ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MYSURU V. KUDLUR RAMASWAMY SATHYANARAYANA, MYSURU

ITA 1130/BANG/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted certain additions made by the AO following a search and seizure operation under section 132 of the Income Tax Act. The assessee, Kudlur Ramaswamy Sathyanarayana, had initially declared additional income during the search, which was not reflected in the returns filed subsequently. The AO made additions based on these declarations, which were contested by the assessee. The CIT(A) deleted some of these additions, leading to the Revenue's appeal. The Tribunal examined the legal and factual basis of the additions and the retractions made by the assessee.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470935 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-09-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 07-06-2024
• Other Referred Cases: B. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai, M. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai, Sujeet Singh Chhabra v Union of India, Pullangode Rubber Products Co. Ltd. Vs. State of Kerala, Tribhovandas Bhimji Zaveri (Delhi) (P) Ltd. v Assistant Commissioner of Income tax, Kailashben Manharlal Chokshi v Aggarwal, Chetnaben J Shah Legal Heir of Jagdishchandra K. Shah v Income Tax Officer, Commissioner of Income Tax v Jagdish Narain Ratan Kumar, Gajjam Chinna Yellappa v Income Tax Officer, Roshan Lal Sancheti Vs. PCIT, PCIT Vs. Roshan Lal Sancheti, M/s Bannalal Jat Construction Pvt. Ltd. v. ACIT, Central Circle-Ajmer
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V. SRIDHAR
• Keywords: Question of law; Unexplained investment; Income from undisclosed sources; Documents seized; Onus to prove; Retraction; TDS; Search and seizure; Block assessment; Loose papers
• Section: 143(3); 192; 64; 132; 153A; 139(1); 68; 131; 22; 69; 13; 207; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : BANGALORE BEFORE SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1130/Bang/2024 Assessment Year : 2014-15 ACIT, Central Circle, Mysuru. Vs. Kudlur Ramaswamy Sathyanarayana, 30, Muda Complex, Opp Sub- Registrar Office, Ramakrishna Nagar, Mysuru, Karnataka – 570 023. PAN : AJOPS 2226 B APPELLANT RESPONDENT Respondent by : Shri. V. Sridhar, CA Appellant by : Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru. Date of hearing : 12.09.2024 Date of Pronouncement : 29.11.2024 O R D E R Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the Revenue against the Order of the CIT(A) [DIN : ITBA/APL/M/250/2023-24/1060355191(1)] dated 31.01.2024. The relevant Assessment Year is 2014-15. 2. Briefly stated, the facts of the case are that the assessee filed return of income under section 139(1) of the Act on 31.03.2015 declaring income of Rs.81,26,510/- and the same was processed. A search and seizure was carried out under a warrant of authorization under section 132 of the Act on 04.02.2015. During the course of ITA No.1130/Bang/2024 Page 2 of 30 search proceedings at the residential premises of the assessee at No.908/84, 4th Main, Vidyaranyapuram, Mysure. Consequent to the search proceedings, various incriminating documents were found at the residence of the assessee and the same were seized. The assessee is the proprietor of M/s. Puneeth Associates, Mysuru, and partner in Bhagirathi Enterprises, Mysuru. The assessee is a document writer and also derives income from house property. Consequent to the search action, a notice under section 153A of the Act was issued on 11.08.2015. In response to the notice, assessee filed return of income on 16.09.2015 declaring total income of Rs.81,26,510/-. Subsequently, other statutory notices were issued to the assessee. During the course of assessment proceedings, it was noticed that the amount declared during the course of search proceedings in respect of Chitravana Resorts, Mysuru, and Belur Project of Rs.1.3 Crores was accepted as additional income in statements recorded during the course of search operations. However, this amount was not declared in the return of income. It was further noticed that the assessee was a partner in M/s. Bhagirathi Enterprises which had constructed a Convention Hall in the name “Sindhur Convention Hall”. As per question answered No. 07, 08, & 09 during the course of search proceedings, the assessee had accepted over and above the investment made for the convention hall an amount of Rs.1.5 Crores and it was accepted as additional income. However, it weas also not disclosed in the return filed in pursuance of notice issued under section 153A of the Act. The AO examined the submissions of the assessee in detail and correlated with the documents ITA No.1130/Bang/2024 Page 3 of 30 found and statements recorded. After considering the entire materials available he added the amount declared as additional income during the course of search to the total income of the assessee. Further, during the course of search proceedings, there was also an investment made by the assessee in Sapthagiri Enclave amounting to Rs.32,00,000/- which was added by the AO and it was not contested before the Tribunal. The assessment was completed and income was assessed at Rs.3,93,26,506/-. 3. Aggrieved from the above Order, assessee filed appeal before the CIT(A). The CIT(A), after considering the detailed written submissions in respect of both the issues, allowed the appeal of the assessee. He noted that the investment made in Chitravana Resorts and Belur Project is recorded in the books of accounts of the assessee and it was paid by Cheque, the relevant part of the CIT (A) order is as under: “4.5 The appellant was asked to produce the copy of agreement pertaining to the transaction with the aforesaid persons and the documentary evidences in support of the claim made above. In response, the appellant submitted as follows. \"1. The advance made to Sri Prasanna Murthy Rs.60,00.000/- and Sri Raghavendra Murthy Rs. I 5,00,000/- is towards Chitravana as they are the owners of the land belonging to Chitravana. 2. There is no written Agreement made towards the advance, as it was an oral agreement between me and Sri Prasanna Murthy and Raghavendra Murthy. 3. The advance made to Sri Ventures is debited in my books of accounts which is Rs.52,76,011/- is for the Belur Project. As ITA No.1130/Bang/2024 Page 4 of 30 at the time of search, it is mentioned as Rs.40,00,000/- is out of the anxiety and difficulty in remembering at that time. 4. The above advances are all made by cheque vide detailed as under: a. Raghavendra Murthy Rs. I 5,00,000/- on 06.11.2012 Chq No.460862 Karnataka Bank Ltd b. Prasanna Murthy Rs.50,00,000/- on 13.12.2012 Chq No 460868 Karnataka Bank Ltd c. Prasanna Murthy Rs. 10,00,000/- on 18.12.2013 RTGS No.40732 With regard to advance to Sri Ventures is as per ANN-I enclosed\" 4.6 The submissions of the appellant were considered by the AO but found not acceptable for the following reasons.  The admission by the appellant that payment of Rs.90,00,000 for Chitravanais not routed through the books was said by the appellant at the time of beginning of the search.  The appellant once again confirmed the preliminary statement subsequently in the final statement.  The appellant has not made any submission controverting the statement given during the search.  The AO relied uponB. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai the Hon'bIe High Court of Madras in [2014152 taxmann.com 449 (Madras). 4.7 In view of the findings discussed above, the AO rejected the claim of the appellant and the undisclosed income of Rs.1,30,00,000 admitted by the appellant during the course of search but not declared in the return of income filed in response to notice u/s 153A was brought to tax u/s 69 of the I.T. Act.” 4.19 I have considered the rival submissions and the assessment order. It is case where a search was conducted but no evidence or incriminating material was found on the issue of advances made to Chitravana Resorts (Rs. 1.3 crore) and investments made in Sindhur Constructions (Rs.1.5 crore) but based on the statement of the appellant who ITA No.1130/Bang/2024 Page 5 of 30 admitted to the unaccounted income, the additions were made. 4.20 The appellant retracted the statement and did not offer the admitted amount in the return or income. The AO ignored the explanation provided by the appellant and proceeded to make addition based on the admission of the appellant during the search. 4.21 The AO merely relied upon the statement given by the appellant and rejected the retraction riled on the strength of the Hon’ble Madras High Court judgment in the case of M. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1). Chennai. However, in this case, various incriminating material in the form of loose sheets/dairy highlighting the cash loans given to various parties were found during the search but the appellant questioned the assessment on the basis that the AO had not scrutinized the material submitted before him and made addition based on a priori considerations. this judgment cannot be compared or relied upon as the factsare different. The other case law (Sujeet Singh Chhabra v Union of India AIR 1997 SC 2560) relied upon by the AO was also perused. The primary question in this case was on cross examination of witnesses in a violation in contravention of the I; ERA & Customs Duty Act. This case also does not have a direct barring on the issue at hand. They don't come to the rescue of the AO as the statement given by the appellant during the search was without any evidence or incriminating material. Once the appellant retracts the statement with or without an) basis, the AO may reject the retraction but he has to pass theassessment order based on the material evidences or by rejecting the books oraccount and estimating the income based on some reasonable assumptions. 4.22 As against this, the appellant quoted numerous judgments incudingPullangode Rubber Products Co. Ltd., Vs. State of Kerala (SC) (1973) (91 ITR 88), Tribhovandas Bhimji Zaeri (Delhi) (P) Ltd., v Assistant Commissioner of ITA No.1130/Bang/2024 Page 6 of 30 Income tax (2016) 177 TTJ (Mumbai) 306, KailashbenManharlal Chokshi v Aggarwal (2015) 379 ITR 0367 (Delhi), ChetnabenJ Shah Legal Heir of Jagdishchandra K. Shah v Income Tax Officer (2016) 288 CTR 0579 (Guj). Commissioner of Income Tax v Jagdish Narain Ratan Kumar (2015) 373 1 I R 0394 (Raj.) and Gajjam Chinna Yellappa v Income Tax Officer (2015) 370 1TR 0671 (AP) etc. in support of his claim that addition cannot be made merely on the basis of statement recorded, which was retracted later, leaving no evidence to rely upon to sustain the addition. 4.23 In this case, the appellant initially stated that he had made advances to Chitravana Resorts which was not passed through the books of account but later retracted and stated that the advances paid a Rs.75,00,000/- to the owners of the land on which the Chintravana Resorts project was to be constructed,was the same transaction referred to him in the statement and that these were paid through the banking channel and passed through the books of account. Similarly,helater stated that one more advance or Rs.40,00,000/- in BelurProject mentioned in the statement was actually the advance paid to Sri Ventures of Rs.52,72,011/-. The appellant filed the confirmation and the bank statements of the corresponding parties to justify the claim. Since, these transactions were found in the books of account and related to the same project as was referred in the preliminary statement. the AC) was left with no choice but to make addition on the basis of the statement provided by the appellant. It wasthe failure on the part of the department that no independent enquiry or investigation was conducted during the search or post search to verify thequantum of investments made, or to find outthe parties to whom such alleged advances were made. In the absence of any independent evidence, addition made u/s l53A does not sustain and liable to be deleted. ITA No.1130/Bang/2024 Page 7 of 30 4. Further, in respect of investment in Sindhur Convention Hall, the CIT(A) at para 4.2 observed that addition of Rs.1.5 Crores over and above the investments in the hands of the partner is not correct and the assessee retracted the claim that he had shown the investments in the firm in his balance sheet at Rs.5,00,000/- in his capital account and Rs.1,50,85,618/- in his current account. He further noted that no evidences were found regarding th actual quantum of investment made, who made the investment, etc. The amount declared towards construction of convention hall over and above of Rs. 1.50 crores should be taxed in the hands of the partnership firm but not in the hands of the assessee and this aspect has been overlooked by the AO and allowed the appeal of the assessee on this issue also . 5. Aggrieved from the above deletion by the CIT(A), the Revenue filed appeal before the Tribunal. 6. The learned DR strongly relied on the Order of the AO and she has filed a written synopsis and referred to the statements recorded which are as under : Q.No.4. Given details of all the movable assets like Fixed Deposits. Term Deposits Vehicles, Investment in Shares, Debentures etc. In your name or in the name of your family member or if you have made investment in any other person name? Ans : All the movable assets are shown in the returns of income, as far I remember. However, an advance of Rs.90 lakhs made to Chitravana Resorts, Mysore and Rs.40 lakhs made to Belur Project have not passed through books of accounts. I declare the total of this, i.e., Rs. 1.3 crores as my additional income for the A.Y. 2014- 15. I have not made any investment in others names. ITA No.1130/Bang/2024 Page 8 of 30 Q. No.18. Please give details of advances if any received by you or the advance given by you to anybody? Ans : I have already declared the advance of Rs. 1.3 crores as additional income for A.Y. 2014-15 vides my answer to Q.no.4. I have not received any advance from others. I now remember that I have paid a sum of Rs. 50 lakhs this year towards marketing of sites to Krishna (8095101091), which I disclose as my additional income for A. Y. 2015-16. Q.No.19. Have you got anything else to say? Ans: I have already voluntarily disclosed additional income of Rs.1.8 crores for A.Y.2014-15 & 2015-16. I further assure you that if I am not able to explain about anything found during search, I will disclose the income corresponding to such findings. However, the assessee had not offered the above additional income in the return of income filed in response to notice u/s 153A of IT Act, 1961. In view of this, vide this office letter dated 27.10.2016 the assessee was requested to show cause why the sum of Rs.1,30,00,000 should not be assessed as his income for the year. In reply to the said letter, the assessee had filed his response. The relevant portion of the reply of the assessee on this issue was as under: With regard to unexplained advance of Rs.1,30,00,000/- to be offered as additional income. The advances are actually reflecting in my books of accounts as follows: - Prasanrta Murthy ... Rs.60,00,000 - Raghavendra Murthy ... Rs.15,00,000 - Sri Ventures ... Rs.52,73,011 Rs.1,27,76,011 In the course of search, I had mentioned that an advance of Rs. 90,00,000/ - is made to Chitravana Resorts, Mysore. The advance are made to Prasanna Murthy and Ranghavendra Murthy is towards Chitravana Resorts, the total amount of advance comes to Rs. 75,00,000/ - Again, an advance of Rs.40,00,0.90/ - made to Belur Project was also mentioned in the course of search which is reflecting in my books of accounts in the name of Sri Ventures of Rs. 52,76,011/ - As per my mentioning at the time, of search, the total advances comes to Rs. 1,30,00,000/ -, the same was already taken .in my books of accounts of which the total advance comes to Rs. 1,27,76,011/ - As I could not remember property at the time of search it was mentioned as advances not ITA No.1130/Bang/2024 Page 9 of 30 passed through books of accounts, but whereas, the advances are already mentioned in my books as a result, it is not offered to tax. In view of the above, during the assessment proceedings, a letter dated 24.11.2016 was issued drawing his attention to the fact that the declaration of Rs.1,30,00,000/- was made by him in the preliminary statement recorded during the beginning the search and requesting him to furnish the explanation to the following points with documentary evidences: 1. Basis for stating that the advance of Rs.60,00,000 made to Prasanna Murthy and Rs.15,00,000 made to Ragavendra Murthy represents payment to Chitravana which you had claimed as Rs. 90,00,000/- in your statement. Copy of agreement pertaining to the transaction based on which payment of Rs.75,00,000/- is made. 3. Basis for claiming the advance made to Sri Ventures of Rs.52,76,011/-as the payment made to Belur Project on which you had claimed to have made an advance of Rs.40,00,000/- in your statement. 4. Documentary evidence in support of your claim vis-a-vis Sri Ventures and Belur Project. In response to this, the assessee had replied as under: \"I am in receipts of the above said letter wherein. I have been asked to submit the explanation which is as under; 1. The advance made to Sri Prasanna Murthy Rs.60,00,000/ - and Sri Raghavendra Murthy Rs. 15,00,000/ - is toward Chitravana as the they are the owners of the land belonging to Chitravana.. 2. There is no written Agreement made towards the advance, as it was an oral agreement between me and Sri Prasanna Murthy and Raghavendra Murthy. 3. The advance made to Sri Ventures is debited in my books of accounts which is Rs. 52,76,011/ - is for the Belur Project. As at the time of search, it is mentioned as Rs. 40,00,000/ - is out of the anxiety and difficulty in remembering at the time. 4. The above advances are all made by cheque vide detailed as under: ITA No.1130/Bang/2024 Page 10 of 30 a. Raghavendra Murthy Rs. 15,00,000/ - on 06. 11. 2012 Chq No.460862 Karnataka Bank Ltd. b. Prasanna Murthy Rs. 50,00,000/ - on 13.12.2012 Chq No. 460868 Karnataka Banl Ltd. c. Prasanna Murthy Rs 10,00,000/- on 18.12.2013 RTGS No.40732 During the assessment proceedings, the submissions of the assessee were carefully considered. However, it was not accepted for the following reasons:  The admission by the assessee that payment of Rs. 90,00,000-/- for Chitravana not routed through the books was done by the assessee at the time of beginning of the search.  The assessee had confirmed the preliminary statement subsequently in the final statement.  The assessee had not made any submission controverting the statement given during the search.  The assessee had claimed that the payment of Rs. 75,00,000 was made through cheque was a part of Rs.90,00,000/- that he had admitted. v.,-  The payment through cheques was routed through the books of the assessee and there was no necessity to admit this as being paid outside the books.  The assessee being a seasoned businessman and assessed to tax for several years very well knew what was not routed through the books.  The assessee claims that there was no agreement and the entire amount was paid based on oral agreement defies business prudence and makes the claim of the assessee unverifiable.  Regarding the payment of Rs.40,00,000/- which the assessee had admitted as having paid to Sri Ventures (Belur Project) outside the books, the assessee is now stating that it is recorded in his books and furnishing the ledger extract.  The admission was about payments being made outside the books and not what was recorded in the books. In the case of B. Kishore Kumar vs. Deputy Commissioner of Income-Tax, Central Circle-W(1), Chennai the Hon'ble High Court of Madras in (2014) 52 taxman.com 449 (Madras) held that where assessee himself stated in sworn statement during search and seizure about his undisclosed income, same was to be levied tax on basis of admission even without scrutinizing documents. ITA No.1130/Bang/2024 Page 11 of 30 The Hon'ble Supreme Court of India upheld the decision of the Hon 'ble Madras High Court and the SLP was dismissed in (2015) 62 taxmann.com 215 (SC)/[2015] 234 Taxman 771 (SC). In view of the facts discussed above, the AO had made the addition on the above issue, as the claim of the assessee that the undisclosed income of Rs. 1,30,00,000/- admitted by the assessee during the course of search but not declared in the return of income filed in response to notice u/s 153A has been brought to tax u/s 69 of the I.T. Act by passing order u/s 143(3) r.w.s 153A of IT Act, 1961. 2. Unexplained investment in the construction of Sindhoor Convention Hall 2014- 15 1,50,00,000/- Comments of the AO: During the course of search u/s 132, it was seen that the assessee is a partner in M/s Bhagirathi Enterprises which had constructed a Convention 1-lall by name \"Sindhur Convention Hall\". The investment of the assessee and the sources for the same were questioned and the assessee had replied as under: \"Q.No. 7. : It is observed that the built up area of the said convention hall is about 31,000 sq.11. and the construction is of superior quality. As such the amount of Rs. 2.75 crores stated by you appears to he on a lower side. So, please state the correct amount of investment and also explain the sources thereof Ans. : Sir, I have not maintained proper records in respect of construction. Though according to me the amount of investment stated by me above is correct, in the absence of proper records I do not want to get into litigation with the department. Hence I state that the investment may be around Rs. 3.5 crores. As regards sources, loan of Rs.1.5 crores from KSFC has been, utilized for the construction. Later on I took further loan froin Axis bank and ING Vysya Bank, out of which were used for construction. In the absence of books of accounts and non-maintenance of proper records I hereby declare the balance amount of Rs. 1.5 crores as my additional income in my individual capacity for the A. Y. 2014-15 over and above my normal income.\" As can be seen from the statement, the assessee had admitted Rs. 1.5 crores additional income. However, on perusal of the return of income filed, it was seen that the assessee had not offered the additional ITA No.1130/Bang/2024 Page 12 of 30 income of Rs. 1.5 crores declared u/s 132(4) as additional income in the return of income file'd in response to notice u/s 153A. In view of this, during the assessment proceedings, a letter dated: 27.10.2016 was addressed to the assessee asking him to explain why the above sum should not be assessed as income in addition to the other income. In response to this, the assessee vide his letter had replied as under: \"With regard to the Additional income to be offered to tax of Rs. 1,50,00,000/ - towards unexplained investment in the construction of Sindhoor Convention Hall, which is a Partnership Firm under the name M/s. Bhagirathi Enterprises. With regard to the Additional income to be offered to tax of Rs. 1,50, 00, 000/- towards unexplained investment in the construction of Sindhoor Convention Flail, the same has to be assessed in the hands of Sindhoor Comvention Hall, which is a Partnership Firm under the name M/s. Bhagirathi Enterprises. As this income is to be taken in the firm's hand, the same is not offered in my Return of Income\". The reply of the assessee was carefully considered. As per the submissions of the assessee on the date of search, no books of accounts were maintained in respect of M/s. Bhagirathi Enterprises with PAN- AAKFB6933D. On perusal of the return of income filed, it was seen that the First return of the firm M/s. Bhagirathi Enterprises had been filed on 30.10:2015. In other words, the assessee had not filed any return of income and it was only after search the assessee had filed the return of income for the first time. As on the date of search, there was no return filed, no books of accounts maintained and in these circumstances, the statement of the assessee stating that he had invested Rs.1.5 crores over and above the bank loans which he had used for the construction of the Convention Hall holds much relevance. The assessee being in the know of things was aware as on the date of search that he had invested Rs.1.5 crores which were routed through his books of accounts as on the date of search. The explanation given by the assessee stating that the same had to be assessed in the hands of Sindhoor Convention Hall which is a Partnership Firm under the name M/s. Bhagirathi Enterprises was not acceptable, as the investment was out of the undisclosed income of the assessee. In the case of B. Kishore Kumar vs. Deputy Commissioner of Income-tax, Central Circle-IV (1), Chennai the Hon'ble High Court of Madras in [2014j 52 taxmann.com 449 (Madras) held that where assessee himself stated in sworn statement during search and seizure about his undisclosed income, same was to be levied tax on ITA No.1130/Bang/2024 Page 13 of 30 basis of admission even without scrutinizing documents. The Hon'ble Supreme Court of India has upheld the decision of the Hon'ble Madras High Court and the SLP was dismissed in [2015] 62 taxmann.com 215 (SCY[2015J 234 Taxman 771 (SC). In view of the above, the sum of Rupees One Crore Fifty Lakhs admitted as undisclosed investment during the course search has been brought to tax as unexplained investment under section 69 of IT Act, 1961 by passing order under section 143(3) r.w.s. 153A of IT Act, 1961. 7. In addition to the above comments of the AO which is in the question and answer recorded during the course of search operation the ld DR submitted that the statements recorded during the course of search and seizure operation is a strong evidence for making addition and the statements recorded are considered as corroborative materials. Therefore, the undisclosed income declared by the assessee has to be taxed in the manner stated hereinabove as per the statements. However, the learned CIT(A) has wrongly allowed the appeal of the assessee. During the course of search and seizure proceedings, the assessee had clearly accepted additional income and later on it was not offered as income which is in violation of sworn in statement recorded on oath under section 132(4) of the Act. Therefore, she requested that the Order of the AO should be upheld and she relied on the judgment of the Hon’ble Apex Court in the case of B. Kishore Kumar Vs. DCIT, Chennai reported in [2015] 62 taxmann.com 215 (SC) Order dated 02.07.2015 and submitted that the AO has also relied on the judgment while framing the assessment in the case of B. Kishore Kumar vs DCIT rendered by the Madras High Court reported in [2014] 52 taxmann.com 449 ( Madras) in which the Hon’ble apex Court has ITA No.1130/Bang/2024 Page 14 of 30 upheld the order of Hon’ble Madras High Court and SLP was dismissed filed by the assessee against High Court order. Accordingly she submitted that the order of the AO should be confirmed. 8. However, on the other hand, the learned Counsel relied on the Order of the CIT(A) and submitted that the amount declared during the course of search is recorded in the books of accounts of the assessee and the assessee had made payment by way of cheque but during the course of search proceedings, he was not remembering exactly because of the under pressure of search and accountant is recording the transactions in the books of the assesee. Therefore, during the course of search, in the statement, the assessee considered it as undisclosed income due to pressure he had undergone during the course of search and later it was also retracted by the assessee. Once the amount is recorded in the books of accounts, it cannot be said that it is an undisclosed income. The assessee made advance of Rs.60 lakhs to Mr. Prasanna Murthy. It was through banking channel vide cheque No.460868 dated 13.12.2012 of Rs.50 lakhs and RTGS dated 18.12.2013 for Rs.10 lakhs and amount to Raghavendra Murthy of Rs.15 lakhs by cheque No.460862 dated 06.11.2012 of Karnataka Bank Ltd. During the course of assessment proceedings on 04.11.2016 and 25.11.2016 had brought out the details of payment to the parties and the assessee’s bank accounts have been verified by the AO and entries are depicted in the bank account. During the course of search, there was no incriminating material found by the search team which ITA No.1130/Bang/2024 Page 15 of 30 can be treated as unexplained investments in Chitravana Resorts / Sri Ventures and these entries are recorded in the books of accounts and appeared in the balance sheet which was given to the search team during the course of search. The AO has made addition only on the basis of preliminary statement recorded at the time of search as assessee was in a shocking state of mind and nervousness. These amounts were paid through banking channel, many questions were posed to assessee to give details of movable assets like Fixed Deposits, Term Deposits, vehicles. The assessee in anxiety gave his answers regarding the investments in Chitravana Resorts, Mysuru. His answers needs to be examined thoroughly. He clarified his answer as “as far as I remember…..” and his memory had actually failed him. The two payments were made for Chitravana Resorts through banking channels. The AO has also not examined the persons to whom the payments have been made. Further, in respect of investments in Sindhur Convention Hall of Rs.1.5 Crores, he strongly relied on the Order of the CIT(A) and submitted that the assessee was completely not knowing about the actual cost of the constructions. Final statement recording was completed in the wee hours at 2.15 a.m. on the next day. The assessee was thoroughly exhausted, coupled with nervousness and in an anxiety to complete the proceedings, he readily agreed to whatever was suggested by the AO and this was ascertained in the books of accounts of the firm. Assessee has taken a loan for the construction which is reflected in the financial statement of the assessee and a soft copy of financial statements were provided which is clear from Q. & Ans. ITA No.1130/Bang/2024 Page 16 of 30 No.04 of the statements. Even the AO has not referred for valuation of the construction of the convention hall without going into the real cost of the construction. The AO has wrongly added in the hands of the partner whereas it should have been added in the hands of the partnership firm. The ld. AR further submitted that the judgemnt relied by the ld. DR is not applicable in the present facts of the case, since, the transactions made of Rs. 1,30,00,000/- towards investments is correctly recorded in the books of the assessee and it has been verified by the AO from the bank statement. The CIT (A) has also distinguished the judgement relied by the assessing officer. 9. In the rejoinder the ld. DR strongly relied on the statements recorded during the course of search . She further submitted that during the search proceedings the assessee was unable to quantify the amount of investments made by the partners, only the name of partners were given. As per question answer No. 05 the partnership Firm was created in the financial year 2014-15 relevant to assessment year 2015-16 which is outside of the disputed assessment year. There was no PAN obtained of the Firm till 04.02.2015. As per Q. & Ans No. 07 the declaration made in the individual capacity. The relevant part is as under: “ In the absence of books of accounts and non maintenance of proper records I hereby declare the balance amount of Rs. 1.5 crores as my additional income in my individual capacity for the AY 2014-15 over and above my normal income.” This declaration was made for the construction of convention hall which was in physical existence. The ITA No.1130/Bang/2024 Page 17 of 30 CIT (A) has wrongly allowed this ground of the assessee raised on this issue without considering the statements recorded. The case laws relied upon by the learned Counsel are distinguishable on the facts. 10. Considering the rival submissions, during the course of search proceedings, the preliminary statements were recorded and assessee had accepted that there is undisclosed investments( additional income) towards Chitravana Resorts, Belur projects and Sindhur Convention Hall to the tune of Rs.1,30,00,000/- and Rs.1,50,00,000/- respectively. The CIT(A) has, after considering the submissions, deleted these two additions. We note from the statements recorded at the preliminary stage of search. It is noted that advance made of Rs.90 lakhs towards Chitravana Resorts, Mysuru, and Rs.40 lakhs made to Belur Project have not been passed through the bank account. However, while filing the return of income, it was not declared as additional income and during the course of assessment proceedings, the CIT(A) noted that these are recorded in the books of accounts of the assessee and paid through cheque but the recipient names are different and assessee submitted that the statements were recorded when the assessee was nervous and anxious. We note from the written submissions and Orders of the AO and CIT(A) that assessee has paid to Prasanna Murthy of Rs.60 lakhs, Raghavendra Murthy Rs.15,00,000/- and to Sri Ventures of Rs.52,76,011/-. Whereas the assessee admitted during the search of Rs. 90,00,000/- advance made to chitravana projects and Rs. 40,00,000/- advance made to Belur Project. The details of payments ITA No.1130/Bang/2024 Page 18 of 30 are in para No. 4.5 of the CIT (A) order. We also gone through on the same and transactions have been carried out through banking channel. The two transactions of Rs. 65,00,000/- ( 50,00,000+15,00,000) have been done on 06.11.2012 and 13.12.2012 which are outside from the disputed financial year. Further the assessee has paid Rs. 10,00,000 on 1812.2013 to Prassana Murty . The AO has also not done cross verification from the recipients and it is clearly reflected in the bank statements and financial statements as was produced by the assessee. Therefore, it cannot be said that it is incriminating statements for confirming the additions made by the AO, therefore we are in agreement in the order of the CIT (A) for deleting to the extent of Rs. 75,00,000/- . Further we gone through the paper Books page No. 76 to 79 we did not find detail of payments of Rs. 52,76,011/- but the assessee has submitted that these are paid and recorded in the books of accounts. The CIT(A) has noted that these amounts are recorded in the books of accounts of the assessee, therefore, it cannot be treated as additional income of the assessee. Since, before us there is no details or reconciliation statement for payment of Rs. 52,76,011 furnished by the assessee, therefore we are remitting back for the purpose of verification from the bank statements and books of account to this issue to the assessing officer for limited purpose. Accordingly, we are partly allowed for statistical purpose. 11. Further, in respect of deletion of Rs.1,50,00,000/- in respect of investment made in Sindhur Convention Hall, even though assessee in ITA No.1130/Bang/2024 Page 19 of 30 his statement has admitted in individual capacity of Rs.1,50,00,000/- as additional income and it was not offered as income. The CIT (A) has noted that it should be taxed in the hand of the Bhagirathi Enterprises and no valuation was done of the construction of Convention Hall. It is clear from the statement recorded at question and answer Nos.6, 7 and 8 which is placed in Paper Book. We are reproducing the statement recorded as under: “Q. No. 06 Please produce the detail of receipts and booking register of Sindhoor Convention Hal J P Nagar Mysore, whether separate books of accounts are maintained for above mentioned business activities Ans. 06. Yes all the bills and booking register are maintained with us as such there are no books of accounts maintained and the said Sindhoor Convention Hall is constructed and completed in October 2013 and Rs. 2.75 crores is invested in construction of said convention Hall. QNo7 It is observed that the built up area of the said convention hall is about 31,000/ sq Ft and the construction is of superior quality. As such. the amount of Rs 2.75 crores stated by you appears to be on a lower side. So please state the correct amount of investment and also explain the sources thereof Ans: Sir I have not maintained proper records in respect of construction. Though according to me the amount of investment stated by me above is correct, in the absence of proper records I. do not want to get into litigation with the department. Hence, I state that the investment may be around Rs.3.5 crores. As regards sources, loan of Rs 1.5 crores from KSFC has been utilized for the construction. Later on I took further loan from Axis bank and INC Vysya Bank, out of which Rs 1.5 crores was used for clearing the loan taken from KSFC and Rs 50 lakhs were used for construction. In the absence of books of account and non-maintenance of proper records I hereby declare the balance amount of Rs 1.5 crores as my ITA No.1130/Bang/2024 Page 20 of 30 additional income-in my individual capacity- for the AY 2014-15, over and above my normal income. Q No. 8 In your premise we found a cash of Rs. 7,72,540/- which is as per inventory marked as 3/KRS. Please explain the source and accounting of this cash. Ans : Yes, 1 confirm this amount belongs to me and as I am not maintaining regular cash book so I have not accounted this amount. But this amount belongs to customers as they pay advances to the purchase of properties and for drawing demand drafts on their name. But I am not able to reveal true source or this cash. I offer this amount as my undisclosed income over and above my regular income. However I request you to seize Rs 7 lakhs only leaving the balance for my day to day expenses. 12. From the above statements it is clear that the assessee has accepted the over and above investments of Rs. 1,50,00,000 in his individual capacity and there is no any quantification of investments made or capital contribution by the other partners towards construction of convention Hall. The contention of the learned Counsel that this income (Rs.1,50,00,000/-) for construction of the convention hall should be assessed in the hands of the partnership firm is not tenable as per the statements recorded during the course of search noted above. The assessee has accepted in individual capacity that the investments were made towards construction of Hall of Rs. 1.50 crore over and above of Rs. 2.75 crore . There is physical existence of the building which was newly constructed and completed in Oct. 2013 whereas in the statements the assessee stated that the Partnership firm was constituted in the financial year 2014-15 as per question & answer No. 05. The Partnership Firm has filed return of income on 30.10.2015 in ITA No.1130/Bang/2024 Page 21 of 30 ITR-5 declaring loss of Rs. 17,28,900. The statements recorded are corroborated with the construction of the building and not providing the investments of other partners are itself incriminating statements for substantiating the additional income accepted by the assessee. Therefore, as per the Hon’ble Apex Court judgment in the case of Roshan Lal Sancheti Vs. PCIT reported in (2023) 150 taxmann.com 228 (SC) dated 28.11.2022, the Hon’ble Apex Court has dismissed the SLP filed by the assessee against Order passed by the Hon’ble High Court of Rajasthan in the case of PCIT Vs. Roshan Lal Sancheti reported in (2023) 150 taxmann.com 227 (Rajasthan). We have gone through the judgment of the Hon’ble High Court of Rajasthan. The relevant part of the judgement are as under:- 9. Learned counsel argued that the Assessing Officer has not given any reason in the assessment order as to why the explanation given by the assessee in the affidavit was not acceptable. Learned CIT(A) has given detailed reasons in respect of each deletion of the addition made by the Assessing Officer. Learned counsel in support of his arguments relied upon the judgment of the Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 and submitted that the Supreme Court therein held that the admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made admission to show that it is incorrect and the assessee should be given proper opportunity to show the correct state of affairs. Reliance is also placed on the judgment of Madras High Court in M. Narayan & Bros. v. Asstt. CIT [2011] 13 taxmann.com 49/201 Taxman 207 (Mag.)/339 ITR 192 wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. It is argued that additions cannot be made merely on the basis of statements which are subsequently retracted even belatedly as held by Delhi High Court in CIT v. Sunil Aggarwal [2015] 64 taxmann.com 107/[2016] 237 Taxman 512/[2015] 379 ITR 367. Learned counsel relied on the judgment of this Court in Escorts Heart Institute and Research Centre Ltd. v. Dy. CIT (TDS) JP [2017] 87 taxmann.com 184/251 Taxman ITA No.1130/Bang/2024 Page 22 of 30 401/[2018] 404 ITR 344; CIT v. Vegetable Products Ltd. [1973] 88 ITR 192(SC) and argued that if two views are possible, the view in favour of the assessee should be preferred. Reliance is also placed on the judgments in CIT v. K.Y. Pilliah & Sons [1976] 63 ITR 411 (SC); Dy. CIT v. Ratan Corpn. [2005] 145 Taxman 503/197 CTR 536 (Guj.); Asstt. CIT v. Shri Devendra Kumar Choudhary [IT Appeal No. 828/JP/16, dated 30-6- 2017]; CIT v. Ashok Kumar Soni [2008] 166 Taxman 371/[2007] 291 ITR 172 (Raj.); Kailahben Manharlal Chokshi v. CIT [2008] 174 Taxman 466/[2010] 328 ITR 411 (Guj.); CIT v. Omprakash K. Jain [2009] 178 Taxman 179/[2010] 322 ITR 362 (Bom.); Mehta Parikh & Co. v. CIT [1956] 30 ITR 181 (SC); Shree Ganesh Trading Co. v. CIT [2013] 30 taxmann.com 170/214 Taxman 262/257 CTR 159 (Jhar.); CIT v. Shri Ramdas Motor Transport Ltd. [2015] 55 taxmann.com 176/230 Taxman 187 (A.P.) Chetnaben J. Shah v. ITO [2017] 79 taxmann.com 328/[2016] 288 CTR 579 (Guj.) 10. We have given our anxious consideration to rival submissions and carefully perused the material on record. 11. Statement of the assessee under section 132(4) of the Act was recorded on 26-9-2012 when the search was carried out at his residential premises. This statement was recorded in the presence of two witnesses who were called at the choice of the assessee from his own locality. The assessee in the proceedings of search agreed to surrender Rs. 2.25 crores as per seven papers found during the search by the Department. Five out of those seven papers were marked as Annexure AS-1 and other two were marked as Annexure AS-2. Various amounts disclosing investments and constructions amounting to Rs. 2,28,44,545/-were written on these papers. Therefore, statement of the assessee about these papers was recorded on 27-9-2012, wherein he surrendered the aforesaid amount. This statement was again reconfirmed by the assessee in his statement recorded under section 131 of the Act on 15-10-2012 and 17-12-2012 before the ADIT. In this statement, the assessee confirmed the entries made on the papers seized as AS-1 and AS-2. In fact, the assessee in his statement dated 25-10-2012 acknowledged further surrender of Rs. 10,00,000/- which he again confirmed in subsequent statement dated 17-12-2012. The affidavit of retraction was filed by the assessee with inordinate delay of 237 days on 20-5-2013. The said affidavit runs into four pages. In para 5 of the affidavit, the assessee admitted that the representative of the department prepared list of 28 exhibits, which were mostly original sale deeds etc. and pressurised him to make surrender of Rs. 5 crores. It was stated that if the original documents were to be taken away by the department, it would have created a difficulty for the assessee to depose them of, therefore, he under pressure had to agree for the surrender. In para 6 of the affidavit also he admitted that after long deliberations and arguments, a consensus was arrived at for surrender of ITA No.1130/Bang/2024 Page 23 of 30 Rs. 2.25 crores on the condition that the representative of the department would not carry the original documents of the sale deeds. In para 8 of the affidavit, it was alleged that the representative of the department got seven papers prepared for surrender of Rs. 2.25 crores on account of which he was made to surrender a sum of Rs. 2,28,44,545/-. In para 9 of the affidavit it was stated that the aforesaid surrender was got verified by him in subsequent statement under section 131 on 15-10-2012 followed by 17-10- 2012. On the basis of aforesaid seven papers, further surrender of Rs. 10,00,000/- was also extracted from the assessee. Confirmation statement given by the assessee under section 131 of the Act was recorded on 25-10- 2012 wherein details of various transactions of sale and purchase of the land and property by the appellant was made. In para 15 of the affidavit, the assessee alleged that on the basis of two documents marked as AS-2, advance amount of Rs. 25 lacs was shown to have been given as loan and a sum of Rs. 21,00,000/- was shown to have been given to Shri Ashok Jat for his land ad-measuring 8 bigha in village Suwan. In para 16 of the affidavit, advance of Rs. 15,00,000/- was shown to have been given in papers AS-2 to Shri Kalu Ji Gurjar and further advance of Rs. 27,00,000/- was shown to be given to Shri Padam Kumar Jain. All these transactions were in fact fictitious. These persons had given affidavits that they did not have any such land, argued the learned counsel for the assessee. 12. This court in. Ravi Mathur, supra, which judgment has been relied by the ITAT in the present case, after considering catena of previous decisions, held that the statements recorded under section 132(4) of the IT Act have great evidentiary value and they cannot be discarded summarily and cryptic manner, by simply observing that the assessee retracted from his statement. One has to come to a definite finding as to the manner in which the retraction takes place. Such retraction should be made as soon as possible and immediately after such statement has been recorded by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials by way of duly sworn affidavit or statement supported by convincing evidence, stating that the earlier statement was recorded under pressure, coercion or compulsion. We deem it appropriate to reproduce para 15 of the said judgment, which reads thus, '15. In our view, the statements recorded under section 132(4) have great evidentiary value and it cannot be discarded as in the instant case ITA No. 720/JP/2017 M/s BannalalJat Construction Pvt. Ltd., Bhilwara v. ACIT, Central Circle-Ajmer by the Tribunal in a summary or in a cryptic manner. Statements recorded under section 132(4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the statements ITA No.1130/Bang/2024 Page 24 of 30 were recorded at the time of search on 9-11-1995 and onwards but retraction, is almost after an year and that too when the assessment proceedings were being taken up in November 1996. We may observe that retraction should be made as soon as possible and immediately after such a statement has been recorded, either by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials, either by way of a duly sworn affidavit or statements supported by convincing evidence through which an assessee could demonstrate that the statements initially recorded were under pressure/coercion and factually incorrect. In our view, retraction after a sufficient long gap or point of time, as in the instant case, loses its significance and is an afterthought. Once statements have been recorded on oath, duly signed, it has a great evidentiary value and it is normally presumed that whatever stated at the time of recording of statements under section 132(4), are true and correct and brings out the correct picture, as by that time the assessee is uninfluenced by external agencies. Thus, whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence which we have observed hereinbefore. Once a statement is recorded under section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time and in the instant case we notice that the AO in the Assessment Order observes:— \"Regarding the amount of Rs. 44.285 lakhs, it is now contended that the statement u/s 132(4) was not correct and these amounts are in ITA No. 720/JP/2017 M/s Bannalal Jat Construction Pvt. Ltd., Bhilwara vs. ACIT, Central Circle-Ajmer thousands, not lakhs i.e. it is now attempted to retract from the statements made at the time of S & S operations.\" Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized i.e. almost after a gap of more than an year. Such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material.' 13. The judgment of the Delhi High Court in Sunil Aggarwal, supra, relied on by the assessee does not in any manner extend any assistance to him because that was a case in which the court found that the assessee, apart from retracting the statement, also discharged the onus on him through cogent material to rebut the presumption that stood attracted in view of the statement made under section 132(4) of the IT Act with reference to the ITA No.1130/Bang/2024 Page 25 of 30 entries in the books of accounts of the sales made during the year and the stock position. Similar was the position in Kailashben Manharlal Chokshi (supra) wherein the High Court of Gujarat found that the assessee gave proper evidence in support of his retraction. The High Court of Madras in M. Narayanan and Bros. (supra), held that when assessee had explained his statement as not correct in context of materials produced, no amount could be added to his income on the basis of his statement. Similarly, what has been held by the High Court of Bombay in Omprakash K. Jain (supra) was that the assessing officer, while considering whether retraction was under duress or coercion, had also to consider genuineness of documents produced before him. 14. The Punjab and Haryana High Court in Commissioner of Income- Tax v. Lekh Raj Dhunna, taking note of the fact that the assessee had made a statement under section 132(4) of the IT Act whereby a surrender of Rs. 2 lakh was made and further that the assessee had admitted that he had earned commission from a party, which was not disclosed in the return filed by him and certain documents were seized which bore the signature of the assessee, held in para 16 of the report as under:— \"16. Thus, in view of sub-sections (4) and (4A) of Section 132 of the Act, the Assessing Officer was justified in drawing presumption against the assessee and had made addition of Rs. 9 lakhs in his income under section 68 of the Act. The onus was upon the assessee to have produced cogent material to rebut the aforesaid presumption which he had failed to displace. The assessee retracted from the said statement, vide letters dated November 24, 1998, and March 11, 1999, during the course of assessment proceedings. However, no value could be attached thereto in the present case. In case the statement which was made by the assessee at the time of search and seizure was under pressure or due to coercion, the assessee could have retracted from the same at the earliest. No plausible explanation has been furnished as to why the said statement could not be withdrawn earlier. In such a situation, the authenticity of the statement by virtue of which surrender had been made at the time of search cannot be held to be bad. The Tribunal, thus, erred in concluding otherwise. The Tribunal, therefore, was not justified in reversing the order of the Assessing Officer which was affirmed by the Commissioner of Income-tax (Appeals) also.\" 15. The Punjab and Haryana High Court in Bachittar Singh (supra), in para 7 of the report, held as under:- \"7. It is not disputed that the statement was made by the assessee at the time of survey, which was retracted on May 28, 2003, and he did not take any further action for a period of more than two months. In such circumstances, the view taken by the Tribunal that ITA No.1130/Bang/2024 Page 26 of 30 retraction from the earlier statement was not permissible, is definitely a possible view. The mere fact that some entries were made in a diary could not be held to be sufficient and conclusive to hold that the statement earlier made was false. The assessee failed to produce books of account which may have been maintained during regular course of business or any other authentic contemporaneous evidence of agricultural income. In the circumstances, the statement of the assessee could certainly be acted upon.\" 16. The High Court of Kerala in O. Abdul Razak,(supra), in para nos.8, 9 and 10 of the report, held as under:— \"8. It cannot be doubted for a moment that the burden of proving the undisclosed income is squarely on the shoulders of the department. Acquisition of properties by the assessee are proved with the documents seized in search. Since under statement of consideration in documents is the usual practise the officer questioned the assessee on payments made over and above the amounts stated in the documents. Assessee gave sworn statement honestly disclosing the actual amounts paid. The question now to be considered is whether the sworn statement constitutes evidence of undisclosed income and if so whether it is evidence collected by the department. In our view the burden of proof is discharged by the department when they persuaded the assessee to state details of undisclosed income, which the assessee disclosed in his sworn statement, on being confronted with the title deeds seized in search. 9. Section 132 of the Income-tax Act deals with search and seizure and sub-section (4) of section 132 empowers the authorised officer during the course of the search and seizure to examine on oath any person who is found to be in possession or control of any books of account, documents, money or valuable articles or things etc. and record a statement made by such person which can be used in evidence in any proceedings under the Income-tax Act. The explanation appended to clause (4) also makes it clear that such examination can be in respect of any matters relevant for the purpose of any investigation and need not be confined to matters pertaining to the material found as a result of the search. A plain reading of section 132(4) would clearly show that what was intended by empowering an officer conducting the search to take a statement on oath was to record evidence as contemplated in any adjudication especially since section 131 confers on all officers empowered therein with the same powers as vested in a court under the Code of Criminal Procedure, for the purpose of the Income-tax Act. ITA No.1130/Bang/2024 Page 27 of 30 10. A Division Bench of this Court in C.I.T. v. Hotel Meriya, found that such statement recorded by the officer as well as the documents seized would come within the purview of evidence under section 158(BB) of the Income-tax Act read with Section 3 of the Evidence Act and Section 131 of the Income-tax Act. Based on the above finding, it was also held that such evidence would be admissible for the purpose of block assessments too. The explanation to Section 132(4) of the Income-tax Act was also noticed by the Division Bench to further emphasise that the evidence so collected would be relevant in all purposes connected with any proceedings of the Income-tax Act.\" 17. The Allahabad High Court in Dr. S.C. Gupta. (supra), in para 7 of the report, held as under:- \"7. As regards the assessee's contention that the statement having been retracted the Assessing Officer should have independently come to a conclusion that there was additional income as sought to be assessed and that there was no material to support that there was such income, this contention in our view is not correct. As held by the Supreme Court in Pullan-gode Rubber Produce Co. Ltd. v. State of Kerala, (1973) 91 ITR 18 an 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. The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and in fact there was no additional income. This burden does not even seem to have been attempted to be discharged. Similarly, P.K. Palwankar v. CGT, [1979] 117 ITR 768 (MP) and CIT v. Mrs. Doris S. Luiz, [1974] 96 ITR 646 (Ker) on which also learned counsel for the assessee placed reliance are of no help to the assessee. The Tribunal's order is concluded by findings of fact and in our view no question of law arises. The applications are, accordingly, rejected.\" 18. All the aforementioned judgments were considered by this Court in M/s. Bannalal Jat Constructions Pvt. Ltd. (supra)wherein also the assessee retracted from his statement initially given under section 132(4) of the Act on 10.10.12014 followed by confirmation statement under Section 131 on 04-12-2014 and made the following observations: \"Reverting back to the present case, the ITAT, on the basis of such statement of Shri Bannalal Jat, concluded that he was managing his business affairs of both his proprietary concern as well as appellant- company from his residence and that in the absence of individual cash-book of respective concerns and other details maintained by him, it is not possible to identify whether the cash so found belongs to the proprietary concern or to the assessee company. ITA No.1130/Bang/2024 Page 28 of 30 Subsequently, when the statement under section 132(4) of the IT Act was recorded on 10-10-2014, which was concluded at his residence, Shri Bannalal Jat categorically admitted that the cash amount of Rs. 1,21,43,210/- belonged to his company M/s. Bannalal Jat Construction Private Limited and the same was its undisclosed income. Thereafter another statement under section 132(4) of the IT Act was recorded at his business premises on 11-10-2014. In reply to question No. 8, he was asked to explain the source of cash amounting to Rs. 3,380/- found at his office and Rs. 1,21,43,210/- found at his residence, he submitted regarding the amount of Rs.1,21,43,210/- found at his residence that he was unable to give any explanation and admitted that he was in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and that the income so generated on account of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed income belonged to his company M/s Bannalal Jat Construction Pvt. Ltd. In response to question no. 11 wherein he was asked to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual expenditure details have been found and taking all that into consideration, he surrendered Rs. 4,01,43,210/- as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s Bannalal Jat Construction Private Limited in respect of unexplained cash amounting to Rs.1,21,43,210/- and Rs.2,50,00,000 and Rs. 30,00,000/- totalling to Rs. 2,80,00,000 in his individual capacity.\" 19. In view of the law discussed above, it must be held that statement recorded under section 132(4) of the Act and later confirmed in statement recorded under section 131 of the Act, cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessee in a belatedly filed affidavit has retracted from his statement. Such retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days. ITA No.1130/Bang/2024 Page 29 of 30 13. During the course of hearing, the learned DR has also relied on the judgment of the Hon’ble Apex Court in the case of B. Kishore Kumar (supra) and it is judgment passed by the Hon’ble High Court of Madras which has been confirmed by the Hon’ble Apex Court reported in (2015) 62 taxmann.com 215. In this case, the SLP filed by the assessee against the judgment of Hon’ble High Court of Madras, the SLP has been dismissed. Respectfully following the above judgments, we partly allow the appeal of the revenue for statistical purpose. The case law relied by the learned Counsel placed in the Paper Book are on different set of facts. Therefore, on these case laws cannot be relied upon. Accordingly, the Revenue succeeded on this issue. 14. In the result, the appeal by the Revenue is partly allowed for statistical purposes. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (KESHAV DUBEY) (LAXMI PRASAD SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated : 29.11.2024. /NS/* ITA No.1130/Bang/2024 Page 30 of 30 Copy to: 1. Appellant 2. Respondent 3. Pr.CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "