AVISHKAR INFRASTRUCTURE P.LTD, MUMBAI V. DCIT CEN CIR 9, MUMBAI

ITA 7165/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92938 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEEVANLAL LAVIDIYA
• Assessee Lawyers: A V SONDE
• Keywords: Search and seizure; Retraction
• Section: 132; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 M/S. AVISHKAR INFRASTRUCTURE PVT. LTD. 19, ACME GHAR, K.D.ROAD, BEHIND RASRAJ RESTAURANT, VILE PARLE (WEST), MUMBAI 400 056. / VS. THE DCIT, CENTRAL CIR.9, OLD CGO BUILDING, MUMBAI 400 020 ./ ./ PAN/GIR NO. : AAFCA 9502R ( / APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY SHRI A.V.SONDE RESPONDENT BY SHRI JEEVANLAL LAVIDIYA ' # $ / DATE OF HEARING :11/06/2015 ' # $ / DATE OF PRONOUNCEMENT : 17/06/2015 / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A) -37, MUMBAI DATED 8/8/2011 FOR ASSESSMENT YEAR 2009- 10. GROUNDS OF APPEAL READ AS UNDER: 1. THE COMMISSIONER OF INCOME TAX (APPEALS)-37, MUM BAI [HEREINAFTER REFERRED TO AS CIT(A)] ERRED IN CONFIRMING THE ADDITION OF RS.4 9,55,843/- (RS.70,00,000/- RS.20,44,157) BEING DIFFERENCE BETWEEN ESTIMATED IN COME OFFERED OF RS.70,00,000/- IN THE STATEMENT RECORDED ON 18.09.2 008 OF SHRI KETAN MEHTA U/S 132(4) OF THE I.T. ACT AND INCOME RETURNED OF RS.20 ,44,157/- FOR THE A.Y.2009-10 & 2010-11 BY THE APPELLANT. . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 2 YOUR APPELLANT SUBMITS THAT THE INCOME OFFERED IN T HE STATEMENT RECORDED U/S 132(4) WERE ONLY AN ESTIMATED INCOME OF RS.70,00,00 0/- FROM THE PROJECT 'ACME CENTRE'. THE APPELLANT INFACT OFFERED THE REALIZED PROFIT FROM THE SAID PROJECT OF RS.19,74,387/- FOR A.Y.2009-10 AND RS.69, 7701- FOR A.Y.2010-11 IN ITS RETURN OF INCOME FOR THE RELEVANT YEARS. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILD ER AND DEVELOPER AND IS FOLLOWING PROJECT COMPLETION METHODOF ACCOUNTING.. IT COMPLETED PROJECT NAMELY ACME CENTER AT AHMADABAD, GUJARAT. 2.1 A SEARCH WAS CARRIED AT THE PREMISES OF THE ASS ESSEE AND ACME GROUP ON 24/07/2008. DURING THE COURSE OF SEARCH STATEME NT OF SHRI KETAN MEHTA WAS RECORDED ON 18/09/2008, IN WHICH UNACCOUNTED IN COME OF RS.22.88 CRORES WAS DISCLOSED IN RESPECT OF ACME GROUP OF CO MPANIES WHICH INTER-ALIA INCLUDE UNDISCLOSED INCOME OF RS.70.00 LACS IN RESP ECT OF ASSESSEES PROJECT NAMELY ACME CENTER AT AHMADABAD FOR ASSESSMENT YE AR 2009-10. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED TH AT ASSESSEE HAD DISCLOSED ONLY A SUM OF RS.19,74,387/- AS AGAINST RS.70.00 LA CS DECLARED DURING THE COURSE OF SEARCH. THE ASSESSEE WAS REQUIRED TO EXP LAIN AS TO WHY ENTIRE AMOUNT OF RS.70.00 LACS WAS NOT DECLARED AND WHY TH E SAME SHOULD NOT BE ASSESSED. IN RESPONSE, IT WAS SUBMITTED THAT DUE T O RECESSION IN REAL ESTATE MARKET IN FINANCIAL YEAR 2008-09, THE ASSESSEE COUL D NOT REALIZE THE PROFIT OF RS.70.00 LACS, WHICH WAS REALIZED AT A SUM OF RS.19 ,74,387/- IN RESPECT OF ASSESSMENT YEAR 2009-10 AND RS.69,770/- IN ASSESSM ENT YEAR 2010-11. THE AO REJECTED THE SAID EXPLANATION OF THE ASSESSEE WI TH THE FOLLOWING OBSERVATIONS: 7. THE CONTENTION OF THE ASSESSEE IS EXAMINED. ON THE EXAMINATION OF THE DETAILS OF THE FOLLOWING ISSUES AROSE: (I) THE DISCLOSURE OF RS.70,00,000/- ON THIS PROJECT HA S BEEN MADE BY SHRI KETAN MEHTA IN HIS STATEMENT RECORDED U/S. 143 (4) ON 18.09.2008 VOLUNTARILY WHICH INDICATES THAT THE ASE SSEE WAS IN A POSITION TO ASCERTAIN THE CORRECT PROFIT ON THIS PR OJECT. (II) THE STATEMENTS RECORDED U/S. 132(4) HAVE EVIDENTIA RY VALUE AND THE ASSESSEE HAS NOT SUBMITTED ANY RETRACTION OF TH E ABOVE STATEMENT RECORDED ON 18.09.2008 TILL DATE. . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 3 (III) THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE OR REAS ON IN SUPPORT OF THE CONTENTION THAT PROFIT WAS LOWER THAN THE A MOUNT DISCLOSED IN THE STATEMENT U/S. 132(4), EXCEPT GIVING A GEN ERAL STATEMENT THAT THERE WAS A RECESSION IN THE REAL ESTATE MARKE T. 8. IN VIEW OF THE STATEMENT OF SHRI KETAN MEH TA RECORDED U/S. 132(4) WHICH HAS NOT YET BEEN RETRACTED AND THE FACTS MENT IONED ABOVE THE BALNCD UNDISCLOSED INCOME OF RS.49,55,843/- (RS.70, 00,000/- - RS.20,44,157) IS ADDED TO THE TOTAL INCOME. PENALT Y PROCEEDINGS U/S.271(1)(C) FOR CONCEALMENT OF PARTICULARS OF INC OME ARE INITIATED SEPARATELY. IT IS IN THIS MANNER, A SUM OF RS.49,55,843/- WAS ADDED TO THE INCOME OF THE ASSESSEE AGAINST WHICH AN APPEAL WAS FILED BEFORE L D. CIT(A). 3. BEFORE LD. CIT(A) IT WAS SUBMITTED THAT NO INCRI MINATING OR ANY MATERIAL WORTH REFERENCE WAS FOUND AND SEIZED RELATING TO AH MADABAD PROJECT. SHRI KETAN MEHTA IN HIS STATEMENT OFFERED A SUM OF RS.25 .88 CRORES IN THE HANDS OF THE GROUP COMPANIES WHICH INCLUDE RS.70.00 LACS FOR A.Y 2009-10 IN RESPECT OF PROJECT ACME CENTER AT AHMADABAD DEVELOPED BY THE ASSESSEE. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS OFFERED T HE INCOME OF RS.19,74,387/- FOR ASSESSMENT YEAR 2008-09 AND RS. 69770/-FOR ASSESSMENT YEAR 2010-11. IT WAS SUBMITTED THAT THE OFFER O F INCOME OF RS.70.00 LACS WAS BASED ON LIKELY COMPLETION AND SALE OF ACME PROJEC T. IT WAS SUBMITTED THAT AT THE TIME OF OFFERING THE PROFIT FROM THE SAID PROJE CT ONE OF THE SHOP WAS SOLD/BOOKED BY THE PURCHASER. BASED ON THE SALE OF ONE SHOP THE ASSESSEE HAD ESTIMATED THAT THE PROJECT WILL FETCH THE HIGHER RA TE FROM THE SALE AND THUS, ASSESSEE HAD ESTIMATED THE PROFIT AND OFFERED THE I NCOME FOR TAX IN STATEMENT OF SHRI KETAN MEHTA. IT WAS SUBMITTED THAT ASSESSEE C OULD NOT FETCH THE EXPECTED PROJECT SALE PRICE DUE TO FALL IN THE PROPERTY MARK ET AND ALSO OVER ALL RECESSION IN ECONOMY DURING THE FINANCIAL YEAR 2008-09. IT W AS FURTHER SUBMITTED THAT THE ASSESSEE AT THE OUTSET OBJECTED TO THE ADDITION MADE BY THE AO, WHICH IS MADE MERELY ON THE BASIS OF STATEMENT OF SHRI KETAN MEHTA ON 18/9/2008. TILL THAT DATE ASSESSEE HAD SOLD TWO SHOPS OUT OF TOTAL FIVE SHOPS. ONE SHOP AT 4 TH FLOOR ADMEASURING 1800 SQ.FTS. WAS SOLD TO SHRI JAY ESH DESAI ON18/07/2008 . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 4 FOR A CONSIDERATION OF RS.75,60.000/- I.E. @ 4200 P ER SQ.FT. ANOTHER SHOP AT SECOND FLOOR ADMEASURING 3950 SQ.FTS. WAS SOLD TO HIND FREIGHT SERVICES PVT. LTD. ON 12/09/2008 FOR A TOTAL CONSIDERATION OF RS. 1,10,60,000/-. BASED ON THE SALE OF ABOVE TWO SHOPS THE ASSESSEE ESTIMATED THE PROFIT FROM THE PROJECT ON ADHOC BASIS AT RS.70.00 LACS AND DECLARED FOR T AX IN THE STATEMENT OF SHRI KETAN MEHTA RECORDED UNDER SECTION 132(4) OF THE AC T. IT WAS SUBMITTED THAT DUE TO GLOBAL RECESSION AND SLOW DOWN IN THE MARKE T THE PROFIT DISCLOSED BY THE ASSESSEE COULD NOT BE RECOGNIZED. THE DETAILS REGARDING PRICE REALIZED BY THE ASSESSEE FROM SALE OF PREMISES WHICH WAS AGGREG ATED TO A SUM OF RS.5,14,88,750/- WAS SUBMITTED IN THE FOLLOWING CHA RT. PARTICULARS AMOUNT(IN RS.) REMARK GROUND FLOOR & FIRST FLOOR 2500 SQ.FT. X RS.5760 PER SQ.FT. 2500 SQ.FT. X RS.3240 PER SQ.FT. 1,44,00,000 81,00,000 SOLD TO NAVKAR HOLDING & ENTERPRISE ON 14.11.2009* SECOND FLOOR: 3950 SQ.FT. SUPER BUILT UP X RS.2800 PER SQ.FT 1,10,60,000 SOLD TO HIND FREIGHT SERVICES P. LTD. ON 12.09.08 THIRD FLOOR: 3950 SQ.FT. SUPER BUILT UP X RS.2625 PER SQ.F.T SOLD TO SHYAM KUMNDANMAL KAPOOR ON 3.10.2008 FOURTH FLOOR: 188 SQ.FT. SUPER BUILT UP X RS.4200 PER SQ.FT. 75,60,000 SOLD TO JAYESH DESAI ON 18/07.2008 * SHOP INITIALLY SOLD TO ACME INIDA PVT. LTD. VI DE ALLOTMENT LETTER DT. 15.10.2008. HOWEVER, THE DEAL WAS CANCELLED ON 23.09.2009 AND SOL D BOTH UNITS FOR A TOTAL CONSIDERATION OF RS.2,25,00,000/- [I.E. RS.1,44,00, 000 + RS.81,00,000] ON 14.11.2009 TO THIRD PARTY M/S. NAVKAR HOLDING & ENTERPRISE. 3.1 REFERRING TO THE ABOVE DETAILS IT WAS SUBMITTED THAT PROFIT OFFERED IN THE STATEMENT OF SHRI KETAN MEHTA WAS ONLY THE ESTIMATE D PROFIT ON ADHOC BASIS FROM THE PROJECT BASED ON EXPECTED SALE CONSIDERATI ON. THE ACTUAL REALIZATION OF SALES WAS ACTUAL PROFIT WHICH HAS BEEN COMPUTE D TO RS.20,44,157/- WHICH WAS OFFERED IN THE RETURN FILED FOR A.Y 2009-10 AND 2010-11 (RS.19,74,387/- FOR ASSESSMENT YEAR 2009-10 AND RS.69,770/- FOR ASSESSM ENT YEAR 2010-11). THUS, IT WAS SUBMITTED THE ADDITION ON RS.49,55,843 /- WAS CONTRARY TO THE FACTUAL POSITION. . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 5 3.2 IT WAS FURTHER SUBMITTED THAT STATEMENT RECORDE D DURING THE SURVEY PROCEEDINGS DOES NOT HAVE EVIDENTIARY VALUE AND ST ATEMENT RECORDED UNDER SECTION 132(4) BUT LATER RETRACTED CANNOT BE RELIE D IN ABSENCE OF ANY CO-RELATED EVIDENCE, MATERIAL; IMMOVABLE OR MOVEABLE ASSETS ET C. AND RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: I. DCIT VS. PREMSONS (130 TTJ 159 (MUMBAI) II.ACIT VS. JORAWAR SINGH III.DCIT VS. OKASA (P) LTD. [10 SOT 164] (MUMBAI) IV) ACIT VS. ANOOP KUMAR [ 94 TTJ 288] (AMRITSAR) V) DCIT VS. PRAMUKH BUILDERS [112 ITD 179](AHD) VI)ACIT V. SANTOGEN TEXTILE MILLS LTD. [94 TTJ 637] (MUMBAI) VII SIHGAD TECHNICAL EDUCATION SOCIETY VS. ACIT [57 DTR 241](PUNE) 3.3 ON THESE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) HAS RECORDED THE FOLLOWING FINDINGS. (I) THAT PROFIT OF ACME CENTER WAS NOT INCLUDED I N THE RETURN OF INCOME BY THE ASSESSEE PROBABLY BECAUSE THE PROJECT WAS NOT COMPL ETED TILL DATE OF SEARCH. (II) ACCORDING TO QUESTION NO0.9,10 & 11 RECORDED AT THE TIME OF SEARCH ON 18/9/2008 THE ASSESSEE THROUGH THEIR AUTHORIZED PE RSONS ADMITTED THE INCOME EARNED IN THE ABOVE AHMADABAD PROJECT AND SU CH ADMISSION WAS MADE UNDER SECTION 132(4) OF THE ACT. BY ADMITTING DISC LOSURE THE ASSESSEE HAD ALTERED THE POSITION OF THE DEPARTMENT. ACCORDING TO WHICH DEPARTMENT DID NOT PURSUE THE MATTER FURTHER AND THUS, ASSESSEE CA NNOT PUT THE DEPARTMENT AT DISADVANTAGEOUS STAGE BY NOT DISCLOSING THE AMOU NT OFFERED DURING THE COURSE OF SEARCH. (III) ASSESSEE DID NOT RETRACT THE SAID STATEMENT T ILL THE DATE OF FURNISHING THE RETURN OF INCOME WHICH WAS DATED 23/9/2009. (IV) THE CONTENTION OF THE ASSESSEE THAT THERE WAS RECESSION IN THE REAL ESTATE MARKET IS NOT SUBSTANTIATED BY ANY STATISTICAL DATA OR MARKET RESEARCH OR BY . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 6 ANY OTHER MATERIAL EVIDENCE. IN FACT, THERE WAS NO SLUMP IN THE REAL ESTATE MARKET. ACCORDING TO DATA FURNISHED BY THE ASSESSE E, IN FACT THE SALE RATE OF IMPUGNED SHOPS HAD INCREASED FROM RS.2800 PER SQ.FT . AS ON 12/9/2008 TO RS.3240 PER SQ.FT. AND RS.5760/- PER SQ.FT. ON 14/ 11/2009. 3.4 LD. CIT(A) HAS ALSO DISTINGUISHED THE CASES RE LIED BEFORE BY THE ASSESSEE BEFORE HIM AND HAS FINALLY CONCLUDED THAT ACTION O F THE AO WAS RIGHT. IN THIS MANNER LD. CIT(A) HAS UPHELD THE ADDITION MADE BY T HE AO. 3.5 THE ASSESSEE IS AGGRIEVED BY SUCH FINDING RECOR DED BY LD. CIT(A) AND HAS RAISED AFOREMENTIONED GROUNDS OF APPEAL. 4. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY L D. AR THAT ASSESSEE SUBMITTED COMPLETE DETAILS OF SALES AND EXPENSES IN CURRED ON THE SAID PROJECT NOT ONLY BEFORE AO BUT ALSO BEFORE LD. CIT(A). ALL THE SALES HAVE BEEN MADE TO THIRD PARTIES , WHOSE NAMES AND ADDRESSES WERE ALSO GIVEN. THE ASSESSEE HAD CONSTRUCTED FIVE SHOPS WHICH WERE SOLD ON DIFFERENT DATES AND BEFORE THE DATE OF RECORDING STATEMENT, TWO SHOPS WERE SOLD. ON THE BASIS OF THE SALE OF THOSE SHOPS THE ASSESSEE ESTIMATED THE PROFITS OF RS.70.0 0 LACS WHICH WAS OFFERED TO TAX IN THE STATEMENT RECORDED IN THE COURSE OF SEAR CH. IT WAS SUBMITTED THAT WHEN ALL THE PARTICULARS REGARDING SALES OF THE SHO PS AND EXPENDITURE INCURRED THEREON WERE DULY PROVIDED, THEN IT WAS HIGHLY IMP ROPER FOR THE AO TO MAKE ADDITION ON THE BASIS OF THE STATEMENT AS BY THE DA TE STATEMENT WAS RECORDED THE ASSESEE COULD STATE ONLY THE ESTIMATE PROFIT O UT OF THE PROJECT WHICH WOULD NOT BE SAID TO BE REAL PROFIT OF THE ASSESSEE IN VI EW OF SUBSEQUENT REALIZATION OF THE SALE PRICE OF THE REMAINING SHOPS WHICH HAVE B EEN SOLD TO INDEPENDENT PARTIES. 4.1 IT WAS SUBMITTED THAT AO WHILE MAKING THE ADDIT ION HAS SOLELY RELIED UPON THE STATEMENT RECORDED DURING THE COURSE OF SE ARCH AND MAIN REASON FOR SUSTENANCE OF ADDITION BY LD. CIT(A) IS ALSO BASED ON THE STATEMENT RECORDED . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 7 DURING THE CORUSE OF SEARCH. LD. AR REFERRED TO TH E CIRCULAR ISSUED BY CBDT NO.286/2/2003-IT(INV) DATED 10/3/2003, WHICH READ A S UNDER: TO ALL CHIEF COMMISSIONERS OF INCOME TAX, (CADRE CONT RA) & ALL DIRECTORS GENERAL OF INCOME TAX INV. SIR, SUB: CONFESSION OF ADDITIONAL INCOME DURING THE COU RSE OF SEARCH & SEIZURE AND SURVEY OPERATION REGARDING. INSTANCES HAVE COME TO THE NOTICE OF THE BOARD WHER E ASSESSEE HAVE CLAIMED THAT THEY HAVE BEEN FORCED TO CONFESS THE UNDISCLOSED IN COME DURING THE COURSE OF THE SEARCH & SEIZURE AND SURVEY OPERATIONS. SUCH CONFE SSIONS, IF NOT BASED UPON CREDIBLE EVIDENCE, ARE LATER RETRACTED BY THE CONCE RNED ASSESSEES WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, ON CONF ESSIONS DURING THE COURSE OF SEARCH & SEIZURE AND SURVEY OPERATIONS DO NOT SERV E ANY USEFUL PURPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND C ONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENTS . SIMILARLY, WHILE RECORDING STATEMENT DURING THE COURSE OF SEAR CH IT SEIZURES AND SURVEY OPERATIONS NO ATTEMPT SHOULD BE MADE TO OBTAIN CONF ESSION AS TO THE UNDISCLOSED INCOME. ANY ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS ALSO, ASS ESSING OFFICERS SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE CO URSE OF SURVEY/OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT OR DER. (EMPHASIS PROVIDED). 4.2 REFERRING TO ABOVE CIRCULAR IT WAS SUBMITTED BY LD. AR THAT THE SAID CIRCULAR WAS PREVAILING ON THE DATE WHEN SEARCH WAS MADE AND ALSO ON THE DATE WHEN ASSESSMENT WAS FRAMED BY AO. IT WAS SUBMI TTED THAT IT HAS BEEN CLEARLY MANDATED THAT THE FOCUS AND CONCENTRATION O F THE DEPARTMENT DURING THE COURSE OF SEARCH SHOULD BE ON COLLECTION OF EVI DENCE WHICH LEADS TO INFORMATION OF WHAT HAS NOT BEEN DISCLOSED OR IS N OT LIKELY TO BE DISCLOSED. IT IS ALSO MANDATED THAT WHILE RECORDING THE STATEMENT D URING THE COURSE OF SEARCH, SEIZURES AND SURVEY OPERATIONS, NO ATTEMPT SHOULD B E MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. IT HAS AL SO BEEN MENTIONED THAT IN RESPECT OF PENDING ASSESSMENT PROCEEDINGS AO SHOULD RELY UPON EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATION OR THEREAFTER WHILE FRAMING RELEVANT ASSESSMENT ORDER. IT WAS SUBMITTED THAT . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 8 RELYING UPON AFOREMENTIONED CIRCULAR NOT ONLY VARIO US BENCHES OF ITAT BUT ALSO VARIOUS HONBLE HIGH COURTS ALSO HAVE DELETED SUCH ADDITIONS WHICH HAVE BEEN MADE SIMPLY ON THE BASIS OF STATEMENT RECORDED DURI NG THE COURSE OF SEARCH/SURVEY. REFERENCE WAS MADE TO THE FOLLOWING DECISIONS: 1. GAJJAM CHINNA YELLAPPA & OTHERS VS ITO, 370 ITR 671 (T & AP) IN THIS CASE THEIR LORDSHIPS HAVE OBSERVED THAT THE INCOME TAX ACT EMPOWERS THE AO OR OTHER AUTHORITIES TO RECORD THE STATEMENT OF TH E ASSESSEE, WHENEVER A SURVEY OR SEARCH IS CONDUCTED UNDER RELEVANT PROVISIONS O F LAW. THE STATEMENT WAS RECORDED REFERABLE TO SECTION 132 OF THE ACT. SUB- SECTION (4) THEREOF ENABLES THE AUTHORITIES NOT ONLY TO RELY UPON THE STATEMENT IN THE CONCERNED PROCEEDINGS BUT ALSO IN OTHER PROCEEDINGS THAT ARE PENDING, BY THE TIME THE STATEMENT WAS RECORDED. IT IS FURTHER OBSERVED BY THEIR LORDSHIP S THAT IF THE STATEMENT IS NOT RETRACTED, THE SAME CAN CONSTITUTE THE SOLE BASIS F OR WHICH AUTHORITIES TO PASS AN ORDER OF ASSESSMENT. HOWEVER, IF IT IS RETRACTE D BY THE PERSON FROM WHOM IT WAS RECORDED, TOTALLY DIFFERENT CONSIDERATION ALTOG ETHER, ENSUE. THE SITUATION RESEMBLES THE ONE, WHICH ARISE ON RETRACTION FROM S TATEMENT RECORDED UNDER SECTION164 OF THE CODE OF CRIMINAL PROCEDURE. THE EVIDENTIARY VALUE OF RETRACTED STATEMENT BECOMES DILUTED AND IT LOSSES T HE STRENGTH, TO STAND ON ITS OWN. ONCE THE STATEMENT IS RETRACTED, THE ASSESSIN G AUTHORITY HAS TO GARNER SOME SUPPORT, TO THE STATEMENT FOR PASSING AN ORDER OF ASSESSMENT. THEIR LORDSHIPS REFERRED TO THE EARLIER DECISION IN THE C ASE OF CIT VS. NARESH KUMAR AGARWAL, 369 ITR 171, WHEREIN IT HAS BEEN HELD THAT A RETRACTED STATEMENT CANNOT CONSTITUTE THE SOLE BASIS FOR FASTENING THE LIABILITY UPON AN ASSESSEE. THEIR LORDSHIPS FURTHER OBSERVED THAT IT IS NOT AS IF THE RETRACTION FROM A STATEMENT BY AN ASSESSEE WOULD PUT THE END TO THE PROCEDURE THAT ENSUED ON ACCOUNTED SURVEY OR SEARCH. THE AO CAN VERY WELL S UPPORT HIS FINDING ON THE BASIS OF OTHER MATERIAL. IF HE DID NOT HAVE ANY O THER MATERIAL, IN A WAY, IT REFLECTS UPON THE VERY PERFUNCTORY NATURE OF THE SU RVEY AND FOR THIS THEIR LORDSHIPS HAVE REFERRED TO THE AFOREMENTIONED CIRCU LAR ISSUED BY THE CBDT . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 9 DATED 10/3/2003, WHICH IS TAKEN EXCEPTION TO THE I NITIATION OF PROCEEDINGS ON THE BASIS OF RETRACTED STATEMENT. 2. CIT VS. ASHOK KUMAR SONI, 291 ITR 172 (RAJ) I N THE SAID CASE, DURING THE COURSE OF SEARCH, IT WAS ADMITTED THAT A TOTAL SUM OF RS.14,50,000/- WAS INVESTED IN THE CONSTRUCTION OF HOUSE PROPERTY AS A GAINST WHICH ONLY A SUM OF RS.7,50,000/- WAS DISCLOSED AND BALANCE AMOUNT OF R S.7,50,000/- WAS OFFERED IN THE STATEMENT RECORDED UNDER SECTION 132(4) OF T HE ACT. THE SAID STATEMENT WAS RETRACTED BY FILING OF THE RETURN. HOWEVER, TH E AO MADE ADDITION OF RS.7,50,000/- ON THE BASIS OF STATEMENT. THE ADDIT ION WAS DELETED BY THE TRIBUNAL. THE DEPARTMENT CHALLENGED THE SAID ORDER OF THE TRIBUNAL. THEIR LORDSHIPS HAVE OBSERVED THAT ADMISSIONS ARE RELEVA NT PIECE OF EVIDENCE AND ARE NOT CONCLUSIVE PROOF OF FACTS. IT WAS FURTHER OBSERVED THAT WHILE DELETING THE ADDITION TRIBUNAL DID NOT ACT MERELY ON THE BAS IS OF RETRACTED STATEMENT BUT HAD ACTED AND REACHED ITS CONCLUSION BY TAKING INTO CONSIDERATION ALL THE RELEVANT MATERIAL AND RELEVANT FINDINGS OF THE TRI BUNAL BEING FINDING OF FACT ON THE BASIS OF WHICH RECORDED STATEMENT COULD NOT BE SAID TO BE VITIATED. 3. GANESH TRADING COMPANY VS. CIT, 84DTR (JHARKAND ) 94 - IN THIS CASE THEIR LORDSHIPS HAVE HELD THAT STATEMENT RECORDED UNDER S ECTION 132(4) IS EVIDENCE BUT ITS RELIABILITY DEPEND UPON THE FACT OF THE C ASE AND PARTICULARLY SURROUNDING CIRCUMSTANCES. IT WAS OBSERVED THAT TH E STATEMENT ON OATH OF THE ASSESSEE IS A PIECE OF EVIDENCE AS PER SECTION 132( 4) OF THE ACT AND WHEN THERE IS INCRIMINATING ADMISSION AGAINST HIMSELF, THEN IT IS REQUIRED TO BE EXAMINED WITH DUE CARE AND CAUTION. IT WAS OBSERVED THAT NO SPECIFIC REASON WAS GIVEN TO REJECT THE ASSESSEES CONTENTION BY WHICH THE AS SESSEE HAS RETRACTED FROM HIS ADMISSION. NONE OF THE AUTHORITIES GAVE ANY REASO N AS TO WHY AO DID NOT PROCEED FURTHER TO ENQUIRE INTO THE UNDISCLOSED INC OME AS ADMITTED BY THE ASSESSEE IN HIS STATEMENT UNDER SECTION 132(4), IN FACT SITUATION WHERE DURING THE COURSE OF SEARCH, THERE WAS NO RECOVERY OF ASS ET OR CASH BY THE DEPARTMENT, IT WAS OBSERVED THAT MERE READING OF T HE STATEMENT OF THE . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 10 ASSESSEE IS NOT AN ASSESSMENT OF EVIDENTIARY VALUE OF THE EVIDENCE WHEN SUCH EVIDENCE IS SELF INCRIMINATING AND IT WAS HELD THAT IN ABSENCE OF SEIZURE OF ANY ASSET OR CASH, ADDITION ON THE BASIS OF RETRACTED S TATEMENT WAS NOT SUSTAINABLE. 4.3 THE OTHER DECISIONS RELIED UPON FOR SIMILAR P ROPOSITIONS WERE AS UNDER: 1. UNIQUE ART AGE VS. ACIT (JAIPUR) (2014) 29 DTR (TRIB) 547(JAIPUR). 2. JYOTHICHAND BHAICHAND SARAF & SONS (P)LTD.VS. D CIT, (2013) 86 DTR (PUNE TRIB) 289 3. SHRI BASANT BANSAL VS. ACIT, 534/JP/2012 ORDER DATED 29/5/2015 4. DCIT VS. PREMSONS (2010) 37 DTR (MUM) 150. 4.4 LD. AR FURTHER SUBMITTED THAT FOR ASSESSMENT Y EAR 2010-11 ASSESSMENT ORDER IS FRAMED UNDER SECTION 143(3) OF THE ACT, CO PY OF WHICH HAS BEEN PLACED AT PAGE 42 TO 43 OF THE PAPER BOOK. HE SUBMITTED T HAT PART OF THE PROJECT WAS SOLD DURING THAT YEAR ALSO AND IN PARA-4 AO HAS ALS O REFERRED TO THE GROSS RECEIPTS AS WELL AS EXPENDITURE INCURRED BY THE ASS ESSEE ON THE IMPUGNED PROJECT AND NONE OF THE RECEIPT OR EXPENDITURE INCU RRED BY THE ASSESSEE HAS BEEN DOUBTED. REFERENCE IN THIS REGARD WAS MADE TO PARA-4 OF THE SAID ORDER, WHICH READ AS UNDER: 4. FURTHER, THE ASSESSEE COMPANY FOLLOWS PROJECT COMPLETION METHOD OF ACCOUNTING. ON ITS COMPLETED PROJECT ACME CENTRE AT AHMEDABAD, THE ASSESSEE COMPANY DECLARED A TOTAL REVENUE RECOGNITION AT RS. 51,488,750/- OUT OF WHICH RS.49,605,750/- IS CLAIMED TO HAVE BEEN DULY ACCOUN TED FOR DURING THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2009-10 AND A S SUCH, THE COMPANY HAS CREDITED ITS PROFIT & LOSS A/C. BY BALANCE AMOUNT O F RS.1,883,000/- AND ACCORDINGLY, OFFERED A TOTAL INCOME OF RS.69,770/- FOR THE PREVIOUS YEAR CONCERNED. AFTER PERUSAL OF DOCUMENTS AVAILABLE ON RECORD AND DISCUSSION WITH THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE, THE TOTAL INCOME AS PER RETURN IS ACCEPTED. TOTAL INCOME : RS.69,770/- ASSESSEE U/S. 143(3) OF THE ACT AT A TOTAL INCOME O F RS.69,770/-. THE NECESSARY DETAILS/ DOCUMENTS ARE PERUSED, VERIFIED ON TEST CH ECK AND KEPT ON RECORD. CREDIT FOR PREPAID TAXES HAS BEEN GIVEN AFTER DUE VERIFICA TION. INTEREST APPLICABLE AS PER LAW CHARGED. DEMAND NOTE AND CHALLAN ISSUED ACCORD INGLY. . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 11 4.5 THUS, IT WAS SUBMITTED BY LD. DR THAT ADDITION IS SIMPLY BASED ON STATEMENT RECORDED DURING THE COURSE OF SEARCH. FU LL PARTICULARS WERE SUBMITTED TO THE AO. THE AO COULD NOT POINT OUT AN Y DISCREPANCY IN THE PARTICULARS SUBMITTED BY THE ASSESSEE. SINCE THE D ETAILS WERE AVAILABLE, ADDITION SIMPLY ON THE BASIS OF STATEMENT WAS CONT RARY TO LAW AS PER AFOREMENTIONED DECISIONS OF THE JUDICIAL AUTHORITI ES. 5. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. DR TH AT ASSESSEE HAD ADMITTED THE INCOME DURING THE COURSE OF SEARCH AND SUCH ADMISSION OF THE ASSESSEE HAS EVIDENTIARY VALUE, THEREFORE, RELYING UPON THE SAME, ADDITION WAS RIGHTLY MADE BY THE AO AND THE SAME HAS RIGHTLY BEE N SUSTAINED BY LD. CIT(A). IT WAS SUBMITTED THAT LD. CIT(A) HAS MET WITH EACH OF THE OBJECTIONS RAISED BY THE ASSESSEE AND THE SAME HAVE BEEN REJECTED. LD. DR RELIED UPON THE FINDINGS RECORDED BY LD. CIT(A) WHICH HAVE BEEN DISCUSSED IN DETAIL IN EARLIER PART OF THIS ORDER. THUS, IT WAS CONCLUDED BY LD. DR THAT LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION AND HIS ORDER SHOULD BE UPHE LD. 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE QUESTION IN THE PRESENT APPEAL REL ATES TO THE DETERMINATION OF PROFIT IN RESPECT OF ACME CENTER, A PROJECT DEVEL OPED BY THE ASSESSEE AT AHMADABAD. THE SOLE BASIS OF THE DEPARTMENT TO A SSESS PROFIT OF RS.70.00 LACS IS BASED UPON THE STATEMENT RECORDED UNDER SE CTION 132(4) OF THE ACT. IT IS A MATTER OF FACT THAT BY THE TIME STATEMENT WAS RECORDED, THE ENTIRE PROJECT WAS NOT SOLD BY THE ASSESSEE. ONLY TWO SHOPS WERE SOLD. THE DETAILS OF SALE OF THE ENTIRE PROJECT BY THE ASSESSEE HAS ALREADY BEEN PRODUCED IN THE TABLE REPRODUCED IN PARA-3. ACCORDING TO THE FACTS, ASS ESSEE HAS DEVELOPED TOTAL AREA OF 14950 SQ.FTS. WHICH COMPRISES OF GROUND FLO OR TO 4 TH FLOOR. BY THE TIME STATEMENT WAS RECORDED THE ASSESSEE HAD SOLD 6000 S Q.FTS. FOR AN AGGREGATE AMOUNT OF RS.1,86,26,000/-, WHICH GIVE RISE TO AVE RAGE RATE OF RS.3103/- PER SQ.FT. THE SUBSEQUENT SALES BY THE ASSESSEE WERE 8 950 SQ.FTS. WHICH WAS SOLD . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 12 FOR AN AGGREGATE AMOUNT OF RS.3,28,68,750/-, WHICH IS AVERAGE SALE RATE OF RS.3672/- PER SQ.FT. ALL THESE SALES ARE MADE TO THIRD PARTY, THE NAMES OF WHICH WERE GIVEN NOT ONLY TO AO BUT ALSO TO LD. CIT (A). THEREFORE, TOTAL RECEIPTS OF THE ASSESSEE FROM THE SAID PROJECT ARE A SUM OF RS.5,14,88,750/-. THE DETAILS OF EXPENDITURE WAS ALSO SUBMITTED TO THE AO . THE RELEVANT PORTION OF THE ASSESSMENT ORDER HAS ALREADY BEEN REPRODUCED. THE AO DID NOT DOUBT THE RECEIPTS OF THE ASSESSEE AS WELL AS EXPENDITURE IN CURRED ON PROJECT BUT HE HAS MADE THE ADDITION SIMPLY ON THE BASIS OF STATEMENT WHICH WAS RECORDED UNDER SECTION 132(4) OF THE ACT. THE ASSESSEE RETRACTED THE STATEMENT BY FILING THE RETURN OF INCOME AND THIS FACT HAS ALSO BEEN ADMITT ED BY LD. CIT(A) WITH THE FOLLOWING WORDS SECONDLY, IN THIS CASE ALTHOUGH THE SEARCH & SEIZU RE WAS CARRIED OUT IN THE PREMISES OF THE APPELLANT ON 24-07-2008, THE APPELL ANT NEVER RETRACTED THE STATEMENT RECORDED U/S. 132(4) OF THE ACT TILL THE DATE OF FURNISHING OF RETURN OF INCOME ON 23-09-2009. 6.1 UNDER THESE FACTS AND CIRCUMSTANCES OF THE CAS E WE HAVE TO EXAMINE THAT WHETHER SUSTENANCE OF IMPUGNED ADDITION IS IN ACCORDANCE WITH LAW OR NOT. THE LAW IN THIS REGARD HAS ALREADY BEEN DESCR IBED IN THE ABOVE PART OF THIS ORDER AND REFERENCE CAN BE MADE TO THE DECISION OF HONBLE TELUNGANA & ANDHRA PRADESH HIGH COURT IN THE CASE OF GAJJAM CHI NNA YELLAPA VS. ITO(SUPRA), WHERE THEIR LORDSHIPS HAVE OBSERVED THA T IN CASE STATEMENT IS RETRACTED THEN TOTALLY DIFFERENT CONSIDERATION ALTO GETHER WILL ENSUE AND THE SITUATION WOULD RESEMBLE TO SECTION 164 OF THE CO DE OF CRIMINAL PROCEDURE. THE EVIDENTIARY VALUE OF RETRACTED STATEMENT BECOM E DILUTED AND IT LOSES ITS STRENGTH TO STAND ON ITS OWN. IN THAT CASE ASSESS ING AUTHORITY HAS TO GARNER SOME SUPPORT TO THE STATEMENT FOR PASSING AN ORDER OF ASSESSMENT. IT IS ALSO HELD THAT RETRACTED STATEMENT WOULD NOT PUT AN END TO THE PROCEDURE, THEN THE AO IS UNDER AN OBLIGATION TO SUPPORT HIS FINDINGS ON THE BASIS OF OTHER MATERIALS AND IF HE DOES NOT HAVE SUCH MATERIAL TH EN IT WOULD REFLECT UPON THE VERY PERFUNCTORY NATURE OF THE SURVEY. FOR HOLDIN G SO THEIR LORDSHIPS HAVE REFERRED TO THE AFOREMENTIONED CIRCULAR DATED 10/3/ 2003, WHEREIN CBDT HAS . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 13 CLEARLY GIVEN THE MANDATE TO THE OFFICERS THAT DURI NG THE COURSE OF SEARCH, SEIZURES AND SURVEY NO ATTEMPT SHOULD BE MADE TO OB TAIN CONFESSION AS TO THE UNDISCLOSED INCOME AND SUCH INSTRUCTIONS TO CBDT WE RE APPLICABLE WHEN THE SEARCH AND SEIZURE WAS MADE AND ASSESSMENT WAS FRAM ED. CBDT HAS FURTHER MANDATED THAT IN RESPECT OF PENDING ASSESSMENT ALSO AO SHOULD RELY UPON THE EVIDENCES/MATERIALS GATHERED DURING THE COURSE OF S EARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING RELEVANT ASSESSMENT ORDER. THE ADDITION MADE IN THE PRESENT CASE IS CONTRARY TO THE AFOREMENTIONED DECI SION OF HONBLE TELANGANA & ANDHRA PRADESH HIGH COURT AS WELL AS AFOREMENTIONED CIRCULAR OF CBDT AS THE ASSESSMENT IS ENTIRELY BASED UPON THE STATEMENT RECORDED DURING THE COURSE OF SEARCH AND NO INDEPENDENT MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO TO SHOW THAT THE INCOME RETURNED WAS INCO RRECT. 6.2 THE OTHER DECISIONS WHICH HAVE BEEN RELIED UPON BY LD. AR ALSO SUPPORTS SIMILAR PROPOSITION AND THESE HAVE BEEN DISCUSSED I N THE ABOVE PART OF THIS ORDER AND FOR THE SAKE OF BREVITY THEY ARE NOT REPE ATED. 6.3 SO FAR AS IT RELATES TO FINDINGS RECORDED BY LD . CIT(A), ONE OF THE FINDING IS THAT BY MAKING ADMISSION UNDER SECTION 132(4) THE A SSESSEE HAS ALTERED THE POSITION OF THE DEPARTMENT BECAUSE OF WHICH THE DEP ARTMENT DID NOT PURSUE THE MATTER FURTHER AND DID NOT VISIT THE SAID ACME CENTRE AT AHMEDABAD. IT MAY BE MENTIONED THAT SUCH OPINION OF LD. CIT(A) WO ULD BE CONTRARY TO THE AFOREMENTIONED CIRCULAR ISSUED BY CBDT, WHERE THE CLEAR MANDATE HAS BEEN GIVEN TO THE INCOME TAX AUTHORITIES WORKING UNDER T HE CBDT THAT WHILE RECORDING THE STATEMENT DURING THE COURSE OF SEARCH /SURVEY NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION OF THE UNDISCLOSED INC OME AND ANY SUCH ACTION WOULD BE VIEWED ADVERSELY. RECOGNIZING SUCH POSITI ON THEIR LORDSHIPS OF TELANGANA & ANDHRA PRADESH HIGH COURT HAVE ALREADY OBSERVED THAT IF ADDITION IS MADE SIMPLY ON THE BASIS OF STATEMENT RECORDED U NDER SECTION 132(4) AND NO MATERIAL IS BROUGHT ON RECORD BY THE REVENUE AUTHOR ITIES THEN IT WOULD REFLECT . / ITA NO.7165/MUM/2011 / ASSESSMENT YEAR 2009-10 14 UPON VERY PERFUNCTORY NATURE OF THE SURVEY/SEARCH A CTION OF THE DEPARTMENT. THEREFORE, IN ABSENCE OF SUPPORTING MATERIAL, THE ADDITION SIMPLY ON THE BASIS OF STATEMENT CANNOT BE UPHELD. THE OTHER FINDING S OF LD. CIT(A) DO NOT SUPPORT THE ADDITION AS THEY ARE ONLY BASED UPON TH E ADMISSION OF THE ASSESSEE. ACCORDING, TO THE FACTS OF THE CASE, TH E ASSESSEE HAD FURNISHED ALL REQUIRED PARTICULARS REGARDING SALE AND EXPENDITURE INCURRED ON THE IMPUGNED PROJECT AND AO COULD NOT POINT OUT ANY DEFECT IN TH OSE PARTICULARS SUBMITTED BY THE ASSESSEE. THUS, THE ADDITION IS MADE SIMPLY ON THE BASIS OF STATEMENT RECORDED DURING THE COURSE OF SEARCH AND IS NOT SUP PORTED BY ANY MATERIAL. IN VIEW OF CASE LAW RELIED UPON BY LD. AR, THE ADDITI ON IS NOT SUSTAINABLE AND IS DELETED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/06/2015 ' )* + , 17/06/2015 ' SD/- SD/- ( . / D.KARUNAKARA RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER ) MUMBAI; + DATED 17/06/2015 ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. /# ( ) / THE CIT(A)- 4. /# / CIT 5. 01 #23 , $ 23 , ) / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, 0# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ) / ITAT, MUMBAI . . ./ VM , SR. PS