IN INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.No.83/Ahd/2012 /Asstt. Year: 2009-2010 Vasantiben Kanaiyalal Patel DCIT, Cent.Cir.3 Ghantiwala Compound Vs Surat. Nr.A.S. Motors A.K. Road Surat. PAN : ADQPP 0310 D. / (Appellant) / (Respondent) Assessee by : Shri Rasesh Shah, AR Revenue by : Shri Sumit Kumar Verma, DR / Date of Hearing : 01/09/2016 / Date of Pronouncement: 17 /10/2016 /O RDER Assessee is in appeal against order of ld.CIT(A)-II, Ahmedabad dated 19.10.2011 passed for Asstt.Year 2009-10. 2. Though grounds of appeal taken by assessee are not in consonance with Rule 8 of Income Tax (Appellate) Rules, 1963 - they are descriptive and argumentative in nature. In brief her grievance is that ld.AO ought to have granted refund of Rs.5,28,801/- in respect of amount of Rs.15 lakhs, which was offered for taxation conditionally. 3. ld.counsel for assessee, at very outset, submitted that identical issue was heard in Division Bench in case of ITA No.81 & ITA No.83/Ahd/2012 2 82/Ahd/2012 dated 6.9.2016 and outcome of those appeals is to be followed in present appeal. ld.DR was unable to controvert this contention of ld.counsel for assessee. 4. I find that Division Bench has decided those appeals vide order dated 6.9.2016. order reads as under: 1. ITA Nos.81 & 82/Ahd/2012 are appeals by two different Assessees directed against order of Ld. CIT(A)-II, Ahmedabad dated 18.10.2011 pertaining to A.Y. 2009-10. 2. As common grievance is involved in both these appeals, though quantum may differ, both these appeals were heard together and are being disposed of by this common order for sake of convenience. 3. common grievance in both these appeals relate to non- granting of refund in respect of amount conditionally offered by asessees as their income for year under consideration so as to cover any discrepancies, errors, omissions, mistakes etc., in seized documents and seized assets vis- -vis regular books. 4. facts of case are that search action u/s. 132 of Act was carried out on 24.09.2008 in Manish Group to which assessees are part of. During course of search operation, Shri Kanaiyalal B. Patel who happens to be main person of Manish Group voluntarily disclosed total income of Rs. 1.10 crores which was subsequently increased to Rs. 2.25 crores covering all assessees of Manish Group. 5. Before transmitting return of income electronically, assessee filed explanatory notes before A.O. stating that explanatory notes so filed should be considered as forming part of computation of income. 6. contents of explanatory notes can be appreciated by following chart:- Sr. Name of Ass. Status Preliminary Identified Unidentified No. Year voluntary discrepancy discrepancy assessee disclosure as per reduced amt. available while details computing total income to register ITA No.83/Ahd/2012 3 claim 1 Manish 2009- Company 1,75,00,000 27,00,000 1,48,00,000 Packaging 10 Pvt.Ltd. (Including cash adjusted of Rs. 32.50 lacs) 2 Kanaiyalal 2009- Individual 10,00,000 -- 10,00,000 B. Patel 10 3 Vasantiben 2009- Individual 15,00,000 -- 15,00,000 K. Patel 10 4 Manish K. 2009- Individual 25,00,000 -- 25,00,000 Patel 10 Total 2,25,00,000 27,00,000 1,98,00,000 7. While filing aforementioned chart, assessees specifically stated that aforementioned chart may also be treated for registering retraction of preliminary disclosure made to extent it remains unidentified during assessment. 8. Thus, unidentified disclosure of Shri Kanaiyalal B. Patel was appropriated at Rs. 10 lacs and that of Shri M.K. Patel was appropriated at Rs. 25 lacs. We are considering appeals of these two persons. 9. claims of appellants are that disclosure was on estimate basis, there was no corroborative unexplained investment/expenditure found at time of search, no undisclosed assets were found nor it is case of revenue that disclosure made by assessees have any nexus with unexplained income found at time of search. 10.At this stage, it would be pertinent to understand view of CBDT on disclosures made at time of search and same reads as under:- CBDT circular No. 286/2/2003-IT (INV), dated 10-3-2003 in reference to confession of income made during course of search proceedings is reproduced herein below: Instances have come to notice of Board where assesses have claimed that they have been forced to confess undisclosed income during course of search and seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by concerned assessee while filing returns of income. In these circumstances, on confession during course of search and seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of ITA No.83/Ahd/2012 4 evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before income-tax departments, similarly, while recording statement during course of search and seizures and survey operations no attempt should be made to obtain confession as to undisclosed income. Any action on contrary shall be viewed adversely. Further, in respect of pending assessment proceedings also, assessing officers should rely upon evidences / materials gathered during course of search / survey operations or thereafter while framing relevant assessment orders 11. If facts of cases in hand are to be considered in light of aforementioned CBDT Circular, in our considered opinion, since there is no co-relation between alleged disclosures of appellants qua seized material, we do not find any reason why addition should be made and why tax paid on such disclosure should not be refunded. 12. It would not be out of place to mention that none of appellants have included income disclosed in their respective returns of income. This proves that assessee never had any intention to include alleged voluntary disclosure in return of income. 13. Considering facts in totality in light of CBDT Circular (supra), we set aside findings of ld. CIT(A) and direct A.O. to issue refunds on such additions of income disclosed but not shown in return of income. 14. Before parting, in one of lead cases of group namely Manish Packaging Pvt. Ltd., Co-ordinate Bench in ITA Nos. 78 & 973/Ahd/2012 had considered similar facts and thus held:- 8. Assessing Officer framed regular assessment on 31-12-2010 inter alia treating above extracted disclosures as voluntary, unconditional, unequivocal and precise which could not brushed aside in assessee's return as conditional. His view was that at most, above stated deemed dividend amount therein (supra) could be held as conditional disclosure. Shri Patel's statements were taken as that of fully conscious ones since administered under oath. And that same had gone un-rebutted for want of tangible evidence. Retraction time period of 11 months was held to be based on legal advice only. Assessing Officer took into account all these conclusions for rejecting assesee's retraction qua impugned sum of Rs. 1.48 lacs and held that entire sum of Rs. 1.75 crores (supra) was its unaccounted income. ITA No.83/Ahd/2012 5 9. CIT(A) has upheld Assessing Officer's action under challenge. 10. learned authorized representative invites our attention to above extracted statement for terming same as conditional disallowance and not categoric one. He submits that same lacks any supportive evidence as well i.e. four basic ingredients of concerned assessee's identity out of above stated four entities (supra), corresponding assessment year, source thereof along with its application and unexplained expenditure is nowhere forthcoming. assessee pleads that both alleged sums of Rs. 2.25 crores and deemed dividend amount of Rs. 4 crores (supra) stand on identical footing being based on Shri Patel's statements. It highlights fact that latter deemed dividend amount was finally disclosed as of Rs. 31,15,897/- only. It refers to Board's circular No. 286/02/2003 dated 10-03-2003 dealing with issue of disclosure made in searches and seizures thereby directing revenue authorities to keep focus and concentration on collection of evidence of income leading to information on what has not been disclosed or is not likely to disclose before department. assessing authority in pending assessments have also been directed to rely upon evidences/materials collected during search/survey operations. assessee quotes catena of case law in support of its plea that impugned addition of Rs. 1.48 crores is not sustainable being merely based on its conditional disclosures hereinabove. It accordingly prays for acceptance of instant appeal. 11. Revenue strongly supports CIT(A) rejecting assessee's retraction in question. It seeks dismissal of present appeal. 12. assessee submits in rebuttal that investigation authorities nowhere pin point any specific incriminating evidence during search to Shri Patel. Nor is there any question in this regard. It accordingly reiterates its earlier submissions. 13. We have heard both parties. Case records and judicial precedents stand perused. We come to admitted facts first. department commenced impugned search operation in assessee's business preemies. And concluded same on 03-10-2008. This time span of 10 days involves four statements being obtained from Shri Patel (supra) inter alia disclosing unaccounted business income of Rs. 2.25 crores along with deemed dividend of Rs. 4 crores. We have extracted relevant portions thereof in preceding paragraphs. same do not reveal any specific incriminating material unearthed in course of search or thereafter highlighting unaccounted business income. above stated disclosure statements are very much vague ones and conditional as well without verifying necessary books and records. relevant array of questions forming part of paper book are found to be not throwing light on any specific material with contents thereof; whatsoever. same factual position continues in assessment, lower ITA No.83/Ahd/2012 6 appellate order and in course of arguments before us. It is not out of place to reiterate that we are dealing with issue of impugned unaccounted business income of Rs. 1,48,00,000/-. We observe in these peculiar circumstances that there is no specific incriminating material supportive of above stated addition right from search till date. We quote Board's circular (supra) issued much prior to search in question directing investigating officers to focus on collection of evidence pointing towards unaccounted income rather than requesting such confessional disclosure statements. We accordingly hold that Revenue has not collected any specific material supporting impugned addition. 14.Now we come to relevant case law quoted. first one (2010) 328 ITR 411 (Guj) Kailashben Manohar Choksi vs. CIT. department had recorded disclosure statement at midnight hours. same stood retracted after two months. There was no evidence collected in support of said disclosures. We find that their lordships accepted retraction since statement was recorded in very much odd hours. It has been held thereafter that additions in question are not sustainable since no material evidence supporting same are forthcoming. It is further evident that this case law pertains to search conducted well before Board's circular (supra) quoted therein. When we apply this ratio vis-a- vis facts before us, it is apparent that there is no incriminating material or evidence available with Revenue which could support impugned addition. 15. next case law is DCIT vs. Shri Vivekanand Sharma ITA 1748/Kol/2012 decided on 01-08-2014. This search is dated 26-023- 2010 followed disclosure statement u/s. 132(4) on 06-05-2010 subsequently retracted on 02-09-2011 i.e. almost one and half years thereafter. learned co-ordinate bench quotes absence of specific material evidence supporting disclosure statement for deciding issue against Revenue. We have afforded Revenue due opportunity to point out any distinction on facts or law. It is unable to do so. 16. We have given thoughtful consideration to above stated facts, lower authorities' findings, rival contentions and our discussion keeping in mind relevant case laws. We are of opinion accordingly Revenue has failed to produce any material evidence supporting impugned addition amount of Rs. 1.48 crores added merely on basis of very much vague and conditional disclosure statement of Shri Patel which stands retracted later on. We hold in these facts Assessing Officer and CIT(A) have erred in making above stated additions in assessee's as its unaccounted income. same stands deleted. Other arguments narrated in preceding paragraphs have been rendered infructuous. ITA 78/Ahd/2012 succeeds. ITA No.83/Ahd/2012 7 15. Our decision is fortified by decision of Co- ordinate Bench (supra). 16. In result, both appeals filed by Assessees are allowed. 5. perusal of above order would indicate that amount disputed by present assessee has also been mentioned at Sr.No.3 on page no.3 of order, while taking note of details in tabular form. There is no disparity of any fact. Therefore, respectfully following above, I allow appeal of assessee, and direct AO to grant refund as claimed by assessee on amount of Rs.15 lakhs, which was offered conditionally. This amount cannot be taxed in hands of assessee, and tax paid on this amount is to be refunded. 6. In result, appeal of assessee is allowed. Order pronounced in Court on 17th October, 2016 at Ahmedabad. Sd/- (RAJPAL YADAV) JUDICIAL MEMBER Vasantiben Kanaiyalal Patel v. DCIT, Cent.Cir.3 Surat