PRADEEP KUMAR DUSAD,JAIPUR V. DCIT CENTRAL CIRCLE 2, JAIPUR

ITA 1192/JPR/2024

AI Insights

The case involves cross appeals by the Income Tax Officer (ITO) and Shri Pradeep Kumar Dusad against the order of the Commissioner of Income Tax (Appeals-4), Jaipur. The appeals pertain to the assessment year 2017-18, with issues revolving around the determination of the cost of acquisition and the receipt of 'on money' in property transactions. The ITO challenged the relief granted by the CIT(A) to the assessee, while the assessee contested the additions made by the AO based on confessional statements. The Tribunal's decision highlighted the lack of incriminating evidence and the reliance on confessional statements, which were retracted, thus not supporting the additions made.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 35396 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Commissioner of Income Tax -14 vs. Jasjit Singh, Mantry Share Brokers Pvt. Ltd. vs. CIT, Harjeev Agarwal vs. CIT, Naresh Kumar Agarwal vs. CIT, Chetna ben Shah vs. ITO, Pullanguegode Rubber & Produce Co. Ltd. vs. State of Kerala, Satinder Kumar vs. CIT, Ajit Chintaman Karve vs. ITO, Hukum Chand Jain vs. ITO, CIT vs. Ashok Kumar Jain, CIT vs. Bhaskar Mittal, Avadh Kishore Das vs. Ram Gopal, Chitra Devi vs. ACIT, KELLOGG INDIA P LIMITED & MADHUKAR PATIL vs. UOI, Monga Metals (P) Limited vs. ACIT, CIT vs. IBC Knowledge P Limited, CIT vs. Sunita Dhadda, CIT vs. Eastern Commercial Enterprises
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL PARIHAR
• Assessee Lawyers: PARTH PATNI
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Retrospective amendment; Question of law; Income from undisclosed sources; Cost of acquisition; Onus to prove; Retraction; Capital Gains; Principle of natural justice; Third party statement; Search and seizure; Opportunity of cross examination
• Section: 142(1); 143(2); 250; 64; 48; 132; 153A; 68; 131; 13; 69A; 153C; 73; 133A; 191; 72

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR MkWa- ,l-lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 1149/JPR/2024 fu/kZkj.k o\"kZ@Assessment Year : 2017-18 The ITO Ward-1(4), Jaipur cuke Vs. Shri Pradeep Kumar Dusad R-1. Behind Motor Aids Petrol Pump, Jhotwara Road, Shashtri Nagar, Jaiapur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABLPD4678H vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA. No. 1192/JPR/2024 fu/kZkj.k o\"kZ@Assessment Years : 2017-18 Shri Pradeep Kumar Dusad R-1. Behind Motor Aids Petrol Pump, Jhotwara Road, Shashtri Nagar, Jaiapur. cuke Vs. The DCIT, Central Circle-2, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABLPD4678H vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Mrs. Swapnil Parihar, JCIT-DR a fu/kZkfjrh dh vksj ls@ Assessee by : Shri Parth Patni, C.A. lquokbZ dh rkjh[k@ Date of Hearing: 20/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 12/ 03/2025 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, JM Both these appeals are the cross appeals filed against the order of the Commissioner of Income Tax, Appeals-4, Jaipur as ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 2 per provision of section 250 of the Income Tax Act [ for short Act ] dated 10-07-2024 for the assessment year 2017-18. 2. The at the outset of hearing the bench noted that the appeal filed by the assessee is delayed by one day. The reasons advanced in the prayer for condonation of delay was that while filling the appeal online, the Email OTP was not generated due to technical reasons and thereby it has resulted in to delay of one day. Considering that aspect of the matter the bench condone the delay one day. 3. The Grounds of appeal raised in the cross appeal of the Revenue and assessee are as under:- ITA No.1149/JP/2024 – A.Y. 2017-18 (Revenue) “1. Whether on the facts and in the circumstances of the case, the Id. CIT(A) has erred in giving a relief of Rs.1,01,18,885/- in AY 2017-18 by unlawfully and erroneously determining the cost of acquisition in AY 2016-17 and giving its set off of against income of A.Y.2017-18, when the fact of receiving of on money of Rs. 1,43,40,000/- has not been disputed by the Id. CIT(A)? 2. Whether on the facts and in the circumstances of the case, the Id. CIT(A) has travelled beyond his jurisdiction and erred in holding for A.Y. 2017-18 that \"In the assessment order for AY 2016-17, the appellant has disputed the cost and the payment of on money and the appellant has contended that the total payment or the total cost was Rs.2.5 Crore and has made such statement on oath also in the statement recorded u/s 131 of the Act. The total cost of acquisition is taken at Rs. 2.5 crores in this order subject to any further orders in proceedings in the case of the appellant\" when the appeal of AY 2016-17 is still pending with CIT(A)? 3. Whether on the facts and in the circumstances of the case, the Id. CIT(A) has erred in giving a finding on cost of acquisition of property in ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 3 AY 2016-17 and estimating of the same at Rs. 2.5 crores when the same matter is pending for decision with CIT(A)?” ITA No.1192/JP/2024 – A.Y. 2017-18- Assessee “1. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in not considering the decision of the Hon'ble Supreme court in the case of Commissioner of Income Tax -14 versus Jasjit Singh (SC) (Civil appeal No. of 2023 @ SLP(C) No. 6644 of 2016) holding that the AO of the other person shall issue notice of earlier six years excluding the year in which the information/material is received from the AO of the searched person. Thus the learned CIT (A) has violated the principle of judicial discipline. 2. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in not accepting the plea of the assessee that in the case of assessee the notice under section 153C was required to be issued by the learned AO on receipt of information/material from the AO of the searched person following the decision of the Hon,ble Supreme Court in the case of Commissioner of Income Tax -14 versus Jasjit Singh (SC) (Civil appeal No. of 2023 @ SLP(C) No. 6644 of 2016). There being no notice under section 153C the assessment deserves to be quashed. 3. That in the facts and circumstance of the case and in law the learned CIT(A) has erred in not deleting the addition made by the learned AO in violation of principles of natural justice. 4. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in confirming the action of the learned AO in considering the sale deeds found during search belonging to firm M/s Eminent Build Developers in the hands of the assessee. Action in the hands of the assessee deserves to be quashed. 5. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in restricting and confirming additions of Rs, 42,21,115/-as against addition of Rs. 1,43,40,000/- which was made by the learned AO solely on the basis of statements without there being any substantive evidence. 6. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in restricting and confirming addition of Rs. 42,21,115/- as against addition of Rs. 1,43,40,000/- which was made by the learned AO on the ground that the purchaser Shri Chandra Prakash Agarwal admitted of having paid on money in the purchase of Agricultural land from the assessee without allowing cross examination of Shri Chandra Prakash Agarwal. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 4 7. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in restricting and confirming addition of Rs 42,21,115/- as against addition of Rs, 1,43,40,000/- which was made by the learned AO despite there being contradictory statements of assessee and Shri Chandra Mohan Badaya regarding the sale consideration of land 8. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in not holding that the learned AO was not justified in applying the provisions of section 68 of the income Tax Act. 1961. 9. That in the facts and circumstances of the case and in law the learned CIT(A) has not held that in the case of the assessee section 68 was not at all applicable. 4. Apropos Ground of appeal of the assessee and that of the Department, the brief facts of the case are that the assessee filed a return of income on 01-08-2017 for the assessment year 2017- 18 declaring a total income of Rs.10,29,710/-. It is noted that a search and seizure action u/s 132A of the Income Tax Act, 1961 or a survey action u/s 133A of the Act was carried out by the Income Tax Department on the members of Chandra Prakash Agarwal Group on 28-07-2016 wherein the assessee is one of the members. The Notice u/s 143(2) of the Act dated 20-09-2018 was issued and served upon the assessee on 26-09-2018. Information and details pertaining to the case of the assessee relevant to the assessment of his income were called for u/s 142(1) of the Act by means of questionnaire and/ order sheet entries wherever deemed fit by the AO. In response to the notice, the assessee furnished ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 5 information and / or details called for. The information so furnished was examined by the AO on a test check basis and the issue pertaining to assessment of income was discussed by the AO. In this case, it is noted that search and seizure proceedings under section 132(4) of the Income Tax Act 1961 was conducted on 28.07.2016, in the case of Shri Chandra Prakash Agarwal and the following documents of dealing in land were found and seized. Name of sellers Name of purchasers Description of land Date of agreement Amount of sale value (In Rs.) Details of annexure Smt. Prabhati Devi S/ Shri Chittarmal, Rampal, Kaluram, Nanchuram M/s. Eminent Build Developers through Partner Shri Prasad Kumar Dusad Agriculture land at Araji Khasra No. 384 area 2.99 hectare at Village- Nindar, Tehsil-Amer, Jaipur 28-07-2015 1,54,21,115 Party No. 1 Annexure A Exhibit-28 Page No.13 to 17 -do- M/s. A R Properties & Colonizers through Proprietor Shri Chandra Mohan Badaya Agriculture land at Araji Khasra No. 384 area 2.99 hectare at Village- Nindar, Tehsil-Amer, Jaipur 28-07-2015 1,29,53,735 Party No. 1 Annexure A Exhibit-28 Page No.44 to 48 -do- M/s. Fortune Real Estate through Partner Shri Chandra Mohan Badaya Agriculture land at Araji Khasra No. 379 area 1.22 hectare at Village- Nindar, Tehsil-Amer, Jaipur 28-07-2015 2,30,28,865 Party No. 1 Annexure A Exhibit-24 Page No. 7 to 11 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 6 It is noted that during the post search proceedings, the statement of one purchaser Shri Chandra Mohan Badaya and the assessee Shri Pradeep Kumar Dusad were recorded u/s 131 wherein they admitted that aforesaid land was purchased by them for total consideration of Rs.10 crore against the total sale consideration mentioned in the sale registered deed at Rs.5,14,03,715/- on behalf of their partnership firm / proprietary concern as mentioned in above table. The land was subsequently sold to Shri Chandra Prakash Agarwal on 10-05-2016 through a deal and Shri Chandra Mohan Badaya, one of the purchaser, admitted at Question No. 6 in the statement recorded u/s 132(4) of the Act during the search proceedings u/s 132 of the Act conducted on 29-07-2016 at his residential premises at A-178,Surya Nagar, Taroo Ki Koot,Tonk Road, Jaipur that on 10-05-2016, he made a deal of 10 bigha land bearing khasra No. 379 and 384 situated at Sikar Road, Nindar and adjacent to Green Triveni with Shri Jitendra Kumar Garg at the consideration of Rs.14.51 Crore in the presence of Shri Kailash Chand Maheshwari. This deal was made through Shri Kailash Chand Maheshwari for which he received Rs. 4.50 crores by Shri Chandra Prakash Agarwal and Rs.25 lacs as brokerage by Shri ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 7 Chandra Mohan Badaya. It is noted that in continuation to the answer of Q. No.6 of his statement recorded on 29-07-2016 Shri Chandra Mohan Badaya had stated that in this sale proceedings 10 bigha land at Nindar, he had to receive Rs.10 Crores from Shri Chandra Prakash Agarwal. Shri Chandra Mohan Badaya had further stated that in this deal he had to receive 9 plots (Plot No.121, 122, `123, 124, 417, 127 & 53 of A Block and 348 & 349 of B Block of Saligrampura, JDA Scheme,Tonk Road, Jaipur) in lieu of Rs.4.01 crores and for the remaining amount (out of Rs.10 crores),he received Rs.5.22 crores through cheques and Rs.78 lacs through cash. The scanned copy relevant portion of the statement is mentioned at page 4 of the assessment order. It is noted that during search proceedings the statement of Shri Chand Mohan Badaya was confronted with Shri Chandra Prakash Agarwal and he was asked vide Question No. 33 of his statement recorded u/s 132(4) of the Act on 31-07-2016 to give clarification for the same. In reply, Shri Chandra Prakash Agarwal had expressed his consent to the statement of Shri Chanda Mohan Badaya and stated that he had paid amounting to Rs.5.28 crores in cash (which includes Rs.4.50 crores paid to Shri Kailash Chand ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 8 Maheshwari) which he offered for taxation in the assessment year 2016-17. In his statement, Shri Chandra Prakash Agarwal further started that the aforesaid plots are recorded in his regular books of accounts and if there is any capital gains tax payable on this then he would also pay the same. The statement of Shri Chandra Prakash Agarwal is mentioned at 5 page of the assessment order. The AO from the statement and evidence of Shri Chandra Prakash Agarwal noticed that Shri Chandra Mohan Badaya had received ‘on money’ in cash and kind on the sale on the sale of 10 bigha land of village-Nindar to Shri Chandra Prakash Agarwal. The AO noted that since in this deal payment of Rs.5.22 crores only was given through cheques and balance payment of Rs.4.78 crores were received as ‘on money’ in cash/kind, therefore value of ‘on money’ paid in cash/ kind by the seller for the entire land of 10 bigha comes to Rs.4.78 Crores. It is mentioned by the AO in the assessment order that in order to verify the above fact Shri Pradeep Dusad S/o Shri Raghuveer Sharan Gupta was also examined and his statement was recorded u/s 131 of the Act on oath on 10-11-2016 in reply to question Nos. 5 to 8 of his statement recorded on oath and Shri Pradeep Dusad admitted that ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 9 he had purchased three bigha land at Nindar in his concern M/s. Eminent Builders Developers from Smt. Prabhati Devi and four other persons and sold it to Shri Chandra Prakash Agarwal. The AO has taken reference to the statement taken in respect of Shri Chandra Prakash Agarwal as mentioned at pages 6 to 9 of the assessment order. The AO on perusal of the statement of Shri Chandra Prakash Badaya felt that Shri Chandra Prakash Badaya not only accepted the receipt of on money from sale of total land situated at Vilage Nindar constituting 10 bighas but also the assessee named Shri Pradeep Dusad has also accepted having been paid on money pertaining to share in land viz. 3 Bighas. He noted that if the cheque portion and on money portion is quantified then it will emerge that the assessee out of total consideration of Rs.3 crores approx. paid Rs.1.62 crores through cheque/ banking channel and balance Rs.1.38 crore thorough cash being on money portion. Thus the AO during assessment proceedings vide questionnaire dated 18-10-2018 asked the assessee to explain the transaction of sale of land situated at Village Nindad and further show cause as to why the on money received in the deal to the extent of Rs. 4.78 should not be considered as his undisclosed ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 10 income The assessee submitted reply to the AO at page 10 of the assessment order as under:- ‘’would be Rs.1.48 crores. Thus when both on purchase and sale it is assumed that there is exchange of on money then also there would not be any tax liability on sale inasmuch as on money alleged to have been paid /payable is more than the on money alleged to be received. (iii) In the show cause notice it has been stated that the assessee has admitted that he has taken on money on this land deal from Shri Chandra Prakash Agrawal, the copy of statement was provided to us on 16-11-2018. On going through the statement, it can be noted that assessee in reply to question no. 6 & 7 has started that land was purchased for Rs.2.50 crores out of which 1,54,21,115/- is paid by cheque 70,77,885/-is paid in cash and Rs.25 lacs is paid by cheque to Shri Chandra Mohan Badaya. This land was sold for Rs.3 crores out of whichRs.1.62 crores 1.62 crores is received by cheque , Rs.18 lacs received from Chanda Mohan Badaya by cheque andRs.1.20 crore is received by way of adjustment of four plots purchased from Chandra Prakash Agarwal for which 64 lacs was paid by cheque (but received back in cash from him.) Thus even according to this statement assessee has received profit of Rs.50 lacs on this transactionof whichRs.7,78,885/- (1.62 cr minus 15421115) is declared in the return. Hence even as per this statement what can be added is only Rs.42,21,115/-, in any case this statement has been taken by exercising undue influence and therefore in the absence of any documentary evidence of payment /receipt of on money, no addition on the basis of this statement can be made. In view of above, no addition on account of alleged payment of on money on purchase or alleged receipt of own money on sale can be added to the income of the assessee.’’ The AO perused the reply of the assessee and noted that the assessee agreed that out of his portion of total sale consideration of Rs.3.00 crores, he received Rs 1.62 crores through cheque, Rs.18 lacs and Rs.1.20 crore through some adjustment entries in form of cheque and plots. Therefore, there is no ambiguity ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 11 regarding total sale consideration and on money portion therein. However, the AO noticed that in this total deal of 10 Crores payment of Rs.5.22 crores only was given through cheques and balance payments of Rs. 4.78 crores were received as ‘one money’ in cash/kind, therefore, value of ‘on money paid in cash /kind by the seller for the entire land or 10 bigha which comes to Rs.4.78 crores and the same has been admitted by Shri Chandra Mohan Badaya and Shri Chandra Prakash Agarwal as well as the assessee in their statement recorded during the search and post search proceedings and there is no ambiguity in respect of payment of on money of Rs. 4.78 crores. It is pertinent to mention that the assessee had accepted that 3 bighas of land (approx) was purchased and sold in his partnership firm M/s. Eminent Builders Developers but the deal had happened through him and the ‘’on money’’ in the deal was to be received by him only. Hence, the same is undisclosed income in the hands of the assessee. Therefore, the assessee’s contention is that he has already declared a gain of Rs.7,78,885/-, is not accepted as the same has been declared in partnership firm M/s. Eminent Builders Developers. The AO noted that the assessee has put forward ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 12 argument that the land purchase on ‘on money ‘ was subsequently sold on ‘on money’ to Shri Chandra Prakash Agarwal. Hence, there is only exchange of ‘on money’ i.e. on money received from Shri Chandra Prakash Agarwal was transferred to seller of 10 biigha land to the partnership firm of the assessee. However, the same was not acceptable due to the reason that the purchase was made by the partnership firm of the assessee on 28-07-2015 whereas the same was sold on 31-05-2016 to Shri Chandra Prakash Agarwal. Hence, there is a difference of more than 10 months. Hence, it cannot be presumed that money on purchase of land was paid out of ‘on money’ received from the sale of the land. It is also noticed that the AO conclusively made an addition of Rs.1,43,40,000/- in the hands of the assessee by observing as under:- ‘’6.13 In view of the foregoing discussion the on-money portion pertaining to the assessee i.e. 1,43,40,000/-out of total \"on money\" of Rs. 4,78,00,000/- received in cash/kind (being 3 Bigha out of total 10 Bigha land) is considered as undisclosed income of the assessee and therefore a sum of Rs. 1,43,40,000/- is added to his taxable income u/s 68 of the I.T. Act and the tax rate at 60% will be applicable as per provision of section 115BBE of the IT act. Penalty proceeding also initiated separately for u/s 271AAB(1)(c) on undisclosed income.’’ ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 13 5. In first appeal, the ld. CIT(A) has partly confirmed the addition amounting to Rs. 42,21,115/- in the hands of the assessee by observing at para 7.2 of his order as under:- ‘’7.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order. The contentions/submissions of the appellant are being discussed and decided as under:- Having perused the material on record, it is undeniable that and undisputed that the appellant had received the on money from Sh Chanda Prakash Agarwal on the sale of 3 Bigha of immovable property. Appellant has contended that the Ld. AO has erred on the facts and in law in making the above addition in the hands of assessee whereas admittedly the land was sold by partnership firm. When the property was purchased by the appellant in the name of the partnership firm, the partnership firm was only used as a conduit and as a colourable device. The transaction was being done by the appellant in his individual capacity. In case it was to be held that the same is assessable in the hands of the partnership firm in that case the case of the partnership firm is to be reopened considering provisions of section 150. However even though the property was registered in the name of the partnership firm of the appellant, and the sale and purchase of the land was done in the name of the partnership firm, however the transaction of giving and taking of the on money was done by the appellant. From the statements of the buyer of the property Shri Chanda Prakash Agarwal during search and seizure and also from the statement on oath of the appellant, the unaccounted money was received by the appellant and there is no reference to any other name or any other party The unaccounted cash is not shown in the books of accounts of the partnership firm. There is no record that the unaccounted cash was firstly received by the partnership firm as a whole and thereafter it was handed over to the appellant Partnership firm is a legal entity and there is no such entry of receipt of cash and giving of cash to the appellant. Appellants also received Rs. 18 lakhs in his bank account which is part of the unaccounted income received by the appellant from Shri Chandra Mohan Badaya. Hence the action of the learned AO is appellant in this regard. The appellant has also contended that the Ld. AO has erred in making the impugned addition by rejecting the claim that there does not remain any income when the alleged on money paid on purchase of land is considered and allowed adjustment against alleged on money received on sale of property In the assessment order the learned AO has ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 14 discussed this aspect The learned AO has opined that since there was a gap of 10 months between the purchase of the property and the payment of on money by the appellant and sale of the property and the receipt of on money by the appellant and thus it cannot be presumed that the on money which was paid by the appellant was paid out of the on money which were received by the appellant on the sale of the property. This view in the assessment order appears to be valid However that does not make the appellant not eligible for the deduction (in AY 2017-18) of the on money paid by him (in AY 2016-17) as cost. When the property was purchased by the appellant in the name of the partnership firm, the partnership firm was only used as a formality and as a colourable device. The transaction was being done by the appellant in his individual capacity Legally, when the land was purchased and on money was paid, the right was created in it and the same was sold and the on money was received and thus the payment at the time of purchase of the property was specifically in connection with the cost and part of the cost and thus allowable as deduction at the time of sale when the on money was received. As per section 69A of the Act, the source is required to be explained by the assessee. The issue of the receipt of the on money on the sale of the property falls under the year under appeal. There is no dispute that the on money was paid by Sh Chander Prakash Agarwal and conformity statements have been given by Sh Chander Prakash Agarwal. Sh. Chander Mohan Badaya and the appellant himself also. In the addition made in the assessment order regarding the receipt of on money on the sale of the property the statements of these parties have also been relied upon. Accordingly the source of the on money or the cash in the hands of the appellant on the sale of the 3 Bigha property in Nindad even though was unrecorded however is explained in terms of section 69A of the Act. Accordingly, the on money in the hands of the appellant in the year under appeal does not fall under the section and the deduction of the on money paid by the appellant at the time of purchase of the same property is allowable. The appellant has challenged the addition of Rs. 1,43,40,000 in the hands of the appellant on account of alleged on money received on sale of property. The appellant has also referred to the assessment order in the case of the appellant himself for the immediately previous assessment year which is assessment year 2016-17. Appellant has contended that search was also conducted in the case of Shri Chandra Mohan Badaya simultaneously when search was conducted in the case of Shi Chandra Prakash Agarwal It so happened that the firms in which Shri Chandra Mohan Badaya was partner namely AR property & Colonizers and M/s Fortune Real Estate had also purchased agricultural land from the same seller(s) Smt. Prabhat Devi ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 15 and other(s) on the same date 28.07.2015 Copies of agreements of purchase of land pertaining to the firm where Shri Chandra Mohan Badaya was partner were also found during the course of search in the case of Shri Chandra prakash Agarwal where documents of agreement of Eminent Build Developers was also found. In his statement that Shri Chandra Mohan Badaya stated that the cost of land (3 bighas) purchased by M/s Eminent Build Developers included on money payment in cash of Rs. 1,46.00.000 It was on the basis of this statement that the learned AO made addition in assessment year 2016-2017 of Rs. 1.45.78.885 being payment in cash over and above the apparent consideration shown in the purchases agreement at Rs 1,54,21,115. On the perusal of the assessment order for the assessment year 2016- 17, it is seen that addition has been made is in the hands of the appellant in connection with the payment of the on money of Rs. 1,45,78,885 for the purchase of the property (purchased in the name of the partnership firm) which has been sold by the appellant in the year under appeal and on money has been received by the appellant on the sale of such property and only the banking payment has been reflected in the books of accounts of the partnership firm. In the assessment order for AY 2016-17 the cost of land has been treated as 3 crore (para 11.6 of that order) including Rs. 1,54,21,115 through banking channel and Rs. 1,45,78,885 through unaccounted on money. In the assessment order for AY 2016-17, the appellant has disputed the cost and the payment of on money and the appellant has contended that the total payment or the total cost was Rs. 2.5 crore and has made such statement on oath also in the statement recorded u/s 131 of the Act. The total cost of acquisition is taken at Rs. 2.5 crores in this order subject to any further orders in proceedings in the case of the appellant. As seen in the assessment order, the appellant himself has also given a working whereby he has shown that there was a total profit of Rs 50 lakhs on this transaction, as the total cost was Rs. 2.5 Crore and the sale consideration is Rs 3 Crore and that out of that a profit of Rs. 7,78,885 (1,62,00,000 less 1,54,21,115) is already disclosed in the books of partnership firm Eminent Buildwell and the profit in the hands of the appellant being difference of payment and receipt of on money is Rs. 42,21,115 including receipt of Rs. 18 lakhs through banking channel in the form of cheque payment as part of the unaccounted income from Sh. Chander Mohan Badaya. Considering the cost at Rs. 2.5 Cr., the appellant paid on money of Rs. 95,78,885 at the time of purchase and on sale received unaccounted money of Rs 1,38,00,000 as the payment of Rs. 1,62,00,000 is apparently recorded in books of firm through banking channel Accordingly, the addition made in the assessment order is restricted hereby to the difference of on money transaction (including cheque ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 16 receipt) in hands of appellant which is Rs. 42,21,115 and the remaining addition is directed to be deleted Accordingly, this ground of appeal is partly allowed.’’ 6. While hearing of the appeal, the ld. AR of the assessee has filed the detailed written submission praying that the addition so sustained amounting to Rs. 42,21,115/- by the ld. CIT(A) needs to be deleted and further submitted that the Revenue has wrongly stated that the ld. CIT(A) has not disputed the receipt of on money of Rs.1,43,40,000/- on sale of land whereas the ld. CIT(A) in fact in the appellate order has taken the on money which is on sale of land at Rs.1,38,00,000/- and thus the issue raised by the Revenue has no relevance which needs to be disallowed. The written submissions as advanced by the ld. AR of the assessee is reproduced as under:- ‘’The assessee is an individual, return of income for A Y 2017.-2018 was filed on 01.08.2017 declaring total income at Rs. 10,29,710/-. In the case of the assessee assessment proceeding were taken for scrutiny w r to search conducted in the case of Shri Chandra Prakash Agarwal on 28.07.2016. The assessment has been completed on 28.12.2018 on total income of Rs, 1,53,69,710/- inter alia making an additions of Rs 1,43,40,000/ The features and facts of the case are as under – Search in the case of Shri Chandra Prakash Agarwal 1. A search and seizure proceedings under section 132(4) of the income tax act 1961 was conducted on 28.07.2016 in the case of Shri Chandra Prakash Agarwal and the following documents of dealing in land were found and seized. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 17 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 18 2. The above table indicates that 10 bighas of Agricultural land was sold by Smt. Prabhati Devi and others to persons as under for a total consideration of Rs, 5,14,03,715/- as per sales deeds 2.1 3 bigha to M/s Eminent Build Developers through partner shri Pradeep kumar Dusad (assessee), wherein shri Pradeep kumar Dusad acted as partner of firm M/s Eminent Build developers 2.2 3 bigha to A R Properties and colonizers through proprietor shri Chandra Mohan Badaya 2.3 4 bigha to M/s Fortune Real Estate through partner Shri Chandra Mohan Badaya, where shri Chandra Mohan Badaya acted as partner of firm M/s Fortune Real Estate 3. These deeds of sale were found with Shri Chandra Prakash Agarwal as later-on the entire 10 bighas land was purchased by him from M/s Eminent Build developers through Shri Pradeep Kumar Dusad (ii) M/s A R Properties and colonizers (iii) M/s Fortune Real Estate through partner Shri Chandra Mohan Badaya. These were part of chain document of these Agricultural land. 4. The Purchase of 3 bighas land by M/s Eminent Build Developers through partner shri Pradeep Kumar Dusad as per sale deeds found during search stand fully accounted for in the books of accounts of the firm M/s Eminent Build developers. The investment was also made by the firm. Copy of relevant account of land, Bank account, Balance sheet are available on paper book. 5. Beside the sale deeds no other documents were found in search in the case of Shri Chandra Prakash Agarwal. As the amount mentioned in these sale deeds stood fully accounted for in the regular books of accounts of the firm M/s Eminent Build Developers, these sale deeds are not incriminating material/documents and no action could be taken on the basis of these sale deeds. 6. However Shri Chandra Prakash Agarwal was examined under section 132(4) on 28.07.2016 It is during the statements that he deposed that 10 bighas land was purchased for Rs, 10.00 Cr. . from all the three persons M/s Eminent Build developers through Shri Pradeep Kumar Dusad (ii) M/s A R Properties and colonizers (iii) M/s Fortune Real Estate through partner Shri Chandra Mohan Badaya, ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 19 Search in the case of Shri Chandra Mohan Badaya 7. Later-on search was also conducted in the case of Shri Chandra Mohan Badaya on 29.07.2016 but nothing was found and seized from him. However his statements was recorded with reference to the statements of Shri Chandra Prakash Agarwal. Shri Chandra Mohan Badaya deposed that entire 10 bighas of land was purchased by shri Chandra Prakash Agarwal for full consideration of Rs,10.00 crores as against apparent consideration of Rs 5.22 crores shown in the sale deeds. He further deposed that the entire 10 bigha Agricultural land was sold to shri Chandra Prakash Agarwal for Rs… 10.00 Crores which included the amount mentioned in sale deed at Rs 5.22 crores . This confessional statement of Shri Chandra Mohan Badaya has been obtained by the revenue authorities in violation of CBDT circular No… F.No. 286/2/2003 – IT (Inv.) dated March 23, 2003 stating as follows: Dated 23.03.2003 Statements of the assessee 8. Later-on assessee Shri Pradeep Kumar Dusad was also examined under section 131 on 10.11.2016. No survey or search was conducted in the case of the assessee. No document(s) were seized from him. However confessional statement was also obtained from Shri Pradeep Kumar Dusad that the 3 bighas land was purchased by the firm M/s Eminent Build Developers on 28.07.2015 for Rs, 3.00 crs. as against Rs. 1,54,21,115/- , shown in the registered sale deed. He further deposed that the land was sold on 31.05.2016 to Shri Chandra Prakash Agarwal for Rs, 3.00 Crs. as against Rs, 1,62,00,000/- shown in the sale deed. Thus there was payment of on money of Rs, 1,48,20,000/- in the purchase of 3 bighas of land and also receipt of on money in the sale of 3 bigha land of Rs., 1,48,20,000/-as per statement only and the statements was without any supporting documents . 9. Satisfaction note is faulty and is irrelevant In view of the aforesaid statements recorded under section 132(4) of Shri Chandra Prakash Agarwal on 28.07.2016 and of Shri Chandra Mohan Badaya on 29.07.2016 and under section 131 of assessee shri Pradeep Kumar Dusad on 10.11.2016, the learned AO drew a satisfaction note for taking action in the hands of the assessee under section 153C. The satisfaction note is reproduced here under ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 20 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 21 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 22 i. First Para of the satisfaction Note On perusal of the first para of the satisfaction note, it is revealed that the learned AO is discussing the issue relating to purchase of Agricultural land on 28.07.2015 from Smt. Prabhati Devi and other by three parties i.e. M/s Eminent build developers through partner Shri Pradeep Kumar Dusad for Rs, 1,54,21,115/-, M/s A R properties and Containers through proprietor shri Chandra Mohan Badaya and M/s Fortune Real Estate through partner Shri Chandra Mohan Badaya. . It is submitted that the amount mentioned in this para is duly accounted for in the regular books of accounts of M/s Eminent Build Developers where the assesseeshri Pradeep kumarDusad is partner. Further there is no murmur of his satisfaction that these have a bearing on the determination of the income of the assessee. a. The satisfaction note drawn by the learned AO on 18.09.2018 contains following information which is in respect of the M/s Eminent Build Developers who purchased Agricultural Land from Smt. Prabhati Devi and others on 28.07.2015 for a sum of Rs. 1,54,21,115/-. Thus the information is strictly speaking in respect of and pertains to M/s Eminent Build Developers who purchased the land through partner Shri Pradeep Kumar Dusad wherein Shri Pradeep Kumar Dusad acted in representative capacity as partner of M/s Eminent Build Developers. The owner of the land is M/s Eminent Build Developers and payment through banking channels was also made by them. In this regard copy of the purchase deed, copy of land account in the books of accounts of M/s Eminent Build Developers are furnished and are available on paper book page. No 19. These are documentary evidences which establish that the land was purchased by the firm M/s Eminent Build Developers and not by Shri Pradeep Kumar Dusad in his individual capacity b. The information in so far as is in respect of purchase of agricultural land from Smt. Prabhati Devi and others by M/s Eminent building developers through partner Shri Pradeep Kumar Dusad for Rs. 1,54,21,115/- is concerned the learned AO has not observed that this information/material/ documents have any bearing on the determination of income of the assessee (Pradeed Kumar Dusad and M/s Eminent Build developers, Partnership firm) in so far as it relates to A Y 2016-2017. In other words the satisfaction note is not asking for any action for any action in any hands of either Pradeep Kumar Dusad or Partnership M/s Eminent Build Developers for the A Y 2016-2017. Therefore the proceedings taken under section 153C happen to be without there being any satisfaction note for the A Y 2016-2017. (ii) Second para of the satisfaction note ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 23 In the second para of the satisfaction note the learned AO has discussed as under “vide question No. 9 the Chandra mohan badaya was asked to give details of purchases of 10 bighas land at village Nindar and reply of the same he admitted that he had purchased 10 bighas land at Nindar from the five persons mentioned above at total consideration of Rs, 10 Crors. In the statement he also furnished the details of payment stating that out of total Rs., 10 Crores payment of Rs, 5.18 Crores was made through cheques, payment of Rs,. 3 crors were made in cash and payment balance amount of Rs. 1.82 was pending. The question No. 9 of statements of shri Chandra mohan Badaya is reproduced hereunder “ The perusal of second para of the satisfaction note reveals the following 1. It is in respect of statement of Shri Chandra Mohan Badaya the statements recorded under section 132(4) on 29.07.2016 is scanned below ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 24 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 25 The perusal of the above statement reveals that the answer is different than the question asked for. The simple question put to Shri Chandra mohan badaya was when did he purchases 10 bighas land and from whom. he was not asked about the consideration paid for the debt. The reply appears to be extracted under pressure suiting to the Revenue. The reply is not relevant to the seized material which are purchased deeds found during the course of search. The purchase deeds of Agricultural land have been registered with the Registration Authorities and nothing was found during search controverting the contents of these deeds. The statement is an aberration and has no live relationship with the seized material. Therefore it is not part of the seized material and cannot be considered as incriminating material in any way. The satisfaction note has not considered this statement of Shri Chandra Mohan Badaya as having a bearing on the determination of income of the assessee because the statement solely pertains to Shri Chandra Mohan Badaya. No connection has been established in this second para of the satisfaction note between the statement of Shri Chandra Mohan Badaya and the assesseee. Hence no action was warranted on the basis of these statements. Further the learned AO himself has not consider it usefull while drafting the order for the A Y 2016-2017 hence this is not of any importance. (iii) Third para of the satisfaction note Further in the third and last para of the satisfaction note the learned AO is mentioned that in reply to question NO. 5 to 8 of the statement of shri Pradeep kumar Dusad stated that he had purchased 3 bigha land from Smt. Prabhatidevi and four other persons and sold it to shri Chandra Prakash Agarwa. He also admitted to have taken on money to the extent to Rs 4.78 crores on this land deal from Shri Chanra Prakash Agarwal. From the above discussion of the learned AO it is crystal clear that in this para the learned AO is discussing the selling part of the Agriculrual land which has taken place on 31.05.2016, which falls in the A Y 2017-2018. Hence in this para also there is no satisfaction of the learned AO relating ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 26 to A Y 2016-2017. The Contents of this do not relates to A Y 2016-2017. These can not form part of satisfaction note for A Y 2016-2017. The transaction of sale of land pertains to assessment year 2017-2018 and not to assessment year 2016-2017 a. It is submitted that M/s Eminent Build Developers sold land to Shri Chandra Prakash Agarwal on 31.05.2016. Thus the sale falls in assessment year 2017-2018. Thus the only material on the basis of which action under section 153C could be taken was pertains to AY 2017-2018 and that too in the case of M/s Eminent Build Developers. The satisfaction note does not disclose any content and any material for taking action under section 153C for A Y 2016- 2017. Hence no action could have been taken in the hands of the assessee for A Y 2016-2017. The only document found and mentioned in the satisfaction note pertaining to A Y 2016-2017 are purchases deeds of land from Smt. Prabhati Devi and others. But these purchases deed are not incriminating material. These have not been adversely commented upon by the learned AO. Further these purchases deed apparently have no bearing on the determination of income of M/s Eminent Build Developers and of assessee. IN the facts and circumstances there was absolutely no case for issuing notice under section 153C for A Y 2016-2017. b. It is submitted that the sale transaction of land pertains and falls in A Y 2017- 2018 as it was sold on 31.05.2016 ( as per statement of Shri Pradeep Kumar Dusad) on the basis of statement of Shri Pradeep Kumar Dusad. It may be noted that no document was found regarding the sale of land by eminent build developers through partner. The fact of sale has emanated by answer to question No. 8 in the statement of Shri Pradeep Kumar Dusad recorded on 10.11.2016. Position of law with respect to drawing satisfaction note by the learned AO of the other person. It is submitted that the provisions of section 153C(1) very clearly stipulate that with effect from 01.10.2014 the learned AO of the other person is required to issue notice under section 153C only after satisfying that the seized material has a bearing on the determination of the income of such other person. In this case satisfaction note has also been drawn after 01.10.2014. The satisfaction note is of dated 18.09.2018. In the circumstances it is amply clear that for taking action in different years the learned AO of the other person is mandatorily required to draw satisfaction note for each such assessment year where he is satisfied that the seized material has a bearing on the determination of the income of the other person. In this case of the assessee ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 27 the learned AO has not shown as what is the seized material which has a bearing on the determination of income of the assessee for A Y 2011-2012 to A Y 2016-2017, wherein he has issued notice under section 153C. The seized document (purchased deed) firstly do not belong to the assessee, these belong to the firm M/s Eminent Build Developers secondly the seized document which is purchased deed has not been adversely commented upon by the learned AO hence no action could have been contemplated on the basis of purchased deed which alone are the seized material. The provision of section 153C(1) are quoted below for ready reference. “153C. (1) Notwithstanding anything contained in section-139, section- 147, section-148, section-149, section-151 and section-153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section-153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section-153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section-153A : Provided that in case of such other person, the reference to the date of initiation of the search under section-132 or making of requisition under section-132A in the second proviso to sub-section (1) of section- 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : Provided further that the Central Government may by rules13 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section-153A except in cases where any assessment or reassessment has abated. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 28 (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section- 132 or requisition is made under section-132A and in respect of such assessment year— (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section-142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section-143 has been served and limitation of serving the notice under sub-section (2) of section-143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section-153A. 14[(3) Nothing contained in this section shall apply in relation to a search initiated under section-132 or books of account, other documents or any assets requisitioned under section-132A on or after the 1st day of April, 2021.]” The perusal of the above reveals that as per the provisions of section 153C before initiating proceeding under section 153C in the case of other person there must be separate satisfaction note of each year(s) of the learned AO of other person, where the proceeding under section 153C is to be initiated, meaning thereby that before initiating proceedings under section 153C in the case of other person there must is year specific satisfaction note for each year of the AO of the other person. In the case of the assessee it happens to that AO of the searched person and AO of the other person is one and the same, thereforethere is only one satisfaction note. However in the satisfaction the learned AO does not specify to which assessment year or years it relates. Therefore to that extent the satisfaction note issued by the learned AO is defective. However in this satisfaction note the learned AO is talking about the sale of land from Firm M/s Eminent Build Developers to Shri Chandra Prakash Agarwal and also taking about transaction of on money of Rs. 4.78 cr. on sale. It is submitted that the sale of Agricultural land by M/s Eminent Build Developers to Shri Chandra Prakash Agarwal has taken place on 31.05.2016 relevant to assessment year 2017-2018. Thus the satisfaction note does not contain anything relating to A Y 2016-2017. In view of the provisions of section 153C the learned AO of other person could initiate proceedings under section 153C for the A Y 2017-2018 only w r to this satisfaction note. It is submitted that since there is nothing in satisfaction note of the learned AO for the ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 29 assessment year 2016-2017, therefore the learned AO was precluded to initiate any proceedings under section 153C of the income Tax Act 1961 for A Y 2016-2017 in the case of the assessee. In view of the above facts it is submitted that the proceeding initiated under section 153C by the learned AO for the assessment year 2016-2017 is unlawful, illegal and unjust. The Hon’ble CIT (A) is therefore requested that the unlawful, illegal, and unjustified proceeding initiated by the learned AO may kindly be quashed. The assessment completed under section 153C in pursuance of such unlawful proceedings should also be quashed. The perusal of the afore said provisions very specifically stipulates that the learned AO is required to proceed against other person and issue notice and assess the income of the other person only if he is satisfied that the seized material has a bearing on the determination of total income of such other person. In this case the learned AO has not stipulated in the satisfaction note drawn by him that how the seized material which in the case are only purchase deed from Prabhatidevi and others have a bearing on the determination of income of the assesee. There is absolutely no discussion in the satisfaction note by the learned AO in so far as purchased deeds are concerned. The learned AO has only adversely stated about the sale transaction of these very Agricultural lands with Shri Chandra Praksash Agarwal from whom 4.78 Cr was alleged received as on money. This transaction has taken place on 31.05.2016 relevant to assessment year 2017-2018. The observation of on money of Rs. 4.78 cr. alleged to have been taken from Shri Chandra Prakash Agarwal is not on the basis of any seized material but it is on the basis of statement of assesseeshri Pradeep Kumar Dusad. There is no seized material pertaining to A Y 2016-2017. In these circumstance the entire satisfaction note is confusion worst confounded. Absolutely ni action for any year could have been taken under section 153C in so far as the assessee is concerned in his individual capacity. (iv) Fourth para of the satisfaction note In this para the leaned AO has stated that seized document which in this case are purchases deeds belong to the assessee have a bearing on the determination of his income. The observations of the leaner AO lacks substance. The sale deed although pertains to the asseseee but do not have any bearing on the income of the axxessee . The learned AO has not stipulated, in the satisfaction note, in what manner these sale deeds have a bearing on the determination of income of the assessee. The amount disclosed in the sale deed is fully accounted for in the books of the firm M/s Eminent Build Developers., There is nothing incriminating in these sale deeds. The learned AO has further stated that in view of these sales deed notice ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 30 under section 153C is to be issue for A Y 2011-2012 to 2016-2017 which is also unlawful. There has to be year specific satisfaction note. In other words for each assessment year the learned Ao has to record in writing that the material in his possession has a bearing on the determination of the income of the asseseee for the relevant assessment year 10. This confessional statement are violative of board circulars IT is submitted that the confessional statements recorded during search and afterwards being of confessional nature are violative of CBDT circulars. The confessional statements of Shri Chandra Parakash Agarwal/ Chanra Mohan Badaya and assesee shri Pradeep Kumar Dusad have been obtained by the revenue authorities in violation of CBDT circular No F.No. 286/2/2003 – IT (Inv.) dated March 23, 2003 . Quoted below and F.No. 286/98/2013-IT (Inv.II) dated 18.12.2014. CBDT Instruction dated March 23, 2003: In the light of the statements recorded followed by retractions on the ground of coercion and threat in the course of Search and Survey operations, the Board issued the Instructions F.No. 286/2/2003 – IT (Inv.) dated March 23, 2003 stating as follows: \"Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess undisclosed income during the course of the search and seizure and survey operation. Such confession, if not based on credible evidence, are taken/retracted by the concerned assessees while filing return of income. In these circumstances, confession during the search and seizure and survey operation 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 department. Similarly, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income.\" CBDT Instruction dated December 18, 2014: F.No. 286/98/2013-IT (Inv.II) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated- 18th December, 2014 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 31 Subject: Admissions of Undisclosed Income under coercion/pressure during Search/Survey – reg. Ref: 1) CBDT letter F.No. 286/57/2002-IT(Inv.II) dt. 03-07-2002 2) CBDT letter F.No. 286/2/2003-IT(Inv.11) dt. 10-03-2003 3) CBDT letter F.No. 286/98/2013-IT(Inv.11) dt. 09-01-2014 Sir/Madam, Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issues with approval of the Chairperson, CBDT 11. Statement being without supporting documents, no action was warranted. Although no action was warranted in the case of the assessee Shri Pradeep Kumar Dusad, firstly because there was nothing untowards or incriminating in the sale deeds of 3 bighas land purchased on 28.07.2016, secondly the deal of land was for and by the firm M/s Eminent Build Developers. Despite this the case of the assessee was taken for scrutiny and the learned AO made addition of receipt of on money of Rs. 1,48,20,000/- purely on the basis of confessional ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 32 statement of Shri Pradeep Kumar Dusad. The learned CIT(A) has reduced the same to Rs 42,21,115/-. The learned AO had made the additions under section 68 of the receipt of on money of Rs, 1,48,20,000/- on sale of land by the assessee to Shri Chandra Prakash Agarwal. Whereas the learned CIT (A) has taxed the difference between the on money paid on purchases of Agricultural land and on money received on sale of Agricultural land Rs 42,21,115/- {(Rs 1,38,00,000/- - Rs. 96,78,885/- - Rs, 7,78,885/- (Gain already shown in the hands of M/s eminent Build Developers in their return of income for the year)} The following case laws are quoted in support wherein it has been held that no additions can be made in such cases simply on the ground of statements which are not supported by the documentary evidences. It has been further held that statements are not incriminating material . i. Hon'ble High Court of Rajasthan in the case of Mantry Share Brokers Pvt. ltd. (96 taxmann.com I am in agreement with the Ld. A/R that it is a settled law that statement alone cannot be treated as incriminating material for the purposes of making addition for assessment completed u/s 153A / 143(3). It has been held in many judgments that mere statement u/s 132(4) or u/s 131 is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or the statement must be made relatable to material by subsequently inquiry/investigation. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supreme Court also. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 33 ii. Hon'ble Delhi High Court in case of Harjeev Agarwal (70 Taxmann.com 95) held thus: A statement of a M/S Maverick Commodity Brokers Pvt. Ltd.& others person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. \" Smt. S.Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras) \"...While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider,. as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred. \" iii. Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh) \" it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in subsection (4) is obviously based on the well established rule of evidence that mere confessional statement ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 34 without there being any documentary proof shall not be used in evidence against the person who made such statement..\" iv. Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made In the hands of the assessee merely on the basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above mentioned case relied on its earlier order in the case of Kailashben Manharlal Chokshi [2008] 174 Taxman 466 (Guj.),wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 72 taxmann.com 355 (Gujarat), Hon'ble Gujarat High Court held that \" It is required to be borne in mind that the revenue ought to have collected enough evidence during the search in support of the disclosure statement. It is a settled position of law that if an assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the search \" v. Pullanguegode Rubber & Produce Co. Ltd. Vs. State of Kerala 91 ITR 18 (SC) An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. vi. Satinder Kumar (HUF) v. CIT [1977] 106 ITR 64 (SC): It was held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the assessee contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention. vii. Chetna ben Shah Vs ITO (2016) 146 DTR 235 (Guj) ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 35 We have heard learned Counsel for the respective parties and perused the records of the case. We are of the view that the CIT (Appeals) has rightly appreciated the case based on the sound principles of law and has also considered the statement made by the Page 13 of 14 HC-NIC Page 13 of 14 Created On Mon Feb 13 19:29:05 IST 2017 O/TAXAP/1437/2007 JUDGMENT assessee at the relevant point of time. We are of the view that in light of the observations made by this Court in the case of Kailashben Manharlal Chokshi v. Commissioner of Income-tax (supra), mere speculation cannot be a ground for addition of income. There must be a some material substance either in the form of documents or the like to arrive at a ground for addition of income. Considering the ratio laid down in the above decision and in the facts of the present case, we are of the view that the issue raised in this Appeal is required to be answered in favour of the assessee and against the Department. viii. Avadh Kishore Das v. Ram Gopal AIR 1979 SC 861: It was held that evidentiary admissions are not conclusive proof of the facts admitted and may be explained or shown to be wrong, but they do raise an estoppel and shift the burden of proof on to the person making them. The Supreme Court further held that unless shown or explained to be wrong, they are an efficacious proof of the facts admitted. ix. Ajit Chintaman Karve V/s I.T.O. (2009) 311 ITR (AT) 66 (Puna) ITAT That merely because an offer was made having no cogent basis or approval of law that should not stop a taxpayer from correcting his mistake. It was the duty of the A.O. to tax only the legitimate amount from a taxpayer. x. Hukum Chand Jain Vs. Income Tax Officer (2011) 334 ITR 197 (Raj) Hon,ble jurisdiction High Court has held that : Admission despite being an important piece of evidence was not conclusive and it was open to the assessee to show that it was not correct. xi. CIT Vs Ashok kumar Jain (2014) 111 DTR 291 (Raj) 369 ITR 145 It was held that if the assessee does not adhere to the surrender made than it is for the learned AO to bring on record cogent material and other evidences to support the addition rather than rely on the statements xii. CIT Vs. Bhaskar Mittal 73 Taxman 437 (Cal) The Law empowers the ITO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so he cannot assess an ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 36 assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppels by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law (sic) . It is always open to an assessee to take the plea that the figure, though shown in his return of total income, is not taxable in law xiii. Ajit Chintaman Karve V/s I.T.O. (2009) 311 ITR (AT) 66 (Puna) That merely because an offer was made having no cogent basis or approval of law that should not stop a taxpayer from correcting his mistake. It was the duly of the A.O. to tax only the legitimate amount from a taxpayer xiv. Contech Transport Service (P) ltd Ors V/s ACIT (2009) 19 DTR 191 (Mumbai) 28-11-08 No addition can be made only on the basis of admission in statement u/s 132 (4) xv. Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone. Thus in view of the aforesaid decisions including the decision of Hon,ble Apex court and decisions of Honble Rajasthan (jurisdictional) High Court the additions made on the basis of standalone statement is unlawful. The assessee was under a state of total confirmation and narrated incorrect facts. There is no adjustment of this amount in next assessment year i.e A Y 2016-2017 but remains a creditor. xvi. Honorable Delhi High Court in a judgment dated 29.05.2024 in Pavitra Realcon Private Limited in ITA 579/2018 has held that solely statement made during the search can not be the basis of an addition. It was further held that the statements constitute information only and to make additions some other evidence or material found during the search should also corroborate the information in the statements 12. Pleas vehemently argued before the learned CIT (A) Before the learned CIT (A) the assessee Vehemently argued on the following points/issues ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 37 No Action called for in the hands of the assessee 12.1 No action was warranted in the hands of the assessee as the dealing in land were of firm M/s Eminent Build Developers, But learned CIT(A) has rejected the plea of the assessee. The assessee submits that both the learned AO and learned CIT(A) appeal have acted unlawfully in considering the deals in land in the hands of the assessee in the face of documentary evidence of the registration of land purchased by the firm, investments having come from the books of the firm. The learned CIT(A) has wrongly held that firm was used as a conduit. The learned CIT(A) has himself accepted the capital gain shown by the firm on sale of this very land (page No 59 of his order) and has given credit of this capital gain of Rs 7,78,885/- while making addition in the hands of the assessee. Copies of computation of income/return of income of firm M/s Eminent Build Developers disclosing capital gain are available on paper book page No. 2 to 36. In these circumstances the assessment completed in the hands of the assessee deserves to be quashed. The issue of capital gain exclusively pertains to the firm M/s Eminent Build developers which the learned CIT (A) has accepted it indirectly. Hon’ble Supreme Court Decision not followed 12.2 It was submitted by the assessee during the course of appellate proceedings that the Hon’ble Supreme Court in the case of Commissioner of Income Tax -14 versus Jasjit Singh (SC) (Civil appeal No. of 2023 @ SLP(C) No. 6644 of 2016) has held that in the case of other persons action under section 153C for earlier six year shall be counted from the year of receipt of information /documents and not from the date of search in the case of searched person. The relevant part of the decision in quoted below.. Apex Court in the case of CIVIL APPEAL NO......OF 2023 (@ S.L.P.(C) No. 6644 of 2016) COMMISSIONER OF INCOME TAX 14 versus JASJIT SINGH (SC) cited at (2023) 334 CTR 00937 (sc) also cited on (2023) 458 ITR 0437 (SC) held that “Search and Seizure- Date from which six year period was to reckoned for issuance of notice- Search and seizure proceedings were conducted in premises of one M/s K—A.O was opinion that some documents and material belonging to respondent(s) assessee. were involved – Notice was issued by concerned jurisdiction AOs, to assessee’s who contended that period for which they were required to file returns, commenced only from date materials were forwarded to their A.Os. Held it is evident on a plain interpretation of section 153(1) that parliamentary intent to enact proviso was to cater no merely to question the abatement but also with regard to date from which six year period was to be reckoned. In respect of which returns were to be filed by ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 38 third party (whose premises are not searched and in respect of whom specific provisions under section 153C was enacted—Revenue argued that proviso (to section 153(c)(1) is confined in its application to question of abatement— Revenue’s argument is Insubstantial and without merit-- It is quiet plausible that without kind of interpretation which SSP Aviation adopted. A O. seized of materials of searched party, under section 132 – would take his own time to forward papers and materials belonging to third party, to concerned AO – In that event if date would virtually “relate back” as is sought to be contended by revenue (to date of seizure), prejudice caused to third party, who would be drawn into proceedings as it were unwittingly ( and in many cases have no concern with it at all), is disproportionate – for instance, if papers are in fact assigned under section 153C after a period of four years, third party assessee’s prejudice is writ large as it would have to virtually preserve records for at least 10 years which is not requirement in law. – such disastrous and hash consequences cannot be attributed to parliament—“ In view of the aforesaid decision, of the Hon’ble Supreme court the satisfaction note drawn by the AO (both the AO of the searched person and the other persons is one and the same) on 18.09.2018 warranted action under section 153C in the case of the assessee for A Y 2017-2018, whereas no notice under section 153C was issued in the case of the assessee for A Y 2017-2018. The learned CIT(A) has observed on page No 39 of his order that in this case notice under section 153C was not issued. Relevant para of the Appellate order is quoted below. “ The issue of incriminating material is irrelevant of the year as the proceedings were initiated as per section 143(2) of the Act and not by issuing notice under section 153C of the Act. Reference to section 153C of the Act at few places by the ld A O is inadvertent mistake and the same is hereby rectified.” The position being so the assessment has been completed in the case of the assesssee without issuance of notice under section 153C which has been mandated by the Hon’ble Supreme Court. It is submitted that by not following the decision of Hon’ble Supreme Court, the learned CIT (A) is guilty of judicial indiscipline. The issue has been discussed by the learned CIT (A) on page No 32 of his order without there being any decision on the issue. The Hon’ble ITAT is humbly requested to quash the assessment order having been framed without issuance of notice under section 153C. The assessee reiterates that no action was warranted in the hands of the assessee as the dealing in land were of the firm M/s Eminent Build developers, even further than action taken is against the decision of the Hon’ble Supreme Court, therefore also the assessment completed in the hands of assessee ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 39 without issuance of notice under section 153C deserves to be quashed. The decision of the Hon’ble Supreme Court is law of land to be followed by all and sundry. 13. No Incriminating material found during search It is further submitted that in the entire assessment order/appellate order there is no mention of any incriminating seized material, which is mandatory as per provisions of section 153C, which can be said to have a bearing on the determination of the income of the assessee for taking action under section 153C. Additions have been made by the learned AO and partly sustained by the learned CIT(A) purely on the basis of confessional statements. It is trite law that additions cannot be made solely on the basis of statements recorded under section 132(4)/131 unless there is material to substantiate the same. In the case of the assessee there is no murmur or mention of any incriminating material found during the course of search in the case of both Shri Chandra Prakash Agarwal and Shri Chandra Mohan badaya. In view of this no action is possible either in the hands of the assessee or the firm M/s Eminent Build Developers. The Hon’ble ITAT is humbly requested to kindly find favor with the submission of the assessee. The following case laws are quoted below- i. Hon'ble High Court of Rajasthan in the case of Mantry Share Brokers Pvt. ltd. (96 taxmann.com I am in agreement with the Ld. A/R that it is a settled law that statement alone cannot be treated as incriminating material for the purposes of making addition for assessment completed u/s 153A / 143(3). It has been held in many judgments that mere statement u/s 132(4) or u/s 131 is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or the statement must be made relatable to material by subsequently inquiry/investigation. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 40 (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supreme Court also. (ii) Hon'ble Delhi High Court in case of Harjeev Agarwal (70 Taxmann.com 95) held thus: A statement of a M/S Maverick Commodity Brokers Pvt. Ltd.& others person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. \" Smt. S.Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras) \"...While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider,. as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred. \" ii. Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh) \" it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 41 possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in subsection (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement..\" iii. Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made In the hands of the assessee merely on the basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above mentioned case relied on its earlier order in the case of Kailashben Manharlal Chokshi [2008] 174 Taxman 466 (Guj.),wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 72 taxmann.com 355 (Gujarat), Hon'ble Gujarat High Court held that \" It is required to be borne in mind that the revenue ought to have collected enough evidence during the search in support of the disclosure statement. It is a settled position of law that if an assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the search \" iv. Chetna ben Shah Vs ITO (2016) 146 DTR 235 (Guj) We have heard learned Counsel for the respective parties and perused the records of the case. We are of the view that the CIT (Appeals) has rightly appreciated the case based on the sound principles of law and has also considered the statement made by the Page 13 of 14 HC-NIC Page 13 of 14 Created On Mon Feb 13 19:29:05 IST 2017 O/TAXAP/1437/2007 JUDGMENT assessee at the relevant point of time. We are of the view that in light of the observations made by this Court in the case of Kailashben Manharlal Chokshi v. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 42 Commissioner of Income-tax (supra), mere speculation cannot be a ground for addition of income. There must be a some material substance either in the form of documents or the like to arrive at a ground for addition of income. Considering the ratio laid down in the above decision and in the facts of the present case, we are of the view that the issue raised in this Appeal is required to be answered in favour of the assessee and against the Department. v. Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone. Thus in view of the aforesaid decisions including the decision of Hon,ble Apex court and decisions of Honble Rajasthan (jurisdictional) High Court the additions made on the basis of standalone statement is unlawful. The assessee was under a state of total confirmation and narrated incorrect facts. There is no adjustment of this amount in next assessment year i.e A Y 2016-2017 but remains a creditor. vi. Honorable Delhi High Court in a judgment dated 29.05.2024 in Pavitra Realcon Private Limited in ITA 579/2018 has held that solely statement made during the search can not be the basis of an addition. It was further held that the statements constitute information only and to make additions some other evidence or material found during the search should also corroborate the information in the statements 14. Violation of principles of Natural justice Before the learned CIT0(A), the assessee also pleaded that the additions were made by the learned AO in violation of principles of natural justice. The additions have been made on the basis of statement of Shri Chandra Prakash Agarwal and Shri Chandra Mohan Badaya but in-spite of specific written request no cross examination of these people was allowed. But the learned CIT(A) has not considered these submission, Therefore the assessment deserves to be quashed. 15. Before the learned CIT (A) the assessee also pleaded that the learned AO has made the addition under section 68 of the income Tax Act, which is wrong . It was pleaded before the learned CIT (A) that the provisions of section 68 are not applicable in the case of the assessee even distantly, ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 43 16. Provisions of section 153C(2) The learned CIT(A) has wrongly observed as quoted above that the assessment in this case was required to be completed under section 143(2) and not by issuing notice under section 153C it is submitted that the assessment year 2017-2018 being relevant to the search period was required to be completed in the manner under section 153A. The entire scheme of search assessment whether to be completed under section 153A or under section 153C mandate that additions are possible with reference to search material only. In the case of the assessee there in no search material, Additions are not based with reference to searched material. In view of this the learned CITA erred in not deleting the additions.. The Hon’ble ITAT is requested to delete the additions and accept the appeal of the assessee. The above facts fully explain that in the case of the assessee, assessment has been framed in violation of law, the same deserves to be quashed. Now in the background of these facts, the individual grounds of appeal are discussed in detail hereunder Ground No 1 & 2 1. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in not considering the decision of the Hon’ble Supreme court in the case of Commissioner of Income Tax -14 versus Jasjit Singh (SC) (Civil appeal No. of 2023 @ SLP(C) No. 6644 of 2016) holding that the AO of the other person shall issue notice of earlier six years excluding the year in which the information/material is received from the AO of the searched person. Thus the learned CIT (A) has violated the principle of judicial discipline. 2. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in not accepting the plea of the assessee that in the case of assessee the notice under section 153C was required to be issued by the learned AO on receipt of information/material from the AO of the searched person following the decision of the Hon,ble Supreme Court in the case of Commissioner of Income Tax -14 versus Jasjit Singh (SC) (Civil appeal No. of 2023 @ SLP(C) No. 6644 of 2016). There being no notice under section 153C the assessment deserves to be quashed. In the above regard it is submitted that under letter dated 25.06.2024 the assessee submitted before the ld CIT (A) as under – copy of the letter dated 25.06.2024 submitted before the learned CIT A is available on paper book page No…37 to 50. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 44 Supreme Court decision regarding action under section 153C in case of other persons on receipt of seized material. It is submitted that In a recent decision the Apex Court in the case of CIVIL APPEAL NO......OF 2023 (@ S.L.P.(C) No. 6644 of 2016) COMMISSIONER OF INCOME TAX 14 versus JASJIT SINGH (SC) cited at (2023) 334 CTR 00937 (sc) also cited on (2023) 458 ITR 0437 (SC) held that ”Search and Seizure- Date from which six year period was to reckoned for . issuance of notice- Search and seizure proceedings were conducted in premises of one M/s K—A.O was opinion that some documents and material belonging to respondent(s) assessee. were involved – Notice was issued by concerned jurisdiction AOs, to assessee’s who contended that period for which they were required to file returns, commenced only from date materials were forwarded to their A.Os. Held it is evident on a plain interpretation of section 153(1) that parliamentary intent to enact proviso was to cater no merely to question the abatement but also with regard to date from which six year period was to be reckoned. In respect of which returns were to be filed by third party (whose premises are not searched and in respect of whom specific provisions under section 153C was enacted—Revenue argued that proviso (to section 153(c)(1) is confined in its application to question of abatement— Revenue’s argument is Insubstantial and without merit-- It is quiet plausible that without kind of interpretation which SSP Aviation adopted. A O. seized of materials of searched party, under section 132 – would take his own time to forward papers and materials belonging to third party, to concerned AO – In that event if date would virtually “relate back” as is sought to be contended by revenue (to date of seizure), prejudice caused to third party, who would be drawn into proceedings as it were unwittingly ( and in many cases have no concern with it at all), is disproportionate – for instance, if papers are in fact assigned under section 153C after a period of four years, third party assessee’s prejudice is writ large as it would have to virtually preserve records for at least 10 years which is not requirement in law. – such disastrous and hash consequences cannot be attributed to parliament-- “ It is submitted that the AO of the other person shall be competent to take action under section 153C in respect of the preceding six years immediately preceding the assessment year relevant to the previous year in which information is received from the AO of the searched person. In other words as per the decisions of the Hon’ble Apex Court the AO will not construe the date of receipt of information from the AO of the searched person as the date of search. To be more plain AO of the other person would not be able to take action in respect of the preceding six assessment years from the actual ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 45 date of search, but would be competent only to take action in respect of six preceding years of the year in which information has been received by him from the AO of the searched person. In this case information by the AO of the other person has been received under a satisfaction note dated 18.09.2018 of the AO of the Searched person. In other words the information has been received on 18.09.2018 i.e. in assessment year 2019-2020. As per the decision of the Hon’ble Supreme Court the AO has to take action under section 153C in respect of preceding six assessment years excluding the assessment year 2019-2020 in which the information has been received. In view of this calculation the AO could issue notice under section 153C for the following Six assessment years only if the seized material had information having bearing on the determination of income of the other person. S No Assessment year No. 1 2019-2020 Current year when information has been received from the AO of the searched person 2 2018-2019 1st year 3 2017-2018 2nd year 4 2016-2017 3rd year 5 2015-2016 4th year 6 2014-2015 5th year 7 2013-2014 6th year Thus in the case of other person action u/s 153C shall be considered on receipt of seized material from the AO the searched persons, if the same has found to have a bearing on the determination of the income of the other person. The Hon’ble Supreme Court has held that the date of receipt of seized material shall not be and cannot be considered as date of conducting of search. The Hon’ble Supreme Court has very categorically stated that this sort of provisions is not workable specifically in a case where seized material is handed over after a long period of 4 years or so to the AO of the other person. And if the AO is expected to take action in such cases in respect of earlier six years it will require the asseseee to keep the books of account for ten years which is not the intention of law and hence not workable. In view of this the Hon’ble Supreme Court has held that the learned AO of the other person shall be competent only to take action in respect of earlier six yea /ten years from the date of receipt of the seized material. In other words date of receipt of seized material shall not be considered as date of conducting of search. To clarify further the learned AO of the other person shall take action against such other persons in respect of earlier six yea s from the date of receipt of seized material and the date of search shall be irrelevant. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 46 It is submitted that in this case the search was conducted in the case of Shri Chandra Prakash Agarwal on 28.07.2016, However the learned AO made a satisfaction note only on 18.09.2018 for proposing action in the hands of assessee under section 153C. In view of this, the learned AO could take action under section 153C in the case of the assessee in respect of assessment years (A Y 2018-2019, 2017-2018, 2016-2017, 2015- 2016, 2014-2015 and 2013-2014) where the learned AO was satisfied that the seized material had a bearing on the determination of the income of the assessee of the other person. Notice under section 153C in such circumstances could be issued for the A Y 2018-2019, 2017-2018, 2016- 2017, 2015-2016, 2014-2015 and 2013-2014. The assessment year of the assessee under consideration is A Y 2017-2018. The learned AO therefore was required to issue notice under section 153C in the case of the assessee for A Y 2017-2018, on having a satisfaction that the seized material received from AO of the searched person had information having a bearing on the determination of the income of the other person. . This has not been done. No notice under section 153C has been issued in the case of the assessee. The assessment order passed under section 143(3)/153(C), therefore deserves to be quashed. The learned CIT(A) has discussed this issue on page No 32 to 34 of the Appellate order In view of the afore said decision of the Hon’ble Supreme Court it is submitted that the same is fully applicable to the facts of the case. The assessee further submits that decisions of the Hon’ble Suipreme Court are to be followed PAN India. The following case laws regarding judicial discipline are quoted below. i. Assistant Collector Central Excise Vs Dunlop India and other 154 ITR 172 (SC) Para 8 of the order We desire to add and a was said in Cassell and co.m Ltd Vs. Broome (1972) AC 1027 (HL), we hop it will never be necessary for us to say so again that “ in the hierarchical system of Courts” which exists in our country, “it is necessary for lower tier”. Including the High Court. “to accept loyalty the decisions of the higher tiers”. “IT is inevitable in a hierarchical system of Courts that there are decisions of the supreme appellate tribunal which do not attract the unamimous approval of all members of the judiciary…. But the judicial system only works if someone is allowed to have the las word and that last word, once spoke, is loyally accepted” (See observation of Lord Hailsham and Lord Diplock ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 47 in Broome Vs Cassell). The better wisdom of the Court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical judicial system. In Cassell Vs Broome (Supra). Commenting on the Court of Appeals comments that Rookes Vs Barnard (1964) AC 1129, was rendered per incuriam, Lord Diplock observed. The court of Appeal fouond themselves able to disregard the decision of this House at Rookes Vs Barnard (1964) SC 1129 by applying to it the label per incuriam. That lavel is relevant only to the right of an appellate Court to decline to follow one of its own previous decisions, not to its right to disregard a decision of a higher appellate Court or to the right of a judge of the High Court to disregard a decision of the Court of Appeal. It is needless to add that in India under Art, 141 of the constitution, the law declared by the Supreme Court shall be binding on all Courts within the territory of India and under Ar. 144 all authorities, Civil and judicial, in the territory of India shall acrt in aid of the Supreme Court. ii. Nepal chand Day Vs ACIT 2023 224 TTJ 0222 (Ranchi Trib) 7. It has been held time and again that law declared by a court will have retrospective effect, if not otherwise stated to be so specifically. It is also well settled proposition that whenever, a previous decision is overruled by a larger bench of the Supreme Court, the previous decision is completely wiped out and Article 141 will have no application to the decision which has already been overruled and the court would have to decide the cases according to the law laid down by the latest decision of the Hon'ble Supreme Court and not by the decision which has been expressly overruled. The above reasoning stems from the principle that when a court decides a matter, it is not as if it is making any new law but it is as if it is only restating what the law has always been. The reliance in this respect can be placed on the decision of the Hon'ble Supreme Court in the case of \"Ramdas Bhikaji and Choudhary vs. Sadananda\" (1980) 1 SCC 550 and on the recent decision of the Hon'ble Supreme Court in the case of \"Manoj Parihar and Ors. Vs. State of Jammu & Kashmir and Ors\" SLP(C) No.11039 of 2022 vide order dated 27.06.2022; \"PV Goerge vs. State of Kerala\" (2007) 3 SCC 557; Assistant Commissioner vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 14 SCC 171, wherein, the Hon'ble Supreme Court has held that judges do not make law, they only discover and find the correct law. Even, that where an earlier decision of the court operate for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which were earlier not correctly understood. In view of the above stated legal position, the law declared by the Hon'ble Supreme Court will be retrospectively applicable and it will be treated that ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 48 earlier decisions of different High Court favouring the assessee would be of no benefit of assessee at this stage as the said I.T.A. No.63/Ran/2022 Assessment Year: 2018-19 Nepal Chandra Dey decisions of the High Courts are treated to be never existed or to say are wiped out by the aforesaid decision of the Hon'ble Supreme Court. Ground NO. 3, 4 5 & 7 3. That in the facts and circumstance of the case and in law the learned CIT(A) has erred in not deleting the addition made by the learned AO in violation of principles of natural justice. 4. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in confirming the action of the learned AO in considering the sale deeds found during search belonging to firm M/s Eminent Build Developers in the hands of the assessee. Action in the hands of the assessee deserves to be quashed. 5. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in restricting and confirming additions of Rs, 42,21,115/- as against addition of Rs. 1,43,40,000/- which was made by the learned AO solely on the basis of statements without there being any substantive evidence. 6. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in restricting and confirming addition of Rs. 42,21,115/- as against addition of Rs. 1,43,40,000/- which was made by the learned AO on the ground that the purchaser Shri Chandra Prakash Agarwal admitted of having paid on money in the purchase of Agricultural land from the assessee without allowing cross examination of Shri Chandra Prakash Agarwal. 7. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in restricting and confirming addition of Rs 42,21,115/- as against addition of Rs,.1,43,40,000/- which was made by the learned AO despite there being contradictory statements of assessee and Shri Chandra Mohan Badaya regarding the sale consideration of land. In the above regard it is the submission of the assessee that assessee had submitted a detailed submission covering the afore said issue on 10.04.2023 before the leaaned CIT(A). A copy of the submission made before the learned CIT(A) dated 10.04.2023 is available on paper book page No…51 to 170. and the relevant part is quoted here. “Facts ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 49 It is submitted that during the course of search in the case of Shri Chandra Prakash Agarwal, copies of agreement for purchaser of agricultural land were found which disclosed that M/s Eminent Build developers a partnership firm (where the assessee is also a one of the partner) have purchased some agricultural land from Smt. Prabhati Devi and other(s) on 28.07.2015 for an apparent consideration of Rs. 1,54,21,115/-. The entire amount as per agreement was paid through banking channels and was fully accounted for in the books of M/s Eminent Build developers. Thus in view of this document not being incriminating in nature no action was warranted either in the hands of the assessee or in the hands of the firm. However search was also conducted in the case of Shri chandra Mohan Badaya simultaneously when search was conducted in the case of shri Chandra Prakash Agarwal. It so happened that the firms in which Shri Chandra Mohan Badaya was partner namely A R property & colonizers and M/s fortune real estate had also purchased agricultural land from the same seller(s) Smt. Prabhati Devi and other(s) on the same date 28.07.2015. Copies of agreements of purchase of land pertaining to the firm where Shri Chandra Mohan Badaya was partner were also found during the course of search in the case of shri Chandra prakash Agarwal where documents of agreement of eminent Build developers was also found. (Copy of these agreement is available on paper book page NO…37 to 47.) Accordingly Shri Chandra Mohan Badaya was examined during the course of search under section 132. It was in his statement that Shri Chandra Mohan Badaya stated that the cost land (3 bighas) purchased by M/s Eminent Build Developers included on money payment in cash of Rs, 1,46,00,000/-. It was on the basis of this statement that the learned AO made addition in assessment year 2016-2017 of Rs, 1,45,78,885/- being payment in cash over and above the apparent consideration shown in the purchases agreement at Rs. 1,54,21,115/-. In other words the cost of land taken by the learned AO in the case of the assessee as per AO works out as under a. Payment made by firm Eminent Build developers by cheques as per agreement and as per bank account of M/s Eminent Build Developers Rs, 1,54,21,115/- b. Alleged Cash payment on account which addition have been made by the learned AO in the hands of the assessee In A Y 2016-2017 treated the same as on money on the basis of statement of shri Chandra Prakash Badaya Rs,. 1,45,78,885/- ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 50 ============= Total Rs. 3,00,00,000/- ============= Thus the additions of Rs, 1,45,78,885/- made in the hands of the assesseee on the basis of Statement of Shri Chandra Mohan Badaya has resulted in the increase of cost of land to Rs., 3,00,00,000/- in place of Rs. 1,54,21,115/- as per purchase agreement. ( Rs. 1,54,21,115/- + Rs. 1,45,78,885/- totaling Rs, 3,00,00,000/-) Thus the cost of Agricultural land as per assessment order for the assessment year 2016-2017works out to Rs, 3,00,00,000/- It so happened that M/s Eminent build developers sold the land on 31.05.2016 to Shri Chandra Prakash Agarwal for an apparent consideration of Rs, 1,62,00,000/-. In respect of the sale registered on 31.05.2016. Copy of sale deed is available on paper book page No 171 to 188. As the land was purchased together with the firms of Shri Chandra Mohan Badaya so also the land was sold by M/s Eminent Build Developers along with the firms of Shri Chandra Mohan Badaya. Accordingly Shri Chandra Mohan Badaya was examined during the course of search under section 132 on the same issue of sale of agricultural land. His statement has been reproduced on page No. 4 of the assessment order. It is on the basis of his statement that the learned AO concluded that on the entire sale of 10 bighas land which included 3 bighas of M/s Eminent Build Developers an amount of Rs. 4,78,00,000/- was received over and above the apparent consideration of Rs. 5,22,00,000/- (This included Rs 1,62,00,000/- of the firm M/s Eminent Build Developers). The learned AO accordingly calculated the share of on money in the hands of the assessee at Rs, 1,43,40,000/- (30% of Total alleged on money of Rs, 4,78,00,000/-) of 3 bighas out of the sale of 10 bighas of agricultural land. Beside the statement of Shri Chandra Mohan Badaya, the learned AO has referred the statement of Shri Chandra Prakash Agarwal on page 4 of the assessment order which is not legible. Similarly he has also referred to the statement of the assessee and has reproduced it on page No. 6 , 7 ,8 and 9 of the assessment order . Thus as per AO the sale consideration works out to Rs. 3,05,40,000/-(Rs. 1,62,00,000/- apparent consideration + Rs. 1,43,40,000/- on money for which additions is made by the learned AO for the A Y 2017-2018) The assessee has also deposed in the statement as under regarding the sale consideration:- Total sales consideration Rs, 3,00,00,000/- Apparent consideration received through cheques Rs,.1,62,00,000/- Received from Chandra mohan Badaya by cheque 18,00,000/- Plots from Shri Chandra Prakash Agarwal 56,00,000/- ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 51 Cash received/receivable 64,00,000/- ========== Total 3,00,00,000/- ========== Thus as per the statements of the assessee the sale consideration works out to Rs. 3,00,00,000- whereas the learned AO has works out the sale consideration to Rs, 3,05,40,000/- (Rs. 1,62,00,000/- + 1,43,40,000/-). These are uncontroverted facts regarding sale consideration of agricultural land of M/s Eminent Build Developers. It is submitted that the learned AO has already made additions of Rs. 1,45,78,885/- in the assessment order for the assessment year 2016-2017, on account of alleged payment made by the assessee at the time of purchase of Agricultural land for an apparent consideration of Rs, 1,54,21,115/-. In other words the cost of land has been taken at Rs, 3,00,00,000/- ( 154,21,115/- + 1,45,78,885/-) These facts are crystal clear and establish beyond doubt that as per the AO himself the cost of land has been worked out at Rs, 3,00,00,000/- in A Y 2016- 2017. Now as per the AO the alleged sale consideration is Rs, 3,05,40,000/- as worked out in the foregoing para(s) and in the assessment order. The short term Capital gain /the profit as per the working of the leaned AO comes as under Sales consideration Rs, 3,05,40,000/- Purchaer consideration Rs. 3,00,00,000/- ============= Difference,. Rs, 5,40,000/- ============ Thus the learned AO made additions of Rs. 1,43,40,000/- without appreciating the facts in correct perspective. The entire order is a result of utter confusion. It is further submitted that the learned AO erred in not accepting the plea of the assessee that the transaction of sale did not deserve to be considered in his hands as the sale was made by firm M/s Eminent Build Developers. The learned AO was not in a position to controvert the following documentary evidences furnished before him. a. The purchase agreement dated 28.07.2015 in the name of the firm M/s Eminent Build Developers for an apparent consideration of Rs, 1,54,21,115/- b. The entire amount of Rs, 1,54,21,115- was paid by firm M/s Eminent Build developers from bank account with ICICI Bank in the name of M/s Eminent Build Developers though banking channels. Copy of the bank ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 52 account of the firm M/s Eminent Build Developers as supporting document is available on paper book page No. 48., c. In the Balance sheet as on 31.03.2016 of the firm M/s Eminent build developers the purchaser of land was disclosed,. Copy of audited Balance sheet is available on paper book page No 49 to 58. d. The sales deed dated 31.05.2016 in the name of the Firm M/s Eminent build developers for an apparent consideration of Rs, 1,62,00,000/- e. The entire amount of Rs, 1,62,00,000/- was received by the firm M/s Eminent Build Developers in bank account with ICICI Bank in the name of firm M/s Eminent build Developers through Banking Channels. Copy of the relevant Bank account is available on paper book page No 87. f. Transaction of sale was also disclosed in the return of income filed by the firm M/s Eminent Build developers for the assessment year 2017-2018 where in gain on account of sale of agricultural land of Rs. 7,78,885/- has been disclosed and tax has been paid accordingly g. Return of the firm M/s Eminent Build Developers both for A Y 2016- 2017 and 2017-20078 stands accepted by the department. Till date no action has been considered in the hands of the firm M/s Eminent Build developers, which shows that the entire transactions of purchases and sales of the agricultural land in the hand s of the firm is in order. In the face of these documentary evidences which establish beyond doubt that the transaction of purchases and sales belonged to firm M/s Eminent Build developers and also deserved to be considered in the hands of the firm M/s Eminent build developers. Absolutely there is no case for considering the purchase and sale of land in the hands of the assessee. The entire approach of the learned AO was misdirected and was unlawful. On this account alone the assessment order deserves to be quashed. The addition made on the basis of statement is further assailed as under a. No addition was called on the basis of statement of shri Chanra Mohan Badaya It is submitted that the sale of land by m/s Eminent build developers is an independent transaction. This is established by the fact of independent registration of the sale transaction before the sub registrar jaipur. Copy of which is available on paper book page No cited supra. In this regard the statement recorded of shri Chandra mohan Badaya are not at all relevant. Shri ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 53 Chandra mohan bayada was neither legally entitled nor competent nor authorized to state anything regarding the transaction of purchase and sales of agricultural land by M/s Eminent building developers. On record he has no say in the affairs of M/s eminent build Developers so his statement deserved to be totally ignored. Further it is most relevant to submit that the statement is not supported by any piece of documentary evidence. It has been repeatedly stated that in the search both of Shri Chandra mohan Badaya and that of shri Chandra prakash Agarwal no documentary evidence was found which disclosed payment or receipt over and above the apparent consideration in the transaction of agricultural land . In the absence of any documentary evidence additions on the basis of statements alone were not justified. The following case laws are quoted in support 1. Smt. Aruna Sankhla Jaipur Vs DCIT Central Circle Jaipur ITA No. 483/JP/2016 A Y 2005-2006 date of order 16.05.2019 It has been held by the jurisdiction ITAT that AO received the statements of the sellers recorded by ACB u/s 161 of CRPC wherein they have admitted on money receipt in respect of the land purchase by the assessee. The statements under section 131 of The Act, there was nothing either found or in possession of the AO to show that any undisclosed income on account of on money payment by the assessee. Hence addition made by the AO on the basis of information received from ACB and consequential inquiry conducted by the AO during the assessment proceedings cannot be treated as incriminating material to justify the addition on account of on money when the assessment was completed and not pending at the time of search. Accordingly, additions made by the AO is not sustainable in law 2. CIT Vs Prabhatilal Saini (2018) 401 ITR 228 (Raj) It has been held that no additions can be made sole on the basis of statements recorded under section 132(4) . It is further held that an addition could not be made solely on the basis of surrender made during the course of search and survey in the absence of corroborative evidence in support and deleted the additions. 3. CIT Vs IBC knowledge P limited (2016) 69 Taxman.com 108 (kar) Where no material belonging to a third party is found during a search, but only as inference of an undisclosed income is drawn during course of enquiry, or during search or during post-search enquiry, section 153C would ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 54 have no application. Thus the detection of incriminating material leading to an inference of undisclosed income is a sine qua non for invocation of section 153C. Said detection can be at three stages (a) when re assessment is initiated (b) during course of reassessment and (c) where re assessment is altered by a difference assessment in respect of searched person or in respect of third party, further such incriminating material must relate to undisclosed income which would empower the assessing officer or upset or disturb a concluded assessment of the other person. Otherwise a concluded assessment would be disturbed without there being any basis for doing so which is impermissible in law. b. Statement of shri Chandra Mohan Badaya has not been accepted by the learned AO in total (partial acceptance is not in accordance with law) It is further submitted that in the statements of Shri Chandra Mohan Badaya reproduced by the learned AO on page No. 4 of the assessment order the sale consideration of 10 bighas of agricultural land has been stated at Rs. 14.51 crores. But this has not been accepted by the learned AO. The reasons are best known to the learned AO why the statement has been rejected. On page 10 para 6.10 of the assessment order the total consideration for 10 bighas of agricultural land has been accepted by the learned AO at Rs. 10.00 Cr. This is totally at variance with the statement of Shri Chandra Mohan Badaya. The submission of the assessee is that on the one hand the learned AO is basing the assessment order entirely on the statement of Shri Chandra Mohan Badaya for assuming and presuming payment of on money in the transaction of the agricultural land but at the same time he has rejected the sale consideration as disclosed by him. Having rejected the statement of shri Chandra Mohan Badaya there was no case left for making the additions. The assessee wonders that when no document was found in search in both the cases namely Shri Chandra Mohan Badaya and Shri Chandra Prakash Agarwal evidencing any payment or receipts or on money over and above the apparent consideration then what was the occasion for examining Shri Chanra Mohan Badaya and Shri Chandra prakash Agrawal except to obtain to surrender by way exerting threat and coercion. Therefore also the statement cannot be made the basis of the addition. The learned AO was precluded in partial acceptance of the statement of shri Chandra Mohan Badaya. This vitiates the assessment order The following case laws are quoted in support. CIT Vs Indeoairways Private limited (2012) 79 DTR 289 (Del) ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 55 c. Discrepancies in the statement of Shri Chanra Mohan Badaya and that of assessee The statement of shri Chandra mohan Badaya and that of the assessee are reproduced below ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 56 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 57 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 58 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 59 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 60 The perusal of the afore said reveals a major discrepancy that where as in the statement recorded on 29.07.2016 (question NO. 16 ) shri Chandra Mohan Badaya stated the sale consideration of 10 bigha of Agricultural land which included 3 bighas of land of M/s Eminent Buld Developers at Rs. 14.51 crores. He has also referred one Shri Kailash chand Maheshwari who also took away Rs. 4.50 Crores. Now in the statement of Shri Pradeed Kumar Dusad the ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 61 assessee recorded on 10.11.2016 the sale consideration of his portion of land being 3 bighas land was stated to be Rs, 3.00 Cr. and on this basis the learned AO as per para 6.10 of the assessment order appearing on page No. 10 of the assessment order has accepted the total deal of Sale of 10 bighas of land at Rs. 10.00 Cr,. A vital question arises that on what account an on what ground the statement of one i.e. Shri Chandran Mohan badaya has been rejected and that of the assessee has been accepted. The submission of the assessee is plain and strong that the statement of shri Chand mohan badya and that of the assessee himself being contradictory both deserved to be ignored. The Statement of both shri Chandra mohan badaya and that of the assessee have no documentary evidence to support. The learned AO has also not bring any ground for believing upon the statement of assessee and disbelieving the statement of the shri Chandra Mohan badaya. In the circumstances the additions made on the basis of contradictory statements deserves to be deleted. ` Before making addtionss the learned AO was required to reconcile both the statements. d. Cross examination of Shri Chandra Mohan Badaya and Shri Chandra Prakash Agrawal not allowed. The learned AO has initiated the assessment proceedings on the basis of statements of Shri Chandra Mohan Badaya, recorded on the back of the assessee The assessee requested vide letter on sub : “reply to query letter no DCIT/Central Cir-2/2018-19/letter/A/1637/dated 18/10/2018 for allowing cross examination of shri CP Badaya but the same was not allowed. Copy of letter requesting for cross examination is available on paper book page No 84 to 86. It is settled position of law that no action could be taken on the basis third party statement without allowing opportunity for cross examination. The following case laws re quoted in support. Following case laws are quoted in support i. Andman Timber Ind. Vs. Commission of Central Excise (2015) 281 CTR 211 (SC). The Apex Court has observed that not allowing cross examination is a serious flaw and makes the order nullity. Andman Timber Ind. Vs. Commission of Central Excise (2015) 281 CTR 211 (SC). “not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order, is a serious flaw which makes the order nullity in as much as it amounted to violation of principle of natural justice because of which the assessee was adversely affected. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 62 ii. COMMISSIONER OF INCOME TAX vs. BIJU PATNAIK HIGH COURT OF ORISSA 190 ITR 0396 Although answers can be recorded either in favour of the Department or against it, ultimately each answer would again become inconclusive on account of the final findings of fact of the Tribunal that ITO has not given reasonable opportunity to the assessee to rebut the statements recorded ex parte under s. 131 of the Act and to furnish explanation to some of the materials. It is true that Tribunal has not given due weight to the relevant and admissible evidence while recording the findings of fact. However, the findings of the Tribunal on such fact are also vulnerable as they may require reconsideration. If answers in respect of each of the questions are indicated in the absence of reasonable opportunity being afforded to the assessee, they would be of academic interest inasmuch as the answers against the assessee would become vulnerable on account of the need to undo the absence or reasonable opportunity. A clear and conclusive finding binding on the parties can be given only after reasonable opportunity is given to the assessee as found by the Tribunal. No answer should be given in advisory jurisdiction which would not finally decide the issue since final finding can be arrived at only after giving reasonable opportunity to the assessee and explanation given by the assessee would have material bearing on the finding. It is necessary that the Assessing Officer gives opportunity to the assessee. Tribunal has not considered the evidence in its proper perspective while rendering the decision in appeal and accordingly, the findings of the Tribunal are vitiated in law. As the final fact-finding forum, the Tribunal has to consider the same again. Since Tribunal has recorded a finding that reasonable opportunity has not been given to the assessee to give rebuttal evidence and explanation, this can effectively be done by the Assessing Officer. The reference applications are disposed of as above leaving it to the Tribunal to pass consequential orders. iii. PRAKASH CHAND NAHTA vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF MADHYA PRADESH) (2008) 301 ITR 0134 : Assessment— Validity—Opportunity of being heard I statements of third party— Unaccounted silver ornaments and utensils were found and seized during the search at the assessee’s premises—Assessee explained that the said silver items were purchased from one R & Co.—AO made addition to the income of the assessee after recording the statement of M, proprietor of R & Co., behind the back of the assessee—Not justified—AO has heavily relied upon the statement of M and has ignored the subsequent affidavit filed by M which is in variance of his original statement—Since the statement of M was used against the assessee and an affidavit was filed controverting the same, it was obligatory on the part of the AO to allow the prayer of assessee for ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 63 cross-examination of M—AO having not summoned M under s. 131 in spite of the request of the assessee, evidence of M could not have been used against the assessee—Therefore, the assessment order is vitiated iv. HEIRS AND LRS OF LATE LAXMANBHAI S. PATEL vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF GUJARAT ) (2010) 327 ITR 0290 Opportunity of being heard—During search of one R, key of bank locker along with two packets containing six promissory notes were recovered—Out of those six promissory notes, one was in the sum of Rs. 8,78,358 executed by one K in the capacity of partner of firm DCI—In his statement recorded during search, R stated that the key of locker and the two envelopes were handed over to him by the assessee—K also admitted in his statement recorded on the same day at 2.00 AM midnight that he had executed the pronote and signed it on behalf of DCI after obtaining a sum of Rs. 8,78,358— Later, K filed an affidavit that his statement was recorded at late hours in the night under coercion and pressure—Subsequently, K along with two other partners of DCI, made a voluntary disclosure of a sum of Rs. 11 lacs including the amount of Rs. 8,78,358 and same was assessed in the hands of the three partners— Relying on the statement of R and the retracted statement of K, AO made addition of Rs. 8,78,358 under s. 68 in the hands of assessee also and the same was confirmed by CIT(A) and Tribunal—Not justified— Apparently, there was a violation of principles of natural justice as the statement of one of the important witnesses, namely, R on which heavy reliance was placed by the AO is neither referred to in the assessment order nor copy thereof was given to the assessee nor the assessee was given an opportunity of cross-examining the said R—Authorities could not be absolved from doing so on the ground that the facts stated by R were admitted by the assessee—K had not only retracted his earlier statement but also made a voluntary disclosure, along with two other partners of DCI, in the sum of Rs. 11 lacs which included the amount of pronote of Rs. 8,78,358—Legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross-examination, is that if the addition is made, the same is required to be deleted on the ground of violation of the principles of natural justice— Orders of all the three authorities set aside and addition deleted. v. COMMISSIONER OF INCOME TAX vs. EASTERN COMMERCIAL ENTERPRISES (HIGH COURT OF CALCUTTA) 210 ITR 0103 Assessee showing a gross profit rate of 5.2%—Revenue being of the opinion that assessee inflated purchases, called in evidence one S from whom assessee made purchases and applied G.P. rate of 30%— S denied having made any sales to assessee in the face of earlier ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 64 affidavits confirming such sales—Statement of S not furnished to assessee nor opportunity to cross-examine him given—Cross examination is sine qua non of the due process of taking evidence and no adverse inference can be drawn against a party unless that party is put on notice of the case made out against him—Matter remanded for cross-examination of S with opportunity to assessee to furnish evidence to rebut the evidence of S vi. KALRA GLUE FACTORY. Vs. SALES TAX TRIBUNAL & ORS. (SUPREME COURT OF INDIA) 167 ITR 0498 Statement which was not tested by cross examination is not good evidence. vii. Jindal Stainless Limited Vs ACIT (ITAT Del bench) ITA No. 3480 del 2006 viii. Monga Metals (P) Limited Vs ACIT ITA No. 1377/All/1997 30.063.1999 Held as under When the finding of the quasi-judicial authority are found to have been influenced by the advice/information/evidence which have been obtained form third party and brough on record without the knowledge of the assessee or without allowing the assessee an opportunity to controvert or disapprove the information, evidence or statement of fact contained in such information or without allowing the assessee to cross-examined such thirty party, the order has to be found violative of principal of natural justice i.e. such an order is an order in violation of principle of natural justice the assessment order for the block period has been passed solely oin the basis on the statements of persons referred to in the facts already extracted and the assessee was not allowed to cross examine any one of them. The undisclosed income referred to in the arguments of the assessee has been determined as a resultof assessment order which is completely in violation of principle of natural justice. Therefore once the assessment is found to be in violation of principal of natural justice, It has to be quashed as b being bad in law and void or a nullity. ix. Kellogg India P Limited & Madhukar Patil Vs, UOI *(2006)(193) E L T. 385 (Bombay High court) = 2007 (8) S,T. T 84 (Bom). Wherein it has been held ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 65 Adjudication - Natural justice- Affected persons must be given fair opportunity not only to answer case against him but to adduce positive evidence in support of his own case together with right to contradict all adverse allegations, if necessary, by permitting him to cross –examine witnesses of opponent. (para 46) x. CIT Vs Sunita Dhadda (Supreme Court) Addition on the basis of statements never confronted to assessee: Susee Auto Plaza (P.) Ltd.vs.Addl. CIT [2010] 3 ITR(TRIB.) 166(CHENNAI) Where, admittedly, no incriminating evidence was either found or seized, which could be said to be directly related to assessee company, but whatever evidence was found was related to group companies, simply on basis of analogy that assessee must be collecting amount from customers like group concerns, addition could not be made to assessee’s income. Any addition which was based on statements which were never confronted to the assessee could not be sustained in the eyes of the law. IN view of the afore said case laws, the ratio of which is fully applicable to the case of the facts of the case of the assessee, the additions made deserves to be deleted. It is submitted that the above submission has not been considered by the learned CIT(A) in proper perspective. For the shake brevity the Gist of the above submission is as under Assessment passed not on the basis of seized material but only on statements a. The entire assessment order is based and has been framed not w r to any incriminating material found during search either in the case of Shri Chandra Prakash Agarwal or in the case of Shri Chandra Mohan Badaya. The assessment has been framed totally on the basis of statements of Shri Chandra Prakash Agarwal and Shri Chandra Mohan Badaya. Further the assesssee was not allowed cross examination of Shri Chandra Prakash Agarwal and Shri Chandra Mohan Badaya. Therefore the entire assessment is vitiated. b. The assessment has been framed in total violation of principles of equity and justice. It is submitted that inspite of specific request no opportunity was granted to the asseseer for cosss examination of Shri Chandra Prakash Agarwal and Shri Chandra Mohan Badaya. It is further submitted that ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 66 in the case of searches conducted at Shri Chandra Prakash Agarwal or in the case of Shri Chandra Mohan Badaya, no incriminating document was found and seized which requires clarificatory statements under section 132(4). The statements recorded in both the cases of Shri Chandra Prakash Agarwal or in the case of Shri Chandra Mohan Badaya are purely of confessional nature extracted by the revenue authorities exerting undue pressure. These statements are in total violation of Board circular F.No. 286/2/2003 – IT (Inv.) dated March 23, 2003 , F.No. 286/98/2013-IT (Inv.II), dated 18.12.2014 , CBDT letter F.No. 286/57/2002-IT(Inv.II) dt. 03-07-2002, CBDT letter F.No. 286/2/2003-IT(Inv.11) dt. 10-03-2003 and CBDT letter F.No. 286/98/2013- IT(Inv.11) dt. 09-01-2014 which advices the revenue authorities for not recording for any confession statement. Additions made on the basis of such confessional statements without there being any substantive evidences deserves to knocked down. The relevant circulars of CBDT is quoted below CBDT Instruction dated March 23, 2003: In the light of the statements recorded followed by retractions on the ground of coercion and threat in the course of Search and Survey operations, the Board issued the Instructions F.No. 286/2/2003 – IT (Inv.) dated March 23, 2003 stating as follows: \"Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess undisclosed income during the course of the search and seizure and survey operation. Such confession, if not based on credible evidence, are taken/retracted by the concerned assessees while filing return of income. In these circumstances, confession during the search and seizure and survey operation 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 department. Similarly, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income.\" CBDT Instruction dated December 18, 2014: F.No. 286/98/2013-IT (Inv.II) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated- 18th December, 2014 Subject: Admissions of Undisclosed Income under coercion/pressure during Search/Survey – reg. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 67 Ref: 1) CBDT letter F.No. 286/57/2002-IT(Inv.II) dt. 03-07-2002 2) CBDT letter F.No. 286/2/2003-IT(Inv.11) dt. 10-03-2003 3) CBDT letter F.No. 286/98/2013-IT(Inv.11) dt. 09-01-2014 Sir/Madam, Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issues with approval of the Chairperson, CBDT c. In the case of the assessee the purchase and sale of land was for and on behalf of the firm M/s Eminent Build Developers and assessee acted as a representative being partner in the firm. The payment was made by the firm from its books of account the registration of land was in the name of the firm. Therefore the proceedings in the hands of the assessee are totally misplaced and unlawful. Ground NO. 8 & 9 8. That in the facts and circumstances of the case and in law the learned CIT(A) has erred in not holding that the learned AO was not justified in applying the provisions of section 68 of the income Tax Act. 1961. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 68 9. That in the facts and circumstances of the case and in law the learned CIT(A) has not held that in the case of the assessee section 68 was not at all applicable. It is submitted that a detailed submission was made before the learned CIT (A) regarding the issue that leaned AO was not justifying in making the addition invoking the provisions of section 68. Vide letter dated 18.06.2024. copy of the letter dated 18.06.2024 is available on paper book page No…cited supra . The same is quoted below. “Section 68 wrongly applied by the learned AO. It is submitted that the learned AO at top para of page No 12 of the assessment order has made addition of Rs. 1,43,40,000/- on account of on money receipt on sale of land. He has treated the receipt of on money on sale of land as undisclosed income of the assessee and the same has been added under section 68 of the income Tax Act 1961. It is submitted that the learned AO has erred in considering on money of Rs, 1,43,40,000/- (being 30% of Rs 4,78,00,000/-) on sale of land as unexplained income of the assessee. . The land was purchased for Rs. 2.50 Cr. which includes registered value of Rs. 1.54 Crs. as such the working of income by the leaned AO is incorrect. Further the learned AO has also acted unlawfully in treating this income arising on sale of land as unexplained under section 68 of the income tax Act. The learned AO further erred in charging tax @ 60% by applying the provisions of section 115BBE of the income Tax Act 1961. The provisions of section 68 in the case of the assessee are not applicable at all even distantly, the same are quoted below. Section 68 of the income tax Act 1961 68.Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 69 (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10 It is submitted that in the case of the assessee nothing is found credited in the books of accounts of the assessee maintained for any previous year and Hence the provisions of section 68 are not applicable in the case of the assessee. Regarding the applicability of section 68 the supreme court in the case of Baladin Ram V/s CIT 71 ITR 427 has held as under :- It was observed that section 68 arises for consideration only when the following circumstances exist:- i. The matter concerns event was that took place on or after 1st April,1962 (the date of the coming into force of the Act 1961 Act), ii. The assessee maintains account books for his previous year iii. The cash credit entry appears in such books of account : and iv. The assessing officer enquiring into the matter comes to the conclusion that the undisclosed income of the assessee. The perusal of the aforesaid decision of the Hon’ble Supreme Court mandates that section 68 is applicable only when there is a credit entry in the books of account maintained by the assessee. In this case of the assessee the learned AO has not discussed any credit entry in any name appearing in the Books of accounts of the assessee. The additions has been made on account of on money received on sale of land on which provisions of section 68 are not applicable, hence the provisions of section 68 are not applicable. Since in this case there are no credits in the books of account maintained by the assessee which can be treated as unexplained, therefore section 68 was wrongly applied. In view of the above Hon’ble CIT (A) is requested to decide the appeal considering the above said submission and grant relief to the asseesese.” The learned CIT(A) although have quoted that above submission of the assessee on page No. 36 to 38 in the Appellate order but has refrained from giving any decision. The Hon,ble ITAT is humbly requested to consider the assesses submission sympathetically and quash the assessment order and ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 70 delete the additions made by the learned AO and partly sustained by the learned CIT (A). Ground No. 10 10. That the appellant craves to add/alter/amend the Grounds of appeal before the final hearing is completed Not pressed Conclusion The learned CIT(A) has erred in not following the Hon’be Apex Court in the case of CIVIL APPEAL NO......OF 2023 (@ S.L.P.(C) No. 6644 of 2016) COMMISSIONER OF INCOME TAX 14 versus JASJIT SINGH (SC) cited at (2023) 334 CTR 00937 (sc) also cited on (2023) 458 ITR 0437 (SC) requiring 153C notice in the case of the assessee In the case additions has been made purely on the basis of statements which is against the settled principles of law The provision of section 153A /153C mandate existence of incriminating material for making additions, further statements are not incriminating material Principles of natural justice have been violated as statement of Shri Chandra Prakash Agarwal and shri Chandra Mohan Badaya have not been supplied for cross examination. Therefore additions made by the AO and partly sustained by CIT(A) deserves to be deleted. Submission with respect to appeal of the revenue ITA No. 1149/JPR/2024 Now after discussing the appeal of the assessee, the appeal of the revenue taken is for discussion as under A Ground No 1, 2 and 3 of Departmental Appeal It is submitted that in all the aforesaid Grounds of Appeal of the revenue the issue is one and the same, it is submitted that while deciding the appeal for the A Y 2017-2018, the learned CIT(A) was seized with the issue of sale of land by the assessee. The land in question has been sold for a apparent consideration for Rs. 1,62,00,000/- but the learned CIT(A) has adopted the ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 71 sale price at Rs. 3.00 Cr. on the basis of statements of the assessee. Similarly the cost of land which falls in assessment year 2016-2017 was purchased for an apparent consideration of Rs. 1,56,42,115/- whereas the assessee has deposed in his statement that the same was purchased for Rs. 2.50 Cr. In view of this the learned CIT(A) has adopted the purchase cost of land at Rs. 2.50 Cr, It is submitted that the entire order of learned CIT(A) in respect of cost of land as well as sale consideration of land is based on the statement of the assessee recorded lateron under section 131. It is relevant to mention that search was not conducted in the case of the asseseee. Search(es) was conducted in the case of Shri Chandra Prakash Agarwal and Shri Chandra Mohan Badaya,. But in the searches of above both the persons namely Shri Chandra Prakash Agarwal and Shri Chandra Mohan Badaya no incriminating material relating to assessee was found at all. In the assessment year for A Y 2016-2017 and 2017-2018 the learned AO has not referred to any incriminating material found and seized in the cases of searches conducted in the cases of Shri Chandra Prakash Agarwal and Shri Chandra Nonth Badaya. Only registered sale deeds of land which were sold to Shri Chandra Prakash Agarwal by the asseseee and Chandra mohan Badaya were found and seized from the possession of shri Chandra prakash Agarwal. These sales deeds are not incriminating material at all, as the sales consideration mentioned in these deeds is fully accounted for in the books of shri Chandra prakash Agarwal and other related parties and assessee as well. The submission of the asssesee is that the position being so, no additions were called for in assessment year 2016-2017 or/and A Y 2017-2018 purely on the basis of statements. There are a number of decisions in which it has been held that statements recorded during search or lateron are not incriminating material. In this case there is no other ground for making addition by the learned AO except these statement of Shri Chandra Prakash Agarwal and Shri Chandra Mohan Badaya, In view of this, the first plea of the assessee is that whatever addition has been in A Y 2017-2018 by the learned AO and upheld by the CIT(A) deserves to be deleted on this ground alone. Because the same has been made purely on the basis of the statement and not with reference to any documentary evidence found and seized during search in the cases of Shri Chandra Prakash Agarwal and srhi Chandra Mohan Badaya . B. Satisfaction note is faulty and is irrelevant In view of the aforesaid statements recorded under section 132(4) of Shri Chandra Prakash Agarwal on 28.07.2016 and of Shri Chandra Mohan Badaya on 29.07.2016 and under section 131 of assessee shri Pradeep Kumar Dusad on 0.11.2016 the learned AO drew a satisfaction note for taking action in the hands of the assessee under section 153C . The satisfaction note is reproduced here under ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 72 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 73 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 74 i. First Para of the satisfaction Note On perusal of the first para of the satisfaction note, it is revealed that the learned AO is discussing the issue relating to purchase of Agricultural land on 28.07.2015 from Smt. Prabhati Devi and other by three parties i.e. M/s Eminent build developers through partner Shri Pradeep Kumar Dusad for Rs, 1,54,21,115/-, M/s A R properties and Containers through proprietor shri Chandra Mohan Badaya and M/s Fortune Real Estate through partner Shri Chandra Mohan Badaya. . It is submitted that the amount mentioned in this para is duly accounted for in the regular books of accounts of M/s Eminent Build Developers where the assesseeshri Pradeep kumarDusad is partner. Further there is no murmur of his satisfaction that these have a bearing on the determination of the income of the assessee. a. The satisfaction note drawn by the learned AO on 18.09.2018 contains following information which is in respect of the M/s Eminent Build Developers who purchased Agricultural Land from Smt. Prabhati Devi and others on 28.07.2015 for a sum of Rs. 1,54,21,115/-. Thus the information is strictly speaking in respect of and pertains to M/s Eminent Build Developers who purchased the land through partner Shri Pradeep Kumar Dusad wherein Shri Pradeep Kumar Dusad acted in representative capacity as partner of M/s Eminent Build Developers. The owner of the land is M/s Eminent Build Developers and payment through banking channels was also made by them. In this regard copy of the purchase deed, copy of land account in the books of accounts of M/s Eminent Build Developers are furnished and are available on paper book page. No 19. These are documentary evidences which establish that the land was purchased by the firm M/s Eminent Build Developers and not by Shri Pradeep Kumar Dusad in his individual capacity b. The information in so far as is in respect of purchase of agricultural land from Smt. Prabhati Devi and others by M/s Eminent building developers through partner Shri Pradeep Kumar Dusad for Rs. 1,54,21,115/- is concerned the learned AO has not observed that this information/material/ documents have any bearing on the determination of income of the assessee (Pradeed Kumar Dusad and M/s Eminent Build developers, Partnership firm) in so far as it relates to A Y 2016-2017. In other words the satisfaction note is not asking for any action for any action in any hands of either Pradeep Kumar Dusad or Partnership M/s Eminent Build Developers for the A Y 2016-2017. Therefore the proceedings taken under section 153C happen to be without there being any satisfaction note for the A Y 2016-2017. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 75 (ii) Second para of the satisfaction note In the second para of the satisfaction note the learned AO has discussed as under “vide question No. 9 the Chandra mohan badaya was asked to give details of purchases of 10 bighas land at village Nindar and reply of the same he admitted that he had purchased 10 bighas land at Nindar from the five persons mentioned above at total consideration of Rs, 10 Crors. In the statement he also furnished the details of payment stating that out of total Rs., 10 Crores payment of Rs, 5.18 Crores was made through cheques, payment of Rs,. 3 crors were made in cash and payment balance amount of Rs. 1.82 was pending. The question No. 9 of statements of shri Chandra mohan Badaya is reproduced hereunder “ The perusal of second para of the satisfaction note reveals the following 2. It is in respect of statement of Shri Chandra Mohan Badaya the statements recorded under section 132(4) on 29.07.2016 is scanned below ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 76 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 77 The perusal of the above statement reveals that the answer is different than the question asked for. The simple question put to Shri Chandra mohan badaya was when did he purchases 10 bighas land and from whom. he was not asked about the consideration paid for the debt. The reply appears to be extracted under pressure suiting to the Revenue. The reply is not relevant to the seized material which are purchased deeds found during the course of search. The purchase deeds of Agricultural land have been registered with the Registration Authorities and nothing was found during search controverting the contents of these deeds. The statement is an aberration and has no live relationship with the seized material. Therefore it is not part of the seized material and cannot be considered as incriminating material in any way. The satisfaction note has not considered this statement of Shri Chandra Mohan Badaya as having a bearing on the determination of income of the assessee because the statement solely pertains to Shri Chandra Mohan Badaya. No connection has been established in this second para of the satisfaction note between the statement of Shri Chandra Mohan Badaya and the assesseee. Hence no action was warranted on the basis of these statements. Further the learned AO himself has not consider it usefull while drafting the order for the A Y 2016-2017 hence this is not of any importance. (iii) Third para of the satisfaction note Further in the third and last para of the satisfaction note the learned AO is mentioned that in reply to question NO. 5 to 8 of the statement of shri Pradeep kumar Dusad stated that he had purchased 3 bigha land from Smt. Prabhatidevi and four other persons and sold it to shri Chandra Prakash Agarwa. He also admitted to have taken on money to the extent to Rs, 4.78 on this land deal from Shri Chanra Prakash Agarwal. From the above discussion of the learned AO it is crystal clear that in this para the learned AO is discussing the selling part of the Agriculrual land which has taken place on 31.05.2016, which falls in the A Y 2017-2018. Hence in this para also there is no satisfaction of the learned AO relating to A Y 2016-2017. The Contents of this do not relates to A Y 2016-2017. These can not form part of satisfaction note for A Y 2016-2017. The transaction of sale of land pertains to assessment year 2017-2018 and not to assessment year 2016-2017 c. It is submitted that M/s Eminent Build Developers sold land to Shri Chandra Prakash Agarwal on 31.05.2016. Thus the sale falls in assessment year 2017- 2018. Thus the only material on the basis of which action under section 153C ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 78 could be taken was pertains to AY 2017-2018 and that too in the case of M/s Eminent Build Developers. The satisfaction note does not disclose any content and any material for taking action under section 153C for A Y 2016-2017. Hence no action could have been taken in the hands of the assessee for A Y 2016-2017. The only document found and mentioned in the satisfaction note pertaining to A Y 2016-2017 are purchases deeds of land from Smt. Prabhati Devi and others. But these purchases deed are not incriminating material. These have not been adversely commented upon by the learned AO. Further these purchases deed apparently have no bearing on the determination of income of M/s Eminent Build Developers and of assessee. IN the facts and circumstances there was absolutely no case for issuing notice under section 153C for A Y 2016-2017. d. It is submitted that the sale transaction of land pertains and falls in A Y 2017- 2018 as it was sold on 31.05.2016 ( as per statement of Shri Pradeep Kumar Dusad) on the basis of statement of Shri Pradeep Kumar Dusad. It may be noted that no document was found regarding the sale of land by eminent build developers through partner. The fact of sale has emanated by answer to question No. 8 in the statement of Shri Pradeep Kumar Dusad recorded on 10.11.2016. Position of law with respect to drawing satisfaction note by the learned AO of the other person. It is submitted that the provisions of section 153C(1) very clearly stipulate that with effect from 01.10.2014 the learned AO of the other person is required to issue notice under section 153C only after satisfying that the seized material has a bearing on the determination of the income of such other person. In this case satisfaction note has also been drawn after 01.10.2014. The satisfaction note is of dated 18.09.2018. In the circumstances it is amply clear that for taking action in different years the learned AO of the other person is mandatorily required to draw satisfaction note for each such assessment year where he is satisfied that the seized material has a bearing on the determination of the income of the other person. In this case of the assessee the learned AO has not shown as what is the seized material which has a bearing on the determination of income of the assessee for A Y 2011-2012 to A Y 2016-2017, wherein he has issued notice under section 153C. The seized document (purchased deed) firstly do not belong to the assessee, these belong to the firm M/s Eminent Build Developers secondly the seized document which is purchased deed has not been adversely commented upon by the learned AO hence no action could have been contemplated on the basis of purchased deed which alone are the seized material. The provision of section 153C(1) are quoted below for ready reference. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 79 “153C. (1) Notwithstanding anything contained in section-139, section- 147, section-148, section-149, section-151 and section-153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section-153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section-153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section-153A : Provided that in case of such other person, the reference to the date of initiation of the search under section-132 or making of requisition under section-132A in the second proviso to sub-section (1) of section- 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : Provided further that the Central Government may by rules13 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years as referred to in sub-section (1) of section-153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section- 132 or requisition is made under section-132A and in respect of such assessment year— (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section-142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section-143 has been served and ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 80 limitation of serving the notice under sub-section (2) of section-143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section-153A. 14[(3) Nothing contained in this section shall apply in relation to a search initiated under section-132 or books of account, other documents or any assets requisitioned under section-132A on or after the 1st day of April, 2021.]” The perusal of the above reveals that as per the provisions of section 153C before initiating proceeding under section 153C in the case of other person there must be separate satisfaction note of each year(s) of the learned AO of other person, where the proceeding under section 153C is to be initiated, meaning thereby that before initiating proceedings under section 153C in the case of other person there must is year specific satisfaction note for each year of the AO of the other person. In the case of the assessee it happens to that AO of the searched person and AO of the other person is one and the same, thereforethere is only one satisfaction note. However in the satisfaction the learned AO does not specify to which assessment year or years it relates. Therefore to that extent the satisfaction note issued by the learned AO is defective. However in this satisfaction note the learned AO is talking about the sale of land from Firm M/s Eminent Build Developers to Shri Chandra Prakash Agarwal and also taking about transaction of on money of Rs. 4.78 cr. on sale. It is submitted that the sale of Agricultural land by M/s Eminent Build Developers to Shri Chandra Prakash Agarwal has taken place on 31.05.2016 relevant to assessment year 2017-2018. Thus the satisfaction note does not contain anything relating to A Y 2016-2017. In view of the provisions of section 153C the learned AO of other person could initiate proceedings under section 153C for the A Y 2017-2018 only w r to this satisfaction note. It is submitted that since there is nothing in satisfaction note of the learned AO for the assessment year 2016-2017, therefore the learned AO was precluded to initiate any proceedings under section 153C of the income Tax Act 1961 for A Y 2016-2017 in the case of the assessee. In view of the above facts it is submitted that the proceeding initiated under section 153C by the learned AO for the assessment year 2016-2017 is unlawful, illegal and unjust. The Hon’ble CIT (A) is therefore requested that the unlawful, illegal, and unjustified proceeding initiated by the learned AO may kindly be quashed. The assessment completed under section 153C in pursuance of such unlawful proceedings should also be quashed. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 81 The perusal of the afore said provisions very specifically stipulates that the learned AO is required to proceed against other person and issue notice and assess the income of the other person only if he is satisfied that the seized material has a bearing on the determination of total income of such other person. In this case the learned AO has not stipulated in the satisfaction note drawn by him that how the seized material which in the case are only purchase deed from Prabhatidevi and others have a bearing on the determination of income of the assesee. There is absolutely no discussion in the satisfaction note by the learned AO in so far as purchased deeds are concerned. The learned AO has only adversely stated about the sale transaction of these very Agricultural lands with Shri Chandra Praksash Agarwal from whom 4.78 Cr was alleged received as on money. This transaction has taken place on 31.05.2016 relevant to assessment year 2017-2018. The observation of on money of Rs. 4.78 cr. alleged to have been taken from Shri Chandra Prakash Agarwal is not on the basis of any seized material but it is on the basis of statement of assesseeshri Pradeep Kumar Dusad. There is no seized material pertaining to A Y 2016-2017. In these circumstance the entire satisfaction note is confusion worst confounded. Absolutely ni action for any year could have been taken under section 153C in so far as the assessee is concerned in his individual capacity. (iv) Fourth para of the satisfaction note In this para the leaned AO has stated that seized document which in this case are purchases deeds belong to the assessee have a bearing on the determination of his income. The observations of the leaner AO lacks substance. The sale deed although pertains to the asseseee but do not have any bearing on the income of the axxessee . The learned AO has not stipulated, in the satisfaction note, in what manner these sale deeds have a bearing on the determination of income of the assessee. The amount disclosed in the sale deed is fully accounted for in the books of the firm M/s Eminent Build Developers., There is nothing incriminating in these sale deeds. The learned AO has further stated that in view of these sales deed notice under section 153C is to be issue for A Y 2011-2012 to 2016-2017 which is also unlawful. There has to be year specific satisfaction note. In other words for each assessment year the learned Ao has to record in writing that the material in his possession has a bearing on the determination of the income of the asseseee for the relevant assessment year The following case laws supporting the view that additions are not possible only on the basis of statements are quoted ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 82 j. Hon'ble High Court of Rajasthan in the case of Mantry Share Brokers Pvt. ltd. (96 taxmann.com I am in agreement with the Ld. A/R that it is a settled law that statement alone cannot be treated as incriminating material for the purposes of making addition for assessment completed u/s 153A / 143(3). It has been held in many judgments that mere statement u/s 132(4) or u/s 131 is not sufficient to make an addition. A statement made must be relatable to incriminating material found during the course of search or the statement must be made relatable to material by subsequently inquiry/investigation. Before proceeding with the matter, it will not be out of place to mention that except the statement in the letter, the AO has no other material on record to assess the income of Rs. 1,82,00,000/-. It is settled proposition of law that merely on the statement that too also was taken in view of threat given in question No.36 as narrated by Mr. Gupta and the same sought to have been relied upon, there is no other material either in the form of cash, bullion, jewellery or document in any other form which can come to the conclusion that the statement made was supported by some documentary evidence. We have gone through the record and find that the CIT (A) has rightly observed as stated hereinabove, which was confirmed by the Tribunal. It would not be out of place to mention that this order of Hon'ble Rajasthan High Court has been confirmed by Hon'ble Supreme Court also. (ii) Hon'ble Delhi High Court in case of Harjeev Agarwal (70 Taxmann.com 95) held thus: A statement of a M/S Maverick Commodity Brokers Pvt. Ltd.& others person, which is not relatable to any incriminating document or material found during search and seizure operation cannot, by itself, trigger a block assessment. The undisclosed income of an Assessee has to be computed on the basis of evidence and material found during search. The statement recorded under Section 132(4) of the Act may also be used for making the assessment, but only to the extent it is relatable to the incriminating evidence/material unearthed or found during search. In other words, there must be a nexus between the statement recorded and the evidence/material found during search in order to for an assessment to be based on the statement recorded. \" Smt. S.Jayalakshmi Ammal [2016] 74 taxmann.com 35 (Madras) \"...While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 83 have to consider,. as to whether there is any corroborative material evidence. If there is no corroborating documentary evidence, then statement recorded under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred. \" iii. Naresh Kumar Agarwal [2015] 53 taxmann.com 306 (Andhra Pradesh) \" it is admitted by the Revenue that on the dates of search, the Department was not able to find any unaccounted money, unaccounted bullion nor any other valuable articles or things, nor any unaccounted documents nor any other valuable articles or things, nor any unaccounted documents nor any such incriminating material either from the premises of the company or from the residential houses of the managing director and other directors. In such a case, when the managing director or any other persons were found to be not in possession of any incriminating material, the question of examining them by the authorised officer during the course of search and recording any statement from them by invoking the powers under section132(4) of the Act, does not arise. Therefore, the statement of the managing director of the assessee, recorded patently under Section 132(4) of the Act, does not have any evidentiary value. This provision embedded in subsection (4) is obviously based on the well established rule of evidence that mere confessional statement without there being any documentary proof shall not be used in evidence against the person who made such statement..\" iv. Hon'ble Gujarat High Court, vide its order dated 14.07.2016, in the case of CHETNABEN J SHAH LEGAL HEIR OFJAGDISHCHANDRA K. SHAH, in TAX APPEAL NO. 1437 of 2007, laid down the ratio that no additions can be made In the hands of the assessee merely on the basis of statements recorded, during the course of search, under section 132(4). Hon'ble High Court in the above mentioned case relied on its earlier order in the case of Kailashben Manharlal Chokshi [2008] 174 Taxman 466 (Guj.),wherein a similar ratio was laid down. Further, in the case of Narendra Garg & Ashok Garg (AOP) [2016] 72 taxmann.com 355 (Gujarat), Hon'ble Gujarat High Court held that \" It is required to be borne in mind that the revenue ought to have collected enough evidence during the search in support of the disclosure statement. It is a settled position of law that if an ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 84 assessee, under a mistake, misconception or on not being properly instructed, is over assessed, the authorities are required to assist him and ensure that only legitimate taxes are collected. The Assessing Officer cannot proceed on presumption u/s 134(2) of the Act and there must be something more than bare suspicion to support the assessment or addition. In the present case, though the revenue's case is based on disclosure of the assessee stated to have been made during the search u/s 132(4) of the Act, there is no reference to any undisclosed cash, jewellery, bullion, valuable article or documents containing any undisclosed income having been found during the search \" v. Pullanguegode Rubber & Produce Co. Ltd. Vs. State of Kerala 91 ITR 18 (SC) An admission is extremely an important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. vi. Satinder Kumar (HUF) v. CIT [1977] 106 ITR 64 (SC): It was held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the assessee contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention. vii. Chetna ben Shah Vs ITO (2016) 146 DTR 235 (Guj) We have heard learned Counsel for the respective parties and perused the records of the case. We are of the view that the CIT (Appeals) has rightly appreciated the case based on the sound principles of law and has also considered the statement made by the Page 13 of 14 HC-NIC Page 13 of 14 Created On Mon Feb 13 19:29:05 IST 2017 O/TAXAP/1437/2007 JUDGMENT assessee at the relevant point of time. We are of the view that in light of the observations made by this Court in the case of Kailashben Manharlal Chokshi v. Commissioner of Income-tax (supra), mere speculation cannot be a ground for addition of income. There must be a some material substance either in the form of documents or the like to arrive at a ground for addition of income. Considering the ratio laid down in the above decision and in the facts of the present case, we are of the view that the issue raised in this Appeal is required to be answered in favour of the assessee and against the Department. viii. Avadh Kishore Das v. Ram Gopal AIR 1979 SC 861: ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 85 It was held that evidentiary admissions are not conclusive proof of the facts admitted and may be explained or shown to be wrong, but they do raise an estoppel and shift the burden of proof on to the person making them. The Supreme Court further held that unless shown or explained to be wrong, they are an efficacious proof of the facts admitted. ix. Ajit Chintaman Karve V/s I.T.O. (2009) 311 ITR (AT) 66 (Puna) ITAT That merely because an offer was made having no cogent basis or approval of law that should not stop a taxpayer from correcting his mistake. It was the duty of the A.O. to tax only the legitimate amount from a taxpayer. x. Hukum Chand Jain Vs. Income Tax Officer (2011) 334 ITR 197 (Raj) Hon,ble jurisdiction High Court has held that : Admission despite being an important piece of evidence was not conclusive and it was open to the assessee to show that it was not correct. xi. CIT Vs Ashok kumar Jain (2014) 111 DTR 291 (Raj) 369 ITR 145 It was held that if the assessee does not adhere to the surrender made than it is for the learned AO to bring on record cogent material and other evidences to support the addition rather than rely on the statements xii. CIT Vs. Bhaskar Mittal 73 Taxman 437 (Cal) The Law empowers the ITO to assess the income of an assessee according to law and determine the tax payable thereon. In doing so he cannot assess an assessee on an amount, which is not taxable in law, even if the same is shown by an assessee. There is no estoppels by conduct against law nor is there any waiver of the legal right as much as the legal liability to be assessed otherwise than according to the mandate of the law (sic) . It is always open to an assessee to take the plea that the figure, though shown in his return of total income, is not taxable in law xiii. Ajit Chintaman Karve V/s I.T.O. (2009) 311 ITR (AT) 66 (Puna) That merely because an offer was made having no cogent basis or approval of law that should not stop a taxpayer from correcting his mistake. It was the duly of the A.O. to tax only the legitimate amount from a taxpayer ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 86 xiv. Contech Transport Service (P) ltd Ors V/s ACIT (2009) 19 DTR 191 (Mumbai) 28-11-08 No addition can be made only on the basis of admission in statement u/s 132 (4) xv. Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone. Thus in view of the aforesaid decisions including the decision of Hon,ble Apex court and decisions of Honble Rajasthan (jurisdictional) High Court the additions made on the basis of standalone statement is unlawful. The assessee was under a state of total confirmation and narrated incorrect facts. There is no adjustment of this amount in next assessment year i.e A Y 2016-2017 but remains a creditor. xvi. Honorable Delhi High Court in a judgment dated 29.05.2024 in Pavitra Realcon Private Limited in ITA 579/2018 has held that solely statement made during the search can not be the basis of an addition. It was further held that the statements constitute information only and to make additions some other evidence or material found during the search should also corroborate the information in the statements C. CBDT on confessional statements - It is most relevant to submit that the statement recorded by the revenue authorities of Shri Chandra Prakash Agarwal, Shri Chandra Mohan Badaya and of the assessee is of confessional nature. The CBDT has issued following circulars advising the field authorities not to record confessional statement as often these are retracted. The Circular(s) of the CBDT are quoted below. “CBDT Instruction dated March 23, 2003: In the light of the statements recorded followed by retractions on the ground of coercion and threat in the course of Search and Survey operations, the Board issued the Instructions F.No. 286/2/2003 – IT (Inv.) dated March 23, 2003 stating as follows: \"Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess undisclosed income during the course of the search and seizure and survey operation. Such confession, if not based on credible evidence, are taken/retracted by the concerned assessees while filing return of income. In these circumstances, confession during the search and seizure and survey operation do not serve any useful purpose. It is, therefore, ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 87 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 department. Similarly, while recording statement during the course of search and seizure operation, no attempt should be made to obtain confession as to the undisclosed income.\" CBDT Instruction dated December 18, 2014: F.No. 286/98/2013-IT (Inv.II) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Dated- 18th December, 2014 “Subject: Admissions of Undisclosed Income under coercion/pressure during Search/Survey – reg. Ref: 1) CBDT letter F.No. 286/57/2002-IT(Inv.II) dt. 03-07-2002 2) CBDT letter F.No. 286/2/2003-IT(Inv.11) dt. 10-03-2003 3) CBDT letter F.No. 286/98/2013-IT(Inv.11) dt. 09-01-2014 Sir/Madam, Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Board has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement during Search/Survey/Other proceeding under the I.T.Act,1961 and/or recording a disclosure of undisclosed income under undue pressure/ coercion shall be viewed by the Board adversely. 4. These guidelines may be brought to the notice of all concerned in your Region for strict compliance. 5. I have been further directed to request you to closely observe/oversee the actions of the officers functioning under you in this regard. 6. This issues with approval of the Chairperson, CBDT|” ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 88 These circulars very clearly direct the revenue authorities that no useful purpose is served in having confessional statement as these are often retracted. In the case of the assessee the circulars of the board have been grossly violated and confessional statement of Shri Chandra Prakash Agarwal, Shri Chandra Mohan Badaya and of the assessee was recorded. It is submitted that this being the position the learned AO should have brought some more material on record for initiating proceeding instead of exclusively basing the proceeding on statements . The followings decision are quoted wherein it has been held that a confessional statements may have evidentiary value but it is not conclusive. The courts have held that instead of depending upon the statement of the assessee, the revenue should exert in the collecting evidence in support of additions. With respect to retraction of statements the following case laws are also quoted. i. Hukum Chand Jain Vs. Income Tax Officer (2011) 334 ITR 197 (Raj) Hon,ble jurisdiction High Court has held that : Admission despite being an important piece of evidence was not conclusive and it was open to the assessee to show that it was not correct. ii. CIT Vs Ashok kumar Jain (2014) 111 DTR 291 (Raj) 369 ITR 145 It was held that if the assessee does not adhere to the surrender made than it is for the learned AO to bring on record cogent material and other evidences to support the addition rather than rely on the statements Conclusion In view of this the learned AO first erred in making addition solely on statement. it is submitted that addition could not have been made by the learned AO exclusively on the basis of statements. The additions besides being based on statements should have been substantiated with reference to other material and evidences, which in this case are lacking. D In view this it is submitted that there is gross violation of principles of nature justice. If the statement of Shri Chandra Prakash Agarwal, Shri Chandra Mohan Badaya and of the assessee is taken away there is no material for making the additions. In such circumstances when the only material for addition was the statements of Shri Chandra Prakash Agarwal, Shri Chandra Mohan Badaya and of the assessee then it was most imperative for the learned AO to have provided an opportunity for cross examination. This having not been done the entire assessment proceedings being in violation of ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 89 principle of natural justice deserves to be quashed. The following case laws are quoted below. i. Andman Timber Ind. Vs. Commission of Central Excise (2015) 281 CTR 211 (SC). The Apex Court has observed that not allowing cross examination is a serious flaw and makes the order nullity. Andman Timber Ind. Vs. Commission of Central Excise (2015) 281 CTR 211 (SC). “not allowing the assessee to cross examine the witness by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order, is a serious flaw which makes the order nullity in as much as it amounted to violation of principle of natural justice because of which the assessee was adversely affected. ii. COMMISSIONER OF INCOME TAX vs. BIJU PATNAIK HIGH COURT OF ORISSA 190 ITR 0396 Although answers can be recorded either in favour of the Department or against it, ultimately each answer would again become inconclusive on account of the final findings of fact of the Tribunal that ITO has not given reasonable opportunity to the assessee to rebut the statements recorded ex parte under s. 131 of the Act and to furnish explanation to some of the materials. It is true that Tribunal has not given due weight to the relevant and admissible evidence while recording the findings of fact. However, the findings of the Tribunal on such fact are also vulnerable as they may require reconsideration. If answers in respect of each of the questions are indicated in the absence of reasonable opportunity being afforded to the assessee, they would be of academic interest inasmuch as the answers against the assessee would become vulnerable on account of the need to undo the absence or reasonable opportunity. A clear and conclusive finding binding on the parties can be given only after reasonable opportunity is given to the assessee as found by the Tribunal. No answer should be given in advisory jurisdiction which would not finally decide the issue since final finding can be arrived at only after giving reasonable opportunity to the assessee and explanation given by the assessee would have material bearing on the finding. It is necessary that the Assessing Officer gives opportunity to the assessee. Tribunal has not considered the evidence in its proper perspective while rendering the decision in appeal and accordingly, the findings of the Tribunal are vitiated in law. As the final fact-finding forum, the Tribunal has to consider the same again. Since Tribunal has recorded a finding that reasonable opportunity has not been given to the assessee to give rebuttal evidence and explanation, this can ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 90 effectively be done by the Assessing Officer. The reference applications are disposed of as above leaving it to the Tribunal to pass consequential orders. iii. CIT Vs Sunita Dhadda (Supreme Court) Cross-examination is one part of the principles of natural justice: A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence iv. The legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross-examination, if the addition is made, the same is required to be deleted on the ground of violation of the principles of natural justice Guj HC in Laxman S Patel 174 Taxman 206 (Also refer Raj HC in Geetanjali 174 Taxman 440 approving 114 TTJ 697; Adarsheela Towers DHC) v. KALRA GLUE FACTORY. vs. SALES TAX TRIBUNAL & ORS. (SUPREME COURT OF INDIA) 167 ITR 0498 Statement which was not tested by cross examination is not good evidence. vi. PRAKASH CHAND NAHTA vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF MADHYA PRADESH) (2008) 301 ITR 0134 : Assessment—Validity—Opportunity of being heard vis-a-vis statements of third party—Unaccounted silver ornaments and utensils were found and seized during the search at the assessee’s premises—Assessee explained that the said silver items were purchased from one R & Co.—AO made addition to the income of the assessee after recording the statement of M, proprietor of R & Co., behind the back of the assessee—Not justified—AO has heavily relied upon the statement of M and has ignored the subsequent affidavit filed by M which is in variance of his original statement—Since the statement of M was used against the assessee and an affidavit was filed controverting the same, it was obligatory on the part of the AO to allow the prayer of assessee for cross-examination of M—AO having not summoned M under s. 131 in spite of the request of the assessee, evidence of M could not have been used against the assessee—Therefore, the assessment order is vitiated vii. HEIRS AND LRS OF LATE LAXMANBHAI S. PATEL vs. COMMISSIONER OF INCOME TAX (HIGH COURT OF GUJARAT ) (2010) 327 ITR 0290 Opportunity of being heard—During search of one R, key of bank locker along with two packets containing six promissory notes were recovered—Out of ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 91 those six promissory notes, one was in the sum of Rs. 8,78,358 executed by one K in the capacity of partner of firm DCI—In his statement recorded during search, R stated that the key of locker and the two envelopes were handed over to him by the assessee—K also admitted in his statement recorded on the same day at 2.00 AM midnight that he had executed the pronote and signed it on behalf of DCI after obtaining a sum of Rs. 8,78,358—Later, K filed an affidavit that his statement was recorded at late hours in the night under coercion and pressure—Subsequently, K along with two other partners of DCI, made a voluntary disclosure of a sum of Rs. 11 lacs including the amount of Rs. 8,78,358 and same was assessed in the hands of the three partners—Relying on the statement of R and the retracted statement of K, AO made addition of Rs. 8,78,358 under s. 68 in the hands of assessee also and the same was confirmed by CIT(A) and Tribunal—Not justified—Apparently, there was a violation of principles of natural justice as the statement of one of the important witnesses, namely, R on which heavy reliance was placed by the AO is neither referred to in the assessment order nor copy thereof was given to the assessee nor the assessee was given an opportunity of cross- examining the said R—Authorities could not be absolved from doing so on the ground that the facts stated by R were admitted by the assessee—K had not only retracted his earlier statement but also made a voluntary disclosure, along with two other partners of DCI, in the sum of Rs. 11 lacs which included the amount of pronote of Rs. 8,78,358—Legal effect of the statement recorded behind the back of the assessee and without furnishing the copy thereof to the assessee or without giving an opportunity of cross-examination, is that if the addition is made, the same is required to be deleted on the ground of violation of the principles of natural justice—Orders of all the three authorities set aside and addition deleted. viii. COMMISSIONER OF INCOME TAX vs. EASTERN COMMERCIAL ENTERPRISES (HIGH COURT OF CALCUTTA) 210 ITR 0103 Assessee showing a gross profit rate of 5.2%—Revenue being of the opinion that assessee inflated purchases, called in evidence one S from whom assessee made purchases and applied G.P. rate of 30%—S denied having made any sales to assessee in the face of earlier affidavits confirming such sales—Statement of S not furnished to assessee nor opportunity to cross-examine him given— Cross examination is sine qua non of the due process of taking evidence and no adverse inference can be drawn against a party unless that party is put on notice of the case made out against him—Matter remanded for cross- examination of S with opportunity to assessee to furnish evidence to rebut the evidence of S ix. Jindal Stainless Limited Vs ACIT (ITAT Del bench) ITA No. 3480 del 2006 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 92 x. Monga Metals (P) Limited Vs ACIT ITA No. 1377/All/1997 30.063.1999 Held as under When the finding of the quasi-judicial authority are found to have been influenced by the advice/information/evidence which have been obtained form third party and brough on record without the knowledge of the assessee or without allowing the assessee an opportunity to controvert or disapprove the information, evidence or statement of fact contained in such information or without allowing the assessee to cross-examined such thirty party, the order has to be found violative of principal of natural justice i.e. such an order is an order in violation of principle of natural justice the assessment order for the block period has been passed solely oin the basis on the statements of persons referred to in the facts already extracted and the assessee was not allowed to cross examine any one of them. The undisclosed income referred to in the arguments of the assessee has been determined as a resultof assessment order which is completely in violation of principle of natural justice. Therefore once the assessment is found to be in violation of principal of natural justice, It has to be quashed as b being bad in law and void or a nullity. xi. Kellogg India P Limited & Madhukar Patil Vs, UOI *(2006)(193) E L T. 385 (Bombay High court) = 2007 (8) S,T. T 84 (Bom). Wherein it has been held Adjudication - Natural justice- Affected persons must be given fair opportunity not only to answer case against him but to adduce positive evidence in support of his own case together with right to contradict all adverse allegations, if necessary, by permitting him to cross –examine witnesses of opponent. (para 46) The ground of the revenue, that the learned CIT(A) has erred in taking the cost of land of the asseseee at Rs 2.50 crores is without any basis. It is submitted that the issue of purchase of land by the asseseee falls in A Y 2016-2017 which is pending before the learned CIT(A). In view of this the revenue has taken objection that when the appeal is pending for 2016-17 and the issue of cost of land pertains to A Y 2016-2017, hence learned CIT(A) was not justified to determine the cost of land at Rs. 2.50 Cr, and finalize the appeal for A Y 2017- 2018. In this regard it is submitted that at the first, the assessee has objected that the entire issue of cost of land /sale of land revolves round the statement of persons searched including the assessee whose statements has also been recorded, but not searched. The assessee has objected that in the absence of ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 93 any incriminating document the cost of land has to be taken w r to the purchases deed, which in the case of the assessee is only of Rs. 1,54,21,215/-. The learned CIT(A) has adopted cost of land not w r to the registered purchased deed but with respect to the statement of the asseseee recorded under section 131 wherein he was pressurized to make a confessional statement that the land in question was purchased for Rs. 2.50 Cr. The assessee leave aside the Ground of Revenue, objects to adoption of cost of land at Rs. 2.50 Cr, whereas the same was required to be taken 1,54,21,215/-. It is further submitted that in all the three Grounds of Revenue, it has been objected that the learned CIT(A) was precluded in taking the cost of land at Rs. 2.50 Cr, but the revenue has not stated at what should be the cost of land. The learned CIT(A) has acted in favour of revenue by adopting the cost of land as pet statement of assessee. Therefore the revenue has no ground for appeal. The statement of the assessee has been quoted in the submission made by the asseseee in appeal filed against the order of CIT(A).  It is submitted that in the facts and circumstances of the assessee, the assessment was required to be completed as per provisions of section 153A/153C, these provisions very specifically laid that additions are possible only w r to incriminating material. In the case of the assessee the additions has been made only w r to statement of the assessee that too recorded w r to section 131, In the satisfaction note there was no reference to any seized material or any incriminating material and hence additions has wrongly made by the learned AO. The same deserves to be deleted.. It is the submissions of the assessee that whatever additions sustained by the learned CIT (A) i.e. Rs. 42,21,115/- also deserves to be deleted. It is also relevant to mention that in ground No. 1 the revenue has wrongly stated that the learned CIT(A) has not disputed the receipt of on money of Rs. 1,43,40,000 on sale of land whereas the learned CIT(A) in appellate order has taken the on money which is on sale of land at Rs. 1,38,00,000/-. Hence the ground has been carelessly taken by the revenue. 7. To support his case, the ld.AR of the assessee has filed the index paper book containing 188 pages. Index paper Book S No Particulars Paper book page No(s) 1 Copy of purchase deed, relevant account of land in the books of firm M/s Eminent Build Developers , Bank account, Balance sheet 1 to 15 ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 94 2 Copies of computation of income/return of income of firm disclosing income on sale of land 2 to 36 3 copy of the submission dated 18.06.2024 furnished on 25.06.2024 submitted before the learned CIT( A) 37 to 50 4 copy of the submission made before the learned CIT(A) dated 10.04.2023 51 to 170 5 Copy of purchase and sale deed of 3 bighas of Agricultural land in the name of firm M/s Eminent Build Developers 171 to 188 8. The ld. AR of the assessee vehemently argued that the assessment year in the year under consideration is 7th year and the same cannot be subjected to the assessment year and for that he relied upon the written submission. Whereas on the merits of the case he stated that when the ld.CIT(A) appreciated that the land is related to the firm and has also allowed the cost of acquisition of the firm sustaining the addition in the hands of the assessee is not correct. 9. On the other hand, the ld. DR supported the order of the AO so far as the appeal of the revenue is concerned and in respect of the appeal of the assessee he relied upon the reasoned finding on the issue in fact he stated that the ld. CIT(A) should not have granted the relief to the assessee and thereby thrust upon the grounds raised in the Departmental appeal. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 95 10. We have heard both the parties and perused the materials available on record. Brief facts of the case as per the assessment order are that a search and seizure action u/s 132 of the Act and survey action u/s 133A of the Act was carried out by the Department on the members of the Chandra Prakash Agarwal Group on 28-07-2016 of which the assessee is one of the members. The assessee filed his return of income on 01-08-2017 for the assessment year 2017-18 declaring a total income at Rs.10,29,710/-. Notice u/s 143(2) of the Act was issued to the assessee on 20-09-2018. Lastly, the AO completed the assessment vide order dated 28-12-2018 at a total income of Rs. 1,53,69,710-/- by giving following narration. ‘’6.13 In view of the foregoing discussion the on-money portion pertaining to the assessee i.e. 1,43,40,000/-out of total \"on money\" of Rs. 4,78,00,000/- received in cash/kind (being 3 Bigha out of total 10 Bigha land) is considered as undisclosed income of the assessee and therefore a sum of Rs. 1,43,40,000/- is added to his taxable income u/s 68 of the I.T. Act and the tax rate at 60% will be applicable as per provision of section 115BBE of the IT act. Penalty proceeding also initiated separately for u/s 271AAB(1)(c) on undisclosed income.’’ In first appeal, the ld. CIT(A) has partly allowed the appeal of the assessee restricting the addition to the extent of Rs.42,21,115/- by observing as under:- ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 96 Considering the cost at Rs. 2.5 Cr., the appellant paid on money of Rs. 95,78,885 at the time of purchase and on sale received unaccounted money of Rs 1,38,00,000 as the payment of Rs. 1,62,00,000 is apparently recorded in books of firm through banking channel Accordingly, the addition made in the assessment order is restricted hereby to the difference of on money transaction (including cheque receipt) in hands of appellant which is Rs. 42,21,115 and the remaining addition is directed to be deleted Accordingly this ground of appeal is partly allowed.’’ The Bench considered the submissions of the assessee and the ld. DR. It is noticed from the records that while proceeding before the ld. CIT(A) as well as now the assessee has successfully made out a case that the land in question was purchased and sold by the firm M/s Eminent Build Developers, a sperate entity having three partners including assessee Shri Pradeep Kuamr Dusad. The entire amount of purchases of Rs. 1,54,21,115/- was paid by firm M/s Eminent Build Developers from bank account of the firm with ICICI Bank. Copy of the bank account has been placed on record (Paper book page No. 13). Further the purchase of land on 28.07.2015 is duly reflected in the Balance Sheet of the firm M/s Eminent Build Developers as on 31.03.2016. Copy of Audited Balance Sheet as on 31.03.2016 of firm M/s Eminent Build Developers is available on record (paper book page No. 15). The Sale deed is registered on 31.05.2016 in the name of the firm M/s ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 97 Eminent Build developers wherein the assessee through partner Shri Pradeep Kumar Dusad who has acted in representative capacity. The entire amount of Sales Consideration of Rs. 1,62,00,000/- was received by firm M/s Eminent Build Developers in the bank account with ICICI Bank. The copy of the bank account has been placed on record (Paper book page No. 14). Based on that set of facts and circumstances, both the transactions of purchase and sale are in the name of firm M/s Eminent Build Developers. The firm has also disclosed capital gain in the return of income filed for AY 2017-2018 on 31.10.2017 which stands accepted by the department. Copy of the computation of total income is available on record. (paper book page No 17 to 36). The purchase of Agricultural land disclosed in the return for the AY 2016-2017 also stands accepted by the department. Hence absolutely there is no case for considering the transaction of land in the hands of the assessee Shri Pradeep Kumar Dusad, the same was required to be considered in the hands of the firm M/s Eminent Build Developers. Further the entire proceedings / additions have been initiated / made on the basis of statements only and no documentary evidence in support of the statements is ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 98 placed on record. The assessee vehemently argued that it is settled position of law that no addition can be made on the basis of statements only which are not supported by any documentary evidence. Even herein this case the ld. CIT(A) has appreciated this fact that the purchase and sale of property were accounted for in the firm and that is why he also set off the alleged onmoney while considering the addition. The assessee is in appeal for the sustained addition and revenue is appeal for the set off of alleged on money and considering it as cost of acquisition. Thus, appreciating the overall aspect of the matter we are of the considered view that once the ld. CIT(A) hold a view that the property in question is in the name of the firm and he also allowed the set off of purchase and sale amount sustaining the addition of the alleged on money merely based on the statement same cannot be considered as unexplained income of the assessee. Because our jurisdictional High Court has held in the case of PCIT Vs. M/s. Esspal International P. Ltd. DB ITA no. 25/2024 dated 03/09/2024 that merely based on the statement no addition can be made. The relevant finding of binding judicial precedent is reproduced herein below: ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 99 11. Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the Assessing Officer. Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of the Hon'ble Supreme Court; one such decision was rendered in \"M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another\" (1973) 19ITR18. 12. Therefore, we hold that no substantial question of law arises between the parties and while so, the present Income Tax Appeal is not maintainable. 13. For the foregoing reasons, D.B. Income Tax Appeal No.25/2024 is dismissed. Based on these observations, Ground no. 3 to 9 are allowed. The above finding is given based on the specific fact that the property in dispute is of firm and not of the assessee and ld. CIT(A) has already considered the set off of that property and allowed the benefit to the assessee and therefore, based on that specific fact the assessee gets relief. 11. Ground no. 1 and 2 raised by the assessee deals the issue of notice beyond six year, stating that In this case information by the AO of the other person has been received under a satisfaction note dated 18.09.2018 of the AO of the Searched person. In other words the information has been received on 18.09.2018 i.e. in ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 100 assessment year 2019-2020. As per the decision of the Hon’ble Supreme Court the AO has to take action under section 153C in respect of preceding six assessment years excluding the assessment year 2019-2020 in which the information has been received. In view of this calculation the AO could issue notice under section 153C for the following Six assessment years only if the seized material had information having bearing on the determination of income of the other person. S No Assessment year No. 1 2019-2020 Current year when information has been received from the AO of the searched person 2 2018-2019 1st year 3 2017-2018 2nd year 4 2016-2017 3rd year 5 2015-2016 4th year 6 2014-2015 5th year 7 2013-2014 6th year Thus in the case of other person action u/s 153C shall be considered on receipt of seized material from the AO the searched persons, if the same has found to have a bearing on the ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 101 determination of the income of the other person. The Hon’ble Supreme Court has held that the date of receipt of seized material shall not be and cannot be considered as date of conducting of search. The Hon’ble Supreme Court has categorically stated that this sort of provision is not workable specifically in a case where seized material is handed over after a long period of 4 years or so to the AO of the other person. And if the AO is expected to take action in such cases in respect of earlier six years it will require the asseseee to keep the books of account for ten years which is not the intention of law and hence not workable. In view of this the Hon’ble Supreme Court has held that the learned AO of the other person shall be competent only to take action in respect of earlier six yea /ten years from the date of receipt of the seized material. In other words the date of receipt of seized material shall not be considered as date of conducting of search. To clarify further the learned AO of the other person shall take action against such other persons in respect of earlier six yea s from the date of receipt of seized material and the date of search shall be irrelevant. Since the bench has allowed the appeal of the assessee on its merits the ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 102 technical ground raised by the assessee become academic and left open. 12. In the result, the appeal of the assessee is allowed. 13. Now coming to the appeal of the revenue the bench noted that in the first ground the revenue has challenged the finding of the ld. CIT(A) while deleting the part on money allowing the set of on money in purchase and sale and thereby sustained the balance amount only and thereby submit that the ld. CIT(A) should not have considered that plea of the assessee and should have confirmed the whole amount added by the ld. AO. The bench noted that since we have while dealing with the ground no. 3 to 9 of the assessee directed to delete the addition and therefore, on that ground we hold that ground no. 1 raised by the revenue has no merits and thereby required to be dismissed. 14. Ground no. 2 raised by the revenue challenges the finding of the ld. CIT(A) in holding in the assessment order for AY 2016-17, the appellant has disputed the cost and the payment of on money and the appellant has contended that the total payment or the total cost was Rs.2.5 Crore and has made such statement on oath also in the statement recorded u/s 131 of the Act. The total cost of ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 103 acquisition is taken at Rs. 2.5 crores in this order subject to any further orders in proceedings in the case of the appellant\" when the appeal of AY 2016-17 is still pending with CIT(A) the finding of the ld. CIT(A) was disputed. While ground no. 3 revenue challenge the finding of the ld. CIT(A) in giving a finding on cost of acquisition of property in AY 2016-17 and estimating of the same at Rs. 2.5 crores when the same matter is pending for decision with CIT(A). 14.1 We note that the grievance of the revenue is that the ld. CIT(A) should not have indulged into the finding of giving effect to the fact that whether the gross on money is to be taxed or the net was not the dispute because the same is related in the case of the firm. The bench noted that we have already while dealing with the appeal of the assessee given the finding that the issue relates to the purchase and sale of land by the firm and the assessee being partner has acted as authorized person and therefore, before us also this issue is becomes premature as we do not have the appeal of the said firm before us and therefore, the issue raised by the revenue is academic at this stage while dealing with the case of the assessee. ITA No. 1149 & 1192/JPR/2024 Shri Pradeep Kumar Dusad 104 15.0 In the result the appeal of the assessee is allowed and that revenue stands dismissed. Order pronounced in the open Court on 12 /03/2025. Sd/- Sd/- ¼ jkBksM deys'k t;UrHkkbZ ½ ¼ MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 12 /03/2025. *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- ITO, Ward-1(4), Jaipur. / DCIT, Central Circle-2, Jaipur. 2. izR;FkhZ@ The Respondent- Shri Pradeep Kumar Dusad 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA No. 1149 & 1192/JPR/2024} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "