 2012-13 to 2016-17, income has been assessed same as returned income. Thus, it is evident all the seized document/incriminating material have considered and explained. For the impugned addition of Rs.2 cr. no reference to any incriminating material has been made forming the basis of addition. Such 21 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others an addition without reference to any incriminating material/seized document ought to be deleted.
8. During the search operations, statement of none of the partners were recorded in the capacity as partner of assessee firm.
9. In the search assessment, any undisclosed income, which can ultimately be added, is only to the extent of any unrecorded assets/material found or any incriminating documents found as representing undisclosed income earned.
10. Reliance is placed on following judicial precedents wherein it is held that no addition is warranted in the absence of incriminating material -
a. Hon'ble Supreme Court in CIT v. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC) - Para 18 [CLPB ] b. Hon'ble Jurisdictional Madhya Pradesh High Court in the case of Mechmen - [2015] 60 taxmann.com 484 - order pronounced on 10.07.2015 - Para 23 [CLPB ] c. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Mohd. Atique - IT(SS)A No. 30/Ind/2016 to 36/Ind/2016 - order pronounced on 16.02.2021 - Para 19 [CLPB ] d. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Satish Neema - IT(SS)A No. 149/Ind /2016, 150/Ind/2016 and 152/Ind/2016 - order pronounced on 07.02.2020 - Para 19 [CLPB ] e. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Kamal Kishore Kotwani - IT(SS)A No. 186 to 190/Ind/2016 - order pronounced on 04.07.2018 f. Hon'ble Jurisdictional Bench of Indore ITAT in the case of Kamta Prasad Dwivedi - IT(SS)A No. 182 to 185/Ind/2016 - order pronounced on 19.09.2018 g. Hon'ble Delhi High Court in the case of CIT v. Kabul Chawla 380 ITR 573, the decision in the case of Pr.CIT v. Meeta Gutgutia 395 ITR 526 and various other decisions, has consistently held that in absence of any incriminating material found as a result of search, assumption of jurisdiction under section 153A is not in accordance with law. [CLPB ] In the decision of Meeta Gutgutia (supra), SLP filed by the Revenue was dismissed by the Hon'ble Supreme Court by giving a reasoning reported 22 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others at [2018] 96 taxmann.com 468 (SC) - SLP dismissal - 02.07.2018. [CLPB ] h. In addition to the decisions of Kabul Chawla (supra) and Meeta Gutgutia (supra), reliance is also placed on several other decisions as listed below -
(i) Pr. CIT v. Lata Jain, 384 ITR 543.
(ii) 211 Taxman 61 (Del) CIT v. Chetan Das Laxhman Das.
(iii) 352 ITR 493 (Del) CIT v. Anil Kumar Bhatia.
(iv) 380 ITR 571 (Del) CIT v. Kurele Paper Mills (P) Ltd., dt. 6-7-2015.
(v) 241 Taxman 440 (Del) CIT v. MGF Automobiles Ltd.
(vi) ITA No. 634/2015 Pr. CIT v. Smt. Kusum Gupta.
(vii) W.P. (C) 8721/2014 & CM No. 20052/2014 Praveen Kumar Jolly.
(viii) IT Appeal No. 810/2016 Pr. CIT v. Mahesh Kumar.
(ix) IT Appeal Nos. 61 & 62/2017 Pr. CIT v. Ram AvtarVerma.
(x) 397 ITR 82 Pr. CIT v. Best Infrastructure (India) (P) Ltd.
11. It is a settled law that decisions of higher authorities carry a binding force on the lower authorities. For the application of judicial discipline, reliance is placed on the decision of Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of Agrawal Warehousing & Leasing Ltd. [2002] 124 Taxman 440 - order pronounced on 11.07.2002 - Para 8
12. While passing the impugned order, Ld. AO did not make reference to any incriminating material but the addition was made by referring to the disclosure made in the statement recorded during search operations. There is no nexus with the seized material and the declaration made in the statement recorded during the search operations. No reference has been made to any incriminating material found during the course of search which could be correlated to the alleged surrender of income earned by the assessee from undisclosed sources.
13. During the search operations, nothing was found to establish that assessee is having any source of income other than the reported sources. The loose papers, hard disks, mobile data and books of accounts were duly explained to the authorized officer. Thus, Ld. AO made an allegation without bringing on record any cogent material that assessee has earned income other than the reported sources of income. Neither could Ld. AO bring on record any specific instance of the assessee having earned any undisclosed income or unexplained investment.
23Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
14.Reference may please be made to the table in the assessment order at page no. 24 which is reproduced as under -
"Subject to the above remarks, total income for the assessee is computed as under -
A.Y. 2017-18
Income as per return of income 7,23,390/-
Undisclosed income admitted during the 2,00,00,000/
search statement u/s 132(4)
Total Assessed Income 2,07,23,390/
From the above table it is evidently clear that Ld. AO has made addition of Rs. 2 crore merely on the basis of the disclosure of a third party made in the statement recorded during the search operations.
15. It is well settled proposition that the strict rules of evidence are not attracted in relation to income tax proceedings and further there is nothing like res judicata or estoppel. In order to tax any income under the Income- tax Act, it is required to be shown that such income has accrued to the assessee or is deemed to have accrued. Income is not earned in air or vacuum. The income presupposes receipt or movement of funds, which are revenue in nature. It is settled law that normally, the onus is upon the revenue to show that any income has accrued to the assessee, particularly when the assessee is disputing the claim of the revenue. In this regard, a gainful reference may be made to the decision rendered in the case of Janki Ram Bahadur Ram v. CIT (57 ITR 21 SC).
In the instant case, search party did not bring any cogent material to establish assessee is having any source of income other the reported sources. No incriminating material supporting the offer made by Shri Arun Hariramani including for his family members, partnership firms, proprietorship concerns, partners and companies were found in search. Ld. AO also failed to bring on record any corroborative evidence to establish assessee is having any source of income other than the reported sources.
19. Reliance is placed on the following judicial precedents -
a. Ashok Kumar Jain [2015] 53 taxmann.com 173 (Raj) - Para 10 and 11 b. Naresh Kumar Verma [2013] 32 taxmann.com 280 (Chandigarh - Trib.) dated 27.11.2012 - Para 8, 9 and 10 [CLPB 205,206 ] 24 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others c. Sunil Aggarwal ITA No. 224/2003 dated 02.11.2015 by the Hon'ble Delhi High Court Para 15 - [CLPB 224 ] d. Hon'ble Gujarat High Court in the case of Chandrakumar Jethmal Kochar [2015] 55 taxmann.com 292 (Gujarat) - Para 6 - [CLPB 231 ]
16. Considering the above facts and circumstances of the case and the applicable law, addition made by Ld. AO of Rs. 1.50 crores in the absence of reference to any incriminating material ought to be deleted.
C. Addition made on the basis of the statement of third person which was never ratified/endorsed/acknowledged/confirmed by the assessee
1. Statement of Shri Arun Hariramani recorded during the search operations at the factory premise on 03.09.2016 - as reproduced at para A point no 2 above.
2. Statement of Shri Vijay Hariramani recorded during the post search proceedings at his residence on 27.10.2016 - as reproduced at para A point no.6 and 7 above.
3. Statement of Shri Prakash Hariramani recorded during the search operations on 03.09.2016 - as reproduced at para A point no. 10 above.
4. Disclosure in all the above mentioned three statements of three persons is made on behalf of other family members, partnership firms, partners, proprietorship concerns and companies. These statements were never confronted to the other family members/group concerns. They have not ratified/endorsed/acknowledged/confirmed the disclosure as made by the above mentioned three persons. No addition can be made by using a document not actually confronted to assessee.
5. The fact that declaration of additional income has been made by one person on behalf of others is corroborated from the question number 2 raised by the authorized officer to Shri Vijay Hariramani. Relevant extract of this question is reproduced above.
6. The authorized officer in the question itself has stated that additional income was declared by Shri Arun Hariramani on behalf of other family members, partnership firms, companies and proprietorship concerns. No addition can be made on the basis of statement of third party.
25Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
7. There are no provisions under the Income-tax Act which authorize any person to accept any amount as undisclosed income on behalf of someone else. It is only under the specified provisions of the Act that a person can act as 'representative assessee' as per provisions of section 160. In the instant case, Shri Vijay Hariramani and Shri Prakash Hariramani are not representative assessees under the above mentioned provisions of the Act.
8. Disclosure made to buy mental peace. Search started on 30.08.2016 and was concluded on 04.09.2016 but was extended upto 27.10.2016 for uplifting of prohibitory order. There was tremendous pressure with distress and disturbed state of mind he had no other alternative but to surrender to the dictates of search party in duress. Consequently, the declaration so made, has no valid/ cogent ground, basis/ supportive plausible material and as such is unfounded being indefensible in the eyes of law.
9. Though admission is the best piece of evidence, yet the same is not conclusive. It is well within the rights of Shri Arun Hariramani, Shri Vijay Hariramani and Shri Prakash Hariramani to demonstrate that the same was incorrectly made and not voluntary. Continuous grilling of a person that too for six consecutive days (from 30.08.2016 to 04.09.2016) would put lot of mental pressure on any person. Under this set of facts it is difficult to accept that the disclosure was voluntary. This conduct of the search party is not in accordance with the CBDT Instructions F. No. 286/2/2003 - IT (Inv.) dated 10th March 2003 wherein it is clearly stated that confessional statements should not be obtained under coercion, threat, stress or duress. [CLPB 284 ]
10. The well-settled position in this respect, as pointed out by the Court, is that while the revenue can use a statement recorded u/s 132(4) as a piece of evidence against the person who has given the statement, such person can, however, retract the statement successfully if he proves that the statement was not given in a proper frame of mind or was given under duress and threat or under a mistaken belief of law. The revenue authorities are also required to corroborate the admission contained in the statement, with independent evidence, more particularly with the incriminating material found during the course of search relating to the admission made in the statement.
26Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others 10.1 The word 'statement' is defined neither in the Income-tax Act nor in the Evidence Act, and, hence, it assumes its dictionary meaning of 'something that is stated'.
10.2 As per section 31 of the Indian Evidence Act, admissions are not conclusive proof of the matters admitted, but they may operate as estoppel under the provisions of the law as contained. For an admission to be effective, corroboration with third party evidence is required. 10.3 It is well settled law that though statements recorded will have evidentiary value, yet such statements are not always conclusive proof since the person making the statement can rebut and retract. 10.4 A retraction to have any evidentiary value must preferably be in a statement not only denying the earlier stated facts but explaining the reasons for making a statement earlier and giving substituted facts in support of retraction. In the present case of the assessee, addition has been made on the basis of statement of Shri Vijay Hariramani. Assessee retracted this disclosure by not including it in the return filed for the impugned year. [PB 01] 10.5 It would be relevant to point out that the statements which are recorded by administering oath are presumed to be carrying truth in view of the provisions of section 181 and section 193 of the Indian Penal Code which provide for imprisonment if the false statement is given. When it is so, no one would like to be punished knowingly and, hence, it is but logical to accept a sworn statement or the statement taken on oath as revealing the truth.
11. For any retraction to be successful in the eyes of law the maker has to show as to how earlier recorded statements do not state the true facts or that there was coercion, inducement or threat while recording his earlier statements.
In such cases, retraction is possible. In any case, for the A.O. to add the income disclosed or confessed, the same must be corroborated with materials on record and if the assessee can demonstrate on the basis of facts that statement was not correct, there is no question as to why retraction should not be allowed.
In the instant case, Shri Arun Hariramani retracted the disclosure made by Shri Vijay Hariramani by attributing Rs. 1.50 crore towards the assessee as the same was not included in the return filed for the impugned year. No document or material was found in the search proceedings to corroborate the tentative breakup for the income surrendered.
27Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
12. Lump sum disclosure of additional income was made by Shri Arun Hariramani for himself and on behalf of other family members, partnership concerns, partners, proprietorship concerns and companies. The tentative breakup of this disclosure of additional income was not based on verification of any documents, no incriminating documents were referred or pointed out and no head of income to which the said offered income relates was specified.
13. During the search operations, no money, bullion, jewellery, stock, cash, any other moveable or immovable property was found which was not accounted, recorded or undisclosed. In the given situation, in absence of any unrecorded assets (being cash/bullion/immovable property, etc.) found and seized in the case of assessee, the only possibility for finding any undisclosed income relating to the assessee was by way of perusal of seized documents, which in fact is nil.
14. Under section 132(4A) of the Act, presumption is only on the basis of 'books of account' or 'documents' or 'assets' found in the course of search. Loose sheets are not books of account or documents. Therefore, presumption cannot be raised on the basis of noting on loose sheets. In absence of any cogent evidence or corroboration in support of the entries in loose sheets, no adverse conclusion can be drawn against the assessee on mere guess and pure suspicion.
14.1 It is important and vital fact in the instant case of the assessee that nothing incriminating was found during the course of conduct of search pertaining to or relating to the impugned addition made. The material which was seized in the search so conducted has been explained. For all the six assessment years in his individual case, returned income has been accepted as assessed by the same Ld. AO.
14.2 There was nothing incriminating found and seized during the course of search in relation to the adverse view taken by the Ld. AO on addition made as per the disclosure in the statement recorded during the search operations. The sole basis for making addition is the statement of Shri Vijay Hariramani (not the assessee) which had been retracted.
14.3 Ld. AO made the impugned addition on the foundation of bare husk of the statement of Shri Vijay Hariramani made in the course of search operation, who attributed so, 'on behalf of the assessee' without there being any incriminating material found in the course of search for its corroboration.
14.4 Ld. AO being quasi-judicial authority is not competent to draw inferences in vacuum, without the base of incriminating material relevant 28 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others to the disallowance made, evidence and relevant provisions, as has been done, in the present case. Ld. AO is required to act in a judicial manner while framing assessment order under section 153A rws 143(3).
14.5 Ld. AO being quasi-judicial authority must not base his findings on no-material or no-evidence. This is a fundamental rule of justice and established legal proposition that there may be something more than bare suspicion, to support the findings, in the assessment order, as held by the Hon'ble Supreme Court, in the case of -
a. Dhirajlal Girdharilal v. CIT [1954] 26 ITR 736 (SC) b. Omar Salay Md. Sait v. CIT [1959] 37 ITR 151 (SC) c. Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) d. Lal Chand Bhagat Ambica v. CIT [1959] 37 ITR 288 (SC) 14.6 In framing the assessment in search cases, as contemplated under section 153A of the Act, Ld. AO is competent to act on what is technically described as 'evidence' in the Indian Evidence Act and also under sections 142 and 143 of the Act, on 'the incriminating material gathered' during the conduct of search. The Assessing Officer, being quasi-judicial authority, cannot make addition, being expedient, as a matter of policy or on the basis of assumed and non-existent material.
14.7 Reliance is placed on the following judicial precedents for the contentions of the assessee:
a. Surinder Pal Verma v. Asstt. CIT [2004] 89 ITD 129 (Chd. ITAT) - order pronounced on 07.01.2004 - Para 24 [CLPB 245 ] b. Asstt. CIT v. Anoop Kumar [2005] 94 TTJ (Asm.) 288 order pronounced on 28.12.2004 Para 7 [CLPB 262 ] c. Hon'ble Madras High Court in the case of CIT v. K. Bhuvanendra [2008] 303 ITR 235 (Mad) held in Para 26 d. Hon'ble Rajasthan High Court in the case of Jagdish Narain Ratan Kumar [2015] 61 taxmann.com 173 (Raj) order dated 05.02.2015 Para 12 [CLPB 266 ] D. Principle of estoppels cannot operate against the provisions of Income-tax Act
1. As in the case of estoppel, it cannot operate against the provisions of statue. If a particular income is not taxable under the Income Tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine.29
Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Equity is out of place in tax law; a particular income is either eligible to tax under the taxing statute or it is not. If it is not, the Assessing Officer has no power to impose tax on the said income. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. The law empowers the AO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so he cannot assess an assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppel by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law.
2. Principles of estoppels will not operate against the Income-tax Act as held by Hon'ble Supreme Court in the case of CIT v. V.MR.P Firm [1965] 56 ITR 67 (SC). [CLPB 267-275 ] Hence, mere admission of additional income would not automatically entitle the assessing officer to assess the same, if the assessee disputes the same subsequently with corroborative evidences.
3. Principles of estoppels were also dealt by Hon'ble Bombay High Court in the case of Balmukund Acharya 310 ITR 310 (Bom) as held in Para 33 [CLPB 283 ] E. Application filed by the 'Ramani Group' before the Hon'ble Settlement Commission
1. An application has been filed before the Hon'ble Settlement Commission in the case of Ramani group on 24.12.2018. This application has been accepted u/s 245D(1) vide order dated 04.01.2019 in which additional income of Rs. 24.27 crores has been offered to tax.
Details of the additional income declared along with the name of the group concerns is tabulated below - [PB 05-06] Sr. Applicant's name Additional No. income declared (Rs.) 1 Ramani Ice-cream Company 11,74,27,005 Private Limited 2 Shri Girish Awatramani 1,75,13,000 3 Shri Vijay Hariramani 39,97,000 4 Windsor Infra 1,46,58,000 30 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others 5 Ishaan Builders and Developers 8,91,96,000 TOTAL 24,27,91,005
2. The admission of application filed before the Hon'ble Settlement Commission is an "in-principle admission".
3. Fact about disclosure of Rs. 25 crores made by Shri Arun Hariramani on behalf of the entities forming part of 'Ramani Group' is reported in the application filed before the Hon'ble Settlement Commission, based on which the above declaration has been made in the said application. [PB 28]
4. Ld. CIT(A) took cognizance of this acceptance of application under section 245D(1) by the Hon'ble Settlement Commission while granting relief to the assessee.
Considering the above facts, circumstances of the case, submissions made, documents on record and judicial precedents, addition made by Ld. AO of Rs. 1.50 crores merely on the basis of statement recorded during search and no nexus with seized documents/incriminating material, ought to be deleted.
11. Reliance was also placed on following decisions:
S.No. Particulars
1. Pullangode Rubber Produce Co. Ltd. [1973] 91 ITR 18 (SC)
2. Ultimate Builders ITA No. 1 34/Ind/20 19 (IT AT Indore)
3. Sudeep Maheshwari IT A No.524/Ind/20 13 (IT AT Indore)
4. Dilip Kumar & Company [2018] 95 taxmann.com 327 (SC)
5. GTC Industries Ltd. [2017] 80 taxmann.com 284 (Mumbai - Trib.) (SB)
6. Sinhgad Technical Education Society [2017] 84 taxmann.com 290 (SC) 31 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
7. Mechmen [2015] 60 taxrnann.corn 484 (MP HC)
8. Sat ish Nema IT(SS)A No 149, 150 & 152/Ind/2016 (ITAT Indore)
9. Meeta Gutgutia [2017] 82 taxmann.com 287 (Delhi HC) 10 Meeta Gutgutia [2018] 96 taxmann.com 468 (SC) 11 Naresh Kumar Verma [2013] 32 taxmann.com 280 (ITA T Chandigarh) 12 Sunil Aggarwal ITA No. 224 of2003 (Delhi HC) 13 Chandra Kumar Jethmal [2015] 55 taxmann.com 292 (Guj. HC) 14 Surinder Pal Verma [2004] 89 ITO 129 (ITAT Chandigarh - TM) 15 Anoop Kumar [2005] 147 taxman 26 (ITAT Amritsar) 16 Jagdish Narain Ratan Kumar [2015] 61 taxmann.com 173 (Raj HC) 17 V. Mr. P. Firm [1965] 56 ITR 67 (SC) 18 Balmukund Acharya [2009] 176 Taxman 316 (Born.)
19. CBDT Instruction F. NO. 286/2/2003- IT (INV. II) dated 10-03-2003
12. We have heard rival contentions and perused the records placed before us and carefully gone through the order of both the lower authorities, written submissions filed by the assessee and various judgments referred and relied by both the parties. Revenue's sole grievance is against the finding of Ld. CIT(A) deleting the addition of Rs.2,00,00,000/- by the Ld. Assessing Officer on account of undisclosed income admitted in the statement made u/s 132(4) of the Act.
13. We note that search action u/s 132(4) of the Act conducted on 32 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Ramani Group on 30th August 2016. All the business concerns and individuals connected with M/s. Ramani Group were subjected to search, incriminating material was found and recorded statement of Mr. Arun Hariramani was recorded u/s 132(4) of the Act wherein lump sum disclosure of the undisclosed income of the group at Rs.25,00,00,000/- was made which was stated to be rough analysis. Again on 27.10.2016 statement was recorded and Mr. Vijay Hariramani brother of Arun Ramani again confirmed the disclosure of unaccounted income of Rs.25 cr. giving following bifurcation:
S.No. Name of individual/firm/company Total Rupees in Cr. 1 Shri Harish Hariramani 2.00 2 Shri Prakash Hariramani 1.00 3 Shri Vijay Hariramani 3.00 4 Shri Arun Hariramani 1.50 5 Shri Abhishek Hariramani 0.13 6 Ms. Diksha Hariramani 0.12 7 Ms. Nandini Hariramani 1.00 8 Mrs. Seema Hariramani 2.00 9 Mr. Ritika Hariramani 0.20 10 Mr. Kritika Hariramani 0.55 11 Mr. Ruchi Hariramani 1.00 12 M/s. Ramani Ic-Cream Co. Ltd. 2.00 13 M/s L.P.J Enterprises 1.50 14 M/s. Ramani Infrastructure 2.00 15 M/s Top-N-Town 1.00 16 M/s Aaditya Food Products 2.00 17 M/s Shree Balajee Builders & Developers 4.00 All total 25.00 33 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
14. While giving above bifurcation Mr. Vijay Hariramani has stated that he looks after the financial matters of the group. Financial records of the group are voluminous. Detailed analysis of various years of the assessee-wise, assessment-wise with respect to quantum is not possible right now and substantial time will be needed to examine the records once copy of seized records provided.
15. We further note that following 5 concerns/individuals of the Ramani Group filed an application on 24.12.2018 before the Income Tax Settlement Commission offering additional income declared in the SOF at Rs.24,27,91,005/-.
Additional Income
Status
Applicant's Name Declared in the SOF
M/s Rarnanllte=crearrr .
Company Ltd Company Rs.11,74,27,005/-.
Shrl Girish Awatramani Individual Rs. 1,75,13,000/-
, ,,,
Shri Vijay Hariramanri" .
Individual Rs.39,97,OOO/-
M/S Windsor Infra Firm Rs. 1,46,58,OOO/-
M/S Ishaan Builders And Firm
Rs.8,91,96,OOO/-
Developers
Total Rs.24,27,91,005
34
Ramani Infrastructure & others
IT(SS)A No.211/Ind/2019, & others
16. The above stated amount was offered to tax and taxes were duly paid and Income Tax Settlement Commission vide its order dated 24.12.2020 passed an order u/s 245D(4) of the Act accepted the assessee's application.
17. We further note that Ld. Assessing Officer took the basis of the bifurcation of Rs.25,00,00,000/- given in the statement on 27.10.2016 by Shri Vijay Hariramani and made the addition in the hands of assessee without referring to any incriminating material found during the course of search belonging to the assessee firm.
Ld. Assessing Officer only asserted the fact that since the statement was given by Vijay Hariramani u/s 132(4) of the Act and the name of assessee was mentioned in the list showing surrender of Rs.2,00,00,000/- the assessee was bound to honour this surrender.
18. We further note that ld. CIT(A) after examining the facts in detail, making references to circulars of Central Board of Direct Taxes and other judicial precedence held in favour of assessee observing as follows:
35Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Ground No 2 to 6:- Through these grounds of appeal, the appellant has challenged the addition of Rs.2,00,00,0001- on account of undisclosed income admitted during search and taxing the income uls 115BBE of the IT Act, 1961. The appellant is having income from salary, house property, remuneration & share income from partnership firms in which he is a partner. The appellant apart from the above, having an income from bank interest etc. The total income was shown at Rs. 7,23,3901- which has been accepted by the A.O., however, the A.O. has made addition of Rs. 2 crores on the ground that the said income was surrendered u/s.132(4) and its retraction in the return is not acceptable.
4.2.1 It has been established that the appellant has no source of income, and filed the nil return of income. In the family, the main business is the business of manufacturing & sale of ice cream which is being carried on in the name of Ramani Ice Cream Co. Pvt Ltd. under the brand name "Top-N-
Town Ice Cream". On 30.08.2016, search operation were conducted at the factory and the other business premises and simultaneously search were also conducted at the residential premises of directors living jointly in the house at E-1, Arera Colony, Bhopal. The search and seizure operation was completed on 04.09.2016. In the search, without reference to any assessment year, or any specific paper an adhoc surrender of income of Rs. 25 crores was made in respect of the entire group by Shri Arun Hariramani in his statement recorded u/s 132(4) on 03.09.2016/04.09.2016. The relevant part of the statement i.e. answer to Q.No.25 is reproduced as under:-
36Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others 37 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others 38 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others 39 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others The above statement clearly shows that it was a bald & adhoc statement of declaration without reference to any assessment year or any specific paper/document, money, bullion, jewellery or other valuable articles of things found in the search.
4.2.2 That the subsequent to the aforesaid statement, the statement of Vijay Hariramani was also taken u/s 132(4) on 27.10.2016. The relevant portion of the statement is as under:-
40Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others From the reading of the above statement, it is abundantly clear that Vijay Ramani said that it is a tentative break up of the figure of income. He further said that the tentative figures of income are subject to modification/correction/revision with respect to individual assessee. The relevant para of the statement is reproduced as under:-
"It is submitted that since I look for financial matter of the group and during the search, I was out of town. Papers and the financial records of the group seized are voluminous and, therefore, their detailed analysis of various years of the assessee-wise, assessment year-wise and with respect to quantum is not possible right now because it will take substantial time that too after getting copy of all seized records. However, subject to rough analysis and memory, based on seized records, I herewith accept and I am giving a chart therein tentative figures of the income of the various assessee in the group which may constitute a 41 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others tentative break up of the disclosed income. The tentative figures of income are subject to modification/correction/revision with respect to individual assessee, quantum of income."
After analyzing the various papers and the seized documents, the group has surrendered/disclosed the income in the application filed before the Settlement Commission. The Hon'ble Settlement Commission has admitted the application and passed an order u/s.245D(1) on 24.12.2018. In the settlement application the statement of Vijay Hariramani, in which, the tentative breakup was given, has also been refered and reproduced and considering the statement of Arun Hariramani, Vijay Hariramani and Prakash Hariramani the disclosure of the income of the group was made at Rs.24,27,91,005/-.
4.2.3 The appellant never surrendered income of Rs. 2 crores in search. The addition has been made on the basis of above tentative/estimated/projected bifurcation given by Vijay Hariramani. It may be mentioned that there is no mention of any assessment year to which the adhoc surrender income relates. It is also mentioned that there is no specific asset/investment/expenditure of the assessee found unexplained to the extent of Rs. 2 crores and there is also no evidence at all that the assessee has earned income Rs. 2 crores from undisclosed sources in previous year relevant to A.Y. 2017-18. There is also no unexplained investment/expenditure to the extent of Rs. 2 crores found to have been made/incurred in the previous year relevant to A.Y. 2017-18.
4.2.4 The A.O. accepted the returned income for all the assessment years from A.Y. 2011-12 to 2016-17, however, in A.Y. 2017-18, he made the addition of Rs. 2 crores without any corroborative evidence or material simply on the basis of a rough/projected/tentative bifurcation given by Vijay Hariramani in his statement as reproduced above.
42Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others The Hon'ble Madras High Court in the case of CIT Vs. Smt. S. Jayalakshmi Amman reported in 390 ITR 189 (Mad) held that if there is no corroborative documentary evidence, then the statement recorded u/s.132(4) of the Act should not be the basis for arriving at any adverse decision against the assessee. The Hon'ble High Court further held that" we are of the view that mere statement without there being any corroborative evidence should not be treated as conclusive evidence against the maker of the statement. The Jurisdictional Appellate Tribunal, Indore in the case of ACIT V s. Y ogesh Kumar Hotwani reported in 30 ITJ 353 (In d) held that no addition be made simply on the basis of statement u/s.132(4) without linking to books and other assets found. The CBDT has also instructed that there should be a focus and concentration on the collection of evidence of income, the relevant circulars are as under :-
Confession of additional Income during the course of search &seizure and survey operation F. No. 286/2/2003-IT (Inv) GOVERNMENT OF INDIA MINISTRY OF FINANCE &COMPANY AFFAIRS DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES Room No. 2541N0rth Block, New Delhi, the 10th March, 2003 To All Chief Commissioners of Income Tax, (Cadre Contral) & All Directors General ofIncome Tax Inv.
Sir Subject: Confession of additional Income during the course of 43 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others 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 eircumstances, 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) F.No. 286/98/2013-IT (Inv.It) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Room No. 265A, North Block New Delhi, the 18th December, 2014
1.All Principal Chief Commissioners of Income Tax
2.All Chief Commissioners of Income Tax
3.All Directors General oflncome Tax (Inv.) 44 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
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/S7/2002-IT(Inv.ll) dt. 03-07-2002
2)CBDT letter F.No. 286/2/2003-IT(Inv.II) dt. 10-03-2003
3)CBDT letter F.No. 286/98/2013-IT(Inv.ll) dt. 09-Q1-2014 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 opriducted 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 admisjon 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 I.T.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 Ramchandranran) Director (Inv.)-II, CBDT 45 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Copy to:
1. DIT (Systems)-IV with a request to upload in the official website ofIncome Tax Department i.e.incometaxindia.gov.in .
2. The Addl. DIT(DBC) with a request to upload in the irsofficersonl website.
(K. Ravi Ramchandranran) Director (Inv.)-II, CBDT The A.O., is not justified in making the addition on the basis of such retracted statement in view of the following decisions :-
4.2.5 It is submitted that the Apex Court in the case of Pullangode Rubber Produce Co Ltd Vs. State ofKerala 91 ITR 18 (SC) 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. "
Further in case of Nagubai Ammal Vs. B. Sharma Rao AIR 1956 SC 593 held " 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 ".
Further in the case ofKrishanlal Shivchand Rai Vs. CIT 88 ITR 293 (P & H) held that "it is an established principle of law that the party is entitle to show and prove that the admission made by him probably is in fact not correct and true"
Further in the case of Rajesh Jain Vs. DCIT ITAT Delhi Bench reported in 100 TTJ (Del) 929/935 held that "it is to be noted that it is not possible to lead direct evidence of the use of pressure tactics. It is to be gathered from the evidence mostly circumstances. The Appellate Tribunal in para 8 of page 933 further held that "it is true that authorized officer carrying on search u/s.132 is entitled as per the statutory provision, to record statement of the person searched u/s. 132(4) of the I.T Act and use that statement for the purpose of assessment. All the same person carrying the search is a person possessing some authority and, therefore, the assessment wholly and exclusively based on confessional statement procured by the revenue authority then, there was no need to have elaborate provision in the statute. There was no need to use long arm of search to collect material for making assessment. Therefore, it is 46 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others insisted that confessional statement should be corroborated some material to show that assessment made is true and fair Further in the case of Ms Aishwarya K. Rai V s, DC IT reported in 105 TTJ (Mum) (TM) 825/896 held that "it is well settled that a statement u/s.132(4) is not the last word, and if the person concerned retracts/clarifies the same subsequently on ascertainment of correct state of affairs and explains the same it can be allowed.
Further in the case of Shrikrishna V s. Kurukshetra University reported in AIR 1976 SC 376 held that" any admission made in ignorance of legal rights or under duress cannot bind the maker of the admission. Mere admission cannot be bedrock or foundation of an assessment.
Further in the case of Pushp Vihar Vs. ACIT reported in 48 TTJ (Born) 389 held that: it cannot be concluded that what the assessee said originally was sacrosanct and the assessee is not at liberty nor it does not lie in his mouth to correct the error, originally committed by giving a different version of truth. As said by the Apex Court in the case of Shri Krishnan (supra) that any admission made in ignorance of the legal rights cannot bind the maker of the admission.
It is always opened to the assessee to demonstrate the correct facts. In the absence of any other material apart from the original admission, there is nothing to support the admission.
Further in the case of Awad Kishore Dass AIR 1979 SC 861 held that "it is true that the evidentiary admissions are not conclusive proof of the facts admitted and may be explained or shown to be wrong. "
Further the Allahabd High Court in the case of CIT V s. Radhakishan Goel reported in 278 ITR 454/460- para 11 (All) held that "It is a matter of common knowledge, which cannot be ignored that the search is being conducted with the complete team of the officers consisting of several officers with the police force. Usually telephone and all other connections are disconnected and all ingress and egress are blocked. During the course of search person is so tortured harassed and put to a mental agony that he loses his normal mental state of mind and at that stage it cannot be expected from a person to pre-empt the statement required to be given in law as a part of his defence 47 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Further in the case of Kailash Ben Manharlal Chouksi V s. CIT reported in 220 CTR 1381147 para 26 (Guj) held that" We are, therefore, of the view that merely on the basis of admission the assessee could not have been subjected to such additions unless and until, some corroborative evidence is found in support of such admission. We are also of the view that from the statement recorded at such odd hours cannot be considered to be a voluntary statement, if it is subsequently retracted and necessary evidence is led contrary to such admission. Hence, there is no reason not to disbelieve the retraction made by the A 0 and explanation duly supported by the evidence. We are, therefore, of the view that the Tribunal was not justified in making addition of Rs. 6 lakhs on the basis of statement recorded by the AO under s. 132(4) of the Act. The Tribunal has committed an error in ignoring the retraction made by the assessee"
Further in the case of R.P. Monga Vs. DCIT reported in 269 ITR (AT) 1 (Del) held that " in the case of income tax proceedings, the confession statement made u/s.132(4) could be used in assessment proceedings only. Therefore, the assessee could retract either while filing the return or during the course of assessment proceedings. This principle has also been followed by the ITAT Nagpur Bench in the case of CIT Vs. Sadhuram Wadhwani reported in 81 TTJ (Nag) 839.
The assessee also refers a decision of Hon'ble Madras High Court in the case of CIT Vs. Smt. Jaya Lakshmi Ammal reported in (2017) 390 ITR 189 (Mad), wherein the Hon'ble Court held that "we are of the considered view that, for deciding any issue, against the assessee, the authorities under the IT Act, 1961 have to consider, as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under s. 132(4) of the IT Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the IT Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under Judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred. "
The court further held that "if the assessee makes a statement under s. 132(4) of the Act, and if there are any incriminating 48 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others documents found in his possession, then the case is different. On the contra, if mere statement made under s. 132(4) of the Act, without any corroborative material, has to be given credence, than it would lead to disastrous results. Considering the nature of the order of assessment, in the instant case characterised as undisclosed and on the facts and circumstances of the case, we are of the view that mere statement without there being any corroborative evidence, should not be treated as conclusive evidence against the maker of the statement. "
4.2.6 The Jurisdictional Tribunal Indore in the case of ACIT V s. Shri Y ogesh Kumar Hotwani reported in 30 ITJ 353/380 (Ind-Trib) has held that no addition can be made merely based on statement u/s.132(4) without linking to the seized books of accounts, other documents, money, bullion, jewellery or other valuable articles or things. In para 18 of the order, at page 380, the Tribunal held as under :-
"We also find that disclosure was not made by the assessee hence it is not binding on him. We also rely on the decision in the case of CIT v. Chandra Kumar Jethmal Kochar, (2015) 230 Taxman 78 (Guj), Asstt. CIT v. Kunwarjeet Finance Pvt. Limited, (2015) 61 Taxmann.com 52 (Ahm.Trib.), CIT v. Jagdish Narayan Ratan Kumar, (2015) 61 taxmann.com 173 (Raj), wherein it was held that when addition of disclosure made by the assessee in statement recorded u/s 132(4), it cannot be sustained despite retraction, when Revenue could not furnish any positive evidence in support of such addition.
Therefore, we are unable to uphold the findings of the AO and inclined to agree with Ld. CIT(A). Further, the Hon'ble Rajasthan High Court in the case of Jagdish Narayan Ratan Kumar (supra) has held that statement made during search must be correlated with records, which are found and if there is no ambiguity, explanation given by the assessee should be taken into consideration before making assessment. Thus, based on these decisions, we are of the opinion that the addition made by merely based on statement u/s 132(4) without linking to the seized books of accounts, other documents, money, bullion, jeweller)" other valuable articles or things is not sustainable in law 4.2.7 No documents/incriminating material or any other assets have been found in his control and possession which may suggest remotely that the assessee had income/investment of Rs. 2 crores in A.Y. 2017-18 and, therefore, in absence of any evidence simply on the basis of statement of third person, addition of Rs. 2 crores is 49 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others neither lawful nor justified. The appellant while filing the application before the settlement commission declared additional income as under which has been earlier disclosed in the individual hands:-
Applicant's Status Additional income Tax payable on Name declared in the additional income SOF declared M/s Ramani Company Rs.11,74,27,005/- Rs.4,03,17,647/- Ice-cream Co.
Ltd.
Shri Girish Individual Rs.1,75,13,000/- Rs.54,11,515/- Awatrimani Shri Vijay Firm Rs.39,97,000/- Rs.49,39,138/- Hariramani M/s. Windsor Firm Rs.1,46,58,000/- Rs.2,9299,13,054/- Infra M/s. Ishaan Firm Rs.8,91,96,000/- Rs.2,92,13,054/-
Builders and
Developers
Total Rs.24,27,91,005/- Rs.8,11,16,427/-
The above income is nothing but the same income which has been declared during the course of search u/s 132(4) of the IT Act, 1961. By making addition again in the hand's of appellant is nothing but the double taxation on the same amount. The similar view has also been upheld by Hon 'ble Jaipur Tribunal in the case of Vaibhav Lakhi vis DCIT. The relevant portion of order is reproduced below:
"Thu it is clear that the AO has also considered this fact that the addition made in the hand of the assessee is subject to the outcome of the ld. Settlement Commission order since the same income cannot be taxed twice. Now the ld. Settlement Commission vide its order dated 22-04-2019 has already accepted the said income offered by these two firms. We have carefully perused the order of the ld. Settlement Commission wherein this amount of Rs. 45,977/- was also part of the undisclosed income offered by these two firms for the A.Y. 2014-15. The total undisclosed income was offered at Rs. 28,71,319/- which was divided between two firms Mis. Bihari Lal Holaram, partnership firm and Mis. Lakhi Gems. in ratio of 95% : 5%. Finally, the said amount was accepted as offer to tax by these two firms as per the order of the ld. Settlement Commission. Once this amoun of Rs. 45,977/- has already been offered for taxation in the hands of the two partnership firms as per the order of the ld.50
Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others Settlement Commission dated 22-04-2019 then the addition in the hands of the assessee is not sustainable. Accordingly, the same is deleted. "
Therefore, the addition made by AO amounting to Rs. 2,00,00,0001- 1S Deleted. Therefore, the appeal on these grounds is Allowed.
19. From perusal of finding of Ld. CIT(A) and the facts placed before us it is clear that firstly surrender of Rs.25,00,00,000/- was on an estimate/tentative basis since no reference was made to specific assessment year, any undisclosed asset or unexplained expenditure or seized records. Secondly, disclosure of Rs.25,00,00,000/- was made before M/s Ramani Group could get the copies of seized records. Thirdly, after analyzing and examining the seized records M/s. Ramani Group has offered undisclosed income of Rs.24,27,91,005/- (almost around Rs.25 cr.) and paid tax of Rs.8.11 Cr. (Appro..) in the name of five assessees namely M/s.
Ramani Ice-cream Company Ltd., Shri Girish Awatramani, Shri Vijay Hariramani, M/s. Windsor Infra & M/s. Ishaan Builders and Developers. Fourthly, the impugned addition is made merely on the basis of statement given u/s 132(4) of the Act without making any reference or placing any nexus with any incriminating material found during the course of search u/s 132 of the Act.
51Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
20. Now question before us is that in case no incriminating material was found during the course of search whether the Assessing Officer can make addition merely on the basis of statement u/s 132(4) of the Act. Although Ld. CIT(A) has referred to various judicial precedence, this tribunal in the case of M/s. Signature Builders in IT(SS)A.No.184 to 186/Ind/2018 & others dated 08.01.2021 adjudicated similar issue and the relevant finding is reproduced below:
70. We have heard rival contentions and perused the records placed before us and carefully gone through the records and submissions made before us. The assessee namely M/s Signature Infrastructure has raised the common issue for Assessment Year 2013-14 and 2014-15 with regard to the addition of Rs.50,00,000/-
and Rs.3,00,00,000/- confirmed by the Ld. CIT(A) which was made by the Ld. A.O on the basis of income declared by the assessee in the statement given u/s 132(4) of the Act. We observe that in the case of assessee's appeal M/s Signature Builders similar issue was raised for Assessment Year 2013-14 and 2014-15 for the addition made on the basis of income declared by the assessee u/s 132(4) of the Act during the course of search carried out on 29.01.2014. Income was declared by the authorised representative of the Signature group under the name of various concerns in the statement made u/s 132(4) of the Act. Subsequently when the assessee was required to file return of income in response to notice u/s 153A of the Act the impugned income was not shown in the Income Tax Return on the basis of the assessee's observation that there was no incriminating material seized during the course of search which could support the impugned amount. During the course of assessment proceedings also the addition made by the Ld. A.O was purely on the basis of statement given during the course of 52 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others search. Nowhere in the assessment order the Ld. A.O has brought on record any incriminating material or loose paper seized during the course of search having its nexus with the addition made on the basis of statement. We further observe that in one of the group concern M/s Ultimate Builders ITA No.134/Ind/2019 order dated 9.8.2019 similar issue came for adjudication and this Tribunal on the basis of the facts of the case as well as relying on the judicial pronouncements deleted the addition since the same were made without referring to the incriminating material found during the course of search. The finding of this Tribunal in the case of M/s Ultimate Builders has been reproduced in the preceding paras while dealing with the similar issue raised in the case of M/s Signature Builders. Since the issue and facts remains the same Ld. Departmental Representative did not controvert this fact that the impugned addition was not based on incriminating material found during the course of search and is just on the basis of the statement given u/s 132(4) of the Act. We in the case of M/s Signature Builders have held in para 21 of this order as follows:-
21. From perusal of the above finding of this Tribunal in the case of M/s Ultimate Builders (supra), we find that the common issue raised in Ground No.3 of M/s Signature Builders is identical to the issue raised and adjudicated in the case of M/s Ultimate Builders (supra). We therefore respectfully following the same and also in view of the identical fact that impugned addition of Rs.25,00,000/- and Rs.3,00,00,000/- made by the Ld. A.O was purely based on the statement given u/s 132(4) of the Act and there was no reference to any incriminating material found during the course of search which could support the impugned addition. We therefore delete the addition of Rs.25,00,000/- for Assessment Year 2013-14 and Rs.3,00,00,000/- for Assessment Year 2014-15 and set aside the action by both the lower authorities and accordingly allow Ground No.3 of assessee's appeal for Assessment Years 2013- 14 and 2014-15 raised in ITA No.185-186/Ind/2018.
71. We therefore respectfully following the decision of this Tribunal in the case of M/s Ultimate Builders (supra) and also other facts of the case are of the considered view that the finding of Ld. CIT(A) deserves to be set aside and addition of Rs.50,00,000/- and Rs.3,00,00,000/- made for Assessment Year 2013-14& 2014-15 is directed to be deleted. Accordingly Ground No.1 raised by the 53 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others assessee for Assessment Year 2013-14 (IT(SS)A No.187/Ind/2019) and for Assessment Year 2014-15 (IT(SS)A No.188/Ind/2019) are allowed.
21. Similar view was taken in the case of M/s Ultimate Builders in ITA 134/2019 dated 09.08.2019 and ACIT vs. Shri Sudip Maheshwari in ITA 524/IND/2013 dated 13/02/2019.
22. In the case of Shri Sudip Maheshwari (supra) this Tribunal relied on the judgment of Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held "admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect". Reliance was also placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat). Similarly reliance was also placed on the judgment of Hon'ble Gujarat High Court in the case of Kailashben Mangarlal Chokshi vs. CIT - (2008) 14 DTR 257 (Guj.), wherein it was held that "merely on the basis of admission, the assessee could not have been subject to additions, 54 Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others unless and until some corroborative evidence is found in support of such admission". Reliance was also placed on Hon'ble Jharkhand High Court in the case of Shree Ganesh Trading Co. V/s Commissioner of Income-tax, Tax Case No.8 of 1999 order dated 03.01.2013
24. We, therefore, in the given facts and circumstances of the case and following the decision of this Tribunal in the case of Signature Builders (supra) and also respectfully following the decisions referred hereinabove find no inconsistency in the finding of Ld. CIT(A) which is based on the examination of facts, settled judicial precedence and direction given in circular issued by Central Board of Direct Taxes and thus hold that he has rightly deleted the addition made by the Ld. AO solely based on the statement given u/s 132(4) of the Act without referring or placing any nexus to the incriminating material seized during the course of search u/s 132(4) of the Act. Thus, revenue fails to succeed in the sole ground raised in ITANo. 211/Ind/2019. Ground no.1 of revenue's appeal stands dismissed.55
Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
25. As regards the remaining appeals at the instance of Revenue vide ITANo.212 to 214 /Ind/2019 in the case of assessee(s) namely Aaditya Food Products, Smt. Seema Hariramani, Shri Harish Hariramani challenging the deletion of addition of Rs.2,00,00,000/- in each case and in the case of Arun Hariramani in ITANo.216/Ind/2019 challenging the deletion of addition of Rs.1,50,00,000/- made by the Assessing Officer, we find that the the impugned additions are made solely on the basis of surrender of undisclosed income made in the statement given during the course of search u/s 132(4) of the Act but without referring to any incriminating material seized during search. Since we have already decided this common issue under the identical facts in the case of another group concern namely Ramani Infrastructure in ITANo.211/Ind/2019 in the preceding paras, we hereby apply the same decision and confirm the finding of Ld. CIT(A) deleting the impugned additions which needs no inference. Thus revenue fails to succeed. The Grounds of appeals raised by the Revenue in all these four appeals also stands dismissed.
56Ramani Infrastructure & others IT(SS)A No.211/Ind/2019, & others
26. In the result, all appeals of the Revenue in the case of assessee(s) namely M/s. Ramani Infrastructure, Aaditya Food Products, Smt. Seema Hariramani, Shri Harish Hariramani & Shri Arun Hariramani vide ITANos.211 to 214/Ind/2018, & ITANo.216/Ind/2019 respectively are dismissed.
The order pronounced as per Rule 34 of ITAT Rules, 1963 on 20.07.2021.
Sd/- Sd/-
(RAJPAL YADAV) (MANISH BORAD)
VICE PRESIDENT ACCOUNTANT MEMBER
दनांक /Dated : 20.07. 2021
Patel/PS
Copy to: The Appellant/Respondent/CIT concerned/CIT(A)
concerned/ DR, ITAT, Indore/Guard file.
By Order,
Asstt.Registrar, I.T.A.T., Indore
57