The Deputy Commissioner Of Income Tax, Central Circle- 1, Mangaluru V. Shri. M N Rajendra Kumar, Udupi

ITA 2366/BANG/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9872 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Appeal Filed On: 14-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHINDE
• Keywords: Unexplained investment; Tax effect; Retraction
• Section: 132; 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No.2366/Bang/2019 Assessment year : 2017-18 The Dy. Commissioner of Income- tax, Central Circle-1, Mangaluru. Vs. Shri MN Rajendra Kumar, 1-276, PO 721, Pulkeri, Karkala Udupi. PAN – AFOPK 5638 K REVENUE ASSESSEE Assessee by : Smt. Sheetal, Advocate Revenue by : Shri Vilas V Shinde, CIT(DR) Date of hearing : 16.12.2021 Date of Pronouncement : 21.01.2022 O R D E R Per Chandra Poojari, Accountant Member This appeal by the Revenue is directed against the order passed by the CIT(A) dated 6/9/2019, which is mentioned from the asst. order passed u/s 143(3) of the Income-tax Act 1961 (the Act) dated 31/12/2018 for the asst. year 2017-18. ITA No.2366/Bang/2019 Page 2 of 21 2. The Revenue raised the following grounds before us. “1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. The CIT(A) has erred in deleting the addition made on account of cash payments of Rs. 10,00,00,000/- 3. The CIT(A) has failed to appreciate the fact that the assessee had admittedly invested in several properties for which he admitted to have effected on money payments on oath. 4. The CIT(A) has failed to appreciate the fact that a valid retraction needs to be factual and effected within a reasonable period of time. 5. The CIT(A) has erred in holding that the statement on oath can be varied to the extent of reducing the admission to nullity without discharging the onus of the basis of such retraction. 6. The CIT(A) erred in not remanding the issue for examination of the assessee with reference to his retraction, the evidences and the circumstances which make the admission on oath reliable. 7. For these and other grounds that may be urged upon, the order of the CIT(A) may be reversed and that assessment order to be restored.” 2. 3. The facts of the case are that the AO made addition on account of investment in the partnership firm M/s SaiSiddi Developers, there is also other investments in the land by the assessee in South Canara , Udupi and Mumbai especially in the name of M/s Om SaiRiddiSiddi Developers, KD Developers, M/s SaiSiddi Developers (SS ITA No.2366/Bang/2019 Page 3 of 21 Developers). Such investment made is listed in the assessment order at page 40 to 45 in para no. 13. The AO has stated that, there is a huge difference between purchase price and the market value of these properties. Based on which, the AO concluded that huge amounts were paid in cash. The AO further noted that, assessee in his statement during the search, declared Rs.10,00,00,000/- as his undisclosed investment in the purchase of properties other than the investment in Om SaiRiddiSiddi Developers. Accordingly, based on the above documents and the declaration made u/s.132(4) by the assessee, the AO added to the returned income of the assessee a sum of Rs.10,00,00,000/- as unexplained investments in land and flats of Navodaya Estate Land Development, Nitte (other than investment in land of M/s OmSaiRiddiSiddi Developers). 4. With regard to additions made on account of unexplained investment in other than Om SaiRiddiSiddi Developers, the AO has discussed that, during the search itself, certain evidences related to cash payments in respect to the other investments were retrieved, when this was posed to the assessee, he agreed that he has made investment from unaccounted cash in lands and ITA No.2366/Bang/2019 Page 4 of 21 flats in Mumbai. The AO further stated that, the assessee was voluntarily agreed and offered Rs.10 crores as his accounted investment in lands other than the investments in land of M/s OmSaiRiddiSiddi, which has been discussed earlier. According to assessee while concluding the issue relating to additions of Rs.10 crores at page no. 46 of the assessment order, the AO has made totally wrong statement for the reasons known to him and the same is reproduced here below for the sake of convenience. "Addition on account of investment in construction of factory premises and side development of Kusuma Cashew at Mangalore brought to tax for A. Y. 2016-17 as unexplained investment is Rs.10,00,00,000/-." 5. The AR further argued that, the adhoc additions made by the AO by alleging that, during the search itself, certain evidences related to cash payments in respect to the other investments were retrieved, when this was posed to the assessee, he agreed and offered Rs.10 crores as his unaccounted investment in the lands other than the investments in land of M/s.OmSaiRiddiSiddi. In fact, the above addition of Rs.10,00,00,000/- was made purely on assumptions and presumptions on adhoc basis and no evidence/materials were found at the time of Search. ITA No.2366/Bang/2019 Page 5 of 21 6.2.4. The ld.AR submitted that he did not find anything against the arguments that, disclosure u/s 132(4) was subject to variation and once the assessee had access to the seized documents, he realized subsequently that, there was no occasion to make this disclosure. He was having an inherent right to clarify the situation, so that it could be taxed only on real income and not on an income which was not there at all, since there was no evidence to prove otherwise too. In addition, the very important fact that, remains that in spite of the search, no material/evidence was found to show that the assessee was having any other undisclosed assets which could be linked with this disclosure. 6. According to AR, the ld.AO merely acted upon on the statement given by the assessee, which was subsequently retracted by him. It was a settled position of law that unless the statement is tested under the cross examination, the same cannot be considered as evidence against the assessee. The AO used the admission made in the statement recorded u/s 132(4) of the Act. But, the ld.AO failed to note that, admission itself cannot be considered as conclusive evidence against the assessee, unless there is corroborative evidence on record. ITA No.2366/Bang/2019 Page 6 of 21 7. The CIT(A) observed that there is no other evidence on record to prove that, on money is paid. The AO, without brining on record any evidence to prove that, on money is exchanged between the parties, merely harping upon the loose sheet, which cannot be considered as conclusive evidence against the assessee to bring on money to tax as undisclosed income. The AO is required to bring further evidence on record to show that, actual on money is exchanged between the parties, but literally failed to do so. The AO did not conduct any independent inquiry relating to the value of the property instead, merely relied upon the statement, which is not correct. Further, there is no proof of origin and destination of on money. 8. The CIT(A) observed that to tax any particular payments, primary evidence is very much necessary and unless there is primary evidence, circumstantial evidence cannot be considered as conclusive evidence against any person to tax any particular payments. Circumstantial evidence plays an important role in income tax proceeding. The payment/receipt of on money is purely a factual issue which cannot be decided based on circumstantial evidence. ITA No.2366/Bang/2019 Page 7 of 21 9. However, the ld.CIT(A) considered the facts of the case and case laws relied on by the ld.AR, the ratio laid down in the said cases are applicable to the assessee's case. The CIT(A) held that, the additions made is purely based on the statement made by the assessee without any corroborative evidence by the AO. In the instant case, the assessee has denied having exchanged the money for investment in SaiSiddiDevelpers. Even after the assessee’s case is covered under search operations u/s 132, the revenue did not unearth any evidence regarding exchange of cash in sale transaction except statement of the assessee at the time of search operation. In the absence of proper inquiry and sufficient evidences, the CIT(A) confirmed the additions made amounting to Rs.10,00,00,000/- being investment in Novodaya Estate Land Developers. 10. Against this Revenue is in appeal before us. 11. The ld.DR submitted that assesee declared a sum of Rs.10 lakhs as income towards unaccounted investment in land other than investment in the lands of M/s OM SaiSiddi Riddi Developers, which is relating to investment ITA No.2366/Bang/2019 Page 8 of 21 in land and flats in Navodaya Estate Land Development, Nitte for the asst. year 2007-08 are for Rs.10 crores. 12. The findings of the CIT(A) is to be vacated since he has overlooked the income declared by the assessee in the statement recorded u/s 132(4) of the Act. Further, he submitted that retraction statement was made cannot be accepted which is made at the time of asst. have no evidential value more so, no evidence was furnished, so as to prove that there is no investment by the assessee and the reason given by the CIT(A) to delete the addition is totally misconstrued. According to the ld.DR, the assessee cannot retract from his statement recorded u/s 132(4) of the Act without making retraction within the reasonable time. If the assesee feels that he has offered certain income on a wrong footings or wrong belief, the right recourse available to the assessee comes u/s 119(2)(b) of the Act. In the present case, according to the ld.DR without any basis, the assessee cannot retract on the ground that the offer was made on non material basis. Accordingly, she submitted that addition is to be sustained and the order of the CIT(A) be reversed. ITA No.2366/Bang/2019 Page 9 of 21 13. On the other hand, the ld.AR submitted that in the assessee’s own case, the Tribunal considered the retraction made by the assessee in assessee’s own case in ITA No.2457/Bang/2019 dated 24/8/2020 and the findings recorded as follows:- “ 99. Second issue in the appeals of the assesses as per Para 2 above is about alleged investment in Om Sai Riddhi Siddhi Developers in A, Ys. 2013 – 14 to 2015 – 16 and connected issue is issue No. 2 in the appeal of the revenue as per Para 3 above being deletion of the protective addition of Rs. 510,98,250/- in A. Y. 2014 - 15. It appears that in other two years i.e. 2013 – 14 and 2015 – 16, no appeal is filed by the revenue because of low tax effect because in these two years, total alleged investment was only Rs. 150 Lacs and Rs. 25 Lacs respectively. This issue is raised by the assessee in A. Y. 2013 – 14 to 2015 – 16 in both the cases i.e. Mr. S. D. Kotian and Mr. M N Rajencdra Kumar. On Page 17 of the assessment order for A. Y. 2013 – 14 in the case of Mr. S. D. Kotian, it is noted by the AO that total investment in the lands of M/s Om Sai Riddhi Siddhi Developers is Rs. 685,98,250/-. Year wise break up of this alleged cash investment is also noted by the AO on the same page being Rs. 150 Lacs in A. Y. 2013 – 14, Rs. 510,98,250/- in A. Y. 2014 – 15 and Rs. 25 Lacs in A. Y. 2015 – 16. The AO has noted on page 18 of the same assessment order that the partners have admitted the investment in their individual hands and the same is assessed therein in the ratio of 25% in the hands of Mr. S. D. Kotian and 75% in the hands of Mr. M N Rajendra Kumar in each of these three years. Although the AO has referred to several seized materials including digital evidence in this regard but ultimately, the AO has proceeded on the basis of statements which were retracted later on but the retraction was not accepted by the AO. Arguments about this issue are made by the learned AR of the assessee by considering it as Issue No. 3 in the written submissions filed by him before the tribunal as reproduced above. On this issue also, although various arguments are raised by the learned AR of the assessee but this argument itself is conclusive in the facts of the present case that ITA No.2366/Bang/2019 Page 10 of 21 since the AO has admitted that land purchases were made by the firm, the alleged cash component cannot be taxed in the hands of the partners and therefore, we first consider the acceptability of this argument and other arguments will be considered if the assessee does not succeed on this argument. We find that this is admitted position that the lands in question are owned by the firm M/s Om Sai Riddhi Siddhi Developers and the AO also has made protective addition in the hands of the said firm after making substantive addition in the hands of these two individuals who are partners in the firm with share of 25% Mr. S. D. Kotian and 75% Mr. M N Rajendra Kumar. Since protective addition is made by the AO in the hands of the firm also, this argument is not decisive and therefore, we examine the acceptability of other arguments. This is one of the arguments that this addition is made on surmises and assumptions based on the excel sheet in the pen drive of MR. Sanjay without bringing any corroborative evidence on record. Reliance was placed on the tribunal order rendered in the case of Anil Jaggi vs. ACIT as reported in 168 ITD 612 (Mumbai), copy on pages 1 to 14 of Case Law Compendium. Para 14 of this tribunal order is relevant and the same reads as under:- “14. We shall now take up the case of the assessee on merits and deliberate on the validity of the addition of Rs. 2.23 crore made by the A.O on the ground that the assessee had made a payment of "on money" for purchase of flats from M/s Lakeview developers. We have perused the facts of the case and the material available on record on the basis of which the addition of Rs. 2.23 crore had been made in the hands of the assessee. We have further deliberated on the material placed on record and the contentions of the ld. A.R to drive home his contention that no payment of any "on money" was made by the assessee for purchase of flats from M/s Lakeview Developers. We find that the genesis of the conclusion of the A.O that the assessee had paid "on money" of Rs. 2.23 crore for purchase of property under consideration is based on the contents of the pen drive which was seized from the residence of an ex-employee of Hiranandani group. We have perused the print out of the pen drive (Page 42 of APB) and find ourselves to be in agreement with the view of the ld A.R that though against the heading "Amount of on money paid" the name, address and PAN No. of the assessee is mentioned along with the details of the property purchased by him, ITA No.2366/Bang/2019 Page 11 of 21 viz. Flat no.2501 in "Somerset" building from Lakeview Developers (a Hiranandani group concern), however, the same would not conclusively prove suppression of investment and payment of "on money" by the assessee for purchase of the property under consideration. We find that the information as emerges from the print out of the pen drive falls short of certain material facts, viz. date and mode of receipt of „on money‟, who had paid the money, to whom the money was paid, date of agreement and who had prepared the details, as a result whereof the adverse inferences as regards payment of "on money" by the assessee for purchase of the property under consideration remain uncorroborated. We further find that what was the source from where the information was received in the pen drive also remains a mystery till date. We find that Sh. Niranjan Hiranandani in the course of his cross- examination had clearly stated that neither he was aware of the person who had made the entry in the pen drive, nor had with him any evidence that the assessee had paid any cash towards purchase of flat. We have deliberated on the fact that Sh. Niranjan Hiranandani in his statement recorded on oath in the course of the Search & seizure proceedings had confirmed that the amounts aggregating to Rs. 475.60 crore recorded in the pen drive were the on-money received on sale of flats, which was offered as additional income under Sec. 132(4) and thereafter offered as such for tax in the petition filed before the Settlement commission. We are of the considered view that there is substantial force in the contention of the ld. A.R that mere admission of the amounts recorded in the pen drive as the additional income by Sh. Niranjan Hiranandani, falling short of any such material which would inextricably evidence payment of "on money" by the assessee would not lead to drawing of adverse inferences as regards the investment made by the assessee for purchase of the property under consideration. We rather hold a strong conviction that the very fact that the consideration paid by the assessee for purchase of the property under consideration when pitted against the „market value‟ fixed by the stamp valuation authority is found to be substantially high, further fortifies the veracity of the claim of the assessee that his investment made towards purchase of the property under consideration was well in order. We are of the considered view that though the material acted upon by the department for drawing of adverse inferences as regards payment of "on money" by the assessee formed a strong ITA No.2366/Bang/2019 Page 12 of 21 basis for doubting the investment made by the assessee for purchase of the property under consideration, but the same falling short of clinching material which would have irrefutably evidenced the said fact, thus, does not inspire much of confidence as regards the way they have been construed by the lower authorities for drawing of adverse inferences in the hands of the assessee. We thus are of a strong conviction that as the material relied upon by the lower authorities does not corroborate the adverse inferences drawn as regards the investment made by the assessee, therefore, the same cannot conclusively form a basis for concluding that the assessee had made payment of "on money" for purchase of the property under consideration. We thus in the backdrop of our aforesaid observations are of the considered view that the adverse inferences drawn by the A.O as regards payment of "on money" of Rs. 2.23 crore by the assessee for purchase of Flat No. 2501 from M/s Lakeview Developers are based on of premature observations of the A.O, which in the absence of any clinching evidence cannot be sustained. We thus are unable to subscribe to the view of the lower authorities and set aside the order of the CIT(A) sustaining the addition of Rs. 2.23 crores in the hands of the assessee.” 100. In this case also, the tribunal noted that the genesis of the conclusion of the AO that the assessee had paid “On Money” of Rs. 2.23 Crore for purchase of property under consideration is based on the contents of the pen drive which was seized from the residence of an of ex-employee of Hiranandani Group. On page 15 of the same assessment order, the AO noted that the information noted by him on page 14 of the assessment order regarding cash investment of Rs. 685,98,250/- was unearthed in the digital evidence from the back up taken from Sanjay – Pen drive 2. Although the AO has referred to several printed sheets also but on page 23 of the same assessment order, the AO while dealing with the assessee’s claim about loose sheets, has observed that these loose sheets are digital evidences retrieved from computers, pen drive and lap tops. Hence, it is clear that even as per the AO, all the materials on which basis, addition was made by him is digital evidences retrieved from computers, pen drive and lap tops. Hence, in our considered opinion, in the facts of the present case, this tribunal order is applicable. The tribunal also noted in that case that Shree Niranjan Hiranandani in his statement recorded on oath in course of search proceedings has confirmed that ITA No.2366/Bang/2019 Page 13 of 21 the amounts aggregating to Rs. 475.60 Crores recorded in the pen drive were the on – money received on sale of flats which was offered as additional income u/s 132 (4) and thereafter offered as such for tax in the petition filed before settlement commission. In spite of this, the tribunal in that case held that though the material acted upon by the department formed a strong basis for doubting the investment made by the assessee for purchase of the property under consideration but the same is falling short of clinching material and deleted the addition in that case. In the facts of the present case which are similar to that case, we respectfully follow this tribunal order and hold that the adverse inference drawn by the AO as regards payment of on money for purchase of various properties in question is not sustainable and we delete the same in the hands of both the partners i.e. Mr. S. D. Kotian and Mr. M N Rajendra Kumar and also in the hands of the firm M/s Om Riddhi Siddhi Developers. Issue No. 2 in the appeals of the assessee as well as issue No. 2 in the appeals of the revenue are decided in favour of the assessee. 101. Third issue in the appeals of the assesses as per Para 2 above is about alleged investment in M/s K. D. Developers. In the written submissions filed by the learned AR of the assessee, his arguments about this issue are contained in the arguments for Issue No. 3 in his submissions. This issue is raised by the assessee in A. Y. 2011 – 12 and 2012 – 13 in the case of Mr. M N Rajencdra Kumar. In Para 11.7 on Page 14 of the assessment order for A. Y. 2011 – 12 in the case of Mr. M N Rajencdra Kumar, it is noted by the AO that M/s K. D. Builders (KDB) is a partnership firm (PAN : AAIFK9762D) of Mr. M N Rajendra Kumar and Mr. Shrikant N Kotian and this firm owns a land at Liberty Gardens, Malad Mumbai. He further noted that this firm was incorporated Mr. Deepak Pandurang Pawar (DPP) and later Mr. M N Rajendra Kumar (MNR) entered the firm as partner. Then the AO noted that the Balance Sheet of MNR on 31.03.2016 shows that the amount of investment in KDB is Rs. 190.66 lacs and this is a meagre amount as compared to the actual investments made as per evidences gathered. Then he discussed about various digital evidences mainly back up taken from Sanjay Pen drive – 2and referred to a statement of the Accountant of MNR Mr. Sanjay Yaswant Katalkar (SYK) in which he stated that an agreement was signed on 28.03.2016with DPP for ITA No.2366/Bang/2019 Page 14 of 21 the Liberty Garden Project, Malad, Mumbai and the approx. value of the project is Rs. 10.19 Crores. Thereafter in Para 11.9 of the same assessment order, the AO noted that during post search proceedings, the assessee submitted copy of agreement signed on 28.03.2016 between DPP and KDB for Rs. 332,47,500/- and observed that in spite of this agreement, the evidences speak differently. In para 11.10 of the same assessment order, the AO referred to the same pen drive of Sanjay and observed that date wise payment to DPP up to 24.10.2011 was Rs. 445.37 lacs and without indicating any basis for saying so, he stated that this cash was paid by Mr. MNR over and above the agreement value of Rs. 332 Lacs. Thereafter in para 11.12 of the same assessment order, the AO talks about payment of Rs. 40 lacs to DPP and states that this payment is of personal nature and also mainly towards the land at Link Road and Wasari Hill. He has noted down date wise details of various payments to DPP. Thereafter the AO has stated about the statement of Mr. MNR u/s 132 (4) in which he accepted about these alleged investments and also noted about the retraction of the assessee but rejected the retraction by saying that the assessee has not produced any evidence in support of retraction and made additions in these two years. In our understanding, these additions are only on the basis of statement which is later retracted also and asking for evidence in support of retraction is like asking for impossible to prove the negative. The assessee states in retraction that no payment in cash was made by him and there cannot be any evidence about non payment. On this issue also, although various arguments are raised by the learned AR of the assessee but this argument itself is conclusive in the facts of the present case that since the AO has admitted that land purchases were made by the firm KDB, the alleged cash component cannot be taxed in the hands of the partners and therefore, we first consider the acceptability of this argument and other arguments will be considered if the assessee does not succeed on this argument. We find that this is not the case of the AO that the lands in question are owned by the Mr. MNR and not the firm M/s K. D. Builders. Hence, we proceed on this basis that the owner of these lands in question is the firm and not the partners of the firm. This is also not a finding of the AO that the cash component is paid by the partners out of their own funds by giving a break up of how much is from own source of which partner. Only this much is noted by the AO tin Para 11.10 to11.12 of the same assessment ITA No.2366/Bang/2019 Page 15 of 21 order that various cash payments were made to DPP on various dates in respect of Liberty Garden Plot Work, Link Road Plot Work and Vasari Hill Plot and some personal payments without any finding that these cash payments are made by Mr. MNR out of his own sources and not out of the funds of the firm M/s KDB. In our considered opinion, even if it is accepted that some cash payments are made to DPP over and above the agreement value, the said cash payment can be added in the hands of the firm and not in the hands of the partners without bring cogent material on record to show that such cash payment was made by the partners out of their own funds by giving a break up of how much is from own source of which partner. Under these facts, in our considered opinion, addition might have been made in the hands of the firm and not in the hands of the partners and we delete the addition made by the AO in the hands of the partners Mr. MNR. We could have directed to make addition in the hands of the firm but by now, it has become time barred because more than 7 & 8 years have elapsed after the end of the relevant assessment year 2011 – 12 and 2012 – 13. This addition is deleted and Issue No. 3 is also decided in favour of the assessee. 14. Accordingly, she submitted that recordings statement u/s 132(4) cannot be relied upon as there was no supporting document to sustain addition. Further, the assessee retracted his statement with regard to investment in land and flats of Navodaya Estate Land Development, Nitte at Rs.10 crores. Being so, without any materials in the hands of the AO, cannot sustain the addition and prayed that the order of the CIT(A) to be upheld. ITA No.2366/Bang/2019 Page 16 of 21 15. We have heard both the parties and perused the materials on record. Admittedly, in this case, the assessee made a statement u/s 132(4) with regard to unaccounted investment in land and flats of Navodaya Estate Land Development, Nitte for the asst. year 2017-18 by the assessee. The AO also not brought on record any material evidence to suggest such an amount of Rs.10 crores invested in the land and flats of Navodaya Estate Land Development, Nitte. The unexplained investment declared by the assessee u/s 132(4) on lump sum basis is without any material evidence and the same was retracted by the assessee during the course of asst. Thereafter, there was no enquiry on the part of the AO with regard to this unaccounted investment. In our opinion, the Act emphasizes the authorities to record the statement of the assessee u/s 132(4) of the Act and when the search is conducted under the relevant provisions of the Act such statement recorded u/s 132(4) of the Act, could become relied upon at the time of asst. proceedings and also in other proceedings, if they are pending before the authorities. However, when the assessee retracted such statement, it is incumbent upon the authorities to bring on record relevant material, which suggests that such undisclosed income. In the present case, though ITA No.2366/Bang/2019 Page 17 of 21 the assessee made a statement u/s 132(4) with regard to unexplained investment of Rs.10 crores, the same was retracted by the assessee during the course of assessment. The AO has no material in his hand to make an addition on this count. In similar circumstances on the basis of same retraction statement, the Tribunal observed in assessee’s own case as cited supra is as follows:- 101. Third issue in the appeals of the assesses as per Para 2 above is about alleged investment in M/s K. D. Developers. In the written submissions filed by the learned AR of the assessee, his arguments about this issue are contained in the arguments for Issue No. 3 in his submissions. This issue is raised by the assessee in A. Y. 2011 – 12 and 2012 – 13 in the case of Mr. M N Rajencdra Kumar. In Para 11.7 on Page 14 of the assessment order for A. Y. 2011 – 12 in the case of Mr. M N Rajencdra Kumar, it is noted by the AO that M/s K. D. Builders (KDB) is a partnership firm (PAN : AAIFK9762D) of Mr. M N Rajendra Kumar and Mr. Shrikant N Kotian and this firm owns a land at Liberty Gardens, Malad Mumbai. He further noted that this firm was incorporated Mr. Deepak Pandurang Pawar (DPP) and later Mr. M N Rajendra Kumar (MNR) entered the firm as partner. Then the AO noted that the Balance Sheet of MNR on 31.03.2016 shows that the amount of investment in KDB is Rs. 190.66 lacs and this is a meagre amount as compared to the actual investments made as per evidences gathered. Then he discussed about various digital evidences mainly back up taken from Sanjay Pen drive – 2and referred to a statement of the Accountant of MNR Mr. Sanjay Yaswant Katalkar (SYK) in which he stated that an agreement was signed on 28.03.2016with DPP for the Liberty Garden Project, Malad, Mumbai and the approx. value of the project is Rs. 10.19 Crores. Thereafter in Para 11.9 of the same assessment order, the AO noted that during post search proceedings, the assessee submitted copy of agreement signed on ITA No.2366/Bang/2019 Page 18 of 21 28.03.2016 between DPP and KDB for Rs. 332,47,500/- and observed that in spite of this agreement, the evidences speak differently. In para 11.10 of the same assessment order, the AO referred to the same pen drive of Sanjay and observed that date wise payment to DPP up to 24.10.2011 was Rs. 445.37 lacs and without indicating any basis for saying so, he stated that this cash was paid by Mr. MNR over and above the agreement value of Rs. 332 Lacs. Thereafter in para 11.12 of the same assessment order, the AO talks about payment of Rs. 40 lacs to DPP and states that this payment is of personal nature and also mainly towards the land at Link Road and Wasari Hill. He has noted down date wise details of various payments to DPP. Thereafter the AO has stated about the statement of Mr. MNR u/s 132 (4) in which he accepted about these alleged investments and also noted about the retraction of the assessee but rejected the retraction by saying that the assessee has not produced any evidence in support of retraction and made additions in these two years. In our understanding, these additions are only on the basis of statement which is later retracted also and asking for evidence in support of retraction is like asking for impossible to prove the negative. The assessee states in retraction that no payment in cash was made by him and there cannot be any evidence about non payment. On this issue also, although various arguments are raised by the learned AR of the assessee but this argument itself is conclusive in the facts of the present case that since the AO has admitted that land purchases were made by the firm KDB, the alleged cash component cannot be taxed in the hands of the partners and therefore, we first consider the acceptability of this argument and other arguments will be considered if the assessee does not succeed on this argument. We find that this is not the case of the AO that the lands in question are owned by the Mr. MNR and not the firm M/s K. D. Builders. Hence, we proceed on this basis that the owner of these lands in question is the firm and not the partners of the firm. This is also not a finding of the AO that the cash component is paid by the partners out of their own funds by giving a break up of how much is from own source of which partner. Only this much is noted by the AO tin Para 11.10 to11.12 of the same assessment order that various cash payments were made to DPP on various dates in respect of Liberty Garden Plot Work, Link Road Plot Work and Vasari Hill Plot and some personal payments without any finding that these cash payments are made by Mr. MNR out of his ITA No.2366/Bang/2019 Page 19 of 21 own sources and not out of the funds of the firm M/s KDB. In our considered opinion, even if it is accepted that some cash payments are made to DPP over and above the agreement value, the said cash payment can be added in the hands of the firm and not in the hands of the partners without bring cogent material on record to show that such cash payment was made by the partners out of their own funds by giving a break up of how much is from own source of which partner. Under these facts, in our considered opinion, addition might have been made in the hands of the firm and not in the hands of the partners and we delete the addition made by the AO in the hands of the partners Mr. MNR. We could have directed to make addition in the hands of the firm but by now, it has become time barred because more than 7 & 8 years have elapsed after the end of the relevant assessment year 2011 – 12 and 2012 – 13. This addition is deleted and Issue No. 3 is also decided in favour of the assessee. 16. In our understanding these additions are only on the basis of statement which is later retracted and also asking for evidence for support of retraction is like asking for impossible to prove the negative. The assessee states in retraction statement that no payment in cash was made by him and there cannot be any evidence about the nonpayment. 16. Being so, in our opinion, the same findings of the Tribunal in the present case also holds good and in our opinion, the addition cannot be sustained on the sole basis of statement recorded u/s 132(4), which was duly retracted by the assessee. There was no iota of evidence to support the unexplained investment made by the ITA No.2366/Bang/2019 Page 20 of 21 assessee in NITTE Development of property. Accordingly, we do not find any infirmity in the order of the CIT(A) in deleting the addition of Rs.10 crores. Accordingly, we confirm the order of the CIT(A) on this issue and grounds raised by the Revenue on these issues are dismissed. 17. In the result, the Revenue’s appeal is dismissed. Order pronounced in court on 21 st January, 2022 Sd/- Sd/- (BEENA PILLAI) ( CHANDRA POOJARI) Judicial Member Accountant Member Bangalore, Dated, 21 st January, 2022 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore. ITA No.2366/Bang/2019 Page 21 of 21 1. Date of Dictation .......................................... 2. Date on which the typed draft is placed before the dictating Member ......................... 3. Date on which the approved draft comes to Sr.P.S ................................... 4. Date on which the fair order is placed before the dictating Member .................... 5. Date on which the fair order comes back to the Sr. P.S. ....................... 6. Date of uploading the order on website................................... 7. If not uploaded, furnish the reason for doing so ................................ 8. Date on which the file goes to the Bench Clerk ....................... 9. Date on which order goes for Xerox & endorsement.......................................... 10. Date on which the file goes to the Head Clerk ......................... 11. The date on which the file goes to the Assistant Registrar for signature on the order ..................................... 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order ............................... 13. Date of Despatch of Order. .....................................................