DCIT, CENTRAL CIRCLE, GHAZIABAD V. HARJEET SINGH SAHNI, NOIDA

ITA 1324/DEL/2021

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had deleted an addition of Rs. 5 crores to the income of Harjeet Singh Sahni, following a search operation under section 132 of the Income Tax Act, 1961. The search led to the seizure of documents and the recording of a statement by the assessee, where he allegedly surrendered undisclosed income. However, the CIT(A) found the statement to be vague and unsupported by any corroborative evidence, leading to the deletion of the addition. The Tribunal agreed with the CIT(A)'s findings, emphasizing the need for clear and unambiguous evidence to support any income addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23767 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: RAKESH GUPTA; SAKSHAM AGRAWAL
• Keywords: Business income; Salary income; Search and seizure
• Section: 143(3); 143(2); 201; 132

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No.1324/Del/2021 Assessment Year: 2017-18 DCIT, Central Circle, Ghaziabad. Vs Harjeet Singh Sahni, 4, ATS Village Green, Sector-93A, Noida, Uttar Pradesh – 201 305. PAN: AAWPS4765J (Appellant) (Respondent) Assessee by : Dr. Rakesh Gupta, Advocate & Shri Saksham Agrawal, CA Revenue by : Shri Dayainder Singh Sidhu, CIT-DR Date of Hearing : 12.03.2025 Date of Pronouncement : 26.03.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the Revenue against the order dated 14.07.2021 of the Commissioner of Income-tax (Appeals), Kanpur-4 (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeals No.CIT(A)-IV/KNP/10662/2018-19 arising out of the appeal before it against the order dated 27.12.2018 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the DCIT, Central Circle, Ghaziabad (hereinafter referred to as the Ld. AO). ITA No.1324/Del/2021 2 2. The facts of the case are that a search and seizure operation u/s 132 of the Act was conducted at the premises of the assessee comprising M/s VVIP and SSG group of cases. The warrant was in the name of Shri Harjeet Singh Sahni and search operation u/s 132 was conducted at the residential premises of the assessee at Villa No.3, ATS Village Green, Sector-93A, Noida. In view of search operation, the group cases were centralized to DCIT, Central Circle, Ghaziabad u/s 127 of the Act. During the relevant assessment year, the assessee had filed return of income on 31.03.2018 declaring total income of Rs.88,76,140/- and, consequently, mandatory notices u/s 143(2) of the Act followed by relevant notices were issued. During the year, the assessee had derived income from salary, business & profession, house property and other sources. During the search operation on 30.12.2016 in bank locker No.71B of Indian Overseas Bank, New Friends Colony, Delhi, the statement of Shri Harjeet Singh Sahni was recorded u/s 132(4) of the Act where he allegedly surrendered undisclosed income of Rs. 5 Cr. Allegedly, Shri Harjeet Singh Sahni had not given any bifurcation as to in which financial year he has made surrender. The surrendered amount was considered under the relevant year. It was stated by him that the undisclosed income has been earned through his business and that this income is besides his regular income. The ld. AO further observed from the ITR for AY 2017-18 that this income has not been disclosed by the assessee. The assessment order mentions that the assessee had not retracted the statement. Thus, relying this statement an addition of Rs.5 crores ITA No.1324/Del/2021 3 has made which has been deleted by the ld. CIT(A) and the relevant observations of the CIT(A) in para 6.4 are produced below:- “On having gone through the written submissions filed by the appellant and the “Statement” of the appellant recorded during the course of search, the following facts are emanating: a. The statement recorded is a general statement wherein even the year in which the surrender is being made is not mentioned nor is any specific income mentioned. b. The words of the statement recorded are “Undisclosed Income Which May Have Been Earned by my business” and hence the statement appears to be a bald statement without any income. c. The statement of the appellant is not supported by any corroborative evidence. d. During the relevant year the appellant has income only from Salaries. Income From House Property and Income from other sources and does not have any Business Income. e. The A.O in his assessment order has not established or linked any incriminating document to the surrender made by the appellant. f. The provisions of Section 132(4) read out as under: The authorized officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery to other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income- tax Act, 1922 (11 of 1922), or under this Act. Thus, the statement recorded u/s 132(4) is a statement on Oath and may thereafter be used as an evidence in any proceedings meaning thereby that there has to be some direct corroborative evidence for escapement of income alongwith which the statement on oath could be used as an evidence. g. As the statement given by the appellant is statement on Oath, but as he has stated that the same relates to his business, it does not imply that the same relates to his proprietary business. He had several business concerns which were also his business on which action u/s 132(4) had been undertaken and no separate surrender was made by him. The above statement implies that he has surrendered for any income which he is not aware of and has been earned by his business concerns. As the additions ITA No.1324/Del/2021 4 amounting to more than Rs 5 crores have already been sustained by the undersigned in various businesses of the appellant and this surrender is not backed by any specific concern or year or any incriminating material the same would imply to have been made in respect of the income the addition of which have been made and sustained u/s 153A. As the addition sustained is more than Rs 5 crores an addition of Rs 5 crores on the hands of the appellant would amount to double addition of the same income and an Income cannot be taxed twice. In view of the above and the various case laws stated by the appellant and considering the fact that additions in excess of the above amounts have already been made and sustained the addition of Rs 5 crores made in the hands of the appellant is hereby deleted.” 3. The Department is in appeal raising the following grounds:- “1 On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by AO on account of the income of Rs.5,00,00,000/- surrendered by the assessee himself voluntarily and the same has not been declared in return of income. 2 On facts and circumstances of the case and in law, the Ld. CIT(A) failed to allude to the relevant facts & circumstances and misread the facts to arrive at the conclusion. 3 That the appellant craves leave to add, modify, amend, or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 4. The ld. DR has supported the order of the ld.AO submitting that the statement was not retracted and otherwise admitted, thus, the onus was on the assessee to explain. The ld. DR relied various case laws which have been mentioned by the AO to submit that the additions made on the basis of the statement cannot be said to be unjustified. The Ld. AR relied the conclusions of ld. CIT(A) made for deleting the additions. ITA No.1324/Del/2021 5 5. After giving thoughtful consideration to the matter on record and the submissions we find that admittedly, at the time of alleged search on the locker, nothing was found in the possession of the assessee in the form of any document, money, bullion, jewellery or valuable article and a bald statement u/s 132(4) of the Act was recorded which was ambiguous with regard to in what circumstances and context or question the statement was made. It was ambiguous with regard to what was the specific business activity leading to that undisclosed alleged income especially when CIT(A) has observed that the assessee was in various business and had many business entities. Then, the statement even does not disclose as to which particular period or assessment year the alleged undisclosed income relates and, thus, we find that even the AO mentions in the assessment order that the assessee had not given any bifurcation as to in which financial year he has made surrender, hence, the surrendered amount was considered in the year under consideration. The ld. DR could not controvert the findings of the ld.CIT(A) that the statement of the assessee is not supported by any corroborative evidence. 6. Certainly, by virtue of section 132(4) of the Act a statement recorded at the time of search or seizure has evidentiary value in any proceedings under the Act. However, the same is not a conclusive piece of evidence and the fundamental principle of law of evidence as applicable in proceedings under the Act is that admissions to be made basis for being acted upon should be clear, ITA No.1324/Del/2021 6 unambiguous, unconditional and unequivocal. Thus, where the authorized officer intends to use the statement recorded u/s 132(4) of the Act alone as a piece of evidence to conclude that there was concealment of income, then, it should be ensured that the statement is recorded in a manner that it is unambiguous, unconditional and conclusive so far as the issue is concerned, otherwise, in the absence of independent validity or corroboration, admission alone cannot be basis for fastening a liability under the proceedings of the Act. That being not the case here, we are inclined to sustain the findings of the ld.CIT(A). The grounds raised have no substance. The appeal of the Revenue is dismissed. Order pronounced in the open court on 26.03.2025. Sd/- Sd/- (M. BALAGANESH) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 26th March, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi "