Assessee company was engaged in the business of real estate. AO based on statement of director of assessee-company recorded during search at assessee's premises made addition towards receipt of on-money on sale of flats. Assessee's case was that AO simply relied upon sworn statement of director without placing any further corroborative material. Held: Mere admission was not conclusive as to the truth of the matter. It was only a piece of evidence, weight to be attached to which must depend on the circumstances in which it was made. It could be shown to be erroneous or untrue. Therefore, addition made merely and solely on the basis of confession without any corroborative evidence was not sustainable in law, moreover when confession made was subsequently retracted and no statement of any buyer was recorded even in respect of fact that buyers had already submitted their respective affidavits.
IN THE ITAT, JAIPUR BENCH
RAMESH C. SHARMA, A.M. & SANDEEP GOSAIN, J.M.
ACIT v. JKD Pearl India Developers (P) Ltd.
I.T.A. Nos. 323, 324/JP/2017
A.Y. 2014-15
9 September, 2020
In favour of assessee.
Revenue by: B.K. Gupta, Addl. CIT
Assessee by: S.L. Poddar, Advocate
Sandeep Gosain, J.M.
Both these appeals have been filed by the revenue against the two separate orders of the learned Commissioner (Appeals)-4, Jaipur dated 14-2-2017 and 15-2-2017 respectively for the assessment year 2014-15.
2. The hearing of the appeals was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. In both these appeals common issues are involved, therefore, both the sake of convenience and brevity, a common order is being passed.
3. Since, common issues are involved in the both these appeals, therefore, as a lead case, for the facts and submissions, we take ITA No. 324/JP/2017. In this appeal, the assessee has raised following grounds of appeal :--
'1. Whether on the facts and the circumstances of the case, the learned Commissioner (Appeals) was right in deleting the addition of Rs. 25,86,60,550 ignoring the fact that assessee himself stated in his statements recorded under section 132(4) of the Act during the course of search as well as past search proceedings that he has received on-money in cash from the buyers of various flats and subsequently he failed to show the same in the return of income.
2. Whether on the facts and the circumstances of the case, learned Commissioner (Appeals) was right in deleting the addition of Rs. 2,50,00,000 ignoring the fact that the assessee himself stated in his statements recorded under section 132(4) of the Act during the course of search as well as post search proceedings that there are certain discrepancies in the documents seized from his house and subsequently he failed to show the same in the return of income.'
4. The brief facts of the case are that the assessee is a private limited company engaged in the business of real estate. A search was conducted at the premises of the assessee on 4-9-2013. Subsequently, return was filed on 29-11-2014 declaring loss of Rs. 1,47,63,169 in response to notice under section 153A of the Income Tax Act, 1961 (in short, the Act). The assessing officer (A.O.) completed the assessment on 30-3-2016 determining total income at Rs. 28,36,60,550 thereby making additions under different heads, i.e., addition under section 68 of the Act on account of receipt of on money on sale of flats, addition under section 69C of the Act and also denied the setoff of loss of Rs. 1,47,63,169.
5. Aggrieved by the order of the assessing officer, the assessee preferred appeal before the learned Commissioner (Appeals), who after considering the case of both the parties had deleted the additions made by the assessing officer.
6. Aggrieved by the order of the learned Commissioner (Appeals), the revenue is in further appeal before the ITAT on the grounds mentioned hereinabove.
7. Ground No. 1 of the present appeal raised by the revenue relates to deletion of addition of Rs. 25,86,60,550 by the learned Commissioner (Appeals). In this regard, the learned Addl. CIT-DR Shri B.K. Gupta appearing on behalf of the Revenue has relied upon the order passed by the assessing officer and also submitted that the learned Commissioner (Appeals) had erred in deleting the additions thereby ignoring the fact that the assessee himself stated in his statements recorded under section 132(4) of the Act during the course of search as well as post search proceedings that he has received on-money in cash from the buyers of various flats and subsequently he failed to show the same in the return of income. The learned DR also relied upon the written submissions dated 22-2-2020 filed by him before the ITAT :--
'1. The brief facts of the case are that a search and seizure action was conducted in the case of the assessee on 4-9-2013. During the course of search, in the statement recorded on oath under section 132(4), Shri Vijay Jain, Director of the assessee company made disclosure of Rs. 30.01 Crore, which included a sum of Rs. 27.51 Crore on account of on-money receipts against booking/sale of flats in the various projects undertaken by the assessee company on the basis of seized material from its business premises and Rs. 2.50 Crore on account of other discrepancies. It may be mentioned that, in the post search enquiries, Shri Vijay Jain affirmed the said disclosure of Rs. 30.01 Crore in its statement recorded under section 131 and reaffirmed the same in its undated affidavit (between 6-6-2013 to 18-9-2013), i.e., the surrender was affirmed on two occasions during post search enquiries. However, vide its Letter, dated 30-6-2014, i.e., after more than 9 months from the date of search, the assessee retracted from the said disclosure and consequently, in its return of income for the assessment year 2014-15 filed on 29-11-2014, no such surrender income was shown. In view of the above, the assessing officer has issued show cause notice to the assessee and after considering its reply and dealing with various contentions raised by the assessee, the assessing officer has given detailed findings in the assessment order and has made the addition of Rs. 30.01 Crore to the income of the assessee and for the sake of brevity, the same are not repeated here.
2. Findings of learned Commissioner (Appeals)
Vide the impugned appellate order, the learned Commissioner (Appeals) has deleted the addition of Rs. 25.01 Crore by observing that :--
(i) The assessing officer has solely relied upon the statement of director of the assessee company and has not carried out any enquiries to prove the receipt of on money.
(ii) The seized documents are dumb documents.
(iii) The onus is on the assessing officer to prove the contents of the seized documents are true under section 292C.
(iv) The assessing officer has not brought on record any independent corroborative evidence to support the addition.
(v) No enquiries were made from the buyers of the flats.
(vi) No on money was credited in the books of accounts, so no addition could be made under section 68 as made by the assessing officer.
3. It is humbly submitted that the above findings of the learned Commissioner (Appeals) are not sustainable in the eyes of law. It is an established principle that the statement recorded under section 132(4) has an evidentiary value and is an important piece of evidence. It is true that the said statement can be retracted on the basis of cogent material, if --
(a) It was made by use of any threat or coercion, or
(b) It was made on the basis of incorrect facts.
However, it is to seen that the retraction was made after more than 9 months of the search. In fact, the director of the assessee company also affirmed the same in statement recorded under section 131 and in the affidavit and thus the retraction was nothing but an afterthought. It is humbly submitted that the learned Commissioner (Appeals) has ignored the statement recorded under section 131 as well as the affidavit of the director of the assessee company. It is to be noted that till the filing of the retraction letter, no complaint was made to the senior authorities of the department about the alleged threat or coercion exercised by the departmental officers for making the surrender. Further, it is evident from the statement of Shri Vijay Jain recorded under section 132(4) that he has not only admitted that the seized documents belonged to the assessee company but also has explained them in detail thereof. Further, these documents contained the details of areas of the flats, total consideration, accounted consideration and on-money receipts for the sale/booking of the flats. It may be mentioned that the rates per square feet (for recorded payments) as stated on the seized documents tallied with the rates mentioned in the sale deeds (AO page 26, point 'a'). The AR has filed various affidavits of the flat owners wherein the sales amount as recorded in the books of accounts were stated. The appellant has also filed copies of ledger accounts of various persons as recorded in its books of accounts. However, it is pertinent to mention that the AR has not filed the complete set of documents for the flats for which affidavits were filed. But on a careful perusal of some of the documents filed by the AR and the assessing officer in their respective paper books, it has been observed that :--
Flat No. 401 JKD Pearl