ITA-129-2018 1 HIGH COURT OF MADHYA PRADESH: JABALPUR (Division Bench) ITA No. 129/2018 PRINCIPAL COMMISSIONER OF INCOME TAX APPELLANT Vs. M/S BHOMIYAJI LAND & FINANCE CO. RESPONDENT Coram: Honble Mr. Justice Ajay Kumar Mittal, Chief Justice Honble Mr. Justice Vijay Kumar Shukla, Judge Appearance: Mr. Sanjay Lal, Advocate for himself and as Proxy Counsel for Ms. Veena Mandlik, Advocate for Appellant. JUDGMENT (Oral) (03.02.2020) Per: Ajay Kumar Mittal, Chief Justice: In view of order of even date passed in R.P. No.25/2020 (Principal Commissioner of Income Tax vs. M/s Bhomiyaji Land and Finance Co.), present appeal is taken up for fresh hearing. 2. present appeal under Section 260A of Income Tax Act, 1961 (for brevity Act) has been preferred by Revenue challenging order dated 31.01.2018 passed by Income Tax Appellate Tribunal, Bench Indore (in short Tribunal ) in ITA No.490/Ind/2013 (Assessee's appeal) and ITA No.412/Ind/2013 (Revenue's Appeal) for Assessment Year 2007- 08 claiming following substantial questions of law: ITA-129-2018 2 (i) Whether ITAT was justified in deleting addition of Rs.23,02,500/- made on account of unexplained investment merely on ground that aforesaid unexplained investment which was voluntarily accepted by assessee later got retracted by him? (ii) Whether ITAT was justified in deleting addition of Rs.28,97,500/- made on account of unexplained investment merely on ground that aforesaid unexplained investment which was voluntarily accepted by assessee later got retracted by him? (iii) Whether ITAT was justified in deleting addition of Rs.3,72,79,410/- by taking net profit rate on unaccounted sales even when assessee failed to provide any documentary evidence of corresponding expenses? 3. facts of case, in brief, are that assessee filed its return of income on 15.11.2007 for assessment year 2007-08 declaring total income of Rs.1,41,350/-. survey action under Section 133A of Act was carried out in business premises of assessee on 15.03.2007 wherein undisclosed income of Rs.60.00 Lac on account of underhand transactions in purchase of land as well as excess cash was found. Such statement of one of partner of assessee Firm, namely, Shri Prem Kumar Agrawal was recorded on oath. assessment under Section 143(3) of Act was completed by Assessing Officer vide order dated 15.12.2009 on total income of Rs.5,10,56,000/-, who added amount of Rs.23,02,500/- on account of unexplained investment under Section 69 in purchase of land; Rs.28,97,500/- towards unexplained investment in properties as per statement of partner; Rs.8,03,142/- towards unexplained money u/s 69A; Rs.3,72,79,410/- towards suppressed sales; Rs.65,67,600/- on account of ITA-129-2018 3 unexplained cash credits and amount of Rs.10,64,500/- was added on account of bogus credit entries in books as well as excess unaccounted money charged from customers. 4. Feeling aggrieved by order of Assessing Officer, assessee filed appeal before Commissioner of Income Tax (Appeals), Ujjain [for short CIT(A)], who vide order dated 28.3.2013 partly allowed same and deleted aforesaid additions of Rs.23,02,500/- and Rs.28,97,500/- holding that certain additions were made only on basis of statement whereas Assessing Officer was obliged to corroborate addition with any other material during assessment proceedings. Similarly, addition made by Assessing Officer to tune of Rs.3,72,79,410/- on account of suppressed sales was restricted to Rs.17,05,082/- after adjusting net profit already shown by appellant, on appreciation of various judicial pronouncements and detailed reasons assigned in order that it was reasonable if net profit @ 8% was applied on estimated sales of Rs.2.5 Crores in place of 1.60% shown by appellant in return because net profit shown by appellant was on lower side considering its line of business. Further, addition made by Assessing Officer to tune of Rs.65,67,600/- towards unexplained cash credits was reduced to Rs.35,37,500/- as appellant had furnished copies of sale deeds and proof of repayment of remaining amount of Rs.30,30,100/-. As regards addition of amount of Rs.10,64,500/- for bogus credit entries, said amount was also restricted by CIT(A) to Rs.3,30,000/- on basis of material on record revealing that remaining accounts amounting to Rs.7,34,500/- were substantiated by proof ITA-129-2018 4 of refund through banking channel, copies of registers, cash receipt vouchers and money receipt etc. which were also got verified along with books of accounts. Thereafter, dissatisfied with that order dated 28.3.2013, Revenue filed appeal before Tribunal, which was registered as ITA No.412/Ind/2013. assessee also preferred appeal being aggrieved by part of order of CIT(A), which was numbered as ITA No.490/Ind/2013. Tribunal vide common order dated 31.1.2018 dismissed both appeals thereby upholding findings of CIT(A). Hence, Department is in present appeal. 5. Before this Court, appellant has restricted challenge to impugned order passed by Tribunal to extent of deletion of amount of Rs.23,02,500/- and Rs.28,97,500/- made on account of unexplained investments and further deletion of Rs.3,72,79,410/- by taking net profit rate on unaccounted sales. submission of learned counsel for appellant with regard to Substantial Question of Law Nos.(i) and (ii) is that Tribunal should not have deleted said additions because they were arrived at keeping in view difference between consideration mentioned in sale deed and fair market value declared by Stamp Valuation Authority. As regards Substantial Question of Law No.(iii) it is urged that CIT(A) while reversing findings of Assessing Officer for addition of amount of Rs.3,72,79,410/- towards suppressed sales, estimated sales at Rs.2.5 Crores and applied net profit at 8% thereby sustaining only addition of Rs.17,05,082/- as against sum of Rs.3,72,79,410/- whereas said suppressed sales was worked out by Assessing Officer on basis of two registers which were ITA-129-2018 5 impounded by him during course of survey conducted on 15.03.2007. It was found that actual sale consideration of plots was much more than registered value shown by assessee in his books. assessee used to record names of purchasers by ink/ball pen and would record amount received from them by pencil leading to inference that unaccounted receipts were routed in books of accounts of assessee under guise of unsecured loans or bogus creditors. Assessing Officer also observed that amount of sale consideration recorded in books was found to be between 25% to 46% of actual sale and remaining 67% was outside books of account, therefore, by applying said ratio, Assessing Officer had rightly worked out unaccounted sale consideration of Rs.3,72,79,410/-. On these premises, learned counsel for appellant submits that impugned order be set aside and appeal be allowed. 6. We have heard learned counsel for appellant and perused material placed on record. 7. Firstly, taking up addition of Rs.23,02,500/- made by Assessing Officer on account of unexplained investment under Section 69 of Act in purchase of land, arising in question No.1, Tribunal had concluded that Assessing Officer had made additions on basis of statement of partner, namely, Shri Prem Kumar Agrawal. However, said statement was retracted on very next day of completion of survey proceedings by way of duly signed affidavit, signed by all partners. Further, except for retracted statement of partner, there was no other material with Assessing Officer to make such addition. ITA-129-2018 6 addition was made on basis that sale consideration which was shown in two sale deeds dated 28.09.2006 and 09.10.2006 was Rs.31,01,000/- and Rs.31,10,000/- whereas Stamp Valuation Authority had determined market price of this land at Rs.42,69,500/- and Rs.42,44,000/- respectively, resulting in difference of Rs.23,02,500/-. Applying provisions of Section 50C of Act, addition was sought to be made. However, provisions of Section 50C of Act were not available to Revenue as assessee was purchaser of land. With regard to substantial question of law No.(i) raised by appellant, learned Tribunal while considering cross-appeals for Assessment Year 2007- 08 came to hold as under:- 22. Apropos Ground No.1 of Revenue's appeal challenged Ld. CIT(A) finding deleting addition of Rs.23,02,500/- unexplained investment. 23. We have heard rival contention and perused material on record before us. We find that Ld. AO taking basis of statement of one of partner Shri Prem Kumar Agrawal in which he accepted that investment made in business are more than price of property and accordingly offered Rs.52,00,000/- as unexplained investment. However, statement was retracted on very next day of completion of survey proceedings by way of filing of affidavit signed by all partners. This fact has not been disputed by Revenue that Ld. AO failed to bring anything on record which could prove that assessee made unexplained investment in purchase of profits except admission of one of partner. It is also observed that alleged addition of Rs.23,02,500/- was made on account of difference in stamp valuation of land purchased on 28.09.2006 and 09.10.2006 at Rs.31,01,000/- and Rs.31,10,000/- from Mr. Amritpal Singh Khanuja. market price of this land as per stamp valuation authority was Rs.42,69,500/- & Rs.42,44,000/- respectively. difference of market price and purchase cost of these two lands comes to Rs.23,02,500/-. However, we do not find any basis in finding of Ld. AO applying provisions of ITA-129-2018 7 section 50C of Act, because provisions of section 50C of Act applies on seller of property and not on purchaser. Ld. CIT(A) has rightly adopted this view holding that provisions of section 50C were not applicable on assessee being purchaser of property and also during survey proceedings no documentary evidence was found which may prove that assessee has made payment over and above registered valuation of property. In lack of any incriminating material, no addition was called for by AO as rightly held by I.T.A.T. Indore Bench in case of ACIT vs. Raj Homes P. Ltd. Bhopal 9 ITJ 286 (2007) and further Hon'ble High Court of Delhi in case of CIT vs. Dheengar Metal Works (2010) 328 ITR 384 also held that, in any event it is settled law that though admission is extremely important piece of evidence it cannot be said to be conclusive and it is open to person, who has made admission, to show that it is incorrect. 24. We, therefore, respectfully following decision and judgments discussed above and in given facts and circumstances of case find no inconsistency in finding of Ld. CIT(A) deleting addition of Rs.23,02,500/- made by Ld. AO u/s 69 of Act. In result Revenue's ground no.1 is dismissed. 8. Nothing was shown that aforementioned finding recorded by learned Tribunal was erroneous or perverse in any manner. 9. Adverting to addition of Rs.28,97,500/-, in respect of which Revenue has claimed that substantial question of law No.(ii) arises in appeal, learned Tribunal observed that Assessing Officer after making addition of Rs.23,02,500/- on basis of provision under Section 50C of Act being difference of market value and purchase cost of plots purchased, as discussed hereinabove, made remaining addition at Rs.28,97,500/- as unexplained investment in properties. This was done on basis of surrender made by partner at Rs.52 Lac. said amount of Rs.23,02,500/- was subtracted from surrender made by partner to tune of Rs.52 Lac to arrive at remaining addition of ITA-129-2018 8 Rs.28,97,500/-. view taken by learned Tribunal that Assessing Officer had erred in making addition of Rs.28,97,500/- finds support from finding arrived at while deciding ground No.1 of Revenue's appeal relating to unexplained investment under Section 69 in purchase of land, that addition could not have been made without bringing any evidence on record and merely on basis of statement given during course of survey which was not on oath and was retracted by all partners by submitting affidavit on very next day of survey. relevant extract of findings recorded by learned Tribunal reads, thus:- 25. Apropos Ground No.2 of Revenue's appeal for A.Y. 2007-08 related to deleting of addition of Rs.28,97,500/- made on account of unexplained investment, we have heard rival contention and perused material on record placed before us. 26. We find that this issue relates to ground No.1 of Revenue's appeal adjudicated above, wherein we have discussed about surrender made by partner at Rs.52 lacs and thereafter retracted on very next day. Ld. AO made addition of Rs.23,02,500/- u/s 69 of Act taking basis of provisions of section 50C of Act, being difference of market value and purchase cost of plots purchase. Ld. AO made remaining addition (Rs. 52 lacs 23,02,500/-) at Rs.28,97,500/- as unexplained investment in properties. We have already discussed issue in detail while adjudicating ground no.1 above that addition cannot be made merely on basis of statement given during course of survey which is not on oath and if there is no incriminating material with AO to make such addition. We, therefore, are of view, Ld. AO erred in making addition of Rs.28,97,500/- without bringing any evidence on record. We, therefore, upheld view taken by Ld. CIT(A) deleting addition of Rs.28,97,500/-. Thus, ground no.2 of Revenue's appeal for A.Y. 2007- 08. 10. We have already observed that appellant failed to point out any illegality or perversity in findings recorded by learned Tribunal with ITA-129-2018 9 regard to substantial question of law No.(i) raised. Since question No.(ii) has been found to be inter-related with question No.(i), therefore, equally for same reason, we have nothing to differ from view taken by learned Tribunal in relation to deletion of addition of Rs.28,97,500/-. 11. We do not find any force in submission put forth by learned counsel for appellants with regard to question of law No.(i) and (ii) that since said unexplained investments were voluntarily accepted by assessee and later on assessee got them retracted, therefore, CIT(A) erred in deleting said additions and so was Tribunal not justified in affirming such findings. law with regard to admission or confession is well settled. admission may be strong piece of evidence but it is not conclusive evidence. veracity of such evidence can be judged vis-a-vis material evidence and obtaining circumstances of case in which it was made because it can always be explained by person who has made such confession or admission. In present case, perusal of findings recorded by Tribunal shows that aforesaid two additions of Rs.23,02,500/- and Rs.28,97,500/- towards unexplained investments were made by Assessing Officer merely on basis of statements given during course of survey and that there is no incriminating material or documentary evidence available with Assessing Officer to substantiate said additions for assessment year 2007-08. That apart, retraction was immediately made on very next day by filing affidavit signed by all partners. Therefore, in given facts and circumstances of case, retraction cannot be said to be for extraneous reason. Thus, in our ITA-129-2018 10 considered opinion, substantial question of law No.(i) and (ii) raised, do not arise in present appeal. 12. As regards substantial question of law No.(iii) claimed by appellant-Revenue, it is gathered that examining correctness of findings of CIT(A) sustaining only addition of Rs.17,05,082/- as against addition of amount of Rs.3,72,79,410/- made by Assessing Officer towards suppressed sales, Tribunal has specifically found that same issue had arisen during adjudication of appeal for earlier assessment year and since there was no dispute with regard to similarity of facts and circumstances of case in hand vis-a-vis appeal decided for earlier assessment year, Tribunal affirmed order of CIT(A) sustaining addition of Rs.17,05,082/- and deleting remaining addition of Rs.3,55,74,328/-. relevant extract of findings of learned Tribunal in this behalf, reads as under:- 13. First common issue relates to addition of suppressed sales of Rs.3,72,79,410/-. Ld. CIT(A) estimated sales at 2.5 crores and estimated net profit @8% thereby sustaining addition at Rs.17,05,082/- and deleted remaining addition of Rs.3,55,74,328/-. We further find that very same issue came up before us during adjudication of appeal for A.Y. 2007-08. As all facts and circumstances remains same which have not been disputed by both parties, we are inclined to apply same view as taken while deciding issue for A.Y. 2007-08 and confirm view taken by Ld. CIT(A) sustaining addition of Rs.17,05,082/- and deleting remaining addition of Rs.3,55,74,328/-. As result ground No.3 of Revenue's appeal and Ground Nos. 2 & 3 of assessee's appeal are dismissed. 13. Learned counsel for Revenue was unable to demonstrate that case of assessee for assessment year 2007-08 for which addition was sustained only to extent of Rs.17,05,082/-, was different from earlier ITA-129-2018 11 decision of Tribunal or that earlier decision of Tribunal was set aside or reversed by High Court or Supreme Court. 14. Apart from aforesaid, findings recorded by CIT(A) and upheld by Tribunal on issues raised in present appeal are based on appreciation of evidence on record. learned counsel for Revenue has failed to point out as to how and in what manner such findings of fact are illegal or perverse. findings arrived at by CIT(A) and affirmed by Tribunal are just and reasonable. only endeavour of learned counsel for appellant was to re-appreciate evidence so as to persuade this Court to take different view, which is not permissible under Section 260A of Act. 15. In view of said fact, substantial questions of law claimed by appellant-Revenue, do not arise for consideration in present appeal. Thus, appeal being devoid of any merit, stands dismissed. (AJAY KUMAR MITTAL) (VIJAY KUMAR SHUKLA) CHIEF JUSTICE JUDGE s/ Digitally signed by SACHIN CHAUDHARY Date: 2020.02.05 11:17:10 +05'30' Principal Commissioner of Income-tax v. Bhomiyaji Land & Finance Co