The ACIT, Central Circle-4, Surat V. Shri Satyanarayan Sharma, Surat

ITSSA 175/AHD/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9541 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-02-2010
• Assessment Year: misc
• Appeal Filed On: 09-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: KK SHAH
• Keywords: Unexplained investment; Salary income; Block assessment; Documents seized
• Section: 131; 132

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI T.K. SHARMA, JM AND D.C.AGRAWAL, AM ASSTT. CIT, CEN. CIR.4, ROOM NO.508, AAYKAR BHAVAN, MAJURAGATE, SURAT. V/S . SHRI SATYANARAYAN SHARMA, D-101, INDRAPRASHT APARTMENT, CITYLIGHT, SURAT. PAN NO.AHBPS 1157N (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SHELLEY JINDAL, CIT, DR RESPONDENT BY:- SHRI K. K. SHAH, AR O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) RAISING FOLLOWING GROUNDS :- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.3,91,000/- MADE ON ACCOUNT OF UNACCO UNTED INVESTMENT MADE IN FLAT NO.D-101 IN INDRAPRASTH APA RTMENT. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.2,00,000/- MADE ON ACCOUNT OF UNACCO UNTED INVESTMENT MADE IN SHOP NO.5 AT HARIKRIPA MARKET. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWIN G SET OFF OF RS.2,00,000/- OUT OF THE ADDITION OF RS.4,00,000/- MADE ON ACCOUNT OF UNACCOUNTED INVESTMENT MADE IN SHOP NO.6 AT HARIKRIPA MARKET, AGAINST THE UNDISCLOSED SALARY IN COME OF IT(SS)A NO.175/AHD/2005 BLOCK PERIOD :97-98 TO 4.2.2003 2 RS.2,79,000/- AND DELETING THE REMAINING ADDITION O F RS.2,00,000/-. 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETIN G THE ADDITION OF RS.65,000/- MADE ON ACCOUNT OF UNACCOUN TED INVESTMENT MADE IN OFFICE AT 419, AT HARIKRIPA MARK ET. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 2. THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZ URE OPERATION UNDER SECTION 132 WAS CARRIED OUT AT THE BUSINESS AND RES IDENTIAL PREMISES OF KUNVAR AJAY GROUP ON 4.2.2003. THE ASSESSEE WAS P RODUCTION MANAGER OF KUNVAR AJAY DESIGNER SAREES (P) LTD., SU RAT. HE WAS ALSO SEARCHED ON THE SAME DATE. ON THE BASIS OF MATERIAL FOUND IN THE SEARCH AND ON THE BASIS OF STATEMENT RECORDED UNDER SECTIO N 132(4) AND U/S 142(1). THE AO PROPOSED THE FOLLOWING ADDITIONS :- UNACCOUNTED CASH AS DISCUSSED IN PARA 5.1 OF A.O. RS.87,440/- UNACCOUNTED SALARY AS DISCUSSED IN PARA 7 OF A.O. RS.2,79,000/- UNACCOUNTED INVESTMENT IN RESIDENTIAL PROPERTY AS P ER PARA 8.1 OF A.O. RS.3,91,000/- UNACCOUNTED INVESTMENT IN SHOPS & OFFICE AS PER PAR A 8.2 TO 8.4 OF A.O. RS.6,65,000/- TOTAL UNDISCLOSED INCOME RS.14,22,440/- 3. IN RESPECT OF ADDITION UNDER THE HEAD SALARY A O HAD FOUND FROM THE DOCUMENTS SEIZED IN THE SEARCH TOTAL SALARY REC EIVED DURING THE BLOCK PERIOD AT RS.11,70,000/- WHEREAS THE ASSESSEE HAD D ECLARED ONLY A SUM OF RS.9,69,000/- IN THE RETURNS OF INCOME. THUS THERE WAS A DIFFERENCE OF RS.2,09,000/- BEING THE SALARY RECEIVED OVER AND AB OVE WHAT WAS DECLARED IN THE RETURN. THE AO FURTHER FOUND ANOTHER SUM OF RS.70,000/- UNDER THE HEAD SALARY NOT DECLARED AND ACCORDINGLY A SUM OF RS.2,70,000/- WAS TAXED AS UNDISCLOSED INCOME IN THE BLOCK PERIOD UND ER THE HEAD SALARY. 3 4. DURING THE COURSE OF SEARCH PROCEEDINGS THE STAT EMENT OF ASSESSEE WAS RECORDED WHERE HE PROVIDED INFORMATION ABOUT IN VESTMENT MADE IN IMMOVABLE PROPERTY. THE RELEVANT QUESTIONS/ANSWERS ARE REPRODUCED BY THE AO BUT FOR THE SAKE OF CONVENIENCE THEY ARE ALS O QUOTED AS UNDER :- Q.11 PLEASE GIVE DETAILS OF ALL THE IMMOVABLE PROP ERTIES IN YOUR NAME AND IN THE NAME OF YOUR FAMILY MEMBERS. A.11 1) D/101, INDRAPRASTH FLAT, ACQUIRED IN 1998 FOR RS .7 TO RS.8 LACS IN MY NAME. 2) TWO SHOPS AT INDRAPRASTH GIVEN ON RENT TO A BARB ER SHOP. ACQUIRED IN 1998 FOR RS.7 TO 8 LACS FOR BOTH THE SHOPS IN MY NAME AND IN THE NAME OF MY WIFE. 3) ANCESTRAL HOUSE IN HARYANA. 4) ONE SHOP IN MAHENDRA GADH IN 2001-02 FOR RS.2 TO 2.5 LACS. 5) OFFICE AT 419, HARIKRUPA MARKET, MOTI BEGAMWADI, SURAT. AT PRESENT EMPTY, NO BUSINESS AND WAS ACQUIRED IN 1998 FOR RS.65,000/-. A.12 I AM HAVING SHARES OF RELIANCE INDUSTRIES. THE STATEMENT IS TEMPORARILY CONCLUDED AT 9.45 A.M. FOR THE COMMENCE MENT OF THE SEARCH PROCEEDINGS AND WILL BE RESUMED AFTER THE PH YSICAL SEARCH IS OVER. AFTER COMPLETION OF THE PHYSICAL SEARCH OF THE HOUSE OF THE ASSESSEE SHRI SATYANARAYAN V. SHARMA THE STATEMENT WAS RESUMED ON 4.2.03 AT 3.30 P.M. THUS ON THE BASIS OF HIS STATEMENT THAT A SUM OF RS .7 TO 8 LACS WAS INVESTED IN THE HOUSE NO.D-101 IN INDRAPRASTH, AS A GAINST A SUM OF RS.4,09,000/- DECLARED IN THE BOOKS INCLUDING INVES TMENT MADE BY HIS WIFE, A DIFFERENCE OF SUM OF RS.3,91,,000/- WAS CON SIDERED UNDISCLOSED INCOME INVESTMENT MADE BY THE ASSESSEE. SIMILARLY, THERE WAS INVESTMENT IN SHOPS WHICH WAS STATED TO THE EXTENT OF RS.7 TO 8 LACS. THE AO TOOK THE FIGURE OF RS.8 LACS AS ACTUAL FIGURE, COMPARED IT W ITH INVESTMENT RECORDED IN THE BOOKS AND FOUND THAT IN SHOP NO.5 TOTAL DECL ARED INVESTMENT WAS RS.2 LACS INCLUDING THE INVESTMENT MADE BY HIS BROT HER. IN SHOP NO.6 4 DECLARED INVESTMENT WAS AGAIN RS.2 LACS. IN THE OFF ICE PREMISES THERE WAS NO DECLARED INVESTMENT BUT INVESTMENT OF RS.65,000/ - WAS FOUND. ACCORDINGLY TOTAL DECLARED INVESTMENT IN SHOPS AND OFFICE WAS FOUND AT RS.4,00,000/- WHEREAS INVESTMENT AS PER STATEMENT W AS FOUND AT RS.8 LACS + RS.2 LACS + RS.65,000/- TOTALING TO RS.10,65,000/ -. REDUCING DECLARED INVESTMENT OF RS.4 LACS AO TREATED RS.6,65,000/- AS UNDECLARED INVESTMENT IN THE SHOPS AND OFFICE. 5. LD. CIT(A) DELETED THE ADDITION OF RS.3,91,000/- , RS.2 LACS RELATING TO SHOP NO.5 AND ANOTHER RS.2 LACS FOR SHOP NO.6 ON THE GROUND THAT THERE IS NO EVIDENCE THAT ASSESSEE HAD PAID ON MONEY. H E UPHELD THE CONTENTION OF ASSESSEE THAT MERELY ON THE BASIS OF STATEMENT OF ASSESSEE NO ADDITION CAN BE MADE. HE ALSO RELIED ON FOLLOWIN G JUDGMENTS:- A) DEEPCHAND & CO. VS. ACIT (MUM) 51 TTJ 421 B) JAGDISHCHAND GUPTA VS. ACIT (CHAND) 56 TTJ 336 C) INDIAN SEED HOUSE VS. ACIT (2000) 69 TTJ 241 (DEL) D) JAYA S. SHELLY VS. ACIT 69 TTJ 336 (MUM) HE ALSO DELETED THE ADDITION OF RS.65,000/- IN RESP ECT OF OFFICE AT 419 HARIKRUPA MARKET ON THE GROUND THAT THIS IS SET OFF AGAINST DECLARED UNDISCLOSED INCOME OF RS.2,09,000/- UNDER THE HEAD SALARY. 6. LD. DR SUBMITTED THAT FIRSTLY UNDISCLOSED SALARY INCOME FOUND FROM THE DOCUMENTS CANNOT BE AVAILABLE FOR INVESTME NT BECAUSE OF THE TIME GAP. ENTIRE DIFFERENCE IS FOUND DURING WHOLE O F BLOCK PERIOD WHEREAS INVESTMENT IN IMMOVABLE PROPERTIES WAS DONE IN 1998 -99. LD. DR ALSO SUBMITTED THAT ADDITIONS HAVE BEEN MADE ON THE BASI S OF STATEMENT WHICH IS AN EVIDENCE ITSELF. ASSESSEE IS THE BEST PERSON TO KNOW ABOUT HIS AFFAIRS AND ABOUT THE INVESTMENTS MADE BY HIM IN HIS PROPER TIES AND, THEREFORE, STATEMENT GIVEN BY HIM UNDER SECTION 132(4) WOULD C ONSTITUTE EVIDENCE, 5 WHICH SHOULD BE RELIED UPON. HE EXTENSIVELY AND REP EATEDLY REFERRED TO THE STATEMENT RECORDED UNDER SECTION 132(4). 7. ON THE OTHER HAND, LD. AR RELIED ON THE ORDER OF LD. CIT(A) AND SUBMITTED THAT NO ADDITION CAN BE MADE MERELY ON TH E BASIS OF STATEMENT IF NO OTHER EVIDENCE IS FOUND DURING THE COURSE OF SEARCH. HE, HOWEVER, FAIRLY ADMITTED THAT STATEMENT GIVEN BY THE ASSESSE E ON THE DATE OF SEARCH UNDER SECTION 132(4) HAS NOT BEEN RETRACTED AND NO COMPLAINT HAS BEEN FILED AGAINST THE OFFICER AND THAT STATEMENT WAS R ECORDED UNDER THREAT OR COERCION. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW STATEMENT UNDER S ECTION 132(4) CONSTITUTES AN EVIDENCE AND CAN BECOME THE BASIS FO R ADDITION IN THE BLOCK ASSESSMENT. THE STATEMENT IS RECORDED ON OATH AND, THEREFORE, IT CANNOT BE BRUSHED ASIDE UNLESS CONTRARY MATERIAL IS PLACED ON RECORD. ONCE STATEMENT ON OATH IS GIVEN BY THE ASSESSEE ABOUT HI S INVESTMENT THEN PRESUMPTION IS RAISED AGAINST HIM ABOUT THE CORRECT NESS OF THE STATEMENT AND TRUTHFULNESS OF ITS CONTENTS. IF SUBSEQUENTLY T HE ASSESSEE WANTS TO MAKE A TURN-AROUND THEN HE HAS TO GIVE CONCRETE AND CONVINCING BASIS SUCH AS IGNORANCE OF THE FACTS OR NOT BEING IN POSI TION TO KNOW THE CORRECT FACTS AND NOT BEING IN POSITION TO STATE WHAT HAS B EEN STATED OR STATEMENT HAS BEEN TAKEN UNDER THREAT/COERCION. IT IS NOT A U NIVERSAL RULE THAT STATEMENT RECORDED UNDER SECTION 132(4) TAKEN ON OA TH HAS TO BE REJECTED, OUT-RIGHTLY BECAUSE NO EVIDENCE IN SUPPORT OF SUCH STATEMENT IS FOUND IN THE SEARCH. THERE ARE TRANSACTIONS OR EVENT WHICH M AY BE IN THE EXCLUSIVE KNOWLEDGE OF THE ASSESSEE AS EITHER THE ASSESSEE IS PRIVY TO SUCH SECRET TRANSACTION OR EVENTS OR THEY PERTAIN TO ASSESSEE H IMSELF. IT IS NOT NECESSARY THAT RECORDING OF THE TRANSACTIONS SHOULD ALWAYS BE FOUND IN THE 6 SEARCH TO SUPPORT THE STATEMENT. IT IS NOT LEGALLY PROPER TO REJECT THE STATEMENT GIVEN BY THE ASSESSEE ON OATH ABOUT HIS P ERSONAL SECRET TRANSACTIONS FOR WHICH THERE WILL NOT BE ANY EVIDEN CE IN BLACK AND WHITE. BUT WHERE A WITNESS GIVES A STATEMENT AND THERE IS VERY LITTLE POSSIBILITY THAT HE COULD BE PRIVY TO THE EVENT OR HE WAS IN A POSITION TO KNOW THE CORRECT STATE OF AFFAIRS THEN RELIANCE ON SUCH STAT EMENT ALONE WILL NOT BE PROPER. A WITNESS MAY RETRACT THE STATEMENT OR MAKE A TURN AROUND AFTER KNOWING CORRECT STATE OF AFFAIRS BUT IT ALL DEPENDS UPON THE PARTICULAR CASE AND NO UNIFORM RULE CAN BE FRAMED EITHER FOR REJECT ING THE STATEMENT OR ACCEPTING IT WITHOUT THERE BEING ANY CORROBORATION. HOWEVER, IN THE STATEMENT GIVEN ON OATH IT HAS TO BE FURTHER SEEN T HE EXTENT, NATURE AND RELIABILITY OF CONTENTS WHICH BECOME BASIS FOR MAKI NG THE ADDITION. IF THE INFORMATION AVAILABLE FROM STATEMENT UNDER SECTION 132(4) IS CURSORY, VAGUE, OR HYPOTHETICAL OR PRESUMPTIVE THEN WEIGHTAG E GIVEN TO SUCH INFORMATION IS CONSIDERABLY REDUCED. THE INFORMATIO N WHICH CAN BE RELIED WITHOUT ANY SUPPORT FROM CORROBORATIVE EVIDENCE SHO ULD BE EXACT, SPECIFIC SUPPORTED BY ANSWERS TO GRILLING QUESTIONS , AND ALSO BY KNOWLEDGE ABOUT PRE AND POST EVENTS OF THE TRANSACT IONS IN QUESTION. FOR EXAMPLE IF, AS IN THE PRESENT CASE, ASSESSEE STATES THAT HE HAS ACQUIRED FLAT NO.D101 FOR RS.7 TO 8 LACS THEN FURTHER INFORMATION REQUIRED TO BE EXTRACTED FROM THE ASSESSEE WAS WHAT WAS THE SPECIF IC AMOUNT FOR WHICH THE FLAT WAS PURCHASED, WHAT WAS THE DECLARED CONSI DERATION AND UNDECLARED CONSIDERATION PAID, WHAT WAS THE SOURCE OF UNDECLARED CONSIDERATION, WHEN IT WAS PAID ALONG WITH DECLARED CONSIDERATION OR PRIOR OR SUBSEQUENTLY, WHETHER THERE WAS ANY WITNES S WHEN UNDECLARED CONSIDERATION WAS PAID, WHAT WAS THE VALUATION OF S TAMP VALUATION AUTHORITIES OR CIRCLE RATES, WHETHER ANY AGREEMENT WAS FRAMED SHOWING UNDECLARED CONSIDERATION ETC. ETC. THE REPETITIVE A ND ALTERNATIVE QUESTIONS BRING OUT CLEARLY THE UNDISCLOSED INVESTMENT ACTUAL LY MADE BY THE 7 ASSESSEE AND IF IT IS SO DONE THEN THIS WOULD BE EN OUGH OF EVIDENCE ON THE BASIS OF WHICH ADDITION OF UNDISCLOSED INVESTMENT M ADE BY THE ASSESSEE HIMSELF CAN BE SUSTAINED. BUT WHERE A CASUAL AND VA GUE AND ONLY SINGLE QUESTION IS RAISED AND SIMILARLY A VAGUE AND CASUAL REPLY IS RECEIVED FROM THE ASSESSEE LIKE IN THE PRESENT CASE THEN THIS ALO NE CANNOT BE BECOME THE BASIS FOR SUSTAINING THE ADDITION. WE NOTICE THAT A UTHORITIES HAVE RECORDED THE STATEMENT OF THE ASSESSEE ON SEVERAL OTHER OCCA SIONS BOTH UNDER SECTION 132(4) AS WELL AS UNDER SECTION 131 ON 4.2. 2003, 21.4.2003 AND 30.4.2003. THOUGH IN ALL 14 PAGES OF STATEMENTS WER E RECORDED BUT THERE ARE NO FURTHER QUESTION IN RESPECT OF INVESTMENT OT HER THAN WHAT IS REPRODUCED BY THE AO. IN OUR CONSIDERED VIEW SUCH V AGUE, UNSPECIFIC AND CASUAL QUESTIONS AND ANSWERS DO NOT BECOME SUFFICIE NT EVIDENCE FOR SUSTAINING ADDITION ABOUT UNDISCLOSED INVESTMENT OR PAYMENT OF ON MONEY. THEREFORE, WE UPHOLD THE ORDER OF LD.CIT(A) WHO HAS DELETED THE ADDITION BY NOT RELYING ON ABOVE QUESTIONS AND ANSW ERS OF THE ASSESSEE. TELESCOPING EFFECT GIVEN BY THE LD. CIT(A) FOR INVE STMENT OF RS.65,000/- IS ALSO IN ORDER, NO FAULT IS POINTED BY THE LD. DR . 9. AS A RESULT, WE CONFIRM THE ORDER OF LD. CIT(A) AND DISMISS THE APPEAL OF REVENUE. SD/- SD/- (T.K. SHARMA) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 12/2/2010 MAHATA/- ORDER PRONOUNCED IN OPEN COURT ON 12/2/2010 8 COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD