Income Tax Appellate Tribunal - Raipur
Sunil Soni, Raipur, Raipur vs Deputy Commissioner Of Income ... on 20 September, 2024
आयकरअपीलीयअिधकरण, रायपुर ायपीठ,रायपुर
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR
ी रिवश सूद, ाियक सद एवं ी अ ण खोड़िपया,लेखा सद के सम ।
BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
(ITA No. 308/RPR/2023)
(Assessment Year:2014-15)
Sunil Soni, V Deputy Commissioner of Income Tax-
Soni Bada, Near Dani Bada, s 1(1), Aayakar Bhawan, Civil Lines,
Opposite Soni Sadan Gali, Budhapara, Raipur, Chhattisgarh, 492001
Raipur, (C.G.), 492001
PAN: AJGPS4472B
(अपीलाथ / Appellant) . ( थ / Respondent)
.
िनधा रतीकीओरसे /Assessee by : Shri R. B. Doshi, CA
राज कीओरसे /Revenue by : Shri S. L. Anuragi, CIT-DR
सुनवाईकीतारीख/ Date of Hearing : 30.08.2024
घोषणाकीतारीख/Date of : 20.09.2024
Pronouncement
आदे श / O R D E R
Per Arun Khodpia, AM:
The appeal under consideration is filed at the instance of the assessee, challenging the order u/s 250 of the Income Tax Act, 1961 (in short "The Act"), passed by Ld. Commissioner of Income Tax (Appeal), NFAC, Delhi, (in short "Ld. CIT(A)"), dated 21.03.2023, for the Assessment Year 2014-15, which in turn had resulted from the order of Deputy Commissioner of Income Tax, Circle-2(1), Raipur (in short "Ld. AO"), under Section 143(3) r.w.s. 153A of the Act, dated 31.03.2016. 2 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
2. The grounds of appeal raised by the assessee are extracted as under:
1. Ld. CIT(A) erred in confirming addition of Rs. 3,30,18,730/- made by AO on account of alleged unexplained investment invoking sec. 69B. The addition made by AO and confirmed by Ld. CIT(A) is arbitrary, baseless, and not justified.
2. Ld. CIT(A) erred in confirming addition of Rs. 69,98,300/- made by AO on account of cash found/surrendered during search. The addition made by AO represents double addition inasmuch as the same was already offered in the return. The addition made by AO and confirmed by Ld. CIT(A) is illegal and without appreciating the facts of case properly.
3. Ld. CIT(A) erred in confirming addition of Rs. 15,70,000/- made by AO on account of alleged excess stock found during search invoking sec. 69B. The addition made by AO and confirmed by Ld. CIT(A) is illegal and without appreciating the facts of case properly.
4. The assessment order passed by the AO and confirmed by Id. CIT(A) is illegal, ab initio void inasmuch as the approval given by Id. JCIT u/s 153D is not in accordance with provisions of law. The assessment order is liable to be quashed in absence of valid approval u/s 153D.
5. The appellant reserves the right to amend, modify or add any of the ground/s of appeal.
3. The brief facts of the case, as stated, are that the assessee is an individual, proprietor of M/s Banshi Lal Soni & sons, had filed his return of income on 31.12.2014, declaring taxable income of Rs. 1,88,17,140/-. A search and seizure action has been performed on the premises of the assessee on 30.10.2013, wherein certain documents and cash have been seized by the department. In due course, the seized loose papers have been examined, scrutinized and checked / verified with the books of accounts of the assessee. Copies of such loose papers have been provided to the assessee requiring him to 3 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur offer his explanations to which a response was given by the assessee. Ld. AO doubted the explanations submitted by the assessee regarding two loose papers bearing serial no. 23 and 24, on which certain transactions have been recorded. The transactions so recorded are reproduced in the assessment order, the same are culled out hereunder for the sake of clarity:
4ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
4. In response to the explanation sought by the Ld. AO, Ld. Counsel of the assessee have furnished written submission, which reads as under:
a) Generally, all the entries pertaining to sales and expenses are recorded in the books of accounts but for few occasions such as dhan-teras or Diwali etc., when there is huge demand for gold, customers pay money in advance for purchase of jewellery and depending on the price fluctuations materialization of order takes place. Your good self may also appreciate that 5 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur this is the general practice in the business of Gold Bullion. Therefore, these amounts are noted down in a loose sheet and as and when the transaction materializes, the actual sales entries are posted in the books of accounts and excess advance money received are returned hack to the customers.
However, no such entries could have been posted in the books of account as the search commenced on 30.10.2013
b) Since the transactions explained above could not be recorded in regular books, the assessee surrendered a sum of Rs.1,55,00,000/- as undisclosed income on account of such entries, on an adhoc basis, without carrying out detailed verification and calculation. Therefore, it is requested that no further addition is to be made on account of unaccounted sales of Rs. 4.30 crores.
c) Without prejudice to our above submission, even if an addition is proposed on account of unaccounted sales, the entire sales amount could not be treated as income only the Gross Profit margin on the undisclosed sales to be considered as income.
5. The aforesaid submission / explanation of the assessee was considered by the Ld. AO, however, the same could not impress upon the Ld. AO, thus, are not accepted, stating that, as per statement of Shri Sunil Soni, the assessee, proprietor of M/s Bansi Lal Soni & Sons, recorded during the search action, it is admitted that the amount recorded in the aforesaid loose papers is his unaccounted sales. But, at the time of scrutiny assessment, the assessee's counsel has taken a different stand, not only in respect of investment but also on a different line that the entries on loose paper are sales and GP should be applied on these sales. It was the assertion of Ld. AO that the transaction totaled as per page No. 23 & 24 recorded was again confronted to the assessee's counsel, but 6 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur no plausible explanation could be offered by him. Accordingly, the total amount of Rs. 4,30,18,730/- after reducing Rs. 1.00 Cr., which has already been surrendered by the assessee from the aforesaid entries, calculated at Rs.3,30,18,730/-, which have been construed as unexplained investment of the assessee and added to his taxable income invoking provisions of section 69B.
6. It is further noticed by Ld. AO that the assessee during the recording of his statement at the time of search and seizure has also admitted that the cash of Rs. 69,98,300/- is his unaccounted income and have offered the same as his unexplained income for taxation. It is further noted that such admission of the assessee was not only declared during the search but also during the assessment proceedings. Accordingly, this amount is also treated as unexplained investment and added to the income of assessee under the provisions of section 69B. In aggregate, the total addition u/s 69B was made for Rs.4,00,17,030/-.
7. Another addition was made by Ld. AO on account of difference in stock for which allegedly no explanation was adduced by the assessee, thus an addition on this account was made u/s 69B of the Act for Rs.15,70,000/-. 7 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
8. After making the aforesaid additions, returned income of the assessee has been enhanced by determining total assessed income at Rs.6,04,04,170/-.
9. Aggrieved by the aforesaid additions by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein the contentions raised by the assessee are not find plausible and convincing by the Ld. CIT(A), the appeal of the assessee thus was dismissed. While deciding the appeal of the assessee, Ld. CIT(A)'s observations are extracted as under:
VI. DISCUSSION OF THE APPEAL ON MERITS The first ground raised by the assessee is addition of Rs. 3,30,18,730 u/s 69B on account of alleged unexplained investment. As per page 2 para 2 of the Assessment Order the details of incriminating documents and details of cash seized during search proceedings are given. There was a search and seizure action u/s 132(1) on 30.10.2013 and notice u/s 153(A) and 143(2) have been issued. Subsequently notice u/s 142(1) was also issued. Taxpayer during the course of scrutiny assessment proceedings filed audit report Form 3CB and 3CD as required u/s 44AB of the Act. Books of accounts, bills, vouchers and a few bank statements produced were submitted for verification. The seized loose papers were examined, scrutinised and checked from the books of accounts. The taxpayer submitted as follows. Generally, all entries of sales and expenses are recorded in the books of accounts. But for few festival occasions such as Dhanteras when there is huge demand for gold, customers pay money in advance for purchase of jewellery and depending on the price fluctuations materialisation of order takes place. This is the common practice of gold and bullion. These amounts are noted down in loose sheets and as and when transaction materialises the actual sales entries are posted in the books of accounts and excess, advance money received are returned back to the customers. Since the transactions of the above nature could not be disclosed in the books of accounts an amount of Rs. 1.55 crores was disclosed by the taxpayer during the course of search. It was requested by the taxpayer that no further addition may be made on account of unaccounted sales of Rs. 4.30 crores. Further they submitted that 8 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur even if addition is proposed on account of unaccounted sales the entire sales amount could not be treated as income; only the GP margin on the undisclosed sale is to be considered as Income. For the following reasons, the argument of the assessee is not found to be tenable.
VI.2 Shri. Sunil Soni, the assessee, had admitted in the statement recorded u/s 132(4) that the amount recorded in the aforesaid papers are his unaccounted sales. But during the scrutiny assessment proceedings the counsel took a stand that these are sales and GP should be applied on the sales. The transactions totalled as per Paper No. 23 & 24 and recorded was again confronted to the counsel. The counsel could not offer any plausible explanation. Therefore, the same was taken as unexplained investment u/s 69B.
VI.3 Since the assessee already surrendered Rs- 1 crore on account of these investment/loose papers the remaining amount of Rs. 3,30,18,730 is to be added to the total income of the taxpayer. A statement u/s 132(4) supported by seized material including loose papers may establish the unexplained investments made by the taxpayer. The authority issuing the authorisation is in possession of some credible information and has reason to believe that conditions stipulated in clauses (a)(b) and (c) of section 132(1) exists and the said information has nexus to such belief. Warrant u/s 132(1) can only be issued on the basis of such information and the CIT/DIT has reason to believe that the person is in possession of money, jewellery or other valuable articles representing income/property which has not been disclosed. The primary thrust of the search and seizure action is to collect evidences of tax evasion which otherwise could not have surfaced and brought to tax. Sec 132(4) has been put in place by legislature to enable the authorized officer to collect such evidences by recording statements u/s 132(4) during the course of search. 132(4) empowers the officer to examine and record a statement under oath of any person who is found to be in possession or control any books of accounts documents, money, bullion, jewellery, any valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income Tax Act. The statement u/s 132(4) recorded by administering oath is presumed to be carrying truth in view oi provisions of section 188 and 193 of IPC which provide or imprisonment if a false is given. So there is considerable Importance for statement u/s 132(4) recorded during search and seizure operation. It is used as evidence in any proceedings and its of great significance. Legislature is aware of the fact that Some admissions made at the time of search may have to be backed by sufficient corroborative evidence (which may not be found). A statement u/s 132(4) holds the sway. This has been upheld in the case of CIT vs Hotel Maria 9 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur (2011) 332 ITR 537. Such statement as well as the documents seized comes under the purview of evidence under Income Tax Act read with section 3 of Evidence Act. Such a statement enables the department to bring on surface tax evasion, to examine the nature of incriminating documents etc. found during the course of search and record the assessee's version with regard to the contents of such incriminating documents and assets, its source, mode and manner of earning/application and its accountability in the books of accounts whether disclosed or undisclosed. 132(4) statement is of highest significance carrying the significant evidence value used by the Assessing Officer during assessment proceedings. The taxpayer is also benefited by 132(4) statements by making a valid disclosure gets benefited from the penalty not leviable u/s 271AAA or 271AAB. 132(4) statements backed by documentary evidences (primary evidences) are the most important piece of evidence in the hands of a taxman. The Supreme Court in the case Pullengode Rubber Produce Company Ltd vs State of Kerala (1973) 91 ITR 18 held that admission is an extremely important piece of evidence though it is not conclusive. Therefore, a statement made voluntarily by the assessee could form the basis of assessment. This judgement was followed by Delhi High Court decision in the case of Arjun Singh vs CWT (1989) 175 ITR 91.
In the case Sarwan Singh Ratan Singh vs State of Punjab AIR 1957 SC 637 held that an admission is only a piece of evidence, the weight to be attached to must depend on the circumstances. Above all the decision in the case of CIT vs Durga Prasad More (1973) (SC) i.e. the test of human probabilities carries the day. Concludingly it can be said that the statement u/s 132(4) has the greatest evidentiary value and it binds on the person who makes it. The legislature in its wisdom has provided that assessment can be made on the basis of such statement. VI.4 Coming to the facts of this case, the taxpayer during the course of search and seizure proceedings had admitted an unexplained income of Rs. 4,00,17,030 and out of this Rs. 1.55 crores was surrendered by the taxpayer as undisclosed Income on an adhoc basis without carrying out detailed verification and conclusion. ln the statement recorded from Shri. Sunil Kumar Soni at the time of search, he admitted the amount recorded in the aforesaid papers as his unaccounted sales. Bu at the time of scrutiny assessment, the assessee through his counsel took a different stand not only in respect of investments but also submitted that these are sales and GP should be applied on sales. The transactions totalled as per Paper No. 23 & 24 confronted with the taxpayer's counsel but no plausible explanation was given by him. No other explanation/evidence was given during the appellate proceedings also. It is hereby pointed out 10 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur that the statement u/s 132(4) is backed by documentary evidences in the form of seized materials which are given in Table 1 and Table No. 2. Therefore, the same is taken as his unexplained investment and liable to be added u/s 69B of the Act. As the assessee has already made a surrender of Rs. 1 crore on account of these investment/loose papers, therefore the remaining amount of Rs. 3,30,18,730 is liable to be added to the total income of the assessee. Likewise, the assessee during recording of his statement at the time of search and seizure have also admitted that the cash of Rs. 69,98,300 is his unaccounted income and offered the same as his unexplained income for taxation. This has been admitted by the person present at the time of search in his statement in response to query no. 5 of his statement. The statement of Shri Manish Soni has been accepted by Shri Sunil Soni Proprietor in his statement further recorded. Not only during the search operation but also at the time of assessment proceedings, the assessee has accepted the same. As per section 69A, when during any FY the assessee is found to be owner of any money, bullion, jewellery or valuable articles and the money, bullion, jewellery or valuable articles not recorded in the books of accounts and the assessee offers no explanation or the explanation offered by the assessee is not satisfactory. Here in this case the taxpayer had voluntarily admitted under oath in the statement u/s 132(4) that the cash of Rs. 69,98,300 is his unaccounted income and offered the same for taxation. Therefore, the same is also liable to be added to the total income of the assessee.
VI. 5 The CIT(A) relied on Hon'ble SC decision in the case CIT vs Singhard Technical Education Society. The facts of the case of Moolchand Malu is entirely different. There was no seized material incriminating or otherwise. The Assessment Order was not based on the seized material but some other extraneous information. The statements of persons relied upon by the Assessing Officer was later on denied stating that they were not allowed to cross examine the third parties. A statement that is not relatable to any incriminating documents cannot be used for making assessment u/s 153A or 153C. This does not apply to the taxpayer because assessment is completed u/s 143(3) based on the materials seized.
addition upheld: Rs. 3,30,18,730 + Rs. 69,98,300 = Rs.4,00,17,030 11 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur VII. Further, during the Search & Seizure action the stock of Gold jewellery & Bullion of 6.612 kg and Silver Weighing at 77.655 kg was found and valuation of the some was got done by the Regd. Approved Valuer whereas as per books maintained by the proprietary firm Ms Bansilal Soni & Sons the figures did not tally and a difference of 72 gms in gold and 610 gms in silver was found valued at Rs. 15,70,000. No explanation for this difference in stock could be adduced by the assessee and hence vide reply dated 23.03.2016 the assessee has admitted his unexplained income invested in stock and offered the same for taxation. On being confronted the proprietor has accepted the same as his unexplained investment valued at Rs. 15,70,000. At the time of assessment, the counsel of the assessee has also accepted the same and did not make any dispute. Therefore, the same is also added to the total income of the assessee as Unexplained investment u/s 69B of the Income tax Act. For concealing the above income penalty proceedings u/s 271(1)(c) are being initiated. During the course of appellate proceedings also no new evidences or explanation were offered by the taxpayer. Basically, the difference in stock was admitted by the taxpayer at the time of search. Since the gold was valued by the registered approved valuer and tallied with the books of accounts, the difference in stock needs to be accepted. Taxpayer had not offered any explanation against the findings of the Assessing Officer. VII. 1 In the case of PCIT vs Deccan Jewellers Pvt Ltd (2021) 132 taxmann.com 73 it was submitted that excess Stock of jewellery found as a result of search was the Suppression of profit from business over the years. This excess Stock has to be treated as business income. Since the assessee has not offered any valid explanation and the same was admitted under oath in the statement u/s 132(4) the addition on account of excess stock of jewellery @ Rs 1570000 is upheld. addition upheld: 1570000/-
Vll. 2 The total undisclosed income detected during search is Rs 150 crores. What is taxed is a meagre 4.15 cr. The income which they admitted during search was brought to tax during assessment proceedings.
VIl. 3 In the result the appeal is dismissed.
12ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
10. Dissatisfied with the order of Ld. CIT(A), wherein the additions made by Ld. AO are sustained by the Ld. CIT(A), therefore, the matter is further carried by the assessee before the Tribunal, which is under consideration before us.
11. At the very inception of the hearing of this appeal, it is pointed out by the Ld. AR that the appeal filed by the assessee is barred by limitation with delay of 145 days. The defect in filing of the appeal on account of delay is confronted to the Ld. AR of the assessee to offer explanation stating the reasons for justification of such delay, in response, Ld. AR submitted that the delay in the present case was unintended, to substantiate such contentions, an application for condonation of delay is filed on 22.04.2024 along with affidavit duly sworn by the assessee, stating various reasons causing such inadvertent delay, which is beyond the control of the assessee and the assessee was prevented with sufficient reasons for not filing the appeal before the tribunal in time, the copy of condonation application and affidavit is extracted as under:
13ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur 14 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur 15 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur 16 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur
12. We have considered the aforesaid application seeking condonation of delay by the assessee, to which Ld. CIT DR has raised objections.
13. On perusal of the reasons for delay in filing of present appeal wherein Ld. AR had shown us that the assessee has exercised the option for receipt of 17 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur communications while filing the appeal before the Ld. CIT(A) in form No. 35 stating 'No' towards the option that "Whether notice / communication may be sent on email ID?". Further, the assessee was under bonafide belief that the order by the Ld. CIT(A) shall be served upon him in physical mode, however, since no physical copy of order was served to the assessee, therefore, there was a valid reasons for the assessee on account of non-service of order in physical form. Ld. AR further offered his explanations regarding the health of the assessee stating certain medical issues, panic situation because of pandemic Covid19, assessee's wife's ill health and other family situation, such all reasons lead to bonafide reasons which have caused the interruption in filing of appeal with the delay, on account of sufficient and unintentional causes beyond the control of assessee, thus, the condonation of delay is requested to be allowed.
14. In view of such facts and circumstances, wherein the assessee has opted for physical communication before the Ld. CIT(A), however there was no evidence brought before us by the department that the order of Ld. CIT(A) was served on the assessee through any physical communication accordingly, the delay involved cannot be said to be totally on account of negligence on the part of the assessee. Also looking to the facts and circumstances apprised before us regarding health issues of the assessee and his family members, we find it appropriate in the present case, that the delay involved of 145 days deserves to 18 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur be condoned. Consequently, the application for condonation of delay by the assessee has been allowed and the delay involved is condoned.
15. Coming to the grounds of present appeal, at the outset, Ld. Authorized Representative, Shri R. B. Doshi, CA (in short "Ld. AR") of the assessee have submitted a written synopsis, the same is extracted as under:
Sunil Kumar Soni, Raipur AY 2014/15 ITA No.308/RPR/2023 (Assessee) Ground No. 1 AO : Page no. 2, para no. 3 & page no. 4, para no 4 CIT(A) : Page no. 9 to 13 Submission of the assessee
1. Some facts Search date 30.10.2013 Cash book written up to 23.10.2013 Dhanteras on 01.11.2013 Diwali on 03.11.2013 Search took place just two days prior 10 Dhanteras and the transactions noted on the loose paper pertain to two days prior to date or search i.e. 28.10.2013 & 29.10.2013
2. Assessee deals in gold bullion, gold ornaments and silver items. Jewellers buy considerable gold bullion on the occasion of Dhanteras.19 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
3. Traders/ jewellers places tentative orders with assessee in advance but formal booking of orders takes place on the day of Dhanteras and bullion is generally supplied subsequently as larger quantity is not maintained by assessee. 4 Noting on loose papers; probable order booking
i) To have fair idea of probable booking by traders/jewellers, to avoid rush, assessee contacts regular buyers for ascertaining their probable requirement for Dhanteras.
ii) Noting on L P no. 23 & 24 (PN 12 & 13 or PB) represents probable order booking by prospective buyers. S01ne buyers place orders in terms of Rupees in round figure while some buyers place order in terms of quantity. Some buyers place order for some fixed auspicious quantitative, value whereof is noted in precise figure.
5. Impugned entries cannot constitute income Entries on LPs do not represent any actual undertaken transaction but only tentative order booking of prospective buyers. Such noting cannot constitute income of an assessee.
6. No corroborative excess cash or unaccounted assets found
i) Cash balance round was Rs.69,98,300/- as against book of balance of Rs.
67,48,747/-.
ii) Entries on the LPs to the tune of Rs. 4.30 crore and if it represented actual receipt of money, larger cash must have been found physically or corresponding unrecorded assets would have been found.
7. No corroborative material entries on LPs not sufficient for making addition
i) Mere entries in loose papers cannot result into addition if they remain uncorroborated.
ii) Reliance on:-
DCIT vs Ashok Vihar in IT(SS)A No. 173/RPR/2014 dt. 01.07.2019, PN 61 to 75 of PB-2, relevant findings on PN 71, para no. 6.1 20 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur Aarti Colonizer Company in IT(SS) A No. 178-180/RPR/2014 dt. 01.07.2019.
CIT vs Lavanya Land Pvt. Ltd. (2017) 297 CTR (Bonn) 204, PN 76 to 88 of PB, relevant findings on PN 86-87, para no. 20 & 21 Gurmeet Singh vs DCIT (2023) 67 CCH 189 (Del. Trib.) CIT vs P. V. Kalyanasundaram (2006) 282 ITR 259, 262 (Mad.), affirmed in (2007) 294 ITR 49 (SC) wherein Hon'ble dismissed appeal, PN 89 to 92 (High Court) & 93 to 96 (SC) of PB-2, relevant findings on PN 92. CIT vs Anil Bhalla (2010) 322 ITR 191, 194-95 (Del.), PN 97 to 101 of PB- 2, relevant findings on PN 100, para no. 5.
Ajay Gupta vs CIT (2020) 270 Taxman 71 (All.), para 10, PN 102 to 105 of PB-2, relevant findings on PN 105, para no. 1 l & 12.
ACIT vs Layers Exports P. Ltd. (2016) 48 CCH 412 (Mum. Trib.), in ITA no. 3019/Mum/2011 dt. 31.10.2016, para 33.
8. Not every order is executed immediately
i) Due to working capital constraints, sometimes order executed for lesser amount / quantity.
ii) Tentative requirements given by traders / jewellers. Final order given on Dhanteras is for a different lesser amount / quantity.
9. Statement during search
i) Statement of Manish Soni, brother of assessee at PN 14 to 23 of PB
ii) PN 17 of PB, question no. 9 statement, assessee's brother stated that he was unable to explain the entries on loose papers.
iii) No admission of assessee during search on these loose papers. 21 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
10. Whatever orders were executed out of bookings, same entered in books post Diwali as sales. Sales account at PN 1 to 11 of PB Noting on LP No. 24 were cancelled (PN 13 of PB). No cognizance or such cancelled entries could have been taken, Total of such entries is Rs. 2,22,18,200/-.
11. Alternate Plea
i) Without prejudice to main submission, entries on loose paper could not be added as undisclosed income. reasonable inference could be drawn and the only inference can be of unrecorded sales.
ii) Income implication only to the extent of GP. GP of past years at PN 51 of PB
iii) Even if GP of the year under appeal is considered (5.30%), GP would be Rs, 22,79,993/- against which Rs. I crore already offered in return. Computation at PN 26 of P B, amount included in Rs. 1.70 crore.
12. Quantum too huge to be considered as income
i) Transactions of two days. It is beyond comprehension that such huge income can be earned in just two day.
ii) Reliance on CIT vs smt. P. K. Noorjahan (1999) 237 ITR 570 (SC) Smt. Rajabai B. Kadam vs ACIT (2002) 83 ITD 229 (Pune)
13. Sec. 69B not applicable
i) Pre-condition for invoking sec. 69B, AO to find that assessee made investment or assessee should be found owner of bullion, jewellery or other valuable article.
ii) No finding given by the AO to the above effect.
iii) Sec, 69B applies where investment found is in excess of that record in books.
No case made out to this effect.
iv) Other deeming sections also not applicable.
v) Alternatively, without prejudice to main submission, set off of Rs. 69,98,300/-
(cash found and added) should have been allowed by AO.
22
ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
Ground no. 2
AO : Page no. 4, para no. 4, last 10 lines
CIT(A) : Page no. 13
Submission of the assessee
1. AO made addition on the basis of statement. Such statement at PN 14 to 23 of PB, relevant answer at PN 15 of PB (question no. 5).
2. Apart from regular income, assessee offered undisclosed income of Rs.
1,70,00,000/- which included Rs. 1 crore on account of various loose papers and Rs. 70 lakh on account of cash found during search. Surrender of loose paper of Rs. 1 crore as per answer to question no. 16 of statement, at PN 23 of PB
3. Computation at PN 26 of PB
4. Amount surrendered already offered in the return. Added again by AO arbitrarily.
Double addition.
5. Without prejudice, even if it was not offered in return, there was no reason to add it again as the cash would be otherwise also covered by surrender of Rs. 1 crore or addition made by AO on account of loose papers.
6. There was no excess cash. Cash found Rs. 69,98,300/-, cash balance as per books Rs. 67,48,747/-, excess cash was hardly Rs. 2,49,553/-. Cash book and supporting documents produced before AO. No defect/ discrepancy pointed out therein. Books accepted by AO.
Ground no. 3
AO : Page no. 5, para no. 5
CIT(A) : Page no. 13 & 14 para no. VII & VII. I
23
ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
Submission of the assessee
1. Without prejudice, Issue of discrepancy in stock of gold & silver and the amount of Rs. 15,70,000/- are both separate. Rs. 15,70,000/- is amount surrendered during search on a/c of investment in pawning business found, which has been wrongly related as value of excess stock. Reference in question no. 8 of statement, at PN 16 & 17 of PB.
2. Excess stock of gold not 72 gms but 51,91 gms [5,512 gms (-) 6,560,090 gms]. Same way, difference or 511 gms found in silver was shortage and not excess [77,655 gms (-) 78,166 gms]. Relevant question no. 7 of statement at PN 16 of PB.
3. Value or excess gold Rs. 1,59,074/- (@Rs.3,065/- per gm rate as on 28.10.2013) and shortage of silver valued at Rs. 25,703 (@ Rs. 50.30/- per gm rate on 23.10.2013).
4. Value or excess gold jewellery covered disclosure of Rs. 1 crore. There was no occasion to make separate addition.
5. Shortage of silver may lead to inference of unrecorded sales, GP whereon @5.30% would come to Rs. 1,362/- which is also covered by disclosure of Rs. 1 crore.
16. During the hearing, Ld. AR on behalf of the assessee, has requested to withdraw the ground no. 4 of the present appeal and has signed in the appeal memo to that effect. Such request of the assessee was not objected by the department, considering the request of the assessee and no objection from department, Ld. AR is permitted to withdraw ground no. 4 of the present appeal. Consequently, ground no. 4 of the present appeal has been rendered as dismissed being not pressed.
24ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
17. Ground No. 1 & 2: Regarding confirmation of addition of Rs. 3,30,18,730/- and Rs. 69,98,300/- u/s 69B of the Act.
17.1 Referring to the written submissions furnished (extracted supra), Ld. AR described that the search on the premises of the assessee has taken place on 30.10.2013, just two days prior to the festival "Dhanteras" dated 01.11.2013. The loose papers impounded were pertaining to transactions dated 28 & 29.10.2013 i.e., two days prior the date of search. Regarding the nature of business of the assessee, Ld. AR has explained that the assessee is a jeweller, deals in the business of Gold Bullion, Gold ornaments and silver items. It is the feature of the assessee's business that on the occasion of "Dhanteras", they usually buy considerable gold bullions. It is further described that tentative orders for advance bookings for supply of bullions is generally placed by the traders / jewellers with the assessee, as large quantities cannot be maintained by the assessee, the orders so noted are completed subsequently as per availability of quantities. Apropos, noting on the loose papers impounded during the search, Ld. AR submitted that such noting are for probable order bookings ascertained as per assessee's communications with regular buyers to have a fair idea of expected business in order to avoid last minute rush. It is the submission that noting on LP No.23 25 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur & 24 (copy furnished at page no. 12 & 13 of the paper book) represents probable order bookings from perspective buyers. Out of which some of buyers have placed their orders in terms of Rupees in round figure, whereas some buyer's places orders in terms of quantity and some buyers for fixed auspicious quantities, value of which is noted in precise figures. Ld. AR further argued and contended that the impugned entries on Loose Papers cannot constitute income of the assessee, as the same does not represent any actual / undertaken transactions, they are only tentative bookings from prospective buyers.
17.2 Apropos, excess cash balance found during the search; it was the submission by Ld. AR that the cash balance found was of Rs. 69,98,300/- as against book balance of Rs.67,48,747/-. It is further argued that the entries in loose papers are for Rs.4.30/- Crores, if the same is treated as actual receipt of money, then the large amount of cash or corresponding unrecorded asset must have been found physically.
17.3 In support of aforesaid contentions that the aforesaid additions u/s 69B are arbitrary, baseless and not justified, the Ld. AR have advanced certain arguments along with judicial pronouncements, described as under: 26 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur a. No corroborative material was found to bring the entries on loose papers within the scope of unexplained investment. Mere entries in loose papers cannot result into addition, if they remain uncorroborated. The case laws relied upon and finding therein furnished before us by the Ld. AR are extracted as under:
DCIT vs Ashok Vihar in IT(SS)A No. 173/RPR/2014 dt. 01.07.2019 6.1 The assessee has claimed before us that loose paper number 108 found during search, which is stated to be profit and loss account, is not a complete document and it is unauthentic. We have perused the loose paper which Is at page number 59 of paper book. As evident from the loose paper, on the debit side of the said profit and loss account, it appears that it is only the gross profit of Rs.6,29,76,970/- which is reflected as it is this figure which has been brought forward In the credit side of profit and loss account as gross profit. Looking at the manner in which the profit and loss account is appearing, we find that although on the credit side sales are reflected, but on the debit side, altogether no entry is appearing except, the gross profit. This is very strange. We cannot conceive of any profit and loss account which does not have a matching cost relating to the sates and if the matching cost is not debited to the profit and loss account, such a profit and loss account cannot give a true picture of the profit arising from sales. It is very strange to observe that on the debit side of the profit and loss account, neither there is any opening stock nor any purchases of land and without there being such items on the debit side, sales have been shown to be effected, Moreover, entire sale proceed is shown as gross profit. This, in our considered view, runs contrary to accounting principle and such a loose paper really does not make any sense and, as rightly contended by [d. AR of the assessee, is a meaningless and 27 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur unauthentic document' If such a profit and loss account reflect any net profit, obviously it cannot be made the basis for assessing income of the assessee, We also find that during search, no books of accounts and detailed entries supporting the figures reflected in the profit and loss account or on loose paper number 107, which gives the details of sales, was found. No day to day cash book Ledger, Journal was found as the assessment order is silent on this point. It is not even the case of Revenue that some other evidence was found during search or brought on record during assessment that the sale proceeds as mentioned in the loose papers were ever received by the assessee from the parties named therein. In other words, apart from the two loose papers, there was absolutely nothing corroborative found during search and therefore, the contents of the loose papers have to be largely discounted. The entries on the loose papers, in view of above facts, could not have been made the basis of addition. We find that the appellant has rightly relied upon the ratio of decision in the case of 'CIT vs Lavanya Land P. Ltd.', (Supra) (wherein the finding of Tribunal that the entries in the loose papers found during search have to be corroborated by any other evidence and in absence of any corroborative material found, no addition can be made only on the basis of the entries in the loose papers, has been affirmed by Hon'ble High Court.
CIT vs Anil Bhalla (2010) 322 ITR 191, 194-95 (Del.)
5. The third dispute in the present appeal is with regard to the addition of Rs. 35 lacs made by the AO as unexplained expenditure of the assessee under s. 69C of the IT Act, 1961. The CIT(A) in this behalf observed that no independent material or evidence had been brought on record by the AO to establish that the notings/jottings recorded on the loose sheet of paper represented an unaccounted transaction. The CIT(A) accepted the explanation 28 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur of the assessee that the sum of Rs. 35 lacs represented requirement of funds for different purposes and did not represent any receipt or outgoing for any such purpose. The CIT(A) considered the material on record at length and came to the following conclusion:
"4.2 I have considered in detail the material on record. From the notings on p.
47 of Annex. A25 it cannot be said that any actual expenditure is represented by such notings which is not recorded in the books of account. To support the addition on account of unexplained expenditure on the basis of jottings on a loose sheet of paper, it is necessary to establish that the notings represent unaccounted transaction, with the help of independent corroborative evidence. In this case apart from the notings on the said paper, no other independent material or evidence has been brought on record. Moreover, the explanation submitted by the appellant is supported by relevant entries in the books of account of VTPL. Accordingly, the allegation of unexplained expenditure outside the books of account has established in the assessment order. The addition of Rs. 35 lacs is, therefore, deleted."
Ajay Gupta vs CIT (2020) 270 Taxman 71 (All.)
11. This Court, in the case of CIT, Kanpur Vs. Shadiram Ganga Prasad, 2010 UPTC 840 has held that the loose parchas found during search at the most could lead to a presumption, but the department cannot draw inference unless the entries made in the documents, so found are corroborated by evidence.
12. As, Section 132(4A) of the Act provides that any books of account, documents, money, bullion, jewellary or other valuable articles or things 29 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur found in possession or in control of any person in course of search may be presumed to be belonging to such person, and further, contents of such books of account and documents are true. But this presumption is not provided in absolute terms and the word used is "may" and not "shall", as such the revenue has to corroborate the entries made in the seized documents before presuming that transactions so entered were made by the assessee. Presumption so provided is not in absolute terms but is subject to corroborative evidence.
b. Ld. AR further submitted that every tentative order recorded by the assessee cannot be executed due to working capital constraints, sometimes they are executed with modifications in terms of volume / amount. c. Referring to statement during the search, Ld. AR drew our attention to statement of Mr. Manish Soni, brother of the assessee, answering question no. 16, have admitted that considering the loose papers, books seized, and mortgage ornaments found in the premises of the assessee during the search, an undisclosed income of Rs.1 crore on behalf of the assessee firm is accepted, generated during the FY 2013-14 (AY 2014-15, the relevant year under consideration) and committed to pay applicable income tax on the same. It is further submitted that assessee's brother in answer to question no. 09, have submitted that he is unable to explain about cash amount and bank cheque details noted on LP's 1. It was the submission that there was no admission by the assessee during the search regarding the 30 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur noting on the loose papers apart from lumpsum declaration of undisclosed income. Ld. AR further submitted that the entries on LP No. 24 are cancelled by the assessee by striking off the same because such bookings were not executed, but such cancellation on the entries aggregating Rs. 2,22,18,200/- was not taken into cognizance by the revenue. d. Ld. AR further came up with an alternate plea, without prejudice to the main submission that even if the entries on the loose papers are considered as unrecorded sale, the addition should be only of the GP. If the GP of year under appeal is considered which is 5.30% the amount calculated would be Rs. 22,79,993/- against which assessee had already surrendered an amount of Rs. 1.00 crore and offered to tax in his return of income for the year under consideration.
e. Ld. AR further placed his argument that the quantum of transaction recorded on loose papers is too huge to consider as income of the assessee only in two days, looking the size of business of assessee. Reliance is placed on the case of CIT Vs Smt. P K Noorjahan (supra) and Smt. Rajabai B. Kadam Vs ACIT (supra).
f. Ld. AR further submitted that provisions of section 69B are not applicable in the present case, as the precondition for invoking section 69B is to prove that the assessee had made investment or found owner of 31 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur bullion jewellery or other valuable article. No such finding was given by the Ld. AO. It is submitted that the investment of the assessee in excess of that recorded in books can qualify for addition u/s 69B but no such case was made out by the department. It was the alternate prayer that the addition should be reduced by setting-off of Rs.69,98,300/- (cash found and added) during the search.
g. Ld. AR submitted that the excess cash found during the search was already offered by the assessee while disclosing the undisclosed income of Rs. 1.70 Crore. Alternatively, the excess cash found during the search was duly explained by the assessee by producing the cash book and supporting documents before the Ld. AO, during the assessment proceedings, wherein no defect / discrepancies qua the books of accounts of the assessee are pointed out, the books of assessee are accepted by the Ld. AO. 17.4 Backed by aforesaid submission, it was the prayer by Ld. AR that the addition made, invoking the provisions of section 69B are utterly arbitrary, baseless, unjustified and confirmation thereof by the Ld. CIT(A) was without proper appreciation of the facts of the case, therefore, such additions are untenable and liable to be deleted.
32ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur 17.5 Per contra, Ld. Departmental Representative, Shri S. L. Anuragi, CIT-DR reiterated the observations and findings by the revenue authorities, have placed his strong reliance on their orders, submitted that the orders of authorities below are reasonable, justified and as per law, thus, deserves to be sustained.
17.6 We have considered the rival submissions, perused the material available on record and case laws relied upon by the Ld. AR. On perusal of the orders of authorities below and the relevant documents furnished before us by the Ld. AR, the main incriminating documents relied upon by the Ld. AO i.e., LP No. 23 & 24 are extracted hereunder for appreciation of the facts:
33ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur 17.7 On perusal of the aforesaid documents, it is observed that various names along with respective figures and the date on the top of the document as 28.10.2013 and 29.10.2013 are mentioned. When such entries are enquired from the assessee to explain their nature and fate, it is submitted by the assessee that there is huge demand for gold on the occasion of festivals "Dhanteras & Diwali", customers pay money in advance for purchase of jewellery and depending on the price fluctuation, the orders so received have materialized. It is further clarified that as per general 34 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur practice in the business of gold bullion, which the assessee in present case is engaged, the amounts are note down on a loose sheet and as and when the transaction materializes the actual sales entries are posted in the books of accounts. The reply of the assessee was not found convincing by the Ld. AO therefore, an addition u/s 69B on account of unexplained investment qua the noting on the loose papers for Rs. 3,30,18,730 and also excess cash found of Rs. 69,98,300, was made in total for Rs.4,00,17,030/-. The matter thereafter preferred for appeal before the Ld. CIT(A), but assessee's contentions are not considered acceptable, so the appeal was dismissed.
17.8 The additions made u/s 69B are based on assessee's statement, towards which no further corroborative evidence are gathered by the revenue. The relevant statements of the assessee recorded u/s 132(4) dated 30.10.2013 are only in the nature of confirmation to the statement of Mr. Manish Soni, Brother of the assessee recorded u/s 132(4) of the even date.
The relevant question No. 7,8,9 and 16 a/w answer thereto in the statement of Mr. Manish Soni are extracted hereunder for better interpretation: 35 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur 36 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur 37 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur 17.9 On perusal of the aforesaid question & responses, it is emanating that initially Mr. Manish Soni has shown his inability of offer any explanation regarding page 1 to 24 of the LPS-1 & blank cheque found during the search.
After various questions finally at question no. 16 Mr. Manish Soni accepted unaccounted income for the current year, taking into considerations loose papers, books, cash loan on mortgaged jewellery etc. for Rs. 1.00 crore and Rs 70 lacs towards excess cash received during the search. So far as the noting on loose paper are found no specific admission was made by Mr. Manish Soni and the amount admitted being surrendered was offered for taxation as "income declare in survey" in the computation of total income and the ITR filed dated 31.12.2014, copy placed before us at page no. 26 to 29 in the assessee's PB. We may herein observe that the entries in the loose paper are not further corroborated by the revenue to establish and prove the perception hold by the department that all such transactions are actually materialised which is a mandatory precondition as per settled position of law and directions of the CBDT, in order to make any addition u/s 69B. Only statements of the assessee cannot be the sole basis for the addition unless the same is substantiated with documentary evidence.
38ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur 17.10 On this issue, Ld. AR has placed his reliance on various judgments, and rightly so wherein it is observed by the hon'ble courts that in absence of any evidence found during the search or brought on record during the assessment by the revenue that the sale proceeds as inferred from the noting in the loose paper were ever actually received by the assessee from the parties named therein. The entries on the loose papers could not have been made the sole basis for addition. As per order of Hon'ble Mumbai High Court in the case of CIT vs LAVANYA Land Pvt. Ltd. (2017) 297 CTR (Bom) 204, on the similar issue has held that:
18. When the Appeal was placed thereafter, this Court was repeatedly informed that the rectification application will be heard by the Tribunal and appropriate orders will be passed. Therefore, the hearing of these Appeals be adjourned. We refused such an adjournment on 27th April, 2017. That is how we have heard both sides at some length.
19. We are not impressed by the arguments of the learned Additional Solicitor General. The Tribunal has decided, as is apparent from the record, the Appeals of the assessees pertaining to the Assessment Years 2007-08, 2008- 09 and 2009-10. These Appeals were directed against the order of the learned Commissioner of Income Tax (Appeals) dated 27 October, 2011. The representatives of both sides, by consent, stated that there are 67 appeals pertaining to 52 different assessees, including the one before the Tribunal, 39 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur which have been decided on identical facts. The issues are also common. That is how the Tribunal clubbed all the appeals together for the convenience sake.
20. The Tribunal noted the grounds of Appeal. It also noted the facts pertaining to the search and seizure action under Section 132 and the statement of Dilip Dherai. The Tribunal noted the fact that the entire land acquisition was looked after by Central Leadership Team of which Mr. Dilip Dherai, Mr. Anand Jain, Mr. Sanjay Punkhia and Mr. Ajit Warthy are key members. The Tribunal also referred to the seized documents. The Tribunal then referred to the order passed by the Commissioner of Income Tax (Appeals). Then the Tribunal noted the arguments of both sides. These arguments were noted in great details. Then, the Tribunal, in paragraph 18 and 19, held as under:
"18. Thus it is clear that before issuing notice u/s. 153C, the primary condition has to be fulfilled and which is that the money, bullion, documents etc., seized should belong to such other person. If this condition is not satisfied, no proceedings could be taken u/s. 153C of the Act. The seized documents marked as page I & 2 or our order do not belong to the assessee but were seized from the residential premises of Shri Dilip Dherai. It is not the case of the Revenue that the impugned documents are in the handwriting of the assessee. At this stage, it would be fair to the Revenue that it cannot be in the handwriting of the assessee since the assessee is a legal person, so to extend our observation, the seized documents are not even in the handwriting of any person related with the assessee because Shri Dilip Dherai is neither a Director nor a shareholder/member nor even an employee of the assessee company. We may mention at this stage that the provisions of the Indian Evidence Act are not strictly applicable to the proceedings under the Income Tax Act, but the broad principles Q/ law of evidence do apply to such proceedings. Further an entry in the books of account maintained in the regular course of business is relevant for the purpose of considering the nature and impact of a transaction, but noting on slip of papers or loose sheet of papers are required to be supported/ corroborated by other evidence. There is also a distinction between loose papers found from the possession of assessee and similar documents found from a third person. In the present case, impugned documents were not found 40 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur from the possession of the assessee but was found from the possession of a third person i.e. Shri Dilip Dherai. Mere mention of the names of the villages where the companies may have purchased lands would not give any basis to assume/presume/surmise that the name of the companies are mentioned in the impugned documents. The very foundation of Sec. 153C has been shaken by not fulfilling the condition precedent for the issue of notice. It is the say of the Ld. DR that in the present case there is no need for recording of the satisfaction. If this plea of the DR is accepted then the legislative intent of inserting sec. 153C in the Act would get defeated because the AO will get unstoppable powers to reopen assessments for 6 year in the case of the ' Other Person ' without recording any basis [ satisfaction] for his action. Therefore this plea of the Ld. DR cannot be accepted.
19. Considering the entire facts and circumstances in the light of the impugned seized documents, we have no hesitation to hold that action taken u/s. 153C of the Act is bad in law.
21. Thereafter, in paragraph 20, the Tribunal considered the merits and once again, at great length. The particular argument revolving around the statement of Dilip Dherai and his answer to question No. 24 was also considered in paragraph 21 of the impugned order. Then, in paragraph 22, the Tribunal refers to the additions made under Section 69C. After reproducing Section 69C and adverting to the fact that Dilip Dherai has retracted his statement, the Tribunal arrived at the conclusion that merely on the strength of the alleged admission in the statement of Dilip Dherai, the additions could not have been made. The concurrent findings of fact would demonstrate that the essential ingredients of Section 69C of the IT Act enabling the additions were not satisfied. This is not a case of 'no explanation'. Rather, the Tribunal concluded that the allegations made by the authorities are not supported by actual cash passing hands. The entire decision is based on the seized documents and no 41 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur material has been referred which would conclusively show that huge amounts revealed from the seized documents are transferred from one side to another. In that regard, the Tribunal found that the Revenue did not bring on record a single statement of the vendors of the land in different villages. None of the sellers has been examined to substantiate the claim of the Revenue that extra cash has actually changes hands. It is in these circumstances that the Tribunal found that on both counts, namely, the legal issue, as also merits, the additions cannot be sustained. Eventually, the Tribunal held in paragraph 25 (page 188) as under:
"25. A perusal of the balance sheet of the assessee show that the authorized, issued and subscribed paid up capital is at Rs. One lakh and the assessee had not done any business during the year under consideration. With such a small corpus and no business activity, nor any has been brought on record by the Revenue, it is not acceptable that the company may have incurred such huge expenditure outside its books of account. Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view. there being no evidence to support the Revenue's case that a huge figure, whatever be its quantum, over and above the figure booked in the records and accounts changes hands between the parties, no addition could therefore, be made u/s 69C of the Act to the income of the assessee. Considering the entire facts brought on record, we have no hesitation to hold that even on merits, no addition could be sustained.
22. We do not think that this case is any different from the one considered by the Division Bench in the case of M/s. Arpit Land Pvt. Ltd. and M/S. Ambit Reality Pvt. Ltd. The Assessment Year in the case of M/S. Arpit Land Pvt. Ltd. was 2008-09 and in the case of M/s. Ambit Reality Pvt. Ltd., it was 2007-08. 42 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur The controversy was identical. The Division Bench, having concluded that no substantial question of law arises for consideration in the Appeals by the Revenue in the case of identical land transactions of two assessees involved in Income Tax Appeal Nos. 83 of 2014 and 150 of 2014, then, a different conclusion is not possible. We do not think that the shift in the stand of the Revenue carries its case any further. We are of the opinion that the Revenue has rightly been faulted for its approach by the Tribunal. The above are pure findings of fact and consistent with the material placed on record. Thus, the jurisdiction and vesting in the Assessing Officer could have been exercised and the satisfaction m that regard was enough, are not matters which can be decided in the further appellate jurisdiction of this Court. It is not possible for us to re-appraise and re-appreciate the factual findings. The finding that Section 153C was not attracted and its invocation was bad in law is not based just on an interpretation of Section 153C but after holding that the ingredients of the same were not satisfied in the present case. That is an exercise carried out by the Tribunal as a last fact finding authority. Therefore, the finding is a mixed one. There is no substantial question of law arising from such an order and which alternatively considers the merits of the case as well.
23. As a result of the above conclusion, we cannot agree with the learned Additional Solicitor General that we can pass a different order and entertain these Appeals for the current year of the search, namely, the Assessment Year 2009-10. That was based on the argument that the action under Section 153C for this year is an incorrect conclusion. All the earlier orders in these Appeals having being noted by us, we have no hesitation in concluding that despite sufficient opportunity being given to the Revenue, it has not been able to satisfy this Court that a different view can be taken.
43ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
24. As a result of the above discussion, and when it is conceded that all these Appeals involve identical issue and challenge, we proceed to dismiss them but without any orders as costs.
17.11 In view of guiding principles laid down in the aforesaid judgments, we observe that in the present case, the revenue was unable to conclusively prove that the noting on loose papers found during the search are for actual transactions executed by the assessee and the cash had actually exchanged hands from the alleged buyers, whose names along with amounts are appearing in the loose papers, though the revenue authorities have the authority mandated by law to make necessary enquiries from all the concerned parties, but no recourse as per records exercised by the revenue. 17.12 We, further would like to make reference of the CBDT's Instruction F. No. 286/2/2003-IT (Inv) dated 10th March, 2003, regarding "Confession of additional Income during the course of search & seizure and survey operation", wherein it is categorically instructed to the departmental authorities as under:
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 44 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely.
Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders 17.13 According to aforesaid binding instructions, the Central Board of Direct Taxes (CBDT) has issued guidelines regarding the use of statements recorded under Section 132(4) of the Income Tax Act. These statements are recorded during search and seizure operations and can be used as evidence in tax proceedings. However, the CBDT has clarified that such statements alone cannot justify additions to income unless corroborated by other evidence.45 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur 17.14 In view of the aforesaid settled law and guidance issued by the CBDT, we find that in present case nothing could be brought on record to establish that noting made on loose papers aggregating to Rs. 4,30,18,730/- could be conclusively treated by the revenue, as unexplained income of the assessee. We, therefore, are of the considered view that the addition made on the basis of hand written noting / jotting / scrubbings cannot survive dehors any concrete evidence to prove that such transactions have been actual materialized, as envisaged by the revenue, which forms the basis to conclude that the assessee is owner of unexplained or undisclosed investment and qualify to be added as income under the provisions of section 69B. Consequently, the addition of Rs. 3,30,18,730/- is struck down, in terms of our aforesaid observations.
17.15 Apropos, addition on account of excess cash found during the search, as per statement of Mr. Manish Soni, an amount of Rs. 70 lac was surrendered qua the cash found which was clarified to be received on account of unaccounted sale of gold / silver, bullion and jewellery, which has been offered for tax in the return of income ROI filed by the assessee for the relevant AY. In view of such admitted facts since the excess cash was Rs. 69,98,300/- 46 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur was already surrendered in round figure for Rs. 70/- lacs, disclosed in the computation of income (extracted supra), no further addition on this count is called for, thus, such addition cannot sustain, so we direct to delete the same. 17.16 In result, ground No. 1 & 2 of the assessee's appeal are allowed, as described above.
18. Ground No. 3: Regarding confirmation of addition of Rs. 15,70,000/- on account of excess stock found during the search, invoking provisions of section 69B.
18.1 On this issue, Ld. AR representing the assessee submitted that as per statement of Mr. Manish Soni, Brother of the assessee, which were confirmed by the assessee in his statement, as per question 8, it is stated and accepted that the excess stock (which was inventory of mortgaged jewellery found in the premises of the assessee) of Rs. 15,70,000/- to be surrendered as undisclosed income of the assessee. Further, in answer to question no. 16, Mr. Manish Soni has categorically declared that an amount of Rs. 1.00 crore is accepted to be surrendered as undisclosed income of the assessee for the FY 13-14, such discloser of Rs. 1.00 crore includes transactions on loose papers, books & 47 ITA No. 308/RPR/2023 Sunil Soni Vs DCIT-1(1), Raipur mortgaged ornaments / jewellery found in the premises of the assessee. Thus, on conjoint reading of question no. 8 & 16 (extracted supra), it can be concluded that the discloser admitted by the assessee for stock of Rs. 15,70,000/- was included in the surrendered amount of Rs. 1.00 crore which is duly offered for tax in the return of income filed for the relevant AY. In view of such facts, addition of Rs. 15,70,000/- separately by the Ld. AO is not justified and confirmation of the same by Ld. CIT(A), stating that no valid explanation was offered by the assessee was misconstrued, whereas such amount was already surrendered by the assessee, therefore, no further explanation is called for. We, therefore, after a thoughtful consideration as per facts borne from the records do not find any justification in the decision of Ld. CIT(A) and any substance in the addition made by Ld. AO, consequently, the addition of Rs. 15,70,000/- on account of excess stock cannot sustain. Resultantly, Ground No. 3 of the assessee stands allowed.
19. Ground NO. 5: This ground of the present appeal is general and academic in nature; therefore, no separate adjudication is required. 48 ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
20. Before parting with, it would be pertinent to express that in the order of Ld. CIT(A), at para VII.2 it is observed that "the total undisclosed income detected during the search is Rs. 150 Crores". In order to verify this aspect, the matter was put up for clarification on 14.08.2024, fixing the date of hearing on 30.08.2024. In the hearing, it was submitted by the Ld. AR that it seems that such fact has incorporated in the order under some inadvertent error on the part of Ld. CIT(A), as the information noted has no nexus to facts of present case, there was no material / evidence or facts involved in the present case to show that there was detection of undisclosed income to the tune of Rs. 150 crores. On this issue, Ld. CIT- DR also affirm the submission of Ld. AR and have agreed that, as per material available on record nothing is arising or revealing about detection of undisclosed income during the search for Rs. 150 crores, so this must be a typographical error, therefore, it can be disregarded. Considering the submission by Ld. AR and fair confirmation by the Ld. CIT-DR, such assertion about detection of undisclosed income during the search for Rs. 150 crores by the Ld. CIT(A) in his order are construed as an inadvertent error, which does not have any bearing on our decision in the present case, thus, the same is disregarded being irrelevant.
49ITA No. 308/RPR/2023
Sunil Soni Vs DCIT-1(1), Raipur
21. In result, appeal of the assessee is allowed in terms of our aforesaid observations.
Order pronounced in the open court on 20/09/2024.
Sd/- Sd/-
(RAVISH SOOD) (ARUN KHODPIA)
ाियकसद / JUDICIAL MEMBER लेखासद / ACCOUNTANT MEMBER
रायपुर/Raipur; िदनां क Dated 20/09/2024
Vaibhav Shrivastav
आदे शकी ितिलिपअ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant- Sunil Soni
2. थ / The Respondent- DCIT-1(1), Raipur
3. आयकरआयु (अपील) / The CIT(A),
4. आयकरआयु / CIT
5. िवभागीय ितिनिध, आयकरअपीलीयअिधकरण,रायपुर/ DR, ITAT, Raipur
6. गाडफाईल / Guard file.
// स या पत ित True copy // आदे शानु सार/ BY ORDER, (Senior Private Secretory) आयकरअपीलीयअिधकरण, रायपुर/ITAT, Raipur