Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: ACCOUNTING STANDARD :: due date for vat payment :: cpt :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: empanelment :: Central Excise rule to resale the machines to a new company :: form 3cd :: articles on VAT and GST in India :: VAT Audit :: list of goods taxed at 4%
 
 
From the Courts »
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)
 Ashok Prapann Sharma vs. CIT (Supreme Court)a
  Vatsala Shenoy vs. JCIT (Supreme Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 M.K.Overseas Pvt. Ltd. Vs. Pr.Commissioner Of Income Tax-06
 Arshia Ahmed Qureshi Vs. Pr. Commissioner Of Income Tax-21
 CHAUDHARY SKIN TRADING COMPANY Vs. PR. COMMISSIONER OF INCOME TAX-21
  Sushila Devi vs. CIT (Delhi High Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 Deputy Director Of Income Tax Vs. Virage Logic International

M/s. Avishkar Infrastructure Pvt. Ltd. 19, Acme Ghar, K.D.Road, Behind Rasraj Restaurant, Vile Parle (West), Mumbai 400 056. Vs. The DCIT, Central Cir.9, Old CGO Building, Mumbai 400 020
June, 18th 2015
                       ,                
            IN THE INCOME TAX APPELLATE TRIBUNAL
                  MUMBAI BENCHES `A' MUMBAI
          [ .. , Û è  .  ,                    è

          BEFORE SHRI       I.P. BANSAL, JUDICIAL MEMBER AND

          SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER
                  . / ITA No.7165/MUM/2011
                  [ [ /Assessment Year 2009-10
    M/s. Avishkar            / The DCIT, Central Cir.9,
   Infrastructure Pvt. Ltd.       Old CGO Building,
                             Vs.
   19, Acme Ghar, K.D.Road,       Mumbai 400 020
   Behind Rasraj Restaurant,
   Vile Parle (West),
   Mumbai 400 056.
   è    . /   . / PAN/GIR No. : AAFCA 9502R
        ( /Appellant)        ..        (× / Respondent)

     Appellant by            Shri A.V.Sonde
     Respondent by           Shri Jeevanlal Lavidiya
                / Da te o f Hearing        :11/06/2015
             /Date of Pronouncement : 17/06/2015

                                  / O R D E R

PER I.P.BANSAL,J.M:

     This is an appeal filed by the assessee and it is directed against order
passed by Ld. CIT(A) -37, Mumbai dated 8/8/2011 for assessment year 2009-
10. Grounds of appeal read as under:


     1. The Commissioner of Income Tax (Appeals)-37, Mumbai [hereinafter referred to
     as CIT(A)] erred in confirming the addition of Rs.49,55,843/- (Rs.70,00,000/-
     Rs.20,44,157) being difference between estimated income offered of
     Rs.70,00,000/- in the statement recorded on 18.09.2008 of Shri Ketan Mehta u/s
     132(4) of the I.T. Act and income returned of Rs.20,44,157/- for the A.Y.2009-10
     & 2010-11 by the Appellant.
                                           2              . / ITA No.7165/MUM/2011
                                                            [ [ /Assessment Year 2009-10

      Your Appellant submits that the income offered in the statement recorded u/s
      132(4) were only an estimated income of Rs.70,00,000/- from the project "Acme
      Centre". The Appellant infact offered the realized profit from the said project of
      Rs.19,74,387/- for A.Y.2009-10 and Rs.69, 7701- for A.Y.2010-11 in its return of
      income for the relevant years.


2.    The assessee is engaged in the business of builder and developer and is
following project completion methodof accounting..             It completed project
namely " Acme Center" at Ahmadabad, Gujarat.


2.1   A search was carried at the premises of the assessee and Acme Group
on 24/07/2008. During the course of search statement of Shri Ketan Mehta
was recorded on 18/09/2008, in which unaccounted income of Rs.22.88
crores was disclosed in respect of Acme Group of companies which inter-alia
include undisclosed income of Rs.70.00 lacs in respect of assessee's project
namely "Acme Center" at Ahmadabad for assessment year 2009-10. However,
during the assessment proceedings the AO noticed that assessee had disclosed
only a sum of Rs.19,74,387/- as against Rs.70.00 lacs declared during the
course of search.     The assessee was required to explain as to why entire
amount of Rs.70.00 lacs was not declared and why the same should not be
assessed. In response, it was submitted that due to recession in real estate
market in financial year 2008-09, the assessee could not realize the profit of
Rs.70.00 lacs, which was realized at a sum of Rs.19,74,387/- in respect of
assessment year 2009-10 and Rs.69,770/- in assessment year 2010-11. The
AO rejected the said explanation of the assessee with the following
observations:
      "7. The contention of the assessee is examined. On the examination of
      the details of the following issues arose:
      (i)   The disclosure of Rs.70,00,000/- on this project has been made by
            Shri Ketan Mehta in his statement recorded u/s. 143(4) on
            18.09.2008 voluntarily which indicates that the asessee was in a
            position to ascertain the correct profit on this project.
      (ii)  The statements recorded u/s. 132(4) have evidentiary value and
            the assessee has not submitted any retraction of the above
            statement recorded on 18.09.2008 till date.
                                        3                . / ITA No.7165/MUM/2011
                                                         [ [ /Assessment Year 2009-10


       (iii) The assessee has not submitted any evidence or reason in support
             of the contention that profit was lower than the amount disclosed
             in the statement u/s. 132(4), except giving a general statement
             that there was a recession in the real estate market.
       8.     In view of the statement of Shri Ketan Mehta recorded u/s. 132(4)
       which has not yet been retracted and the facts mentioned above the
       balncd undisclosed income of Rs.49,55,843/- (Rs.70,00,000/- -
       Rs.20,44,157) is added to the total income.          Penalty proceedings
       u/s.271(1)(c) for concealment of particulars of income are initiated
       separately.

It is in this manner, a sum of Rs.49,55,843/- was added to the income of the
assessee against which an appeal was filed before Ld. CIT(A).


3.     Before Ld. CIT(A) it was submitted that no incriminating or any material
worth reference was found and seized relating to Ahmadabad Project.             Shri
Ketan Mehta in his statement offered a sum of Rs.25.88 crores in the hands of
the group companies which include Rs.70.00 lacs for A.Y 2009-10 in respect
of project "Acme Center" at Ahmadabad developed by the assessee.            For the
year   under    consideration   the   assessee   has    offered   the   income     of
Rs.19,74,387/- for assessment year 2008-09 and Rs.69770/-for assessment
year 2010-11.    It was submitted that the offer of income of Rs.70.00 lacs was
based on likely completion and sale of Acme Project. It was submitted that at
the time of offering the profit from the said project one of the shop was
sold/booked by the purchaser. Based on the sale of one shop the assessee had
estimated that the project will fetch the higher rate from the sale and thus,
assessee had estimated the profit and offered the income for tax in statement of
Shri Ketan Mehta. It was submitted that assessee could not fetch the expected
project sale price due to fall in the property market and also over all recession
in economy during the financial year 2008-09. It was further submitted that
the assessee at the outset objected to the addition made by the AO, which is
made merely on the basis of statement of Shri Ketan Mehta on 18/9/2008. Till
that date assessee had sold two shops out of total five shops. One shop at 4th
floor admeasuring 1800 sq.fts. was sold to Shri Jayesh Desai on18/07/2008
                                             4               . / ITA No.7165/MUM/2011
                                                               [ [ /Assessment Year 2009-10


for a consideration of Rs.75,60.000/- i.e. @ 4200 per sq.ft. Another shop at
second floor admeasuring 3950 sq.fts. was sold to Hind Freight Services Pvt.
Ltd. on 12/09/2008 for a total consideration of Rs.1,10,60,000/-. Based on
the sale of above two shops the assessee estimated the profit from the project
on adhoc basis at Rs.70.00 lacs and declared for tax in the statement of Shri
Ketan Mehta recorded under section 132(4) of the Act. It was submitted that
due to global recession and slow down in the market the profit disclosed by
the assessee could not be recognized.            The details regarding price realized by
the assessee from sale of premises which was aggregated to a sum of
Rs.5,14,88,750/- was submitted in the following chart.


Particulars                              Amount(in Rs.)     remark
Ground floor & first floor
2500 sq.ft. X Rs.5760 per sq.ft.         1,44,00,000        Sold to Navkar Holding         &
2500 sq.ft. x Rs.3240 per sq.ft.           81,00,000        Enterprise on 14.11.2009*

Second Floor:
3950 sq.ft. super built up x Rs.2800 per 1,10,60,000         Sold to Hind Freight Services p.
sq.ft                                                        Ltd. on 12.09.08
Third Floor:                                                 Sold to Shyam Kumndanmal
3950 sq.ft. super built up x Rs.2625 per                     Kapoor on 3.10.2008
sq.f.t
Fourth Floor:
188 sq.ft. super built up x Rs.4200 per 75,60,000            Sold    to  Jayesh   Desai    on
sq.ft.                                                       18/07.2008
      *   Shop initially sold to Acme Inida Pvt. Ltd. vide allotment letter dt. 15.10.2008.
    However, the deal was cancelled on 23.09.2009 and sold both units for a total
    consideration of Rs.2,25,00,000/- [i.e. Rs.1,44,00,000 + Rs.81,00,000] on 14.11.2009 to
    third party M/s. Navkar Holding & Enterprise.


3.1    Referring to the above details it was submitted that profit offered in the
statement of Shri Ketan Mehta was only the estimated profit on adhoc basis
from the project based on expected sale consideration. The actual realization
of    sales was actual profit which has been computed to Rs.20,44,157/- which
was offered in the return filed for A.Y 2009-10 and 2010-11 (Rs.19,74,387/- for
assessment year 2009-10 and Rs.69,770/- for assessment year 2010-11).
Thus, it was submitted the addition on Rs.49,55,843/- was contrary to the
factual position.
                                        5             . / ITA No.7165/MUM/2011
                                                       [ [ /Assessment Year 2009-10




3.2   It was further submitted that statement recorded during the survey
proceedings does not have evidentiary value and statement recorded under
section 132(4) but later retracted cannot be relied in absence of any co-related
evidence, material; immovable or moveable assets etc. and reliance was placed
on the following decisions:
i. DCIT vs. Premsons (130 TTJ 159 (Mumbai)
ii.ACIT vs. Jorawar Singh
iii.DCIT vs. Okasa (P) Ltd. [10 SOT 164] (Mumbai)
iv) ACIT vs. Anoop Kumar [ 94 TTJ 288] (Amritsar)
v) DCIT Vs. Pramukh Builders [112 ITD 179](Ahd)
vi)ACIT v. Santogen Textile Mills Ltd. [94 TTJ 637](Mumbai)
vii Sihgad Technical Education Society vs. ACIT [57 DTR 241](Pune)


3.3   On these submissions of the assessee Ld. CIT(A) has recorded the
following findings.
(i) that profit of "Acme Center" was not included in the return of income by the
assessee probably because the project was not completed till date of search.
(ii) According to Question No0.9,10 & 11 recorded at the time of search on
18/9/2008 the assessee through         their authorized persons admitted the
income earned in the above Ahmadabad Project and such admission was made
under section 132(4) of the Act.    By admitting disclosure the assessee had
altered the position of the Department. According to which Department did
not pursue the matter further and thus, assessee cannot put the Department
at disadvantageous stage by not disclosing the amount offered during the
course of search.
(iii) Assessee did not retract the said statement till the date of furnishing the
return of income which was dated 23/9/2009.
(iv) The contention of the assessee that there was recession in the real estate
market is not substantiated by any statistical data or market research or by
                                        6              . / ITA No.7165/MUM/2011
                                                        [ [ /Assessment Year 2009-10





any other material evidence.    In fact, there was no slump in the real estate
market. According to data furnished by the assessee, in fact the sale rate of
impugned shops had increased from Rs.2800 per sq.ft. as on 12/9/2008 to
Rs.3240 per sq.ft. and Rs.5760/- per sq.ft. on 14/11/2009.


3.4   Ld. CIT(A) has also distinguished the cases relied before by the assessee
before him and has finally concluded that action of the AO was right. In this
manner Ld. CIT(A) has upheld the addition made by the AO.
3.5   The assessee is aggrieved by such finding recorded by Ld. CIT(A) and has
raised aforementioned grounds of appeal.


4.    After narrating the facts, it was submitted by Ld. AR that assessee
submitted complete details of sales and expenses incurred on the said project
not only before AO but also before Ld. CIT(A). All the sales have been made to
third parties , whose names and addresses were also given. The assessee had
constructed five shops which were sold on different dates and before the date of
recording statement, two shops were sold. On the basis of the sale of those
shops the assessee estimated the profits of Rs.70.00 lacs which was offered to
tax in the statement recorded in the course of search. It was submitted that
when all the particulars regarding sales of the shops and expenditure incurred
thereon were duly provided, then it was highly improper for the AO to make
addition on the basis of the statement as by the date statement was recorded
the assesee could state only the estimate profit out of the project which would
not be said to be real profit of the assessee in view of subsequent realization of
the sale price of the remaining shops which have been sold to independent
parties.


4.1   It was submitted that AO while making the addition has solely relied
upon the statement recorded during the course of search and main reason for
sustenance of addition by Ld. CIT(A) is also based on the statement recorded
                                          7              . / ITA No.7165/MUM/2011
                                                          [ [ /Assessment Year 2009-10


during the coruse of search. Ld. AR referred to the Circular issued by CBDT
No.286/2/2003-IT(INV) dated 10/3/2003, which read as under:


"
      To
      All Chief Commissioners of Income Tax, (Cadre Contra)
      &
      All Directors General of Income Tax Inv.
      Sir,
      Sub: Confession of additional income during the course of search & seizure and
      survey operation ­ regarding.
      Instances have come to the notice of the Board where assessee have claimed that
      they have been forced to confess the undisclosed income during the course of the
      search & seizure and survey operations. Such confessions, if not based upon
      credible evidence, are later retracted by the concerned assessees while filing
      returns of income. In these circumstances, on confessions during the course of
      search & seizure and survey operations do not serve any useful purpose. It is,
      therefore, advised that there should be focus and concentration on collection of
      evidence of income which leads to information on what has not been disclosed
      or is not likely to be disclosed before the Income Tax Departments . Similarly,
      while recording statement during the course of search it seizures and survey
      operations no attempt should be made to obtain confession as to the undisclosed
      income. Any action on the contrary shall be viewed adversely. Further, in
      respect of pending assessment proceedings also, assessing officers should rely
      upon the evidences/materials gathered during the course of survey/operations or
      thereafter while framing the relevant assessment order. (emphasis provided).

4.2   Referring to above circular it was submitted by Ld. AR that the said
circular was prevailing on the date when search was made and also on the date
when assessment       was framed by AO.        It was submitted that it has been
clearly mandated that the focus and concentration of the Department during
the course of search should be on collection of evidence             which leads to
information of what has not been disclosed or is not likely to be disclosed. It is
also mandated that while recording the statement during the course of search,
seizures and survey operations, no attempt should be made to obtain
confession as to the undisclosed income. It has also been mentioned that in
respect   of   pending    assessment     proceedings     AO     should   rely   upon
evidences/materials gathered during the course of search/survey operation or
thereafter while framing relevant assessment order.           It was submitted that
                                        8             . / ITA No.7165/MUM/2011
                                                       [ [ /Assessment Year 2009-10


relying upon aforementioned circular not only various Benches of ITAT but also
various Hon'ble High Courts also have deleted such additions which have been
made simply on the basis of statement recorded during the              course of
search/survey. Reference was made to the following decisions:


1. Gajjam Chinna Yellappa & Others vs ITO, 370 ITR 671 (T & AP) ­ In this
case their Lordships have observed that the Income tax Act empowers the AO
or other authorities to record the statement of the assessee, whenever a survey
or search is conducted under relevant provisions of law. The statement was
recorded referable to section 132 of the Act. Sub-section (4) thereof enables the
authorities not only to rely upon the statement in the concerned proceedings
but also in other proceedings that are pending, by the time the statement was
recorded. It is further observed by their Lordships that if the statement is not
retracted, the same can constitute the sole basis for which authorities to pass
an order of assessment. However, if it is retracted by the person from whom it
was recorded, totally different consideration altogether, ensue. The situation
resembles the one, which arise on retraction from statement recorded under
section164 of the    Code of Criminal Procedure.      The evidentiary value of
retracted statement becomes diluted and it losses the strength, to stand on its
own. Once the statement is retracted, the assessing authority has to garner
some support, to the statement for passing an order of assessment.           Their
Lordships referred to the earlier decision in the case of CIT vs. Naresh Kumar
Agarwal, 369 ITR 171, wherein it has been held that a retracted        statement
cannot constitute the sole basis for fastening the liability upon an assessee.
Their Lordships further observed that it is not as if the retraction from a
statement by an assessee would put the end to the procedure that ensued on
accounted survey or search. The AO can very well support his finding on the
basis of other material. If he did not have any other material, in a way, it
reflects upon the very perfunctory nature of the survey and for this their
Lordships have referred to the aforementioned circular issued by the CBDT
                                         9             . / ITA No.7165/MUM/2011
                                                        [ [ /Assessment Year 2009-10


dated 10/3/2003, which is taken exception to the initiation of proceedings on
the basis of retracted statement.


2. CIT vs. Ashok Kumar Soni, 291 ITR 172 (Raj) ­ In the said case, during the
course of search, it was admitted that a total sum of Rs.14,50,000/- was
invested in the construction of house property as against which only a sum of
Rs.7,50,000/- was disclosed and balance amount of Rs.7,50,000/- was offered
in the statement recorded under section 132(4) of the Act. The said statement
was retracted by filing of the return.       However, the AO made      addition of
Rs.7,50,000/- on the basis of statement.        The addition was deleted by the
Tribunal. The Department challenged the said order of the Tribunal.           Their
Lordships have observed that admissions are relevant piece of evidence and
are not conclusive proof of facts. It was further observed that while deleting
the addition Tribunal did not act merely on the basis of retracted statement but
had acted and reached its conclusion by taking into consideration all the
relevant material and relevant findings of the Tribunal being finding of fact on
the basis of which recorded statement could not be said to be vitiated.
3. Ganesh Trading Company vs. CIT, 84DTR (Jharkand) 94 - In this case their
Lordships have held that statement recorded under section 132(4) is evidence
but its reliability   depend upon      the fact of the case and particularly
surrounding circumstances. It was observed that the statement on oath of the
assessee is a piece of evidence as per section 132(4) of the Act and when there
is incriminating admission against himself, then it is required to be examined
with due care and caution. It was observed that no specific reason was given
to reject the assessee's contention by which the assessee has retracted from his
admission.    None of the authorities gave any     reason as to why AO did not
proceed further to enquire into the undisclosed income as admitted by the
assessee in his statement under section 132(4), in fact situation where during
the   course of search, there was no recovery of asset or cash by the
Department,     it was observed that mere reading of the statement of the
                                           10              . / ITA No.7165/MUM/2011
                                                            [ [ /Assessment Year 2009-10


assessee is not an assessment of evidentiary value of the evidence when such
evidence is self incriminating and it was held that in absence of seizure of any
asset or cash, addition on the basis of retracted statement was not sustainable.


4.3   The other decisions relied upon for similar propositions were as under:
1. Unique Art Age vs. ACIT (Jaipur) (2014) 29 DTR (Trib) 547(Jaipur).
2. Jyothichand Bhaichand Saraf & Sons (P)Ltd.vs. DCIT, (2013) 86 DTR (Pune
Trib) 289
3. Shri Basant Bansal vs. ACIT, 534/JP/2012 order dated 29/5/2015
4. DCIT vs. Premsons (2010) 37 DTR (Mum) 150.


4.4   Ld. AR further submitted that for assessment year 2010-11 assessment
order is framed under section 143(3) of the Act, copy of which has been placed
at page 42 to 43 of the paper book. He submitted that part of the project was
sold during that year also and in para-4 AO has also referred to the gross
receipts as well as expenditure incurred by the assessee on the impugned
project and none of the receipt or expenditure incurred by the assessee has
been doubted. Reference in this regard was made to para-4 of the said order,
which read as under:
             "4. Further, the assessee company follows project completion method of
      accounting. On its completed project `Acme Centre' at Ahmedabad, the assessee
      company declared a total revenue recognition at Rs.51,488,750/- out of which
      Rs.49,605,750/- is claimed to have been duly accounted for during the
      immediately preceding assessment year 2009-10 and as such, the company has
      credited its profit & loss a/c. by balance amount of Rs.1,883,000/- and
      accordingly, offered a total income of Rs.69,770/- for the previous year
      concerned. After perusal of documents available on record and discussion with
      the authorized representative of the assessee, the total income as per return is
      accepted.
                    Total income              : Rs.69,770/-
      Assessee u/s. 143(3) of the Act at a total income of Rs.69,770/-. The necessary
      details/ documents are perused, verified on test check and kept on record. Credit
      for prepaid taxes has been given after due verification. Interest applicable as per
      law charged. Demand note and challan issued accordingly."
                                       11            . / ITA No.7165/MUM/2011
                                                        [ [ /Assessment Year 2009-10


4.5   Thus, it was submitted by Ld. DR that addition is simply based on
statement recorded during the course of search.           Full particulars were
submitted to the AO.     The AO could not point out any discrepancy in the
particulars submitted by the assessee.      Since the details were available,
addition      simply on the basis of statement was contrary to law as per
aforementioned decisions of the Judicial Authorities.


5.    On the other hand, it was submitted by Ld. DR that assessee had
admitted the income during the course of search and such admission of the
assessee has evidentiary value, therefore, relying upon the same, addition was
rightly made by the AO and the same has rightly been sustained by Ld. CIT(A).
It was submitted that Ld. CIT(A) has met with each of the objections raised by
the assessee and the same have been rejected. Ld. DR relied upon the findings
recorded by Ld. CIT(A) which have been discussed in detail in earlier part of
this order.    Thus, it was concluded by Ld. DR that Ld. CIT(A) has rightly
confirmed the addition and his order should be upheld.


6.    We have heard both the parties and their contentions have carefully been
considered. The question in the present appeal relates to the determination of
profit in respect of "Acme Center", a project developed by the assessee at
Ahmadabad.       The sole basis of the Department to assess profit of Rs.70.00
lacs is based upon the statement recorded under section 132(4) of the Act. It
is a matter of fact that by the time statement was recorded, the entire project
was not sold by the assessee. Only two shops were sold. The details of sale of
the entire project by the assessee has already been produced in the table
reproduced in para-3.     According to the facts, assessee has developed total
area of 14950 sq.fts. which comprises of ground floor to 4th floor. By the time
statement was recorded the assessee had sold 6000 sq.fts. for an aggregate
amount of Rs.1,86,26,000/-, which give rise to average rate of Rs.3103/- per
sq.ft. The subsequent sales by the assessee were 8950 sq.fts. which was sold
                                          12              . / ITA No.7165/MUM/2011
                                                            [ [ /Assessment Year 2009-10


for an aggregate amount of Rs.3,28,68,750/-, which is average sale rate of
Rs.3672/- per      sq.ft. All these sales are made to third party, the names of
which were given not only to AO but also to Ld. CIT(A). Therefore, total receipts
of the assessee from the said project are a sum of Rs.5,14,88,750/-.               The
details of expenditure was also submitted to the AO. The relevant portion of
the assessment order has already been reproduced. The AO did not doubt the
receipts of the assessee as well as expenditure incurred on project but he has
made the addition simply on the basis of statement which was recorded under
section 132(4) of the Act. The assessee retracted the statement by filing the
return of income and this fact has also been admitted by Ld. CIT(A) with the
following words"
      "Secondly, in this case although the search & seizure was carried out in the
      premises of the appellant on 24-07-2008, the appellant never retracted the
      statement recorded u/s. 132(4) of the Act till the date of furnishing of return of
      income on 23-09-2009."


6.1   Under these facts and circumstances of the case we have to examine
that whether sustenance of impugned addition is in accordance with law or
not. The law in this regard has already been described in the above part of this
order and reference can be made to the decision of Hon'ble Telungana &
Andhra Pradesh High Court in the case of Gajjam Chinna Yellapa vs.
ITO(supra), where their Lordships have observed that in case statement is
retracted then totally different consideration altogether will        ensue and the
situation would resemble to section 164 of the Code of Criminal Procedure.
The evidentiary value of retracted statement become diluted and it loses its
strength to stand on its own.      In that case Assessing authority has to garner
some support to the statement for passing an order of assessment. It is also
held that retracted statement would not put an end to the procedure, then the
AO    is under an obligation to support his findings on the basis of other
materials and if he does not have such material then it would reflect upon the
very perfunctory nature of the survey. For holding so their Lordships have
referred to the aforementioned circular dated 10/3/2003, wherein CBDT has
                                        13              . / ITA No.7165/MUM/2011
                                                           [ [ /Assessment Year 2009-10





clearly given the mandate to the officers that during the course of search,
seizures and survey no attempt should be made to obtain confession as to the
undisclosed income and such instructions to CBDT were applicable when the
search and seizure was made and assessment was framed. CBDT has further
mandated that in respect of pending assessment also AO should rely upon the
evidences/materials gathered during the course of search/survey operations or
thereafter while framing relevant assessment order. The addition made in the
present case is contrary to the aforementioned decision of Hon'ble Telangana &
Andhra Pradesh High Court as well as aforementioned circular of CBDT as
the assessment is entirely based upon the statement recorded during the
course of search and no independent material has been brought on record by
the AO to show that the income returned was incorrect.


6.2   The other decisions which have been relied upon by Ld. AR also supports
similar proposition and these have been discussed in the above part of this
order and for the sake of brevity they are not repeated.


6.3   So far as it relates to findings recorded by Ld. CIT(A), one of the finding is
that by making admission under section 132(4) the assessee has altered the
position of the Department because of which the Department did not pursue
the matter further and did not visit the said Acme Centre at Ahmedabad. It
may be mentioned that such opinion of Ld. CIT(A) would be contrary to the
aforementioned circular issued by CBDT, where the clear mandate has been
given to the Income Tax Authorities working under the CBDT that while
recording the statement during the course of search/survey no attempt should
be made to obtain confession of the undisclosed income and any such action
would be viewed adversely.       Recognizing such position their Lordships of
Telangana & Andhra Pradesh High court have already observed that if addition
is made simply on the basis of statement recorded under section 132(4) and no
material is brought on record by the Revenue authorities then it would reflect
                                        14             . / ITA No.7165/MUM/2011
                                                         [ [ /Assessment Year 2009-10


upon very perfunctory nature of the survey/search action of the Department.
Therefore, in absence of supporting material, the addition simply on the basis
of statement    cannot be upheld.      The other findings of Ld. CIT(A) do not
support the addition as they are only based upon the admission of the
assessee.   According, to the facts of the case, the assessee had furnished all
required particulars regarding sale and expenditure incurred on the impugned
project and AO could not point out any defect in those particulars submitted by
the assessee.   Thus, the addition is made simply on the basis of statement
recorded during the course of search and is not supported by any material. In
view of case law relied upon by Ld. AR, the addition is not sustainable and is
deleted.


7.    In the result, the appeal filed by the assessee is allowed.
      Order pronounced in the open court on 17/06/2015
           Û   17/06/2015    

           Sd/-                                             Sd/-
(.   / D.KARUNAKARA RAO)                            (..  / I.P. BANSAL)
 è / ACCOUNTANT MEMBER                       Û è / JUDICIAL MEMBER
  Mumbai;
                 Dated 17/06/2015
    /Copy of the Order forwarded to :
1.    / The Appellant
2.   × / The Respondent.
3.    È() / The CIT(A)-
4.    È / CIT
5.    ,   ,  / DR, ITAT,
     Mumbai
6.   [  / Guard file.


                                                             / BY ORDER,
×  //True Copy//
                                      /                  (Dy./Asstt. Registrar)
                                        ,  / ITAT, Mumbai
.../Vm, Sr. PS

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions