Addition based on statement alone cannot be sustained

The addition based on statement alone that too based on mistaken facts and retracted cannot be sustained. – ITAT Delhi in the case of MAHAMAYA GENERAL FINANCE COM Ltd. Vs DCIT, DELHI








ITA No.3237/Del/2013

A.Y. : 2009-10


DCIT, CENTRAL CIRCLE-14,                                                           M/S MAHAMAYA GENERAL FINANCE

NEW DELHI                                                                                     COM. LTD.,

ROOM NO. 320, 3RD FLOOR,                        VS.                         4/4, A, STOCK EXCHANGE BUILDING,

E-2, JHANDEWALAN EXTN.,                                                          ASAF ALI ROAD,

ARA CENTRE, NEW DELHI                                                            NEW DELHI – 110 002


(APPELLANT)                                                                                                (RESPONDENT)


Department by : Ms. Deepika Mittal, CIT(DR)

Assessee by : S h . Rajesh Jain, CA

Date of Hearing : 25-07-2016

Date of Order : 01-08-2016



The Revenue has filed the present appeal against the impugned order dated 20/2/2013 passed by the Ld.

Commissioner of Income Tax (Appeals-XXXIII), New Delhi on the following grounds:-

  • On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.1,00,00,000/- made by the Assessing Officer on account of surrender made by the assessee under section 132(4) of the Income tax Act, 1961 during the course of search on 31.07.2009 as well as during post search proceedings on 17.09.2009 under section 131 of the Income tax Act, 1961.
  • On the facts and in the circumstances of the case, the CIT (A) has erred in deleting this addition without appreciating the facts of the case that despite the surrender was made by the assessee itself under section 132(4) of the Income tax Act, however, the same was not disclosed in the return of income filed under section 153A of the Income tax Act, 1961, and no tax was paid on it accordingly.
  • On the facts and in the circumstances of the case, the CIT(A) has erred in deleting this addition without appreciating the fact that the retraction made by the assessee was not supported by any documentary evidence, as it has been held by various judicial authorities that for any retraction to be successful in the eyes of law the maker has to show as to how the earlier recorded statement does not state the true facts or that there was coercion, inducement or threat while recording his earlier statement.
  • On the fact and in the circumstances of the case, the CIT(A) has erred in deleting this addition without appreciating the fact that during the course of search, 15 letter heads of different contractors were seized, out of which some were blank and signed, on the basis of which, M/s Ramprastha Builders Pvt. Ltd. a sister concern of assessee had itself accepted the facts and had surrendered an amount of Rs. 4.0 crores in the assessment year 2009-10 on account of WIP and declared in the return of income accordingly.
  • The order of the CIT(A) is erroneous and is not tenable on facts and in law.
  • The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or during the course of the hearing of the appeal.

2. The facts in brief are that a search and seizure action u/s. 132 of the Income Tax Act, 1961 (hereinafter referred as the Act) was conducted by the Department on 30.7.2009 in Ramprastha Group of cases. The assessee company M/s Mahamaya General Finance Co (P) Ltd., business premises of 4/4A, Stock Exchange Building, Asaf Ali Road, New Delhi – 110 002 which was also covered u/s. 132(1) of the Income Tax Act, 1961. The case was centralized with this Circle by order u/s. 127 of the Act and accordingly notice u/s. 153A of the Act was issued to the assessee on 5.1.2010. In response to the same, return eclaring an income of Rs. 17,60,947/- was filed on 31.5.2010. Notice u/s 143(2) and 142(1) of the Act, 1961 were issued alongwith a questionnaire dated 14.9.2010. Due to change of Officer, fresh Notice again issued on 26.6.2011 for 8.7.2011. In response to various statutory notices, Authorised Representative of the assessee attended the proceedings from time to time and furnished necessary details, information and documents. After considering the documents/ material filed by the assessee, AO observed that at the time of search Sh. Balwant Singh, Chairman of Ramprastha Group of Companies surrendered an amount of Rs. 1 crore u/s. 132(4) of the I.T. Act in the case of the assessee for AY 2009-10. AO further observed that on perusal of the return reveals that the assessee has not disclosed this amount in the return of the income for the AY 2009-10 filed on 31.5.2010. Hence, AO made the addition fo Rs, 1,00,00,000/- and completed the assessment at a total income of Rs. 1,17,60,947/- vide his order dated 30.12.2011 passed u/s. 153A/143(3) of the I.T. Act, 1961.

3. Being aggrieved with the aforesaid assessment order, assessee appealed before the Ld. CIT(A), who vide impugned order dated 20.2.2013 has deleted the addition and partly allowed the appeal of the Assessee.

4. Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal.

5. At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that addition made by the AO may be upheld.

6. On the contrary, Ld. A.R. of the assessee relied upon the order of the ld. CIT(A) and stated that the same may be upheld and appeal of the Revenue may be dismissed. He also draw our attention towards the ITAT Delhi Bench ‘F’ order dated 16.2.2016 passed in the case of DCIT vs. Ramaprastha Builders Pvt. Ltd.; DCIT vs. Ramprastha Greens (P) Ltd. and DCIT vs. Ramparasthan Promoters & Developers Pvt. Ltd. passed in ITA No. 3238/Del/2013 (AY 2010-11); 3239/Del/2013; 3240 & 4341/Del/2013 (AY 2010-11 & 2009-10) respectively and stated that in the related group of cases similar issue has been dealt by the Tribunal and the addition in dispute has been deleted. Accordingly, he requested that by following the ITAT order and by upholding the Ld. CIT(A)’s order, Appeal of the Revenue may be dismissed.

7. We have heard the both parties and perused and considered the relevant records available with us especially the impugned order passed by the Ld. CIT(A). We find that Ld. First Appellate Authority has elaborately discussed the issue in dispute by considering the submissions of the assessee and adjudicated the issue in dispute at pages 31 to 32 in his impugned order. The said relevant paras of the impugned order are reproduced as under:- 

“I have considered the entire facts and arguments of Ld AR. Neither the Investigation Wing nor the Assessing Officer has correlated any seized document with the surrender of unaccounted receipt. At the time of putting question leading to surrender of income some seized document was referred, namely, B-2 to B-27. Exact incriminating or nature of document was never confronted either by Investigation Wing or the Assessing Officer to Sh. Balwant Singh. Only seized document discussed by the Assessing Officer is signed blank letter head of contractor in support of unaccounted work-inprogress. 

This blank letter head in no way proves unaccounted payment to the contractor specially under the circumstances that various contractor of Ramprastha Group were surveyed simultaneously and no document of unrecorded receipts were found and no addition was made in the hands of contractors on this issue. This factor is very important when entire construction is done through contractors. Therefore, I agree with the Ld. AR that entire addition is made on the basis of statement uls 132(4) of Sh. Balwant Singh. I have considered the contents of statement under Section 132(4) of Sh. Balwant Singh. He has made disclosure of additional income on behalf of various companies of Ramprastha Group and other persons. The substantive part of answer, Sh. Balwant Singh has stated that mostly the transactions are recorded in books of accounts and some parts are unaccounted. Ld AR has argued that entire seized document was examined during post search and assessment proceeding and no incriminating material was found. Subsequent statements were recorded in the Investigation Wings as mentioned in the assessment order. However no question was asked in furtherance of the statement regarding the contents of seized document. During original statement also subsequent details of work-in-progress, such as address, quantum of work done, accounted work-in- progress and undisclosed work in progress were not asked for. The appellant company during post search proceeding has twice informed the Investigation Wing that the surrender of workin- progress is made without pinpointing any seized material. No action was apparently taken even by the Assessing Officer, when effectively the statement got retracted. Ld AR proved that partly the surrender was on mistaken facts as the Sh. Balwant Singh has stated that cash payment for acquiring the land was debited in the books of accounts and, therefore, deduction was not available for disallowance u/s. 40A(3). This is an apparent mistake of facts. Ramprastha Group of Companies has never made cash payment for acquiring land. It has paid only account payee cheque to Dharam Raj Construction and Infrastructure (P) Ltd. who in turn has made cash payment to the seller of the land. 

After considering entire facts and circumstances of the case and judicial pronouncement relied upon by the Ld. AR, in my view, the addition based on statement alone that too based on mistaken facts and retracted cannot be sustained. Accordingly, the addition made on account of unaccounted receipts is hereby deleted. This ground of appeal is allowed.”

7.1 We find considerable cogency in the Assessee’s AR contention that the issue in dispute is also covered by the ITAT Delhi Bench ‘F’ order dated 16.2.2016 in the group cases of DCIT vs. Ramaprastha Builders Pvt. Ltd.; DCIT vs. Ramprastha Greens (P) Ltd. and DCIT vs. Ramparasthan Promoters & Developers Pvt. Ltd. passed in ITA No. 3238/Del/2013 (AY 2010-11); 3239/Del/2013; 3240 & 4341/Del/2013 (AY 2010-11 & 2009-10) respectively in identical facts. 

7.2 After going through the findings of the Ld. CIT(A) as mentioned in para no. 7 as aforesaid, as well as respectfully following the findings of the ITAT order, as mentioned in para 7.1 above on the issue in dispute, we are of the view that the neither the Investigation Wing nor the Assessing Officer has correlated any seized document with the surrender of unaccounted receipt. After considering entire facts and circumstances of the case and respectfully follow the judicial pronouncements, as discussed in ITAT order dated 16.2.2016 in the group cases of DCIT vs. Ramprastha Builders Pvt. Ltd. & Ors. case, we uphold the order of the Ld. CIT(A) on the issue in dispute and dismiss the Appeal filed by the Revenue.

8. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 01/08/2016.

Sd/-                                                              Sd/-

[ANADI N. MISHRA]                                               [H.S. SIDHU]

ACCOUNTANT MEMBER                                     JUDICIAL MEMBER

Date 01/08/2016


Copy forwarded to: –

  1. Appellant –
  2. Respondent –
  3. CIT
  4. CIT (A)

By Order,

Assistant Registrar, ITAT, Delhi Benches

Copy of Order