SHANKALP ASSOCIATES LLP,BENGALURU V. ACIT, CENTRAL CIRCLE-1(1), CHENNAI

CO 35/CHNY/2025

AI Insights

The case involves appeals by the Assistant Commissioner of Income Tax against ETA Karnataka Estates Limited and Sankalp Associates LLP concerning the assessment year 2017-18. The primary issue was the alleged receipt of on-money in cash during the sale of immovable property, which was not disclosed in the income returns. The Income Tax Department conducted search and seizure operations, leading to the discovery of loose sheets and the recording of a sworn statement from Shri Mohamed Maraikayar, which initially admitted to the receipt of on-money. However, this statement was later retracted. The CIT(A) deleted the addition made by the Assessing Officer, a decision which was challenged by the Revenue in the Tribunal. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of concrete evidence and the procedural improprieties in obtaining the sworn statement.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705564 (ITAT-CHENNAI)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2017-2018
• Other Referred Cases: Tribhuvandas Bhimji Zaveri (Delhi) Pvt. Ltd. v. ACIT, Kailashben Manharlal Choksi v. CIT, DCIT v. U.K. Paints (Overseas) Ltd., CIT v. Raj Pal Bhatia, CIT v. Harjeev Aggarwal, PCIT v. Rohit Karan Jain, Vijay M Pai v. DCIT, Rajagopal Saravanan v. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: E.PAVUNA SUNDARI
• Assessee Lawyers: G. BASKAR; P.M. KATHIR; MS. SANKALP ASSOCIATES
• Keywords: Set aside; Document seized; Retraction; Principle of natural justice; Search and seizure; Source of fund
• Section: 143(3); 142(1); 132; 153A

Judgement Text

"आयकर अपीलीय अिधकरण,‘ए’ ᭠यायपीठ,चे᳖ IN THE INCOME TAX APPELLATE TRIBUNAL‘A’ BENCH, CHENNAI ᮰ी जॉजᭅ जॉजᭅ के, उपा᭟यᭃ एवं ᮰ी एस.आर.रघुनाथा, लेखा सद᭭य के समᭃ BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENTAND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं/.ITA No.3046/Chny/2024 िनधाᭅरण वषᭅ/Assessment Year: 2017-18 & C.O. No. 81/Chny/2024 [In ITA No. 3046/Chny/2024] The Assistant Commissioner of Income Tax, Central Circle 1(1), Chennai. Vs. ETA Karnataka Estates Limited, No. 10 & 11, 4th Floor, Chennai City Center, Dr. R.K. Salai, Mylapore, Chennai 600 004. [PAN: AACCB-0947-J] (अपीलाथᱮ/Appellant) (Respondent/Cross Objector) आयकर अपील सं/.ITA No.3047/Chny/2024 िनधाᭅरण वषᭅ/Assessment Year: 2017-18 & C.O. No. 35/Chny/2025 [In ITA No. 3047/Chny/2024] The Assistant Commissioner of Income Tax, Central Circle 1(1), Chennai. Vs. Sankalp Associates LLP, No. 48/1, Mariyapanapalaya, 12th Main Road, K.P. Agrahara, Karnataka 560 023. [PAN: ADCFS-1189-D] (अपीलाथᱮ/Appellant) (Respondent/Cross Objector) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri G. Baskar, Advocate & Shri P.M. Kathir, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. E. Pavuna Sundari, CIT सुनवाई कᳱ तारीख/Date of Hearing : 18.06.2025 घोषणा कᳱ तारीख/Date of Pronouncement : 02.07.2025 आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: These appeals filed at the instance of the Revenue in respect of different assessees are directed against separate orders of the - 2 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 Commissioner of Income Tax (Appeals)-18, Chennai both dated 24.09.2024 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant assessment year is AY 2017-18. The assessees also filed Cross Objections in C.O. Nos. 81/Chny/2024 & 35/Chny/2025 against the above appeals. First, we shall take up the main appeals for adjudication. 2. The common issue involved in both the appeals, hence, they were heard together and are being disposed off by this consolidated order. The solitary issue raised in both the appeals is with regard to receipt/payment of on-money towards sale/purchase of immovable property. We shall first adjudicate appeal in ITA No. 3046/Chny/2024. I.T.A. No. 3046/Chny/2024 [ETA Karnataka Estates Limited] 3. Brief facts of the case are as follows: 4. The assessee company filed its original return of income on 24.10.2017 admitting a total income of ₹.26,61,74,680/-. A search and seizure operations under section 132 of the Income Tax Act, 1961 [“Act” in short] was carried out in the Buhari group of cases on 04.01.2017. Search was also conducted in the case of M/s. ETA Star Property Developers Private Limited on 04.01.20217. During the course of search, loose sheets belonging to the assessee [M/s. ETA Karnataka Estate Limited] were - 3 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 seized. Accordingly, the Assessing Officer issued notice under section 153A r.w.s. 153C of the Act on16.11.2018. In response to the said notice, the assessee filed its return of income on 14.12.2018 declaring a total income of ₹.26,61,74,660/-. Consequently, notice under section 143(2) of the Act dated 14.12.2018 and notice under section 142(1) of the Act dated 17.12.2018 were issued to the assessee calling for the information mentioned therein and the assessee furnished the information as called for. 6. According to the Assessing Officer, as per page Nos. 451 to 501 of the loose sheets, the assessee, M/s. ETA Karnataka Estates Limited sold an immovable property (Immovable property bearing Municipal Corporation No.8, (P.I.D.No.26-61-08) situated at Railway Compound Road, Bangalore 560023 (hitherto comprised in land bearing survey no.4 8 5 of Hanumanthapura Village, Kasaba Hobli, Bangalore Taluk) measuring 31,581 (Thirty One Thousand Five Hundred Eighty One) Square Feet on 26.08.2016 to M/s. Sankalp Associates LLP for ₹. 16,26,42,150/-. In this connection, a sworn statement under section 132(4) of the Act was recorded from Shri Mohammed Maraikayar, Director of M/s ETA Karnataka Estates Limited on 05.01.2017. In the said sworn statement, vide his reply to Question Nos. 11 and 12, Shri Mohamed Maraikayar has stated that the sale consideration as per the sale deed of ₹. 16,26,42,150/- was received through banking channels from M/s. Shankalp Associates LLP and an - 4 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 amount of ₹.5,00,00,000/- was also received in cash over and above the sale deed value of ₹.16,26,42,150/- from M/s. Shankalp Associates LLP through one Shri Bharat Kumar during the Financial year 2016-17 relevant to the Asst. Year 2017-18. 7. Against the notice under section 142(1) of the Act dated 17.12.2018 show causing the assessee as to why the amount of ₹.5,00,00,000/- should not be added to the total income returned towards on money received on account of sale of movable property, the assessee filed its reply vide letter dated 24.12.2018, the contents extracted at page 3 of the assessment order are reproduced herein below: With respect to your query of not offering of Rs. 5,00,00,000 as undisclosed income in the Return of income filed us. 1530, we would like to bring it to your kind attention that Mr. Mohamed Maraikayar, Director of the Assessee Company has filed retraction of his statement, given in his sworn statement on 05.01.2017 by way of letter dated 18.08.2017, which was filed with the Deputy Director of Income Tax (Inv) Unit (2) Bangalore through tapal section on 18.05.2017 and in support of the same photocopy of the said letter is enclosed for your kind perusal. The contents of the sad letter dated 15.05.2017 towards communication of his retraction of his statement given in his sworn statement dated 08.01.2017 is fully reproduced hereunder for your immediate reference: With respect to the above, I would like to brief your goodself on the chronology of search proceedings on 04.01.2017 and 05.01.2017 as under: The Income Tax Department has conducted search at my house at Bangalore on 04.01.2017 as a part of ETA Group Company search and concluded the search on 05.01.2017 midnight in my sworn statement dated 05.01.2017 at about 5 pm at my house, I have given the fact that there were no cash transactions involved in the sale of Whitefield and HPCL and at Bangalore. I was taken to ETA Office at about 7.45 pm on the same day. But on 05.01.2017, while interrogating Mr. Khalid Buhari at his residence at Chennai, since he was willing to accept some undisclosed income and since he - 5 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 was not having sufficient time to recollect the exact sources of that income, just to close the searching procedures quickly, he has declared Rs. 15 crores as cash received from Whitefield sales, even though it was not the fact. This was conveyed to me over phone at about 8 pm on 05.01.2017 and was requested by him to declare accordingly. Since the Department was insisting me to declare some income in both the deals, I was forced to give in the statement that the same amount of Rs. 15 crores, which was declared by Mr. Khalid Buhari by allocating Rs. 10 crores for Whitefeld and Rs.5 crores for HCL deal. Not accepting offer, the Department on its own has finalized Rs. 15 The Whitefield and Rs. 5 crores for HPCL land, even though there were no cash vain both the deal. The Department has prepared sworn statement at about midnight on 05.01.2017 at our Bangalore office and obtained my signature with the above incorrect contents, which are totally contrary to the facts and figures. RETRACTION OF MY STATEMENT AND FURNISHING OF ACTUAL FACTS AND FIGURES IN CONNECTION WITH THE DEAL OF SALE OF LAND AT WHITE FIELD AND HPCL Hence, I hereby retract the entire contents of my statements, which were taken from me the sworn statement on the late night of 05.01.2017 or on 06.01.2017 early hours) at our Bangalore Office. Accordingly I would like to give the correct facts of the transactions with regard to land sale at White Field as well as HPCL as follow: i. There was no cash transaction in Whitefield land Sales as such I have not received any cash from Mr. Avinash Amarlal of M/s. Anushka Investments. ii. There was no cash transaction in HPCL land Sales also as such I have not received any cash from Mr. Bharat Kumar Jain. iii. The undisclosed income of Rs. 15 crores declared by Mr. Khalid Buhari was an accumulation of cash over a period of time and I was unable to recollect the exact sources of income. Further the application of those funds have already been recorded with the Department. iv. The actual declaration of Mr. Khalid Buhari was only Rs. 15 crores and it was not Rs. 20 crores and hence the department's recording of undisclosed income of Rs. 20 crores is incorrect and totally contrary to the facts and actual figures. I will be much obliged, if you could record my retraction of the original statement forced to be given by me on 5 January 2017 and also request you to record the actual facts and figures of the transaction as explained by me from the above points mentioned from (i) to (iv). - 6 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 Further it may be noted that M/s. Shankalp Associates LLP has categorically stated in his sworn statement that he had not paid any on money to any one in respect of purchase of property bearing Survey No.4 & 5 of Hanumanthapura Village, Kasaba Hobli, Bangalore also known as HPCL land and further they have confirmed in their sworn statement that the total purchase consideration was only Rs. 16,26,42,150 (Rupees Sixteen Crores Twenty Six Lakhs Forty Two Thousand One hundred fifty) in respect of the purchase of the above said property known as HPCL Land. Considering the above facts on ground reality and also taking into account the retraction of Mohamed Maraikar's statement given his sworn statement on 05.01.2017 in which, he has categorically stated that there was no cash transaction in HPCL land Sales also stated that he has not received any cash from Mr. Bharat Kumar Jain and also taking into account the sworn statement of M/s. Shankalp Associates LLP confirming that no on money was paid in respect of purchase of HPCL Land property, offering of Rs. 5,00,00,000 as undisclosed income in the hands of the company assessee does not arise. Also find enclosed an Annexure.\" 8. Considering the reply of the assessee as well as considering the sworn statement recorded under section 132(4) of the Act on 05.01.2017 from Shri Mohammed Maraikayar, Director of M/s ETA Karnataka Estates Limited, who had agreed to the receipt of cash of Rs.5,00,00,000/- and moreover, the retraction filed only on 18.05.2017, which is after a gap of 4 months, seems to be only an afterthought to avoid taxation, the Assessing Officer added the above amount of Rs. 5,00,00,000/- to the total income of the assessee and completed the assessment under section 143(3) r.w.s. 153C r.w.s. 153A of the Act dated 30.12.2018. 9. Aggrieved by the assessment order dated 30.12.2018, passed under section 143(3) r.w.s. 153C r.w.s. 153B(1)(b) r.w.s. 153A of the Act, the assessee filed appeal before the CIT(A). The assessee filed detailed written submissions, which is reproduced at para 5 pages 7 to 18 of the - 7 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 impugned order and also in support its submissions, the assessee relied upon various case law. After elaborately discussing the issue in appeal from para 7, 8, 8.1 to 8.7 of the impugned order as well as by relying upon the order of the Mumbai Benches of the Tribunal in the case of Tribhuvandas Bhimji Zaveri (Delhi) Pvt. Ltd. v. ACIT, following the judgement of the Hon’ble High Court of Gujarat in the case of Kailashben Manharlal Choksi v. CIT reported in 328 ITR 411 and the directions of the CBDT in their Circular No. 286/2003 dated 10.03.2003, the CIT(A) has observed that the addition was not based on any corroborative evidence. The CIT(A) held that the Assessing Officer had failed to consider the written submissions of the buyer and directed the Assessing Officer to delete the addition of ₹. 5 crores made towards receipt of on-money in the assessment. 10. Aggrieved by the impugned order, the Revenue is in appeal before the Tribunal. 11. The ld. DR has submitted that the CIT(A) has erroneously deleted the addition of Rs.5 crores made towards receipt of on-money without considering the facts that the Assessing Officer has made the addition on the basis of seized material. She further submits that the CIT(A) failed to consider the seized material, a registered sale deed that the assessee had sold immovable property to M/s. Sankalp Associates LLP were found - 8 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 during the course of search containing primary evidence of transaction made by the assessee. The ld. DR vehemently argued that the CIT(A) failed to note the statement recorded under oath from Mr. Mohammed Maraikayar under section 132(4) of the Act, who is the Director of M/s. ETA Star Property Developers Ltd confirming that over and above the registered price, an amount of ₹.5 crores were paid by way of cash. She further submits that the statement recorded under section 132(4) of the Act statutorily deemed to have evidentiary value and cannot be retracted at the mere will of the assessee and prayed to set aside the impugned order and restore that of the Assessing Officer. 12. The ld. AR Shri G. Baskar, Advocate opposed the submissions of the ld. DR. He vehemently argued that during the course of search, no incriminating material has been found or seized in respect of receipt of on- money. He drew our attention to the registered sale deed filed in the form of paper book and more particularly referred to page 26 and submitted that the sale transaction of immovable property is not a secret mission, but, after making wide publicity in the leading newspaper “The Indian Express” and “Kannada Prabha” dated 30.05.2016, the sale transaction has been executed, which cannot be a ground for the Department towards receipt of on-money in cash. Further, he argued that the sworn statement recorded under section 132(4) of the Act dated 05.01.2017 is a typed statement and - 9 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 not a manuscript. He further drew our attention the requisition for recording of retraction of statement given on 05.01.2017 dated 15.05.2017, Shri Mohamed Maraikayar has admitted that the search was concluded on the midnight of 05.01.2017 and also clearly stated at last para of first page that the Department was insisting him to declare some income in both the deals and also at second page in first para, it has been stated that the Department has prepared sworn statement at about midnight on 05.01.2017 and obtained signature with incorrect contents, being totally contrary to the facts and figures, which is absolutely against the principle of natural justice and such sworn statement recorded under pressure cannot have any evidentiary value. The ld. AR further submitted that the Department could not bring on record any corroborative evidence in support of sworn statement made against the assessee. 13. The ld. AR has further submitted that the Absolute Sale Deed was executed on 26.08.2016 and the Department conducted the search operation on 04.01.2017 and argued that the Department has not brought on record having found and seized any cash from the residence of Shri Mohamed Maraikayar, Director of ETA Karnataka Estate Limited or any material evidence of undisclosed investment made by Shri Mohamed Maraikayar. - 10 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 14. The ld. AR has further submitted that the sworn statement recorded under section 132(4) of the Act, which was created by the Department at the time of search operation, cannot be treated as a document seized during the course of search and would not qualify the expression “document” having been seized during the search. The ld. AR relied on the following case law in support of his arguments. (i) CIT v. Raj Pal Bhatia reported in 333 ITR 315 (Delhi). (ii) CIT v. Harjeev Aggarwal [2016] 290 CTR 263 (Delhi) (iii) PCIT v. Rohit Karan Jain [2025] 173 taxmann.com 184 (Gauhati) (iv) Vijay M Pai v. DCIT in ITA No. 3064/Chny/2019 (v) Kailashben Manharlal Chokshi v. CIT [2010] 328 ITR 411 (Gujarat) (vi) Rajagopal Saravanan v. ACIT ITA No. 119/Chny/2024 15. We have heard rival submissions and perused the materials available on record. A search and seizure operations under section 132 of the Act was carried out in the Buhari group of cases on 04.01.2017. Search was also conducted in the case of M/s. ETA Star Property Developers Private Limited on 04.01.20217. During the course of search, loose sheets belonging to the assessee [M/s. ETA Karnataka Estate Limited] were seized, which reveals that the assessee sold an immovable property hitherto comprised in land bearing survey no.4 8 5 of Hanumanthapura Village, Kasaba Hobli, Bangalore Taluk admeasuring 31,581 Sq. Ft. on 26.08.2016 to M/s. Sankalp Associates LLP for ₹. 16,26,42,150/-. In this connection, a sworn statement under section 132(4) of the Act was recorded from Shri Mohammed Maraikayar, Director of M/s ETA Karnataka - 11 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 Estates Limited on 05.01.2017. In the said sworn statement, vide his reply to Question Nos. 11 and 12, Shri Mohamed Maraikayar has stated that the sale consideration as per the sale deed of ₹. 16,26,42,150/- was received through banking channels from M/s. Shankalp Associates LLP and an amount of ₹.5,00,00,000/- was also received in cash over and above the sale deed value of ₹.16,26,42,150/- from M/s. Shankalp Associates LLP through one Shri Bharat Kumar during the Financial year 2016-17 relevant to the Asst. Year 2017-18. Vide notice under section 142(1) of the Act, the Assessing Officer show caused the assessee as to why the amount of ₹.5,00,00,000/- should not be added to the total income returned towards on money received on account of sale of movable property, the assessee filed its reply vide letter dated 24.12.2018 furnishing retraction of his statement and also furnished actual facts and figures in connection with the deal of sale of property and the same is reproduced herein above. Without taking cognizance of the retraction of his statement, by considering the sworn statement under section 132(4) of the Act dated 05.01.2017, the Assessing Officer added an amount of ₹.5,00,00,000/- being receipt of on- money and brought to tax. Before the CIT(A), the assessee filed detailed written submissions and heavily relied on the decision of the Hon’ble High Court of Gujarat in the case of Kailashben Manharilal Choksi v. CIT (supra) in support of its view that cognizance needs to be taken of the retracted statement especially when the recording of statement under section 132(4) - 12 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 of the Act, was at the odd hours of the search. The assessee further submitted before the CIT(A) that M/s. Shankalp Associates LLP, the buyer of the property in question, denied making any such payment of on-money to the assessee. The assessee also argued that no additions can be made without any incriminating materials unearthed during the course of search either under sections 153A or 153C of the Act and relied on the judgement of the Hon’ble Supreme Court in the case of DCIT v. U.K. Paints (Overseas) Ltd. in Civil Appeal No. 6634 of 2021 dated 25.04.2023. Before the CIT(A), the assessee also relied on the CBDT Instruction No. 286/2003-IT(Inv) dated 10.03.2003 and 286/98/2013-IT (Inv-II) dated 18th December 2014, which instructs the officials to focus on gathering evidence related to income and emphasizes that during search, seizure, and survey operations, officials should refrain from obtaining confessions regarding undisclosed income under coercion/undue influence. Any action on the contrary shall be viewed adversely. Before the CIT(A), the assessee has contended that without due consideration of the subsequent retraction by the assessee and lack of corroborative evidence, deviates from established legal principles and non-compliance of the above said CBDT instructions, and prayed to delete the addition made by the Assessing Officer. After considering the submissions of the assessee, the CIT(A) directed the Assessing Officer to delete the addition by making following observations: - 13 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 8.2 The Grounds 2 to 10 are against the addition of Rs 5 crores made by the AO towards receipt of on-money on sale of land to M/s. Sankalp Associates LLP during the year. During the course of search in the premises of M/s ETA Star Property Developers Private Limited, a group concern of the appellate-company, on 04.01.2017, copies of sale deed executed by the appellant in respect of sale of HPCL property to M/s. Sankalp Associates LLP were found. Later, a sworn statement u/s 132(4) was recorded from the Director of the appellant company, Sri Mohammed Maraikayar on 05.01.2017. In the said statement, the Director deposed that apart from receipt of sale consideration of Rs.16.26 cores through banking channels, they received on-money of Rs.5 crores in cash from one Sri Bharat Kumar, of M/s Sankalp Associates. 8.3 It is based on the above admission, during the course of proceedings u/s 153C, the AO questioned on the issue of not admitting the receipt of on-money in the return of income filed in response to notice issued u/s 153C. It is the submission of the appellant that they have not received any on-money and that the deposition made earlier was retracted by the Director vide a letter dated on 15.05.2017. The relevant portion of the retraction are as under: In my sworn statement dated 05.01.2017 at about 5 pm at my house, I have given the fact that there were no cash transactions involved in the sale of Whitefield and HPCL land at Bangalore. I was taken to ETA Office at about 7.45 pm on the same day. But on 05.01.2017, while interrogating Mr. Khalid Buhari at his residence at Chennai since he was willing to accept some undisclosed Income and since he was not having sufficient time to recollect the exact sources of that income just to close the searching procedures quickly, he has declared Rs.15 crores as cash received from Whitefield sales, even though it was not the fact. This was conveyed to me over phone at about 8 pm on 05.01.2017 and was requested by him to declare accordingly. Since the Department was insisting me to declare some income in both the deals, I was forced to give in the statement that the same amount of Rs.15 crores, which was declared by Mr. Khalid Buhari by allocating Rs. 10 crores for Whitefield and Rs. 5 crores for HCL deal. Not accepting my offer, the Department on its own has finalized Rs.15 crores for Whitefield and Rs.5 crores for HPCL land, even though there were no cash vain both the deal. - 14 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 The Department has prepared sworn statement at about midnight on 05.01.2017 at our Bangalore of and obtained my signature with the above incorrect contents, which are totally contrary to the facts and figures. Hence, I hereby retract the entire contents of my statements, which were taken from me the sworn statement on the late night of 05.01.2017 or on 06.01.2017 early hours) at our Bangalore Office. Accordingly I would like to give the correct facts of the transactions with regard to land sale at White Field as well as HPCL as follow: i. There was no cash transaction in Whitened land dales as such have not received any cash from Mr. Avinash Amarlal of M/s. Anushka Investments. ii. There was no cash transaction in HPCL land Sales also as such I have not received any cash from Mr. Bharat Kumar Jain. iii. The undisclosed income of Rs.15 crores declared by Mr. Khalid Buhari was an accumulation of cash over a period of time and I was unable to recollect the exact sources of income. Further the application of those funds have already been recorded with the Department. 8.4 From the statement recorded on 05.01.2017 u/s 132(4) and later the above retraction filed on 15.05.2017 from the Director, it can be seen that in the first place, there was no incriminating material found evidencing receipt of cash / on-money by the appellant. The only document found during the course of search in the premises of M/s ETA Star Property Developers Pvt. Ltd., is a copy of sale deed dated 26.08.2016, executed in favour of appellant by M/s. Sankalp Associates LLP for a consideration of Rs.16.26 crores. Other than this registered sale deed, which is a document available in public domain, no other incriminating material was found in the premises of the M/s ETA SPDPL. It is neither a case that an agreement for a higher consideration in respect of this transaction was found nor some loose sheet found evidencing receipt of cash. When the contents of the registered sale deed were questioned, the Director, had admitted some on-money on this transaction. No reasons for making such admission were brought in the statement recorded u/s 132(4) on 05.01.2017, in the retraction letter, the Director had brought out some reasons like initially he had not admitted any on-money, obtaining his signature at the midnight of 05.01.2017 wherein the on-money receipts were mentioned at Rs. 15 crores in the - 15 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 sworn statement, etc. Therefore, in the absence of any incriminating material, the admission made by the Director of the appellant-company, even u/s 132(4) will not carry any evidentiary value. As long as the admission is not based on any concrete material found during the course of search, the appellant is free to retract from the earlier statement and the period of 120 days for such retraction does not make any difference. 8.5 Leaving the discussion on the admission and retraction of the selling company Director aside for the time being, the version of the purchasing company is in place. Sri Maraikayar brought in the name one Sri Bharat Kumar, purportedly through whom they have received on-money. Based on this statement, the Investigation Wing recorded the statement of Sri Bharat Kumar Jain of the purchaser company. In that statement, Sri Bharat Kumar has categorically denied to have paid any on-money in respect of purchase of this HPCL property. Even the purchasing company at no point of time had admitted to have paid any on-money in purchase of property from the appellant company. 8.6 Therefore, the grounds raised by the appellant that the addition was not based on any corroborative evidence, that the AO had failed to consider the written submissions of the buyer have to be allowed as such. With regard to the retraction, the reliance by the appellant on the decision of the Hon’ble ITAT Mumbai decision in the case of Tribhuvandas Bhimji Zaveri (Delhi) Pvt. Ltd., Vs. ACIT, following the Gujarat High Court decision in the case of Kailashben Manharial Choksi Vs. CIT (328 ITR 411) are all considered. Likewise, as was brought out by the appellant, the AO could not find any evidence during search with regard to the on-money receipt but only had recorded statement of admission of additional income. This was against the advice given by the CBDT in their Circular no.286/2003 on 10.03.2003. 8.7 In the light of the above discussion, the contentions of the appellant are acceptable and all the grounds raised from 2 to 9 are to be treated as allowed and the AO is directed to delete the addition of Rs.5 crores made towards receipt of on-money in the assessment. 16. We find that the sworn statement recorded under section 132(4) of the Act from the assessee, Shri Mohamed Maraikayar, Director of M/s. ETA Karnataka Estates Limited, on the midnight of 05.01.2017 under pressure and coercion, has no legal sanctity in view of the decision of the Hon’ble - 16 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 High Court of Gujarat in the case of Kailashben Manharlal Chokshi v. CIT (supra). While holding so, the Hon’ble High Court has emphasized as to whether an addition is made merely based on the statement recorded under section 132(4) of the Act and whether any cognizance taken of the retracted statement. In the present case, the Assessing Officer has not taken cognizance of the retraction statement made vide his letter dated 15.05.2017 before the Deputy Director of Income Tax (Inv.) much before filing of assessee’s original return of income as well as initiating assessment proceedings. Therefore, it cannot be said that the retraction statement of the assessee is an afterthought to avoid taxation. The CIT(A) has rightly observed that as long as the admission is not based on any concrete material found during the course of search, the assessee is free to retract from the earlier statement and the period of 120 days for such retraction does not make any difference. 17. We find that except statement recorded under section 132(4) of the Act, the Department has no piece of documentary evidence against the assessee or found and seized during the course of search. The assessee has brought on record copy of the Absolute Sale Deed dated 26.08.2016, which is available in public domain, no other incriminating material was brought on record. In fact, after making public notice published in Indian - 17 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 Express and Kannada Prabha dated 30.05.2016, the sale transaction has been executed. 18. In the sworn statement recorded under section 132(4) of the Act, Shri Mohamed Maraikayar has brought in the name one Shri Bharat Kumar, purportedly through whom they have received on-money and based on the statement, we note from para 8.5 of the impugned order that the Investigation Wing recorded the statement of Shri Bharat Kumar Jain of the purchase company, who has categorically denied to have paid any on- money in respect of purchase of the property. We also noted that the purchasing company at no point of time had admitted to have paid any on- money in purchase of property from the assessee company. The reason for not bringing out the statement of Shri Bharat Kumar Jain in the assessment order is best known to the Department. Moreover, in the assessment order we could not find any cross examination has been made with the person who deposed payment of on-money for purchase of the property in question. 19. We find that the CIT(A) has rightly observed that when the Assessing Officer could not find any evidence with regard to the on-money receipt except recorded statement of admission of additional income, the addition made in the hands of the assessee is against the advice of the CBDT in their Circular No. 286/2003 dated 10.03.2003. - 18 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 20. Under the above facts and circumstances, we are of the considered opinion that the CIT(A) has rightly directed the Assessing Officer to delete the addition of ₹.5,00,00,000/- made towards receipt of on-money, is fully justified and we find no reason to interfere with the impugned order. Thus, the grounds raised by the department are dismissed. I.T.A. No. 3047/Chny/2024 for AY 2017-18 in the case of Sankalp Associates LLP. 21. The Appellant-Revenue preferred the present appeal against the order of the CIT(A) dated 24.09.2024 passed under section 250 of the Act for the assessment year 2017-18. The grounds of appeal, facts and circumstance of the case and even material used for framing the assessment under section under section 143(3) r.w.s. 153C r.w.s. 153B(1)(b) r.w.s. 153A of the Act dated 30.12.2018 are similar to the facts and circumstances relevant to AY 2017-18 in the case of ETA Karnataka Estates Limited in ITA No. 3046/Chny/2025, wherein, we have confirmed the order passed by the CIT(A) in deleting the addition made by the Assessing Officer, therefore, we hold our findings would be equally applicable to the assessee M/s. Sankalp Associates LLP in ITA No. 3047/Chny/2024 for AY 2017-18 under consideration. Thus, the appeal filed by the Revenue is dismissed. - 19 - ITA Nos.3046 & 3047/Chny/2024 & C.O. Nos. 81/Chny/24 & 35/Chny/25 C.O. Nos. 81/Chny/2024 [In ITA No. 3046/Chny/24] & 35/Chny/2025 [In ITA No. 3047/Chny/2024 22. The main objection argued by the ld. AR is with regard to the jurisdiction of the Assessing Officer under section 153C of the Act. Since we have decided the issue on merits by dismissing the appeals filed by the Revenue, the grounds raised in Cross Objections are not adjudicated and dismissed as infructuous. 23. In the result, both the appeals filed by the Revenue and Cross Objections filed by the assessee are dismissed. Order pronounced in the open court on 2nd July, 2025. Sd/- (एस.आर .रघुनाथा) (S.R. RAGHUNATHA) लेखा सद᭭य/ACCOUNTANT MEMBER Sd/- (जॉजᭅ जॉजᭅ के) (GEORGE GEORGE K) उपा᭟यᭃ /VICE PRESIDENT चेɄई/Chennai, िदनांक/Date: 02.07.2025 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "