Appeal Details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 2692 (ITAT-CUTTACK)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 year(s) 7 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
25-09-2022
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
22-09-2022
Assessment Year
2016-2017
Appeal Filed On
10-02-2020
Judgement Text
आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री अरुण खोड़पऩया ऱेखा सदस्य के समऺ । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपीऱ (तऱाशियाां और अशिग्रहण)सं./IT( SS) A No.77 ,78 &7 9/CT K/2019 (नििाारण वषा / Asses s m ent Years : 2 0 1 2-2 0 1 3 , 2 0 1 5-2 0 1 6 & 2 0 1 6-2 0 1 7) ACIT (Cent ra l) Cutt ack. ..................Re ven ue Versus Bishanda ya l Je we l l ers, Na yasa rak, P. O.:C handini Cho wk, Cuttack-753002 P AN : AAH F B 329 8 C ....................As sessee AND प्रत्याऺेऩ सं./ Cross Objection No.01/CTK/2020 ( Ar i s i n g o u t o f I T ( S S ) A N o .79/ C T K / 2 0 19) (नििाारण वषा / Asses s m ent Year : 2016-2 017) Bishanda ya l Je we l l ers, Na yasa rak, P. O.:C handini Cho wk, Cuttack-753002 P AN : AAH F B 329 8 C ....................Assessee Versus ACIT , (Centra l), Cu ttack ..................Revenue Shri M.K.Gautam, CIT-DR for the Revenue Shri S.K.Sarangi, CA for the assessee Date of Hearing : 23/09/2022 & 26/09/2022 Date of Pronouncement : 26/09/2022 आदेश / O R D E R Per Bench : These there appeals are directed by the revenue against the order passed by the ld. CIT(A)-2, Bhubaneswar, all dated 23.09.2019, for the assessment years 2012-2013, 2015-2016 & 2016-2017, respectively. The IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 2 assessee has also filed cross objection arising out of the appeal filed by the revenue for A.Y.2016-2017. 2. It was submitted by both the sides that facts for the assessment year 2012-2013 would lay the facts for all the three appeals. Consequently, IT(SS)A No.77/CTK/2019 was taken for hearing first. 3. It was submitted by the ld. CIT-DR that the assessee is a partnership firm, which is stated as per the audit report, to be doing trading business of jewellery, precious and semi precious stones. It was submitted that there were search on the premises of the assessee on 09.12.2015. It was submitted that in the course of search, it was found that the assessee was also doing the business of manufacturing of gold jewellery. A notice under section 153A of the Act came to be issued on 10.01.2017. Returns of income were filed for all the assessment years on 04.10.2017. The ld. CIT-DR drew our attention to page 4 of the paper book of the assessee to submit that this was a copy of inventory of the items found during the course of search and item No. 21 showed a bunch of loose sheets, identified as BDJC-21, item No. 25 showed a register identified as BDJC-25, item No. 27 showed a hard disc and its extracts as BDJC-27. He further drew our attention to page 27 of the paper book to show that item No.12 was identified as pen drive being CWJ-12. Ld. CIT- DR drew our attention to page 62 of the paper book which was a copy of the audit report and at page 64 at Column No. 8, it is mentioned as “Trading in jewellery, precious & semi precious stones”. It was submitted IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 3 that this was wrong and the assessee was also doing manufacture of gold jewellery. He further drew our attention to page 67 of the paper book which was part of the audit report, wherein at clause 28(a) the quantitative details has been mentioned as “not available”. He also drew our attention to column No.28(b), which was in relation to manufacturing, wherein it is mentioned as “not applicable”. He then drew our attention to page 28 of the paper book which is a statement of Shri Nand Kishore Tibrewal, who is one of the partner of the assessee partnership firm. He drew our attention to page 29 of the paper book wherein in regard to question No.6, the said partner has mentioned that the assessee is maintaining its accounts in a software namely, Jewel.xp, a software provided by Bidut Software Solutions P. Ltd. which was a hardware specific programme. It was submitted that the assessee has claimed before the ld. CIT(A) for the first time that the AO has not given copies of the seized materials of the copies extracted from the hard disk (BDJC-27) and the pen drive (CWJ- 12). The ld. CIT(A) had called for a remand report from the AO vide a remand letter dated 30.01.2019. It was the submission that by the time when the ld. CIT(A) called for the remand report, the AO was changed. The new incumbent AO had tried to open the hard disk in a standard computer and he was unable to do so and consequently the AO had replied to the CIT(A) in the remand report that he was unable to open the software. However, he provided the softy copy of the hard disk and pen drive to the CIT(A). It was submitted that with this in mind, the assessment IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 4 is to be read. The ld. CIT-DR drew our attention to question No.9 in the statement of Shri Nand Kishore Tibrewal, which is in respect of difference in the stock. It was the submission that in respect of question No.9, wherein the quantity-wise stock position in respect of Cuttack branch were placed before the assessee. The assessee had been asked to provide the value of the closing stock of the relevant year ending and the assessee had submitted that he is unable to provide the same and he needed more time. He further drew our attention to question No.16. It was submitted that in reply to question No.16, though the assessee submitted that he was not in agreement with the valuation of the stock made in the question raised, he had agreed to offer an amount of Rs.10 crores and to pay taxes thereon to buy peace. It was submitted that consequently in the return of income for the relevant assessment year, the assessee had revalued the closing stock and had enhanced the same, however, after enhancement of the closing stock it was noticed that this resulted into a loss for the assessment year 2012-2013 to an extent of Rs.2,52,00,090.65. It was the submission that this has been brought out by the ld. AO in page 2 para 3 of his assessment order. It was his further submission that in the other assessment years, the difference had been shown as income. It was the submission that consequently the net result was that the disclosure made by the assessee by enhancement of value of closing stock was to an extent of Rs.4,53,08,556.80 as against Rs.10 crores offered by the assessee. It was submitted that before the ld. CIT(A) the assessee has IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 5 claimed that the AO had got the figures in the course of search only for the assessment year 2012-2013 but for the remaining assessment years the AO has resorted to estimation. It was the submission that BDJC-27 being the hard disk, contained data for all the years upto the date of search. It was further submitted by the ld. CIT-DR that the pen drive CWJ- 12 contained the sales summary for the year 2010 to 2015. The ld. CIT- DR drew our attention to pages 3 & 4 of the assessment order to submit that the hard disk, identified as BDJC 27, contained all the details of purchase and sales for the assessment years 2010-2011 to 2015-2016. It was submitted that consequently the AO had taken the said data from the hard disk to an excel sheet. He drew our attention to pages 6 to 19 to show the various data entered in the excel file. The AO had then segregated the transactions in the different years. In respect of purchase of gold bars, bullion, old jewellery and new ornaments, it was submitted that as the gold bars were of purity of 99.5%, at pages 6 & 7 the AO had converted the same into 916 jewellery requirements. Consequently the weight of the bars was determined at 98,284.36 gms. Similarly, at page 9 of the assessment order the AO determined the purchase of old gold jewellery weight at 393.002 gms and in respect of new jewellery at 229.736 gms. It was also noticed that the assessee has moved old jewellery to Anand Refinery for melting and extracting material out of the old items and this was for a weight of 15649.484 gms. The ld. AO at page 9 of his assessment order consequently computed the said quantity to IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 6 arrive at 126555.032 gms. It was the submission that the assessee has shown the purchases at 39,881.113 gms. The assessee has shown a closing stock as on 31.03.2012 at 46,989.97 gms as per the reply to question No.13 in the statement recorded, which has been extracted at page 15 of the assessment order. Consequently, the AO held that the stock of gold ornaments were 79,565.062 gms. This computation has been shown at page 11 of the assessment order. It was the submission that the stock declaration as given by the assessee was, therefore, wrong. It was the submission that it was also noticed that the assessee has been giving bars and jewellery to the karigars for making of new ornaments. However, on the ground that the assessee is not paying the karigars in cash but is paying in kind being the differential between the pure gold given to the karigar and same weight of 916 jewellery returned by them, no addition was determined by the AO. Ld. CIT-DR further drew our attention to page 13 of the assessment order to submit that for the assessment year 2012-2013, the AO had determined the net annual gold stock at 67,567. It was submitted that the AO has considered the annual figure for each year, no extrapolation has been done and neither estimation has been done. Ld. CIT-DR drew our attention to page 13 & 14 of the assessment order to submit that even in respect of silver for some of the years the computation showed a negative stock. He further drew our attention to page 17 of the assessment order to submit that in respect of gold purchased the AO had determined the net annual gold stock at IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 7 60,684 gms in respect of Cuttack and 11,012 gms in respect of Bhubaneswar and after reducing the sales of 35174.11 arrived at the stock of 25510 as on 31.03.2012 to which he added the stock of the assessment year 2011-2012 of 78,177 being the opening stock in the assessment year 2012-2013 to arrive at a total stock of 1,04,088 gms. The AO reduced the disclosed closing stock of 34,453.633 to determine the undisclosed stock at 69,634, the rate as per the purchase register maintained by the assessee was applied and determined the value of undisclosed stock at Rs.19,07,42,154/-. It was further submitted that in page 18 of the assessment order the AO determined the undisclosed investment in the stock at 21,28,56,716/- and as such the stock was not found during the course of search, treated the same as undisclosed sales and applying the same rate of sale as shown by the assessee in its books determined the income for undisclosed sale at Rs.22,72,83,221/-. Similarly, in respect of silver, the AO at page 19 of the assessment order determined undisclosed investment in purchase at Rs.10,21,68,279/-. It was the submission that subsequently, the AO at page 22 of his order issued a show cause notice to the assessee vide a letter dated 08.12.2017 to which at para 6 page 26 the AO has recorded the reply given by the assessee on 26.12.2017 and has rejected the same on the ground that the said explanation is vague and evasive. Consequently, the AO made addition of Rs.47,81,47,015/- rejecting undisclosed investment in silver stock to an extent of Rs.8,73,07,384/-, undisclosed investment in IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 8 gold to an extent of Rs.19,07,42,154/- and undisclosed sales of Rs.20,00,97,477/-. 4. It was further submitted by the ld. CIT-DR that before the AO the assessee had never asked for the seized material. It was the submission that neither it was a claim before the AO that copies in respect of hard disk (BDJC-27) or the pen drive (CWJ-12) ever requested for. It was the submission that for the first time before the ld. CIT(A) the assessee has sought the said information in respect of hard disk (BDJC-27) and the pen drive (CWJ-12). The ld. CIT-DR drew our attention to page 36 & 39 of the paper book, which was a copy of the remand letter issued by the ld. CIT(A) to the AO. It was the submission that in page 37 of the paper book at para 3(a), the ld. CIT(A) has mentioned that the assessee has claimed that the seized material CWJ-12 is a pen drive and BJDC-27 is a hard disk and the data contained in them has not been given and confronted to the assessee even though the data has been used by the AO in the assessment order. It was the submission that the AO has adopted the figures from the seized material as was available for each of the separate assessment years. It was the submission that the ld. CIT(A) mentioned in his order that the AO has extracted the appraisal report. It was submitted that once a search took place the AO has no other option but to follow the appraisal report and determine the assessment as has been done in the appraisal report. Ld. CIT-DR further drew our attention to page 40 of the paper book which is a copy of the remand report sent by the AO to the ld. IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 9 CIT(A) on 31.03.2019, wherein the new incumbent AO mentioned that the said BDJC-27 and CWJ-12 was not opening in a general computer and even a computer expert was unable to open the same. He had also sent the seized materials to the ld. CIT(A). Ld. CIT-DR drew our attention to page 13 of the ld. CIT(A) to submit that he has given a finding in para 9.1 to 9.3. It was the submission that the ld. CIT(A) mentioned that the AO has not made any independent enquiry before making the additions and that the entire assessment order is a reproduction of the appraisal report. It was further submitted that in para 9.2 the ld. CIT(A) mentioned that there is no data available in respect of any of the financial year other than F.Ys.2009-2010 & 2010-2011, even for these years the data available are partial. It was further submitted that in para 9.3 the ld. CIT(A) holds that neither during the course of search nor the post search proceedings, nor in the assessment proceedings, nor even in the remand proceedings, the seized materials have been confronted to the assessee and that the additions have been made in complete disregard to the principles of natural justice. It was the submission that the order of the ld. CIT(A) is a cryptic and unsustainable and the same is liable to be reversed. Ld. CIT- DR also filed his written submissions as follows :- The findings of the ld. CIT (Appeals) are erroneous for the following reasons: a) The CIT (Appeals) is silent about the provisions of section 292C of the Act. Section 292C reads as under: "Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 10 under section 132 [or survey under section133A], it may, in any proceeding under this Act, be presumed— (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. Section 292C extends the presumption in respect of any documents, valuables, etc., found with or recovered from the assessee during a search or survey for the purpose of any proceedings under the Act. However, the presumption is rebuttable, and the onus for the same is on one who contends otherwise, i.e. who challenges the said presumption. In fact, the CIT(Appeals) has tried to shift burden to the A.O. on the ground that he has failed to conduct any enquiry in this regard. As a matter of fact, this onus can't be shifted to the Deptt. b) Coming to the allegation that copies of seized material were not provided to the assessee company, the following facts are pertinent: i.) No such contention was ever raised before the DDIT(Investigation), Bhubaneswar in the post search proceedings or before the A.O. at the time of commencement or conclusion of assessment proceedings. ii.) When the A.O. issued the show cause notice dated 08.12.2017 to the assessee, it had filed the reply on 26.12.2017 (pages 48 and 49 of the paper book filed by the assessee on 17.02.2020). It can be seen from said reply that no such contention as regard non- supply of seized material was ever raised by the AR of the assessee. iii.) As per scrutiny report dated 06.11.2019 (copy enclosed) submitted by Shri R. N. Satdive, ACIT, Central Circle, Cuttack, the digital books found at Cuttack and Bhubaneswar were identified as BDJC-27, CWJ-12 and other documents BDJC-21 respectively which were seized. It is also mentioned that the documents IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 11 BDJC-27 were copied from original documents on 15.12.2017 in front of the A/R of the assessee Shri Ketul Seth along with two independent witnesses. iv.) I have also asked the Addl.DIT (Investigation), Unit-2, Bhubaneswar (Smt. Dipi Agarwal) to supply the copies of extracts of BDJC-12 and CWJ-12. The ACIT, Central Circle, Cuttack has also been asked to locate the copies of these extracts. Since the matter is seven years old therefore it will take some time to place these documents before the Hon'ble Bench. v.) It may please be noted that this contention was for the first time raised before the CIT(Appeals) who did not examine the issue in proper perspective. vi.) The CIT (Appeals) was aware of the fact that seized documents BDJC-21 and BDJC-25 contained the voluminous data in respect of unexplained investment in the stock of gold/silver and undisclosed sales for AY 2016-17 and AY 2015-16 respectively (page-37 of the paper book filed by the assessee on 17.02.2020). However he himself took a contradictory stand in para-9.2 on page-14 of the appellate order to hold that there was no data or details whatsoever in respect of AY 2012-13, AY 2015-16 and AY 2016-17. It is clear that he did not bother to see the contents of Hard Disc BDJC-27 which were reproduced by the A.O. on page-3 of the assessment order. There is no doubt that it contained the details of purchases from FY 2010-11 to FY 2015-16 and similarly details of sales of gold, silver & diamond for the FY 2009-10 to FY 2015-16. The CIT (Appeals) also did not bother to see the contents of Pen Drive CWJ- 12 which were reproduced by the A.O. on page-4 of the assessment order. There is no doubt that it contained the details of sales summary for the period 2010-2015 besides the sales register in text format for FY 2014-15 and FY 2015-16. Thus data/details for all these years were available with the Department. These details were reproduced by the A.O. on page-13 to 15 and pages 17 to 19 of the assessment order. vii.) Similarly as per remand report of the A.O. dated 31.03.2019 (page-40 of the paper book filed by the assessee), BDJC-27 was a hard disc containing digital data such as purchases, sale, stock of old gold and quantitative stock etc. and CWJ-12 was a pendrive containing digital data and books of account pertaining to Cuttackwala Jewellers and Bhubaneswar branch of Bishandayal Jewellers. The books of account of the assessee were maintained in BIDUT software and this data could not be opened in the general computer system. viii.) The A.O. asked the CIT(Appeals) that if he desired, the seized copies of BDJC-21 and BDJC-25 will be submitted for his perusal. Further the soft copy of the seized material BDJC-27 and CWJ- IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 12 12 containing digital data were enclosed with the remand report of the A.O. It was therefore incumbent upon the CIT(Appeals) to further examine the seized material. But the CIT(Appeals) without paying heed to such request passed the appellate order in haste. It was an admitted fact that the assessee firm did not maintain any stock registers and all the data was available in hard disc, pendrive, BDJC-21, BDJC-25 and other seized documents. Therefore the allegation of non-supply of seized material is just an eye-wash and should not be believed. b) The ld. CIT(Appeals) has not accorded due cognizance to the fact that the partner of the assessee firm had voluntarily made a disclosure of Rs.10 crores on account of variation in the stock u/s. 132(4) while replying to question no.16 (page-32 & 33 of paper book filed by the assessee on 17.02.2020). In the last page-8 of the statement (page-35 of paper book filed by the assessee on 17.02.2020), he has affirmed that said statement was recorded correctly. Further he has affirmed that it was recoded without any pressure, coercion or inducement. c) The statement u/s.132(4) was recorded on 10.12.2015. No retraction was made by the said partner or other partners of the assessee firm till the date of filing return of income on 04.10.2017. Thus retraction was made in the present case after a lapse of 22 months. d) Merely because a statement is retracted, it cannot become invalid. For any retraction to be successful in the eyes of law, the assessee has to show as to how the recorded statement does not state the true facts or that there was coercion, inducement or threat while recording the statement. The burden of proof in on the assessee. The retraction has to be genuinely made within reasonable time and immediately after such a statement has been recorded either by filing a complaint to the superior authority of otherwise brought to the notice of the higher officials, duly sworn affidavit or statements supported by convincing evidence. Nothing has been done by the assessee in the present case. e) It is a settled law that for a valid and binding retraction, it is not enough that the assessee merely retracts it; the timing of the retraction and the explanation for the statement as well as retraction may be crucial and can be considered by the Assessing Authorities. Given the legislative object of getting at concealed income, which is secreted away in diverse and different ways, such statements or even documents, which may not be accurate or complete in themselves, have to be scrutinized in the backdrop of probabilities of human conduct. Perfect books of account and materials are not expected in search and seizure cases and any undisclosed income/clandestine income would in all probabilities be kept outside the books. Reliance is placed on the decision of Hon'ble Delhi IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 13 High Court in the case of Bhagirath Aggarwal vs. CIT (351 ITR 143) (31 taxmann.com 274) wherein it was held that an addition in assessee's income relying on statements recorded during search operations cannot be deleted without proving statements to be incorrect. f) Reliance is also placed on the decision of the Hon'ble Allahabad High Court in the case of Dr. S.C. Gupta vs. CIT (248 ITR 782) wherein it was observed in para-7 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 Pullangode Rubber Produce Co. Ltd. vs. State of Kerala, (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". g) The Hon'ble Kerala High Court in case of CIT vs. O. Abdul Razak (20 taxmann.com 48) held that a self-serving retraction, without anything more cannot dispel statement made under oath under section 132(4) of the Act. A statement made under oath deemed and permitted to be used in evidence, by express statutory provision, has to be taken as true unless there is contra evidence to dispel such assumption. The observations of the Hon'ble High Court in paras-6 to 9 are reproduced as under: "6. The additions made by the assessing officer was on the basis of clear admission made by the assessee in the statement recorded under Section 132(4) of the Act. The Tribunal has proceeded to deal with the issues on the premise that no evidentiary value can be attributed to the statement under Section 132(4) of the Act especially in the context of there being a retraction and that for making additions, the Assessing Officer should necessarily unearth materials during the search. 7. The statement on oath given by the assessee is produced by the Revenue as Annexure-A. From a reading of the statement, it is evident that the assessee had voluntarily submitted before the Income Tax Officer that the IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 14 amount shown in the document with respect to purchase of four properties were not the actual amounts and that he had paid more than that shown in the document. The assessee has also categorically stated the amounts actually paid with reference to the total extent of each of the properties. In fact it is the case of the assessee as is revealed from page 25 of the order of the Tribunal that the documents recovered during the search were put across to the assessee and it was looking into these documents that the assessee had stated the details of the various transactions. The statement given under oath has to be considered in the context of the long prevalent practice of not stating the actual consideration with respect to transactions of immovable properties, for the purpose of evading stamp duty. True, the assessee has a case in his retraction statement, as also before the first appellate authority and the Tribunal that he was threatened and coerced into stating the facts recorded in the statement under Section 132(4) of the Act. It is pertinent to note that the first appellate authority has clearly found that the appellant had volunteered the information and the demeanour of the deposition belies the contention of threat and coercion. Strangely, the Tribunal refused to go into that aspect as is discernible from paragraph 31 in so many words: "Though we are not going into the aspect of duress or coercion on the assessee as mentioned in the retraction statement, we do not find that the revenue had at-least brought anything on record in respect of on money payment except the sworn statement (which has also been retracted by the assessee later on). The Tribunal without going into that aspect merely disbelieves the statement recorded under Section 132(4) relying on the retraction statement as also on the lack of any material on record with respect to the alleged actual payments. The deletion made by the Tribunal is on the premise that the burden of proving undisclosed income in search is not established by the department. 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 understatement of consideration in documents is the usual practice, 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 IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 15 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 authorized 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". h) In the case of CIT vs. Ravi Mathur 2017 (1) WLC (Raj.) 387, the Hon'ble Rajasthan High Court held that the statements recorded under section 132(4) of the Income Tax 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 bringing 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. Para 15 of the said judgment, is reproduced herein under:— "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 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 were recorded at the time of search on 09.11.1995 IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 16 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 Assessing Officer in the assessment order has observed :- "Regarding the amount of Rs. 44.285 lakhs, it is now contended that the statement under section 132(4) was not correct and these amounts are in thousands, not lakhs i.e. it is now attempted to retract from the statements made at the time of Search & Seizure operations". This decision was followed in the case of Bannalal Jat Constructions (P.) Ltd. (106 taxmann.com 127) and SLP filed by the assessee was dismissed by the Hon'ble Supreme Court (106 taxmann.com 128). i) In the case of Hiralal Maganlal & Co. vs. DCIT (96 ITD 113), the Hon'ble Mumbai ITAT held that the retraction sought to be made by the assessee several months after making the declaration under section 132(4) was nothing but a well planned device to frustrate the efforts of the Department to unearth unaccounted income. In para-25, the Hon'ble ITAT observed as under:- "25. In our view, the retraction sought to be made by the assessee several months after making the declaration under IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 17 section 132(4) was nothing but a well planned device to frustrate the efforts of the Department to unearth unaccounted income. The attempt of the assessee to retract from the said declaration is not only against the well-settled principles of common law and against the letter and spirit of section 115 of the Evidence Act but also against the principles of equity, justice and good conscience. The declaration made by Shri Prataprai Sanghvi under section 132(4) clearly fell under section 115 of the Evidence Act and hence it was not open to the assessee to retract from the said declaration after the Departmental Authorities had accepted the same and altered their position by closing the search. Further, declarations falling under section 115 of the Evidence Act do not require any corroboration. Retraction from declaration or acts falling under section 115 of the Evidence Act is also not possible at all. The retraction filed by the assessee in the case before us is hit by section 115 and hence the Assessing Officer was justified in rejecting the same. We see no infirmity in his action". j) In the case of Kantilal C Shah vs. ACIT (14 taxmann.com 108), it was held by the Hon'ble Ahmedabad ITAT that statement recorded u/s.132(4A) is an evidence by itself and any retraction should be supported by strong evidence to show that there was coercion or undue force. This view is also supported by following decisions: (i) Carpenters Classics (Exim) Pvt. Ltd vs. DCIT (108 ITD 142) (Bangalore ITAT) (ii) Hiralal Maganlal & Co. vs. DCIT (96 ITD 113) (Mumbai ITAT) In the case of Hotel Kiran (82 ITD 453) (Pune ITAT), the Tribunal held that where during the course of search, the assessee makes some admission, he debars the authorized officers from making further investigation. Therefore, in their wisdom, the Legislature has provided that such statement can be used as evidence and the assessment can be made on that basis. A reference may be made to the decision of Hon'ble Supreme Court of India in the case of Surjeet Singh Chhabra vs. Union of India [1997] 1 SCC 508 wherein the Hon’ble Apex Court held that the Revenue officials are not Police officers and the confession, though retracted, is an admission and would bind the petitioner. In the case of T.S. Kumarasamy vs. ACIT (65 ITD 188) (Madras ITAT), the Tribunal held that ITOs are not police officers, they do not use unfair means or third degree methods in recording statement on oath. Therefore such statements and oaths cannot be retracted unless it is proved by legally acceptable evidence that such admission/confession or oath was not voluntarily tendered or was under coercion or duress. In the present case no such evidence has been produced or even shown to have existed. The Hon’ble Punjab and Haryana High Court in the case of Rakesh Mahajan Vs. CIT (214 CTR 218) held that "it is a well settled law IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 18 that admissions constitute best piece of evidence because admission are self-harming statements made by the maker believing it to be based on truth. It is well known that no one will tell a lie especially harming one's own interest unless such a statement is true". k) As regards the contention of the CIT(Appeals) that no data was available in the Appraisal report for other years except AY 2010-11 and AY 2011-12 in respect of undisclosed sales or unexplained investment, it is submitted that he has blindly followed the submissions made by the assessee without bothering to examine the seized material and detailed working of the A.O. in quantifying the undisclosed sales and unexplained investment. In fact, the letter of the CIT(Appeals) dated 30.01.2019 calling for remand report from the A.O. has been verbatim reproduced by him in the appellate order forming the basis for allowing relief to the assessee. This shows that he was already pre-determined to allow the relief to the assessee. Without prejudice to the above argument, reliance is also placed on the decision of Hon'ble Delhi High Court in the case of CIT vs. Chetan Das Lachmandas (25 taxmann.com 227) wherein it was held that there is no condition in section 153A that additions should strictly be made on basis of evidence found in course of search or other post-search material or information available with Assessing Officer which can be related to evidence found. It was further held that seized material could also be relied upon to draw inference that there were similar transactions throughout period of six years covered by section 153A of the Act. The observations of the Hon'ble Delhi High court in para-11 & 13 are reproduced as under: "11. The question, however, is whether the seized material can be relied upon to also draw the inference that there can be similar transactions throughout the period of six years covered by Section 153A. It is in this context it is relevant to note the judgment of the Supreme Court in H.M. Esufali H.M. Abdulali (90 ITR 271). We have to remember that with the advent of Section 153A, we are taken back to the pre-chapter XIV-B situation, where assessments were made on the basis of material and evidence collected during search. In the cited judgment the facts were these. The case arose under the sales tax law. Assessments under the MP General Sale Tax Act and Central Sales Tax Act had been completed on a dealer of iron and steel. They were made primarily on the basis of the returned filed by the assessee and the books of accounts. Subsequently, the flying squad of the sales tax department inspected the business premises of the assessee and found a bill book for the period of 19 days from September 1 to 19, 1960 showing sales of the value of Rs. 31,171/- which had not IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 19 been entered in the account books maintained by the dealer. On this basis the Sales Tax Officer initiated reassessment and after rejecting the account books estimated the escaped turn over at Rs.2,50,000/- under the MP General Sales Tax Act and Rs.1,00,000/- under the Central Sales Tax Act, adopting the sale of Rs.31,171/- as escaped turnover for a period of 19 days as the basis. The contention of the assessee in that case was that the action of the Sales Tax Officer was arbitrary inasmuch as he had no evidence of escaped turnover for the entire accounting period and he was not legally correct in estimating or inferring that the assessee would have indulged in sales outside the books of accounts for the entire accounting period. The Supreme Court rejected such a contention in the following words: - "It is now proved as well as admitted that his dealings outside his accounts during a period of 19 days were of the value of Rs.31,171/-. From this circumstance, it was open to the Sales Tax Officer to infer that the assessee had large-scale dealings outside his accounts. The assessee has neither pleaded nor established any justifiable reason for not entering in his accounts the dealings noted in the bill book seized. It is obvious that he was maintaining false accounts to evade payment of sales tax. In such a situation, it was not possible for the Sales Tax Officer to find out precisely the turnover suppressed. He could only make an estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him is not arbitrary and has nexus with facts discovered, the same cannot be questioned. In the very nature of things the estimate made may be an over-estimate or an under-estimate or an under-estimate. But, that is no ground for interfering with his "best judgment". It is true that the basis adopted by the officer should be relevant to the estimate made. The High Court was wrong in assuming that the assessing authority must have material before it to prove the exact turnover suppressed. If that is true, there is no question of "best judgment" assessment. The assessee cannot be permitted to take advantage of his own illegal acts. It was his duty to place all facts truthfully before the assessing authority. If he fails to do his duty, he cannot be allowed to call upon the assessing authority to prove conclusively what turnover he had suppressed. That fact must be within his personal knowledge. Hence, the burden of proving that fact is on him. No circumstance has been placed before the assessing authority to show that the assessee's dealings during September 1, 1960, to September 19, 1960, outside his accounts were due to some exceptional circumstance or that they were proportionately more than his dealings outside his accounts during the remaining periods. The assessing authority could not have been in possession of any correct measure to find out the escaped turnover during the periods November 1, 1959, to August 31, 1960, and September 20, 1960, to October IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 20 20, 1960. The task of the assessing authority in finding out the escaped turnover was by no means easy. In estimating any escaped turnover, it is inevitable that there is some guess-work. The assessing authority while making the "best judgment" assessment, no doubt, should arrive at its conclusion without any bias and on rational basis. That authority should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his "best judgment" and not of anyone else. The High Court could not substitute its "best judgment" for that of the assessing authority. In the case of "best judgment" assessments, the courts will have to first see whether the accounts maintained by the assessee were rightly rejected as unreliable. If they come to the conclusion that they were rightly rejected, the next question that arises for consideration is whether the basis adopted in estimating the turnover has reasonable nexus with the estimate made. If the basis adopted is held to be a relevant basis even though the courts may think that it is not the most appropriate basis, the estimate made by the assessing authority cannot be disturbed. In the present case, there is no dispute that the assessee's accounts were rightly discarded. We do not agree with the High Court that it is the duty of the assessing authority to adduce proof in support of its estimate. The basis adopted by the Sales Tax Officer was a relevant one whether it was the most appropriate or not. Hence the High Court was not justified in interfering with the same." 13. Coming to the order of the Tribunal, we are of the view that the reasons given by it to distinguish the judgment of the Supreme Court cited (supra) are not sound. Firstly, there was seized material in the present case to show that the assessee has been indulging in off-record transactions. The observation of the Tribunal that no evidence was found to show that the actual turnover of the assessee was more than the declared turnover is hair splitting. The Tribunal lost sight of the fact that all was not well with the books of account maintained by the assessee and it has been keeping away its income from the books. That should have been sufficient for the Tribunal to examine the estimate made by the Assessing Officer, having regard to the principles laid down in the judgment of the Supreme Court (supra). The Tribunal also failed to note the difference between Section 158BB appearing in the Chapter-XIVB and the assessment made by virtue of the provisions of Section 153A of the Act. Secondly, the Tribunal expects the purchasers from the assessee to come forward and declare that they have paid more than what was appearing in the sale bills issued to them and has commented upon the lack of any inquiry from the IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 21 purchasers on this line. Suffice to say that this throws an impossible burden on the Assessing Officer, having regard to the observations of the Supreme Court that the assessee cannot be permitted to take advantage of his own illegal acts, that it was his duty to place all facts truthfully before the assessing authority, that if he fails to do his duty he cannot be allowed to say that Assessing Authority failed to establish suppression of income, that the facts are within his personal knowledge and therefore it was the burden of the assessee to prove that there was no suppression. Thirdly, the Tribunal has stated that there was no corroborative material to substantiate the contents of the loose papers found during the search. We are not impressed by this reason at all. The papers are not denied or disputed by the assessee. The CIT (Appeals) has found that the partners of the assessee firm had admitted to the practice of suppressing the profits. The papers themselves show two different rates, one higher and the other lower and on comparison with the sale bills it has been found that the sale bills show the lower rate and these findings have not been denied by the assessee. The Tribunal, therefore, erred in looking for some other corroboration to substantiate the contents of the loose papers, overlooking that the loose papers needed no further corroboration and the sale bills compared with the seized papers themselves corroborated the suppression of income. Fourthly, the Tribunal has relied on the observations of the CIT (Appeals) that no serious consideration can be given to the loose papers and has held that this shows that there is "nothing more in Revenue's kitty apart from those said loose papers pertaining to November, 2005 (financial year 2005-06) to support suppression of sales receipts on the part of the assessee firm". The Tribunal, with respect, has misread the observations of the CIT (Appeals) and has relied on a single observation without reading the order of the CIT (Appeals) as a whole. Moreover, in such cases, it is expected of the Tribunal to also independently examine the decision of the CIT (Appeals) which is impugned before it. In such cases it would be more appropriate to find out or ascertain whether there is any positive material which is in support of the assessee's case or anything upon which the assessee can rely in order to discharge the burden placed upon him in the light of the judgment of the Supreme Court in H.M. Esufali H.M. Abdulali (supra). Mere negative findings should not be made use of to throw out the case of the department". Similar view was taken by the Hon'ble Kerala High Court in the case of CIT vs, Hotel Meriya (332 ITR 537) wherein it was held that when it is revealed in a search under section 132 that assessee was following a particular method to conceal income, it is just and reasonable to presume that same practice was followed by assessee in all assessment years in block period for purpose of IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 22 block assessment. Though such presumption is rebuttable but in such circumstances, it is for assessee to establish that same method of concealment was not followed in earlier assessment years in block period or that method of concealment detected was practiced only from a particular period. The observations of the Hon'ble High Court in para-9 and 10 are reproduced as under: "9. None of the provisions under Chapter XIV-B mandates that for making block assessment, there shall be evidence regarding the concealment of income for every year in the block period. It cannot be expected that the assessee would retain documents regarding the concealment of income. If documents for every concealment are insisted to be searched, practically the provision for block assessment would be defeated. We cannot shut our eyes to the legislative intent. Here, what was disclosed that for sale, no bills are issued, but paper slips are issued with the price. Though carbon copy is retained, it did not contain the sale price. Sale slips are destroyed then and there. Cash books are maintained by recording the 80 per cent of the price of liquor at a later date. When such practices are adopted, nobody can expect evidence for every year in a block period. What is possible is only to have a best judgment assessment on the basis of the evidence collected during search. The Assessing Officer is authorized and empowered to make block assessment in a judicious manner on the basis of the materials disclosed during the search under section 132 of the Income-tax Act. 10. No person other than the partner of the respondent had in unambiguous terms stated that 20 per cent of the sales outturn is suppressed and only 80 per cent is recorded in the account books and it was the practice from the very beginning. So, it is just and appropriate to presume that there was uniform concealment of income in all assessment years during the block period. There is no material on record to show that the concealment of the sales out turn during any of the assessment year in the block period is lesser than the concealment detected under section 132 of the Income-tax Act. There is no whisper in the statement given by the partner of the respondent or any of the employees that there was any change of the rate of concealment in any year during the block period. No good reason was given to reject the above mentioned statement of the partner and employees recorded during search. Oral evidence was corroborated by the documentary evidence. So, it is just and appropriate to conclude that the concealment was same in all the years during the block period. Adding to that we find that when it is revealed in a search under section 132 of Income-tax Act that the assessee was following a particular method to conceal IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 23 the income, it is just and reasonable to presume that the same practice was followed by the assessee throughout all the assessment years in the block period for the purpose of block assessment. Of course, the presumption is rebuttable. In such circumstances, it is for the assessee to establish that the same method of concealment was not followed in the earlier assessment years in the block period or that the method of concealment detected was practiced only from a particular period. Here, regarding that, assessee had not adduced any evidence to rebut the presumption or to come to a contrary finding. On the other hand, in unambiguous terms, it was stated by the partner of the respondent, who is in-charge of the bar that only 80 per cent of the sales outturn is recorded in the cash books and that is the practice followed from the beginning of the business. In the light of the above statement it is just and appropriate to presume that what is detected out in search is the practice followed throughout the block period to conceal the income. The first appellate authority adopted different slabs with no good explanation. We find that there is no material to adopt an assessment in any year during the block period at a lesser rate than that was assessed for the assessment year during which search was conducted. The appellate Tribunal was not justified in arriving a conclusion that there is no evidence regarding concealment of the income for the assessment years 1996-97 to 2000-01. The procedure adopted by the first appellate authority in calculating the concealment of income at different rates is also without any supporting materials and against the intention of the Legislature expressed in Chapter XIV-B of the Income-tax Act. Hence, we answer the question in favour of the appellant and find that the respondent is liable to be assessed during the block period at uniform rate". l) The CIT(Appeals) has held in para-9.1 on page-13 of the appellate order that the A.O. has not made any enquiry before making the impugned additions on the basis of seized documents. In this regard, reliance is placed on the decision of Hon'ble Delhi High Court in the case of CIT vs. Jansampark Advertising & Marketing (P.) Ltd. (56 taxmann.com 286) wherein it was held that In case of unaccounted entries found in books of account of assessee, though it was the obligation of Assessing Officer to conduct proper scrutiny of material, in event of Assessing Officer failing to discharge his functions properly, such obligation to conduct proper inquiry shifted to Commissioner (Appeals) and Tribunal and they could not simply delete addition made by Assessing Officer on ground of lack of inquiry. The observations of the Hon'ble Delhi High Court in para-38 and 43 are reproduced as under: IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 24 "38. The provision of appeal, before the CIT (Appeals) and then before the ITAT, is made more as a check on the abuse of power and authority by the AO. Whilst it is true that it is the obligation of the AO to conduct proper scrutiny of the material, given the fact that the two appellate authorities above are also forums for fact-finding, in the event of AO failing to discharge his functions properly, the obligation to conduct proper inquiry on facts would naturally shift to the door of the said appellate authority. For such purposes, we only need to point out one step in the procedure in appeal as prescribed in Section 250 of the Income Tax Act wherein, besides it being obligatory for the right of hearing to be afforded not only to the assessee but also the AO, the first appellate authority is given the liberty to make, or cause to be made, "further inquiry", in terms of sub- section (4) which reads as under:— "The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the A.O. to make further inquiry and report the result of the same to the Commissioner (Appeals)". 42. The AO here may have failed to discharge his obligation to conduct a proper inquiry to take the matter to logical conclusion. But CIT (Appeals), having noticed want of proper inquiry, could not have closed the chapter simply by allowing the appeal and deleting the additions made. It was also the obligation of the first appellate authority, as indeed of ITAT, to have ensured that effective inquiry was carried out, particularly in the face of the allegations of the Revenue that the account statements reveal a uniform pattern of cash deposits of equal amounts in the respective accounts preceding the transactions in question. This necessitated a detailed scrutiny of the material submitted by the assessee in response to the notice under Section 148 issued by the AO, as also the material submitted at the stage of appeals, if deemed proper by way of making or causing to be made a "further inquiry" in exercise of the power under Section 250(4). This approach not having been adopted, the impugned order of ITAT, and consequently that of CIT (Appeals), cannot be approved or upheld". In view of above facts & circumstances, the order of CIT(Appeals) needs to be reversed and that of the A.O. is required to be restored. 5. It was further submitted that under the provisions of Section 292C of the Act, the burden was on the assessee to prove that the data in the IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 25 seized material was wrong. This has not been done by the assessee. It was further submitted that the copies of the seized material was never asked for by the assessee either before the DDIT(Inv.) or before the AO. It was submitted that even when the show cause notice was issued to the assessee, the assessee did not raise the said contention. 6. Further, Ld CITDR submitted that assessee’s grievance that copies of the seized materials were not confronted to the assessee is baseless as the digital books found at Cuttack and Bhubaneswar were identified as BDJC-27, CWJ-12 and other documents BDJC-21 respectively which were seized. It is also mentioned that the documents BDJC-27 were copied from original documents on 15.12.2017 in front of the A/R of the assessee Shri Ketul Seth along with two independent witnesses. In support of this the Ld DR has submitted a copy of the “MAHAZARNAMA” duly signed by A/R of the assessee Shri Ketul Seth is scanned and reproduced hereunder for ready reference:- IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 26 7. It was the submission that the Mahazarnama which has been extracted above clearly shows that the copies of the seized material had been given to the representative of the assessee through Mr. Ketul Sheth. It was further submitted that on 15.12.2017, the ld. AR of the assessee Shri Ketul Sheth had come to the office with his own computer and software to take out the extracts. However, it must be mentioned here that the copy of the Mahazarnama, which has been submitted by the ld. CIT- DR does not show that said Shri Ketul Sheth has carried any computer to the office of the revenue for the purpose of opening the said hard disk identified as BDJC-27. This submission by the ld. CIT-DR is just a figment of his imagination. The ld. CIT-DR also made allegation that the copy of the seized material had been given to the ld. AR of the assesse on 15.12.2017. This also does not come out of the Mahazarnama. Ld. CIT- DR further drew our attention to the proforma for scrutiny report in the CIT(A) order which has been attached with the written submission of the ld. CIT-DR wherein page 5 of the said scrutiny report it was submitted that the document in BDJC-27 were copied from the original document on 15.12.2017 in front of the ld. AR of the assessee Shri Ketul Sheth along with two independent witnesses and that the details of the extracts are mentioned by the AO in the assessment order. It was the submission that information extracted from BDJC-27 and CWJ-12 contained data for all the years. It was the submission that the ld. CIT(A)’s order is a cut paste of the remand letter calling for a remand report. It was further submitted IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 27 by the ld. CIT-DR that had the CIT(A) found that the investigation as done by the AO was inadequate, in view of the decision of the Hon’ble Delhi High Court in the case of Jansampark Advertising & Marketing (P.) Ltd., reported in (2015) 56 taxmann.com 286, he would have done the investigation himself. It was the submission that in the said decision, the Hon’ble Delhi High Court also placed the burden of the Tribunal to ensure that an effective enquiry was carried out. It was the submission that the seized documents being the extracts from BDJC 27 & CWJ-12 showed unaccounted purchases and sales and these evidences carried over the oral submissions given by the partner of the assessee firm in respect of the declaration of Rs.10 crores. It was the submission that the seized materials showed more than Rs.30 crores of transactions. The ld. CIT-DR further drew our attention to the written submission filed by the ld.AR of the assessee and the contents of the same are as under :- 1. Assessee is a partnership Firm carrying on trading business in Gold and Silver Jewellery. Search and seizure conducted u/s- 132 of the .T Act, in the business premises of the assessee on 09.12.2019. 2. For the impugned asst. years followings additions were made under un-disclosed investment in purchase of Gold, Silver and undisclosed sales and a separate addition was made towards seizure of cash of Rs.23,28.690/- found on the date of search. AY-2012-13 AY-2015-16 AY-2016-17 Qty (gms) Amount Qty (gms) Amount Qty (gms) Amount Particulars of Additions made by the Ld. AO Undisclosed Investment in GOLD 69,634 19,07,42,154 1,588 43,57,848 6,757 1,77,56,714 Undisclosed Sale of GOLD 69,634 20,00,97,477 1,588 52,50,833 6,757 2,19,34,911 Undisclosed 17,19,200 8,73,07,384 2,85,022 1,14,01,361 27,917 9,90,942 IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 28 Purchase of SILVER Cash Seized - - - - - 23,28,690 Total 47,81,47,015 2,10,10,042 4,30,11,257 3. The assessee challenged the assessment orders before the Ld CIT(A) on the ground that the additions are based on guess work, without any basis and not connected to seized materials and copies of the seized materials were not confronted to the assessee. 4. Ld. CIT(A) after considering the submissions of the assessee and assessment orders called for a remand report from the Ld A.O. 5. The Ld. A.O submitted a remand report (P.B Page-40-41). In the remand report Ld. A.O has admitted that data saved in the Hard Disk (BDJC-27) and Pen-drive CWJ-12 could not opened in spite of engaging computer expert. 6. During remand proceedings Ld. A.O could not justify the additions with reference to any seized materials. In the remand report there is no finding against the assessee's submission. 7. Ld. CIT(A) after examination of detailed submissions of the assessee and after going through the remand report, has passed detailed and exhaustive order and rightly held that additions made in violation of principles of natural justice, without providing seized materials to the assessee cannot be sustained. 8. In the statement recorded u/s-132(4) (PB Page 28-35), assessee never admitted that there is purchase and sale of Gold and Silver outside the books of accounts. 9. In the statement u/s-132( 4) in response to authorized officers query on valuation of closing stock (PB Page-32, question no. 16) it was stated that assessee do not agree with valuation of stock made by the Authorised officers. However assessee agrees that there is some variation in the valuation of closing stock. Therefore, to buy piece of mind and to avoid future litigation Rs.10 crore was disclosed as additional income in the statement recoded u/s 132(4). 10. It may kindly be noted that disclosure made by the assessee is out of confusion and to avoid future litigation and in the Question No.-16 of the statement u/s-132(4) there is a pressure on the assessee by the search party inviting reference to provision of penalty & prosecution. 11. In the return filed u/s-153A assessee disclosed additional income of Rs.4.53 crore due to change in valuation of closing IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 29 stock. There has been no addition by the A.O towards non- disclosure of balance income of Rs.5.47 crore (Rs.10 crore – Rs.4.53 crores) in the assessment completed u/s-153A. 12. It is submitted that addition cannot be made solely on the basis of statement recorded u/s-132(4) without its corroboration with cogent materials brought on record. 13. In the assessment order A.O has not referred to any incriminating entry in the books of accounts found in the course of search. The A.O has acted without material or evidence in making such addition. Only a general observation is made in the assessment order and remand report that the additions are based on seized material. The contents of the seized materials are not brought out in details in the assessment order / remand report. 14. In the case of Kabul Chawla Hon'ble Delhi High court has held that assessment u/s-153A cannot be arbitrary or made without any relevance or nexus with the seized material. An Assessment has to made under this section only on the basis of seized materials. 15. As per CBDT letter F.No.-286/2/2003-IT(Inv.IT) Dt.l0.03.2003 and letter F.No.-286/98/2013-IT(Inv.IT) Dt.18.12.2014 obtaining confessional statement on undisclosed income by applying undue influence/coercion is prohibited and it has been instructed by the CBDT that focus should be on gathering evidence of undisclosed income. It is humbly prayed before the Hon'ble Bench to kindly consider the above submissions and there is no merit in the appeal filed by the department and the same are liable for dismissal. 8. In response to the written submission filed by the ld. AR of the assessee, ld.CIT-DR submitted that the assessee claims that the additions are made on guess work but the additions are actually based on the seized material as has been done in the assessment order. In respect of the remand report relied upon by the assessee that the hard disk and pen drive could not be opened engaging a computer expert, it was submitted that the assessee’s representative Shri Ketul Sheth has been IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 30 given the copies and the assessee had not raised the said objections before the AO. It was further submitted that the assessee’s partner had offered Rs.10 crores to buy peace but he had retracted from the same and said retraction should not be permitted by the Tribunal. It was the submission that in the statement the assessee’s partner himself has mentioned that there was no threat or coercion and now to claim the same in the written submission is a falsity. It was the submission that the assssee’s claims that the addition cannot be made solely on the basis of the statement recorded u/s.132(4) of the Act without corroboration with cogent material brought on record. It was submitted by the ld. CIT-DR that this statement has no basis and the addition has been made on the basis of seized material which showed evasions of more than Rs.30 crores. It was the prayer that the order of the ld. CIT(A) should be reversed. 9. In reply, ld. AR drew our attention to page 2 of the assessment order para 4 to submit that the AO himself has mentioned that the appraisal report is reproduced therein from page 2 para 4 to page 22 para 5. It was the submission that no independent enquiry was done by the AO in respect of alleged evidence found in the course of search. It was the submission that the additions are based on certain calculation made at page 17 of the assessment order which is totally unsupported by any reference to the seized material. Ld.AR further drew our attention to page 50 of the paper book which is a copy of notice issued u/s.153A of IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 31 the Act. At pages 53 to 56 is the questionnaire issued to the assessee which is extracted hereinbelow :- Questionnaires (Bishandayal Jewellers) 1. If the return has been e-filed, a hard copy of the return with signature of the assessee in the verification column of the return form. 2. If the accounts have been audited u/s. 44AB, the audit report in original along with the audited accounts with all schedules to the Balance Sheet and the P&L account. In case accounts are maintained but not liable to-tax audit, original copies of Balance Sheet and P&L account along with all schedules thereto should be furnished. 3. Give a detailed note on the business activities carried on during the previous year. Furnish details of any discontinued business or business done in the previous assessment year(s) but not. carried on this year with reasons. Please also explain the activities carried out in different segments of business. 4. Give the addresses of office(s) (Registered office, Head office etc.), principal place of business, branches, factories and godowns in India or outside owned or taken on rent by you. Please also confirm there is any change office address after filing of the return. 5. Give details of all the business concerns associated with you alongwith their addresses, activities, assessment details viz. PAN, AO's addresses etc. Sate briefly the husiness relationship, if any with them. Give details of the transactions with the associate concerns during the year alongwith the ledger extracts. 6. Give details of the Bank Accounts including F.Ds in the following format Name & address of the Bank with branch Account No/ Type of Account Interest received/accrued and closing balance as on 31.03.2012 (1) (2) (3) 7. Furnish details of unsecured loans/deposits taken during the year including squared up loans in the following format: IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 32 Name& address of the person Opening balance Details of transactions Closing balance Rate of Interest Interest Paid/payab le during the year Debit Credit Debit Credit Debit Credit (1) (2) (3) (4) (5) (6) Also submit in each case (i) Amount and date of loan/deposit taken, when it was first taken. (ii) Mode of transactions (cash/cheque/DD) (iii) Confirmation from the creditor/depositor (iv) PAN and assessment particular of the creditor including details regarding the A.O. having jurisdiction over him (v) Details/evidences regarding the identity of the creditor/depositor, his/her creditworthiness and the genuineness of the transaction. 8. Give details of the secured loans in the following format : Sr.No. Amount of loan taken Name and address of bank/financi al institution Amount of security pledged/v alue of hypothec ation of stock Details of collater al security offered Name and address of third party (1) (2) (3) (4) (5) (6) 9. Give details of the sundry debtors in whose names sums exceeding Rs.1,00,000/- each was outstanding, including the accounts squared up during the year in the following format: Name& address of the debtor Opening balance Details of transactions Closing balance Nature of service rendered/transaction Debit Credit Debit Credit Debit Credit (1) (2) (3) (4) (5) Whether the person is covered U/s. 40A(2)(b) IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 33 10. Give details of the loans, advances and deposits given including the accounts squared up during the year in the following format: Name& address of the debtor Purpose of debit/dep osit Opening balance Details of transactions Closing balance Rate of intere st Total intere st in the year Purpo se which given Debit Credit Debit Credit Debit Credit (1) (2) (3) (4) (5) (6) (7) State whether any money has been advanced free of interest. If so, give details and state the necessity of advancing the money. Also show cause why equivalent interest at the prevailing market rate should not be disallowed out of the gross interest expenses claimed as deduction on the ground of not having been wholly and exclusively incurred for the purpose of the business as required U/s.37(1) of the Income Tax Act. 1961. 11. As regards acquisition of various fixed assets during the year, please furnish information in the following format: Name& address of the supplier Descript ion of the asset Bill No. and date Place where installed Date of installation Date of actual uae Cost of assets Depreciatio n claimed and rate at which claimed Debit Credit Debit Credit Debit Credit (1) (2) (3) (4) (5) (6) (7) (8) 13. Give details of depreciable assets transaction during the year as under: Description of the asset transferred Block of the assets in which it falls Considerat ion received or accruing as a result of transfer Written down value at the beginning of the previous year Expenses incurred wholly and exclusively in connection with the transfer (1) (2) (3) (4) (5) 14. Give details of any tax-free income earned, if any. IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 34 15. Give details of any receipts of the year which have not been taken as income but are acquired to be so done as per section 41(1). 16. Please furnish details of various payments made to persons covered U/s. 40A(2)(b) and submit necessary evidences to prove the reasonableness of the payments. Please furnish copies of their account from your ledger. Give complete and correct addresses of all such persons alongwith their PAN/A.O. particulars. 17. Furnish details of purchases above Rs.50,000/- made during the year in the following format: Name & address of the party from whom purchases are made Products purchases Quantity Amount of purchases during the year Amount paid Balance payable (1) (2) (3) (4) (5) (6) 18. Furnish details of sales above Rs. 50,000/- made during the year in the following format. Name & address of the party from whom sales are made Products sold Quantity Amount of sales during the year Amount received Balance receivable (1] (2) (3) (4) [5) (6) 19. Details of the immovable properties acquired in your name or in the name of your family members, HUF etc during the F/Y 2011-12 in the following format Name & Pan of the Person Description of the Property & Address/locati on Amount invested in Rs/Your investment Date/Dates of Transaction Mode of Transaction (1) (2) (3) (4) (5) 20. Furnish month-wise details of opening stock, purchase, sales and closing stock of different materials - indicate quantity and value. IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 35 21. Whether any preliminary expenses have been claimed during the year ? If so, please give the details. Please explain the admissibility of such claim. 22. Please furnish details of all the expenditure claimed as deduction U/s.37 of the Income Tax Act. 1961 with documentary proof in support of your claim that such expenditure was incurred wholly and exclusively for the purpose of your business. (i) Please specifically mention any penalty or fine imposed on/incurred by you during the year by any Authority alongwith details regarding the offence or violation for which the same were imposed. (ii) Please state why such amounts should not be disallowed as per the Explanation to Section 37(1). 23. Please furnish the names and complete postal addresses of all the persons to whom payments were made by way of Commission, Brokerage or Incentives. 24. Please give details.of the taxes deducted at sources and also if such taxes were remitted to the Govt. Account within the prescribed time (In respect of payments made by way of any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical service to which section 40(a)(la) applies.) 25. Please provide details of statutory payments covered by 43B and state if such payments have been made before the due date for filing of Return, please furnish proof of the same, if not already filed with the Return. 26. Details of deduction claimed under chapter VIA with supporting documents. Sd/- (Vijay D. Patel) Asst. Commissioner of Income Tax, (Central), Cuttack 10. It was the submission that there is no reference much less mentioned of the seized material. He further drew our attention to page 43 of the paper book which was a copy of the show cause notice issued by the AO on 8 th December, 2017. It was the submission that this was IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 36 identical to the appraisal report issued after the search. The same is extracted as under GOVERNMENT OF INDIA OFFICE OF THE ASST. COMMISSIONER OF INCOME TAX. CENTRAL CRICLE. 3 rd FLOOR, AAYAKAR BHAWAN, SHELTER CHHAK CUTTACK - 753 008 No: ACIT/Central Cir/Scrutiny/2017-18/ Dated. Cuttack the 8 th December. 2017. PAN: AAHFB3298C To The Principal Officer, M/s. Bishandayal Jewellers, Naya Sarark. Choudhry Bazar, Cuttack 753 002. Sir, Sub: Assessment proceedings in your case for A.Y. 2010-11 to 2016-17- reg. Kindly refer to the above. During the course of proceedings a cash amounting to Rs.23,28,690/- was found. Out of this amount Rs. 20,00,000/- was seized from the business premises of the assessee at Naya sarak Cuttack. Please explain the sources of the same and please explain why the same should not be treated as unaccounted cash of the assessee as the cash book was not upto date on the day of search. During the course of search conducted at your business premises, several documents, registers and digital! equipments (especially BDJC-27 and CWJ-12) Were seized. These include retail sale invoices, sales return details, stock as per digital books, tax audit report and audited accounts. In addition to the above you had furnished certain statements and stock details during the post search investigation. From such details as well as from other enquiries made and statements recorded on oath, it is seen that although you have dealt in sale of gold and I silver ornaments and articles and other articles but the stock statement maintained by you consist of gold bars bf 99.5% purity and ornaments. There is no mention of manufacture of gold ornaments from gold bars as to how much of ornaments were manufactured out of gold bars. The statements also reveal that while converting gold bar info gold ornaments, you have taken different rates on different data varying from as low as of 101.01 (for July, 2014 to high of 103.361. Neither any evidence in support of actual manufacture of ornaments from bars were found in your premises during the course of search nor you could produce any such evidence afterwards; In fact in the statements recorded on oath you admitted that no such evidence was ever maintained by you. The ornaments dealt in by you were of 22ct gold i.e. having 91.6% purity. The normal rate of conversion from 99.5% pure gold to 22ct gold ornament of 91.6% purity is 108.62. That is for every 100 gm of pure/ gold of 99.5% purity, 108.62 gm of ornaments are manufactured. Amount of gold bar of 99.5% purity claimed to have been purchased by you during the respective financial years, 22ct ornament which could be produced applying conversion rate of 108.6 and actual ornament as disclosed by you in the stock statements. IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 37 Inventory of stock with the Karigars has not been made during the search & seizure operation. This was not disclosed either. In other words, stock inventorized during the search is not the complete stock of the assessee on that date. The details of stock as collected from the registers extracted from digital data seized leads to the following calculation of investment in undisclosed stock with the asseessee. Absence of such stock in the stock inventory reveals that the said stock has been disposed of out of books and income generated out of that has not been considered for taxation. *rates are computed on the basis of information in purchase registers in txt/x/s files, available in/extracted from seized digital data. The cumulative net annual stock as on 31/03/2012 competed on the basis of information in seized books of the assessee is more than what the assessee disclosed in the statement recorded u/s.132(4) of IT Act, 1961. The investment in stock has not been disclosed correctly. Assessee has made investment equal to the amount of cost of stock and it has not brought into its books the sale proceeds of such extra stock. The investment in undisclosed stock which is part of unaccounted income for the different FYs totaling to Rs.21,28,56,716/-. Details of yearwise break up is as under. FY2011-12 Rs. 19,07,42,154 FY2014-15 Rs. 43,57.848 FY2015-16 Rs. 1,77,56.714 In the seized digital data the sales registers for different period is available. On that basis the rate per gm is also calculated; IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 38 FY Sales-Sales return Rate per gm (Rs) Net sales in gm Net sales in Rs 2009-10 48720.946 91584622.57 1879.78 2010-11 46989.97 101805790 2166.54 2011-12 38575.3 110848495.9 2873.56 2012-13 39370.928 135755591.6 3448.12 2013-14 47615.76 157864007.7 3315.37 2014-15 59128.489 195512487.8 3306.57 2015-16 34367.982 111567131.8 3246.25 Applying that rate undisclosed income out of sale of undisclosed stock as mentioned above is calculated as under. FY Undisclosed stock in gm Avr Rate per gm Income on sale of undisclosed stock (Rs.) 2011-12 69634 2873.56 20,00,97,477 2014-15 1588 3306.57 52,50,833 2015-16 6757 3246.25 2,19,34,911 TOTAL 22,72,83,221 The above sales to the extent of Rs.22,72,83,221/- has not been disclosed by the assessee in respective AYs. Please explain why the same should not be added to the respective asstt. Year. Regarding silver stock at Cuttack and Bhubaneswar similar to gold stock at those two shops is also computed as under : IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 39 BBSR 19022.65 108997 -89974.35 NET 116801.012 566912.98 (E) 14-15// CTC 757439 5024.64 83266.363 383473.88 467256.123 MM 168 94.19 120454.06 -103559.87 NET 363696.253 (F) 645586.75 (G) 285022 (G-E-F) 40.00 11401361.94 15-16- 10/12/ 1 5//CTC 830038 15853.91 69806.016 249773.51 715924.416 BBSR 14963.16 64074 -49110.84 NET 666813.576 (H) 638896.34 (I) 27917 IH-I) 35.50 990942.60 10,21,68,279 Considering the above investment in purchases to the extent of Rs. 10,21,68,279/- is found to have been concealed by the assessee in following different FYs. FY2011-12 Rs. 8,73,07.384 FY2012-13 Rs24,68,590 FY2014-15 Rs. 1,14,01,361 FY2015-16 Rs. 9,90,942 Stock was inventoried at the business premises during the course of search & seizure operation on 09/12/2015. Stock of gold and silver was found at 44622.7gm and 939137.21 gm respectively. Since there was no stock inventory in any of the audit reports prepared till the date of search, you are requested to reconcile the same alongwith supporting evidence. Examination of entries in seized loose sheet bunch marked BDJC- 21 and other documents show that the firm was regularly giving part of its stock to its own workshop and to the Karigars for ornament making irrespective of its non-submission of details in the Audit Reports as a manufacturer. The weight of ornaments supplied by Karigar is converted from non-fine to fine to compute gold stock balance that remains with him. Date Non-fine wt Fine wt Balance Total balance 4/12/15 88.91 85.131 857.051 771. 92 2/12/15 2612.89 2501.842 3408.281 857.051 1/12/15 195.36 187.057 3486.466 3299.409 28/11/15 63.69 60.983 3048.429 2987.446 26/11/15 164.68 157.681 20/11/15 48.88 46.299 839.838 793.539 126.3 120.932 134.837 13.905 10/11/15 68.111 202.948 134.837 273.38 261.761 79.871 76.391 519.987 443.590 7/11/15 124.66 118.008 539.411 421.403 IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 40 5/11/15 220.4 211.033 389.758 178.725 28/10/15 41.9 39.82 102.641 62.815 26/10/15 72.97 69.868 182.302 48.99 21/10/15 393.39 378.67 558.973 182.302 17/10/15 129.96 123.066 664.429 541.363 15/10/15 37.28 35.695 325.587 289.892 Ornaments weighing 2612.89gm was returned to Bishandayal Jewellers. It was non-fine or of 91.6% purity. Since the Karigar had been provided gold of 99.5% purity, the supply was converted and taken as 2501.842gm of fine gold(99.5% purity) to compute the balance of gold (99.5% purity) remained with the Karigar. The running return reached 3408.281gm leaving a balance of 857.051gm of gold (99.5% purity) with the Karigar. Application of normal conversion rate makes ornaments of 2717.000412gm(91.6%) from 2501.842gm of gold(99.5%) (108.6/100 x 2501.842). The figures in the table show booking of stock at a lower irate. The difference is nothing but making charges paid to the Karigar in kind. In this particular case, the differential weight applying rate of Rs2500/- per gram comes to Rs.2,60.275/- (104.11 x 2500). The Karigars are regularly collecting raw material from the assessee firm and returning finished products to it. Payments are made to them regularly and the accounts are running ones as evidenced by entries in the Karigar' Register. The amount of payment as computed here clearly shows that the payments satisfy the financial limits referred to in Section 194C of the IT Act. Gold in bullion form which is purchased as such or extracted by the firm out of old gold purchased and melted is handed over to the Karigars. The Karigar creates saleable jewellery out of it and is paid in kind for this work. The payments in kind referred to above are not brought to books directly. These payments to Karigars are hidden expenditures which are adjusted in stock valuation. Deduction is booked in the financial statements but it does not appear as a deduction in profit & loss account to skip TDS provisions. Please explain. During the course of search proceedings assessee has made disclosure of Rs. 10,00,00,000/-. A statement u/s. 132(4) was recorded in which Shri Nandkishore Tibrewal was admitted suppression of income and offered it for taxation please furnish headwise details. The next date of hearing is fixed on 22/12/2017 at 02.30 PM. Yours faithfully Sd/- (VIJAY D. PATEL) Asst. Commissioner} of Income Tax, Central Circle, Cuttack. IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 41 11. It was further submitted that in the course of assessment proceedings, the assessee had requested for the seized documents by oral submission though nothing was given in writing. It was the further submission that admittedly as per the Mahazarnama, the seized material, being BDJC-27, was opened only on 15.12.2017. CWJ-12 was not opened at all. Thus, if this seized material was opened only on 15.12.2017, how could the AO has issued the show cause notice on 08.12.2017 bringing on all these datas ? It was the submission that this is why the assessee has been continuously claiming that the assessment order is a reproduction of the appraisal report and the evidences have not been given to the assessee. The ld. AR also placed before us the copy of the order sheet for the assessment year 2012-2013 to show that after 06.11.2017 no further entries are there. He further submitted that in the assessment year 2015-2016 the last date of entries is 13.11.2017. It was submitted by the ld. AR that on 15.12.2017 attempt was made to retrieve data from the hard disk BDJC-27 but no actual data was retrieved as the hard disk was empty. Another attempt was made in the remand proceedings and even there no data was retrieved because there was nothing to retrieve. The ld. AR submitted that on 23.10.2019, in the course of remand proceedings, the AO has asked the assessee to attend the office on 24.01.2019 at 2.00 PM to enable the office to provide the required documents/materials but they were unable to do so, as there was no data to retrieve. It was further submitted by the ld. AR on behalf of the IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 42 assessee that on perusal of Panchnama at page 4 in item No.27, the authorised officer mentioned that the BDJC-27 as hard disk with working copy. If this is the working copy on the basis of which the appraisal report has been prepared even such working copy has not been provided to the assessee nor has it been shown from where they have got the said working copy. It was submitted that it should be kept in mind that from the said alleged seized material in the appraisal report excel sheet has been prepared. Nothing has been provided to even corroborate that what has been extracted in the excel sheet are from the seized material or not. It was the prayer that as the additions have not made on the basis of any seized material, therefore, the additions made by the AO has rightly been deleted by the ld. CIT(A). It was the prayer that the order of the CIT(A) deserves to be upheld. 12. In respect of the cross objection filed by the assessee, it was submitted by the ld. AR that this was against the action of the ld. CIT(A) in confirming the addition of Rs.23,28,690/- being the cash found at the time of search. It was submitted by the ld. AR that in the course of search cash was found and out of which Rs.20 lakhs had been seized. It was the submission that the entire cash found at the Cuttack branch of the assessee of Rs.23,28,690/- was treated as undisclosed income of the assessee. It was submitted by the ld. AR that the assessee is able to explain the cash found was part of the sales of the previous day. It was the submission that neither the AO nor the CIT(A) was willing to examine IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 43 the fact. It was the prayer that the addition may be deleted in the interest of justice. 13. In reply, ld. CIT-DR submitted that the assessee has not been able to explain the cash found of Rs.23,28,690/- in the course of assessment proceedings or before the ld. CIT(A). It was submitted that fresh evidence could not be considered by the Tribunal. It was the prayer that the addition as confirmed by the CIT(A) be sustained. 14. We have considered rival submissions. 15. A perusal of para 4 of the assessment order, shows that the assessee has not produced any evidence before the AO and CIT(A). It is not appropriate for the assessee to claim that nobody was willing to consider the evidence. It was for the assessee to have placed the evidence compulsorily. This being so, we deny to accept any fresh evidence in the respect of said addition. Consequently, the findings of the AO and CIT(A) in confirming the addition of Rs.23,28,690/- stands upheld. Consequently, the cross objection filed by the assessee in CO No.01/CTK/2020 arising out of the appeal of revenue for A.Y.2016-2017 stands dismissed. 16. At this point of time, the ld. CIT-DR was requested to place a copy of appraisal report before the Bench. It was the submission that today being a Friday (i.e. on 23.09.2022), the time may be granted till 26.09.2022 for production of the appraisal report. Consequently, the order was dictated in respect of arguments raised by both the sides and the IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 44 onward dictation of the order is paused till 26.09.2022 for perusal of the appraisal report. 17. Today, i.e. on 26.09.2022, Shri S.Shivanandan, ld. CIT-DR, appeared on behalf of Shri M.K.Gautam, CIT-DR (who has argued the case) and placed the appraisal report as has been sought by the Bench on 23.09.2022. After careful perusal of the appraisal report, the bench proceeded to complete the order. 18. It must be mentioned here that a perusal of the assessment order at page 2 para 4 shows that the AO himself has categorically admitted that he has extracted the investigation done and the conclusion reached by the investigation wing and that has been reproduced. Thus, clearly para 4 of the assessment order is nothing but the extract from the appraisal report. In para 5 of the assessment order, the AO has made a gist of the para 4, which is the extract of the appraisal report, in the form of show cause notice on the assessee. This makes it clear that the AO when completed the assessment, was not privy to the extracts of the seized materials, namely, BDJC-27 and CWJ-12. A perusal of the paper book filed by the assessee at page 27, which shows the pen drive as CWJ-12 and at page 4 which shows the hard disk with working copy as BDJC-27, admittedly has not been seen by the AO. In the written submission, ld. CIT-DR stated that the ld. AR of the assessee Shri Ketul Sheth went to the office of the AO with his own computer and software on 15.12.2017 to take out the extracts. For a moment, if we see the date of 15.12.2017 with IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 45 para 5 of the assessment order, where the AO has mentioned the show cause notice, the show cause notice has been issued on 08.12.2017, much before opening of the hard disk or attempt to open the hard disk. Thus, clearly no data was available with the AO other than the appraisal report when he issued the show cause notice. Now, coming to this date of 15.12.2017 a perusal of the Mahazarnama, which has been prepared by the Assistant Commissioner of Income Tax, Central Circle, Cuttack in the presence of two witnesses and the assessee’s authorized representative Shri Ketul Sheth, it mentions that the seized material being BDJC-27 was found in a sealed position and the seal is intact. This is obviously before 15.12.2017. This seized material has not been opened nor examined. Nowhere in the Mahazarnama prepared by the Assistant Commissioner of Income Tax, Central Circle, Cuttack mentions that the authorized representative of the assessee has come with his computer and software. Therefore, the submission of the ld. CIT-DR that the AR of the assessee Shri Ketul Sheth has come to his office with his own computer and software to take the extracts is contrary to the Mahazarnama prepared. There is no discussion at all in the Mahazarnama with regard to the opening of the pen drive being CWJ-12. The submission of the ld.CIT-DR that the software used by the assessee is hardware specific programme is also not coming out of any of the documents of the revenue. In fact, in the remand report, the AO mentioned that an expert had also been called for to extract the information from the hard disk which was also futile. There is IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 46 no certificate or intimation from the said expert that the software is hardware specific. On this point, it would also be worthwhile to mention that in the inventory, on the date of search, which has been shown at page 4 of the paper book of the assessee at item No.27, shows the hard disk “with working copy” identified as BDJC-27. What is meant by this “working copy” ? If it is the extract, then what happened to those extracts? Why were they not available before the AO? Why they have not been referred to in the appraisal report ? These facts clearly show that the foundation on the basis of which the assessment has been done, being the so called extracts from BDJC-27 and CWJ-12, are not available with the department, nor they were provided to the assessee for his rebuttal. 19. Now, coming to the appraisal report, the extracts of which has been used by the assessee in para 7, though the ld.CIT-DR refers to the same as the excel sheet prepared by the AO, this statement of the AO in his assessment order at para 4 of the comparison with the same with appraisal report, shows that these are nothing but the figures dawn out by the investigation wing in the appraisal report. At page 7, the gold bars have been quantified at 98,284.36 gms and the old gold ornaments purchased net weight has been determined at 492.929 gms. The appraisal report, thus, determines the computation of purchases of Cuttack branch for the assessment year 2011-2012 at 126.555 gms whereas the sales have been determined at 50101.66 to be the transfer to the Bhubaneswar branch head office is 8572 gms. Even these are the IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 47 information relating to the assessment year 2011-2012. The impugned first year of appeal is assessment year 2012-2013. After this excel sheet shows wherein for the assessment year 2012-2013, the net closing stock has been determined at 29,799 gms and in respect of silver in the assessment year 2012-2013, a net negative stock of 11,456 gms has been determined. As against this, the excel chart at page 15 shows positive figures for the four branches of the assessee being, Cuttack, Bhubaneswar, Angul and Guragaon for both gold and silver. On what basis the appraisal report has been prepared showing negative figures are also not known. Thus, clearly the assessment made is unsupported by any of the seized materials. No stock statement of the inventory as on the date of search is also produced. The revenue has been unable to produce any of the seized material to substantiate any of the figures for any of the assessment years. The so-called “working copy” of the hard disk being BDJC-27 has also not been produced before the Tribunal nor before the ld. CIT(A). This being so, we are of the view that the ld. CIT(A) was absolutely right in facts in arriving at the conclusion that the additions have been made in all the three assessment years under consideration in total violation of the principle of natural justice and that the additions have been made clearly on estimate basis. Consequently, we find no error in the order of the ld. CIT(A) which calls for any interference. In these circumstances, the findings of the ld. CIT(A) on the issue for all the three assessment years under consideration, stands confirmed. IT(SS)A Nos.77-79/CTK/2019 & CO No.1/CTK/2020 48 20. In the result, all the three appeals of the revenue and the cross objection of the assessee, are dismissed. Order dictated and pronounced in the open court on 26/09/2022. Sd/- (अरुण खोड़पऩया) (ARUN KHODPIA) Sd/- (जाजज माथन) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 26/09/2022 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : आदेशाि ु सार/ BY ORDER, (Assistant Registrar) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack . 1. अऩीऱाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. पििागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यापऩत प्रयत //True Copy//
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