ACIT, CENTRAL CIRCLE-1, COIMBATORE V. FOUNDATION ONE INFRASTRUCTURES PVT. LTD., COIMBATORE

MA 124/CHNY/2025

AI Insights

The case involves the Assistant Commissioner of Income Tax, Central Circle-1 Coimbatore, as the applicant, and Foundation One Infrastructures Private Limited, as the respondent. The Revenue filed miscellaneous applications seeking rectification of the Tribunal's order which had deleted additions made on account of purported unaccounted money collected from customers towards the sale of flats for the assessment years 2013-14 to 2016-17. The Tribunal had previously found that the additions were not supported by corroborative evidence and that the statements and materials relied upon were either invalid or lacked evidentiary value. The Revenue's applications were based on arguments that the Tribunal had erred in its initial findings, citing independence of sections 131(1A) and 133A(3)(iii), and the admissibility of certain statements and materials as evidence. However, the Tribunal dismissed these applications, affirming its original decision and rejecting the Revenue's contentions as mere rearguments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785021 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 05-08-2025
• Other Referred Cases: Thiru A.J.Ramesh Kumar v DCIT [2022] 441 ITR 495 (Mad), ACIT v M/s.Vetrivel Minerals in WA(MD) Nos.119 to 123 of 2022 and C.M.P (MD) Nos.1186, 1187, 1188, 1190, 1192 of 2022 (judgment dated 30.04.2025), Arjun Panditrao Khotkar v Kailash Kushanrao Gorantyal & Ors. (2020) 7 SCC 1
• Laws Referred To: Income Tax Act, Indian Evidence Act, 1872
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T. BANUSEKAR
• Keywords: Rectification of order
• Section: 133A

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI Įी जॉज[ जॉज[ क े, उपाÚय¢ एवं Įी एस.आर.रघुनाथा, लेखा सदèय क े सम¢ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER िविवधया िचकासं/ M.A. Nos. 122, 123, 124 & 125/CHNY/2025 (arising in I.T.A. Nos.3148 to 3151/CHNY/2024) िनधाᭅरण वषᭅ / Assessment Years : 2013-14 to 2016-17 The Assistant Commissioner of Income Tax, Central Circle-1 Coimbatore. vs. Foundation one Infrastructures Private Limited, 4/3, G.D.Street, Race Course, Coimbatore-641 018. PAN: AABCF 1701B (अपीलाथᱮ/Applicant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮकᳱओरसे /Applicant by : Shri Nishant Rao, JCIT ᮧ᭜यथᱮकᳱओरसे/Respondent by : Shri T. Banusekar, Advocate सुनवाई कᳱ तारीख/Date of hearing : 24.10.2025 घोषणा कᳱ तारीख /Date of Pronouncement : 11.11.2025 आदेश /O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: By way of this miscellaneous application, the revenue has requested for rectification of mistake in the order of the Tribunal u/s.254(2) of the Income Tax Act in ITA Nos.: 3148 to 3151/CHNY/2024 for the assessment years 2013-14 to 2016-17 vide order dated 11.03.2025. Printed from counselvise.com 2 M.A Nos.122 to 125/CHNY/2025 2. The Tribunal vide its order dated 11.03.2025 deleted the additions made on account of purported unaccounted money collected from customers towards sale of flats on the following counts: a) The said additions based on mere reliance on loose sheets [Statements recorded u/s.131(1A) and entries in excel sheets printed from the desktop of the Assistant General Manager of the company] were not warranted in the facts and circumstances of the case since the revenue has not brought on record any other corroborative evidence to show that the assessee company had received on money from sale of flats. b) That the statements recorded u/s.131(1A) based on which additions were made was not valid since the revenue had not brought on record any reason to suspect that any income has been concealed or likely to be concealed but for which a statement under the said section could be recorded. It was also held that the revenue had bypassed the requirement of satisfying the provisions of section 133A(6) in recording the statements u/s.131(1A) which is not valid in the eyes of law. c) That the statements recorded u/s.131(1A) were invalid and that the same do not have any evidentiary value and thus could not have been used by the Assessing Officer to make additions. d) The impounded material in the form of excel sheets that were taken from the computer of the employee of the company were not accompanied with certificate in terms of section 65B(4) of Indian Evidence Act, 1872 so as to make such impounded material admissible evidence, a criteria which was not found to be satisfied in the instant case. e) That the impounded material contained a lot of inaccurate data which are not capable of being reconciled, thus making it unreliable for making additions as done by the Assessing Officer in the instant case. Printed from counselvise.com 3 M.A Nos.122 to 125/CHNY/2025 f) That the Assessing Officer relied upon the impounded material only in parts which could not have been done for making additions in the instant case. The Assessing Officer could not have relied upon the letters that were obtained in addition to the statements recorded u/s.131(1A) since the contents of the letters were contradictory to each other. 3. On the other hand, the Ld. DR vide the miscellaneous application raised the following points as mistakes that were apparent on record in the order of the Tribunal which needed to be rectified: a) It was pointed out that the provisions of section 131(1A) and 133A(3)(iii) operate independently and thus the authorized officer was duly empowered to exercise his powers to record statements u/s.131(1A) in the instant case. b) It was stated that the statement recorded u/s.131(1A) on 13.07.2017 was recorded much after the completion of survey on 23.03.2017 in which it was admitted that the assessee had received on money based on which additions were rightly made by the Assessing Officer in the instant case. c) It was stated that the Tribunal observed that there were inconsistencies between the two letters dated 12.06.2017 and 26.07.2017 wherein the assessee had come up with the amount of on-monies that were received on sale of flats. The Tribunal noted that one letter referred to financial year and the other referred to assessment years as the date of receipt. It is now the revenue’s contention that the Assessing Officer’s reliance on the letter dated 26.07.2017 to make the additions was correct since in the said letter, the assessee revised the information and thus such clarified communication has legal admissibility and independent evidentiary value. Printed from counselvise.com 4 M.A Nos.122 to 125/CHNY/2025 d) That the issue of duplication of additions made by the Assessing Officer for assessment years 2015-16 and 2017-18 was never raised during the course of assessment or appellate proceedings and was raised for the first time before this Tribunal. e) It was the contention of the assessing Officer that the burden is on the appellant to show that admission made by him in the statement at the time of survey was wrong and for this he relied on the decision of the Hon’ble Madras High Court in the case of Thiru A.J.Ramesh Kumar v DCIT [2022] 441 ITR 495 (Mad). f) That the evidences in the form of loose sheets impounded during the course of survey in the instant case are nothing but documents impounded as per section 133A and as such satisfy the evidentiary value for Income Tax Proceedings and that such loose sheets contain entries entered on a day to day basis and not random entries. g) That based on the impounded materials and reconciliation of various details recovered during the course of search were relied upon by the Assessing Officer in completion of assessment which satisfied the test of evidence. h) That the statements given during the course of survey will only give the correct picture, as the deponent is free to depose the actual facts known to him without being under the compulsive influence of his master. i) That the observation of the Tribunal in so far as the loose sheets lacking certification in terms of section 65B(4) of the Indian Evidence Act is admissible is not correct in view of the decision of the Hon’ble Madras High Court in the case of ACIT v M/s.Vetrivel Minerals in WA(MD) Nos.119 to 123 of 2022 and C.M.P (MD) Nos.1186, 1187, 1188, 1190, 1192 of 2022 (judgment dated 30.04.2025). Printed from counselvise.com 5 M.A Nos.122 to 125/CHNY/2025 4. In response to the above contentions, the Ld. AR relied heavily on the order of this Tribunal dated 11.03.2025 to state that the contentions of the Ld.DR are not mistakes apparent on record but are only fresh arguments taken in respect of the findings of this Tribunal. The Ld.AR had stated that the contentions of the Ld.DR hold no merit since all of such contentions have been considered at length and were covered extensively in the order of the Tribunal. At best, the Ld.AR submitted that the contention raised by the Ld.DR as regards the criteria of complying with section 65B(4) of the Evidence Act could remotely be held as a mistake apparent on record albeit the same not having any bearing on the ultimate conclusion of the Tribunal with addressing this issue. 5. The Ld.AR had also drawn our attention to the inconsistencies in the letters relied upon by the Assessing Officer to make the additions in the instant case and reiterated that the same do not have any evidentiary value and thus could not become a basis for making such additions as stated in the miscellaneous application filed by the revenue wherein it was contended that the Assessing Officer rightly relied on the letter dated 26.07.2017 to make the additions in the instant case. It is in light of the same that the Ld.AR prayed that this miscellaneous application may be dismissed since there are no mistakes apparent on record in the order of this Tribunal. 6. We have heard the rival contentions and perused the material on record. At the outset, we are of the prima facie view that there are no Printed from counselvise.com 6 M.A Nos.122 to 125/CHNY/2025 mistakes apparent on record in the order of the Tribunal warranting our inference u/s. 254(2) of the Income Tax Act since as rightly pointed by the Ld.AR, the contentions of the Assessing Officer in this miscellaneous application are more in the nature of fresh arguments rather than mistakes that have crept in the findings of the Tribunal. 7. In so far as the contention of the Ld.DR that the provisions of section 131(1A) and 133A(3)(iii) operate independently and that the statements recorded u/s.131(1A) are permissible, we note that after analyzing the provisions of section 133A(3)(iii) and 133A(6) and various judicial precedents in this regard as stated in the order of the Tribunal, we find no merit in the contention of the Ld. DR since it is amply clear that unless the provisions of section 133A(6) are not satisfied, the authorized officer cannot usurp the powers of section 131(1A) and record a statement therein without satisfying the requirements of section 133A(6), particularly in case of a survey proceeding. 8. As far as the contention of the Ld.DR regarding the reliance of the Assessing Officer on the letter dated 26.07.2017 to pin the additions is concerned, we note that as pointed out in the order of the Tribunal when there are several inconsistencies in the two letters submitted before the Assessing Officer as well as the excel sheets containing the entries regarding purported on money payments, the same can never be considered as reliable material to make the additions as done in the instant case. Printed from counselvise.com 7 M.A Nos.122 to 125/CHNY/2025 9. In fact it may also be noted that the Assessing Officer in the instant case was unsure of whether to rely on the statements recorded u/s.131(1A) in which the Managing Director admitted receipt of cash at the time of booking of flats or the two letters submitted pursuant to the statements recorded which again contained content in respect of the year of receipt of purported on-money that were contradictory in nature. In fact, the Assessing Officer merely relies on the project-wise and year-wise details of on-money receipts that were provided by the assessee company to make additions across various assessment years. The said details were provided through two letters, one on 12.06.2017 and the other on 26.07.2017, contents of which have been reproduced in the assessment order. On a glimpse of the contents of the first letter, it can be seen that the year of receipt is mentioned as relating to AYs 2014-15 to 2018-19 since the year of receipt is stated as the years 2013-14 to 2017-18. Coming to the second letter, it can be seen that the assessee company had agreed to offer income in AYs 2013-14 to 2017-18. For example, for the assessment year 2015-16, as per the contents of the first letter, the assessee company agreed to offer Rs.50,00,000/- but however, as per the contents of the second letter, the assessee company had no income to offer for assessment year 2015-16. Despite the same, the Assessing Officer had considered the contents of the first letter to make the addition of Rs.50,00,000/- for the assessment year 2015-16. 10. This clearly shows that the letters given in writing by the assessee company are contrary to each other, making them undependable and that Printed from counselvise.com 8 M.A Nos.122 to 125/CHNY/2025 the Assessing Officer has also not relied only on the letter dated 26.07.2017 as contended by the Ld.DR but has used the contents of both letters partially and thus these cannot be used against the assessee company. Therefore, for the Ld.DR to now say through his miscellaneous application that the contents of the second letter dated 26.07.2017 was rightly taken by the Assessing Officer is in stark contrast to the stand taken during the course of hearing of the appeal. In fact, these arguments of considering the contents of the letter dated 26.07.2017 as the correct letter is nothing but a fresh argument that is now being taken in the miscellaneous application, which cannot be done now in our considered view. Thus, the letter dated 26.07.2017 could not partake a document having evidentiary value particularly when the inconsistencies highlighted therein could not be controverted by the department. 11. As far as the contention of the Ld.DR regarding raising the issue of duplication of additions for two assessment years for the first time before the Tribunal is concerned, we are of the view that the same cannot in any manner become a mistake apparent on record merely because the said issue was raised for the first time before the Tribunal. The Tribunal being the final fact finding authority is bound to give a finding in respect of the said issue since and moreover where the issue of duplication of additions was also not controverted by the department. 12. We note that the reliance of the Ld.DR on the decision of the Hon’ble Madras High Court in the case of Thiru A.J.Ramesh Kumar v DCIT Printed from counselvise.com 9 M.A Nos.122 to 125/CHNY/2025 [2022] 441 ITR 495 (Mad) would not help the revenue in any case since the said decision dealt with the implication of a statement recorded u/s.132(4) of the Act during the course of search which by default has evidentiary value whereas the statements recorded in the instant case were u/s.131(1A) of the Act and thus the facts are completely distinguishable. 13. We further note that the impounded material in the form of excel sheets which reflect purported on-money payments do not have any evidentiary value for elaborate reasons already discussed in the order of the Tribunal and thus could not have been relied upon to make the additions in the instant case particularly considering the fact the no corroborative evidence was brought on record to substantiate the same. 14. Lastly, we note that the Ld.DR had brought to the notice of the Tribunal regarding the decision rendered by the Hon’ble Madras High Court in the case of Vetrivel Minerals which held that the requirements of section 65B(4) of the Evidence Act would not apply to Income Tax Proceedings and thus the observation of the Tribunal to such extent by stating that the excel sheets impounded during the course of survey in the instant case could not have constituted valid evidence since they were not accompanied by a certificate in terms of section 65B(4) of the Evidence Act would constitute mistake apparent on record warranting rectification. Printed from counselvise.com 10 M.A Nos.122 to 125/CHNY/2025 15. In this regard, at the outset, it may be noted that the observation of the Tribunal as regards the requirement of satisfying the provisions of section 65B(4) of the Indian Evidence Act was concerned, it may be noted that the said observation was given after relying on the decision of the Hon’ble Supreme Court in the case of Arjun Panditrao Khotkar v Kailash Kushanrao Gorantyal & Ors. (2020) 7 SCC 1 and that the decision of the Hon’ble Madras High Court in Vetrivel Minerals was not put across to the bench by the Ld.DR at the time of hearing of the appeal. In any case, the additions have not been deleted only on the basis of non-compliance of the provisions of section 65B(4) of the Indian Evidence Act. Therefore, the question of whether this aspect constitutes a mistake apparent on record is academic for the purpose of disposing of the present miscellaneous application. 16. In the result, the miscellaneous applications filed by the Revenue are dismissed. Order pronounced in the open court on 11th November, 2025 at Chennai. Sd/- Sd/- (एस.आर. रघुनाथा) (S.R. RAGHUNATHA) लेखा सदèय/ACCOUNTANT MEMBER (जॉज[ जॉज[ क े) (GEORGE GEORGE K) उपाÚय¢ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 11th November, 2025 RSR Printed from counselvise.com 11 M.A Nos.122 to 125/CHNY/2025 आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Applicant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT, Coimbatore 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF. Printed from counselvise.com "