C P Mahaveer Prasad , Mysore V. The Deputy Commissioner of Income Tax Central Circle-1(4), Bangalore

ITA 2132/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2387 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 06-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAMCHAND KHINCHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN , JUDICIAL MEMBER ITA NO. 2132/BANG/2018 ASSESSMENT YEAR : 2014 - 15 SHRI C.P. MAHAVEER PRASAD, NO.504, 6 TH MAIN, 2 ND CROSS, RAMAKRISHNA CROSS, RAMAKRISHNA NAGAR, MYSORE 570 022. PAN: ABQPM 2611N VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4), BANGALORE. APP ELLANT RESPONDENT APP ELLANT BY : SHRI PADAMCHAND KHINCHA, CA RESPONDENT BY : SHRI RAJENDRA CHANDEKAR, JT.CIT(DR)(ITA T), BENGALURU. DATE OF HEARING : 20 .0 8 .2018 DATE OF PRONOUNCEMENT : 31.08.20 18 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 11.05.2018 OF THE CIT(APPEALS)-11, BANGALORE RELATING TO ASSES SMENT YEAR 2014-15. 2. IN THIS APPEAL, THE ONLY GROUND RAISED BY THE A SSESSEE IS WITH REGARD TO THE CORRECTNESS OF ADDITION OF RS.25 LAKH S MADE TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE ASSESSEE IS AN INDIVIDUAL. THERE WAS A SEAR CH AND SEIZURE OPERATION CONDUCTED U/S.132 OF THE INCOME TAX ACT, 1961 (ACT) IN THE ASSESSEES RESIDENTIAL PREMISES AT MYSORE ON 12.9.2 013. THE ASSESSEE IS AN EMPLOYEE OF ESS & ESS INFRASTRUCTURE PVT. LTD. SEARCH WAS CARRIED OUT IN THE CASE OF ESS & ESS INFRASTRUCTURE PVT. LTD. A LSO AND THE ASSESSEE WAS SEARCHED BECAUSE HE WAS EMPLOYEE OF ESS & ESS INFRA STRUCTURE. ITA NO. 2132/BANG/2018 PAGE 2 OF 6 STATEMENT U/S.132(4) OF THE ACT OF THE ASSESSEE WAS RECORDED IN THE COURSE OF SEARCH. THE GIST OF THE STATEMENT OF THE ASSESSEE WAS THAT HE WAS EMPLOYEE OF ESS & ESS INFRASTRUCTURE PVT. LTD., ON A MONTHLY SALARY OF RS.10,000/-. HE OWNS NO IMMOVABLE PROPERTY AND HAS FIXED DEPOSIT OF RS.83,000/- IN HIS NAME. ESS & ESS INFRASTRUCTURE PVT. LTD. IS IN THE BUSINESS OF REAL ESTATE AND HIS JOB WAS TO COLLECT MONEY FROM HIS BOSS FOR MAKING PAYMENT TO FARMERS AGAINST LAND AGREEMENTS M ADE. HE USED TO NEGOTIATE WITH FARMERS FOR PURCHASE OF LAND. IN AN SWER TO Q 13 REGARDING WHY VOUCHERS OF EXPENDITURE AND PAYMENTS AND BILLS OF EXPENDITURE PERTAINING TO ESS & ESS INFRASTRUCTURE PVT. LTD., W ERE FOUND IN ASSESSEES PREMISES, THE ASSESSEE REPLIED THAT THEY WERE LYING WITH HIM FOR THE PAST 2 YEARS AND COULD NOT BE TAKEN TO OFFICE DUE TO BUSY SCHEDULE. IN ANSWER TO Q 15 REGARDING LOOSE SHEETS NUMBERED PAGES 1 TO 59, BEING VOUCHERS, THE ASSESSEE REPLIED THAT THOSE WERE VOUCHERS WRITTEN B Y HIM AT THE INSTRUCTION OF HIS BOSS AND THAT HE DOES NOT KNOW DETAILS ABOUT THE EXPENSES. THERE IS NO OTHER ADMISSION TO OFFER INCOME IN HIS HANDS MAD E BY THE ASSESSEE IN THE STATEMENT RECORDED U/S.132(4) OF THE ACT. 4. BY LETTER DATED 3.6.2014, THE ASSESSEE INFORMED THE DDIT (INVESTIGATION) UNIT II(1), BANGALORE THAT THERE WE RE SOME PAPERS/VOUCHERS WHICH WERE FOUND IN HIS RESIDENTIAL PREMISES AND HE IS NOT AWARE OF THE CONTENTS OF THOSE DOCUMENTS. THAT HIS EMPLOYER ESS & ESS INFRASTRUCTURE PVT. LTD. HAS CONSIDERED THESE DOCUMENTS WHILE MAKI NG DECLARATION BEFORE THE SETTLEMENT COMMISSION. IN PARAGRAPH-5 OF THIS LETTER THE ASSESSEE HAS STATED THAT A SUM OF RS.50 LACS WAS HANDED OVER BY HIS EMPLOYER FOR PURCHASE OF LAND AND THAT THE SAID AMOUNT WAS ROTAT ED IN THE MARKET FOR SECURING LANDS. SINCE NO PURCHASES WERE MADE, THE SAID SUM WAS RETURNED TO HIS EMPLOYER. THAT THE ASSESSEE DID NO T DERIVE ANY INCOME ON SUCH LAND DEALINGS. NEVERTHELESS, TO PURCHASE PEAC E, THE ASSESSEE IS OFFERING A SUM OF RS.25 LACS TO TAX AS HIS INCOME F OR THE YEAR ENDING 31.3.2014. ITA NO. 2132/BANG/2018 PAGE 3 OF 6 5. IN THE RETURN OF INCOME FILED FOR AY 2014-15, TH E ASSESSEE DID NOT OFFER TO TAX THE SUM OF RS.25 LACS. THE AO CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE SUM OF RS.25 LACS WHICH WAS A GREED TO BE OFFERED TO TAX AS INCOME IN THE LETTER DATED 3.6.2014 WAS NOT DECLARED IN THE RETURN OF INCOME. THE ASSESSEE IN REPLY TO THE SAID QUERY OF THE AO SUBMITTED THAT THE SAID ADMISSION TO OFFER INCOME TO TAX WAS MADE UNDER A MISTAKE AND IGNORANCE. THAT THE ASSESSEE WAS FROM A RURAL BACK GROUND WITH NO PROPER KNOWLEDGE OF TAX LAWS. THAT ESS & ESS INFRASTRUCTU RE PVT. LTD., HAVE ALREADY DISCLOSED INCOME BEFORE SETTLEMENT COMMISSI ON CHENNAI AND THAT THERE WAS NO BASIS ON WHICH IT CAN BE SAID THAT THE ASSESSEE EARNED INCOME OF RS.25 LACS. 6. THE AO HOWEVER WAS OF THE VIEW THAT THE ADMISSIO N AND DECLARATION OF INCOME BY THE ASSESSEE WAS FINAL AND CONCLUSIVE AND THAT THE SUM OF RS.25 LACS WAS LIABLE TO BE TAXED IN THE HANDS OF T HE ASSESSEE. ON APPEAL BY THE ASSESSEE, THE CIT(A) UPHELD THE ORDER OF THE AO, OBSERVING AS FOLLOWS:- 1. THE AO MADE AN ADDITION OF RS.25,00,000/- BASED ON A VOLUNTARY DECLARATION MADE BY THE APPELLANT DURING THE COURSE OF A SEARCH PROCEEDING IN THE CASE OF M/S ESS & ESS IN FRASTRUCTURES PVT LTD. THE APPELLANT DID NOT HONOUR THE DECLARATI ON AND DID NOT OFFER THE AMOUNT VOLUNTEERED TO BE DECLARED AS UNDI SCLOSED INCOME, TO TAX IN THE RETURN OF INCOME FILED. THE A PPELLANT HAS ALSO NOT RETRACTED ON THE DECLARATION MADE. UNDER T HESE CIRCUMSTANCES THE AO MADE THE ADDITION. THE FACT TH AT THE APPELLANT VOLUNTARILY OFFERED THE SUM OF RS.25,00,0 00/- TO TAX WITH A CONDITION THAT THE SAME IS DONE WITH A VIEW TO PURCHASE PEACE ONLY ENSURED THAT THE DEPARTMENT DID NOT CARR Y OUT ANY FURTHER INVESTIGATION OR INQUIRIES INTO HIS AFFAIRS . HAVING ENSURED THE SAME THE APPELLANT IS NOT CORRECT IN NOT HONORI NG THE DECLARATION. HE HAS ALSO NOT RETRACTED THE DECLARAT ION MADE AND NOR HAS HE ALLEGED ANY COERCION WHILE GIVING THE DE CLARATION. IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES THE ADDI TION MADE IS SUSTAINED. ITA NO. 2132/BANG/2018 PAGE 4 OF 6 7. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED COUNSEL FOR THE ASSESSEE READ OUT THE S TATEMENT U/S.132(4) OF THE ACT AND SUBMITTED THAT THERE WAS NO ADMISSION T O OFFER ANY INCOME IN THE SAID STATEMENT. THE LETTER DATED 3.6.2014 BY T HE ASSESSEE WAS GIVEN ONLY TO PURCHASE PEACE BUT THERE WAS NO BASIS FOR D ECLARATION OF RS.25 LACS AS INCOME OF THE ASSESSEE AND THIS HAS ALSO BEEN MA DE CLEAR IN THE SAID LETTER. THERE WAS NO EVIDENCE FOUND IN THE COURSE OF SEARCH BY WHICH IT CAN BE SAID THAT THE ASSESSEE EARNED INCOME OF RS.25 LA CS. THERE IS NO OTHER BASIS TO COME TO SUCH A CONCLUSION. AN ADDITION TO TOTAL INCOME CANNOT BE MADE ON THE BASIS OF ADMISSION OF AN ASSESSEE WHEN IT IS SHOWN THAT THE SAID ADMISSION IS MADE UNDER ERRONEOUS BELIEF AND T HERE IS NO BASIS OR EVIDENCE TO SHOW THAT THE ADMISSION IS TRUE. THE L EARNED DR SUBMITTED THAT THE ASSESSEES PLEA WAS THAT THE AMOUNT OF RS. 25 LACS WAS OFFERED TO TAX BY HIS EMPLOYER IN PROCEEDINGS BEFORE SETTLEMEN T COMMISSION, BUT HE HAS NOT SUBSTANTIATED THE SAID PLEA. 8. I HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSION. I HAVE GONE THROUGH THE STATEMENT U/S.132(4) OF THE A CT AND I FIND THAT THERE WAS NO ADMISSION TO OFFER ANY INCOME IN THE SAID ST ATEMENT. THE GIST OF THE STATEMENT U/S.132(4) OF THE ACT HAS ALREADY BEEN NA RRATED IN THE EARLIER PART OF THIS ORDER. IN THE LETTER DATED 3.6.2014 FILED BY THE ASSESSEE HE HAS AGREED TO DECLARE RS.25 LACS AS INCOME AND THAT SUC H DECLARATION IS GIVEN ONLY TO PURCHASE PEACE AND THAT THERE WAS NO BASIS FOR DECLARATION OF RS.25 LACS AS INCOME OF THE ASSESSEE. THERE WAS NO EVIDENCE FOUND IN THE COURSE OF SEARCH BY WHICH IT CAN BE SAID THAT T HE ASSESSEE EARNED INCOME OF RS.25 LACS. THERE IS NO OTHER BASIS TO C OME TO SUCH A CONCLUSION. IN SUCH CIRCUMSTANCES, THE ADDITION OF RS.25 LACS IS SOUGHT TO BE MADE ONLY ON THE BASIS OF THE ASSESSEES LETTER DATED 3.6.2014. IT IS ALSO A WELL-ACCEPTED PRINCIPLE THAT AN ADMISSION IS NOT CONCLUSIVE EVIDENCE AS TO THE TRUTH OF THE MATTER STATED THEREIN. IT IS ONLY A PIECE OF EVIDENCE THE ITA NO. 2132/BANG/2018 PAGE 5 OF 6 RELEVANCY OF WHICH IS REQUIRED TO BE JUDGED BASED O N THE MATERIAL EVIDENCE AND CIRCUMSTANCES IN WHICH IT IS MADE. IN THE DECIS ION IN PULLANGODE RUBBER PRODUCE CO, LTD. VS. STATE, OF KERALA 1972 C TR (SC) 253: (1973) 91 ITR 18 (SC) , THE APEX COURT HELD THAT AN ADMISSION IS EXTREMEL Y AN IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID T HAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHO W THAT IT IS INCORRECT. THE STATEMENT OF THE ASSESSEE U/S.132(4) OF THE ACT SHOWS THAT HE IS EMPLOYEE OF ESS & ESS INFRASTRUCTURE PVT. LTD., WHO WERE THE MAIN PERSONS WHO WERE SEARCHED U/S.132 OF THE ACT. THE ASSESSEE EARNS A MONTHLY SALARY OF RS.10,000/-. HE RECEIVED RS.50 LACS FROM HIS EMPLOYER FOR PURCHASE OF LANDS FROM FARMERS BUT COULD NOT CONCLU DE THE TRANSACTIONS AND RETURNED THE SAME TO HIS EMPLOYER. HE IS A PERSON OF NO OR VERY LITTLE MEANS AND NOT CAPABLE OF EARNING RS.25 LACS. IN SU CH CIRCUMSTANCES, NO CREDENCE CAN BE GIVEN TO THE ADMISSION OF THE ASSES SEE THAT TOO IN A LETTER. SUCH ADMISSION IS NOT EVEN IN A STATEMENT U/S.132(4 ) OF THE ACT WHICH HAS SOME EVIDENTIARY VALUE. THERE ARE NO CIRCUMSTANCES WHICH CAN GO TO SHOW THAT THE ADMISSION MADE BY THE ASSESSEE COULD BE TR UE. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THE ADDITION O F RS.25 LACS AS INCOME OF THE ASSESSEE CANNOT BE SUSTAINED. I THEREFORE DIRE CT THAT THE SAID ADDITION BE DELETED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF AUGUST, 2018. SD/- ( N.V. VASUDEVAN ) JUDI CIAL MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2018. / D ESAI S MURTHY / ITA NO. 2132/BANG/2018 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.