DCIT CC-7(2) , MumbaiA V. M/S. DADASHREE REMEDIES PVT. LTD, MUMBAI

ITA 2184/MUM/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9749 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 29-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Block assessment; Retraction
• Section: 147; 68; 132; 143(3); 153A; 133(6); 158B(b)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No.2184/Mum/2021 (Asse ssment Year :2009-10) Dy. Commissioner of Income Tax, CC-7(2) Room No.655, Aayakar Bhavan, M.K.Road, Mumbai – 400 020 Vs. M/s. Dadashree Remedies Pvt. Ltd., 312, Narshi Natha Street Masjid Bunder Mumbai – 400 009 PAN/GIR No.AAKCS 4863Q (Appellant) .. (Respondent) Assessee by Ms. Poojan Mehta Revenue by Mr. Chetan Kacha Date of Hearing 26/08/2022 Date of Pronouncement 28/09/2022 आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in ITA No.2184/Mum/2021 for A.Y.2009-10 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-49, Mumbai in appeal No.CIT(A)-49, Mumbai/10086/2019-20 dated 24/08/2021 (ld. CIT(A) in short) against the order of assessment passed u/s.153A r.w.s. 143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2019 by the ld. Asst. Commissioner of Income Tax, Central Circle 7(2), Mumbai (hereinafter referred to as ld. AO). ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 2 2. At the outset, we find that there is a delay in filing of appeal of the Revenue by 25 days. In view of the relaxation offered by the Hon’ble Supreme Court, we hereby condone the delay and admit the appeal of the Revenue for adjudication. 3. The Revenue has raised the following grounds of appeal:- “1. On the facts and the circumstances of the case and in law, the Ld. CIT(A) erred in deciding that AO did not have jurisdiction to make additions in an assessment u/s 153A of the Act in the case of the assessee by ignoring the fact that no incriminating material/ evidence is necessary for assessment proceedings under section 153A of the Income Tax Act, 1961. 2. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in deciding that the assessment u/s 153A cannot be done on the basis of statement recorded under section 132(4) of the Act by ignoring the fact that the statement recorded under the oath do have evidentiary value. 3. On the facts and the circumstances of the case and in law, the Ld. CIT(A) has failed to discuss the merits of the case wherein the assessee has brought its unaccounted income Rs. 4,51,87,500/-into its books of account. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary.” 4. We have heard rival submissions and perused the materials available on record. A search and seizure action u/s.132 of the Act was conducted in the case of Thakkar and Ashar group on 05/07/2017. In the opinion of the ld. AO, the assessee company is part of the aforesaid group. Accordingly, notice u/s.153A of the Act was issued on 09/11/2019 to the assessee pursuant to the centralisation. In response to the said notice, the assessee company electronically filed its return of income on 13/11/2019 declaring total income of Rs.34,400/-. The ld. AO observed that assessee company had received huge share premium of Rs.4,50,00,000/- during the year under consideration from the following entities:- ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 3 Sr. No. Date of Allotment Name of the Party Share Premium (Rs.) 1. 27.03.2009 Pace Logistics (India) Pvt. Ltd. 1,35,00,000/- 2. 31.03.2009 Dazzel Confindive Ltd. 90,00,000/- 3. 31.03.2009 IFSL Ltd. 1,93,50,000/- 4. 31.03.2009 Rallis Commercial Pvt. Ltd. 31,50,000/- 4,50,00,000/- 4.1. Further the assessee company also received unsecured loans of Rs.1,87,500/- during the year under consideration from the following parties:- Sr. No. Name of the Party Amount of Loan (Rs.) 1. Kumar Madan 18,500/- 2. DevKumar Thakkar 1,19,000/- 3. Jayesh Dedhia 50,000/- 4.2. The ld. AO observed that one of the Directors of the assessee company Shri Devkumar Thakkar was confronted at the time of recording his statement on oath during the course of search u/s.132(4) of the Act wherein he stated that he was not aware of receipt of any share premium or any other transaction in the assessee company. Accordingly, the assessee was asked to explain the nature and source of credit within the meaning of Section 68 of the Act in ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 4 respect of share premium as well as unsecured loans received by the assessee. The assessee filed all the necessary documents containing the shareholders and loan creditors during the assessment proceedings clearly establishing the identity, creditworthiness and genuineness of transactions with them. Moreover all the parties responded to the notices issued u/s.133(6) of the Act by the ld.AO directly and furnished the details and documents called for by the ld. AO directly. The parties had also explained their sources for giving money to the assessee company either in the form of share capital / share premium and unsecured loans. Thereafter, the ld. AO did not make any verification with regard to the documents filed by the assessee. He heavily relied on the statement recorded during the course of search from one of the Directors of the assessee company Shri Devkumar Thakkar who stated that he was not aware of receipt of share premium and other transactions of the assessee company. He also relied on the statement of one Shri Naresh Khodidas Bhoricha who was an Accountant in M/s. Best Enterprises (same address of the assessee) who stated that he was not aware of the existence of the assessee company on the given address. Accordingly, the ld. AO concluded that the transactions of the assessee company are not genuine and proceeded to treat the receipt of share premium of Rs.4,50,00,000/- and unsecured loan of Rs.1,87,500/- as unexplained cash credit u/s.68 of the Act. 4.3. Before the ld. AO, the assessee made a primafacie objection that proceedings u/s.153A of the Act had been wrongly invoked on him vide letter dated 19/11/2019. The assessee also stated before the lower authorities that the assessment for A.Y.2009-10 was an unabated / concluded assessment as on the date of search and since ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 5 there was no incriminating material found during the course of search, no addition could be made in the hands of the assessee company in the search assessment framed u/s.153A of the Act. We find that this point has been given credence by the ld. CIT(A) while granting relief to the assessee by observing as under:- “6.2.7. The facts are that a search and seizure operation was conducted in the case of Thakkar and Ashar Group on 05.07.2017 and the Appellant was also covered in the said search operation. Subsequently, assessment of the Appellant was completed u/s 143(3) r.ws. 153A of the Act, wherein addition on account of share premium amounting to Rs. 4.50 crore and unsecured loans amounting to Rs 1,87,500/- for the A.Y. 2009-10 and unsecured loans amounting to Rs. 55 Lakhs for the A.Y. 2010-11. were made u/s 68 of the Act by treating the same as not genuine. 6.2.8. In the assessment order, the AO has referred to statement of Shri Devkumar Thakkar, wherein he had admitted that he was not aware of the transactions of this company and his name was used by one Shri Kirit Nagda in an unauthorized manner for making him director in this company. This statement, is however, not with reference to any document or any other evidence found during the course of search. 6.2.9. The primary contention of the assessee is that the assessment was previously conducted u/s 147 r.w.s.143(3) of the Act wherein the share premium was accepted as genuine after due verification of facts. The assessee also filed copies of replies submitted by the subscribers of share in response to notices issued u/s 133(6) of the Act during the original assessment proceedings. The contention of the assessee is that the assessment which had reached finality in this manner could not have been disturbed by treating the share premium and loan as bogus when there is no evidence or incriminating material found during the course of search. The assessee further submitted that the ld. AO has never brought to its notice what was the material found during the course of search which prompted the impugned additions made in its case. Appellant has contended that not even a single incriminating material was found during the course of search operation which could cast any doubt whatsoever on the genuineness of the share premium and the unsecured loans. 6.2.10. I find that in the assessment order, the additions have primarily been made on the basis of statements of Shri Dev ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 6 Kumar Thakkar and Shri Naresh Khodidas Bhoricha. Shri Bhoricha has said that he was not aware of the existence of the assessee company at the given address and Shri Dev Kumar Thakkar, one of the directors of the company, has stated that he was not aware of any transactions relating to this company. However, a perusal of the material on record clearly reveals that the contention of the Appellant is true that not even a single incriminating material has been found from the premises of the Appellant, which could provide any evidence as to the fact that the share capital/premium and unsecured loans not being genuine. Further, there is no incriminating material placed on record, which has been found during the course of search operation in relation to the share capital and unsecured loans taken by the Appellant. 6.2.11. In the present case at hand, the assessee submitted that assessment was previously completed u/s 143(3) r.ws 147 of the Act on 27.03 2015, thereby making it an unabated assessment, as on the date of search. Accordingly, the assessment year under consideration was unabated and not pending before the AO as on the date of search. Since, the proceedings for A.Y. 2009-10 had not abated and the assessment for the said assessment year already stood completed, the contention of the assessee is that the AO was empowered only to make additions based on the incriminating material found and seized during the course of search operation. It is a material fact on record that the AO had failed to bring on record any incriminating material found during the course of search either during the course of the assessment proceedings or the remand proceedings, despite being provided with several opportunities. In fact, there is no discussion in the assessment order about any specific incriminating material, which have been found during the course of search operation in relation to the impugned share premium unsecured loans raised by the Appellant, neither any such material was brought on record during the remand proceedings. 6.2.12. In the detailed submissions made before me the assessee has contended that the Ld. AO has primarily relied upon the statement of Shri Dev Kumar Thakkar recorded u/s 132(4) of the Act. But, in a submission dated 19.12.2019, it was clarified to the Id. AO that Shri Thakkar has become director of the appellant company on 16.02.2009 and he was not associated with the day-to-day functions of this company and financial decisions of the company were taken by another director Shri Pravin Shah. It was also submitted that statement of Shri Thakkar was recorded in the capacity of proprietor of M/S Best Enterprises, which was functioning from the same premises, which is apparent from his ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 7 statement itself. It was further submitted that Shri Thakkar stated that Shri Kirit Nagda could be aware of the details of the transaction and statement of Shri Kirit Nagda was also recorded during the course of search and it is evident from his answer to question No. 33, as reproduced in the submissions of the assessee previously, that he has provided complete details of the share premium received by the company. It was accordingly contended that merely because Shri Thakkar was not aware of the transactions of the assessee company, no adverse view could be taken on the basis of the same as to the genuineness of the transactions of the assessee company details of which were duly furnished during the course of original assessment proceedings as well and which were verified and accepted as genuine during the course of original assessment proceedings. It was further submitted that in any case, Shri Thakkar has retracted his statement vide affidavits dated 12.07.2017 and 31.07.2017, which were filed before the Assessing Officer on 11.12.2019. The assessee submitted that vide these affidavits Shri Thakkar has clarified that his statement regarding the assessee company were incorrect. As such, there is nothing incriminating in his said statement to form any adverse view as to genuineness of transaction of the assessee company. 6.2.13. The assessee further submitted that even this statement of Shri Thakkar is very general, non-revealing and vague. The assessee further submitted that in any case the statement of Shri Thakkar is not in respect of any document found during the course of search and, therefore, additions cannot be made on the basis of such statement. In this regard, the assessee placed reliance on the several decisions including in the case of Hon'ble Delhi High Court in the case of CIT vs. Harjeev Aggarwal (Supra), CIT vs Best Infrastructure (India Pvt. Ltd.) (Supra) and PCIT vs. Saumya Construction (Pvt. Ltd) (Supra). 6.2.14. The assessee further submitted that the Ld. AO has made the additions solely on the basis of the said statements and even no adverse evidence was brought on record even during the course of assessment proceedings as to the genuineness of the claim of the assessee despite the fact that the details of the transactions were duly filed during the course of assessment proceedings. It was therefore submitted by the assessee that even on merit there was no reason or occasion to make such additions which were made merely on the basis of conjecture and surmises. 6.2.15. I have considered the facts of the case, It is evident from the assessment order that the Ld. AO has not referred to any documents found or seized during the course of search: The additions are primarily based on the basis of statements of ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 8 Shri Thakkar and Shri Bhoncha. Shri Bhoricha is an employee of the proprietorship concern of Shri Thakkar. On perusal of his statement, as reproduced in the assessment order, it is evident that he has merely stated that he is not aware of the existence of the assessee company at the given address and that Mr. Thakkar would be knowing about the company. As such he has not categorically said that the assessee company did not exist at the given address. Shri Devkumar Thakkar, in his statement have said that he was not aware of the transactions of the assessee company, which he has retracted subsequently though there is a considerable time gap in filing of the retraction statement before learned AO. However, the claim of the assessee is that he joined as director only in February 2009 and he was not actively involved with the functioning of the assessee company and, therefore, it was not expected that he will be aware of the transactions of the company and his statement has no evidentiary value. 6.2.16. On careful perusal of the facts, it is evident that even if retraction of Shri Thakkar is not taken into account, in his statements he has merely said that he is not aware of the transactions of this company and that his name was misused by Shri Kirit Nagda in making him a director of the company, but he did not say it categorically that the impugned transactions per se are not genuine or bogus. The claim of the assessee that his statement is vague and general appears to be justified. Merely because he had stated that he was not aware of the transactions of the assessee company, in my considered view, that itself would not be sufficient to hold that all the transactions of the assessee company are non-genuine without having support of other evidences that too in an assessment u/s 153A which has not abated. More so, when Shri Kirit Nagda, in his statement recorded during the course of search itself has provided the details of share premium received by the company and there was nothing adverse as to the same found during the course of search. I have also taken note of the fact that during the course of original as well as current assessment proceedings the assessee has filed details of share premium received during the year and the loan transactions and even during the course of said assessment proceedings no further evidences were found to hold the transactions as not genuine, rather the same was held genuine in the original assessment. 6.2.17. In this regard, it is pertinent to note that it is not unusual that more than one company functions from one address, especially where they belonged to one group. Several companies can have the same registered office. Businesses raise capital and such capital is rotated in economy for increasing production and trade and for making more efficient ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 9 use of capital. Companies change hands, sometimes in quick succession. This is the normal formation of capital in any open economy and the process of capital formation cannot be taken to be representing only unaccounted funds or impeded. The sources of capital introduced in the assessee company was established during the original assessment proceedings. No evidence was found during the search to indicate introduction of unaccounted cash / funds in the form of share capital. Therefore, the contention of the assessee that the conclusion based on the facts relied upon by the ld. AO that the share capital introduced in the assessee company, are unexplained, is unsubstantiated and not based on any evidence found during the course of search appears to be justified. In fact, the Id. AO could not even find any evidence to treat the same as bogus during the course of enquiry conducted during the course of assessment proceedings as notices issued u/s 133(6) of the Act were duly replied and the impugned transactions were confirmed by the respective parties. 6.2.18. However, irrespective of the merit of the facts, what is required to be adjudicated as to these grounds is whether the Ld. AO had jurisdiction to make addition in an assessment u/s 153A for an assessment year which is not abated merely on the basis of statements recorded during the course of search which are not with reference to any documents or material seized during the course of search. conclusion either by following Kabul Chawla (supra) or otherwise. This includes the decisions of the Hon'ble Gujarat High Court in Pr. CIT v. Soumya Construction (P.) Ltd [2016] 387 ITR 529/[12017] 81 taxmann.com 292 (Guj); Pr. CIT v. Devangi alias Rupa [Tax Appeal Nos. 54, 55 to 57 of 2017, dated 2-2-2017]; the Hon'ble Karnataka High Court in CIT v. IBC Knowledge Park (P.) Ltd. [2016] 385 ITR 346/69 taxmann.com 108 (kar.); the Hon'ble Kolkata High Court in Pr. CIT v. Salasar Stock Broking Ltd. [GA No. 1929 of 2016, dated 24-8-2016]. In Meeta Gutgutia (supra) the entire gamut of the case law had been analysed and the legal position was reiterated that unless there is incriminating material qua each of the AYs in which additions are sought to be made, pursuant to search and seizure operation, the assumption of jurisdiction under Section 153A of the Act would be vitiated in law. 6.2.23. Another issue which requires consideration is statements of Shri Thakkar and Shri Bhoricha recorded during the course of search which are not with reference to or in respect of any documents found during the course of search be considered as incriminating material for making assessment in the impugned assessment proceedings u/s 153A of the Act. I find that the additions made by the AO are primarily made on the basis of statement of Shri Thakkar u/s 132(4) of the Act. I ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 10 further find that the statement made by Shri Thakkar has no nexus with any seized material. The statement of Shri Bhoricha is also not with reference to any material found during the course of search. In fact, the addition u/s 68 is not based upon any seized/incriminating material at all. Hon'ble Delhi High Court in the case of CIT vs Harjeev Aggarwal, 241 Taxman 199(Delhi) have held that statements recorded under Section 132(4) of the Act do not by themselves constitute incriminating material. The relevant findings of the Hon'ble High Court are extracted below for reference: 19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132 (4) of the Act would by itself be sufficient to assess the income, as disclosed by the Assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make a block assessment merely because any admission was made by the Assessee during search operation. 21. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 11 books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 158B(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 23. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context of Section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment. 24. If the Revenue's contention that the block assessment can be framed only on the basis of a statement recorded under Section 132(4) is accepted, it would result in ignoring an important check on the power of the AO and would expose assessees to arbitrary assessments based only on the statements, which we are conscious are sometimes extracted by exerting undue influence or by coercion. Sometimes statements are recorded by officers in circumstances which can most charitably be described as oppressive and in most such cases, are subsequently ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 12 retracted. Therefore, it is necessary to ensure that such statements, which are retracted subsequently, do not form the sole basis for computing undisclosed income of an assessee. 6.2.24. This position was reiterated by Hon'ble Delhi High Court in the case of Pr. CIT Vs. Best Infrastructure (India) Pvt. Ltd., 397 ITR 182 (Delhi.), in order dated 01.08.2017. The relevant finding of the Hon'ble High Court is reproduced as under “38. Fifthly, statements recorded under Section 132 (4) of the Act of the Act do not by themselves constitute incriminating material as has been explained by this Court in Commissioner of Income Tax v. Harjeev Aggarwal (supra). Lastly, as already pointed out hereinbefore, the facts in the present case are different from the facts in Smt. Dayawanti Gupta v. CIT (supra) where the admission by the Assessees themselves on critical aspects, of failure to maintain accounts and admission that the seized documents reflected transactions of unaccounted sales and purchases, is non exstent in the present case. In the said case, there was a factual finding to the effect that the Assessees were habitual offenders, indulging in clandestine operations whereas there is nothing in the present case, whatsoever, to suggest that any statement made by Mr. Anu Aggarwal or Mr. Harjeet Singh contained any such admission.” 6.2.25. In Commissioner of Income Tax-14, Mumbai v. Rakesh Ramani [2018] 94 taxmann.com 461 (Bombay), it was held that in course of block assessment, wherein the assessee brought on record various documents to establish that jewellery seized from him actually belonged to his employer, impugned addition made in respect thereof merely on ground that assessee in course of statement made under section 132, had admitted that said jewellery belonged to him, could not be sustained. 6.2.26. In this regard, it is pertinent to note that the statements recorded during the course of search would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expressly mandated by virtue of the explanation to Section 132(4) of the Act. However, such statements on a standalone basis without reference to any other material discovered during search and seizure operations would not empower the AO to make an assessment u/s 153A/153C for the assessment ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 13 years which had attained finality and which are unabetted because any admission was made by the Assessee during search operation. 6.2.27. A plain reading of Section 132 (4) of the Act indicates that the authorized officer is empowered to examine on oath any person who is found in possession or control of any books of accounts, documents, money, bullion, jewellery or any other valuable article or thing. The explanation to Section 132 (4), which was inserted by the Direct Tax Laws(Amendment) Act, 1987 w.e.f. 1st April, 1989, further clarifies that a person may be examined not only in respect of the books of accounts or other documents found as a result of search but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Act. However, as stated earlier, a statement on oath can only be recorded of a person who is found in possession of books of accounts, documents, assets, etc. Plainly, the intention of the Parliament is to permit such examination only where the books of accounts, documents and assets possessed by a person are relevant for the purposes of the investigation being undertaken. Now, if the provisions of Section 132(4) of the Act are read in the context of Section 158BB(1) read with Section 1588(b) of the Act, it is at once clear that a statement recorded under Section 132(4) of the Act can be used in evidence for making a block assessment only if the said statement is made in the context of other evidence or material discovered during the search. A statement of a person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. 6.2.28. In CIT v. Sri Ramdas Motor Transport Ltd. (1999) 238 ITR 177 (AP), a Division Bench of the Hon'ble Andhra Pradesh High Court, reading the provision of Section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under Section 132(4) of the Act cannot be invoked. The relevant passage from the aforesaid judgment is quoted below. ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 14 "A plain reading of sub-section (4) shows that the authorised officer during the course of raid is empowered to examine any person if he is found to be in possession or control of any ITA No.4223/Del/2018; 4225/Del./2018 & 4226/Del./20118 undisclosed books of account, documents, money or other valuable articles or things, elicit information from such person with regard to such account books or money which are in his possession and can record a statement to that effect. Under this provision, such statements can be used in evidence in any subsequent proceeding initiated against such per son under the Act. Thus, the question of examining any person by the authorised officer arises only when he found such person to be in possession of any undisclosed money or books of account. But, in this case, it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles of things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section 132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under section 132(4) of the Act, does not have any evidentiary value. This provision embedded in sub- section (4) is obviously based on the well - established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement. The finding of the Tribunal was based on the above well settled principle." 6.2.29. It is also necessary to mention that the aforesaid interpretation of Section 132(4) of the Act must be read with the explanation to Section 132(4) of the Act which expressly provides that the scope of examination under Section 132(4) of the Act is not limited only to the books of accounts or other assets or material found during the search. However, in the context of Section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under Section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cannot be the sole basis for making a block assessment ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 15 6.2.30. In Commissioner of Income Tax v. Naresh Kumar Aggarwal: (2014) 3699 ITR 171 (T & AP), a Division Bench of Telangana and Andhra Pradesh High Court held that a statement recorded under Section 132(4) of the Act which is retracted cannot constitute a basis for an order under Section 158BC of the Act. The relevant extract from the said judgement is quoted below: "17. The circumstances under which a statement is recorded from an assessee, in the course of search and seizure, are not difficult to imagine. He is virtually put under pressure and is denied of access to external advice or opportunity to think independently. A battalion of officers, who hardly feel any limits on their power, pounce upon the assessee, as though he is a hardcore criminal. The nature of steps, taken during the course of search are sometimes frightening. Locks are broken, seats of sofas are mercilessly cut and opened. Every possible item is forcibly dissected. Even the pillows are not spared and their acts are backed by the powers of an investigating officer under section 94 of the Code of Criminal Procedure by operation of sub- section (13) of section 132 of the Act. The objective may be genuine, and the exercise may be legal, However, the freedom of a citizen that transcends, even the Constitution cannot be treated as non- existent." "18. It is not without reason that Parliament insisted that the recording of statement must be in relation to the seized and recovered material, which is in the form of documents, cash gold, etc. It is, obviously to know the source thereof, on the spot. Beyond that, it is not a limited licence, to an authority, to script the financial obituary of an assessee," "19. At the cost of repetition, we observe that if the statement made during the course of search remains the same, it can constitute the basis for proceeding further under the Act even if there is no other material. If, on the other hand, the statement is retracted, the Assessing Officer has to establish his own case. The statement that too, which is retracted from the assessee cannot constitute the basis for an order under section 158BC of the Act.” 6.2.31. In view of the above finding of the Hon'ble High Courts statements of Shri Thakkar and Shri Bhoricha recorded under section 132(4) of the Act alone cannot be considered as incriminating material unless any corroborating incriminating material is found during the course of the search from the premises of the assessee. Hence, there is nothing on record to hold a view that the impugned additions were made on the basis of any incriminating material found and seized during the course of search. In the given facts and circumstances of the case, the view taken by the Id.AO on this issue in this case ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 16 cannot be upheld as the AO did not have jurisdiction to make additions during the impugned assessment without referring to any incriminating material found during the course of search. The additions of Rs. 4.50 crore made on account of share premium received and Rs. 1,87,500/- on account of loans received are accordingly directed to be deleted. Grounds No. 1, 3 and 4 of the appeal are accordingly allowed. 4.4. All the issues that are in dispute before us have been addressed elaborately by the ld. CIT(A) both on legal grounds as well as on merits by placing reliance on various settled case laws of various Hon’ble High Courts. It is a fact that has been brought on record that except the statement u/s.132(4) of the Act, the ld. AO did not place any reliance on any incriminating material seized during the course of search for the purpose of framing an addition u/s.68 of the Act in the instant case. Moreover, the very same issue was the subject matter of adjudication by the erstwhile ld. AO in the re-assessment proceedings completed for A.Y.2009-10 u/s.143(3) r.w.s. 147 of the Act dated 27/03/2015 wherein it was accepted as genuine. This itself goes to prove that there could not be any incriminating material that could be found during the course of search relatable to these additions. The only basis for making the addition is statement recorded u/s.132(4) of the Act which has been duly admitted by the ld. AO both in the assessment order as well as in the remand proceedings. It is trite law that statement u/s.132(4) of the Act cannot be considered as an incriminating material unless it is corroborated by some other evidence found during the course of search and the said statement cannot be relied upon solely for the purpose of making an assessment. The decisions in this regard have already been dealt elaborately by the ld. CIT(A) as detailed hereinabove. Hence, it could be safely concluded that the assessment for A.Y.2009-10 is a concluded assessment as on ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 17 the date of search in the instant case and assessment has been framed by the ld. AO by making additions u/s.68 of the Act without reference to any incriminating material found during the course of search relatable to such additions. This issue is very well settled by the decision of the Hon’ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645 (Bom). 4.5. In view of the aforesaid observations and respectfully following judicial precedents relied upon hereinabove, we do not find any infirmity in the order passed by the ld. CIT(A). Accordingly, the grounds raised by the Revenue are dismissed. 5. In the result, appeal of the Revenue is dismissed. Order pronounced on 28/09/2022 by way of proper mentioning in the notice board. Sd/- (PAVAN KUMAR GADALE) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 28/09/2022 KARUNA, sr.ps ITA No. 2184/Mum/2020 M/s. Dadashree Remedies Pvt. Ltd., 18 Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary / Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//