The Deputy Commissioner Of Income Tax, Central Circle- 1, Mangaluru V. Shabana Shareef, Mangalore

MA 84/BANG/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6150 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-12-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 22-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Loose papers; Principle of natural justice; Retraction
• Section: 131; 132; 143(3); 133A; 153A; 119(2)(b); 264; 254(2); 13; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER MP Nos.79 & 80/Bang/2021 [in ITA Nos. 2626 & 2627/Bang/2019] Assessment years : 2015-16 & 2016-17 The Deputy Commissioner of Income Tax, Central Circle 1, Mangalore. Vs. Shri Ahmed Shareef, Prop. Shauhan Traders, D.No.35-2-256, Imtiyaz Manzil, Karmbar, Bajpe, Mangaluru. PAN : ACAPA 5956F APPLICANT RESPONDENT MP Nos.81 to 84/Bang/2021 [in ITA Nos. 2628 to 2631/Bang/2019] Assessment years : 2013-14 to 2016-17 The Deputy Commissioner of Income Tax, Central Circle 1, Mangalore. Vs. Smt. Shabana Shareef, Prop. Golden Supari Traders, D.No.20-1-713, Sabeena Complex, Azzizuddin Road, Bunder, Mangaluru. PAN : AKTPS 3681C APPLICANT RESPONDENT Appellant by : Shri Srinivas Kamath, CA Respondent by : Ms. Priyadarshini Baseganni, Jt.CIT(DR)(ITAT), Bengaluru. Date of hearing : 12.11.2021 Date of Pronouncement : 20.12.2021 MP Nos.79 to 84/Bang/2021 Page 2 of 25 O R D E R Per Chandra Poojari, Accountant Member These are miscellaneous petitions filed by the assessee through which revenue seeks rectification/recall of the order of the Tribunal dated 22.3.2021 in ITA Nos.2626 to 2631/Bang/2019. 2. The first issue in MP Nos. 79, 81, 82, 83 & 84/Bang/2021 is with regard to the finding of the Tribunal that income on unexplained deposit to bank account of the assessee to be estimated at 2% of the cash deposit into bank account instead of 5% of the amount sustained by the CIT(Appeals). According to the ld. DR, the AO estimated income at 12%, contrary to which the CIT(A) estimated at 5%. On appeal by the assessees as well as department, the Tribunal limited the estimation of income @ 2% and allowed the appeals of the assessee and dismissed the appeals of the revenue which is improper. She submitted that the assessee himself declared income at 3.44% of Gross Profit and 1.41% of Net Profit and estimation of income @ 2% on undisclosed deposits in the bank account falls below the profit declared by the assessee in his books of account. As such, the order of the Tribunal be recalled. 3. The ld. AR relied on the order of the Tribunal. 4. We have heard both the parties and perused the material on record. In this case, the Tribunal decided the issue by placing reliance on the earlier order of the co-ordinate Bench in the case of M.A. Siddique Vs. DCIT in ITA Nos.62 to 66/Bang/2020 Dt.14.08.2020 as follows:- “17. We have considered the rival submissions. We find that in Para 10 on page 61 of the assessment order, the AO has noted that total deposits in the blank accounts of the assessee in the form of cash deposit and by way of clearing in the A. Y. 2015 – 16 is Rs. 120,89,582/- and declared turnover is Rs. 55,20,720/- MP Nos.79 to 84/Bang/2021 Page 3 of 25 and he concluded that such excess deposit in the bank account Rs. 65,68,862/- is unaccounted income of the assessee. The AO has observed on the same page of the assessment order that cash deposit in Bhatkal Urban Cooperative Bank and IDBI Bank include those made under the duplicate PAN of the assessee Rs. 56,02,200/- although the assessee claims that the said PAN was never used. In our considered opinion, the basis adopted by the AO to make this addition is not a valid basis. This is undisputed fact that the books of account of the assessee are audited. This is also the claim of the assessee that all the entries in the various bank accounts are duly entered in the books and there is no concrete adverse finding of the AO that a particular bank account is not appearing in the books of the assessee or that some specific entries of the declared bank accounts is not appearing in the books of the assessee. If all the bank accounts of the assessee opened with original PAN or duplicate PAN are appearing in the books and all entries in such bank account is appearing in the books, it cannot be said that there is any unexplained deposit in bank merely for this reason that it exceeds the declared turnover. Learned CIT (A) has very correctly observed that the entire cash deposit of the year may not be the turnover of the particular year and he also observed very correctly that it may contain cash receipts from the credit sales of the earlier years, contra entries, loans and advances etc. But after making these correct observations, he jumped to this incorrect conclusion that the assessee has failed to lead any evidence in this regard before him or before the AO and therefore, He has no option but to confirm this addition. In our considered opinion, when there is no specific finding of the AO that a particular bank account is not appearing in the books of the assessee or that some specific entries of the declared bank accounts is not appearing in the books of the assessee, this cannot be said that that there is any unexplained deposit in bank merely for this reason alone that it exceeds the declared turnover. In this regard, these observations of CIT (A) clinches the issue in favour of the assessee that entire cash deposit of the year may not be the turnover of the particular year and he also observed very correctly that it may contain cash receipts from the credit sales of the earlier years, contra entries, loans and advances etc. Under these facts, we hold that there is no valid basis of this allegation of the AO that there is unaccounted cash income simply on this basis that deposits in MP Nos.79 to 84/Bang/2021 Page 4 of 25 bank accounts exceed the declared turnover. We delete this addition. This Ground No. 4 is allowed.” 5. The above order of the coordinate Bench of this Tribunal was binding which was duly followed by the Tribunal. If the department has any grievance, the remedy lies elsewhere and not before this Tribunal. Being so, we decline to entertain this ground raised by the revenue in all the petitions and the same is rejected. 6. In MP Nos.80, 82, 83 & 84/Bang/21, the ground raised is regarding the direction of the Tribunal to the AO to recompute the income after overlooking the income declared by the assessees in the statement recorded u/s. 132(4) of the Act. 7. In these assessment years, the assessee declared income in the statement recorded u/s. 132(4) of the Act as follows : Smt. Shabana Shareef Assessment Year Amount Rs. 2014-15 Rs.45 lakhs 2015-16 Rs.50 lakhs 2016-17 Rs.5 lakhs. Shri Amar Shareef 2016-17 Rs.1.00 Crore 8. The assessee declared this income in the statement recorded u/s. 132(4) of the Act. The searched team found certain incriminating documents during the course of search action in these cases. Thereafter the assesses filed the Return of Income declaring specific undisclosed income with regard to incriminating seized material found during the course of search action. The Assessing Officer assessed the undisclosed income in addition to the income voluntarily declared by these assesses in the statement recorded u/s. 132(4) of the Act. In our opinion, the Assessing MP Nos.79 to 84/Bang/2021 Page 5 of 25 Officer made independent addition based on the seized material found during the course of survey action, there cannot be income addition on account of voluntary disclosure made by the assesses. Hence, in our opinion, it is appropriate to set off of income declared by the assessee in the statement recorded u/s. 132(4) of the Act out of undisclosed income computed by the Assessing Officer. Accordingly, we direct the Assessing Officer to recompute the income after overlooking the income declared by the assessee in the statement recorded u/s.132(4) of the Act. Otherwise it amounts to double addition for the same lapse found in the Books of Accounts of the assesses. 9. Further, the Tribunal recorded the findings as follows:- “6.1 .......... the CBDT Circular No. 14(XL-35) of 1955, dated 11.4.1955 as per which the lower authorities should have guided the assessee as to the correct proposition of the law regarding taxability of capital gain. For clarity, we reproduce the contents of the said Circular:- " Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a tax payer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assesses on whom it is imposed by law, officers should — (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; MP Nos.79 to 84/Bang/2021 Page 6 of 25 (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. 6.2 Further the ld.AR placed reliance on the CBDT F.No.286/2/2003/IT(INV) Dt.10.03.2003, which clearly refrains the Assessing Officer recording confessional statement during the course of search and seizure and survey operations and also warns the Assessing Officer not to admit to obtain any confessional statement as to the undisclosed income, any action contrary shall be viewed adversely. It also states that the Assessing Officer should rely upon evidences and material gathered during the course of search. In the present case, the AO made additions in this assessment year based on the statement recorded u/s. 132(4) after making independent addition on the basis of incriminating material found during the course of search action. It cannot be appreciated. For this purpose, it is pertinent to mention the ratio laid down by the various Courts which are as under:- (i) The Hon’ble Delhi High Court in the case of CIT v. Bharat General Reinsurance Co. Ltd., 83 ITR 303 (Del) held as follows:- “It was true that the assessee itself had included that dividend income in its return for the year in question, but there was no estoppel in the Income-tax Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resiled from the position which it had wrongly taken while filing the return. Quit apart from it, it was incumbent on the income-tax department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly included the income in its return for a particular year, it could not confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. Therefore the income from dividend was not assessable during the assessment year 1958-59, but it was assessable in the assessment year 1953-54. It could not, therefore, be taxed in the assessment year 1958-59.” MP Nos.79 to 84/Bang/2021 Page 7 of 25 (ii) The Hon’ble Bombay High Court in the case of Nirmala L. Mehta vs. A. Balasubramaniam, C.I.T. (2004) 269 ITR 1 (Bom) held that there cannot be any estoppel against the statute. Article 265 of the Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. (iii) The Hon’ble Supreme Court in the case of CIT, Madras vs V. MR. P. Firm, Muar reported in 56 ITR 67(SC) held as under:- "If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under the taxing statute or it is not. If it is not, the Income-tax Officer has no power to impose tax on the said income." 6.3 As we discussed earlier, the addition shall be confined to the incriminating material found during the course of search action. Accordingly, we direct the Assessing Officer not to consider the additions made on the basis of statement recorded u/s. 132(4) of the Act. This ground of appeal by the assesses is allowed. " 10. Against these findings, the Revenue has filed the present petitions to recall/rectify the order of the Tribunal. 11. The ld. DR submitted that the ITAT has directed the AO to recompute the income offered after overlooking the income declared by the assessee in the statement recorded u/s.132(4) of the Act. Further, it is mentioned, otherwise, it amounts to double addition for the same lapse found in the Books of Accounts of the assessee. She submitted that the above two statements in the order of the Tribunal are not clear as to whether the income declared by the assessee has to be reduced or no addition is to be made towards the declaration made by the assessee MP Nos.79 to 84/Bang/2021 Page 8 of 25 u/s.132(4) of the Act and therefore a miscellaneous petition is filed with the following ground :- "the ITAT erred in holding that the assessee declared his income in the statement recorded u/s.132(4) of the Act which is not specific to any issue and accordingly, 1TAT's direction to recompute the income after overlooking the income declared by the assessee in the statement recorded u/s.132(4) of the Act". 12. If the direction of the Tribunal is to reduce the declared income u/s.132(4) out of the returned income, then, it is submitted that the decision of the Tribunal is beyond the ground of appeal filed by the assessee. The assessee's grounds of appeal are reproduced:- “(i) The impugned orders of the authorities below are opposed to law and facts of the case; (ii) The impugned orders are against the provisions of Law/Act and have been made in violation of the principles of natural justice and equity; (iii) On the facts and circumstances of the case, the Authorities below erred in levying/confirming the additions with respect to alleged undervaluation of property on estimation basis (ITA Nos.2625, 2727 & 2629/Bang/2019 only). (iv) On the facts and circumstances of the case, the Authorities below erred in in not giving telescoping effect by netting income computed under Asset method and income computed under Income Method; (v) On the facts and circumstances of the case, the Learned Assessing Officer erred in not giving deduction u/s.132(4) of the Act towards income declared by the wife of the Appellant; (vi) On the facts and circumstances of the case, the Authorities erred in charging interest u/s.234A. 2348 & 234C of Rs.1.89 420/-; MP Nos.79 to 84/Bang/2021 Page 9 of 25 (vii) The appellant craves for leave to. add to, delete from or amend the grounds of appeal.” 13. The ld. DR submitted that nowhere in the grounds of appeal, the assessee has asked for the reduction of income filed in the return of income. Further, it is to be noted that the assessee declared Rs.1 crore income during the course of search and accordingly filed the return. Subsequently, the assessee has not retracted his statement before the AO and has never made any plea for reduction of income before the CIT(A). No such plea has been made by the assessee either before the CIT(A) or before the ITAT. 14. She submitted that in ground No.5 of form No.36, the assessee has mentioned as under :- (i) "on the facts and circumstances of the case. the Authorities below erred in not giving telescoping effect by netting income computed under Asset method and income computed under Income Method". 15. According to her, this ground No.5 is towards the telescoping benefit and not for reduction of income from the returned income. If the ground is taken as for reduction of income from the income returned, then it is not covered by the provisions of Section 253 of the Act. She drew our attention to section 253 of the Act which states as follows:- " ....... any assessee aggrieved by any of the orders......”. 16. She submitted that in the instant case, there is no scope for the assessee to be aggrieved by the order of the AO with regard to the income disclosed by the assessee himself. Nowhere he has made any application before the AO retracting his disclosure. Therefore, the only grievance of the assessee was that the AO did not telescope the benefit MP Nos.79 to 84/Bang/2021 Page 10 of 25 towards the additions made out of the disclosed income and went ahead to make addition over and above the income declared by him. 17. It was further submitted by the ld. DR that the assessee cannot retract from his statement u/s.132(4) or the income returned u/s.153A or 139(1) by appeal u/s.253 of the Act without making representation for such retraction before the AO. In such circumstances, if the assessee feels that he has offered certain income on a wrong footing or wrong belief, the right recourse available to the assessee would be to go under 119(2)(b) of the Act and even if the assessee would have to plead for his retraction of his returned income before the Tribunal, the matter may be remitted back to the AO for verification of assessee's retraction vis-a-vis the seized material and other material available on record. Without any basis, the assessee cannot retract on the ground that the AO made independent addition based on the seized material over and above the income disclosed by the assessee. 18. In view of the above, the ld. DR submitted as under:- (i) The direction of the Hon'ble ITAT to overlook the income disclosed by the assessee u/s.132(4) is beyond the appeal made by the assessee in the grounds of appeal; (ii) Without prejudice, even if the assessee has made oral submissions clarifying his grounds before the Tribunal, then the assessee's request is beyond the jurisdiction of Section 253 as he has not made any application of retraction before the AO. Therefore, the matter needs to be remitted to the AO since the income offered by the assessee has been taken into the books of accounts and the additions made by the AO are over and above the assets disclosed by the assessee in the Balance Sheet. For such reasons, the AO has not provided the telescoping benefit. Just because the AO has made addition over and above the income declared MP Nos.79 to 84/Bang/2021 Page 11 of 25 by the assessee, the Tribunal is not right in reducing the income returned by the assessee without any clear application made for such reduction/retraction by the assessee. (iii) The income disclosed u/s.132(4) on a lumpsum basis is a valid income and the case laws mentioned in the ITAT's order with regard to estoppel are not applicable in this case as the income is offered by the assessee to cover up the discrepancies noticed during the course of search for which he was not able to provide satisfactory explanation. The assessee has made clear and categorical statement that he is voluntarily offering Rs.1 crore to cover up all the discrepancies noticed during the course of search. Such declaration is also reiterated by the assessee during the penalty proceedings vide his statement dated Nov 2020 which is much after he filed appeal before the ITAT. 19. It was further submitted by the ld. DR that the order of the ITAT is not in consonance with the decision of the Hon'ble Apex Court in the case of Bannalal Jat Constructions (P) Ltd. v. ACIT (2019) 106 taxmann.com 128 (SC) wherein it is held that the declaration made u/s.132(4) is a valid one and if there is any retraction, the burden lies on the assessee to show that the admission made earlier u/s.132(4) was wrong and such retraction is to be supported by strong evidence. In the instant case, the assessee has not given any details or documents to show that his earlier declaration was wrong. In fact, the assessee has never retracted his statement. 20. According to her, since the order of the Hon'ble ITAT in giving relief to the assessee is not in consonance with the Supreme Court decision in the above mentioned case, the order of the Tribunal has to be treated as a mistake apparent from record and rectified. 21. The ld. DR submitted, therefore, it is clear that the assessee has never retracted from his disclosure and his only grievance is that the AO MP Nos.79 to 84/Bang/2021 Page 12 of 25 should not have made additions over and above his declaration. Therefore, it is to be held that the disclosure made by the assessee has to be held as valid as there is no retraction before the AO and the oral submissions by the assessee before the Tribunal is not supported by any evidences or details as to how the declaration made by the assessee was incorrect. 22. In view of the above, the ld. DR prayed that there is a mistake in the order of the ITAT in going beyond the grounds of appeal filed by the assessee and giving relief to the assessee which is not claimed by the assessee. Without prejudice, even if the assessee has made application for withdrawing his declaration. it is requested that the matter may be remitted back to the AO to verify the genuineness of such retraction vis-a-vis the material available on record. 23. With regard to the validity of declaration made by the assessee u/s.132(4), she relied on the following case laws wherein it is held that the clear and categorical declaration given by the assessee u/s.132(4) is to be considered as valid and not to be considered as mere offer of income under duress. Such declaration need not be linked one-to-one to seized material:- (i) Decision of the Hon'ble Madras High Court in Sri B. Kishore Kumar vs. DCIT TC(A) Nos.738 to 744 of 2014 dated 03.11.2014; and (ii) Decision of the Hon'ble Supreme Court in the case of Dayawanti v. CIT in IA.No.62022/2017 dated 03.10.2017. 24. The ld. AR relied on the order of the Tribunal and submitted that there is no error in the order of the Tribunal so as to rectify the same. 25. We have heard both the parties and perused the material on record. In these cases, there was search conducted at the residential premises of the assessee on 24.11.2015 at Door No.35-2-256, Imtiaz Manzil, MP Nos.79 to 84/Bang/2021 Page 13 of 25 Karambar, Bajpe, Mangalore. There was also survey u/s. 133A of the Act on 24.11.2015 at Golden Supari Traders at business premises at Mohd. Ali Road, Bandar, Mangalore. Consequent to this search and survey action, Notice u/s. 153A was issued to these two assessees on 27.10.2016. Thereafter assessments were framed for the above Assessment Years under consideration u/s. 153A r.w.s. 143(3) of the Act. 26. During the course of search, statement was recorded u/s. 132(4) on 22.12.2015. For clarify, we reproduce one of the declaration u/s. 132(4) recorded from Mrs. Shabana Sharief below:- “ Date : 22 nd December, 2013 From Mrs ShabanaSharief, Prop: M/s Golden Super' Traders, D No 20-2-232, Muhammed Ali Road, Bunder, MANGALORE 575001. To The Asst Director of Income Tax (Inv) Central Revenue Budding, Attavar, MANGALORE 575001. Sir, Sub: Declaration under Section 132(4) of the Income Tax Act, 1961 in connection with Search. Proceedings / PAN : AKTPS3681C. I wish to state that a search under Section 132 of the Income Tax Act, 1961 (the Act) was conducted in my premises on 24-11- 2015. I wish to state that I am assessed to tax under PAN: AKTPS3681C and I have filed my returns of income electronically upto date till AY 2015-16. I have regularly filed MP Nos.79 to 84/Bang/2021 Page 14 of 25 my return of income declaring income from business as Areca(Supari) Dealer; Commission Dealer, Bus Operator and Transporter after submitting my books Account to tax audit from time to time. In the course of search proceedings, I have been asked to provide explanations to transactions stated to be not found recorded in regular books of account. I am a sole-proprietor, woman entrepreneur and being semi-literate, have been relying on my administrative staff and part time consultants to maintain books of account, vouchers and ensure compliance of tax matters. In the absence of concrete evidence to co-relate any such transactions to my regular books of account, I am hereby surrendering as income under Section 132(4) of the Act as follows:- I hereby offer an income of Rupees Forty five Lakhs towards income from business and investments earned during the year 2013-14, Rupees Fifty Lakhs towards income from business and investments earned during the year 2014-15 and Rupees Five Lakhs towards income from business and investments earned during the current year 2015-16. The said surrender of income is to cover all omissions and commissions in recording of transactions and this statement under Section 132(4) is being made to amend/improve all earlier declarations/ statements made by me either explicit or implied declaring income in the course of search proceedings. I hereby state that the above income has been surrendered to cover all omissions/commissions in recording my business operations. I seek your permission to regularise any inconsistencies/mistakes in the declared income on detailed verification of seized records. A separate application is being hereby made for providing copies of seized material in order to process the same and substantiate the manner of quantification of surrendered income. I hereby undertake to pay the taxes on the surrendered income by way of advance tax before the due date of payment of advance tax for this year and by way of self-assessment tax before due date to furnish returns of income. MP Nos.79 to 84/Bang/2021 Page 15 of 25 I state that I am making this surrender declaration voluntarily, to co-operate in the proceedings by the Income Tax Department connected with the Search Proceedings, to buy peace and settle disputes if any regarding connected findings in order that no penalties are levied and no other penal proceedings are conducted against me. Being a semi-literate person and woman entrepreneur operating as a sole-proprietor with limited administrative support, I once again request your guidance and co-operation in conducting my business affairs in a law abiding manner and in discharging my statutory and contractual liabilities correctly. Yours faithfully, For Golden Supari Traders, Sd/- ShabanaSharief – Proprietor” 27. Consequently, the assessees offered income as per statement recorded u/s. 132(4) in these assessment years. However, the AO made addition on the basis of seized material also. As seen from the 4 th para of the declaration u/s. 132(4) of the Act, the assessee offered additional income vide letter dated 22.12.2015 as follows:- “I hereby offer an income of Rupees Forty five Lakhs towards income from business and investments earned during the year 2013-14, Rupees Fifty Lakhs towards income from business and investments earned during the year 2014-15 and Rupees Five Lakhs towards income from business and investments earned during the current year 2015-16. The said surrender of income is to cover all omissions and commissions in recording of transactions and this statement under Section 132(4) is being made to amend/improve all earlier declarations/ statements made by me either explicit or implied declaring income in the course of search proceedings. I hereby state that the above income has been surrendered to cover all omissions/commissions in recording my business MP Nos.79 to 84/Bang/2021 Page 16 of 25 operations. I seek your permission to regularise any inconsistencies/mistakes in the declared income on detailed verification of seized records. A separate application is being hereby made for providing copies of seized material in order to process the same and substantiate the manner of quantification of surrendered income.” 28. Thus it means that the offer made by the assessee is conditional and it is not unconditional surrender of income. The AO, however, in addition to the surrender of income u/s. 132(4), made additions on the basis of seized material also. On this count, the Tribunal observed [in para 6 last portion of the order) that the AO made independent additions based on seized material found during the course of search action, thereafter there cannot be any additions on account of voluntary disclosure made by the assessee u/s. 132(4) of the Act. Further it was directed by the Tribunal to set off of the income declared by the assessee in the statement recorded u/s. 132(4) of the Act out of undisclosed income computed by the AO. 29. In the present case, it is specifically pleaded by the assessee in the statement recorded u/s. 132(4) that surrender of income covers all omissions or commissions in recording of transactions in their books of accounts and also stated in the statement that by this offer the assessee wants to regularize any inconsistencies / mistakes in the declared income on detailed verification of seized records. In other words, surrender was made to cover all omissions and commissions committed by the assessee in his business transactions. Being so, it is observed that the AO confine to the addition either on statement recorded u/s. 132(4) or seized material unearthed during the course of search action. He cannot consider the income offered u/s. 132(4) and also consider the seized material and make addition on both the counts. On this reason, the Tribunal observed it amounts to double addition and directed the AO to set off income declared by the assessee in the statement recorded u/s. 132(4) out of undisclosed MP Nos.79 to 84/Bang/2021 Page 17 of 25 income computed by the AO on the basis of assessee’s seized material. There is no ambiguity in these findings of the Tribunal. 30. Further the Act empowers the AO to record the statement of the assessee u/s. 132(4) when a search is conducted under the relevant provisions of the Act and the statement recorded u/s. 132(4) enables the authority not only to rely upon the statement in the assessment proceedings, but also in other proceedings that are pending. However, the Tribunal after considering the statement recorded u/s. 132(4) and also the addition made by the AO from the seized material observed that if both undisclosed income is sustained, it amounts to double addition. In other words, the AO is prohibited from adopting such a contrary view on the reason of the maxim “approbate and reprobate” i.e., the principle whereby a person cannot both approve and reject an instrument or a document. When the AO accepted the surrender of income by the assessee u/s. 132(4) as offered by the assessee, he is precluded from making addition on the basis of seized material. Similarly, if he makes an addition on the basis of seized material, he is precluded from making addition on the basis of surrender of income of the assessee u/s. 132(4) of the Act. The Tribunal has never observed that the statement u/s. 132(4) has no evidentiary value. 31. The statement u/s. 132(4) got diluted on the reason that the AO proceeded to make addition on the basis of the seized material. Hence it was directed to delete the income declared by the assessees vide the statement recorded u/s. 132(4) out of the undisclosed income computed by the AO. 32. Now the ld. DR wants to recall the earlier order of the Tribunal and readjudicate the same in the light of the judgment of Supreme Court in the case of Bannalal Jat Constructions (P) Ltd. v. ACIT, 418 ITR 291 (Raj). In MP Nos.79 to 84/Bang/2021 Page 18 of 25 our opinion, this judgment was delivered on different set of facts wherein the question before the Rajasthan High Court was as follows:- “"Whether under the facts and circumstances of the case and in law the ld. ITAT was justified in upholding the additions made by the Assessing Officer merely on the basis of statements recorded u/S 132(4) of the Income Tax Act, 1961 ignoring the presumption laid down u/S 292C of the Income tax Act, 1961 and the evidences brought on record by the Appellant?” 33. While answering this question, the High Court held as under:- “19. Reverting back to the present case, the ITAT, on the basis of such statement of Shri Bannalal Jat, concluded that he was managing his business affairs of both his proprietary concern as well as appellant-company from his residence and that in the absence of individual cash-book of respective concerns and other details maintained by him, it is not possible to identify whether the cash so found belongs to the proprietary concern or to the assessee company. Subsequently, when the statement under Section 132(4) of the IT Act was recorded on 10.10.2014, which was concluded at his residence, Shri Bannalal Jat categorically admitted that the cash amount of Rs.1,21,43,210/- belonged to his company M/s. Bannalal Jat Construction Private Limited and the same was its undisclosed income. Thereafter another statement under Section 132(4) of the IT Act was recorded at his business premises on 11.10.2014. In reply to question No. 8, he was asked to explain the source of cash amounting to Rs.3,380/-found at his office and Rs.1,21,43,210/- found at his residence, he submitted regarding the amount of Rs.1,21,43,210/- found at his residence that he was unable to give any explanation and admitted that he was in the business of civil construction and in such business, various expenses have been inflated and shown in the books of accounts, and that the income so generated on account of such inflation in expenses is represented in the form of cash was found at his residence. This undisclosed income belonged to his company M/s Bannalal Jat Construction Pvt. Ltd. In response to question no. 11 wherein he was asked to provide any other explanation which he wishes to provide, he submitted that pursuant to search operations where various documents, loose papers, entries, cash, investment, advances and individual MP Nos.79 to 84/Bang/2021 Page 19 of 25 expenditure details have been found and taking all that into consideration, he surrendered Rs.4,01,43,210/- as his undisclosed income. He also categorically stated that the said disclosure is in the hands of M/s Bannalal Jat Construction Private Limited in respect of unexplained cash amounting to Rs.1,21,43,210/- and Rs.2,50,00,000 and Rs.30,00,000/- totalling to Rs.2,80,00,000 in his individual capacity. 20. Subsequently, on 04.12.2014 during the post-search proceedings, statement of Shri Bannalal Jat was again recorded under Section 131 of the IT Act, wherein he was again confronted with the various documents seized and cash found during the course of search and the consequent surrender made by him in respect of his two concerns and in response thereto, he again confirmed the surrender of undisclosed income amounting to Rs.1,21,43,210/- and Rs.1,35,00,000/-. It is in this background that we have to view his reply to the show-cause notice submitted on 02.12.2016. This show-cause notice was issued to him by the assessing officer when the appellant-company offered the said undisclosed income to tax. The reliability, importance and sanctity of admission made during search could be refuted only by cogent and convincing evidence. We may in this connection refer to earliest judgment of the Supreme Court in Pullangode Rubber Produce Co. Ltd., (supra) wherein it was held that admission is an extremely important piece of evidence but it can't be said that it is conclusive. It is open to the person, who made admission to show that it is incorrect. The assessee should be given proper opportunity to show the correct state of affairs. The law with regard to this has developed much thereafter. There is no gainsay the fact that admission made during the search can be disputed by the assessee and at the same time however it is equally well settled that the statement made voluntarily by the assessee could form the basis of assessment. Mere fact that the assessee retracted the statement at later point of time could not make the statement unacceptable. The burden lay on the assessee to show that the admission made by him in the statement earlier at the time of survey was wrong. Such retraction, however, should be supported by a strong evidence stating that the earlier statement was recorded under duress and coercion, and this has to have certain definite evidence to come to the conclusion that indicating that there was an element of compulsion for assessee MP Nos.79 to 84/Bang/2021 Page 20 of 25 to make such statement. However, a bald assertion to this effect at much belated stage cannot be accepted. The assessee indulged in maintaining transaction on diaries and loose papers which was not permissible in any of the method of accounting. The assessee, while filing the return of income, has not disclosed any undisclosed income and hence, retracted from the admission made by him during the course of search. Subsequent retraction from the surrender without having evidence or proof of retraction is not permissible in the eyes of law. The statement recorded during the course of search action which was in presence of independent witnesses has overriding effect over the subsequent retraction. 21. In view of the above discussion, the question formulated vide order dated 09.05.2018 is answered in favour of the revenue and against the assessee.” 34. Against this, the assessee filed SLP before the Supreme Court reported in [2019] 264 Taxman 5 (SC). In our opinion, primarily the facts and circumstances of the case considered by the Rajasthan High Court has no relevance in the present facts and circumstances of the case and the ratio laid down by the Supreme Court in the SLP cannot be ratio decendi. 35. Coming to the argument of the ld. DR, in our opinion, the revenue wants to reargue the case before the Tribunal in the guise of miscellaneous petition which is not permitted u/s. 254(2) of the Act. What is mistake apparent from the record must be obvious and a patent mistake and not something which can be established by long drawn process of reasoning and on points which there may be conceivably two opinions. If there are two views and a mistake is required to be substantiated by lengthy arguments as in this case and by placing reliance on decisions, it will not be an error or mistake that can be said to be on the face of the record. Thus a decision on a debatable point of law is not a mistake apparent from the record. In other words, one must be able to look at the order or record and say: here is a mistake. If one cannot know this and one has to probe MP Nos.79 to 84/Bang/2021 Page 21 of 25 through the fats to determine where the mistake is, it will not be a mistake apparent from the record, but one arrived at by a process of reasoning as held by the Supreme Court in the case of T.S. Balaram, ITO v. Volkart Brothers (1971) 82 ITR 50 (SC). 36. In the present case, since the department could not find any unaccounted money, article or incriminating document with reference to the statement recorded u/s. 132(4) from the assessee and also the income offered by the assessee u/s. 132(4) of the Act was conditional as discussed earlier, in that event, the Tribunal came to the conclusion that no addition is possible with regard to surrender of income u/s. 132(4) of the Act, as the AO opted to make additions on the basis of seized document. In other words, when the AO made addition on the basis of seized document, he cannot once again consider the income offered u/s. 132(4) of the Act which was fully diluted by the action of the AO. The argument of the ld. DR is that the assessee has shown the assets corresponding to the income offered u/s. 132(4), as such addition to be sustained on this count. In our opinion, as discussed earlier, the department is not able to co-relate the unaccounted money, article or thing to the income offered u/s. 132(4). Further, the department cannot re-argue the case in the proceedings u/s. 254(2) of the Act as the Tribunal has taken a conscious decision on this issue. Being so, there is absolutely no basis for the AO to fasten liability on the assessee on the basis of surrender of income by the assessee itself u/s. 132(4) of the Act. The offering of income u/s. 132(4) of the Act would not put an end to come to the conclusion that there was undisclosed income. That undisclosed income shall be supported by unearthing of corresponding unaccounted money, article or thing or assets which is not so in this case. In other words, the department has not unearthed any unaccounted assets in this regard and the assessee himself offered MP Nos.79 to 84/Bang/2021 Page 22 of 25 corresponding assets to the unaccounted income which was not verified by the AO. 37. However, the Tribunal combined its findings with regard to following two grounds in para 6 of its order. “ On the facts and circumstances of the case, the Authorities below erred in not giving telescoping effect by netting income computed under Asset method and income computed under Income Method. On the facts and circumstances of the case, the authorities below erred in not giving deduction for the income declared by the appellant u/s 132(4) of the Act.” 38. With regard to telescoping of unaccounted assets as sourced by undisclosed income computed under the income method. we are of the opinion that undisclosed assets should be deemed that it was sourced by undisclosed income computed under the income method. In other words, there cannot be any addition on both the counts, one on account of undisclosed assets and another towards undisclosed income based on seized material. The AO computed undisclosed income under the income method, then, he has to give telescoping benefit towards the undisclosed assets found during the course of search. 39. With regard to income declared in the statement recorded u/s. 132(4) of the Act, we are of the opinion that the AO has to confine to the addition made on the basis of income method only as discussed above in para 38. 40. In view of the above discussion, para 6 and 6.3 of the order of the Tribunal is amended as follows:- “6. The next ground in ITA Nos.2627, 2629, 2630 & 2631/Bang/2019 is with regard to non-giving of set off of MP Nos.79 to 84/Bang/2021 Page 23 of 25 income declared by the assessee in the statement recorded u/s. 132(4) of the Act. In these assessment years, the assessee declared income in the statement recorded u/s. 132(4) of the Act as follows : Smt. Shabana Shareef Assessment Year Amount Rs. 2014-15 Rs.45 lakhs 2015-16 Rs.50 lakhs 2016-17 Rs.5 lakhs. Shri Amar Shareef 2016-17 Rs.1.00 Crore The assessee declared this income in the statement recorded u/s. 132(4) of the Act. The search team found certain incriminating documents during the course of search action in these cases. Thereafter the assesses filed the Return of Income declaring specific undisclosed income with regard to incriminating seized material found during the course of search action. The Assessing Officer assessed the undisclosed income in addition to the income voluntarily declared by these assesses in the statement recorded u/s. 132(4) of the Act. In our opinion, the Assessing Officer made independent addition based on the seized material found during the course of search action, there cannot be addition on account of voluntary disclosure made by the assessees. With regard to giving telescoping effect by netting income computed under asset method and income method, the AO is directed to give the same. In other words, we confirm the computation of income on the basis of income method which is supported by MP Nos.79 to 84/Bang/2021 Page 24 of 25 seized material, subject to our finding with reference to the seized material. Accordingly, AO has to recompute the income overlooking the income declared by the assessee in the statement recorded u/s. 132(4) of the Act.” “6.3 As we discussed earlier, the addition shall be confined to the incriminating material found during the course of search action subject to our findings in para 38 of this order. Accordingly, we direct the Assessing Officer not to consider the additions made on the basis of statement recorded u/s. 132(4) of the Act. Both the grounds of the appeals by the assessees are allowed.” 41. There is no change in the final result in the order of the Tribunal. 42. The miscellaneous petitions by the revenue are disposed of accordingly. Pronounced in the open court on this 20 th day of December, 2021. Sd/- Sd/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated, the 20 th December, 2021. / Desai S Murthy / MP Nos.79 to 84/Bang/2021 Page 25 of 25 Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.