Sarla Finance Pvt. Ltd., Kolkata V. A.C.I.T., CC - 3(1), Kolkata, Kolkata

ITSSA 115/KOL/2022

AI Insights

The case involves Sarla Finance Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-21, Kolkata, confirming the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The additions pertained to Rs. 48,00,22,000 received from the liquidation of investments, which the Assessing Officer deemed as bogus. The Tribunal examined the evidences and arguments presented, including the retracted statement of the director and the lack of specific defects in the documents provided by the assessee. The Tribunal concluded that the additions were made on the basis of suspicion and conjecture, without substantial evidence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128293 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-06-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 08-12-2022
• Other Referred Cases: Crystal Networks (P) Ltd vs CIT, M/s Satyam Smertex Pvt. Ltd vs. DCIT, CIT vs Raj Kumar Agarwal, PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd, Principal Commissioner of Income Tax vs. Golden Goenka Fincorp Ltd, Naresh Kumar Agarwal vs. CIT, Shree Chand Soni vs. DCIT, CIT vs. Harjeev Agarwal, Commissioner of Income Tax vs. Sunil Agarwal, Basant Bansal vs. ACIT, Dy. CIT vs. Pramukh Builders
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Question of law; Accommodation entries; Retraction; Liquidation
• Section: 131; 68; 132; 133A; 153A; 250; 191; 64

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘सी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Rajesh Kumar, Accountant Member I.T(SS)A. No.115/Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd.......................................................................Appellant 3, ChotopoleRaigachi, Rajarhat, Kolkata-700135. [PAN: AADCS8616G] vs. ACIT, Central Circle-3(1), Kolkata.................................................... Respondent Appearances by: Shri A. K. Tibrewal, AR and Amit Agarwal, Advocate, appeared on behalf of the appellant. Shri G. Hukugha Sema, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing :June 14, 2023 Date of pronouncing the order :August 31, 2023 आदेश / ORDER संजय गग[, ÛयाǓयकसदèयɮवारा/ Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 17.10.2022 of the Commissioner of Income Tax (Appeals)- 21, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee in this appeal has taken the following grounds of appeal: “1. That the Ld. Commissioner of Income Tax (Appeals), Kolkata-21 erred in passing the impugned Order under section 250 of the Act on 17.10.2022 dismissing the appeal of the Appellant Company without allowing reasonable opportunity of hearing. 2. That, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in dismissing all the grounds of appeal of the Appellant Company thereby confirming the I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 2 addition of Rs 48,00,22,000 made by Ld Assessing Officer under section 68 of the Income Tax Act, 1961. 3. That the Ld CIT(A) was wholly unjustified in dismissing the Appeal of the Appellant Company when the impugned assessment order passed by Ld. Assessing Officer on 23.04 2021 under section 153A of the Income Tax Act 1961 was without jurisdiction, illegal and void ab initio. 4. That the impugned assessment order passed by the Ld. Assessing Officer was without jurisdiction, illegal and void ab initio since the Assessing Officer failed to issue the mandatory Notice under section 143(2) of the Act in accordance with law. 5. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs 48.00,22,000 made by the Ld. Assessing Officer under section 68 of the Act without appreciating that section 68 and section 115BBE are not applicable to the amounts of Rs 48,00,22,000 received by the Appellant Company on liquidation of its investment in shares admittedly made in the Financial Year 2010-11 from the admitted source of capital raised in that year. 6. That the LdCIT(A) erred in sustaining the addition of Rs.48,00,22,000 made by the Assessing Officer under section 68 of the Act on the alleged ground that the buyers of the shares sold by the Appellant Company had no creditworthiness to explain the source of their investment. 7. That, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in confirming the addition of Rs.48,00,22,000 made by the Assessing Officer under section 68 of the Act relying on the statement of Mr.Pramod Kumar Lundia recorded under section 132(4) of the Income Tax Act, 1961 although admittedly the said statement was retracted by him by an Affidavit sworn in before Metropolitan Magistrate, Kolkata on 11th March 2019. 8. That the Ld. CIT(A) erred in dismissing the appeal without considering the papers and documents available in the assessment records and further erred in relying on different judgements which are distinguishable and/or inapplicable to the facts of the instant case. 9. That the Ld. CIT(A) erred in agreeing with the Assessing Officer whereby he charged higher rate of tax by invoking the provisions of section 115BBE of the Act. 10. That the impugned order passed by Ld. CIT(A) is against law and facts of the case.” 3. The brief facts of the case are that during the assessment proceedings, the Assessing Officer (in short “the AO”) noted that the I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 3 assessee, M/s Sarla Finance Pvt. Ltd. had raised bogus capital/premium during the earlier FY 2010-11 relevant to AY 2011-12 through a number of companies which are enlisted in the departmental database of paper/shell companies having no real existence. These funds were invested in a number of companies having no physical existence. That previously the concern M/s Sarla Finance Pvt Ltd was managed by Shri Mukesh Banka, who was an entry operator. During F.Y.-2016-17 the concern was taken over by Shri Pramod Kumar Lundia (key person of Sarla Finance Pvt. Ltd) by paying Rs. 2,00,00,000/- in cash to Shri Mukesh Banka. After acquisition of the concern, M/s Sarla Finance Pvt. Ltd liquidated its unquoted investment to different shell/paper entities and brought in fund to its bank accounts. The AO observed that during relevant assessment year, assessee has liquidated investment standing in the asset side of the balance sheet to the tune of Rs. 48,00,22,000/-. To verify the identity and creditworthiness of the concerns and genuineness of the transactions, the AO issued summons u/s 131 of the Act to the purchasers to whom such unquoted investments were sold off. The AO has recorded that in response to the summons issued, although none appeared on the given date, however paper replies were received from them. The AO further noted that from the perusal of those replies, it revealed that they were similarly formatted, having similar language and the totality of these documents showed that these were made by one or a few individuals under the control of someone. The Assessing Officer further noted that the main/key person of the appellant company namely Shri Pramod Kumar Lundia had got recorded his statement u/s 132(4) of the Income Tax Act on 04.03.2019 before the Investigation Directorate wherein, he offered the aggregate amount of I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 4 share capital and share premium of Rs. 54,83,18,800/-as his undisclosed income. However, the said statement was retracted by him by filing an affidavit before Metropolitan Magistrate, Kolkata. The Assessing Officer, however, relied upon the retracted statement of Shri Pramod Kumar Lundia and held that the investments sold by the assessee were bogus and that the assessee had brought in his own unaccounted money by showing bogus sales of investment. He, therefore, made the impugned additions holding the entire sale of investment as bogus. 4. Being aggrieved by the said additions, the assessee preferred appeal before the ld. CIT(A). However, the ld. CIT(A) confirmed the additions so made by the Assessing Officer. The assessee, thus, has come in appeal before us. 5. Before us, the ld. counsel for the assessee has submitted that admittedly the investments were acquired in the Financial Year 2010- 11 and that the same were accepted by the department. No additions were made by the department in the Assessment Year 2011-12 relevant to financial year 2010-11. The assessee had sold those investments in the assessment year under consideration i.e. A.Y 2018-19. The ld. counsel has submitted that if the purchases/acquisition of investments were admitted, the Assessing Officer was not justified in making the addition relating to the sale of those investments. 5.1 That the investments were received through banking channel and that all the details of investments were furnished before the Assessing Officer. 5.2. The ld. Counsel has further submitted that it had sold its investments to various corporate and non-corporate entities. Sale of I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 5 investments was made in the normal course of conduct of its business. That the assessee furnished all the details of sale of investments also and that the said details have also been incorporated by the Assessing Officer in the assessment order, itself. Buyers were identifiable persons/concerns and assessed to income tax. They had made the payments through proper banking channel and copies of sale bills, other related documents, copy of ITR, copy of audited accounts, copy of relevant bank statements of the buyers were submitted before the AO. There was no cash deposit before payment made by the buyer through their bank accounts. That the buyers had sufficient net worth to purchase the shares sold by the assessee. That the buyers of investments had furnished confirmations of the purchases/transactions of various investments from the assessee. The Assessing Officer in the assessment order itself, has mentioned that all the buyers had filed replies to the summons issued u/s 131 of the Act. That the Assessing Officer has not pointed out any defect or discrepancy in the replies furnished by the companies towards purchase the investment. The Assessing Officer has not referred to any of the enquiry conducted by him from the buyers of the investments in shares. That there was no evidence on record to show that there was any cash rotation between the assessee company and the alleged buyers of the investment. That there was nothing on record to show that the returns of income filed by the buyers of the investments were rejected by the Assessing Officer. That the entire details relating to the creditworthiness of the buyers were furnished before the Assessing Officer. That there were no paper companies involved in the transactions. The ld. counsel, in this respect, has relied upon the paper-book to show that the assessee had furnished the details not only I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 6 of the assessee including its bank account but also the details of sale of investments along with ledger accounts of the buyers and summary of transaction of investment scrip-wise. The details of payment made, the details of sources, bank statement, ITR acknowledgement and audited financials etc. filed by the buyers of the investments have also been relied upon by the ld. counsel (copies of which has been placed on pages 191 to 889 of paper-book). He, therefore, has submitted that the assessee has not concealed any fact from the Assessing Officer. 5.3. The Ld. Counsel has further submitted that instead of pointing out any defect or discrepancy in the evidences and the details furnished by the assessee, the AO proceeded to take adverse inference only on the ground that the directors of the subscriber companies did not appear personally before the AO. The ld. Counsel for the assessee in this respect has relied upon the decision of the Jurisdictional Calcutta High Court in the case of Crystal networks (P) Ltd. vs CIT 353 ITR 171 (Calcutta).The ld. Counsel has also relied upon the decision of the co- ordinate Kolkata Bench of the tribunal in the case of ‘M/s Satyam Smertex Pvt. ltd. vs. DCIT’, ITA No.2445/Kol/2019 vide order dated 29.05.2020, wherein, the coordinate bench of the tribunal, while further relying upon the decision of the Hon’ble Allahabad High Court in the case of CIT vs Raj Kumar Agarwal vide ITA No.179/2008 dated 17.11.2009 has held that non production of the director of the company, which is regularly assessed to income Tax having PAN, on ground that the identity of the subscriber is not proved, cannot be sustained. 5.4. The Ld. Counsel has further contended that the reliance of the Assessing Officer on some portion of the retracted statement of Shri I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 7 Pramod Kumar Lundia was not justified to make the impugned additions. 5.5. The ld. counsel has further submitted that both the lower authorities i.e. Assessing Officer and the CIT(A) have made general observations about the modus operandi of certain companies introducing their unaccounted income into the books of the company. However, in the case of the assessee, no specific instances or evidences have been brought on record which may prove that the sale consideration received by the assessee on sale of shares/investments was bogus or that in the own unaccounted money of the assessee has been routed into the system through the alleged bogus transactions. The ld. counsel, therefore, has pleaded that the Assessing Officer has made the impugned additions merely on the basis of suspicion, conjecture and surmises without pointing out any defect or discrepancy in the details submitted by the concerned buyers. 5.6. That the assessee had made sale of investments of Rs.48,00,22,000/-which were duly reflected in its books of account, hence, sale proceeds of such investments cannot be added under deeming provisions of Income Tax Act, as this would lead to double taxation of the same. In support of its contentions, he has cited decision of Kolkata ITAT dated 29.05.2020 in the case of Bhagwant Merchant Pvt. Ltd. Vs. ITO, ITA No 2614/Kol/2019. The ld. Counsel has cited another decision of Delhi ITAT in the case of Brij Resources Pvt. Ltd. Vs. ITO. ITA No 8835/Del/2019, order dated 07.07.2021, in support of its contentions. In view of these decisions, the ld. Counsel has submitted that sale of investments once recorded in the regular books of account, if added under deeming provisions of the Act, leads to double taxation. I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 8 The ld. AR has further relied upon the following case laws: “1. Vishal Holding & Capital (P) Ltd. [2011] 12 taxmann.com 150 (Judgement dated 09.08.2010) 2. ITO vs. Vishal Holdings Pvt. Ltd. ITI No. 1788/Del/09 (Order dated 17.07.2009) 3. ITO vs. Jatin Investment Pvt. Ltd. ITA Nos. 4325 & 4326/Del/2009 (Order dated 27.05.2015) 4. ACIT -vs- Jotindra Steel & Tubes Ltd. [2022] 139 taxmann.com 157 (Delhi-Trib) Order dtd 18.01.2022 5. ITO -vs- M/s ShrishtiFincapPvt. Ltd. ITA No. 2264/Del/2013 - Order dated 07.10.2015 6. ITO -vs- M/s Gemini Commerce Pvt. Ltd. ITA No. 14/Kol/2921 - Order dated 15.03.2023 7. Sarowar Goods Pvt. Ltd. ITA No. 617/Kol/2929 Order dated 10.05.2022 8. AdbhutVinimayPvt. Ltd. ITA No. 2404/Kol/2017 - Order dated 24.10.2018 9. ITO -vs- MRG Securities Pvt. Ltd. ITA No. 64/Kol/2021 - Order dated 18.01.2023 10. M/s Osian Stock Broking Pvt. Ltd. ITA No. 375/Kol/2022 Order dated 12.05.2023 11. CIT Vs Orchid Industries (P) Ltd 397 ITR 136 (Bom) 12. Crystal Networks (P)Ltdvs CIT reported in 353 ITR 171 (Calcutta) ” 6. The ld. DR, on the other hand, has submitted that the bogus investments were raised by the assessee company in earlier years. That the director of the assessee company, Mr. Pramod Kumar Lundia, had purchased the assessee company at a nominal rate and after selling the shares/investments of different companies during the year under consideration, the assessee company bought fixed assets. That during the search action in another case, Sh. Mukesh Banka, who was an I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 9 entry provider and had made statement that he had been provided accommodation entries, however, the said statement retracted by him later on. That even Shri Pramod Kumar Lundia, director of the assessee company, had also admitted in his statement recorded u/s 132(4) of the Act that since he cannot prove the source of the investments in the assessee company, he therefore had offered the amount of Rs.54 crores as his undisclosed income. However, he filed an affidavit before the Metropolitan Magistrate, Kolkata on 11.03.2019 and retracted his statement on 05.01.19 and 04.03.19. The ld. DR, therefore, has concluded that the facts on file would show that the bogus investments have been sold by the assessee and the assessee introduced its own unaccounted income by way of sale of bogus investments. 7. We have heard the rival contentions and gone through the record. In this case, the case of the Assessing Officer is that the assessee in earlier assessment year i.e. A.Y 2009-10 had acquired bogus investments in shares of the various companies. However, no dispute was raised by the department during the said year. The earlier investments acquired by the assessee had already been admitted by the department. A perusal of the assessment order would reveal that the Assessing Officer had not discussed about the financials of any of the buyers by holding that their creditworthiness was not proved. All the buyers had filed replies/confirmations admitting the transactions in question. The Assessing Officer has not pointed out any defect or discrepancy in the details furnished by the buyers. The assessee has also furnished all the details including its copy of ITR, details investment sold, bank account, contract note etc. All the details of the buyers have also been furnished. The AO, in our view, could have taken an adverse inference, only if, he would have pointed out the I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 10 discrepancies or insufficiency in the evidences and details received in his office and pointed out as to on what account further investigation was needed by way of recording of statement of the directors of the buyer companies. Even if the directors of the buyer companies have not come personally in response to the summons issued by the AO, in our view, adverse inference cannot be taken against the assessee solely on this ground as it is not under control of the assessee to compel the personal presence of the directors of the shareholders before the AO. The Ld. Counsel for the assessee has rightly placed reliance upon the decision of the Hon’ble Bombay High Court in the case of PCIT, Panji vs. Paradise Inland Shipping Pvt. Ltd. reported in (2017) 84 taxman.com 58 (Bom), wherein, the Hon’ble High Court has held that once the assessee has produced documentary evidence to establish the existence of the subscriber companies, the burden would shift on the revenue to establish their case. Further the jurisdictional Calcutta High Court in the case of “Crystal networks (P) Ltd. vs CIT” (supra) has held as under: “We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter creditworthiness. As rightly pointed out by the learned counsel that the CIT(Appeals) has taken the trouble of examining of all other materials and documents viz., confirmatory statements, invoices, challans and vouchers showing supply of bidi as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued in our view is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the produce of the assessee or not. When it was found by the CIT(Appeal) on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact finding.” I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 11 We also find support in this respect from the decision of Hon’ble Supreme Court in the case of Orissa Corporation Ltd. (supra) “That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under Section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. I f the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case.” Similar ratio has been laid down by the Hon’ble Mumbai High Court in the case of CIT Vs Orchid Industries (P) Ltd (supra) by holding that provisions of section 68 of the Act cannot be invoked for the reasons that the person has not appeared before the AO where the assessee had produced on records documents to establish genuineness of the party such as PAN, financial and bank statements showing share application money. 8. The value of the investments may increase or decrease during different time periods. Merely because during the earlier years the company was purchased by its directors at nominal rates, that factor on standalone basis is not enough to conclusively hold that the investments held in the said company were bogus, especially when the same were accepted in the year of their acquisition. Similarly to prove the sales of investment, the AO was required to discuss the details and evidences furnished by the assessee and was required to point out specific facts to hold the buyer companies as shell companies. But, I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 12 admittedly, no such exercise has been done by the Assessing officer. The Assessing Officer as well as CIT(A) has made/confirmed the impugned additions only on the basis of the retracted statement of the director of the assessee company namely Shri Pramod Kumar Lundia. However, as laid down by the various Higher Courts of the country, the retracted statement cannot be made sole basis for making the additions. The Jurisdictional Calcutta High Court in the case of Principal Commissioner of Income Tax Vs. Golden Goenka Fincorp Ltd. [2023]148 taxmann.com 313(Calcutta) has held that where assessing officer solely based on statement of assessee’s director recorded during search operation treated share application money received by assessee company as undisclosed income and made additions u/s 68 of the Act, since said statement was retracted and there was no cash trail or any other corroborative evidence or investigation brought on record by AO, impugned additions were liable to be deleted. Even the Hon’ble A.P. High Court in the case of “Naresh Kumar Agarwal” (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of “Shree Chand Soni vs. DCIT” (2006) 101 TTJ 1028 (Jodhpur). The Hon’ble Delhi High Court in the case of “CIT vs. Harjeev Agarwal” in ITA No.8/2004 vide order dated 10.03.16 has observed that a statement made under section 132(4) of the Act on a stand-alone basis, without reference to any other material discovered during search and seizure operation, would not empower the AO to make a block assessment merely because any admission was made by the assessee I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 13 during search operation. In the case of “Commissioner of Income Tax vs. Sunil Agarwal” (2015) 64 taxman.com 107 (Delhi-HC), the assessee therein, during the course of search, made a categorical admission under section 132(4) that the cash amount seized belonged to him and it represented undisclosed income not recorded in the books of accounts. The assessee did not immediately retract from the above admission but only during the assessment proceedings at a belated stage. In his retraction, the assessee stated that the surrender was made under a mistaken belief and without looking into books of account and without understanding law and that he had been compelled and perturbed by events of search and that the pressure of search was built so much that he had to make the surrender without having actual possession of the assets or unexplained investments or expenses incurred and that there was no such income as undisclosed. The Hon’ble Delhi High Court, after considering the fact and circumstances of the case, while dismissing the appeal of the revenue, observed that though the fact that the assessee may have retracted his statement belatedly, yet, it did not relieve the AO from examining the explanation offered by the assessee with reference to the books of account produced before him. Although, a statement under section 132(4) of the Act carries much greater weight than the statement made under section 133A of the Act, but a retracted statement even under section 132(4) of the Act would require some corroborative material for the AO to proceed to make additions on the basis of such statement. In the case of “Basant Bansal vs. ACIT” reported in (2015) 63 taxmann.com 199 (Jaipur Trib.), having somewhat similar facts, the assessee therein, during the search and seizure action u/s 132 of the Act, offered a summary discloser of income as undisclosed and the I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 14 department accepted the summary surrender of income and thereafter advance tax for the said surrendered of income was also deposited, but thereafter it was contended by the assessee that the surrender was made under threat or coercion and that no incriminating material was found during the search action. The stand of the department was that the admission was voluntary and was not under a mistaken belief of fact or law and that the assistance had enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it, observed that the assessee’s surrender was not based on any incriminating material and that the discloser being not voluntary and extracted by the department in creating a coercive situation cannot be relied solely to be basis of addition as undisclosed income. The co- ordinate bench of the Tribunal while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement which is not supported by the department with cogent corroborative material cannot be a valid basis for sustaining such ad-hoc addition. The co-ordinate Jaipur Bench of the Tribunal (supra) further observed that the issue of existence of pressure, threat, coercion during search proceedings is to be judged by reference to the existing facts and circumstances, human conduct and preponderance of possibilities. During the search proceedings, record relating thereto being in exclusive custody of the searching officers, it is their wish and will which prevails during the fateful period. That it is almost impossible for the assessee to adduce demonstrative evidence of I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 15 exerting such pressure. The co-ordinate bench of the Tribunal (supra) while holding so, apart from relying upon various decisions of the higher courts has also relied upon the decision of the Tribunal in the case of “Dy. CIT vs. Pramukh Builders” (2008) 112 ITD 179 (Ahd.) wherein it has been held that even in the absence of proof of coercion or pressure, the statement by itself cannot be taken as conclusive. Therefore, merely in the absence of proof of pressure, threat, coercion or inducement the statement cannot be held as conclusive and additions cannot be made by solely relying on a statement or a letter. The case of the assessee, before us, is on better footing as in this case, there is no delay in retraction of the statement. 9. Even the CBDT Letter No.286/2/2003-IT(Inv) dated Oct 3, 2003 in this respect read as under: “To The Chief Commissioners of Income Tax, (Cadre Contra) & All Directors General of Income Tax Inv. Sir, Subject: Confession of additional Income during the course of search & seizure and survey operation – regarding Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration 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 search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 16 Further, in respect of pending assessment proceedings also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders Yours faithfully,” A perusal of the above circular also shows that it is in the notice of the statutory controlling body of the Income Tax Authorities that the revenue officials are used to take confessional statements from the person searched under force, pressure or threat and that is why they have made it mandatory that additions solely on the basis on such statements should not be made and that corroborative evidences should be collected or obtained before making such additions. The circular of the CBDT is binding on the revenue officials. In the facts and circumstances of this case, when seen in the light of above case laws and CBDT circular, additions in this case cannot be said to be justifiably made. In view of the observations, the impugned additions are not sustainable and the same are accordingly ordered to be deleted. 10. In the result, the appeal of the assessee is hereby allowed. Kolkata, the 31 st August, 2023. Sd/- Sd/- [Rajesh Kumar] [Sanjay Garg] लेखा सदèय/Accountant Member ÛयाǓयक सदèय/Judicial Member Dated: 31.08.2023. RS Copy of the order forwarded to: 1. Sarla Finance Pvt. Ltd 2. ACIT, Central Circle-3(1), Kolkata 3.CIT(A)- I.T(SS)A. No.115 /Kol/2022 Assessment Year: 2018-19 Sarla Finance Pvt. Ltd 17 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches